Yahoo Finance Should You Retain Acadia Healthcare (ACHC) in Your Portfolio?
Acadia Healthcare Company, Inc. ACHC is well-poised to grow on the back of rising admissions and growing demand for behavioral healthcare services. The company keeps enhancing its capabilities to address that demand.
Acadia Healthcare — with a market cap of $6.4 billion — is a behavioral healthcare services provider in the United States and Puerto Rico. Courtesy of solid prospects, this presently Zacks Rank #3 (Hold) stock is worth retaining at the moment.
The Zacks Consensus Estimate for ACHC’s 2023 earnings is pegged at $3.23 per share, indicating 7.3% year-over-year growth. The estimate remained stable over the past week. Acadia Healthcare beat on earnings in two of the last four quarters, met once and missed on the other occasion, with an average surprise of 2.3%. This is depicted in the figure below.
Acadia Healthcare Company, Inc. Price and EPS Surprise
Acadia Healthcare Company, Inc. price-eps-surprise | Acadia Healthcare Company, Inc. Quote
The consensus mark for 2023 revenues stands at $2.9 billion, indicating 9% growth from a year ago.
Headquartered in Franklin, TN, Acadia Healthcare is likely to benefit from the rising patient days and bed capacity. It is on track to add 300 beds to its existing facilities this year. The company also intends to inaugurate a minimum of six comprehensive treatment centers in 2023. Thegrowth in the senior population is likely to be beneficial for companies like ACHC as the demand for hospital services increases.
As non-COVID utilization of resources keeps rising, the company’s volumes are expected to grow significantly. In the overall U.S. facility, it registered year-over-year growth of 10.4% in admissions in the first quarter. Our estimate suggests the metric to grow more than 4% this year from the 2022 level. The top line is likely to receive support from growth in specialty treatment and acute inpatient psychiatric facilities.
Acquisitions and joint ventures are likely to continue helping Acadia Healthcare add scale to its business. Prudent acquisitions to expand in the behavioral healthcare industry and increasing footprint in the acute care space bode well for ACHC. Also, the company does not shy away from shedding non-core assets with lower profitability.
ACHC expects operating cash flows to be in the range of $450-$500 million this year. Capital expenditures for expansions are estimated to stay between $350 million and $400 million. This will support its growth initiatives. Moreover, it projects maintenance capital in the $40-$50 million range for this year.
Key Concerns
There are a few factors that investors should keep an eye on.
Acadia Healthcare’s growing expenses are concerning. The metric jumped 7% and 9.7% in 2021 and 2022, respectively. Our estimates for salaries, wages & benefits and professional fees for 2023 indicate 8.9% and 10.7% year-over-year growth, respectively. Also, its return on equity of 10.2% compares unfavorably with the significantly higher industry average figure.
Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Better-Ranked Players
Investors interested in the broader medical space may look at better-ranked players like Medpace Holdings, Inc. MEDP, GeneDx Holdings Corp. WGS and Establishment Labs Holdings Inc. ESTA, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Medpace Holdings’ 2023 earnings is pegged at $8.11 per share, indicating an 11.4% improvement from the year-ago level. The consensus estimate for MEDP’s revenues in 2023 suggests a 20.9% year-over-year rise.
The consensus estimate for GeneDx’s 2023 earnings indicates 89% year-over-year growth. The Zacks Consensus Estimate for WGS’ revenues in 2023 is pegged at $205 million.
The consensus mark for Establishment Labs’ 2023 earnings has improved 6.2% in the past 30 days. Furthermore, the consensus estimate for ESTA’s revenues in 2023 suggests 27.6% year-over-year growth.
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Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report
Medpace Holdings, Inc. (MEDP) : Free Stock Analysis Report
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GeneDx Holdings Corp. (WGS) : Free Stock Analysis Report
