Executive Summary

Q3 2025 revenue was $851.6 million (+4.4% YoY), with diluted EPS $0.40 and adjusted EPS $0.72; Adjusted EBITDA declined to $173.0 million as volumes and rate pressures weighed on profitability .
Guidance was lowered: FY25 revenue to $3.28–$3.30B, Adjusted EBITDA to $650–$660M, and adjusted EPS to $2.35–$2.45, reflecting incremental PLGL charges, payer-related rate/denial pressure, and softer volumes; tax rate was reduced, and operating cash flow outlook cut .
Management is taking decisive actions: portfolio optimization (five facility closures), capex reduction in 2026 by at least $300M to accelerate free cash flow, and targeted referral initiatives that drove +3.3% same-facility admissions; 429 beds added in Q3 via JV hospitals and expansions .
Payer friction—especially in Medicaid managed care—manifested in increased utilization review, shorter length of stay approvals, and higher denials/bad debt; legal/investigation costs moderated from Q2 but remain elevated; incremental $4–$6M PLGL charge expected in Q4 .
Near-term stock reaction catalysts: guidance reduction, PLGL accrual, payer/macro uncertainty and government shutdown delaying CMS supplemental approvals (up to $22M potential EBITDA not in guidance); offsets include bed ramp, capex discipline, and quality outcome initiatives .

What Went Well and What Went Wrong

What Went Well

Same-facility admissions grew 3.3% YoY, with referral initiatives showing momentum; revenue per patient day increased 2.3% YoY and same-facility revenue rose 3.7% .
Development execution: 429 beds added in Q3 (three JV hospitals with Geisinger, Ascension Seton, Fairview); total 908 beds added YTD, positioning for future EBITDA as facilities ramp .
Legal/investigation costs moderated sequentially (~28% down vs Q2), with expectation for further step down; management reiterated focus on quality/technology with measured outcomes (e.g., symptom reductions at a JV facility) .

What Went Wrong

Adjusted EBITDA fell to $173.0M (from $194.3M YoY), with startup losses up to $13.3M and higher PLGL expenses; GAAP diluted EPS down to $0.40 (from $0.74 YoY) and adjusted EPS to $0.72 (from $0.91) .
Payer-related headwinds: increased denials/bad debt and stricter utilization in Medicaid, length-of-stay scrutiny, and rate updates below expectations pressured volumes and revenue realization .
FY25 guidance cut (revenue, EBITDA, EPS, operating cash flows), with incremental $4–$6M PLGL in Q4 and CMS supplemental programs delayed by government shutdown (up to $22M potential EBITDA excluded from outlook) .

Financial Results

Consolidated P&L Trends (Quarterly)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$770.5	$869.2	$851.6
Adjusted EBITDA ($USD Millions)	$134.2	$201.8	$173.0
Diluted EPS ($USD)	$0.09	$0.33	$0.40
Adjusted EPS ($USD)	$0.40	$0.83	$0.72
Adjusted EBITDA Margin %	17.4% (calc from $134.2/$770.5)	23.2% (disclosed)	20.3% (calc from $173.0/$851.6)

Notes: Adjusted EBITDA margin Q2 2025 is disclosed directly at 23.2% . Q1/Q3 margins are calculated from reported revenue and adjusted EBITDA .

YoY Comparison (Q3 2025 vs Q3 2024)

Metric	Q3 2024	Q3 2025	YoY Change
Revenue ($USD Millions)	$815.6	$851.6	+4.4%
Adjusted EBITDA ($USD Millions)	$194.3	$173.0	-10.9% (calc)
Diluted EPS ($USD)	$0.74	$0.40	-45.9% (calc)
Adjusted EPS ($USD)	$0.91	$0.72	-20.9% (calc)

Segment Revenue (Q3 2025)

Segment	Revenue ($USD Millions)	YoY Change
Acute inpatient psychiatric	$471.5	+7.2%
Specialty treatment facilities	$148.1	-4.9% (closures)
Comprehensive treatment centers (CTCs)	$144.5	+7.7%
Residential treatment centers	$87.5	+1.8%

Operating KPIs (Q3 2025)

KPI (Same Facility unless noted)	Q3 2024	Q3 2025	Change
Same-facility revenue ($USD Millions)	$798.4	$827.8	+3.7%
Same-facility patient days	800,845	811,607	+1.3%
Same-facility admissions	50,286	51,966	+3.3%
Average length of stay (days)	15.9	15.6	-1.9%
Revenue per patient day ($)	$997	$1,020	+2.3%
Total facility adjusted EBITDA ($USD Millions)	$230.1	$210.8	-8.4%

Guidance Changes

Metric	Period	Previous Guidance (Aug 2025)	Current Guidance (Nov 2025)	Change
Revenue	FY 2025	$3.30–$3.35B	$3.28–$3.30B	Lowered
Adjusted EBITDA	FY 2025	$675–$700M	$650–$660M	Lowered
Adjusted EPS	FY 2025	$2.45–$2.65	$2.35–$2.45	Lowered
Interest expense	FY 2025	$130–$140M	$135–$140M	Narrowed up
Tax rate	FY 2025	25%–26%	22.5%–23.5%	Lowered
D&A	FY 2025	$185–$195M	$190–$195M	Slightly raised floor
Stock comp	FY 2025	$40–$45M	$33–$38M	Lowered
Operating cash flows	FY 2025	$460–$485M	$400–$425M	Lowered
Expansion capex	FY 2025	$495–$535M	$505–$515M	Narrowed (mid raised)
Maintenance & IT capex	FY 2025	$105–$115M	$105–$115M	Maintained
Total bed additions	FY 2025	950–1,000 beds	945–1,076 beds	Range broadened

Additional notes: Q4 will include incremental $4–$6M PLGL expense; potential up to $22M EBITDA from CMS supplemental programs is excluded due to timing uncertainty amid the government shutdown .

Earnings Call Themes & Trends

Topic	Q1 2025 (Prior-2)	Q2 2025 (Prior-1)	Q3 2025 (Current)	Trend
Payer dynamics (Medicaid)	Affirmed guidance; noted operational focus; no explicit payer pressure flagged in PR	Emergent Medicaid volume softness in acute; stricter utilization; managing denials; guidance adjusted partly for softer volumes	Continued friction: stricter length-of-stay approvals, denials/bad debt; rate updates below expectations	Worsening pressure into H2 2025
Supplemental payments	Expected net $0–$15M FY25 initially	TN program approved; net +$30–$40M FY25; disclosed $28.5M retro benefit for FY24	Tracking CMS approvals; up to $22M possible but excluded from guide due to shutdown	Tailwind building but timing uncertain
Capex/free cash flow	2025 largest bed expansion year; capex plan affirmed	Considering capex pause to accelerate FCF; identified >$100M capex savings on projects	2026 capex to be ≥$300M lower; goal to be FCF positive in 2026	Accelerating capex discipline
Legal/investigations	Elevated transaction/legal costs begin; quality focus highlighted	Government investigation spend ~$54M in Q2; expected moderation H2	Q3 legal costs down ~28% vs Q2; further step-down expected	Improving sequentially
Quality/technology	Quality dashboard, monitoring devices; 50+ KPIs tracked	Continued investment; focus on outcomes for payer engagement	Outcome highlights at JV facility (symptom reductions); increased survey rigor, Acadia performing well	Strengthening differentiation
Labor	Favorable trends, centralized recruitment	Wage growth stable ~3.5% in Q2	Turnover improved for six consecutive quarters; base wage growth stabilizing	Improving/Stable
Portfolio actions	Noted underperformers impact; willingness to close/repurpose	Considering closures/asset monetization	Closed 5 facilities; expect mid-single-digit EBITDA tailwind in 2026	Active optimization

Management Commentary

CEO: “We are taking decisive steps to improve performance… including targeted efforts to drive volume recovery, a reduction in capital expenditures to accelerate free cash flow generation, and portfolio rationalization…” .
CFO: “Adjusted EBITDA came in approximately $5 million below our internal expectations, driven primarily by lower volumes and an increase in bad debts and denials… Startup losses were $13.3 million” .
CEO on outcomes: “Outcomes data… shows significant improvement in psychiatric symptoms, including a 47% reduction in depressive symptoms, a 47% reduction in anxiety symptoms, and a 34% improvement in quality of life” .
CFO on outlook: “We now expect Adjusted EBITDA of $650–$660 million… and adjusted EPS of $2.35–$2.45… incremental $4–$6 million PLGL in Q4… up to $22 million of EBITDA from supplemental payments under review at CMS is not included” .

Q&A Highlights

Payer friction detail: Medicaid managed care increasing utilization review, scrutinizing discharge criteria, and contributing to denials; management sees concentration in Medicaid-heavy markets rather than adverse media-driven issues .
Seasonality and Q4 bridge: Q4 is seasonally lowest; startup losses to peak then step down; closures incur low single-digit millions in Q4 run-out costs; caution not to run-rate Q4 into 2026 .
DSOs and AR: Spike driven by slower federal plan payments and denials; management expects collections with continued revenue cycle focus .
Capex/2026: FY25 capex guided to $610–$630M; FY26 capex to be ≥$300M lower; fewer bed additions in 2027 (150–250) imply further capex declines .
Legal spend: Down ~28% from Q2; majority of investigative work completed by Q3; further moderation expected .
Facility closures: Expect mid-single-digit EBITDA tailwind in 2026; ongoing stringent review with minimal additional closures anticipated barring poor returns .

Estimates Context

Metric	Q1 2025 Estimate*	Q1 2025 Actual	Q2 2025 Estimate*	Q2 2025 Actual	Q3 2025 Estimate*	Q3 2025 Actual
Revenue ($USD Millions)	$769.8	$770.5	$841.0	$869.2	$846.4	$851.6
Primary EPS ($USD)	$0.357	$0.40	$0.707	$0.83	$0.660	$0.72
EBITDA ($USD Millions)	$132.1	$125.5 (GAAP EBITDA)	$177.2	$191.3 (GAAP EBITDA)	$178.4	$167.0 (GAAP EBITDA)

Notes:

Revenue and EPS represent consensus means; Actual EPS shown as adjusted EPS for direct comparison to consensus “Primary EPS.” Revenue/EBITDA estimates/actuals marked with an asterisk are from S&P Global; Values retrieved from S&P Global.*
Q3 2025: Revenue beat; adjusted EPS beat; EBITDA (GAAP) miss versus consensus mean .

Key Takeaways for Investors

Demand remains resilient, but Medicaid payer friction (utilization management, denials, bad debt) is the key near-term earnings headwind; watch rate negotiations and authorization trends into Q4/Q1 .
Guidance reset de-risks FY25, yet includes incremental PLGL and excludes up to $22M of potential supplemental payments; any CMS approvals are upside catalysts .
Capex discipline is material: ≥$300M reduction in 2026 and portfolio closures aid 2026–2027 FCF and margin trajectory; bed ramp (632 beds entering same-facility in Q1’26) should support volumes .
Legal/investigation spend peaked in Q2 and moderated in Q3 (~28% down); continued improvement should benefit EBITDA/FCF quality .
Segment mix trends: acute and CTC growth offset specialty decline (closures); optimizing market focus and JV-heavy pipeline should improve returns .
Labor backdrop improving (turnover down, wage growth stabilizing), helping conversion of referrals into admissions as initiatives scale .
Near-term trading setup hinges on payer headlines, PLGL accrual, and government shutdown timing; medium-term thesis focuses on disciplined growth, quality outcomes, and FCF unlock from capex normalization .

Acadia Healthcare Company, Inc. (ACHC)·Q3 2025 Earnings Summary