Sign in
AH

Acadia Healthcare Company, Inc. (ACHC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $774.2M (+4.2% y/y), while diluted EPS fell to $0.35 and adjusted EPS to $0.64; adjusted EBITDA declined to $153.1M and margin compressed to 19.8% due to a $14.3M professional liability reserve increase, $11.2M start-up losses, and a $5M impact from a facility closure .
  • Same-facility revenue rose 4.7% y/y on patient days +3.2% and revenue per patient day +1.4%; total facility revenue per patient day was $997 (+1.7% y/y) and same-facility adjusted EBITDA was $196.4M .
  • FY 2025 guidance: revenue $3.3–$3.4B, adjusted EBITDA $675–$725M, adjusted EPS $2.50–$2.80; Q1 2025 guidance: revenue $765–$775M, adjusted EBITDA $130–$135M, with elevated start-up losses and lower supplemental payments expected in Q1 .
  • Capital allocation/catalysts: new $300M share repurchase authorization; management highlighted a 2026 EBITDA/FCF inflection as start-up losses decline and CapEx moderates, and indicated plans to upsize the revolver to ~$1B in a refinancing disclosed in the 10-K context .

What Went Well and What Went Wrong

What Went Well

  • Same-facility growth: Revenue +4.7% y/y on patient day growth (+3.2%) and pricing (+1.4% revenue per patient day), showing resilient underlying demand .
  • Capacity expansion and JV momentum: 577 newly licensed beds added in Q4; JV hospitals opened in Denver (Intermountain) and Detroit (Henry Ford), with 800–1,000 beds targeted for 2025 .
  • Technology/quality investments: CEO detailed broad deployment of EMR, patient monitoring, and staff wearables, plus real-time dashboards with 50+ KPIs to drive safer, compliant care and operational effectiveness .

What Went Wrong

  • Margin compression: Adjusted EBITDA margin fell to 19.8% from 22.8% y/y, driven by a $14M reserve increase for professional/general liability and $11.2M start-up losses; closure impacted revenue ($7M) and EBITDA ($5M) .
  • Underperforming facilities: Management flagged a small group as a ~$20M EBITDA headwind embedded in FY25 guidance; turnaround timing remains uncertain .
  • Supplemental payment timing: Revenue per patient day growth moderated versus Q3, with Q1 2025 net supplemental payments expected down $10–$15M y/y; full-year FY25 assumes flat to +$15M net supplemental payments .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$742.8 $796.0 $815.6 $774.2
Net Income Attributable ($USD Millions)$57.7 $78.5 $68.1 $32.6
Diluted EPS ($)$0.63 $0.85 $0.74 $0.35
Adjusted EPS ($), excl. provider relief fund (PRF)$0.85 $0.91 $0.91 $0.64
Adjusted EBITDA ($USD Millions)$171.6 $187.6 $194.3 $153.1
Adjusted EBITDA Margin (%)22.8% 23.6% 23.8% 19.8%

KPIs and Operating Stats:

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Same-Facility Revenue ($USD Thousands)$730,836 $776,145 $802,555 $765,014
Same-Facility Patient Days742,011 773,499 800,880 765,763
Same-Facility Admissions45,917 49,091 50,368 47,866
Same-Facility Rev. per Patient Day ($)$985 $1,003 $1,002 $999
Total Facility Patient Days757,345 791,673 815,126 776,456
Total Facility Admissions47,295 50,511 51,513 48,679
Total Facility Rev. per Patient Day ($)$981 $1,006 $1,001 $997

Estimate Comparison (Wall Street consensus):

  • S&P Global consensus data for Q4 2024 and Q1 2025 was unavailable at time of analysis due to API rate limits; no comparison to consensus is provided [GetEstimates errors].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025N/A$3.3–$3.4B New
Adjusted EBITDAFY 2025N/A$675–$725M New
Adjusted EPSFY 2025N/A$2.50–$2.80 New
Interest ExpenseFY 2025N/A$130–$140M New
Tax RateFY 2025N/A25%–26% New
D&A ExpenseFY 2025N/A$175–$185M New
Stock Comp ExpenseFY 2025N/A$45–$50M New
Operating Cash FlowsFY 2025N/A$460–$510M New
Expansion CapExFY 2025N/A$525–$575M New
Maintenance & IT CapExFY 2025N/A$105–$115M New
Total Bed AdditionsFY 2025N/A800–1,000 beds New
RevenueQ1 2025N/A$765–$775M New
Adjusted EBITDAQ1 2025N/A$130–$135M New
Long-Term Targets2026–2028N/ARev +7%–9% CAGR; EBITDA +8%–10% CAGR; 600–800 beds/yr New

Assumptions embedded: start-up losses ~$50–$55M FY25 (up ~$25M y/y), net Medicaid supplemental payments $0–$15M FY25, Q1 2025 start-up losses ~$20M (up ~$15M y/y) and net supplemental payments down ~$10–$15M y/y .

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Pricing and revenue per dayRev/PD +5.6%; strong pricing tailwind Rev/PD +3.6% same-facility Rev/PD +1.4% same-facility; moderation due to supplemental timing Moderating into FY25 (prudence on rates)
Capacity expansionAdded 37 beds; opened 100-bed de novo Mesa Extensive bed construction planned Q4, JV pipeline 577 new licensed beds; JV openings; 800–1,000 beds targeted in 2025 Accelerated in 2024; sustained but moderating CapEx beyond 2025
Supplemental paymentsFY24 guide included ~$10M one-time state payments PRF in 2023 only; supplemental cadence noted Q1 down $10–$15M y/y; FY25 net flat to +$15M; gross < $200M with net ~two-thirds ballpark Lumpy; cautious FY25 outlook
Underperforming facilities/referralsNot highlighted Closure of two facilities in Q3; some facilities underperform Small group causing ~$20M FY25 headwind; referral issues localized and improving Remediation underway; upside if turnaround accelerates
Legal/professional liabilityNot highlightedLegacy Desert Hills settlement in 2023 $14M reserve increase for liability claims; +$10M y/y liability expense in FY25 More conservative reserving; reinsurance costs higher
Tech and quality initiativesNot highlightedNot highlightedEMR, monitoring devices, staff wearables, 50+ KPI dashboards Continued investment; quality focus
Capital structure/liquidityNet leverage ~2.5x; $371.5M revolver available Net leverage ~2.5x; $321.5M revolver available Plan to upsize revolver to ~$1B; share repurchase $300M authorized Liquidity enhancement; buyback flexibility
Free cash flow outlookNot highlightedNot highlighted2026 EBITDA growth high-end of 8%–10% range; FCF inflection as start-up losses decline and CapEx moderates Improving FCF profile

Management Commentary

  • CEO: “We believe we have led the industry in adopting the latest technology… helping us to deliver safe, quality care with positive clinical outcomes and patient satisfaction scores.”
  • CEO: “We completed construction on approximately 1,300 beds in 2024… expect to add between 800 and 1,000 total beds this year.”
  • CFO: “Adjusted EBITDA margin was 19.8%… prior year 22.8%… due to a $14M increase to reserves for self-insured professional and general liability claims… and $11.2M start-up losses.”
  • CFO: “Our FY25 guidance assumes… ~$20M EBITDA headwind from [a] small group of underperforming facilities… same-facility RPPD growth in the low single digits.”
  • CFO: “Total gross supplemental payments would be less than $200 million… a good ballpark for net is about two-thirds.”
  • CFO: “We’ve refinanced the existing bank facilities and… upsizing our revolver to about $1 billion.”

Q&A Highlights

  • Financing and liquidity: Management expects revolver upsizing to ~$1B and natural deleveraging as EBITDA grows; comfortable increasing leverage to fund buybacks within prudent thresholds .
  • Bridge from Q1 to full-year: Q1 is a low contributor given start-up losses (~$20M, ~35%–40% of FY total) and supplemental payment timing; Q2 likely similarly below typical cadence with improvement second half .
  • Underperforming facilities: Actions include local competitive review, programming, BD funnel, admissions process, leadership assessment, tech adherence (EMR/monitoring), and physical plant improvements .
  • Returns on de novo/JV amid higher construction costs: Management still sees attractive returns supported by rate improvement and volume ramp into 2026 .
  • Pricing outlook: Conservative posture given policy noise; commercial rate environment expected stable; CTC tailwind normalizing after outsized growth in 2023–early 2024 .

Estimates Context

  • S&P Global consensus (EPS, revenue, EBITDA) for Q4 2024 and Q1 2025 was unavailable at time of analysis due to API limits, so beats/misses versus Wall Street cannot be assessed. The company’s own Q1 guide embeds higher start-up losses and lower net supplemental payments, which may drive near-term estimate conservatism, while FY25 assumes a $20M EBITDA headwind from underperformers and liability expense +$10M y/y .

Key Takeaways for Investors

  • Near-term setup: Expect softer Q1 (and potentially Q2) due to elevated start-up losses and supplemental payment timing; model cadence improving in second half .
  • Structural demand intact: Same-facility growth and RPPD resiliency support the thesis; technology/quality investments differentiate operations and mitigate risk .
  • Capacity-driven growth: Record beds added in 2024 with 800–1,000 targeted for 2025; embedded EBITDA from 1,600–1,800 beds supports a 2026 earnings inflection .
  • Margin watchpoints: Liability reserving (+$14M in Q4, +$10M y/y in FY25) and underperforming facilities (~$20M FY25 headwind) explain recent compression; upside if remediation progresses faster .
  • Supplemental payments: Gross exposure < $200M; net typically ~two-thirds; cadence is lumpy—monitor Tennessee program timing and state-directed dynamics .
  • Capital allocation: $300M buyback authorization provides potential support; revolver upsizing to ~$1B enhances flexibility ahead of an expected FCF inflection by end of 2026 .
  • JV pipeline: Partnerships with leading systems (Intermountain, Henry Ford) deepen market presence and may accelerate volume ramp as licensing and operations mature .

Additional notes:

  • Cross-reference: Q4 2024 press release cites 163 CTCs across 33 states, while Q3 2024 press release cited 164 across 32 states—likely timing/classification differences; monitor future disclosures for consistency .