Acadia’s Growth Plans Include 30 Possible Partnerships, 600 New Beds

Acadia Healthcare (Nasdaq: ACHC) has its eyes set on growth, with plans to add about 600 beds across new and existing facilities in 2020 and a “robust pipeline of approximately 30 projects” on the partnership front. Even the sale of Acadia’s UK business, expected for later this year, ties in, as it could eventually help fuel domestic expansion.

Acadia leaders shared those insights Friday during the company’s fourth-quarter and year-end 2019 earnings call.

“We are pursuing a purposeful and best-in-class growth trajectory,” CEO Debbie Osteen told investors. “As we continue to grow our four lines of business, you will see the synergies, complimentary investments and corresponding operating leverage we can achieve through this approach. We believe Acadia is in the ideal position to meet the tremendous market needs that exist.”

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The Franklin, Tennessee-based behavioral health care provider operates more than 220 facilities in 40 states and Puerto Rico. Facilities vary in type from inpatient psychiatric hospitals and specialty treatment facilities to residential treatment centers and outpatient clinics, offering a variety of mental health, eating disorder, trauma and substance abuse treatment services.

The company also has 361 facilities in the United Kingdom, which it is currently preparing to sell off. In 2019, revenue from Acadia’s UK arm accounted for about 35% of total revenue.

Acadia executives first announced their intentions to sell the company’s UK division last May following years of financial struggles across the pond. The sale seems to be on track to be completed in just a few months, Osteen explained on the call.

“We solicited and now have received initial non-binding offers to acquire our UK business from multiple bidders,” she told investors. “We are currently in the second phase of the sale process, during which interested bidders will receive proposed transaction documents and complete their confirmatory due diligence.”

A sale should be completed in the second or third quarter, Osteen said. It seems proceeds from the deal would be used, in part, to help Acadia expand, CFO David Duckworth hinted on the call. 

“We don’t have specifics to share with you at this time,” Duckworth said when asked how the money will be deployed. “We do intend to deleverage the company and have a capital structure that allows us to pursue the growth and the different opportunities that we believe we have.”

Meanwhile, company leaders were more overt when it came to talking about growth plans. Acadia is eyeing a number of new partnerships and bed additions for 2020 and beyond, they said.

Currently, the company has five joint ventures in operation, three in development and a number being considered.

“Our integration team has received increased interest from health systems who would like to partner with us,” Osteen said. “We now have a robust pipeline of approximately 30 projects.”

Company leaders also announced plans for six new comprehensive treatment center denovos, as well as plans to add about 600 beds across existing and new facilities in 2020. Acadia added 519 beds in the U.S. last year.

On top of that, the company is also eyeing opportunities to drive volume on the Medicare front, after legislation went into effect January 1 that established new Medicare Part B coverage for opioid use disorder treatment.

“While it is too early to decide the full benefit, we expect that this will drive volume growth by treating new patients and allowing improved coverage and access for dual eligible patients,” Osteen said.

In Q4, Acadia’s revenue was up 4.9% year-over-year at $780.2 million. For the year, revenue came in at $3.1 billion, up slightly from about 3 billion in 2018.

Net loss attributable to Acadia stockholders in the fourth quarter was $11.3 million, or $0.13 per diluted share. That’s an improvement from Q4 2018, when it was a net loss of $331.6 million, or $3.80 per diluted share.

The company’s stock was down more than 5.8% as of end-of-day trading Friday. It closed at $29.60.

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