In light of COVID-19, Acadia Healthcare (Nasdaq: ACHC) has temporarily suspended the sale of its U.K. business. Executives previously hinted proceeds from the sale would be used to help grow the U.S. arm of the business.
While interest from potential buyers remains strong, the Franklin, Tennessee-based behavioral health provider will pause the sales process until market conditions improve, CEO Debbie Osteen announced in a press release announcing the news.
“Our objective continues to be maximizing value for our stockholders,” Osteen said. “At this time, our focus is on serving our patients in the U.K. to the very best of our ability and ensuring the safety and health of our employees.”
The move didn’t come as a surprise to analysts from Jefferies given tight credit markets, they wrote in a report.
“We find comfort in the fact that management is merely delaying the sale (buyers are still interested), especially since the stock appears to reflect a no-sale scenario,” they wrote. “Also a positive is management’s comment that volumes are tracking as planned, even with COVID, underscoring the defensive nature of the company’s business.”
Acadia operates more than 220 facilities in 40 states and Puerto Rico, as well 361 facilities in the United Kingdom.
The company first announced it would sell its UK business last year. On Acadia’s year-end earnings call in February, Osteen said it had received several offers from potential buyers and that she expected the sale to be completed in Q2 or Q3 of this year.
CFO David Duckworth went on to suggest funds from the sale would be used to help the company grow its domestic business.
“We don’t have specifics to share with you at this time,” Duckworth said on the February call. “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.”
Coronavirus concerns has also prompted Acadia to take additional precautions to keep patients and staff safe.
“We are making decisions as we go,” Chief Medical Officer Michael Genovese recently told BHB. “We have resisted making broad sweeping generalizations that will be meaningless to people or make it unnecessarily burdensome to places where it’s not applicable.”
At most of Acadia’s facilities, telehealth is being used when possible and visitation has been restricted for older populations with comorbidities and for younger people who are immunocompromised, Genovese said.
Despite the pause in the UK sale process, Acadia still expects to see continued growth, Osteen said in the press release.
“Though we do not know exactly how this situation will unfold, we are carefully monitoring the impact to our business and believe Acadia is well-positioned to support our patient population and continue to grow our business.”
In fact, Osteen said she expects to see greater demand for behavioral health services, with Acadia prepared to meet the demand.
“Our balance sheet remains strong, and we have adequate liquidity and capital to invest in and grow our business,” Osteen said. “Acadia had $90 million in cash and cash equivalents and full availability under its $500 million revolving credit facility as of February 29, 2020.”
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