Acadia CEO Explains Confidence Behind Five-Year Plan, 10% EBITDA Growth Target

After a quiet few years on the homefront, Acadia Healthcare (Nasdaq: ACHC) has its sights set on domestic expansion and a 10% EBITDA growth rate. It’s all part of the behavioral health provider’s five-year plan, which leaders touted late last month during Acadia’s Q4 and year-end earnings call.

CEO Debbie Osteen recently provided more color on those goals and what’s driving them during a Tuesday presentation at the virtual Raymond James 42nd Annual Institutional Investors Conference.

“By selling the UK [facilities], we really see a very compelling opportunity in the US,” Osteen said. “We believe now with our increased financial flexibility that we are well-positioned to take advantage of what now is really a strong demand.” 

Advertisement

Headquartered in Franklin, Tennessee, Acadia is one of the largest behavioral health companies in the nation, with 227 facilities of various types across the U.S. and Puerto Rico. It also previously owned about 360 locations in the United Kingdom, which it recently sold to Waterland Private Equity for $1.47 billion.

That sale allows the company to reposition its focus entirely on the U.S. Plus, it gives Acadia the financial flexibility to make strategic investments in its service lines via bed expansions, de novo facilities, health system partnerships and strategic M&A, leaders explained on Acadia’s recent earnings call.

The company is most bullish on facility expansions, with plans to add 300 beds in 2021 and to expand at similar rates from there. 

Meanwhile, company leaders said they’re second most excited about health system partnership opportunities. Currently, Acadia has 30 projects in the pipeline and predicts that 2022 will be its strongest year for joint ventures, with four or five set to open. 

Leaders also have their eyes set on five target states and dozens of de novos over the next five years. Additionally, they’re staring down a good pipeline for M&A but are “going to be disciplined,” Osteen said.

In highlighting the five-year plan, she said the goal was to show confidence in the company’s future.

“We have confidence in the fact that we are in the right services, we have the pathways and we know how to execute,” she said during the Raymond James presentation. “We’ve done a lot over the last couple of years to really focus internally with some of the operations; but we’re a growth company, and we want to return to the US strong, and we want to grow over those service lines.”

Acadia’s four services lines include its acute care arm, which represents about 47% of its U.S. revenues; its specialty business focused on inpatient residential programs for substance use disorder (SUD) or eating disorders, which accounts for 21% of its US revenues; its outpatient arm, or Comprehensive Treatment Centers (CTC), which generates about 17% of U.S. revenues; and its residential treatment center business, which represents about 14% of its U.S. revenues. 

“As I think about the US, and the demand, and the profile for each of those service lines, we believe that over the next five years, we have growth across each of the pathways,” Osteen said during the Raymond James presentation. 

Specifically, Acadia’s multi-pathway plan will provide a 10% EBITDA growth rate over the next five years, leaders project.

Companies featured in this article: