Mental health operator Acadia (Nasdaq: ACHC) is furthering its foothold in the comprehensive treatment center (CTC) space with the acquisition of four new addiction care centers in Georgia.
Acadia’s acquisition of Georgia-based Brand New Start Treatment Centers – announced Tuesday – brings the company’s total network of sites offering medication assisted treatment (MAT) to 148 facilities.
This is part of the provider’s larger expansion strategy. Last week during a Q3 earnings call, the company revealed it is on track to reach its goal of adding 600 beds in 2022. Its growth strategy consists mainly of M&A, de novos and joint ventures.
“We feel like we were able to pay a very fair price and, at the end of the day, grow the business,” Chris Hunter, CEO of Acadia, said during a Tuesday fireside chat with Credit Suisse. “I do think it’s illustrative of our ability to look at a market and say sometimes it makes sense for us to do a de novo, sometimes it makes sense for us to partner on a JV front, if it’s an inpatient facility. Other times, it makes sense for us to do M&A, and we’re constantly balancing that equation.”
Financial terms of the Brand New Start Treatment Centers deal were not disclosed.
Founded in 2005, Acadia is headquartered in Franklin, Tennessee. It has inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers, outpatient clinics and therapeutic school-based programs. Acadia has 239 behavioral health facilities with 10,600 beds in 39 states, according to its webpage.
Acadia decided to buy Brand New Start Treatment Centers instead of pursuing a de novo strategy because it had a very limited footprint in Georgia but saw a ripe opportunity in the market. Acquiring an established company would make the move into the market quicker.
Smaller deals like this could be part of Acadia’s strategy going forward.
“So we’re excited to have more scale in that market,” David Duckworth, CFO at Acadia, said during the Credit Suisse event. “There are some larger players in the industry, and there can be a variety of valuation multiples that we see across the industry. But for a smaller tuck in, of which there are, we think more, that could be attractive. It’s a great opportunity to overlay the de novo opportunity we are continuing to pursue.”
Acadia is actively looking to grow its CTC business. In Q3, it opened two new CTCs, and it’s on track to open a total of six CTCs by 2022’s end.
This comes as rates of substance use disorder continue to rise in the wake of the COVID-19 pandemic, according to the CDC. Drug overdose deaths increased by almost 30% from 2019 to 2020. The agency reports that 75% of overdose deaths involved an opioid.
Additionally, state and municipal governments are looking to set up CTC facilities with the money from opioid settlements.
Hunter noted that Acadia was approached by a county that received some settlement money and was interested in standing up an opioid use disorder (OUD) clinic. Acadia already had a presence in the county through an inpatient facility but not a CTC.
“I think there’s some opportunity just given our scale, that counties know that we have a broad range of services, and they’re looking to us to advise them and to help them as they are trying to put dollars to work,” Hunter said. “There are so many different ways that the settlement dollars can be used, but it’s primarily around treatment and access to care.”
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