How Acadia Healthcare Plans to Double Revenue by 2028

Acadia Healthcare (Nasdaq: ACHC) plans to double its annual revenue by the end of 2028.

The Franklin, Tennessee-based behavioral health company projects $2.6 billion total revenue by the end of this year. Acadia Healthcare projects its annual revenue in five years will be between $4.5 billion and $5 billion, according to materials and comments from the company’s investor day.

It also expects profits to go from $595 million to $605 million by year’s end to $1.06 billion to $1.2 billion by the end of 2028.

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“Our strategy as a company is this simple,” Chris Hunter, who became Acadia’s CEO in April, said on Wednesday. “It’s to become the indispensable behavioral health provider for high-acuity and complex-need patient populations.”

Hunter described a three-pronged approach for the company. Acadia Healthcare will expand its facility footprint through joint-venture partnerships, de novo builds, and launching “programmatic” M&A. It will also expand services across the care continuum. Finally, the company will strengthen its technology capabilities.

The company projects that the top line will expand through organic and inorganic growth. In particular, Acadia is anticipating adding 1,000 beds or more a year through these means starting in 2024. Acadia executives forecasted that the company will add about 570 beds by year’s end and about 670 by the end of 2023.

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Many of the company’s projections did not account for M&A.

Today, Acadia Healthcare operates 246 facilities — 10 residential treatment, 37 specialty services, 51 acute care and 148 comprehensive treatment centers (CTC) facilities — and about 10,800 beds.

Internally, Acadia Healthcare will make major investments in technology to support patient and provider experiences, operational efficiency and other efforts to maintain profitability.

“We today have manual paper-based processes across most of the company,” Acadia Healthcare CFO David Duckworth said. “The potential for electronic medical records is a significant opportunity for not only Acadia but also the industry.”

Acadia Healthcare to meet demand trends

Andrew Lynch, chief strategy officer, identified three essential market trends Acadia Healthcare seeks to address — the unmet need for treatment, regional shortages of treatment and the fragmented nature of the industry.

Acadia Healthcare has identified 100 metros that are “significantly underbedded” or have fewer than 50 inpatient psychiatric beds per 100,000 residents. Acute inpatient psychiatric facilities accounted for 49% of Acadia’s revenue in 2021, according to its 2021 financial filing.

The company also expects to see major growth in its comprehensive treatment centers — all-in-one addiction and support services facilities. It expects to open 6 de novo or joint venture facilities in 2023 and at least 14 a year starting 2024.

“For example, 70% of our patients admitted to our specialty facilities carry a diagnosis of opioid use disorder,” Dr. Nassar Khan, head of CTCs, said. “When you look at our footprint, 14 of our 37 specialty facilities have a CTC within 20 miles. We’re actively working on building linkages across our service lines so that we can follow patients across the continuity of care.”

Khan was appointed to his role in September.

Technology investments bring it all together

The behavioral health industry has been slow to invest in health tech. Specifically, providers are behind with electronic health record and management software adoptions, a fact Hunter called out.

“Very few parts of the healthcare industry have the level of paper that we still see in the behavioral health industry,” he said. “You don’t see data and analytics leverage to the extent that you see in other parts of health care in the economy.

“And all of that together — this large unmet need is highly recognized and the low industry maturity — provide a real opportunity for Acadia moving forward,” Hunter said.

Data and analytics efforts will appear in the company’s marketing “to proactively find some of these patients in need more aggressively,” Hunter added.

The technology plan extends to all aspects of the business including simple things such as expanding the range of Wi-Fi in facilities to leading-edge cases such as the use of wearable technology to decrease the need for staff to do patient check-ins.

Improved technology services also play in the workforce realm. While the company has faced a stable but challenging workforce market, the limited growth of the workforce demands Acadia Healthcare to become a destination employer.

“We want to lead the industry in our recruiting efforts but, more importantly, be seen as a provider of choice to wear if you’re a mental health professional or psychiatric nurse you want to work at an Acadia facility,” John Hollinsworth, executive vice president of operations, said.

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