Acadia CEO Breaks Down Strategy: Focus on JVs, Expand Existing Facilities

Acadia Healthcare Co. Inc. (Nasdaq: ACHC) will prioritize joint ventures in its quest to double revenue.

The Tennessee-based behavioral health giant also plans to build de novo facilities and add beds to existing facilities, CEO Chris Hunter and CFO David Duckworth said at JP Morgan’s Health Care conference yesterday.

Acadia Healthcare previously laid out its value proposition and ambitious five-year plans at its investor day in December.


Apart from the de novo and existing facility expansions, Duckworth called other planned efforts “incremental” to its revenue and profit projections when compared to joint ventures and existing facility bed expansion. He also emphasized that Acadia Healthcare doesn’t need M&A to grow and that acquisitions need to meet ideal conditions.

“We have a very strong balance sheet. But we also have the ability to be disciplined on M&A knowing that we have these different ways of growing,” Duckworth said. “We can really be selective and look for the right M&A opportunity that is at the right valuation and provides the right return for the company.

“And we can compare that against what we can do through these other growth pathways.”


On top of growing the company’s footprint, it intends to enrich its service lines and major more investments in its technology.

“There are very few parts of the healthcare industry today that still have the level of paper that we still see in the behavioral health industry,” Hunter said. “There’s still a real lack of EMRs and analytics in our industry that are not leveraged to the extent that you see in other parts of healthcare and the broader economy.”

Acadia working with health systems 

Hunter also highlighted the “immature” and “fragmented” nature of the behavioral health industry as an opportunity for Acadia Healthcare.

Hospital systems have recognized the massive increase in demand for behavioral health driven by COVID-19, Duckworth said. Systems are also interested in increasing the integration between behavioral health and physical health.

“They have not had the right setting,” Duckworth said. “They may have a unit of their hospital dedicated to behavioral health.

“But they have not historically had that more state-of-the-art freestanding, more therapeutically appropriate facility to provide that treatment and that’s what we are building with our partners.”

Acadia Healthcare hopes to partner with “strong, reputable partners” in several markets, Duckworth said. The company has identified 100 metros that don’t have enough behavioral health beds as potential expansion locations.

The company has opened 9 of the 18 JV facilities that it has announced. 

On the same-facility expansion side, Acadia Healthcare has a clearer path to a return on investment. It’s the company’s strong opportunity because of the strong infrastructure, local know-how and relationships at the local level.

“This is the highest return opportunity for the company because we do have an existing operation that we’re able to leverage,” Duckworth said.

The U.S. is in a psychiatric bed shortage. Part of that crisis was caused by Medicaid refusing to cover mental health services in facilities dedicated to mental illness. Some investors, developers and operators are hoping to step into the void left by the state psychiatric hospitals that once defined how the U.S. care for those with mental illness and disabilities.

Over the course of a few years, health care real estate investment trusts (REITs) have appeared as another partner to support behavioral health facility development.

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