Acadia Makes Good on M&A Promise, Buys Diversified Behavioral Health Provider Turning Point Centers

Acadia Healthcare Company (Nasdaq: ACHC) is attributing recent revenue growth to favorable rate increases across service lines and decreasing wage inflation. This comes after a long stretch of workforce challenges and rising salaries.

Those developments bode well for the behavioral health industry at large.

“The labor environment continues to show signs of improvement, positioning the company for continued stability and wage-growth moderation over the remainder of the year,” Acadia CEO Christopher Hunter said on the company’s Q2 earnings call on Friday morning.


Wage inflation decreased from 7.5% in the first quarter of 2023 to 6.3% in the second quarter of the year.

This wasn’t the only win for the Franklin,Tennessee-based provider; Hunter noted that it also saw an uptick in patient days and revenue per day. Specifically, the number of patients’ days grew by 4.9%, and revenue per day increased by 6.1%.

“We had anticipated some moderation in the revenue per day and the rates in the back half of the year previously,” Heather Dixon, Acadia’s CFO, said on the earnings call. “But as we’ve finalized the number of the Medicaid and commercial rate increases, … we’re seeing much more direct visibility into the second half of the year. And the experience can, of course, vary by market and payer, but we continue to see average rate increases in the mid-single digits, and so that’s now what we’re projecting for the back half of the year.”


These and other factors contributed to Acadia bringing in $731 million in new revenue for Q2 2023, a 12% increase compared to $651 during the same quarter a year ago.

In light of its recent financial results, Acadia announced it has increased its full-year revenue guidance to between $2.86 billion and $2.9 billion.

Leaning into M&A

Acadia continues to double down on its multi-pronged approach to growth, announcing the acquisition of a 76-bed facility in Utah.

The provider has laid out a five-point approach to growth that focuses on M&A, de novos, facility expansion, JVs, and adding more comprehensive treatment centers (CTCs) for addiction treatment.

In previous earning calls, Hunter has noted that the provider anticipated furthering its M&A strategy to take advantage of falling valuations. Still, Acadia has remained relatively quiet on the M&A front until this announcement.

Acadia purchased Turning Point Centers, a specialty provider of substance use disorder (SUD) and primary mental health treatment services based in Salt Lake City. The deal will include Turning Points’ continuum of services, including residential, partial hospitalization and outpatient services.

With the deal, Acadia sees the potential to grow the facility by 48 beds.

“Our ability to extend our specialty footprint, but also the synergies with our other lines of business, just have made this [acquisition] particularly attractive,” Hunter said. “This is a proprietary transaction that we identified and sourced ourselves. When we have historically looked back at those acquisitions that have been most successful at Acadia, the ability to have expansion opportunities has proven important. … And we do expect that while this won’t close until the end of the year, the acquisition will be accretive in its first year.”

While this new acquisition will add a significant number of beds, it will only be a fraction of the company’s total growth for 2023. Acadia plans to add a total of 607 beds by the end of the year. The bulk of these beds, roughly 300, will come from de novo growth.

But the company is also ambitiously growing its joint venture footprint, announcing its 20th partnership in July.

Using technology

In addition to growing its bed count and geographical footprint, Acadia is also setting its sights on technology adoption. Specifically, the provider plans to invest in electronic medical records.

“Our investment in electronic medical records, for example,” Hunter said, “is focused on improving clinical standardization, workflow, clinician experience, and ultimately the quality and efficiency of the care we deliver for our complex patients.”

Acadia also plans to invest in patient monitoring technology to help improve its patient safety efforts.

“This technology provides real-time data visibility and feedback to our clinical staff, ensuring consistent execution across our facilities through the patient safety initiatives that we’ve implemented over the last 12 months,” Hunter said. “We are pleased with our progress and have seen positive results in patient care and fewer patient incidents.”

During the company’s Q2 earnings call, Hunter briefly addressed the company’s ongoing legal battle in New Mexico. On July 7, a court ordered Acadia to pay $405 million in a civil case involving the sexual abuse of a child.

“Since that filing, there have been no developments, and we have nothing new to report,” Dixon said. “In accordance with the accounting guidance we have maintained our professional liability reserves related to this matter consistent with the amounts recorded and prior periods. We are evaluating all legal options and intend to challenge the verdict. Given this is ongoing litigation we will not be providing additional commentary regarding this legal matter.”