Acadia CEO Breaks Down Future Expansion Opportunities

Acadia (Nasdaq: ACHC) is the country’s largest pure-play behavioral health provider — and it doesn’t plan to lose that title any time soon. 

Its ambitious growth strategy includes adding 300 beds per year, but recently, that number has been closer to 400 additional beds. And there is plenty of room to grow across the country, according to Acadia CEO Christopher Hunter. Today, there are about 100 under-bedded sizable metro statistical areas (MSAs)  in the U.S. 

“It’s on us to look at these 100 under-bedded markets, to have our own proprietary view as to which are most attractive and to where we might have deficiency,” Hunter said during the Wells Fargo 2023 Healthcare Conference on Wednesday. 


Acadia is a behavioral health provider that operates 250 facilities with about 11,000 beds in 39 states and Puerto Rico at the end of 2022.

While Acadia has committed to growing through a multi-pronged approach, the provider has put the pedal to the metal on its joint venture partnership strategy over the last few years. Hunter noted that the provider has completed 20 JVs to date, representing 21 facilities. This includes Tufts Medicine, Nebraska Methodist Health System and SolutionHealth.

“If there is a market that we see as desirable, and there’s a logical health plan partner like there was in New Hampshire with the Solution Health JV we just announced, … it makes more sense to partner,” Hunter said. “One of the benefits of having a partner is not only do they have really strong payer relationships, the [partners] generally have a brand in that market that can be helpful in bringing over employers and have a broader reach. I think they also see the struggles of behavioral providers, and as a result, frequently, they’ll bring beds over to us as part of the transaction.”


Acadia has a long list of factors it evaluates before deciding to expand into a new market. Those factors include its ability to acquire land, obtain licenses, staff hospitals and the reimbursement rate environment in a new market. 

“So as we enter the markets, we already have a pretty good idea of what we’ll be setting forth into,” Heather Dixon, Acadia’s CFO, said during the Wells Fargo presentation.

While hospitals and health systems do approach Acadia to work on a partnership together, more often than not, the JV is selected through a request for proposal (RFP) process. Hunter noted that Acadia has been able to win a “disproportionate share” of JV agreements through the RFP process, in part because of its track record. 

“Frequently, there is some sort of an RFP in place,” Hunter said. “There are a lot of folks that do JVs across the behavioral health landscape, but I would say head-to-head, given our track record in the high profile names [we’ve worked with], we increasingly have a great deal of confidence in our ability to prevail.”

As part of the JV and de novo process, Acadia will enter a market six months before a facility opens its doors and hire critical stakeholders, including a hospital CEO, chief nursing officer and CFO. That process could even be accelerated in a JV.

“In many instances for JV partners, that could be a very quick ramp because the JV partner has a need and already has a pipeline of patients,” Dixon said. “Sometimes, they will transfer from their behavioral unit to ours.”

Beyond JVs

JVs aren’t the only growth path for Acadia. The company has also prioritized growing through M&A and de novo expansion.

“We’re bullish on M&A,” Hunter said. “Our balance sheet is very strong. I think we are the desired partner of choice.”

Recently, the company acquired Utah-based provider Turning Point Centers, a 76-bed specialty provider of substance use disorder (SUD) and primary mental health treatment services based in Salt Lake City.

Hunter explained that this acquisition made sense because Acadia had an acute care facility, a comprehensive treatment center (CTC) and a residential treatment center (RTC) in the Utah market, and this acquisition would give it a fourth service line. 

“We proactively approached the Turning Point team and we were able to get that done. I think that’s increasingly representative of our ability to be very proactive on the M&A front,” Hunter said. “It’s a more nuanced approach towards looking at these under-bedded markets. … We’re looking at the payer mix; we’re looking at the wage rate inflation in that given market. There’s 20-plus different criteria that we all look at together.” 

Hunter hinted that Acadia has several M&A opportunities in the CTC space. Providers looking to sell their business have come to Acadia because “they know M&A is part of our strategy and that we’re financially strong,” Hunter said.

The company is also looking at M&A targets with room for expansion opportunities.

“We’re always looking for ways to optimize,” Hunter said. “When [facilities] get to 70% occupancy rate we’re challenging them to look to expand potentially. I think that’s one of the things from an M&A standpoint that’s always attractive to us. … Some of the more successful have been those planning for expansion from the outset.”

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