Behavioral health titan Acadia Healthcare (Nasdaq: ACHC) saw the largest expansion of its bed count in its history during 2024. The expansion will lead to a spike in startup costs and a potential hit to profitability in 2025.

Going into 2026, Acadia Healthcare executives speaking at the 2025 J.P. Morgan Healthcare Conference say that they expect to see earnings pop and more cash to finance a less intense but steady expansion of its facilities.

“Just to step back a little and talk about [2026] and beyond, I think we’ll have some tailwinds that come through EBITDA,” Heather Dixon, Acadia Healthcare CFO, said at the J.P. Morgan Healthcare Conference. “Tailwinds will certainly come through from a bed-ramping perspective. As those startup costs decline, that’ll lead to better cash flow for both of those reasons as well.”

Dixon added that startup costs for new facilities will double in 2025 compared to 2024 as the company brings a huge flight of new beds online during the coming year. Earlier in the year, the company said it would spend between $550 and $595 million on expansion-related capital expenditure. Dixon pointed out that nearly all that cash is going toward expanding the company’s bed count, with about $100 million going toward maintenance and IT costs.

Once the 1,300 beds that were built out in 2024 and the 1,200 beds under construction come online, startup costs are expected to drop in the second half of the year and continue to fall in 2026. So far, the company has state licenses for 800 of the new beds built in 2024, Acadia Healthcare CEO Chris Hunter said during the presentation. The remaining 500 licenses are expected to come through early in the year.

The new cash flow from the new beds is expected to help the company continue its expansion at a historically elevated level.

“We can still grow faster, even if we moderate that pace of growth; we will see the benefits of the beds we’ve added,” Dixon said. “We have an opportunity here to moderate the pace and smooth out the bed growth a little bit so that we can unlock some free cash flow and be more opportunistic with capital allocation.”

Acadia Healthcare operates 260 locations in 40 states and Puerto Rico. It operates 52 acute facilities, 35 specialty facilities primarily consisting of residential addiction treatment and some residential eating disorder treatment facilities, 164 outpatient opioid use disorder outpatient clinics the company calls comprehensive treatment centers, and nine pediatric residential treatment facilities.

The company’s $3.1 billion in revenue in the first nine months of 2024 came 57% from Medicaid, 26% through commercial insurance, 14% through Medicare and 3% through self-pay and “other” sources, according to a slide show from the company.

Hunter, who was named CEO in 2022, set a mandate for the company to double the company’s revenue by 2028. Its multi-prong attack on revenue growth leans heavily on joint ventures with other health systems and expanding existing facilities.

During the J.P. Morgan Healthcare Conference presentation, Hunter focused on Acadia Healthcare’s quality initiatives and various validations of its quality practices by outside groups.

In 2024, Acadia faced a wave of public scrutiny. The Senate Finance Committee released a brutal report about the residential treatment segment of behavioral health that included a retelling of previous wrongs at Acadia facilities. The New York Times also released two exposes last year, the first of which Hunter said during an earnings call impacted the company’s financial performance. More recently, The Times released a report alleging shoddy oversight and fraud in its comprehensive treatment centers.

A few weeks before The Times report, an Indiana-based publication called Mirror Indy published a report citing several local Acadia Healthcare facility employees and patients that detailed several incidents of sexual violence.

In September, the criminal division of the U.S. Department of Justice requested information from the company about its billing and admissions practices. Initially conducted via subpoenas from two U.S. Attorney’s offices, the DOJ has consolidated efforts with federal investigators and inquiries from “a number of federal agencies and departments investigating such issues.” The DOJ is allowing Acadia Healthcare to share information on a voluntary basis, according to its latest quarterly financial report.