Acadia Healthcare (Nasdaq: ACHC) has temporarily halted the sale of its U.K. business due to ongoing concerns over the COVID-19 pandemic. The decision comes as the Franklin, Tennessee-based behavioral health provider seeks to prioritize patient care and staff safety amid market uncertainty. While interest from potential buyers remains strong, Acadia will pause the sales process until conditions stabilize, CEO Debbie Osteen stated in a press release.
“Our objective continues to be maximizing value for our stockholders,” Osteen said. “At this time, our focus is on serving our patients in the U.K. to the very best of our ability and ensuring the safety and health of our employees.”
Analysts from Jefferies noted that the suspension was expected given tight credit markets. “We find comfort in the fact that management is merely delaying the sale (buyers are still interested), especially since the stock appears to reflect a no-sale scenario,” they wrote. They also highlighted that volumes are tracking as planned, even amid COVID-19, demonstrating the defensive nature of Acadia’s business.
Acadia operates over 220 facilities across 40 states and Puerto Rico, as well as 361 facilities in the United Kingdom. The company first announced its intention to sell its U.K. business last year, with executives noting that proceeds from the sale would be used to support growth in the U.S. behavioral health market. During the company’s year-end earnings call in February, Osteen indicated that several offers had been received, with the sale expected to close in Q2 or Q3 of 2020.
CFO David Duckworth emphasized that funds from the sale would be used to deleverage the company and strengthen its capital structure, allowing Acadia to pursue strategic growth opportunities. “We do intend to deleverage the company and have a capital structure that allows us to pursue the growth and the different opportunities that we believe we have,” Duckworth said.
Patient Care and Safety Amid COVID-19
The decision to suspend the sale also reflects Acadia’s focus on patient and staff safety during the coronavirus pandemic. Chief Medical Officer Michael Genovese explained that the company is taking targeted actions to reduce risk rather than applying broad policies that might be unnecessary or burdensome in some facilities.
At most Acadia locations, telehealth services are being expanded where possible to limit in-person contact. Visitation has been restricted for vulnerable populations, including older adults with comorbidities and immunocompromised individuals. These measures aim to minimize exposure to the virus while maintaining continuity of care for patients.
Genovese noted, “We are making decisions as we go. We have resisted making broad sweeping generalizations that will be meaningless to people or make it unnecessarily burdensome to places where it’s not applicable.”
Financial Stability and Future Growth
Despite pausing the sale of its U.K. operations, Acadia expects continued growth in its domestic and international business. Osteen assured investors that the company is well-positioned to meet rising demand for behavioral health services.
“Our balance sheet remains strong, and we have adequate liquidity and capital to invest in and grow our business,” Osteen said. As of February 29, 2020, Acadia held $90 million in cash and cash equivalents and had full availability under its $500 million revolving credit facility.
The company believes that behavioral health services may experience increased demand due to the pandemic, with individuals requiring mental health and addiction support during times of heightened stress and uncertainty. Acadia’s leadership emphasized that the organization is prepared to address this need through both in-person and telehealth services.
Telehealth Expansion
The COVID-19 crisis has accelerated the adoption of telehealth services across the behavioral health industry, and Acadia has been proactive in implementing these solutions. Telehealth allows patients to access therapy, medication management, and other services from the safety of their homes, reducing the risk of exposure to the virus.
By expanding telehealth capabilities, Acadia ensures that patients continue to receive care despite restrictions on in-person interactions. The use of virtual platforms also helps the organization manage operational efficiency while protecting staff and patients.
Market Implications
While the U.K. sale is on hold, Acadia continues to monitor market conditions and expects potential buyers to remain interested when the sale resumes. Analysts believe that the company’s defensive position and diversified operations position it well to weather the current uncertainty in global markets.
The decision to pause the sale demonstrates the company’s prioritization of operational stability and patient safety over immediate financial transactions. By maintaining its focus on high-quality care and staff well-being, Acadia reinforces its commitment to both patients and shareholders.
Strategic Outlook
Acadia’s leadership remains optimistic about the company’s ability to navigate challenges posed by COVID-19. The organization’s strong liquidity, robust operational infrastructure, and emphasis on telehealth position it to continue serving patients effectively while pursuing growth opportunities in the U.S. market.
Osteen emphasized that the company’s focus remains on patient care and operational excellence. “Though we do not know exactly how this situation will unfold, we are carefully monitoring the impact to our business and believe Acadia is well-positioned to support our patient population and continue to grow our business,” she said.
Conclusion
The temporary suspension of Acadia’s U.K. sale highlights the behavioral health industry’s adaptability in the face of unprecedented challenges. With patient care and safety at the forefront, the company is leveraging telehealth and operational best practices to continue providing essential services.
Acadia’s strong financial position ensures that the organization can maintain stability and capitalize on growth opportunities once market conditions improve. By focusing on both patient needs and shareholder value, Acadia demonstrates resilience and strategic foresight during a period of global uncertainty.
As the behavioral health industry navigates the COVID-19 pandemic, companies like Acadia serve as examples of how proactive measures, financial preparedness, and innovation in care delivery can help organizations thrive despite challenging circumstances.
