Acadia Healthcare (Nasdaq: ACHC) is experiencing a remarkable rebound from the disruptions caused by COVID-19. After a temporary decline in patient census earlier this year, the behavioral health giant has reached record levels in its U.S. facilities, signaling strong demand and growth potential heading into 2021. CEO Debbie Osteen highlighted these achievements during Acadia’s Q3 2020 earnings call, emphasizing both the company’s recovery and its strategic growth initiatives.
Record Census Achieved Amid Recovery
Osteen shared that October marked the highest census in Acadia’s history for its U.S. facilities. She attributed this milestone not only to the rising demand for behavioral health services amid the pandemic but also to Acadia’s diverse service offerings. “We believe — because of the strong demand trends and the fact that we have such diversity in the service lines — that this is going to continue into 2021,” Osteen stated.
Headquartered in Franklin, Tennessee, Acadia operates 582 facilities across 40 states, the United Kingdom, and Puerto Rico. Its locations include inpatient psychiatric hospitals, specialty treatment centers, residential treatment facilities, and outpatient clinics. Q3 2020 volumes were particularly strong across acute services, with specialty services showing signs of recovery after being initially impacted by travel restrictions.
COVID-19 and Behavioral Health Demand
The pandemic has placed a spotlight on behavioral health needs, with more Americans facing mental health and substance use challenges than ever before. Osteen noted that while COVID-19 has caused significant disruptions, it has also underscored the importance of access to behavioral care. The increase in demand, combined with Acadia’s strategic growth, has helped the company achieve its record census.
Strategic Growth and Expansion
Acadia’s growth strategy played a critical role in the company’s recovery. For the first three quarters of 2020, Acadia added 206 beds to existing U.S. facilities, with an additional 100 beds expected in the fourth quarter. The company has pursued a mix of bed expansions, de novo facilities, and joint ventures to strengthen its market presence.
One notable example is the 144-bed facility in Reading, Pennsylvania, opened in July through a joint venture with Tower Health. Another upcoming project is a joint venture hospital in Nashville with Ascension Saint Thomas, expected to open in Q4 2020. Osteen emphasized that these initiatives allow Acadia to reach more patients in new and existing markets, further cementing its leadership position in behavioral health care.
UK Business Sale and Domestic Opportunities
Acadia has also considered the sale of its UK operations as a means to fuel domestic growth. Earlier in 2020, plans for the sale were paused due to COVID-19-related uncertainties. However, the process has now relaunched, with multiple non-binding offers received from potential bidders. While Osteen did not provide specific details, she confirmed that the sale aligns with market practices for similar UK transactions and is expected to create additional opportunities for Acadia to expand its U.S. footprint.
Financial Performance in Q3
Acadia’s strong census and strategic expansions translated into solid financial performance for Q3 2020. Overall revenue increased more than 7% year-over-year, reaching $833.3 million. U.S. same-facility revenue rose 7.5% to $546.4 million, while patient days increased 4.2% year-over-year, and revenue per patient day grew 3.1%.
The company has also benefited from governmental support through the CARES Act Provider Relief Fund (PRF), receiving approximately $32.5 million in total. Of that, $12.8 million was distributed in Q3, with $18.1 million from previous PRF income reversed from Q2 2020.
Leadership Perspective on Growth
CEO Debbie Osteen highlighted the dual impact of organic growth and strategic partnerships in driving Acadia’s success. The company’s collaborations with hospitals and health systems across the U.S. have created new opportunities to expand its services and reach more patients. Osteen emphasized that the combination of bed expansions, new facilities, and joint ventures positions Acadia for continued growth well into 2021 and beyond.
The Role of Behavioral Health in the Pandemic
COVID-19 has amplified behavioral health challenges nationwide, with increases in anxiety, depression, and substance use disorders. Acadia’s record census reflects the broader trend of heightened demand for mental health and addiction treatment services. Osteen noted that while the company initially faced challenges due to the pandemic, including travel restrictions and decreased referrals, the rebound demonstrates the critical role that behavioral health providers play in supporting public health during crises.
Future Outlook
Looking ahead, Acadia expects strong demand for behavioral health services to continue into 2021. The company’s leadership remains focused on both expanding capacity and enhancing service delivery. With ongoing growth initiatives and potential domestic opportunities arising from the UK business sale, Acadia is well-positioned to meet the increasing behavioral health needs of the population.
The company’s stock performance reflects investor confidence, with shares up more than 23% at the end of Q3, closing at $35.65.
Conclusion
Acadia Healthcare’s record census and strategic growth initiatives underscore the resilience of the behavioral health sector amid the COVID-19 pandemic. By combining bed expansions, new facility openings, joint ventures, and potential domestic reinvestment from the UK sale, Acadia is poised to continue its upward trajectory in 2021. CEO Debbie Osteen’s outlook highlights the strong demand for behavioral health services and the company’s ability to adapt and grow in a rapidly changing healthcare environment. With solid financial results and a robust operational strategy, Acadia stands as a leading example of how behavioral health providers can navigate the challenges of the pandemic while preparing for future growth.
