Acadia Healthcare Co. Inc. (Nasdaq: ACHC) is carving out a position as a “proactive acquirer” within the behavioral health sector. CEO Christopher Hunter described the company’s approach during its second-quarter earnings call as both opportunistic and patient, signaling a deliberate but ready stance toward mergers and acquisitions (M&A). This mindset supports the broader growth ambitions of Acadia, which aims to continue its behavioral healthcare expansion through a combination of organic growth and strategic partnerships.
Since divesting its UK operations in early 2021, Acadia has been focused on rebuilding and accelerating growth in the U.S. market. Hunter pointed out that the company is actively meeting with other healthcare providers and service lines to explore partnership opportunities. While Acadia has been cautious not to disclose specific acquisition targets or deals, the leadership emphasizes the importance of relationship-building as a foundation for future M&A activity.
Building Relationships for Future Growth
Acadia’s management understands that successful expansion requires more than financial capacity; it involves cultivating trust and strategic alignment with potential partners. With a strong balance sheet and a net leverage ratio of 2.1x at the end of the second quarter, the company is financially well-positioned to act quickly when the right opportunities arise. Hunter noted that many companies in the behavioral health space may now be more open to partnerships due to current valuation levels, making proactive outreach essential.
The company’s focus is particularly strong on the acute care segment, where joint ventures and collaborations can add significant value by combining resources and expertise. By concentrating on geographic regions that fit Acadia’s operational model and patient care philosophy, the company ensures that its behavioral healthcare expansion is sustainable and aligned with community needs.
Four Pillars of Expansion
Acadia’s behavioral healthcare expansion strategy rests on four distinct but interconnected pillars. First is the addition of new beds to existing facilities, which leverages current infrastructure to increase patient capacity efficiently. Second is building new, Acadia-owned inpatient facilities, allowing the company to establish modern treatment centers designed to meet evolving patient needs. Third, the company actively pursues joint ventures that foster collaboration with other healthcare providers and systems. Finally, M&A activities remain a key growth avenue, although the company prefers to approach acquisitions with careful timing and strategic fit.
In the first half of 2022, Acadia added 78 beds to its existing locations, with plans to add an additional 150 beds in the third quarter. Notably, the company opened a 60-bed children’s hospital in Chicago’s North Side, soon to be known as Montrose Behavioral Health Hospital. Additionally, an adult inpatient facility with 110 beds is scheduled to open in 2023, further expanding Acadia’s footprint.
Joint Ventures as Key Drivers
Joint ventures remain an important engine for behavioral healthcare expansion at Acadia. The company currently has 19 joint ventures in progress, signaling a strong commitment to collaborative growth. Recent partnerships include a $65 million collaboration with Tufts Medicine and a joint venture with ECU Health, marking Acadia’s expansion into the North Carolina market. The company plans to open its eighth and ninth JV facilities in Knoxville, Tennessee, and Fort Wayne, Indiana, later this year.
These joint ventures offer a strategic advantage by allowing Acadia to leverage the strengths of established local healthcare systems while extending its specialized behavioral health services. This collaborative model not only expands geographic reach but also promotes integrated, patient-centered care.
Strong Financial Performance Supports Expansion
Acadia Healthcare’s solid financial results provide a firm foundation for its growth plans. For the second quarter of 2022, the company posted a 79% increase in net income to $81.9 million and saw total revenue rise 12% year-over-year to $652 million, surpassing analyst expectations. Hunter acknowledged ongoing challenges in the labor market but expressed cautious optimism as hiring trends improved and contract labor costs stabilized.
In contrast to some competitors who lowered their financial outlooks due to workforce shortages, Acadia raised its guidance for 2022. The company now anticipates revenue between $2.56 billion and $2.60 billion, adjusted EBITDA between $583 million and $613 million (excluding federal assistance), and adjusted earnings per diluted share in the range of $2.93 to $3.18. These upward revisions underscore confidence in the company’s behavioral healthcare expansion trajectory and operational resilience.
Operational Scale and Outlook
By the end of Q2, Acadia operated 239 behavioral healthcare facilities across 39 states and Puerto Rico, with roughly 10,600 beds and a workforce of approximately 22,500 employees. These employees serve a daily census of about 70,000 patients, highlighting the company’s significant presence and influence within the sector.
Looking ahead, Acadia Healthcare’s combination of organic growth through facility expansions and joint ventures, along with a prudent and proactive approach to M&A, positions it well for sustained growth. The company’s focus on relationship-building, strategic geographic targeting, and maintaining financial strength reflects a comprehensive and thoughtful strategy for behavioral healthcare expansion in an evolving market landscape.
As demand for behavioral health services continues to rise, driven by growing awareness and societal needs, Acadia Healthcare’s multifaceted growth plan aims to deliver greater access and quality care while creating shareholder value. Investors and industry watchers will be paying close attention to how Acadia leverages its “proactive acquirer” position and navigates future opportunities in this dynamic space.
