Acadia Healthcare(ACHC) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Acadia reported a year-over-year revenue growth of 12.5%, reaching $750.3 million for Q3 2023 [22] - Adjusted EBITDA increased by 13.4% to$ 175.9 million compared to $155.1 million in Q3 2022 [23] - Adjusted EPS grew by 13.8% to$ 0.91 per diluted share, up from $0.80 in the same quarter last year [23] - Same facility revenue increased by 13% year-over-year, driven by both volume and rate improvements [8] Business Line Data and Key Metrics Changes - All service lines, including acute, specialty, and CTC, experienced strong performance, with acute and specialty seeing the most significant volume growth [32] - The CTC service line expanded to 155 locations across 32 states, with plans to open six new CTCs in 2023 [11] - The company added 204 beds to existing facilities in the first nine months of 2023, on track to meet the goal of approximately 300 bed additions by year-end [10] Market Data and Key Metrics Changes - The company noted a decrease in wage inflation from 7.5% in Q1 to 5.7% in Q3 2023, indicating improved labor trends [9] - The impact of Medicaid redetermination has been manageable, with approximately 40% of patients having completed the process [34] Company Strategy and Development Direction - Acadia's growth strategy includes five defined pathways: facility expansions, de novo facilities, joint ventures, acquisitions, and extending the continuum of care [17] - The company is focused on developing wholly owned de novo facilities in underserved markets, with two new hospitals expected to open by year-end [10] - Joint ventures are a significant growth pathway, with 20 partnerships representing 21 hospitals, and a robust pipeline for future collaborations [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the ongoing demand for behavioral health services and the company's ability to meet this demand through strategic execution [7] - The company anticipates continued growth in 2024, with significant opportunities through defined pathways and joint ventures [18] Other Important Information - Acadia has maintained a strong financial position with$ 99.6 million in cash and $520 million available under its revolving credit facility [25] - The company announced a definitive agreement to acquire Turning Point Centers, which will add 76 beds and potentially 48 more over time [15] Q&A Session Summary Question: Inquiry about professional liability reserves - Management confirmed that the increase in reserves was part of the regular review process and not due to changes in claims volume [30] Question: Update on service line performance and Medicaid redetermination - Management indicated strong performance across all service lines, with no significant impact from Medicaid redetermination on patient volume [32] Question: Thoughts on payment rates and payer classes - Management expressed satisfaction with rate negotiations, expecting continued strong rates into Q4 and 2024 [37] Question: Discussion on joint ventures and partnerships - Management noted ongoing interest from health systems in partnerships to address behavioral health needs, indicating a strong pipeline for future joint ventures [41] Question: Impact of construction costs on future growth - Management acknowledged previous spikes in construction costs but indicated improved management strategies moving forward [59] Question: Corporate overhead expectations for next year - Management expects corporate costs to level off and continue to build leverage as a percentage of revenue [65]