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Here's Why Acadia Healthcare Is Making Gains Today

By Cory Renauer – Updated Apr 9, 2019 at 4:32PM

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The company's outlook following its first quarter under new leadership is better than expected.

What happened

Shares of Acadia Healthcare (ACHC 1.04%), an international provider of behavioral healthcare services, are on the move despite a fourth-quarter earnings report that missed consensus estimates on the top and bottom lines. With a new CEO at the helm, investors looking forward to 2019 have pushed the stock 13.5% higher as of 12:13 p.m. EST on Friday. 

So what 

Acadia recorded a $325.9 million goodwill impairment charge in the fourth quarter related to its U.K. facilities. Adjusting for this and other noncash charges allowed the company to report $2.24 per share in adjusted earnings, which was just 2.6% less than a year earlier.

Click here for the latest earnings call transcript for Acadia Healthcare.

Guy in a suit bending a downward sloping chart back up.

Image source: Getty Images.

Investors were more impressed with top-line revenue improvements last year. In the U.S., same-facility revenue rose 3.5% in the fourth quarter, compared to the previous-year period. In the U.K., same-facility revenue ticked up to 4.4%, although the segment's EBITDA margin sank to 16.4% from 21% a year earlier. According to Acadia, margins in the U.K., which are responsible for 36% of total revenue, contracted due to higher wages in a tightening labor market.

Now what

Acadia Healthcare expects adjusted earnings per share to reach between $2.15 and $2.30 this year, compared to $2.24 in 2018. On the top line, it anticipates that revenue will reach between $3.15 billion and $3.20 billion, compared to $3.01 billion in 2018. 

The company's push into the U.K. hasn't worked out nearly as well as expected, but it's still earning a profit and patient demand for treatment to manage mental health problems is surging. While it looks like recent talks with private equity groups have broken down, meeting earnings expectations in 2019 could bring those investors back to the deal table. 

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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