Bank of America (BofA) Securities downgraded Acadia Healthcare Inc (NASDAQ:ACHC), a behavioral health company that operates inpatient psych hospitals, residential treatment centers, and outpatient clinics, as well as therapeutic school-based programs.
BofA downgraded Acadia given the headwinds from cuts to Medicaid state-directed payment programs (SDPs) in 2028+.
Analyst Joanna Gajuk downgraded Acadia Healthcare to Neutral from Buy and lowered the price forecast from $27 to $25 on lower estimates.
On the positive side, BofA expects volume to rebound as denovos ramp up in the medium term before the Medicaid cuts start.
Also Read: Psychiatric Hospital Operator Acadia Healthcare Earns Upgrade Amid Expected Recovery In 2025
BofA wrote on Wednesday that Acadia's same-store volumes decelerated to low single digits, driven by disruptions at a few locations due to legal issues and, more recently, lower inpatient admissions due to payor pressure.
Going forward, analyst Gajuk expects volume growth to pick up as new bed capacity ramps up — Acadia expanded beds by 12% in 2024 and is on track for an additional 8% in 2025. Improvements at underperforming facilities would provide an additional upside.
Acadia Healthcare reported second-quarter adjusted earnings of 83 cents, beating the consensus of 68 cents per share.
Sales increased 9.2% year over year to $869.23 million, beating the consensus of $840.02 million.
Acadia Healthcare lowered fiscal 2025 adjusted earnings per share from $2.50-$2.80 to $2.45-$2.65 compared to the consensus of $2.67.
The company also narrowed its sales guidance from $3.3 billion-$3.4 billion to $3.3 billion-$3.35 billion versus the consensus of $3.334 billion.
Price Action: ACHC stock is down 8.48% at $21.33 at the last check on Wednesday.
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