Acadia Healthcare Company, Inc. Q3 2025 results
Snapshot
Acadia Healthcare Company, Inc. reported $852M of revenue in Q3 2025, up 4.4% year over year, with diluted EPS of $0.40 and an operating margin of 9.0%.
- Revenue
- $852M
- YoY growth
- +4.4%
- Diluted EPS
- $0.40
- Operating margin
- 9.0%
What management said
- •Todd's deep experience in healthcare finance, capital allocation, and operational transformation will be instrumental as we continue executing our growth strategy and enhancing shareholder value.
- •Turning to our third quarter results, we reported revenue of $851.6 million, representing a 4.4% increase over the third quarter of last year.
- •Adjusted EBITDA was $173 million, compared with $194.3 million in the prior year period.
- •As previously disclosed, these results reflect softer-than-expected volumes in our Medicaid book of business, particularly in our acute care segment.
- •Same facility volume growth was 1.3% in the quarter, which was consistent with the preliminary commentary we shared at the Jefferies Healthcare Services Conference in late September.
- •These items are causing us to reduce our Adjusted EBITDA guidance for 2025 to $650 million-$660 million from our previously issued guidance of $675 million-$700 million.
- •First, let me expand on how we are focused on capturing the inherent growth opportunity that currently exists in the business.
- •These additions are expected to contribute meaningfully to both same facility volume and EBITDA as they ramp over the next several years and reach their full performance potential.
- •Our execution across these initiatives drove over 3% same facility admissions growth in Q3 compared to last year, which is an acceleration from trends in the first and second quarters.
- •As a backdrop, the demand environment for behavioral health services remains structurally strong.
- •We continue to see rising acuity across patient populations, greater awareness and destigmatization of mental health, and a persistent supply-demand imbalance, particularly in underserved geographies.
- •That said, we're taking a more measured approach to capital deployment in the near term.
What went well
- •Third quarter 2025 revenue of $851.6 million grew 4.4% over the prior-year quarter, with same-facility revenue up 3.7% driven by a 2.3% increase in revenue per patient day and 1.3% growth in patient days.
- •Same-facility admissions grew over 3% year-over-year, an acceleration from first- and second-quarter trends, driven by targeted referral-source action plans in acute care.
- •The company added 83 beds to existing facilities in Q3 (274 year-to-date through expansions) and commenced operations at three previously announced joint venture hospitals with Geisinger, Ascension Seton, and Fairview Health Services.
- •Three CTCs were added in Q3, extending reach to 177 CTCs across 33 states, with 14 added in 2025 amid continued strong demand for medication-assisted treatment.
- •Costs related to managing the government investigations fell to $39 million, down 28% from the Q2 high watermark, with further moderation expected.
- •Q3 CapEx of $135.8 million was more than $20 million favorable to plan, and the company expects to generate positive adjusted free cash flow for full-year 2026, ahead of the prior run-rate timeline.
What went wrong
- •Adjusted EBITDA of $173 million fell from $194.3 million a year earlier and came in approximately $5 million below internal expectations, driven primarily by lower volumes and an increase in bad debts and denials.
- •Same-facility volume growth of 1.3% was about 100 basis points below internal expectations, reflecting softer-than-expected Medicaid volumes, particularly in acute care.
- •The company cut full-year 2025 Adjusted EBITDA guidance to $650-$660 million from $675-$700 million amid volume softness, rate pressure, higher employee healthcare benefit costs, and increased professional and general liability expense.
- •Q3 startup losses of $13.3 million rose from $7.3 million in Q3 2024, and several development projects were paused for failing to project acceptable returns.
- •DSO spiked in the quarter on slower payments from some federal plans plus rising denials and bad debt.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year revenue | FY2025 | $3.3B-$3.35B | $3.28B-$3.3B | lowered |
| Full-year Adjusted EBITDA | FY2025 | $675M-$700M | $650M-$660M | lowered |
| Full-year Adjusted EPS | FY2025 | $2.45-$2.65 | $2.35-$2.45 | lowered |
| Full-year same-facility volume growth | FY2025 | 2%-3% | low end of 2%-3% | lowered to low end |
| Full-year revenue per patient day growth | FY2025 | low single-digit | lower end of low single-digit | lowered to low end |
| Full-year net Medicaid supplemental payments | FY2025 | $30M-$40M | high end of $30M-$40M | raised to high end |
| Q4 PLGL incremental charge | Q4 2025 | not previously provided | $4M-$6M | newly provided |
| Full-year startup losses | FY2025 | $60M-$65M | $60M-$65M | unchanged |
| Full-year CapEx | FY2025 | not previously stated this call | $610M-$630M | revised |
| Beds to be added | FY2025 | not previously stated | 945-1,076 total | provided |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | +4.4% to $851.6M | same-facility revenue up 3.7%, partly offset by softer-than-expected Medicaid volumes |
| Adjusted EBITDA | down to $173M from $194.3M | lower volumes and increased bad debts and denials, with supplemental payments a partial offset |
| Same-facility volume growth | +1.3% | softer Medicaid volumes, about 100 basis points below internal expectations |
| Same-facility admissions | +over 3% | targeted referral-source action plans in acute care, an acceleration from Q1 and Q2 |
| Startup losses | $13.3M vs $7.3M prior year | large number of newly opened facilities |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Medicaid volume / payer friction | weaker Medicaid acute volumes emerging in Q2 | more frequent utilization review and length-of-stay scrutiny from Medicaid managed care, concentrated in Medicaid-heavy markets | worsening |
| Bad debts and denials | emerging pressure | increased denials, driven by reimbursement for fewer days than care provided, during or post-discharge | worsening |
| Capital discipline | revised 2025 CapEx of $610M-$630M | 2026 CapEx at least $300M lower; several development projects paused | tightening |
| Startup losses | $60M-$65M for 2025 | expected to decrease modestly in 2026, material step-down in 2027 | peaking then improving |
| Government investigation legal costs | Q2 high watermark | $39M in Q3, down 28%, expected to keep moderating | improving |
| Leadership | interim CFO Tim Sides; COO Nasser Khan | Todd Young joined as permanent CFO; Nasser Khan stepping down as COO | transition |
Q&A summary
What exactly is happening with payers, is it Medicaid, and have denials worsened over the last quarter or two?
Payer friction shows up in both rate and volume, concentrated in Medicaid; the most notable pressure is on length of stay via more frequent utilization review from Medicaid managed care, and bad debt is driven by reimbursement for fewer days than care provided; adverse media is not a factor.
How durable are the bad debt, denial, length-of-stay, and PLGL headwinds heading into 2026?
Q4 is seasonally the slowest quarter and should not be run-rated; startup losses, closure costs, and some items will not repeat at the same level, while industry-wide PLGL pressure persists and up to $22 million of supplemental payments await CMS approval.
How do you reconcile a $300 million CapEx reduction with still opening 500-700 beds in 2026?
The majority of capital for the large 2026 acute facilities was already spent in 2025 (development around 85% complete at year-end), and several new-facility and expansion projects that did not meet return thresholds were paused, allowing a meaningful step-down.
Will you walk away from paused de novos, and what is the 2027 CapEx and depreciation outlook?
Joint ventures are contractual obligations that will not be abandoned, but de novos where land was bought or construction not started were relatively easy to pause; 2027 CapEx is expected lower than 2026 with only 150-250 beds coming online versus 500-700 in 2026.
What is the run-out cost and EBITDA headwind for the five facility closures, and will there be more closures?
Closure run-out expenses are expected to flip to a mid-single-digit-million EBITDA tailwind in 2026; the company ring-fenced five to seven facilities it is monitoring and does not expect significant further closures but will be rigorous on returns.
For the $22 million in Medicaid supplemental benefits, what is the annualized benefit and key states?
Florida is the one key state, with three others in the mix; the $22 million would be incremental in Q4 and provide a nice incremental run rate going forward, with specifics deferred to February guidance.