Why Seasoned Investors Hold Acadia Shares (ACHC)


Acadie Health Company, Inc. ACHC is well positioned to grow with strong volumes and operational improvement in the US segment. Streamlining the portfolio to increase profits is also commendable.

– Zack

Acadia Healthcare – with a market capitalization of $ 6.1 billion – provides behavioral health care services in the United States and the United Kingdom. installations and others.

The company has beaten earnings estimates three times in the past four quarters and met once, with the average surprise being 20.2%.

Thanks to a solid outlook, this Zacks Rank # 3 (Hold) action is worth holding onto for now.

Main positive points

The company’s revenue grew at a CAGR of 3.1% over the 2015-2020 period due to strong organic and inorganic growth. Even though revenues were initially affected by the coronavirus epidemic, a high performing US business drove revenue. For 2021, revenues are estimated to be between $ 2.295 billion and $ 2.315 billion, the midpoint of which indicates 10% growth over the figure released in 2020. Acadia Healthcare’s growth strategy, which includes expansion network through the addition of beds, the establishment of de novo wholly owned facilities through strategic joint ventures and acquisitions, bodes well for revenue.

Acadia Healthcare has focused on buyouts to accelerate its growth. This strategy helped the company add facilities, beds and hospitals to its network and contributed to revenue. The company remains actively engaged in its pipeline of acquisitions and expects the buyout and joint venture activities to be strongly oriented towards critical facilities in the domestic market. In fact, the company added 104 beds to its existing operations in the third quarter.

Acadia Healthcare is also actively pursuing Joint Ventures (JVs) with renowned healthcare systems, which helps the company expand its capabilities through the addition of beds. The healthcare provider has a strong portfolio of joint venture projects, which have yet to be completed. This makes the company optimistic for the year 2022. 2022 will likely be its strongest year for joint ventures, as four or five facilities are expected to begin operations. This month, it entered into a joint venture with California’s renowned integrated health system, Scripps Health, to operate an inpatient behavioral health hospital in the Eastlake community of Chula Vista. The hospital will house 120 beds and a specialized unit, which will deal with behavioral health treatment for active duty military personnel and veterans.

Its strategic measures to rationalize the portfolio in order to increase profits are also commendable. He separated the underperforming UK operations this year which had a negative impact on growth. This decision allows Acadia Healthcare to improve profitability and achieve growth by focusing on more profitable businesses.

Main concerns

However, there are a few factors that are hampering the growth of the stock in recent times.

The CCHA expects adjusted earnings per share for 2021 to be between $ 2.51 and $ 2.59, down from the earlier forecast of $ 2.50 to $ 2.70. The decrease in results can be worrisome. In addition, the company’s high leverage remains a source of concern for investors. Its long-term debt of $ 1.44 billion is well above its cash and cash equivalents of $ 196.3 million, highlighting the company’s low creditworthiness. This can affect its financial flexibility. Nonetheless, we believe that a systematic and strategic action plan will stimulate its long-term growth.

Actions to consider

Some better ranked players in the medical space include Co-Diagnostics, Inc. CODX, Doximity, Inc. DOCS and Harrow Health, Inc. HROW, each with a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

Salt Lake City, UT-based Co-Diagnostics’ net income for 2021 saw an upward revision in estimates over the past 30 days and no movement in the opposite direction. During this period, its profit estimates rose 17.9%. CODX has beaten earnings estimates three times in the past four quarters and missed once with the average surprise being 35.6%. The molecular diagnostics company offers a wide range of testing services to its customers. Its CoSara joint venture in India has likely increased the size of its addressable market. In addition, the Co-Diagnostics Logix Smart ™ ABC test received a green signal from Mexican watchdogs. Agreements like these will continue to strengthen its customer base around the world.

Based in San Francisco, Calif., Doximity’s net income for 2021 has seen four upward revisions to estimates in the past 30 days and no movement in the opposite direction. During that time, his profit estimates rose 39%. DOCS ‘cloud-based digital platform for healthcare professionals is expected to continue to grow in the coming days. As coordinated patient care and virtual patient visits are expected to increase, supported by improved technologies, demand for Doximity’s platform will continue to increase.

Based in San Diego, Calif., Harrow Health’s net income for 2021 is expected to grow 346.2% year-over-year. It has seen an upward revision in estimates over the past 30 days and no movement in the opposite direction. HROW has beaten earnings estimates three times in the past four quarters and missed once, with an average surprise of 38%. It is a healthcare company focused on ophthalmology. Its recent acquisitions of drug candidates for ophthalmic surgery from Sintetica and Wakamoto Pharmaceutical are major strengths. Measures like these are likely to strengthen Harrow Health’s commercial success in the US and Canadian markets.

Over the past six months, shares of Co-Diagnostics, Doximity and Harrow Health have risen 15.3%, 25.8% and 8.6% respectively.

Technological IPOs with huge profit potential: Last year, major IPOs jumped 299% in the first two months. With record amounts of cash flowing in IPOs and a record stock market, this year could be even more lucrative.

View Zacks Hottest Tech IPOs Now >>

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

Acadia Healthcare Company, Inc. (ACHC): Free Inventory Analysis Report

Harrow Health, Inc. (HROW): Free Stock Analysis Report

CoDiagnostics, Inc. (CODX): Free Inventory Analysis Report

Doximity, Inc. (DOCS): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks investment research


Comments are closed.