In a vote of confidence for the behavioral healthcare sector, KeyBanc Capital Markets has upgraded Acadia Healthcare (NASDAQ: ACHC) from ‘Sector Weight’ to ‘Overweight’ with a price target of $70. The upgrade reflects growing optimism about the Franklin, Tennessee-based company’s expansion strategy and potential for strong financial performance in 2025 and beyond.
KeyBanc analyst Matthew Gillmor points to several factors supporting the upgrade, including growing patient volumes and increased enrollment in health insurance exchanges and Medicaid-aided payment programs. The analyst anticipates Acadia’s stock will benefit from an inflection point as investor sentiment improves and visibility into the company’s recovery becomes clearer in the latter half of 2025.
Since its founding in 2005, Acadia Healthcare has grown into one of the nation’s largest behavioral health providers. The company currently operates 260 facilities across 40 states and Puerto Rico, including:
- 52 acute care facilities
- 35 specialty treatment facilities
- 164 comprehensive treatment centers
- 9 pediatric residential treatment facilities
Financial metrics underscore the company’s market position. For the first nine months of 2024, Acadia reported revenue of $3.1 billion, with a diverse payer mix comprising:
- 57% Medicaid
- 26% Commercial insurance
- 14% Medicare
- 3% Self-pay and other sources
The company’s aggressive growth strategy includes significant bed expansion, with 1,300 new beds added in 2024 and another 1,200 under construction. According to CFO Heather Dixon, while startup costs will double in 2025 compared to 2024, this investment is expected to drive substantial returns as facilities reach operational maturity.
“We can still grow faster, even if we moderate that pace of growth; we will see the benefits of the beds we’ve added,” Dixon explained during a recent investor presentation. “We have an opportunity here to moderate the pace and smooth out the bed growth a little bit so that we can unlock some free cash flow and be more opportunistic with capital allocation.”
The company’s expansion plans are supported by approximately $321.5 million available under its $600 million revolving credit facility. This financial flexibility, combined with existing operations generating substantial cash flow, positions Acadia for continued growth.
Market analysts note several tailwinds supporting Acadia’s growth trajectory:
- Rising demand for behavioral healthcare services
- Increased insurance coverage for mental health treatment
- Successful joint venture partnerships with major health systems
- Strong operational execution across facilities
The consensus mark for 2025 earnings is projected at $3.59 per share, indicating a 5.5% growth from the 2024 estimate. Revenue projections for 2025 suggest a 9% increase to $3.5 billion from 2024 levels.
Acadia’s track record of executing on growth initiatives while maintaining quality metrics has impressed analysts. The company consistently performs 3-5 times better than CMS national benchmarks for key safety measures, and its comprehensive treatment centers have achieved remarkable patient outcomes.
Looking ahead, Acadia’s leadership team remains focused on balancing growth with operational excellence. The company’s expansion strategy, combined with its commitment to quality care, positions it well to capitalize on increasing demand for behavioral health services.
From its headquarters in Franklin, Tennessee, Acadia Healthcare continues to demonstrate its ability to execute on its growth strategy while maintaining high standards of patient care. The KeyBanc upgrade reflects growing confidence in the company’s ability to translate its expansion initiatives into strong financial performance in the years ahead.
