Acadia Healthcare Company, Inc. (ACHC): what the price assumes

boothcheck covers Acadia Healthcare Company, Inc. (ACHC) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/ACHC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.5%); the inversion above states its own rate.

Per-Model Detail (n=3)

Solvency

Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.

Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.

Bullet Takeaways

• Last year's headline loss was almost entirely bookkeeping: the FY2025 10-K reports that "we recorded non-cash impairment charges of $1,007.9 million, which is recorded in loss on impairment", a write-down of the value assigned to past acquisitions rather than money leaving the business.
• The operating business behind that charge is still growing slowly, with revenue up 5.0% to $3,312.8 million in fiscal 2025 and same-facility revenue up 4.9%, while same-facility other operating expenses climbed from 13.3% of revenue to 15.5%, which is the squeeze that matters.
• Second-quarter results land after the close on July 28, 2026, and management has already told the market to expect a soft one, guiding revenue to $835 million to $850 million.

Bull Case

One number rewrites the whole story here, and it is a number that never touched the bank account. The FY2025 10-K states that "we recorded non-cash impairment charges of $1,007.9 million, which is recorded in loss on impairment". That single line is the difference between a company reporting a billion-dollar loss and a company reporting an ordinary year. An impairment is an admission that assets bought in the past were bought too dearly. It says nothing about what those assets earn today.

What they earn today is the actual question, and the operating picture is duller than the headline suggests. The filing reports that "Revenue increased $158.8 million, or 5.0%, to $3,312.8 million for the year ended December 31, 2025 from $3,154.0 million", with same-facility revenue up 4.9%, admissions up 2.3% and revenue per patient day up 2.8%. Those are the numbers of a business that is still filling beds and still getting paid a little more for each day of care. Slow, but not broken. A company genuinely in decline does not grow admissions.

The demand side is unusual for a healthcare provider in that nobody disputes it. Inpatient psychiatric capacity in the United States has been shrinking for decades while diagnosed need has not, and Acadia's four service lines sit across the acute and residential parts of that shortage: acute inpatient psychiatric facilities are 55% of revenue, with specialty treatment at 17%, comprehensive treatment centers at 17% and residential treatment at 11%. The scarce input is not patients. It is licensed beds and the staff to run them, which is precisely why the largest competitor in the category writes in its own 10-K that "there have been occasions when we were unable to fill all vacant positions and, consequently, we were required to limit patient volumes". Capacity constraints cut both ways, and they favor whoever already holds the licenses.

Concentration risk, the usual failure mode for a facility operator dependent on state Medicaid budgets, has been diluted deliberately. No state or U.S. territory accounted for more than 14% of revenue in fiscal 2025, and management frames that as intentional: "We believe that our increased geographic diversity will mitigate the impact of any financial or budgetary pressure that may arise in a particular state or market where we operate." A single hostile state budget cannot break the model.

The balance sheet has more room than the loss year implies, because the covenant that matters is measured on operating results rather than on the write-down. The filing reports: "At December 31, 2025, our Consolidated Total Net Leverage Ratio was 4.0x, and we were in compliance with all financial covenants." Behind that sit a $1.0 billion senior secured revolving facility and a $650.0 million term loan running to February 2030. Share count has been flat over the four years to March 2026, so none of this has been financed by handing existing owners a smaller slice.

The bear will say the litigation and staffing costs are permanent rather than cyclical, and that is a live argument. But the price on offer already assumes the operating profit shrinks from here, and it does not need the growth story to work. It needs the business to stop getting worse.

Bear Case

Universal Health Services operates the other large behavioral health platform in the country, and the comparison is not flattering. UHS turns 11.5% of a $17.76 billion revenue base into operating profit and grew that base 10.4% over the year. Encompass Health (EHC) grew 10.0%. National HealthCare (NHC) grew 10.3%. Acadia grew same-facility revenue 4.9%. In a service business where scale buys negotiating leverage with payors and the ability to absorb a bad quarter in one market, being the slower-growing, smaller operator in a category with a well-capitalized incumbent is a structural position, not a temporary one. The competitors do not need Acadia to fail. They only need to keep taking the better sites, the better payor contracts and the scarce clinical staff.

The cost line shows what that pressure looks like from inside. Same facility other operating expenses were $500.9 million in fiscal 2025, or 15.5% of revenue, against $410.6 million, or 13.3%, the year before. Two points of revenue is an enormous move in a business that runs on single-digit operating margins, and the filing attributes part of it to unfavorable adjustments of $52.7 million in 2025 against $10.1 million in 2024. The company also disclosed that "we revised our 2025 earnings forecast to reflect the impact of higher professional and general liability" expenses tied primarily to patient-related litigation. That is a cost of doing business in this specific line of care, and it is not obviously cyclical.

Which leads to the risk that has no clean financial expression. This company's product is the custody of people who cannot advocate for themselves, and the 10-K says so directly: "We care for a large number of vulnerable individuals with complex needs and any care quality deficiencies could adversely impact our brand, reputation" and the ability to market its services. The same filing flags "negative publicity or unfavorable media attention, whether warranted or unwarranted, that could have a significant, adverse effect on the trading price of our common stock or adversely impact our reputation", alongside the False Claims Act regime under which private parties can bring whistleblower suits over billing. Federal investigations into the company's admissions and billing practices have continued past a $19.85 million False Claims Act settlement, and a separate investor suit settled for $179 million. A reputational problem in behavioral health is not a marketing problem. It is a referral problem, and referrals are the top of the revenue funnel.

Growth by acquisition, the strategy that produced the impaired goodwill in the first place, carries the same exposure forward. The filing is blunt about it: "Our business growth and acquisition strategies expose us to a variety of operational and financial risks." A company that has just written down $1,007.9 million of prior deal value is telling you, in the most expensive way available, that its historical judgment about what a facility was worth ran ahead of what the facility earned.

The valuation defense has a hole in it too. Against what the company actually owns on the books, the price sits roughly 69% above where the book-value references land, and the reason those references are weak is that the return on that book value is currently negative. Against the sector's revenue multiple the price looks like a bargain, sitting at about 37% of it, but a revenue multiple is a statement about what a dollar of revenue is worth to a profitable operator. It is only a bargain if the profit comes back. Management has told the market the near term gets worse before that happens, guiding second-quarter adjusted earnings to a range below the consensus estimate at the time. The cheapness is real. What it is cheap relative to is the unresolved question.

Valuation

Today's $34.49 works out to roughly 10 times company-wide operating income, which is low enough that the price does not require the business to grow at all. It sits below the level that even a steady mid-single-digit annual decline in operating profit would warrant. That is the whole starting position, and it is worth stating plainly because the reported bottom line points somewhere else entirely.

The reason the two disagree is a single accounting entry. The FY2025 10-K reports "non-cash impairment charges of $1,007.9 million, which is recorded in loss on impairment", which turns an operating year into a headline loss without changing what the facilities collect. Underneath it, the filing shows "Revenue increased $158.8 million, or 5.0%, to $3,312.8 million for the year ended December 31, 2025".

The methods split cleanly, and the split is the information. Measured against what the company owns, the price sits about 69% above where the book-value references land, and those references carry a caveat of their own: they are floors computed on a book value earning a negative return, which is why they land low. Measured against what the sector pays per dollar of revenue, the same price sits at about 37% of that benchmark. Earnings-power and cash-flow approaches produce nothing usable at all, because trailing earnings are negative and there is no positive base to discount. So the pattern is not "cheap" or "expensive." It is that the only lens supporting this price is the one that values revenue rather than profit, and the only lenses that value profit have nothing to work with.

Among the healthcare operators in its comparison set, Acadia's multiple sits in the lower half of the range, which is consistent rather than anomalous: DaVita (DVA) converts 15.1% of revenue to operating profit and Surgery Partners (SGRY) 11.8%, while Acadia's trailing profitability is currently negative on the reported basis. A low multiple against peers who are earning and a low multiple against peers who are not are different facts, and this is the second one.

Leverage is where the downside gets bounded, and the filed measure is the honest one because it is computed on operating results rather than on the write-down. The 10-K states that "At December 31, 2025, our Consolidated Total Net Leverage Ratio was 4.0x, and we were in compliance with all financial covenants." The facilities behind it are a $1.0 billion senior secured revolver and a $650.0 million term loan maturing February 28, 2030, so the refinancing wall is not immediate. Share count has been unchanged over the four years to March 2026, meaning the loss year was absorbed without issuing equity into it.

Put together, the price is not asking for a recovery. It is asking for the operating profit to decline no faster than a slow, steady grind, and the company's own near-term guidance says the grind is still going.

Catalysts

Second-quarter 2026 results are due after the close on Tuesday, July 28, 2026, with the call the following morning. Management guided the quarter to revenue of $835 million to $850 million, against $828.8 million reported in the first quarter of 2026, itself up 7.6% year over year. On April 29, 2026 the company also guided second-quarter adjusted earnings per share, a company-defined measure, to a range below the analyst consensus at the time, citing startup losses at new facilities, higher bad debt, legal settlement costs and rising leverage. That combination of a rising top line and a falling bottom line is the specific thing to check in the print.

The company reinstated a former chief executive, Debra Osteen, in January 2026, in the middle of the legal and financial pressure described above. Bringing back a prior operator is a signal about which direction management thinks the fix runs, toward operating discipline rather than toward another acquisition wave, and the near-term test of it is the same-facility expense line rather than revenue.

Federal scrutiny of admissions and billing practices has not closed. The company paid $19.85 million to resolve False Claims Act allegations concerning medically unnecessary inpatient behavioral health services, and investigations continued after that settlement. Because professional and general liability expense is already showing up in the reported cost base, further legal developments hit the income statement directly rather than only the headline risk, and the quarterly expense disclosure is where they will surface first.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• UHS (UNIVERSAL HEALTH SERVICES, INC.)
• FY2025 10-K: …in operations and capital expenditures is, therefore, highly competitive in these states. In those states that do not have CON laws or which set relatively high levels of expenditures before they become reviewable by state authorities, competition in the form of new services, facilities and capital spending is more…
• FY2025 10-K: …In all of the geographical areas in which we operate, there are other facilities that provide services comparable to those offered by our facilities. In addition, some of our competitors include hospitals that are owned by tax-supported governmental agencies or by nonprofit corporations and may be supported by…
• SEM (SELECT MEDICAL HOLDINGS CORP)
• FY2025 10-K: …Competition Critical Illness Recovery Hospitals and Rehabilitation Hospitals Our critical illness recovery hospitals and our rehabilitation hospitals both compete on the basis of the quality of the patient services we provide, the outcomes we achieve for our patients, and the prices we charge for our services. The…
• FY2025 10-K: …illness recovery hospital, rehabilitation hospital, and outpatient rehabilitation businesses, our ability to retain customers and physicians, or maintain or increase our revenue growth, price flexibility, control over medical cost trends, and marketing expenses may be compromised and our revenue and profitability may…
• EHC (Encompass Health Corporation)
• FY2025 10-K: …contract labor. See Item 1A, Risk Factors , for further discussion of competition for staffing, shortages of qualified personnel, and other factors that may increase our labor costs and constrain our ability to take new patients. We remain confident in the prospects of our business based on the increasing demands for…
• FY2025 10-K: …competition from local or national entities with longer operating histories or other competitive advantages, such as acute-care hospitals who provide post-acute services similar to ours or other post-acute providers with relationships with referring acute-care hospitals or physicians. Aggressive payment review…
• SGRY (Surgery Partners, Inc.)
• FY2025 10-K: …we compete with hospitals and operators of other surgical facilities to attract physicians and patients. We believe that the competitive factors that affect our surgical facilities' ability to compete for physicians are convenience of location of the surgical facilities, quality of care offered, convenience of…
• FY2025 10-K: …in multiple markets, each with a different competitive landscape, shifts within our payor mix or case mix may not be uniform across all of our affiliated facilities. Rather, these shifts may be concentrated within certain markets due to local competitive factors. In addition, we are unable to predict the results of…
• ARDT (Ardent Health, Inc.)
• FY2025 10-K: …subject to various federal, state and local statutes and ordinances regulating their operation. Management does not believe that compliance with such statutes and ordinances will materially adversely affect our financial position or results of operations. Competition The hospital industry is highly competitive, and…
• FY2025 10-K: …including its geographic coverage, and access to patients. A location convenient to a large population of potential patients or a wide geographic coverage area through a hospital network can significantly benefit an acute care hospital's competitive position. Another important factor is the scope and quality of…
• MD (Pediatrix Medical Group, Inc.)
• FY2025 10-K: …of the applicable practice group. See "Government Regulation-Fee Splitting; Corporate Practice of Medicine." COMPETITION The physician services industry is highly fragmented. Competition in our business is generally based upon a number of factors, including reputation, experience and level of care and our affiliated…
• FY2025 10-K: …Economic Conditions and Other Factors Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2025, the percentage of our patient service revenue being reimbursed under government-sponsored or government-funded healthcare programs ("GHC Programs") remained stable…
• DVA (DAVITA INC.)
• FY2025 10-K: …and operations in light of evolving marketplace dynamics or broader changes to the regulatory landscape, including changes related to the antitrust and competitive environment or changes resulting from new business activities in the dialysis or pre-dialysis space by our existing competitors, other market…
• FY2025 10-K: , regulations and other requirements...;" and "We are subject to risks associated with our participation in government healthcare programs." Medicare Advantage revenue Medicare Advantage (MA, managed Medicare or Medicare Part C) plans are offered by private health insurers who contract with CMS to provide their…
• NHC (NATIONAL HEALTHCARE CORP)
• FY2025 10-K: …our competitors' facilities are located in newer buildings and may offer services not provided by us or are operated by entities having greater financial and other resources than us. Certain of our competitors are operated by not-for-profit, non-taxpaying or governmental agencies that can finance capital expenditures…
• FY2025 10-K: …non-operating income from equity in earnings of unconsolidated investments, dividends and realized gains and losses on marketable securities, interest income, and other miscellaneous non-operating income. 4 Quality of Patient Care The Centers for Medicare and Medicaid Services ("CMS") introduced the Five-Star Quality…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.