Keeping in line with its acquisitions strategy, Acadia Healthcare Company Inc. ACHC recently announced three acquisitions – two in the U.K. and one in the U.S. The U.K. acquisitions were completed on Jun 1, while the takeover in the U.S. is expected to close by Jul 1.
Notably, the completion of all the three acquisitions will bring 17 inpatient behavioral health facilities to Acadia with over 500 beds.
In the U.K., Acadia purchased the behavioral health operations of Care UK, which include 15 inpatient facilities with approximately 300 beds, providing behavioral health services to children, adolescents and adults. The company also completed the purchase of another inpatient behavioral health facility, with 42 beds, from England-based Choice Lifestyles.
In addition, Acadia entered into an asset purchase agreement with U.S.-based Belmont Behavioral Health, part of the not-for-profit Einstein Healthcare Network. Per the agreement, Acadia will purchase an inpatient behavioral health facility with 147 beds for an aggregate cash consideration of approximately $145 million. The facility, which serves the greater Philadelphia and Pennsylvania market, garnered total revenue of approximately $82 million in 2014.
Management expects all the three transactions to prove accretive. Accordingly, the company raised its 2015 adjusted EPS guidance to $2.12–$2.15 from the previous range of $2.11–$2.15.
We believe that company is growing largely on the back of acquisitions along with reasonable organic growth. Through 2014, Acadia completed five acquisitions which brought 27 facilities and over 1,400 beds to the company. The company also added 378 beds at its existing facilities during the year.
Moreover, the acquisitions of PiC (July 2014) and CRC Health Group (Feb 2015) have greatly diversified the company’s services, payer mix and geographical presence. We note that management is further evaluating potential acquisitions in its domestic market, including more transactions with non-profit healthcare providers.
We believe that Acadia’s acquisitions strategy will offer robust opportunities to gain significant market traction which in turn will drive the company’s top line and boost profits.
Stocks to Consider
Currently, Acadia carries a Zacks Rank #2 (Buy).
Other well-placed stocks in the med-hospitals industry include HCA Holdings Inc. HCA, Mednax Inc. MD and Tenet Healthcare Corp THC. All the three stocks carry the same Zacks Rank as Acadia.
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