Share price of Acadia Healthcare Company Inc. ACHC increased 2.11% ($1.65) to close at $79.98 on Jul 1, 2015, following the acquisition of Belmont Behavioral Health. Acadia Healthcare also scaled a 52-week high of $80.47, which reflects year-to-date return of 30.7%.
As announced earlier, Acadia Healthcare paid approximately $145 million for the 147-bed inpatient behavioral health facility. Belmont Behavioral Health, part of the not-for-profit Einstein Healthcare Network, serves the greater Philadelphia and Pennsylvania market. The facility garnered total revenues of approximately $82 million in 2014.
We believe Acadia Healthcare is growing largely on the back of acquisitions along with reasonable organic growth. Through 2014, the company completed five acquisitions which brought 27 facilities and over 1,400 beds to the company. It 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.
The recently completed transaction with Einstein Healthcare Network is part of that strategy. Along with the Belmont buyout, the company announced the acquisition of The Manor Clinic – a 15-bed residential rehabilitation facility in Southampton, U.K.
Further, Acadia Healthcare announced the takeover of behavioral health operations of Care UK, which include 15 inpatient facilities with approximately 300 beds. The facility provides behavioral health services to children, adolescents and adults.
We believe that Acadia Healthcare’s aggressive acquisition strategy will expand its presence in the domestic as well as international markets going forward. In June, Acadia Healthcare completed the purchase of another inpatient behavioral health facility with 42 beds from England-based Choice Lifestyles.
Further, The Manor Clinic acquisition will help the company to enter the growing addictions treatment market in the U.K.
Stocks to Consider
Currently, Acadia Healthcare sports a Zacks Rank #1 (Strong Buy).
Other well-placed stocks include The Ensign Group ENSG, China Biologic CBPO and Cambrex Corp CBM. All the three stocks carry the same Zacks Rank as Acadia Healthcare.
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