Behavioral Health Composite

February, 2019

Behavioral Healthcare Stocks up 0.5% in February

The Behavioral Health Composite, which tracks investor interest in the three public behavioral healthcare companies – Acadia Healthcare (ACHC), American Addiction Centers (AAC), and Universal Health Services (UHS) – was up 0.5% for the month of February. The S&P 500, by comparison, was up 2.9% during the same period.

February was a fairly quiet month across the board.

  • American Addiction Centers – AAC (↑4.5%) was up slightly for the month of February.  No significant news to report.
  • Acadia Healthcare – ACHC (↓5.3%) was down likely due investor anticipation of the company missing Q4 and full year 2018 earnings expectations.  ACHC released its fourth quarter and year‑end 2018 earnings on February 28, 2019, after the close of the market.
  • Universal Health Services – UHS (↑2.4%) was up after positive Q4 and year-end 2018 results, which were delivered on February 27th.   EPS for Q4 came in at $2.37 while expectations were $2.34.  Revenue came in at $2.75 billion compared to estimates of $2.74 billion.  For the Behavioral Health segment, on same facility basis, adjusted admissions rose 4.5% while adjusted patient days dipped 1.2%, both on a year-over-year basis. Net revenues were up 2% in Q4 due to higher admissions.
graph displaying data for january health composite

For the last twelve months (LTM), the BHC well behind the S&P 500 at a 27.5% loss relative to the S&P’s gain of 2.6%.

graph displaying data for january health composite

Valuation – Public Comps

Below are the Enterprise Value / EBITDA and Enterprise Value / Revenue ratios for AAC, ACHC and UHS.  The valuations provide a relative barometer for what smaller companies can expect.  Given the higher relative risk of smaller companies (e.g., less liquidity, smaller revenue base), we typically (though not always) see multiples that are lower than those of the public companies.

Stock Prices

Company 2/28/19
AAC $2.55
ACHC $26.29
UHS $138.83

Enterprise Value/EBITDA

Company 2/28/17 2/28/18 2/28/19
AAC 13.26x 10.98x 11.75x
ACHC 12.35x 11.27x 9.61x
UHS 9.61x 8.56x 9.86x

Enterprise Value/Revenue

Company 2/28/17 2/28/18 2/28/19
AAC 1.52x 1.51x 1.16x
ACHC 2.55x 2.31x 1.82x
UHS 1.67x 1.42x 1.54x

M&A News

March 1, 2019Perimeter Healthcare, a network of mental and behavioral health treatment centers backed by Ridgemont Equity Partners, announced the acquisition of Lake Pines Hospital, a 36-bed behavioral healthcare facility, and the St. Theresa Hospital building that houses the program in Kenner, La.  Perimeter plans to add 40 to 45 beds to the inpatient facility over the next eight months as part of a renovation project. The facility will be renamed Perimeter Behavioral Hospital of New Orleans.

February 22, 2019Family Counseling Services of Cortland County and Family & Children’s Society announced the merger between the two services.  The renamed Family & Children’s Counseling Services will serve as a joint urban-rural agency focused on essential behavioral healthcare services throughout the Oneida, NY region

February 19, 2019Ryan Chapman, who grew and sold a nationwide service company, Premier Parking, before age 35, purchased Integrative Life Center (ILC), a provider of residential and outpatient treatment for substance abuse, eating disorders and mental health disorders.  The company was founded in 2010 and has two facilities in the Nashville, TN area.  Ryan Chapman is now the majority shareholder and CEO.

February 6, 2019Ideal Option, a provider of Medication-Assisted Treatment (MAT) and behavioral counseling services for individuals suffering from Opioid Use Disorder (OUD), announced today a strategic minority investment by BlueCross BlueShield Venture Partners (BCBSVP). BCBSVP invests on behalf of 33 BlueCross BlueShield entities in healthcare companies of strategic relevance to BlueCross BlueShield Plans.

January 24, 2019Pharos Capital Group-backed Beacon Specialized Living Services acquired Owakihi, Inc., which provides home and community-based support services to individuals with intellectual and developmental disabilities.  Headquartered in Saint Paul, MN, Owakihi serves over 200 individuals across 14 sites in the seven counties surrounding Minneapolis and Saint Paul.