Acadia Flags Earnings Ding Due to Tighter NY Medicaid Payment Policy
Behavioral health services company Acadia Healthcare Co. Inc. could lose about 5 percent of its earnings before interest, taxes, depreciation and amortization because of a New York measure restricting residents enrolled in Medicaid from receiving care outside the Empire State.
Acadia doesn’t operate any treatment centers in New York but does run several specialty facilities in Pennsylvania near that state’s border with New York. Those centers primarily treat patients with substance use disorders and help make Pennsylvania the single most important state to Nashville-based Acadia, accounting for about 13% of its revenues.
Speaking this week at the 44th Annual J.P. Morgan Healthcare Conference in San Francisco, CEO Chris Hunter said his team estimates that New York’s move could trim $25 million to $30 million from Acadia’s EBITDA, which was about $600 million last year. That potential financial impact would become reality, Hunter said, if Acadia can’t backfill the Pennsylvania beds previously used by New York residents.
“At times, there are decisions made that we don’t, frankly, understand from an economic standpoint,” Acadia CFO Todd Young told the JPMorgan gathering. “This decision by the state of New York not to provide for their patients if they go to a facility right across the state line in Pennsylvania is one of those [...] It’s unfortunate patients are going to have to travel further to get care that’s probably not as good as what we provide. And it’s going to cost the state more money.”
The New York news comes as Acadia looks to bounce back from 2025, when its stock lost more than 60% of its value. Hunter, who has been CEO since the spring of 2022, and his team have in the past year pulled back on an expansion push as they faced weakening demand and greater reimbursement uncertainty from the One Big Beautiful Bill Act while also needing to pay out more in settlement costs and legal fees. They also moved to close a handful of Acadia’s more than 270 facilities.
Looking to 2026, the Acadia team may have to wrestle with another state regulatory issue. Hunter and Young said they’re watching potential changes in staffing ratio requirements in California. Hunter said a tightening of those mandates could force Acadia to lower its patient census in the Golden State, which accounts for about 8 percent of revenues.
The coming year for Acadia won’t be all about managing headwinds, though. The reduction in capital spending from recent years will improve free cash flow by about $300 million and the capacity added by a lot of that recent capex—Acadia added more than 1,300 beds in 2024 and 2025 and is slated to add another 600 this year—will grow their contributions to the company’s profits even though the additions of the last two years have so far been ramping up more slowly than expected.
Shares of Acadia (Ticker: ACHC) took a 5 percent hit after executives’ J.P. Morgan conversation and have given up more ground since. They closed Jan. 15 at $11.91, about 10 percent below where they began the week. The company’s market capitalization is now about $1 billion.
About the Author
Geert De Lombaerde
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post for more than a decade and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.