What Management Said
Read the full Q2 2026 transcript ↗Overall, Acadia delivered solid results in the second quarter that were consistent with our expectations across our key financial and operating metrics, including revenue, adjusted EBITDA, adjusted EPS, and free cash flow. We delivered revenue that was above the high end of our guidance range, as well as adjusted EBITDA and adjusted EPS that were near the high end of our guidance. We generated $124 million of free cash flow and reduced our debt by $113 million. We are taking a disciplined approach to capital deployment, including CapEx, and we expect to generate additional free cash flow in the second half of the year.
For the second quarter, our total revenue was flat compared with the prior year period. Our specialty business delivered solid performance in the second quarter, including a $5 million sequential increase in revenue. Our RTC business delivered strong revenue growth in the second quarter, driven by volume growth and capacity expansions that were completed last year. In our CTC service line, revenue was flat on a year-over-year basis.
Adjusted EBITDA includes two items that were not included in our guidance. A benefit related to the Florida Supplemental Payment Program, and an expense related to an increase in our professional and general liability reserves for prior years. The combined impact of these two items was a $2.5 million reduction to adjusted EBITDA in the second quarter. During the second quarter, we made further progress with that group, including revenue and facility-level EBITDA results for those 2023 to 2026 cohorts that were ahead of our expectations.
What went well
- Acadia delivered solid Q2 results consistent with expectations, with revenue above the high end of guidance and adjusted EBITDA and adjusted EPS near the high end of guidance.
- The company generated $124 million of free cash flow (operating cash flow of $162 million on $39 million of capex) and repaid $113 million of debt, ending the quarter at approximately 4.1x net leverage.
- The 2023-2026 new-facility cohorts delivered revenue and facility-level EBITDA ahead of expectations for the second consecutive quarter, reinforcing confidence in $200 million of incremental adjusted EBITDA relative to 2025; an increasing number of new facilities are contributing positive EBITDA.
- Two new acute JV facilities opened on schedule in June -- a 144-bed facility with Orlando Health in Florida and a 96-bed facility with Methodist Jennie Edmundson in Iowa -- bringing over 300 beds added in the first half, on track for 500-600 beds in 2026.
- RTC revenue grew 12% year-over-year to $97 million on solid volume growth and higher revenue per day, and specialty revenue rose 4% sequentially to $134 million.
- Startup losses of $12 million were better than expected, corporate overhead declined about $3 million sequentially, AR days improved to 49, and the labor environment remained stable with wage growth around 3%.
What went wrong
- Total revenue of $866 million was flat year-over-year, distorted by prior-period supplemental payments; normalized growth was 2.8% (3.2% same-facility), with New York Medicaid program changes on Pennsylvania facilities cutting same-facility growth by about 1 point.
- Adjusted EBITDA absorbed a $28.6 million actuarial increase to professional and general liability (PLGL) reserves -- largely offsetting a $26.1 million Florida supplemental-payment benefit -- for a net $2.5 million negative impact versus guidance, driven by higher case severity on certain 2025 policy-year claims.
- Full-year PLGL costs are now trending toward $130-$135 million (versus the prior $100-$110 million range) once the prior-year adjustment is added, though the current-year forecast was unchanged.
- CTC (opioid treatment) revenue was flat year-over-year and slightly behind expectations despite opening six clinics year-to-date, reflecting softer methadone-market demand trends.
- Same-facility revenue per patient day declined 0.8%, and revenue growth lagged the stronger 6%+ same-facility admission growth due to a mix shift toward shorter-stay acute admissions.
- The de novo pipeline is thinning -- no new de novo or JV project is scheduled to begin in Q4 2026 or early 2027 -- and government investigation costs, while lower, remain hard to forecast.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2026 | $3.4B-$3.45B |
| Adjusted EBITDA | FY2026 | $590M-$615M |
| Adjusted EPS | FY2026 | $1.45-$1.60 |
| Operating cash flow | FY2026 | $350M-$400M |
| Capital expenditures | FY2026 | $235M-$255M ($120M-$140M in H2), revised down on capital discipline and timing |
| Bed additions | FY2026 | 500-600 beds on track (300+ added in H1; de novo near Jacksonville, FL in Q3) |
| New-facility cohort EBITDA | vs 2025 | $200M incremental reaffirmed, with high confidence |
| Supplemental payment upside | FY2026 | Florida and Ohio 2026-program-year reviews could add more than $20M incremental EBITDA if approved (only a $5M Florida baseline is in Q3) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | Flat at $866M (+2.8% normalized) | Prior-year included $48.7M of Tennessee supplemental payments; this year included $22.3M of Florida supplemental payments; New York Medicaid changes cut same-facility growth ~1 point. |
| Acute revenue | Flat at $495M (+6% normalized) | Strong volume and admissions growth from existing and new JV/de novo facilities, masked by prior-period supplemental payments. |
| Specialty revenue | $134M (+4% sequential) | Absorbed a full quarter of the New York Medicaid decision; team building referral sources in Pennsylvania and other states. |
| RTC revenue | +12% to $97M | Solid volume growth plus growth in revenue per day from prior-year capacity expansions. |
| CTC revenue | Flat at $141M | Steady demand but slightly behind expectations; six new clinics opened year-to-date. |
| Adjusted EBITDA | $149.2M | Included a $26.1M Florida supplemental benefit offset by a $28.6M PLGL reserve increase (net -$2.5M vs guidance); same-facility adjusted EBITDA of $200.9M. |
| Free cash flow | $124M | $162M operating cash flow less $39M capex; supported $113M of debt repayment and improved AR days to 49. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Operational turnaround under returning CEO | Managed-care, litigation, and JV-pacing challenges over prior years | Six months into Debbie Osteen's return, a 'back to basics' focus on an experienced operations team, flattened acute-service-line structure, removed middle-management layer, new dashboards, and faster licensing/accreditation/payer contracting (approval timelines cut in half) is driving cohort outperformance. | — |
| New-facility cohort ramp | Slower, sometimes delayed ramps in 2025 | 2023-2026 cohorts outperformed startup targets two quarters running; example Coachella Valley (2024 de novo) is above 90% occupancy and considering bed additions; management reaffirmed $200M of incremental EBITDA versus 2025. | — |
| Professional and general liability reserves | Multi-year PLGL step-ups; 2025 broad frequency-driven adjustment | A proactively added mid-year actuarial review drove a $28.6M adjustment on higher severity of specific 2025 policy-year claims moving toward settlement; full-year PLGL now ~$130-$135M, with current-year forecast unchanged. | — |
| Capacity growth over new de novos | Pipeline of de novo/JV projects | With one de novo left in 2026 (Jacksonville) and no new de novo/JV starting in Q4 or early 2027, the best return on capital is adding beds at existing facilities above ~75% occupancy that are turning away patients; capex guidance was reduced accordingly. | — |
| Payer relationships and revenue cycle | Friction and denials pressure with payers | Relationships described as generally strong and market-specific; a three-pronged revenue-cycle approach stabilized bad debts/denials sequentially, cut the year-over-year bad-debt headwind to $7M from $9M, and improved AR days to 49; rate increases running low-to-mid single digits. | — |
| Medicaid work requirements | — | Management expects no material impact from January work requirements (which apply only to Medicaid-expansion states), believing behavioral-health and substance-use patients will qualify for the exemptions provided for severe mental illness and substance use. | — |
Q&A Summary
Brian Tanquilut (Jefferies) asked for qualitative evidence supporting confidence in the $200 million cohort EBITDA ramp, and separately what drove the raised EBITDA and cash-flow guidance and lower capex.
Osteen cited cohort revenue, volume, and facility-level EBITDA ahead of expectations (e.g., Coachella Valley above 90% occupancy, now weighing bed additions). Duckworth attributed the raised free-cash-flow outlook to strong core performance, better working capital (AR days down to 49), lower cash interest, and a disciplined, detailed review of capital projects, with some Q2 capex simply timing.
A.J. Rice (UBS) asked where Osteen has made progress on prior challenges (managed care, litigation, JV pacing) and about the labor environment.
Osteen emphasized 'back to basics' -- a strong operations team, cohort ramps exceeding expectations, better referral relationships with demonstrable outcomes, new dashboards, and disciplined expense/staffing management. Duckworth described a stable, positive labor environment with strong recruiting/retention and wage growth around 3%, and Osteen noted JV partners often transfer existing hospital-unit staff to new facilities.
Whit Mayo (Leerink) probed whether the PLGL adjustment reflects changed claim frequency or severity, whether it is one-time, and how to get comfortable there won't be more.
Duckworth attributed the $28.6M adjustment to higher case severity on specific 2025 claims moving toward settlement (versus last year's broader frequency-driven adjustment), consistent with the industry litigation environment; the current-year forecast was unchanged, but full-year PLGL now trends to $130-$135M and he would not predict future adjustments beyond citing strong risk-management programs.
Pito Chickering (Deutsche Bank) asked about CTC revenue softness and the specific initiatives behind stronger 2026 de novo ramps.
Duckworth said CTC demand remains steady but performed slightly behind expectations, with selective clinic additions ahead. Osteen credited people and structure -- reviewing talent, flattening the acute service line, removing a middle-management layer, improving JV alignment/communication, cutting approval timelines in half, and accelerating payer contracting -- for the faster ramps.
Ann Hynes (Mizuho) asked why 3.2% normalized same-facility revenue growth lagged 6%+ same-facility admission growth.
Duckworth explained it as a service-mix effect: bed additions are heavily weighted to acute, which carries much higher admission counts given shorter stays than RTC and specialty, so admissions outpace revenue -- a dynamic expected to continue as acute remains a heavier mix.
More on Acadia Healthcare Company, Inc.
Reported 2026-07-29 · figures from the Acadia Healthcare Company, Inc. Q2 2026 earnings call.
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