Acadia & Ochsner Form Partnership, Announce New Facility

Acadia Healthcare (NASDAQ:ACHC) , a provider of inpatient behavioral healthcare services, recently announced a strategic partnership with Ochsner Health System – the largest non-profit, academic, multi-specialty and healthcare delivery system in southeast Louisiana.

Under the alliance, Acadia will set up an 82-bed acute psychiatric hospital, scheduled to open in 2018. Notably, the facility will be based in LaPlace, LA, and will provide care to potential patients in the greater New Orleans metropolitan area that has a ‘a radically under-bedded market’.

Notably, Acadia will provide the funds required for the reconstruction of facility and manage day-to-day work at the place.

Benefiting from this agreement, Acadia is expected expand its networks by foraying into the unidentified inpatient psychiatric care markets in the U.S., apart from New Orleans.

Meanwhile, we note that Acadia has been on an acquisition spree in the recent past that includes the notable takeover of Priory Group for $2.2 billion and four other acquisitions adding approximately 240 beds.

Additionally, in its existing facilities Acadia added 125 new beds in the U.S. and U.K. and opened de novo facility with 60 new beds, in the last reported quarter.

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Our Take

In our view, Acadia diversifies its core business through the acquisition and creation of new facilities. In this regard we note that Acadia registered a year-over-year surge of 8.5% in U.S. same facility revenues in second-quarter fiscal 2016.

A glimpse at the share price movements reveal that Acadia inched up 0.4% to close at $51.83 following the news. Meanwhile, the company is also on a rise with its exclusive and highly sensitive youth suicide awareness programs, in partnership with The Jason Foundation.

We believe all these developments, coupled with the recent agreement with Ochsner, will significantly enhance Acadia’s growth trajectory in the coming quarters.

Zacks Rank & Key Picks

Currently, Acadia has a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader medical sector include IDEXX Laboratories Inc. (NASDAQ:IDXX) , Masimo Corporation (NASDAQ:MASI) and NuVasive Inc. (NASDAQ:NUVA) . Notably, all the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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