Behavioral health company Acadia Healthcare (NASDAQ: ACHC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 6.1% year on year to $821.5 million. Guidance for next quarter’s revenue was optimistic at $825 million at the midpoint, 2.6% above analysts’ estimates. Its non-GAAP profit of $0.07 per share was significantly above analysts’ consensus estimates.

Is now the time to buy Acadia Healthcare? Find out by accessing our full research report, it’s free.

“Our results for the fourth quarter reflect improved volume growth with year-over-year revenue growth of 6%,” said Debbie Osteen, Chief Executive Officer of Acadia.

Company Overview

With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Acadia Healthcare’s sales grew at a decent 9.7% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Acadia Healthcare’s recent performance shows its demand has slowed as its annualized revenue growth of 6.4% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can dig further into the company’s revenue dynamics by analyzing its number of admissions, which reached 52,170 in the latest quarter. Over the last two years, Acadia Healthcare’s admissions averaged 3.1% year-on-year growth. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Acadia Healthcare reported year-on-year revenue growth of 6.1%, and its $821.5 million of revenue exceeded Wall Street’s estimates by 2.8%. Company management is currently guiding for a 7.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.5% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Acadia Healthcare was profitable over the last five years but held back by its large cost base. Its average operating margin of 2.4% was weak for a healthcare business.

Looking at the trend in its profitability, Acadia Healthcare’s operating margin decreased by 44.4 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 31.1 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q4, Acadia Healthcare generated an operating margin profit margin of negative 142%, down 151.1 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Acadia Healthcare, its EPS declined by 6.1% annually over the last five years while its revenue grew by 9.7%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Acadia Healthcare’s earnings to better understand the drivers of its performance. As we mentioned earlier, Acadia Healthcare’s operating margin declined by 44.4 percentage points over the last five years. Its share count also grew by 1.4%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q4, Acadia Healthcare reported adjusted EPS of $0.07, down from $0.64 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Acadia Healthcare’s full-year EPS of $2.02 to shrink by 14.6%.

Key Takeaways from Acadia Healthcare’s Q4 Results

It was good to see Acadia Healthcare beat analysts’ EPS expectations this quarter. We were also glad its EBITDA guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its full-year EBITDA guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 10.8% to $19.02 immediately after reporting.

Sure, Acadia Healthcare had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).