2023-04-20 08:18:15 ET
- Shares of Acadia Healthcare ( NASDAQ: ACHC ) trended lower pre-market Thursday after Deutsche Bank downgraded the mental health operator to Sell from Hold, citing concerns about the outlook for its comprehensive treatment center (CTC) business.
- The conclusion is based on multiple macro factors, which according to the firm, will change the CTC's 10% growth momentum to a lower growth amid several industry-specific risks, such as Medicaid redeterminations and declining opioid patients.
- The analyst also questions the sustainability of ~40% Medicaid margins and cites the impact of the Mainstream Addiction Treatment Act (MAT Act), which removes the X-Waiver requirement for opioid treatment.
- Despite management expertise and unclear timing of these headwinds, "we believe investors need to underwrite ACHC's growth with the short-term risk from Medicaid redetermination as well as the longer tail risk from the MAT Act and the drag that could have on ACHC's CTC business."
- Read: Seeking Alpha analyst Zach Bristow reaffirmed his Buy rating on Acadia ( ACHC ) in February at a $94 price target.
For further details see:
Acadia cut to Sell at Deutsche Bank on headwinds to CTC business