Acadia Healthcare CFO Details 2026 Focus: Bed Ramp-Ups, Medicaid Headwinds, and Malpractice Costs

Acadia Healthcare (NASDAQ:ACHC) Chief Financial Officer Todd Young, who joined the company about four months ago, outlined management’s focus areas for 2026 during a conference discussion that touched on facility ramp-ups, organizational changes, payer dynamics, and litigation and malpractice costs.

Leadership transition and operational priorities

Young said the company’s market positioning remains strong, pointing to sustained demand for behavioral health services and a diversified portfolio spanning acute inpatient, specialty inpatient, residential, and outpatient services, including its opioid treatment center (CTC) business.

He also highlighted enthusiasm within the organization after Debbie Osteen returned as CEO in January, citing her operating background and familiarity with Acadia’s facilities. Young described an opportunity to drive growth from beds that have come online over the past few years without requiring as much incremental capital, but he emphasized the need to improve execution.

According to Young, management is focused on ensuring the “right people” are in key roles across hospital leadership and divisional management, and on making accountability for decision-making clearer—particularly around new facilities and joint venture (JV) facilities. He said Osteen’s prior experience with the company could accelerate decisions about organizational structure and staffing layers, aided by improved quality data streams and dashboards.

New facilities, ramp timelines, and closures

Young addressed the company’s recent experience with de novo facility performance, attributing underperformance to a combination of factors, including expectations that proved too aggressive, timing mismatches that drove staffing and fixed-cost ramp ahead of volume, and slower-than-expected licensure processes. He noted that bringing on acute beds often requires steps such as Medicare tie-in numbers and other approvals in order to serve involuntary Medicaid patients, and some of those processes have taken longer than historical norms.

On facility closures, Young said the company believes it is largely through the bulk of the recent closure activity, and management’s focus is on filling existing beds rather than shutting locations. He said Acadia does not expect additional closures beyond those previously discussed on its earnings call. He referenced:

• A consolidation of two leased facilities in Pennsylvania tied to a New York Medicaid decision and expiring leases, shifting operations into larger facilities for efficiency.
• One previously announced closure that became official in January.

Young said Acadia would still close a facility if it is not financially viable, but described the current priority as improving operations and occupancy, particularly because adding new beds has become more expensive given construction cost inflation.

Guidance assumptions: New beds, startup losses, and embedded earnings opportunity

Young discussed the company’s near-term startup dynamics, noting several large facilities coming online, including ECU Health (which he said was 166 beds and opened Dec. 10), Tufts (opened recently during a snowstorm in Boston), and Orlando Health as the next opening. He said guidance assumptions were built using recent history to remain “reflective,” while management aims to ramp faster through urgency on documentation and Joint Commission surveys.

He also noted that Tufts opened initially with 24 beds and is expected to add capacity on a unit-by-unit basis over time.

On bed growth, Young pointed to previously provided guidance of 400 to 600 total beds, which includes expansion beds, and he said the company expects to continue emphasizing efficient expansions at existing facilities—often adding beds where fixed infrastructure and referral sources are already in place. He suggested that this approach would be more of a focus in the 2027–2028 timeframe than launching new facilities, given the number of newer facilities that still need to be filled.

Young reiterated management’s view that there is meaningful earnings potential embedded in recently added capacity. He said Acadia has about 3,000 beds brought on between 2023 and 2026, primarily acute beds, and reiterated that the company has said facilities typically reach target performance “inside 5 years.” He described active monitoring of underperforming facilities and said JV partners are a major area of focus, including analyzing referral volumes from partner hospitals and working to replicate best-in-class partner performance across the JV portfolio.

New York Medicaid headwind and backfilling plans

Young discussed a previously cited headwind tied to New York Medicaid, described in the conversation as $25 million to $30 million. He said the impact estimate is based on a conservative assumption that Acadia would lose all historically received out-of-state New York patients, with associated revenue removed, along with associated variable expenses tied to higher occupancy.

He said Acadia intends to backfill those beds and noted that the company received approval from New Jersey Medicaid to be within that system, enabling it to take Medicaid patients from New Jersey. He added that the company is also looking to backfill through greater Pennsylvania, given facility locations.

Malpractice trends, reserves, and payer environment

Young provided detail on professional liability and general liability (PLGL) expense, explaining it includes both insurance premiums and self-insured costs. He said the insurance market has changed materially, describing a shift from approximately $3 million of self-insurance in 2022 before insurance coverage applies, to $15 million today, and added that for certain sexual assault claims, cost sharing can extend above $25 million.

Young said PLGL expense increased by $61 million in 2025, driven by two main factors: the need to increase reserves for certain historic claims (about $18 million, which he said is not expected to repeat in 2026) and a sharp rise in claim volume. He said claims were up 186% last year after being relatively stable for three to four years, and that 2026 assumptions keep claim volume at that elevated level rather than assuming reversion to prior norms.

Young said he now meets monthly with the legal team to track incoming claims and settlements relative to actuarial estimates, and that actual results were in line with guidance assumptions at the time of the discussion. He said the company’s balance sheet reserve increased to $155 million from $78 million the prior year, and noted that many of the adjustments were non-cash, with most of the higher claim volume expected to play out over a two- to seven-year timeframe. He also said Acadia plans to review actuarial assumptions at least twice per year.

On managed Medicaid, Young said payer behavior varies, and he echoed Osteen’s view that the company is seeing industry cycles similar to prior periods. He noted bad debt increased last year and said the company is assuming stability rather than significant improvement in 2026. He also said the company is focused on documentation and advocacy, while using improved industry rate data to support payer negotiations at both corporate and facility levels.

Turning to capital allocation, Young said Acadia’s leverage is about 4x and expected to remain in that general range in 2026, which he said is higher than management and investors would prefer. He said the company’s priority is debt paydown rather than share repurchases, even with an existing buyback authorization. Young added that planned capital expenditures are expected to decline materially in 2026, supporting expectations for free cash flow positivity, and said CapEx could step down further in 2027 given the lack of a major de novo build plan at present.

About Acadia Healthcare (NASDAQ:ACHC)

Acadia Healthcare Company, Inc (NASDAQ: ACHC) is a publicly traded provider of behavioral healthcare services headquartered in Franklin, Tennessee. Founded in 2005, the company has grown through organic expansion and strategic acquisitions to establish itself as a leading specialist in mental health and addiction treatment across the United States.

Acadia operates a diversified network of inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and intensive outpatient programs.