Acadia Healthcare Rockets 12% as Activist Investor Drops the Gauntlet

Acadia Healthcare Company, Inc. ACHC shares surged 11.7% yesterday after activist investor Engine Capital revealed a 3% stake and laid out an aggressive playbook for change. From pushing for new board members and calling for asset sales to fund buybacks, to questioning the “growth at any cost” strategy, the letter was a full-throttle challenge to the company’s direction.Engine Capital argues that Acadia is deeply undervalued, with its strong cash generation and extensive real estate overshadowed by years of poor execution, bloated overhead, misguided capital spending and heavy management churn. These missteps, they contend, have undermined investor confidence and left the stock trading far below its true worth.ACHC is currently trading at a forward P/E of 8.87X, a steep discount to both its five-year median of 20.55X and the industry average of 13.55X. It carries a Value Score of A. Engine Capital believes the disconnect in valuation highlights how sharper discipline and operational improvements could unlock meaningful upside for investors. Image Source: Zacks Investment ResearchThe stock has cratered 67.5% over the past year, far worse than the industry’s 5.8% decline, with a Department of Justice probe into alleged facility misconduct further pressuring sentiment. Image Source: Zacks Investment ResearchTo reverse the slide, Engine Capital calls for a sweeping overhaul: refresh the board with directors who bring behavioral health and capital allocation expertise, realign executive pay toward free cash flow and returns, and pause aggressive expansion until the foundation is stronger. They also want the company to reinstate a regional leadership model, streamline layers of costly bureaucracy and boost collaboration across facilities. Finally, Engine Capital proposes monetizing select assets and channeling the proceeds, together with improved free cash flow, into sizeable buybacks, moves they argue would swiftly rebuild trust and close the valuation gap.In a separate release, Acadia emphasized that it maintains regular dialogue with shareholders and remains open to constructive feedback.How Are Peers Faring?Hospital operators like Tenet Healthcare Corporation THC and HCA Healthcare, Inc. HCA are benefiting from rising demand due to the growing senior population and cases of diseases.Tenet Healthcare is riding on growing patient revenue per adjusted admissions. It has been steadily gaining from USPI's performance and tuck-in acquisitions. THC also doesn't shy away from divesting its non-core and unprofitable business units. Meanwhile, HCA Healthcare banks on increasing admissions, an extensive healthcare services suite and a widespread treatment network across the country. Buyouts help it boost its portfolio and penetrate further into different geographies.In the first half of 2025, HCA bought back shares worth $5 billion and paid dividends worth $351 million.Acadia’s Estimates & Zacks RankThe Zacks Consensus Estimate for ACHC’s 2025 earnings of $2.54 per share implies a 23% decrease year over year. Image Source: Zacks Investment ResearchThe stock currently sports a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tenet Healthcare Corporation (THC): Free Stock Analysis Report HCA Healthcare, Inc. (HCA): Free Stock Analysis Report Acadia Healthcare Company, Inc. (ACHC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks