|Addiction Treatment Industry Newswire|
|10/30/2014 -ATIN – The landscape of the addiction treatment marketplace has been turned upside down as Acadia Healthcare, the Joey Jacobs led mental health and addictions company he started as his vehicle for acquiring assets and growing quickly, bought CRC Health Group in a deal that is among the most significant ever to hit the national addictions space. In one fell swoop, Jacobs has acquired properties that places him in a leading position in the addictions space as lately his deals had placed him more on the mental health side of things. Jacobs is the legendary founder of Psychiatric Solutions which he sold to Universal Health Services and cemented his reputation as the leading entrepreneur in the behavioral health space; the UHS deal being very successful and made money for a lot of investors who had bought Psychiatric Solutions stock.
Acadia Buys CRC
The CRC deal announcement was part of Acadia’s third quarter earnings, which skyrocketed largely as a result of acquisition activity but also significant organic growth of nearly 10 percent for Acadia. The fact that CRC was attractive to Jacobs and Acadia speaks volumes about how CRC has overcome some major problems and is now on an operational path that is much more stable and growth oriented. Long-time CRC operations guys like Jerry Rhodes have been raised to senior leadership positions, with Rhodes now leading the company as CEO and turnaround specialists like Andy Eckert moved up to governance positions as board chief. Acadia said in a press release late Wednesday that it estimated the deal for CRC to be worth $1.175B in an all stock transaction, with Acadia giving 6.3M shares of Acadia stock and assuming all of CRC’s debt. CRC had approximately $450M of annual revenue, which when added to Acadia’s approximate $709M of revenue in the first nine months of 2014 shows that CRC will have a major impact on Acadia operations right after Acadia acquired significant assets in the UK. Said Jacobs in a prepared statement: “Acadia achieved very strong profitable growth for the third quarter of 2014, as both our organic and acquisition growth strategies produced strong results.”
Bain Still Tied Significantly to Behavioral Health
By accepting Acadia stock as consideration for CRC, Bain Capital cannot be said to have exited the behavioral health space. And in fact Jacobs and Acadia describe CRC as the largest specialty behavioral health services company in the United States. Acadia said that CRC will contribute 36 residential facilities and 84 “comprehensive” treatment facilities, which are the opiate centers that previously contributed far more to CRC’s results on a percentage basis than today. To put the size of the CRC deal in perspective, Acadia said it completed five transactions in the year ended Sept 30, 2014 that brought just 27 facilities with them in total but a very large number of licensed beds, 1,500. There were 410 new beds added to Acadia’s existing facilities during the period.
Acadia Stock Soars on High Volume
Bain has already done well, with Acadia Healthcare stock soaring more than 10 percent today on the Nasdaq stock exchange. What is key here is that by mid-morning Acadia trading volume is already almost double the average trading volume for a single trading day, over 550,000 shares traded, whereas American Addiction Centers, AAC, share trading volume on the NYSE has been low since the company went public in an IPO that was priced above the expected range showing that investor interest in addiction treatment remains high. AAC shares did not get a lift today from the CRC announcement, but is still trading very significantly higher than the AAC IPO price of $15 a share at over $21 a share.
Top Photo: Joey Jacobs is in the center cheering the taking of Psychiatric Solutions public ….
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