Intrinsic value of Acadia Healthcare Company, Inc. - ACHC

Previous Close

$34.72

  Intrinsic Value

$35.28

stock screener

  Rating & Target

hold

+2%

Previous close

$34.72

 
Intrinsic value

$35.28

 
Up/down potential

+2%

 
Rating

hold

We calculate the intrinsic value of ACHC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  3,090
  3,178
  3,275
  3,382
  3,497
  3,623
  3,758
  3,902
  4,057
  4,222
  4,398
  4,585
  4,783
  4,993
  5,215
  5,450
  5,699
  5,961
  6,237
  6,529
  6,836
  7,160
  7,501
  7,860
  8,238
  8,636
  9,055
  9,495
  9,958
  10,444
Variable operating expenses, $m
  2,631
  2,697
  2,770
  2,850
  2,937
  3,031
  3,132
  3,241
  3,357
  3,481
  3,302
  3,442
  3,591
  3,749
  3,916
  4,092
  4,279
  4,475
  4,683
  4,902
  5,133
  5,376
  5,632
  5,902
  6,186
  6,484
  6,798
  7,129
  7,476
  7,842
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,631
  2,697
  2,770
  2,850
  2,937
  3,031
  3,132
  3,241
  3,357
  3,481
  3,302
  3,442
  3,591
  3,749
  3,916
  4,092
  4,279
  4,475
  4,683
  4,902
  5,133
  5,376
  5,632
  5,902
  6,186
  6,484
  6,798
  7,129
  7,476
  7,842
Operating income, $m
  459
  481
  505
  532
  561
  592
  626
  662
  700
  741
  1,096
  1,143
  1,192
  1,244
  1,300
  1,358
  1,420
  1,485
  1,554
  1,627
  1,704
  1,784
  1,869
  1,959
  2,053
  2,152
  2,256
  2,366
  2,481
  2,603
EBITDA, $m
  921
  947
  976
  1,008
  1,042
  1,080
  1,120
  1,163
  1,209
  1,258
  1,311
  1,366
  1,425
  1,488
  1,554
  1,624
  1,698
  1,776
  1,859
  1,946
  2,037
  2,134
  2,235
  2,342
  2,455
  2,573
  2,698
  2,829
  2,967
  3,112
Interest expense (income), $m
  161
  185
  191
  197
  205
  213
  221
  230
  240
  251
  262
  275
  288
  302
  316
  332
  348
  365
  384
  403
  424
  445
  468
  492
  517
  544
  572
  601
  632
  664
  699
Earnings before tax, $m
  274
  290
  308
  327
  348
  371
  395
  421
  449
  479
  821
  855
  890
  928
  968
  1,010
  1,055
  1,102
  1,151
  1,203
  1,258
  1,316
  1,377
  1,442
  1,509
  1,580
  1,655
  1,734
  1,817
  1,904
Tax expense, $m
  74
  78
  83
  88
  94
  100
  107
  114
  121
  129
  222
  231
  240
  251
  261
  273
  285
  297
  311
  325
  340
  355
  372
  389
  408
  427
  447
  468
  491
  514
Net income, $m
  200
  212
  225
  239
  254
  271
  289
  308
  328
  350
  600
  624
  650
  677
  707
  737
  770
  804
  840
  878
  919
  961
  1,005
  1,052
  1,102
  1,154
  1,208
  1,266
  1,326
  1,390

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,333
  6,512
  6,711
  6,930
  7,167
  7,424
  7,700
  7,997
  8,314
  8,653
  9,013
  9,395
  9,802
  10,232
  10,687
  11,169
  11,678
  12,215
  12,781
  13,379
  14,009
  14,673
  15,372
  16,108
  16,882
  17,697
  18,555
  19,456
  20,405
  21,402
Adjusted assets (=assets-cash), $m
  6,333
  6,512
  6,711
  6,930
  7,167
  7,424
  7,700
  7,997
  8,314
  8,653
  9,013
  9,395
  9,802
  10,232
  10,687
  11,169
  11,678
  12,215
  12,781
  13,379
  14,009
  14,673
  15,372
  16,108
  16,882
  17,697
  18,555
  19,456
  20,405
  21,402
Revenue / Adjusted assets
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
Average production assets, $m
  4,524
  4,653
  4,795
  4,951
  5,120
  5,304
  5,501
  5,713
  5,940
  6,182
  6,439
  6,712
  7,003
  7,310
  7,635
  7,979
  8,343
  8,727
  9,132
  9,558
  10,009
  10,483
  10,982
  11,508
  12,061
  12,643
  13,256
  13,900
  14,578
  15,290
Working capital, $m
  19
  19
  20
  20
  21
  22
  23
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
Total debt, $m
  3,293
  3,405
  3,529
  3,665
  3,812
  3,972
  4,144
  4,328
  4,526
  4,736
  4,960
  5,198
  5,451
  5,719
  6,002
  6,301
  6,618
  6,952
  7,304
  7,676
  8,068
  8,481
  8,915
  9,373
  9,855
  10,362
  10,895
  11,456
  12,046
  12,666
Total liabilities, $m
  3,939
  4,051
  4,175
  4,310
  4,458
  4,618
  4,790
  4,974
  5,171
  5,382
  5,606
  5,844
  6,097
  6,364
  6,647
  6,947
  7,263
  7,598
  7,950
  8,322
  8,714
  9,126
  9,561
  10,019
  10,501
  11,008
  11,541
  12,102
  12,692
  13,312
Total equity, $m
  2,394
  2,462
  2,537
  2,619
  2,709
  2,806
  2,911
  3,023
  3,143
  3,271
  3,407
  3,551
  3,705
  3,868
  4,040
  4,222
  4,414
  4,617
  4,831
  5,057
  5,295
  5,546
  5,810
  6,089
  6,381
  6,690
  7,014
  7,355
  7,713
  8,090
Total liabilities and equity, $m
  6,333
  6,513
  6,712
  6,929
  7,167
  7,424
  7,701
  7,997
  8,314
  8,653
  9,013
  9,395
  9,802
  10,232
  10,687
  11,169
  11,677
  12,215
  12,781
  13,379
  14,009
  14,672
  15,371
  16,108
  16,882
  17,698
  18,555
  19,457
  20,405
  21,402
Debt-to-equity ratio
  1.380
  1.380
  1.390
  1.400
  1.410
  1.420
  1.420
  1.430
  1.440
  1.450
  1.460
  1.460
  1.470
  1.480
  1.490
  1.490
  1.500
  1.510
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.550
  1.550
  1.560
  1.560
  1.570
Adjusted equity ratio
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  200
  212
  225
  239
  254
  271
  289
  308
  328
  350
  600
  624
  650
  677
  707
  737
  770
  804
  840
  878
  919
  961
  1,005
  1,052
  1,102
  1,154
  1,208
  1,266
  1,326
  1,390
Depreciation, amort., depletion, $m
  462
  466
  471
  476
  481
  488
  494
  501
  509
  517
  215
  224
  233
  244
  255
  266
  278
  291
  304
  319
  334
  349
  366
  384
  402
  421
  442
  463
  486
  510
Funds from operations, $m
  662
  678
  695
  715
  736
  758
  783
  809
  837
  866
  814
  848
  883
  921
  961
  1,003
  1,048
  1,095
  1,145
  1,197
  1,252
  1,310
  1,372
  1,436
  1,504
  1,575
  1,650
  1,729
  1,812
  1,900
Change in working capital, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Cash from operations, $m
  661
  677
  695
  714
  735
  758
  782
  808
  836
  865
  813
  847
  882
  920
  960
  1,002
  1,046
  1,093
  1,143
  1,195
  1,250
  1,308
  1,369
  1,434
  1,502
  1,573
  1,648
  1,727
  1,809
  1,897
Maintenance CAPEX, $m
  -147
  -151
  -155
  -160
  -165
  -171
  -177
  -183
  -190
  -198
  -206
  -215
  -224
  -233
  -244
  -255
  -266
  -278
  -291
  -304
  -319
  -334
  -349
  -366
  -384
  -402
  -421
  -442
  -463
  -486
New CAPEX, $m
  -115
  -128
  -142
  -156
  -170
  -183
  -198
  -212
  -227
  -242
  -257
  -273
  -290
  -307
  -325
  -344
  -363
  -384
  -405
  -427
  -450
  -474
  -499
  -526
  -553
  -582
  -613
  -644
  -678
  -712
Cash from investing activities, $m
  -262
  -279
  -297
  -316
  -335
  -354
  -375
  -395
  -417
  -440
  -463
  -488
  -514
  -540
  -569
  -599
  -629
  -662
  -696
  -731
  -769
  -808
  -848
  -892
  -937
  -984
  -1,034
  -1,086
  -1,141
  -1,198
Free cash flow, $m
  399
  398
  397
  398
  400
  403
  408
  413
  419
  426
  350
  359
  368
  379
  391
  403
  417
  432
  447
  464
  482
  501
  521
  542
  565
  588
  614
  640
  669
  698
Issuance/(repayment) of debt, $m
  100
  112
  124
  136
  148
  160
  172
  184
  197
  210
  224
  238
  253
  268
  283
  300
  316
  334
  353
  372
  392
  413
  435
  458
  482
  507
  533
  561
  590
  620
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  100
  112
  124
  136
  148
  160
  172
  184
  197
  210
  224
  238
  253
  268
  283
  300
  316
  334
  353
  372
  392
  413
  435
  458
  482
  507
  533
  561
  590
  620
Total cash flow (excl. dividends), $m
  499
  510
  521
  534
  548
  563
  580
  597
  616
  636
  574
  597
  621
  647
  674
  703
  733
  766
  800
  836
  874
  913
  955
  1,000
  1,046
  1,095
  1,147
  1,201
  1,258
  1,318
Retained Cash Flow (-), $m
  -60
  -68
  -75
  -82
  -90
  -97
  -105
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -172
  -182
  -192
  -203
  -214
  -226
  -238
  -251
  -264
  -278
  -293
  -308
  -324
  -341
  -358
  -377
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  438
  442
  446
  452
  458
  466
  475
  485
  496
  508
  438
  452
  467
  484
  502
  521
  541
  563
  586
  610
  635
  663
  691
  722
  754
  787
  823
  860
  900
  942
Discount rate, %
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
  402
  369
  337
  305
  274
  244
  216
  189
  163
  139
  99
  83
  68
  55
  44
  34
  26
  20
  15
  11
  7
  5
  3
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Acadia Healthcare Company, Inc. is a provider of behavioral healthcare services, with operations in the United States and the United Kingdom. The Company focuses on acquiring and developing behavioral healthcare facilities. The Company operates through two segments: U.S. Facilities and U.K. Facilities. The Company is engaged in operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As of December 31, 2016, the U.S. Facilities segment included 208 behavioral healthcare facilities with approximately 8,500 beds in 39 states and Puerto Rico, and the U.K. Facilities segment included 365 behavioral healthcare facilities with approximately 8,600 beds in the United Kingdom. As of December 31, 2016, the Company had operated 573 behavioral healthcare facilities with approximately 17,100 beds in 39 states, the United Kingdom and Puerto Rico.

FINANCIAL RATIOS  of  Acadia Healthcare Company, Inc. (ACHC)

Valuation Ratios
P/E Ratio 501.6
Price to Sales 1.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 231.5
Growth Rates
Sales Growth Rate 56.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.9%
Cap. Spend. - 3 Yr. Gr. Rate 35.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 150%
Total Debt to Equity 151.7%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 0.3%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 11.7%
EBITDA Margin - 3 Yr. Avg. 16.3%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 12.9%
Pre-Tax Margin 1.2%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 87.9%
Eff/ Tax Rate - 3 Yr. Avg. 51.6%
Payout Ratio 0%

ACHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACHC stock intrinsic value calculation we used $3012 million for the last fiscal year's total revenue generated by Acadia Healthcare Company, Inc.. The default revenue input number comes from 0001 income statement of Acadia Healthcare Company, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ACHC stock valuation model: a) initial revenue growth rate of 2.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.9%, whose default value for ACHC is calculated based on our internal credit rating of Acadia Healthcare Company, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Acadia Healthcare Company, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ACHC stock the variable cost ratio is equal to 85.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ACHC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Acadia Healthcare Company, Inc..

Corporate tax rate of 27% is the nominal tax rate for Acadia Healthcare Company, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ACHC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ACHC are equal to 146.4%.

Life of production assets of 36.1 years is the average useful life of capital assets used in Acadia Healthcare Company, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ACHC is equal to 0.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2333.307 million for Acadia Healthcare Company, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 88.313 million for Acadia Healthcare Company, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Acadia Healthcare Company, Inc. at the current share price and the inputted number of shares is $3.1 billion.

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