Impact of State Reimbursement Rate Increases for 2026
Illinois finalized a 3.9% rate increase to $30.80/hour, effective January 1, 2026, adding approximately $17.5 million in annualized revenue with low 20% margins.
Texas finalized a 9.9% rate increase to $17.13/hour, effective September 1, 2025, adding approximately $17.7 million in annualized revenue with margins just over 20%.
Both increases are subject to federal approval and are expected to positively impact revenue and margins in 2026.
Impact of New Medicaid Legislation and State Programs on Revenue
The passing of the One Big Beautiful Bill Act introduces potential reductions in Medicaid supplemental payments starting in fiscal 2028, affecting over half of the company's projected $230 million revenue from existing programs.
Management believes the provisions of the bill are manageable due to carve-outs from work requirements and extended implementation timelines for Medicaid changes.
The company expects a $40 million to $45 million recurring benefit from the Tennessee Directed Payment Program, which underscores the importance of state-level behavioral health investments.
Despite potential reductions, Acadia anticipates offsetting some revenue loss through reductions in provider taxes paid in states with Medicaid payment adjustments.
The legislation's impact on Medicaid volumes is expected to be limited in the short term due to exemptions for populations with chronic substance use and complex medical conditions.
Management remains committed to partnerships that recognize the long-term cost savings of integrated behavioral and physical health care.
Adjusted EBITDA increased by 59% year-over-year on an underlying basis to $50.8 million.
Adjusted net income grew approximately 85% year-over-year on an underlying basis, reaching $36 million.
Approximately $15 million of common stock was repurchased under the authorized $500 million share repurchase program.
Free cash flow was robust despite a $19.3 million strategic inventory build to support ASCENIV demand, ending the quarter with $90.3 million in cash.
GAAP net income was $34.2 million.
Gross profit rose to $67.2 million with gross margins improving to 55.1%, a 7.7% expansion on an underlying basis.
Total revenues for Q2 2025 reached $122 million, representing a 14% year-over-year increase or approximately 29% growth on an underlying basis excluding a nonrecurring Medicaid rebate accrual reversal from 2024.
Acquired 1.9 million shares at a cost of approximately $332 million in the first half of 2025, repurchasing about 34% of outstanding shares since 2019.
Available borrowing capacity was approximately $1 billion under a $1.3 billion revolving credit facility as of June 30, 2025.
Behavioral health hospitals' same-facility net revenues increased 5.4% excluding Tennessee Medicaid directed payment program, driven by 4.2% revenue per adjusted day increase and 1.2% adjusted patient days growth.
Capital expenditures were $505 million in the first half of 2025, with 25% related to two new/replacement facilities opening in spring 2026.
Cash generated from operating activities decreased by $167 million to $909 million in the first half of 2025 compared to the same period in 2024.
Net income attributable to UHS per diluted share was $5.43 for Q2 2025, with adjusted net income per diluted share at $5.35 after adjustments.
Operating expenses on a same-facility basis increased 3.1% excluding insurance subsidiary impact.
Same-facility adjusted admissions to acute care hospitals increased 2.0% year-over-year, while surgical volumes declined slightly.
Same-facility EBITDA in acute care hospitals increased by 10% due to solid revenues and expense controls.
Same-facility net revenues in acute care hospitals increased 5.7% excluding insurance subsidiary impact.
Impact of the One Beautiful Bill Act on Medicaid Payments and Future Revenue
The legislation includes significant changes to Medicaid, including limits on payments and provider taxes starting in 2028, phased in over five years through 2032.
Projected 2025 net benefit from Medicaid programs is approximately $1.2 billion, with an estimated reduction of $360-$400 million annually from 2028 to 2032.
Uncertainty remains around implementation and state responses, with some states still seeking approval and potential for new programs despite the bill.
Dafinchi
