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Acadia Healthcare Updates PLGL Reserves Following Annual Actuarial Review, Lowers 2025 Guidance
Adjusted EBITDA Guidance Reduced by $49M and EPS by $0.41, Driven Entirely by an Increase in Professional and General Liability Expenses FRANKLIN,
About this update from Acadia Healthcare Company, Inc.
[{"type":"text","content":"\nAdjusted EBITDA Guidance Reduced by $49M and EPS by $0.41, Driven Entirely by an Increase in Professional and General Liability Expenses\n\n FRANKLIN, Tenn.--(BUSINESS WIRE)--\nAcadia Healthcare Company, Inc. (“Acadia” or the “Company”) (NASDAQ: ACHC) today announced an update to its professional and general liability (“PLGL”) reserves, following its annual, third-party actuarial review of anticipated PLGL costs. This update reflects higher expected expenses associated primarily with patient-related litigation.\n\nAs a result, the Company now expects full-year 2025 Adjusted EBITDA in the range of $601 million to $611 million, compared to its prior guidance of $650 million to $660 million, reflecting an incremental $49 million of PLGL expense identified in the final actuarial report. Adjusted earnings per share guidance has also been revised to $1.94 to $2.04, down from the previous range of $2.35 to $2.45.\n\n“As noted on our November 6, 2025, earnings call, we anticipated additional PLGL pressure in 2025 due to trends observed across our industry; however, the magnitude identified in the final actuarial report exceeded our expectations,” said Todd Young, Chief Financial Officer of Acadia.\n\nPLGL Expense\n\nThe Company now projects 2025 PLGL expense of approximately $116 million, compared to $54 million in 2024, representing a year-over-year increase of approximately $62 million.\n\nConsistent with broader industry trends, this increase is primarily driven by:\n\n\nHigher expected settlement costs for claims related to policy years prior to September 1, 2024;\n\n\nA 168% increase in claim frequency during the 2025 policy year (September 1, 2024, to August 31, 2025) versus the 2024 policy year;\n\n\nElevated incurred-but-not-reported (“IBNR”) reserves, reflecting the increased claims activity; and\n\n\nLess favorable reinsurance coverage terms versus prior years.\n\n\nBased on current trends, the Company has assumed that the number of claims for the 2026 policy year (September 1, 2025, through August 31, 2026) will remain at roughly the same level as the 2025 policy year.\n\nAcadia expects its net PLGL liability at year-end 2025 to increase significantly from the $78 million it had on its balance sheet on December 31, 2024, to $145 million to $165 million on December 31, 2025. For 2026, PLGL expense is expected to range betwee...