What Happened?
Shares of behavioral health company Acadia Healthcare (NASDAQ: ACHC) jumped 6% in the afternoon session after activist investor Khrom Capital Management urged the company's board to explore strategic alternatives, including a potential sale.
The investment firm, which held a 5.5% stake in the behavioral healthcare provider, sent a letter citing years of poor stock performance and governance failures. In the letter, Khrom Capital stated it believed 'credible and interested' potential buyers existed for Acadia. This action followed a similar request from another activist investor, Engine Capital, which had also asked the company to consider an asset sale and add new directors to its board. The pressure from large shareholders to explore a sale was seen as a potential way to maximize value for investors.
Is now the time to buy Acadia Healthcare? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Acadia Healthcare’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 8.3% on the news that activist investor Engine Capital disclosed it had built a roughly 3% stake in the mental health services provider and was pushing for significant changes. In a letter to Acadia's board, the activist fund called for a board refresh, a review of the company's assets, and a halt to expensive projects for new facilities. Engine Capital criticized what it described as Acadia's "growth at any cost" approach, which it claimed resulted in poor execution and a bloated corporate structure. The fund argued that the company's board lacked a single director with relevant operating experience. Engine Capital also encouraged Acadia to consider selling assets to generate cash for share repurchases, describing the company's stock as "deeply undervalued." This push for a strategic overhaul came as Acadia faced multiple federal investigations.
Acadia Healthcare is down 36.1% since the beginning of the year, and at $26.04 per share, it is trading 56.1% below its 52-week high of $59.32 from October 2024. Investors who bought $1,000 worth of Acadia Healthcare’s shares 5 years ago would now be looking at an investment worth $841.50.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
