Acadia Healthcare Stock Surges After Activist Hedge Fund Reportedly Seeks Board Revamp

Activist hedge fund Engine Capital is reportedly pushing Acadia Healthcare (ACHC) to refresh its board as it faces multiple federal investigations.

According to a report by The Financial Times, the fund holds a roughly 3% stake in Acadia and has written a letter to the company's board, requesting a review of its asset portfolio, improvements to its board of directors, and the halting of capital-intensive projects for new facilities.

Acadia provides for-profit behavioral healthcare services. It is currently facing probes from the Department of Justice and Securities and Exchange Commission over allegations of holding patients against their will and falsifying insurance claims, the report noted.

Shares of the company rose over 8% on Wednesday morning following the news. On Stocktwits, retail sentiment around ACHC stayed within the ‘bullish’ territory over the past 24 hours, while message volume stayed at ‘normal’ levels.

Tennessee-headquartered Acadia operated a network of 274 behavioral healthcare facilities, including inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers, and outpatient clinics, with approximately 12,100 beds in 39 states and Puerto Rico as of the end of June. The company estimates that it serves more than 82,000 patients daily.

As per FT, Engine Capital accused Acadia of maintaining a “growth at any cost” approach in its letter. It alleged that the approach has given rise to a bloated corporate structure and noted that a 2022 reorganisation left the company with an unwieldy management structure that has stifled the company’s turnaround.

The firm also urged the company to add new directors with experience in behavioral health and capital allocation, while noting that the current board has no director with relevant operating experience. The hedge fund also encouraged the company to consider selling its assets and repurchasing shares.

ACHC stock is down 40% this year and approximately 69% over the past 12 months. 

Read also: uniQure Stock Rises Pre-Market After Investigational Huntington’s Disease Drug Slows Disease In Trial

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