Khrom Capital pushes Acadia Healthcare to explore sale amid poor performance

NEW YORK - Khrom Capital Management LLC, which owns 5.5% of Acadia Healthcare Company, Inc. (NASDAQ:ACHC), has called for the behavioral healthcare provider to launch a formal review of strategic alternatives, including a potential sale of the company. The healthcare provider, currently valued at $2.26 billion, has maintained profitability over the last twelve months despite challenges, according to InvestingPro data.

In a letter sent to Acadia’s board on Wednesday, the investment firm cited persistent underperformance, with the company’s shares down approximately 71% over the past three years and 71% over the past decade, significantly underperforming healthcare peers and broader market indices. InvestingPro analysis suggests the stock is currently undervalued, trading at just 0.74 times book value, while maintaining a 5.64% revenue growth rate over the last twelve months.

"We believe that the Board must immediately initiate a formal strategic review process, including the evaluation of a sale of all or part of the Company," wrote Eric Khrom, Managing Partner at Khrom Capital, in the letter.

The investor criticized Acadia’s governance structure, pointing to long-tenured board members, including Reeve B. Waud who has served for 20 years, and the company’s decision to maintain a staggered board until 2029. The letter also highlighted what it described as "strategic missteps" over the past decade, including entering and exiting the UK market and launching "an aggressive and poorly justified capital expenditure campaign." InvestingPro data reveals the company operates with a significant debt burden of $2.41 billion, representing 78% of common equity. Get access to more detailed financial health metrics and 12+ additional ProTips with an InvestingPro subscription.

Khrom Capital’s letter follows a similar call from Engine Capital LP last week, indicating growing shareholder discontent. The investment firm noted significant votes against company nominees at the recent annual meeting, with 17.2 million votes against Waud. Despite governance concerns, the company has maintained positive earnings, with analysts forecasting continued profitability for the current fiscal year.

The investor also stated that the ongoing Department of Justice investigation should not prevent the company from exploring strategic alternatives, noting there is "ample precedent for transactions being completed at attractive valuations during active regulatory reviews."

According to the letter, Khrom Capital believes "credible and interested" potential buyers exist for the company.

The information in this article is based on a press release statement from Khrom Capital.

In other recent news, Acadia Healthcare disclosed preliminary third-quarter 2025 results, revealing a same-store patient day growth of 1.3%, which did not meet the consensus estimate of 1.8%. UBS maintained its Buy rating on the company, highlighting a reduced 2026 capital expenditure outlook. Meanwhile, Cantor Fitzgerald held a Neutral rating, acknowledging Acadia’s efforts in cost control through adjustments in nursing staff composition. Acadia Healthcare is also in the spotlight due to activist investor Engine Capital acquiring a 3% stake, urging the company to make significant changes amidst ongoing federal investigations. BofA Securities downgraded Acadia from Buy to Neutral, citing concerns over impending Medicaid cuts expected to impact the company starting in 2028. Mizuho also adjusted its price target for Acadia to $22, noting execution issues in the second-quarter 2025 results, which fell short of expectations. These developments reflect a mixed landscape for Acadia Healthcare as it navigates various challenges and strategic shifts.

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