Franklin-based Acadia Healthcare is continuing to explore a sale of the United Kingdom business it acquired in 2016 for $1.5 billion.
The behavioral health giant has tapped British banking dynasty Rothschild to test the market for the potential sale of The Priory Group, reports The Telegraph, which accounts for 35 percent of Acadia’s overall revenue.
“We have engaged in preliminary conversations with a number of interested parties and have completed the necessary front-end preparatory steps consistent with market practice for U.K. transactions of this nature,” Acadia CEO Debbie Osteen said in an earnings call with investors Wednesday morning. “We are continuing discussions with prospective parties and after consulting with our advisors and in light of the upcoming December elections in the U.K.”
Reports say Franklin-based Acadia is considering breaking up its Priory network into two or more divisions — perhaps heath operations and social operations — ahead of a sale. London-based buyout firm CapVest has already expressed interested in a potential acquisition of Priory’s social services.
The proposition to split Priory’s network comes as its mental health facilities across the region struggle to adhere to regulatory standards. Multiple facilities have been shut down by government bodies, including Priory Hospital Blandford and Ellignham Hospital’s Children’s mental health ward. Other facilities have been called out by the Care Quality Commission and other watchdogs for serious concerns, some even receiving massive fines for gross negligence and improper care.
Priory Group’s instability has been dragging down the company’s overall financial performance for the past few quarters, but saw hints of stabilization in Q3. U.K. division revenues were down 2 percent for the quarter and EBITDA remained flat at $40.7 million. Priory facilities’ combined assets total nearly $2.5 billion. Of note, Osteen said 150 beds in the division have been taken offline for retooling but are set to be active again in early 2020.
Acadia first announced the prospective sale of the division in May, and has continued to test the market for its 370 behavioral facilities across England, Wales, Scotland and Northern Ireland. Those centers last year brought in $1.1 billion in revenue but have seen their EBITDA slide to $186 million from $245 million since 2016.
Overall, Acadia reported $42.7 million in profits on $476.7 million revenues in the third quarter. Adjusted EBITDA finished at $49.5 million, down 10 percent year over year, largely due to Hurricane Dorian and the California wildfires, according to a company leaders. They estimate overall EBITDA took a $9 million hit due to the natural disasters.
Acadia shares (Ticker: ACHC) were up 1.6 percent to $31.43 in Friday afternoon trading. They’ve remained relatively flat since jumping 22 percent from $25 to $32 in early September.
This story first appeared in our sister publication The Nashville Post.