Acadia Healthcare downgraded to Sell due to rising costs, Medicaid risks, and high valuation.

Acadia Healthcare Company, Inc. has been downgraded to a Sell rating due to ongoing structural challenges and a sharp increase in its valuation. Despite changes in leadership and reduced capital expenditures, the company faces a significant margin disadvantage driven by high insurance costs and increasing claim frequency. Additionally, Acadia's heavy reliance on Medicaid, which accounts for over 60% of its revenue, is threatened by upcoming reimbursement rate cuts after 2028 under the OBBBA. The company's valuation is stretched compared to peers, and its high leverage makes it vulnerable to small shifts in growth or margin assumptions, raising concerns about its financial stability moving forward.