Acadia Healthcare Settles Multiple Lawsuits for $400 Million

In a significant development, Acadia Healthcare Co. Inc. (Nasdaq: ACHC) has reached a $400 million settlement to resolve three legal cases filed against the company and its former subsidiary, Youth and Family Centered Services of New Mexico, known as Desert Hills. The agreement, outlined in a public SEC filing, comes in the wake of a July jury verdict awarding $485 million in compensatory and punitive damages, with a substantial portion directed at Acadia Healthcare.

According to the filing, the settlement brings closure to all three cases without Acadia or Desert Hills admitting any liability. These civil proceedings ran concurrently with criminal investigations, which centered on allegations of sexual abuse against a foster parent affiliated with Youth and Family Centered Services of New Mexico, as reported by the Albuquerque Journal.

Under the terms of the settlement, the plaintiffs from the $485 million judgment, notably including a child identified as G.S., will receive $200 million, while the plaintiffs from the remaining two cases will each be awarded $100 million.

Acadia Healthcare intends to fund the settlement through a combination of insurance coverage, available cash reserves, and existing credit lines. Notably, the financial impact of the settlement will be excluded from the company's profitability target for 2023. Market analysts view the settlement as a favorable outcome for Acadia Healthcare, alleviating concerns about potential liabilities. Jefferies, a prominent financial firm, highlighted the positive implications of the settlement, particularly in light of earlier estimations suggesting liabilities could have reached approximately $1 billion. The resolution of these legal matters, coupled with Acadia Healthcare's post-settlement valuation, is anticipated to attract investor confidence and drive increased interest in the company's stock.
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The news of the settlement arrives just days before Acadia Healthcare is scheduled to release its third-quarter earnings results. The company has surpassed earnings expectations in previous quarters, credited to improvements in insurance rates and alleviation of labor pressures.






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