Acadia potential payments in lawsuit worse than expected, says BofA

BofA analyst Kevin Fischbeck notes that Acadia Healthcare disclosed that a jury awarded a total of $485M damages in a lawsuit where the company is one of the defendants and said the “sizable” potential payment that equates to about 7% of Acadia’s market cap was worse than expected. However, Acadia will challenge the verdict and is working on appeals, notes the analyst, who points out that the company settled two other similar cases at “much lower amounts.” Assuming $50M is left as covered by insurance and tax affecting the amount, BofA estimates the max payment could be $350M, but views this as a “worst case” one-time impact. While the stock likely trades down on the news, the firm maintains its Buy rating and $100 price target on Acadia shares.