Acadia Healthcare's (ACHC) operational turnaround is advancing, with new facilities opening on schedule and surpassing startup expectations, a "meaningful" improvement from the past couple of years, UBS said in a note emailed Thursday.

The turnaround is due to the return of the company's former chief executive officer and chief financial officer, who have focused on execution, accountability, and leadership, UBS analysts said. The changes they have made have boosted facility licensing, payer contracting, and occupancy ramps, resulting in several new facilities reaching positive profit numbers ahead of schedule, the analysts said.

The payer environment continues to stabilize, with Acadia stating that it received low- to mid-single-digit rate increases from payers, amid generally strong relationships with managed care organizations, according to the note.

However, investors are paying close attention to the Acadia's $28.6 million increase in its professional and general liability reserves, which mostly offset the $26 million benefit from the Florida Directed Payment Program, the analysts said. They noted that the company admits that the situation will be hard to predict even as current-year reserve assumptions remain unchanged.

UBS kept the company's stock rating at buy and raised the price target to $41 from $39.

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