Acadia Healthcare (Nasdaq: ACHC) has agreed to pay $179 million to settle a class action lawsuit that alleged securities fraud.
Approximately $30 million of the settlement funds will be derived from insurance proceeds; the remainder will be funded from cash on hand and existing credit lines. The company will report the expense as part of its Q4 but will exclude it from EBITA.
The settlement will include a release “with no admission or finding of liability by Acadia or any of its former or current officers.”
In the lawsuit, investors alleged that in 2017, the company misrepresented its investment in its U.K. business, which it said was a “competitive strength.” However, the suite claims that soon after it came to light that the U.K. operations were financially struggling.
This led the company to lower its financial guidance for the year and caused its stock prices to plummet by 26%, according to the lawsuit.
The lawsuit has been in the courts for years and was heading to trial before the settlement was reached. In several pre-trial motions, Acadia moved to exclude evidence from being shown to a jury, including evidence that Acadia maintained a 30-day automatic email deletion policy for its U.S. operations. The motion was denied.
Acadia has faced its share of legal challenges over the past few years. In early 2025, Acadia closed a residential and outpatient treatment facility, following allegations of abuse at the facility. The company denies the allegations.
Acadia has been subject to ongoing investigations by the Department of Justice and the Securities and Exchange Commission.
Additionally, the Senate Finance Subcommittee on Health Care launched an information probe into the practices and patient outcomes of three large for-profit methadone clinics, including Acadia.
The company has faced several major lawsuits in the past. For example, the company was required to pay $405 million, after a jury ruled against it in a civil lawsuit involving sexual abuse of a minor at a now-closed facility. Later that year, the company agreed to pay $400 million to settle three cases regarding abuse at the now-closed facility.
The legal expenses have added up. In the first half of the year, the company’s legal expenses totaled $84.5 million.
Overall, Acadia has struggled on the market, with the stock falling more than 50% year to date. While the company reported a 4.4% year-over-year revenue growth in Q3, it is taking a measured approach to growth, pausing its de novo development projects.