BRENTWOOD, Tenn., March 13, 2019 /PRNewswire/ -- AAC Holdings,
Inc. (NYSE: AAC) (the "Company") announced fourth quarter and full
year 2018 operational highlights and other recent developments.
Recent Operational and Fourth Quarter 2018 Financial
Highlights:
(All comparisons are to the comparable
prior-year period, unless otherwise noted)
- Implemented over $30 million in
annualized expense reductions to benefit 2019 operating
margins
- Closed a $30 million incremental
term loan with existing lenders to provide additional
liquidity
- New admissions increased 39% to 4,184 (increase related to the
acquisition of AdCare on March 1,
2018)
- Total average daily census was 1,002 compared to 995 (increase
related to the acquisition of AdCare on March 1, 2018)
- Outpatient visits increased 104% to 44,165 (increase primarily
related to the acquisition of AdCare on March 1, 2018)
"The census downturn that we experienced in the last several
months of 2018 was more significant than originally anticipated,
with an initial 30% drop in call volume resulting in sharply
decreased admissions in the third
and fourth quarters," said Michael
Cartwright, Chairman and Chief Executive Officer of AAC
Holdings, Inc. "However, admissions have begun to improve in early
2019, with average admissions per day improving by more than 20%
through February 2019 compared to
December 2018. We believe that this
upturn reflects marketing initiatives we launched last year and
continue to implement into 2019, including enhancing our online
outreach resources."
"We also acted to improve liquidity and reduce operating
expenses. We have closed a $30
million incremental term loan that provides us with
additional liquidity moving into 2019. We continue to seek to
improve our balance sheet and have commenced a process to generate
additional value from our treatment center real estate
portfolio. At the same time, we have continued our expense
savings initiatives into 2019, which, when combined with our
previous cost savings initiatives announced in the fourth quarter
of 2018, are expected to total over $30
million in annualized savings."
"2018 was a challenging year for us," Cartwright continued. "But
we've started this year with positive momentum and we expect to see
continued improvement. We believe we have the right things to help
us get there – significant cost savings initiatives, options with
our real estate portfolio, new processes in place within our sales
and marketing team, and most of all our continued commitment to
excellent clinical care."
Postponement of Conference Call
The Company has postponed its conference call scheduled for March 13, 2019 as the
Company requires additional time to complete the consolidated
financial statements for the year ended December 31, 2018. The Company
intends to reschedule its earnings conference call and issue
guidance for the 2019 fiscal year, following completion of
its consolidated financial
statements.
Evaluation of Strategic Alternatives in AAC's Real Estate
Portfolio
The Company has commenced a process to explore strategic
alternatives to generate additional value from its real estate
portfolio consisting of treatment centers located across
the United States. Management's
goal is to leverage the portfolio to create additional liquidity,
lower its cost of capital and enhance shareholder value. Real
estate strategic alternatives could include further sale leasebacks
of individual facilities or larger portions of the company's real
estate portfolio.
Cost Savings Initiatives
The Company has enacted a series of cost savings initiatives
during the fourth quarter for 2018 and into the first quarter of
2019 which is expected to result in over $30
million of annualized cost savings. These
initiatives have included reductions in the Company's corporate
expenses, consolidation of its Las
Vegas market, consolidation of the its southern California market, the sale of the Company's
New Orleans operations, and the
consolidation of its lab operations.
Incremental Term Loan and Amendment of Existing Credit
Facility
The Company has closed a $30
million incremental term loan with its existing lenders. In
addition, the Company amended its existing secured credit facility
to, among other items, provide increased flexibility with respect
to certain financial covenants.
AdCare Acquisition
On March 1, 2018, AAC acquired
AdCare, Inc. and its subsidiaries ("AdCare"). AdCare offers
treatment for drug and alcohol addiction and includes, among other
things, a 114-bed hospital and 5 outpatient centers in
Massachusetts, as well as
a 59-bed residential inpatient treatment center and 2
outpatient centers in Rhode
Island. AdCare was purchased for total consideration of
$85.0 million, subject to
adjustments.
Fourth Quarter 2018 Operational Results
New admissions increased 39% to 4,184 from 3,018 in the same
period in the prior year. The increase in new admissions was
related to the acquisition of AdCare on March 1, 2018. New admissions excluding AdCare
decreased 19.7%, to 2,422 from 3,018.
Total average daily census ("ADC") was 1,002 compared to 995 in
the same period in the prior year. The increase in ADC was related
to the acquisition of AdCare on March 1,
2018. ADC excluding AdCare decreased 14.3%, to 853 from
995.
Outpatient visits increased 104% to 44,165 from 21,651 in the
same period in the prior year. The increase in outpatient visits
was primarily related to the acquisition of AdCare on March 1, 2018. Outpatient visits excluding AdCare
decreased 19.6%, to 17,411 from 21,651.
Full Year 2018 Operational Results
New admissions increased 47.2% to 18,099 from 12,299 in the
prior-year period. The increase in new admissions was related to
the acquisition of AdCare on March 1,
2018. New admissions excluding AdCare decreased 5.8%, to
11,588 from 12,299.
Total ADC was 1,080 compared to 972 in the prior-year period.
The increase in ADC was related to the acquisition of AdCare on
March 1, 2018. ADC excluding AdCare
decreased 2.1%, to 952 from 972.
Outpatient visits increased 141.3% to 174,123 from 72,155 in the
prior year period. The increase in outpatient visits was primarily
related to the acquisition of AdCare on March 1, 2018. Outpatient visits excluding AdCare
increased 13.0%, to 81,532 from 72,155.
Balance Sheet and Cash Flows
As of December 31, 2018, AAC
Holdings' unaudited balance sheet reflected cash and cash
equivalents of $5.4 million, net
property and equipment of $166.9
million and total debt of $319.2
million (current and long-term portions). In March 2019, we closed on a $30 million incremental term loan that provides
the company with additional liquidity. Management believes current cash flow, cash
on hand, along with anticipated access to debt and capital markets
or anticipated proceeds from sale-leaseback transactions will be
sufficient to fund our expected future liquidity needs.
About American Addiction Centers
American Addiction Centers is a leading provider of inpatient
and outpatient substance abuse treatment services. We treat clients
who are struggling with drug addiction, alcohol addiction and
co-occurring mental/behavioral health issues. We currently operate
substance abuse treatment facilities located throughout
the United States. These
facilities are focused on delivering effective clinical care and
treatment solutions. For more information, please find us at
AmericanAddictionCenters.org or follow us on Twitter.
Forward Looking Statements
This release contains forward-looking statements within the
meaning of the federal securities laws. These forward-looking
statements are made only as of the date of this release. In some
cases, you can identify forward-looking statements by terms such as
"anticipates," "believes," "could," "estimates," "expects," "may,"
"potential," "predicts," "projects," "should," "will," \"would,"
and similar expressions intended to identify forward-looking
statements, although not all forward-looking statements contain
these words. Forward-looking statements may include information
concerning AAC Holdings, Inc.'s (collectively with its
subsidiaries, "AAC Holdings" or the "Company") possible or assumed
future results of operations, including descriptions of the
Company's revenue, profitability, outlook and overall business
strategy. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results
and performance to be materially different from the information
contained in the forward-looking statements. These risks,
uncertainties and other factors include, without limitation: (i)
our inability to effectively operate our facilities; (ii) our
reliance on our sales and marketing program to continuously attract
and enroll clients; (iii) a reduction in reimbursement rates by
certain third-party payors for inpatient and outpatient services
and point-of-care and definitive lab testing; (iv) our failure to
successfully achieve growth through acquisitions and de novo
projects; (v) the possibility that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of
an acquisition; (vi) our failure to achieve anticipated financial
results from contemplated and prior acquisitions; (vii) a
disruption in our ability to perform diagnostic laboratory
services; (viii) maintaining compliance with applicable regulatory
authorities, licensure and permits to operate our facilities and
laboratories; (ix) a disruption in our business and reputational
and economic risks associated with civil claims by various parties;
(x) inability to meet the covenants in our loan documents or
lack of borrowing capacity; (xi) our inability to effectively
integrate acquired facilities; and (xii) general economic
conditions, as well as other risks discussed in the "Risk Factors"
section of the Company's most recently filed Annual Report on Form
10-K, Quarterly Report on Form 10-Q and other filings with the
Securities and Exchange Commission; and (xii) risks related to the
closing process for our fiscal year ended December 31, 2018. As a result of these
factors, we cannot assure you that the forward-looking statements
in this release will prove to be accurate. Investors should not
place undue reliance upon forward-looking statements.
AAC HOLDINGS,
INC.
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OPERATING
METRICS
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Unaudited
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Three Months Ended
December 31,
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Years Ended
December 31,
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2018
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2017
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2018
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2017
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Operating
Metrics:
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New
admissions1
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4,184
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3,018
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18,099
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12,299
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Average daily
inpatient census2
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745
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737
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807
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775
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Average daily sober
living census3
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257
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258
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273
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197
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Total average daily
census
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1,002
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995
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1,080
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972
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Average episode
length (days)4
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22
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28
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22
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28
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Outpatient
visits5
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44,165
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21,651
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174,123
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72,155
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Inpatient bed count
at end of period6
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1,080
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939
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1,080
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939
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Effective inpatient
bed count at end of
period7
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1,076
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939
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1,076
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939
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Average effective
inpatient bed
utilization8
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69
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%
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78
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%
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73
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%
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78
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%
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1
Represents total client admissions at our inpatient facilities for
the periods presented.
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2
Represents average daily client census at all of our inpatient
facilities.
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3
Represents average daily client census at our sober living
facilities.
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4
Average episode length is the consecutive number of days from
admission to discharge that a client stays at an AAC
inpatient facility and, when applicable, an AAC sober
living facility.
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5 Represents the total number
of outpatient visits at our standalone outpatient centers during
the periods presented.
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6
Inpatient bed count at end of period includes all beds at inpatient
facilities.
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7
Effective bed count at end of period represents the number of beds
for which our facilities are staffed based on planned
census.
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8
Average effective inpatient bed utilization represents average
daily inpatient census divided by the average effective inpatient
bed count during the applicable period.
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content:http://www.prnewswire.com/news-releases/aac-holdings-inc-reports-fourth-quarter-and-full-year-2018-operational-highlights-and-other-recent-developments-postpones-conference-call-300811430.html
SOURCE AAC Holdings, Inc.