AAC Holdings, Inc. (NYSE: AAC) announced its results for the
second quarter ended June 30, 2016. All comparisons included in
this release are to the comparable prior year period unless
otherwise noted.
Second Quarter 2016 Operational and Financial
Highlights:
- Client admissions increased 60% to
2,890
- Average daily residential census
increased 52% to 821
- Outpatient visits increased 397% to
13,079
- Revenues increased 33% to $71.5
million
- Net income available to common
stockholders was $0.9 million, or $0.04 per diluted share
- Cash flows provided from operations
totaled $2.0 million
- Adjusted EBITDA was $12.5 million (see
non-GAAP reconciliation herein)
- Adjusted earnings per diluted share was
$0.18 (see non-GAAP reconciliation herein)
- Average daily residential revenue was
$801
De Novo and Acquisition Highlights:
- In April 2016, completed the
acquisition of Townsend in Louisiana, adding a 32-bed in-network
facility, seven in-network outpatient centers and an in-network
lab
- In May 2016, completed the acquisition
of Solutions Recovery in Las Vegas, adding 124 sober living beds,
80 licensed in-network detoxification, residential and halfway
house beds, and two in-network outpatient centers
- In June 2016, opened the 93-bed Laguna
Treatment Hospital, in Aliso Viejo, California
- In June 2016, commenced development of
a 150-bed residential treatment center in Ringwood, New Jersey
- 44 detoxification and
residential beds and 48 sober living beds at The Oxford
Center’s existing location anticipated to come online in first
half 2017
Revenues in the second quarter of 2016 increased to $71.5
million compared with $53.8 million for the same period in the
prior year. Net income available to stockholders decreased to $0.9
million, or $0.04 per diluted share, in the second quarter of 2016
compared with $5.6 million, or $0.26 per diluted share, in the
prior-year period. Adjusted EBITDA decreased to $12.5 million
compared with $14.4 million for the same period in the prior year.
Adjusted net income available to stockholders decreased to $4.1
million, or $0.18 per diluted share, compared with $7.4 million, or
$0.35 per diluted share, in the prior-year. Adjusted net income
available to stockholders and Adjusted EBITDA are non-GAAP
financial measures. Tables reconciling these measures to net income
available to stockholders and net income, respectively, are
included in this release.
“The continued growth in admissions, census and outpatient
visits is in line with our expectations for delivering exceptional
clinical quality and reflects our ability to offer clients and
their families a broader range of treatment options and support,”
noted Michael Cartwright, Chairman and Chief Executive Officer of
AAC Holdings, Inc. “We made great strides in integrating our recent
acquisitions, ramping up and adding to our de novo projects as well
opening Laguna Treatment Hospital – our first chemical dependency
recovery hospital. With the recent enhancements to and the increase
in our credit facility, we have much improved access to attractive
sources of capital that will allow us to pursue opportunities in
our acquisition pipeline.”
De Novo Activity and Pipeline
In April 2016, the Company began construction on an 11,000
square-foot in-network lab located in Slidell, Louisiana to replace
an existing in-network lab that was part of the Townsend
acquisition. The new lab is expected to be completed in the fourth
quarter of 2016.
In June 2016, the Company opened Laguna Treatment Hospital, a
93-bed Chemical Dependency Rehabilitation Hospital near Aliso
Viejo, California. AAC has staffed the hospital to ramp up
admissions over the first 12 to 18 months of operation.
In June 2016, the Company commenced development of a 150-bed
residential treatment center in Ringwood, New Jersey. The facility
is expected to be completed in the first half of 2018.
The Company has 44 additional residential beds and 48 sober
living beds under development at The Oxford Centre in Mississippi
that are currently expected to come online in the first half of
2017.
Acquisition Activity
In April 2016, the Company has completed the acquisition of
Townsend for a total purchase price of $22.0 million. Located in
Louisiana, Townsend operates a 32-bed in-network facility, with 20
beds licensed for detoxification and inpatient treatment, seven
in-network outpatient centers that deliver intensive outpatient
treatment as well as an in-network lab.
In April 2016, the Company acquired a 100-room hotel in
Arlington, Texas for $5.35 million. The Company is currently in the
process of converting the facility into sober living beds. The
Company expects the property to generate approximately $5.0 million
in incremental revenue and approximately $2.0 million in
incremental Adjusted EBITDA for the Company’s Greenhouse outpatient
center in 2017.
In May 2016, the Company completed the acquisition of Las
Vegas-based Solutions Recovery for a total purchase price of $13.0
million. The acquisition included 124 sober living beds, 80
licensed in-network detoxification, residential and halfway house
beds, and two in-network outpatient centers.
Financing Activity
In July 2016, the Company increased its senior secured credit
facility to $171.25 million, consisting of a $50 million revolving
credit facility and a $121.25 million term loan. The facility is
scheduled to mature in March 2020 and bears interest at LIBOR plus
a margin between 2.25% to 3.25% or a base rate plus a margin
between 1.25% and 2.25%, in each case depending on the Company’s
leverage ratio. The facility has an accordion feature that provides
for an additional $75 million of borrowing capacity under the
credit facility, subject to certain consents and conditions,
including obtaining additional commitments from lenders.
Balance Sheet and Cash Flows from Operations
As of June 30, 2016, AAC Holdings’ balance sheet reflected cash
and cash equivalents of $7.3 million and total debt of $167.5
million. Capital expenditures in the second quarter of 2016 totaled
$12.7 million. Cash flows provided by operations totaled $2.0
million for the second quarter of 2016 compared with $9.1 million
in the prior-year period. Days sales outstanding (DSO) was 95 for
the second quarter of 2016 compared with 80 for the prior-year
period. Provision for doubtful accounts was 6.9% of total revenues
for the second quarter of 2016 compared with 7.8% of total revenues
for the prior-year period.
2016 Outlook
AAC updated its guidance for the full year 2016. Revenues are
expected to be in the range of $275 million to $285 million. This
estimate is based on average daily residential census for the year
of 840; average daily residential revenue of approximately $775 to
$800; and approximately $37 million to $39 million of revenue from
standalone outpatient centers and related lab services from those
visits, as well as the other revenue from Referral Solutions
Group.
Adjusted EBITDA is expected to be in the range of $52 million to
$55 million and adjusted earnings per diluted share is expected to
be in the range of $0.85 to $0.90. Assumptions also include an
annual effective tax rate of 37% to 39% and diluted
weighted-average shares outstanding of approximately 23 million for
the year.
This outlook does not include the impact of any future
acquisitions, transaction-related costs, litigation settlement,
expenses related to legal defenses and de novo start-up
expenses.
Earnings Conference Call
The Company will host a conference call and live audio webcast,
both open for the general public to hear, later this morning at
10:00 a.m. CT. The number to call for this interactive
teleconference is (412) 542-4144. A replay of the conference call
will be available through August 12, 2016, by dialing (412)
317-0088 and entering the replay access code: 10090116.
The live audio webcast of the Company’s quarterly conference
call will be available online at ir.americanaddictioncenters.org.
The online replay will be available on the website one hour after
the call.
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
@AAC_Tweet.
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; “Holdings” or the “Company”) possible or assumed
future results of operations, including descriptions of Holdings’
revenues, 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 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 expansions; (v) uncertainties
regarding the timing of the closing of acquisitions; (vi) the
possibility that a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of an acquisition;
(vii) our failure to achieve anticipated financial results from
prior acquisitions; (viii) a disruption in our ability to perform
definitive drug testing services; (ix) maintaining compliance with
applicable regulatory authorities, licensure and permits to operate
our facilities and lab; (x) a disruption in our business and
reputation and potential economic consequences associated with the
indictment of certain of our subsidiaries and current and former
employees, including a former director and senior executive and the
civil securities claims brought by shareholders; (xi) our inability
to agree on conversion and other terms for the balance of
convertible debt; (xii) our inability to meet our covenants in the
loan documents; (xiii) our inability to obtain senior lender
consent to exceed the current $50 million limit in unsecured
subordinated debt; (xiv) our inability to integrate newly acquired
facilities;; and (xv) general economic conditions, as well as other
risks discussed in the “Risk Factors” section of the Company’s
Annual Report on Form 10-K, and other filings with the Securities
and Exchange Commission. 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. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS Unaudited (Dollars in
thousands, except per share amounts)
Three
Months Ended Six Months Ended June 30, 2016
March 31, 2016 June 30, 2015 June 30, 2016
June 30, 2015 Revenues Client related revenue $ 68,226 $
62,706 $ 53,784 $ 130,932 $ 96,607 Other revenue 3,316
2,642 — 5,958
— Total revenues 71,542 65,348 53,784 136,890 96,607
Operating expenses Salaries, wages and benefits 36,191 31,971
19,733 68,162 38,107 Advertising and marketing 4,509 4,397 5,119
8,906 9,737 Professional fees 3,869 4,307 1,861 8,176 3,330 Client
related services 5,500 4,919 3,478 10,419 6,393 Other operating
expenses 7,255 6,546 5,536 13,801 10,349 Rentals and leases 1,892
1,532 1,159 3,424 1,859 Provision for doubtful accounts 4,943 5,483
4,177 10,426 7,559 Litigation settlement 42 108 1,500 150 1,520
Depreciation and amortization 4,225 3,915 1,676 8,140 3,016
Acquisition-related expenses 1,196 764
982 1,960 1,980 Total
operating expenses 69,622 63,942
45,221 133,564 83,850 Income
from operations 1,920 1,406 8,563 3,326 12,757 Interest expense
2,221 1,702 482 3,923 1,223 Other income, net (36 )
(7 ) (49 ) (43 ) (60 ) (Loss) income before
income tax expense (265 ) (289 ) 8,130 (554 ) 11,594 Income tax
(benefit) expense (107 ) (20 ) 3,014
(127 ) 4,359 Net (loss) income (158 ) (269 )
5,116 (427 ) 7,235 Less: net loss attributable to noncontrolling
interest 1,030 855 439
1,885 1,039 Net income attributable to
AAC Holdings, Inc. stockholders 872 586 5,555 1,458 8,274 BHR
Series A Preferred Unit dividend — — — — (147 ) Redemption of BHR
Series A Preferred Units — — —
— (534 )
Net income available to AAC Holdings, Inc.
common stockholders
$ 872 $ 586 $ 5,555 $ 1,458 $ 7,593
Basic earnings per common share $ 0.04 $ 0.03 $ 0.26
$ 0.07 $ 0.36 Diluted earnings per common share $ 0.04 $ 0.03 $
0.26 $ 0.06 $ 0.36 Weighted-average shares outstanding: Basic
22,761,671 22,094,790 21,293,512 22,429,948 21,241,839 Diluted
22,811,345 22,113,500 21,487,816 22,499,064 21,376,210
AAC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS Unaudited (Dollars in thousands)
June 30, December 31,
2016 2015 Assets
Current assets Cash and cash equivalents $ 7,269 $ 18,750
Accounts receivable, net of allowances 74,692 60,934 Prepaid
expenses and other current assets 3,727 6,840
Total current assets 85,688
86,524 Property and equipment, net 128,623 109,724 Goodwill
134,847 108,722 Intangible assets, net 9,790 9,470 Other assets
3,252 1,609
Total assets $
362,200 $ 316,049
Liabilities and
Stockholders’ Equity Current liabilities Accounts
payable $ 9,500 $ 7,878 Accrued liabilities 23,097 21,653 Current
portion of long-term debt 4,702 3,611 Current portion of long-term
debt – related party — 1,195
Total
current liabilities 37,299 34,337 Deferred tax liabilities
1,050 1,195 Long-term debt, net of current portion 162,821 140,335
Other long-term liabilities 4,505 3,694
Total liabilities 205,675 179,561
Stockholders’ equity 163,576 141,654 Noncontrolling
interest (7,051 ) (5,166 ) Total stockholders’ equity
including noncontrolling interest 156,525
136,488
Total liabilities and stockholders’ equity $
362,200 $ 316,049
AAC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Dollars in thousands)
Six Months Ended June 30, 2016
2015 Cash flows from operating
activities: Net (loss) income $ (427 ) $ 7,235
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Provision for doubtful accounts 10,426 7,559 Depreciation and
amortization 8,140 3,016 Equity compensation 4,776 2,874
Amortization of debt issuance costs 208 85 Deferred income taxes
(145 ) (807 ) Changes in operating assets and liabilities: Accounts
receivable (21,189 ) (25,427 ) Prepaid expenses and other assets
920 (229 ) Accounts payable 1,169 4,865 Accrued liabilities 2,422
7,327 Other long term liabilities 18 95
Net cash provided by operating activities 6,318
6,593
Cash flows from investing activities:
Purchase of property and equipment (19,745 ) (34,087 ) Acquisition
of subsidiaries, net of cash acquired (19,150 ) (13,740 ) Escrow
funds held on acquisition — (511 ) Purchase of intangible assets —
(540 ) Sale of other assets, net — 153
Net cash used in investing activities (38,895 )
(48,725 )
Cash flows from financing activities: Proceeds
from long-term debt 24,500 73,802 Payments on long-term debt and
capital leases (2,209 ) (25,520 ) Repayment of long-term debt —
related party (1,195 ) (195 ) Repayment of subordinated notes
payable — (945 ) Redemption of BHR Series A Preferred Units
— (8,529 ) Net cash provided by financing activities
21,096 38,613 Net change in cash and
cash equivalents (11,481 ) (3,519 ) Cash and cash equivalents,
beginning of period 18,750 48,540 Cash
and cash equivalents, end of period $ 7,269 $ 45,021
AAC HOLDINGS, INC.
OPERATING METRICS Unaudited Three Months
Ended June 30, 2016 March 31, 2016 June 30,
2015 Operating Metrics: Average daily residential
census1 821 764 539 Outpatient visits2 13,079 4,978 2,634 Average
daily residential revenue3 $ 801 $ 832 $ 1,003 Average net daily
residential revenue4 $ 738 $ 756 $ 918 New admissions5 2,890 2,623
1,806 Bed count at end of period6 1,139 934 587 Effective bed count
at end of period7 1,064 892 587 Days sales outstanding (DSO)8 95 88
80
1
Includes client census at all of our owned and leased
residential facilities. 2 Represents the total number of
outpatient visits at our stand-alone outpatient centers during the
period. 3 Average daily residential revenue is calculated as
total revenues from all of our owned and leased residential
facilities during the period divided by the product of the number
of days in the period multiplied by average daily residential
census. 4 Average net daily residential revenue is
calculated as total revenues from all of our owned and leased
residential facilities less provision for doubtful accounts during
the period, divided by the product of the number of days in the
period multiplied by average daily residential census. 5
Includes total client admissions at our owned and leased
residential facilities for the period presented. 6 Bed count
at end of period includes all beds at owned and leased inpatient
facilities. 7
Effective bed count at end of period
represents beds for which our facilities are staffed based on
planned census.
8 Revenues per day is calculated by dividing the revenues
for the period by the number of days in the period. Days sales
outstanding is then calculated as accounts receivable, net of
allowance for doubtful accounts, at the end of the period divided
by revenues per day.
AAC HOLDINGS, INC.
SUPPLEMENTAL RECONCILIATION OF NON-GAAP DISCLOSURES
Unaudited (Dollars in thousands, except per share
amounts)
Reconciliation of
Adjusted EBITDA to Net Income
Three Months Ended Six Months Ended June 30,
2016 March 31, 2016 June 30, 2015 (1)
June 30, 2016 June 30, 2015 (1) Net (loss)
income $ (158 ) $ (269 ) $ 5,116 $ (427 ) $ 7,235 Non-GAAP
Adjustments: Interest expense 2,221 1,702 482 3,923 1,223
Depreciation and amortization 4,225 3,915 1,676 8,140 3,016 Income
tax (benefit) expense (107 ) (20 ) 3,014 (127 ) 4,359 Stock-based
compensation and related tax reimbursements 2,137 2,638 1,241 4,775
2,874 Litigation settlement and California matter related expense
1,311
2,325
1,500 3,636 1,520 Acquisition-related expense 1,298
860
982 2,158 1,980 De novo start-up expense and other 1,243 862 —
2,105 — Facility closure operating losses and expense 367
— 426 367
1,010 Adjusted EBITDA $ 12,537 $ 12,013 $
14,437 $ 24,550 $ 23,217
Reconciliation of
Adjusted Net Income Available to AAC Holdings, Inc. Common
Stockholders to Net Income Available to AAC Holdings, Inc. Common
Stockholders
Three Months Ended Six Months Ended June 30,
2016 March 31, 2016 June 30, 2015 (1)
June 30, 2016 'June 30, 2015 (1) Net
income available to AAC Holdings, Inc. common stockholders $ 872 $
586 $ 5,555 $ 1,458 $ 7,593 Non-GAAP Adjustments: Litigation
settlement and California matter related expense 1,311 2,325 1,500
3,636 1,520 Acquisition-related expense 1,298 860 982 2,158 1,980
De novo start-up and other expenses 1,243 862 — 2,105 — Facility
closure operating losses and expense, net of taxes 367 — 316 367
749 Redemption of BHR Series A Preferred Units — — — — 534 Income
tax effect of non-GAAP adjustments (967 ) (280 )
(920 ) (1,247 ) (1,315 ) Adjusted net
income available to AAC Holdings, Inc. common stockholders $ 4,124
$ 4,353 $ 7,433 $ 8,477 $ 11,061
Weighted-average shares outstanding - diluted
22,811,345 22,113,500 21,487,816 22,499,064 21,376,210
Adjusted diluted earnings per share $ 0.18 $ 0.20 $
0.35 $ 0.38 $ 0.52
Adjusted EBITDA, adjusted net income available to AAC Holdings,
Inc. common stockholders, and adjusted diluted earnings per share
(herein collectively referred to as "Non-GAAP Disclosures") are
“non-GAAP financial measures” as defined under the rules and
regulations promulgated by the U.S. Securities and Exchange
Commission. The Non-GAAP Disclosures should not be considered as
measures of financial performance under U.S. generally accepted
accounting principles ("GAAP"). The items excluded from the
Non-GAAP Disclosures are significant components in understanding
and assessing our financial performance and should not be
considered as an alternative to net income or other financial
statement items presented in the condensed consolidated financial
statements. Because the Non-GAAP Disclosures are not measures
determined in accordance with GAAP, the Non-GAAP Disclosures may
not be comparable to other similarly titled measures of other
companies.
Management defines Adjusted EBITDA as net (loss) income adjusted
for interest expense, depreciation and amortization expense, income
tax (benefit) expense, stock-based compensation and related tax
reimbursements, litigation settlement and California matter related
expense, acquisition-related expense (which includes professional
services for accounting, legal, valuation services and licensing
expenses), de novo start-up expenses and facility closure operating
losses and expense associated with the closing of The Academy and
FitRx in the fourth quarter of 2015.
Management defines Adjusted Net Income Available to AAC
Holdings, Inc. common stockholders as net income available to AAC
Holdings, Inc. common stockholders adjusted for litigation
settlement and California matter related expense,
acquisition-related expense (which includes professional services
for accounting, legal, valuation services and licensing expenses),
de novo start-up expenses, facility closure operating losses and
expense associated with The Academy and FitRx, redemption of BHR
Series A Preferred Units, and the income tax effect of the non-GAAP
adjustments at the then applicable effective tax rate.
Adjusted diluted earnings per share represents diluted earnings
per share calculated using adjusted net income available to AAC
Holdings, Inc. common stockholders as opposed to net income
available to AAC Holdings, Inc. common stockholders.
With respect to our “2016 Outlook” above, the Company is
omitting a reconciliation of forward-looking non-GAAP financial
measures to the most directly comparable GAAP financial measures
because the Company is unable to provide such reconciliations
without the use of unreasonable efforts. This inability results
from the inherent difficulty in forecasting generally and
quantifying certain projected amounts that are necessary for such
reconciliations. In particular, sufficient information is not
available to calculate certain adjustments required for such
reconciliations, including California litigation expenses and
acquisition-related expenses. We expect these adjustments to have a
potentially significant impact on our future GAAP financial
results.
(1) Balances shown represent recasted amounts as disclosed in
the Company's Current Form 8-k as filed with the SEC on February
23, 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160804005363/en/
SCR PartnersInvestor Contact:Tripp Sullivan,
615-760-1104IR@contactAAC.comorMedia Contact:Joy Sutton,
615-587-7728Mediarequest@contactAAC.com
Ares Acquisition (NYSE:AAC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ares Acquisition (NYSE:AAC)
Historical Stock Chart
From Sep 2023 to Sep 2024