BRENTWOOD, Tenn., Sept. 13, 2017 /PRNewswire/ -- AAC Holdings,
Inc. (NYSE: AAC) announced today that it has reached a definitive
agreement to acquire AdCare, Inc. ("AdCare"), its affiliates
and associated real estate assets for total consideration of
$85 million. Through this
acquisition, AAC accelerates its longstanding plan to
diversify into government pay, leverage an existing outpatient and
business development presence in New England and continue the
expansion of its hospital strategy.
AdCare, founded in 1986, is one of the leading providers of
addiction treatment in New England with over 6,000 hospital and
residential admissions and over 115,000 outpatient visits per year.
AdCare's facilities being acquired include a 114-bed hospital
for substance abuse treatment including detoxification and
rehabilitation services and five outpatient centers in Massachusetts and a 52-bed (46 currently
licensed) residential treatment center and two outpatient centers
in Rhode Island. AdCare's unique
hospital setting allows the company to treat the most acute
patients while offering step-down capability to longer residential
care and outpatient services. AdCare Criminal Justice
Services ("ACJS") provides substance abuse treatment programs
to inmates, criminal offenders not sentenced to jail or
inmates following release from jail under contracts
with state criminal justice agencies. In addition, the
acquisition will include the purchase of 1-800-ALCOHOLâ„¢, a
nationally recognized referral phone line, and other toll-free
numbers that together generate approximately 50,000 calls per
year.
AdCare generated revenue of $51
million for the twelve months ended June 30, 2017, with Adjusted EBITDA of
$8.5 million. AdCare's revenues
during this period were approximately 59% related to Medicare
reimbursement, 22% from in-network contracts and 19% from Medicaid
reimbursement.
The transaction is currently anticipated to close in the first
half of 2018 and is subject to regulatory review and customary
closing conditions. The transaction is anticipated to be
financed through a combination of proceeds from the
issuance of an incremental term loan under AAC's senior secured
loan facility, cash on hand, seller financing and $5 million of restricted shares of AAC common
stock.
Michael Cartwright, Chairman and
Chief Executive Officer of AAC Holdings, said, "We are excited to
announce the agreement with AdCare and accelerate our plans to
further diversify our business by payor, region and treatment type.
AdCare provides exceptional treatment services to New
Englanders and has done so for over 30 years. David Hillis, Sr. and AdCare's strong management
team have extensive experience running both hospital and local
market based outpatient centers, two focus areas of growth for AAC.
In addition to the near-term benefits of combining our
existing operations in New England with AdCare, we will look to
AdCare's management team and internal resources to help AAC
expand into government pay options in select AAC markets.
AdCare is an ideal, strategic fit within the AAC platform. We
look forward to welcoming the talented and dedicated AdCare
employees to the AAC family," noted Mr. Cartwright.
David Hillis, Sr., CEO and
Chairman of the Board of AdCare, added, "We selected AAC after
getting to know its leadership team, visiting its treatment centers
and spending time at AAC's corporate offices, all of which gave us
the opportunity to appreciate the platform AAC has
built. Most importantly, we are pleased to convey that
AAC shares the same commitment to clinical excellence as AdCare and
that AAC is the ideal partner to build upon the AdCare
legacy. By joining AAC, we will be in a better
position to battle the opioid crisis and meet the
treatment needs in the markets we serve." It is currently
anticipated that Mr. Hillis, who is the former Chairman of the
National Association of Addiction Treatment
Providers, will join AAC's board of directors following
the closing of the transaction.
Credit Suisse acted as financing advisor to AAC; Bass, Berry
& Sims PLC acted as legal counsel and Krokidas & Bluestein
LLP and Nixon Peabody, LLP acted as state regulatory counsel to
AAC. Coker Capital Advisors and Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C. acted as financial and legal advisor, respectively,
to AdCare.
Transaction Conference Call
The Company will host a conference call and live audio webcast,
both open for the general public to hear, later today at
5:00 p.m. CT to discuss the AdCare
transaction and a related financial presentation posted on the
Company's Investor Relations page. The number to call for this
interactive teleconference is (412) 542-4144. A replay of the
conference call will be available through September 20, 2017, by dialing (412) 317-0088 and
entering the replay access code, 10112015.
The live audio webcast of the Company's 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) the ability to consummate
and realize the benefits of the proposed acquisition; (ii)
uncertainties regarding the timing of the closing of the
acquisition; (iii) the failure or inability of either AAC or AdCare
to satisfy closing conditions or obtain approvals necessary to
close the transaction; (iv) unexpected costs or delays associated
with efforts to obtain the regulatory or other approvals necessary
to close the transaction; (v) unexpected difficulties and
expenditures in connection with integration programs; (vi) risks
and uncertainties in litigation or investigative proceedings,
whether or not related to the transaction; (vii) the availability
of financing; (viii) incurrence of additional debt in connection
with the transaction, 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.
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SOURCE AAC Holdings, Inc.