BRENTWOOD, Tenn., March 1, 2018 /PRNewswire/ -- AAC Holdings,
Inc. (NYSE: AAC), announced today the completion of the acquisition
of AdCare, Inc. ("AdCare") for total consideration of $85 million.
"We are thrilled to announce the closing of our acquisition of
AdCare, which furthers our long-term strategy of diversifying our
payor, region and treatment types," said Michael Cartwright, Chairman and Chief Executive
Officer of AAC Holdings. "We look forward to adding AdCare's
seasoned management team and dedicated employees to the AAC family
and expanding our footprint in the Northeast, in order to build
upon AdCare's over 30 years of exceptional clinical care and change
the lives of those who seek our help."
AdCare, founded in 1986, is one of the leading providers of
addiction treatment in New England with approximately 8,000
hospital and residential admissions and over 116,000 outpatient
visits per year. AdCare's facilities include a 114-bed hospital for
substance abuse treatment, including detoxification and
rehabilitation services, and five outpatient centers in
Massachusetts and a 59-bed
residential treatment center and two outpatient centers in
Rhode Island. The acquisition also
includes the purchase of 1-800-ALCOHOL™, a nationally recognized
referral phone line, and other toll-free numbers that together
generate approximately 50,000 calls per year.
David Hillis, Sr., Chief
Executive Officer and Chairman of the Board of AdCare added,
"Our leadership team and talented employees are very happy to be
joining the team at AAC, which shares the same commitment to
clinical excellence as AdCare and is the ideal partner to build
upon the AdCare legacy. The opioid crisis in the Northeast
continues to worsen, and there is an increasing need to deliver
best in class treatment in in a variety of locations, types of
treatments and payors. AAC's national reputation and financial and
operational strength will allow our team to extend the number of
patients we can serve."
AdCare generated revenue, before the provision for bad debts, of
$54 million and net income of
$10 million for the twelve months
ended September 30, 2017.
In connection with the acquisition of AdCare, AAC closed on the
$65 million incremental term loan
arranged by Credit Suisse Securities (USA) LLC, Deutsche Bank Securities, BMO
Capital Markets Corp. and Whitney
Bank (d/b/a Hancock Bank).
2018 Revised Outlook
In May 2014, the FASB issued
Accounting Standards Codification (ASC) Topic 606, "Revenue from
Contracts with Customers," a replacement of Revenue Recognition
Topic 605. AAC adopted ASC 606 on January 1,
2018. Under ASC 606, the majority of our provision for
doubtful accounts, which historically was reported as an operating
expense, will now be reported as a direct reduction to revenue in
2018. This change in presentation will reduce revenues and
operating expenses by the same amount and is not expected to have
an effect on net income or earnings per share.
AAC is revising its guidance for the full year 2018 to include
AdCare from the March 1, 2018
acquisition date. Results for 2018 full year guidance as set forth
below have been provided for the 10 months inclusive of ASC 606,
and for comparability only, 2018 full year guidance has also been
provided excluding the impact of ASC 606 (dollars in millions,
except share data):
|
|
Full Year 2018
Revised Guidance
|
|
|
As Currently
Reported
|
|
Adjusted for
Adoption of ASC 606
on January 1, 2018
|
Total
Revenues
|
|
$360 -
$375
|
|
$325 -
$340
|
Residential
treatment facility revenue
|
|
$285 -
$290
|
|
$262 -
$266
|
Outpatient and
sober living facility revenue
|
|
$44 -
$50
|
|
$40 -
$46
|
Client related
diagnostic services revenue (includes point of care
drug testing and client related diagnostic laboratory services
revenue)
|
|
$18 -
$21
|
|
$12 -
$15
|
Non-client related
revenue (includes third-party marketing,
laboratory services and criminal justice services)
|
|
$13 -
$14
|
|
$11 -
$13
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$68 - $72
|
|
$68 - $72
|
Adjusted Earnings per
Diluted Common Share
|
|
$0.75 -
$0.80
|
|
$0.75 -
$0.80
|
AAC expects an annual effective tax rate of 24% to 26% and
diluted weighted-average common shares outstanding of approximately
24.5 million for the year.
This outlook above does not include the impact of any future
acquisitions, transaction-related costs, litigation settlement or
expenses related to legal defenses.
With respect to the "2018 Revised Outlook" above, reconciliation
of adjusted EBITDA and adjusted earnings per diluted common share
guidance to the closest corresponding GAAP measure on a
forward-looking basis is not available without 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 de novo
start-up and other expense and acquisition-related expenses. We
expect these adjustments may have a potentially significant impact
on future GAAP financial results.
*****
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 diagnostics laboratory
revenue; (iv) an increase in our provision for doubtful accounts
based on the aging of receivables; (v) our failure to successfully
achieve growth through acquisitions and de novo projects; (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
contemplated and prior acquisitions, including the AdCare
acquisition; (viii) a disruption in our ability to perform
diagnostics laboratory services; (ix) maintaining compliance with
applicable regulatory authorities, licensure and permits to operate
our facilities and laboratories; (x) a disruption in our business
and reputational and economic risks associated with the civil
securities claims brought by shareholders or claims by various
parties; (xi) inability to meet the covenants in our loan
documents; (xii) our inability to effectively integrate acquired
facilities; and (xiii) 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.
View original
content:http://www.prnewswire.com/news-releases/aac-holdings-completes-acquisition-of-adcare-inc-300607123.html
SOURCE AAC Holdings, Inc.