BRENTWOOD, Tenn., Nov. 6, 2018 /PRNewswire/ -- AAC Holdings, Inc.
(NYSE: AAC) today announced financial results for the third quarter
ended September 30, 2018 and updates
its previously issued full year 2018 guidance.
Third Quarter 2018 Operational and Financial
Highlights:
(All comparisons are to the comparable
prior-year period, unless otherwise noted)
- Total revenue increased 10% to $77.5
million on a comparable accounting basis (decreased 4% as
reported)
- Average daily inpatient revenue (ADR) decreased 12% to
$758
- Total average daily census (ADC) increased 16% to 1,132
- Outpatient visits increased 163% to 48,626
- Net loss attributable to AAC Holdings, Inc. common stockholders
was $11.5 million, or $(0.47) per diluted common share
- Adjusted EBITDA was $10.7 million
(see non-GAAP reconciliation herein)
- Adjusted loss per diluted common share was $(0.08) (see non-GAAP reconciliation herein)
Included in the Company's results of operations for the third
quarter ended September 30, 2018 is a
$6.0 million reduction to revenue as
a result of a change in accounting estimate, which took effect on
July 1, 2018 (see section titled
"Change in Accounting Estimate"). Adjusting for the change in
accounting estimate, 2018 Operational and Financial Highlights on a
non-GAAP basis are as follows:
- Total revenue, excluding the change in estimate, increased 18%
to $83.5 million on a comparable
accounting basis (see non-GAAP reconciliation herein)
- Average daily inpatient revenue (ADR), excluding the change in
estimate, decreased 3% to $828
- Net loss attributable to AAC Holdings, Inc. common
stockholders, excluding the change in estimate, was $6.7 million or $(0.28) per diluted common share (see non-GAAP
reconciliation herein)
"Our third quarter results were not what we expected. Although
we started off the third quarter with a very strong July, we hit
unanticipated headwinds in August that caused a significant decline
in call volume and led to lower census," said Michael Cartwright, Chairman and Chief Executive
Officer of AAC Holdings, Inc. "We believe that we have the right
marketing leadership to navigate these headwinds. Our marketing
strategy is broad and diverse, focused on various paid and earned
media online and in other traditional media. We strive to be as
accessible and as informative as possible to those searching for
addiction treatment."
Adoption of New Revenue Recognition Standard
In May 2014, the FASB issued
Accounting Standards Codification Topic 606, "Revenue from
Contracts with Customers" (ASC Topic 606), a replacement of Revenue
Recognition ASC Topic 605. The Company adopted ASC Topic 606 on
January 1, 2018 using the modified
retrospective approach. Under ASC Topic 606, the provision for
doubtful accounts, which historically was reported as an operating
expense, is now reported as a direct reduction to
revenue effective January 1,
2018. This change in presentation reduced revenues and
operating expenses by the same amount and did not have an effect on
net income or earnings per share. As the Company adopted ASC
Topic 606 using the modified retrospective approach, prior year
periods were not recast and as such, revenues as reported for those
periods are not comparable to the current year presentation. For
purposes of this release, we have applied our adoption of ASC Topic
606 to the prior year period. We believe this allows for an
accurate comparison of prior period revenue. Where we have used
language such as "less the provision for doubtful accounts," this
indicates a comparison of periods that reflects our adoption of ASC
Topic 606.
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.
Change in Accounting Estimate
During the three months ended September
30, 2018 and effective as of July 1,
2018, we made a change to our accounting estimate of the
collectability of accounts receivable, specifically relating to
accounts where we have received a partial payment from a commercial
insurance company and we are continuing to pursue additional
collections for the balance that we estimate remains outstanding
("partial payment accounts receivable"). Based on the limited
number of claims that were closed through our historical appeals
process, information with respect to the ultimate resolution of the
appeals of these partial payment accounts receivable has been
limited. As a result, initial assumptions of the ultimate
collectability rates for partial payment accounts receivable were
primarily based on industry and other data. During 2018, to enhance
our own collection processes, we began using a third-party vendor
to pursue collections on these partial payment accounts
receivable. As of September 30,
2018, we are using this vendor exclusively for collection of
the partial payment accounts receivable. As a result of
utilizing the third-party vendor, the number of partial payment
claims closed through the appeals process has increased allowing us
to rely on our own collection history and additional information
obtained from the third party vendor to estimate ultimate
collectability. This recent information indicated that our current
assumptions were different from our historical assumptions. We used
this additional information to further refine our procedures to
more precisely estimate the collectability of partial payment
accounts receivable. This change in estimate resulted in a
reduction in revenue of approximately $6.0
million, an increase in net loss of approximately
$4.8 million, or $0.20 loss per basic and diluted share for the
three and nine months ended September 30,
2018. We determined this change in assumptions and
estimation procedures of the collectability of partial payment
accounts receivable is a change in accounting estimate in
accordance with Accounting Standards Codification ("ASC") 250-10
"Accounting Changes and Error Corrections."
Third Quarter 2018 Financial Results
AAC breaks down its revenues between client related revenue and
non-client related revenue. Client related revenue includes: (1)
inpatient treatment facility services and related professional
services; (2) outpatient facility services, related professional
services and sober living services; and (3) client related
diagnostic services, which includes point of care drug testing and
client related diagnostic laboratory services. Non-client related
revenue includes marketing and diagnostic services provided to
third parties as well as addiction services provided to individuals
in the criminal justice system.
Total revenue on a comparable accounting basis (i.e., less the
provision for doubtful accounts) increased 10% to $77.5 million compared with $70.7 million in the same period in the prior
year. Total revenue as reported decreased 4%.
Inpatient treatment facility revenue, on a comparable accounting
basis, decreased 2% to $58.5 million
compared with $59.4 million in the
same period in the prior year. ADR decreased 12% to $758 compared with $857 in the same period in the prior year.
Outpatient and sober living facility revenue, on a comparable
accounting basis, increased 56% to $11.3
million compared with $7.3
million in the same period in the prior year. Average
revenue per outpatient visit (ARV) decreased 47% to $233 compared with $437 in the same period in the prior year.
Client related diagnostic services revenue, on a comparable
accounting basis, increased 185% to $4.7
million compared with $1.6
million in the same period in the prior year.
Non-client related revenue, on a comparable accounting basis,
increased 21% to $3.0 million
compared with $2.5 million in the
same period in the prior year.
Net loss attributable to AAC Holdings, Inc. common stockholders
was $11.5 million, or $(0.47) per diluted common share, compared with
$0.8 million, or $0.03 per diluted common share, in the prior-year
period.
Adjusted EBITDA decreased 29% to $10.7
million compared with $14.9
million for the same period in the prior year. Adjusted net
(loss) income attributable to AAC Holdings, Inc. common
stockholders decreased to $2.1
million, or $(0.08) per
diluted common share, compared with $2.7
million, or $0.12 per diluted
common share, for the same period in the prior year. Adjusted
EBITDA, adjusted net income attributable to AAC Holdings, Inc.
common stockholders and adjusted earnings per diluted common share
are non-GAAP financial measures. Tables reconciling these non-GAAP
measures to the most directly comparable GAAP measures are included
at the end of this release.
Balance Sheet and Cash Flows
As of September 30, 2018, AAC
Holdings' balance sheet reflected cash and cash equivalents of
$5.3 million, net property and
equipment of $166.3 million and total
debt of $305.5 million, net of debt
issuance costs of $8.5 million. Cash
on hand in addition to our borrowing capacity under the Company's
revolver was $20.8 million at
September 30, 2018. From time to
time, we expect to engage in additional debt and capital markets,
bank credit and other financing activities, and sale-leaseback
transactions depending on our needs and financing alternatives
available at that time. Our current cash flow, cash on hand,
access to borrowings under our credit facility, along with
anticipated access to debt and capital markets and/or anticipated
proceeds from sale-leaseback transactions will be sufficient to
fund our expected future liquidity needs.
Cash flows used in operations totaled $4.0 million and maintenance capital expenditures
totaled $1.8 million for the third
quarter of 2018.
2018
Outlook
|
|
AAC updates its
previously issued guidance as follows:
|
|
|
Full Year 2018
Guidance
|
|
|
(in millions,
except share data)
|
Total
Revenues
|
|
$315 -
$320
|
Inpatient treatment
facility revenue
|
|
$248 -
$250
|
Outpatient and
sober living facility revenue
|
|
$38 -
$39
|
Client related
diagnostic services revenue
|
|
$18 -
$19
|
Non-client related
revenue
|
|
$11 -
$12
|
|
|
|
Adjusted
EBITDA
|
|
$47 - $50
|
Adjusted Loss per
Diluted Common Share
|
|
$(0.15) -
$(0.10)
|
|
The Company expects an annual effective tax rate of 20% and
diluted weighted-average common shares outstanding of approximately
24.1 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 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.
Earnings Conference Call
The Company will host a conference call and live audio webcast
on Tuesday, November 6, 2018, at 8:00 a.m. CT to
further discuss these results. The number to call for this
interactive teleconference is 412-542-4144. A replay of the
conference call will be available through November 13, 2018,
by dialing 877-344-7529 and entering the replay access code,
10126088. The live audio webcast of the Company's
quarterly conference call will also be available online in the
Investor Relations section of the Company's website
at ir.americanaddictioncenters.org.
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 (or failure to pay) 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 Annual Report on Form 10-K for the year
ended December 31, 2017, the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 2018, the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 2018 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 share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client related
revenue
|
$
|
74,477
|
|
|
$
|
77,948
|
|
|
$
|
233,693
|
|
|
$
|
224,859
|
|
Non-client related
revenue
|
|
2,996
|
|
|
|
2,476
|
|
|
|
9,014
|
|
|
|
6,646
|
|
Total
revenues
|
|
77,473
|
|
|
|
80,424
|
|
|
|
242,707
|
|
|
|
231,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
|
44,831
|
|
|
|
36,709
|
|
|
|
131,765
|
|
|
|
107,989
|
|
Client related
services
|
|
8,594
|
|
|
|
6,598
|
|
|
|
24,734
|
|
|
|
19,622
|
|
Provision for doubtful
accounts
|
|
—
|
|
|
|
9,682
|
|
|
|
366
|
|
|
|
25,765
|
|
Advertising and
marketing
|
|
3,037
|
|
|
|
3,074
|
|
|
|
8,220
|
|
|
|
10,115
|
|
Professional
fees
|
|
5,697
|
|
|
|
3,641
|
|
|
|
14,297
|
|
|
|
9,322
|
|
Other operating
expenses
|
|
12,833
|
|
|
|
8,306
|
|
|
|
35,615
|
|
|
|
25,294
|
|
Rentals and
leases
|
|
2,760
|
|
|
|
2,105
|
|
|
|
7,439
|
|
|
|
5,839
|
|
Litigation
settlement
|
|
100
|
|
|
|
—
|
|
|
|
3,135
|
|
|
|
—
|
|
Depreciation and
amortization
|
|
5,573
|
|
|
|
5,218
|
|
|
|
16,946
|
|
|
|
15,745
|
|
Acquisition-related
expenses
|
|
1,058
|
|
|
|
370
|
|
|
|
1,363
|
|
|
|
595
|
|
Total operating
expenses
|
|
84,483
|
|
|
|
75,703
|
|
|
|
243,880
|
|
|
|
220,286
|
|
(Loss) income from
operations
|
|
(7,010)
|
|
|
|
4,721
|
|
|
|
(1,173)
|
|
|
|
11,219
|
|
Interest expense,
net
|
|
8,738
|
|
|
|
5,492
|
|
|
|
23,340
|
|
|
|
11,072
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,435
|
|
Other expense,
net
|
|
732
|
|
|
|
49
|
|
|
|
643
|
|
|
|
77
|
|
Loss before income
tax benefit
|
|
(16,480)
|
|
|
|
(820)
|
|
|
|
(25,156)
|
|
|
|
(5,365)
|
|
Income tax
benefit
|
|
(3,324)
|
|
|
|
(456)
|
|
|
|
(4,902)
|
|
|
|
(459)
|
|
Net loss
|
|
(13,156)
|
|
|
|
(364)
|
|
|
|
(20,254)
|
|
|
|
(4,906)
|
|
Less: net loss
attributable to noncontrolling
interest
|
|
1,663
|
|
|
|
1,126
|
|
|
|
5,546
|
|
|
|
3,149
|
|
Net (loss) income
attributable to AAC
Holdings, Inc.
common
stockholders
|
$
|
(11,493)
|
|
|
$
|
762
|
|
|
$
|
(14,708)
|
|
|
$
|
(1,757)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per common share
|
$
|
(0.47)
|
|
|
$
|
0.03
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.08)
|
|
Diluted (loss)
earnings per common share
|
$
|
(0.47)
|
|
|
$
|
0.03
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.08)
|
|
Weighted-average
common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
24,205,159
|
|
|
|
23,331,414
|
|
|
|
24,039,550
|
|
|
|
23,246,353
|
|
Diluted
|
|
24,205,159
|
|
|
|
23,469,985
|
|
|
|
24,039,550
|
|
|
|
23,246,353
|
|
AAC HOLDINGS,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
|
December
31,
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,259
|
|
|
$
|
13,818
|
|
Accounts receivable,
net of allowances
|
|
|
94,583
|
|
|
|
94,096
|
|
Prepaid expenses and
other current assets
|
|
|
5,547
|
|
|
|
4,022
|
|
Total current
assets
|
|
|
105,389
|
|
|
|
111,936
|
|
Property and
equipment, net
|
|
|
166,345
|
|
|
|
152,548
|
|
Goodwill
|
|
|
198,952
|
|
|
|
134,396
|
|
Intangible assets,
net
|
|
|
12,561
|
|
|
|
8,829
|
|
Deferred tax assets,
net
|
|
|
13,042
|
|
|
|
8,010
|
|
Other
assets
|
|
|
10,679
|
|
|
|
12,556
|
|
Total
assets
|
|
$
|
506,968
|
|
|
$
|
428,275
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
8,722
|
|
|
$
|
4,579
|
|
Accrued and other
current liabilities
|
|
|
31,607
|
|
|
|
27,661
|
|
Accrued
litigation
|
|
|
—
|
|
|
|
23,607
|
|
Current portion of
long-term debt
|
|
|
8,350
|
|
|
|
4,722
|
|
Total current
liabilities
|
|
|
48,679
|
|
|
|
60,569
|
|
Long-term debt, net
of current portion and debt issuance costs
|
|
|
297,143
|
|
|
|
196,451
|
|
Financing lease
obligation, net of current portion
|
|
|
24,459
|
|
|
|
24,541
|
|
Other long-term
liabilities
|
|
|
11,993
|
|
|
|
10,546
|
|
Total
liabilities
|
|
|
382,274
|
|
|
|
292,107
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
145,066
|
|
|
|
150,994
|
|
Noncontrolling
interest
|
|
|
(20,372)
|
|
|
|
(14,826)
|
|
Total stockholders'
equity including noncontrolling interest
|
|
|
124,694
|
|
|
|
136,168
|
|
Total liabilities
and stockholders' equity
|
|
$
|
506,968
|
|
|
$
|
428,275
|
|
AAC HOLDINGS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Cash flows (used
in) provided by operating activities:
|
|
|
|
|
|
|
|
Net loss
|
$
|
(20,254)
|
|
|
$
|
(4,906)
|
|
Adjustments to
reconcile net loss to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
|
Provision for doubtful
accounts
|
|
366
|
|
|
|
25,765
|
|
Depreciation and
amortization
|
|
16,946
|
|
|
|
15,745
|
|
Equity
compensation
|
|
3,104
|
|
|
|
6,048
|
|
Loss on extinguishment
of debt
|
|
—
|
|
|
|
5,435
|
|
Loss on disposal of
property and equipment
|
|
1,000
|
|
|
|
—
|
|
Amortization of debt
issuance costs
|
|
2,077
|
|
|
|
949
|
|
Deferred income
taxes
|
|
(5,032)
|
|
|
|
(981)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
3,503
|
|
|
|
(30,978)
|
|
Prepaid expenses and
other assets
|
|
(461)
|
|
|
|
(703)
|
|
Accounts
payable
|
|
645
|
|
|
|
(3,423)
|
|
Accrued and other
current liabilities
|
|
2,207
|
|
|
|
1,336
|
|
Accrued
litigation
|
|
(23,300)
|
|
|
|
—
|
|
Other long-term
liabilities
|
|
(559)
|
|
|
|
(257)
|
|
Net cash (used in)
provided by operating activities
|
|
(19,758)
|
|
|
|
14,030
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(15,458)
|
|
|
|
(27,186)
|
|
Acquisition of
subsidiaries
|
|
(65,827)
|
|
|
|
—
|
|
Net cash used in
investing activities
|
|
(81,285)
|
|
|
|
(27,186)
|
|
Cash flows
provided by financing activities:
|
|
|
|
|
|
|
|
Payments on 2015
Credit Facility and Deerfield Facility
|
|
—
|
|
|
|
(211,094)
|
|
Proceeds from 2015
Credit Facility and Deerfield Facility,
net of deferred
financing costs
|
|
—
|
|
|
|
18,000
|
|
Payments on 2017
Credit Facility
|
|
(5,172)
|
|
|
|
(15,813)
|
|
Proceeds from 2017
Credit Facility, net of deferred financing costs
|
|
99,286
|
|
|
|
211,494
|
|
Proceeds from
financing lease obligation, net of deferred financing
costs
|
|
—
|
|
|
|
24,617
|
|
Payments on capital
leases and other
|
|
(563)
|
|
|
|
(596)
|
|
Payments on AdCare
Note
|
|
(500)
|
|
|
|
—
|
|
Payment of employee
taxes for net share settlement
|
|
(567)
|
|
|
|
(1,004)
|
|
Net cash provided by
financing activities
|
|
92,484
|
|
|
|
25,604
|
|
Net change in cash
and cash equivalents
|
|
(8,559)
|
|
|
|
12,448
|
|
Cash and cash
equivalents, beginning of period
|
|
13,818
|
|
|
|
3,964
|
|
Cash and cash
equivalents, end of period
|
$
|
5,259
|
|
|
$
|
16,412
|
|
|
|
|
|
|
|
AAC HOLDINGS,
INC.
|
|
OPERATING
METRICS
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Operating
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
admissions1
|
|
4,934
|
|
|
|
3,057
|
|
|
|
13,915
|
|
|
|
9,281
|
|
Average daily
inpatient census2
|
|
838
|
|
|
|
755
|
|
|
|
828
|
|
|
|
787
|
|
Average daily sober
living census3
|
|
294
|
|
|
|
219
|
|
|
|
278
|
|
|
|
177
|
|
Total average daily
census
|
|
1,132
|
|
|
|
974
|
|
|
|
1,106
|
|
|
|
964
|
|
Average episode
length (days)4
|
|
20
|
|
|
|
28
|
|
|
|
22
|
|
|
|
28
|
|
Average daily
inpatient revenue5
|
$
|
758
|
|
|
$
|
857
|
|
|
$
|
841
|
|
|
$
|
749
|
|
Revenue per
admission6
|
$
|
15,095
|
|
|
$
|
25,498
|
|
|
$
|
16,794
|
|
|
$
|
24,228
|
|
Outpatient
visits7
|
|
48,626
|
|
|
|
18,491
|
|
|
|
129,958
|
|
|
|
50,504
|
|
Revenue per
outpatient visit8
|
$
|
233
|
|
|
$
|
437
|
|
|
$
|
221
|
|
|
$
|
397
|
|
Client related
diagnostic services9
|
|
6
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
13
|
%
|
Inpatient bed count
at end of period10
|
|
1,112
|
|
|
|
971
|
|
|
|
1,112
|
|
|
|
971
|
|
Effective inpatient
bed count at end of period11
|
|
1,108
|
|
|
|
949
|
|
|
|
1,108
|
|
|
|
949
|
|
Average effective
inpatient bed utilization12
|
|
76
|
%
|
|
|
75
|
%
|
|
|
81
|
%
|
|
|
77
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Represents total client admissions at our inpatient facilities for
the periods presented.
|
2
Represents average daily client census at all of our inpatient
facilities.
|
3
Represents average daily client census at our sober living
facilities.
|
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.
|
5
Average daily inpatient revenue is calculated as total revenues
from all of our inpatient 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 inpatient
census.
|
6
Revenue per admission is calculated by dividing total client
related revenue, after the provision for
doubtful accounts, by new admissions.
|
7 Represents the total number
of outpatient visits at our standalone outpatient centers during
the periods presented.
|
8
Revenue per outpatient visit is calculated as total revenues from
all of our standalone outpatient facilities, after the
provision for doubtful accounts, divided by the number of
outpatient visits during the period.
|
9
Client related diagnostic services revenue, as a percentage of
client related revenue, includes point-of-care and
client related diagnostic laboratory services.
|
10
Inpatient bed count at end of period includes all beds at inpatient
facilities.
|
11
Effective bed count at end of period represents the number of beds
for which our facilities are staffed based on
planned census.
|
12
Average effective inpatient bed utilization represents average
daily inpatient census divided by the average
effective inpatient bed count during the applicable
period.
|
AAC HOLDINGS,
INC.
|
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
Reconciliation of
Adjusted EBITDA to Net Loss (Income) Attributable to AAC Holdings,
Inc. Common Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Net (loss) income
attributable to AAC Holdings, Inc. common stockholders
|
|
$
|
(11,493)
|
|
|
$
|
762
|
|
|
$
|
(14,708)
|
|
|
$
|
(1,757)
|
|
Non-GAAP
Adjustments1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
8,738
|
|
|
|
5,492
|
|
|
|
23,340
|
|
|
|
11,072
|
|
Depreciation and
amortization
|
|
|
5,573
|
|
|
|
5,218
|
|
|
|
16,946
|
|
|
|
15,745
|
|
Income tax
benefit
|
|
|
(3,324)
|
|
|
|
(456)
|
|
|
|
(4,902)
|
|
|
|
(459)
|
|
Net loss attributable
to noncontrolling interest
|
|
|
(1,663)
|
|
|
|
(1,126)
|
|
|
|
(5,546)
|
|
|
|
(3,149)
|
|
Stock-based
compensation
|
|
|
945
|
|
|
|
1,859
|
|
|
|
3,104
|
|
|
|
6,048
|
|
Litigation settlement,
regulatory and
California matter
related expense
|
|
|
2,517
|
|
|
|
442
|
|
|
|
6,920
|
|
|
|
1,003
|
|
Acquisition-related
expense
|
|
|
1,065
|
|
|
|
470
|
|
|
|
1,518
|
|
|
|
784
|
|
De novo start-up and
other expense
|
|
|
515
|
|
|
|
584
|
|
|
|
1,155
|
|
|
|
4,866
|
|
Recruitment and
retention expense
|
|
|
420
|
|
|
|
—
|
|
|
|
1,305
|
|
|
|
—
|
|
Employee severance
expense
|
|
|
359
|
|
|
|
996
|
|
|
|
1,654
|
|
|
|
1,785
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,435
|
|
Change in accounting
estimate2
|
|
|
6,000
|
|
|
|
—
|
|
|
|
6,000
|
|
|
|
—
|
|
Facility closure
operating losses and expense
|
|
|
1,020
|
|
|
|
706
|
|
|
|
3,805
|
|
|
|
706
|
|
Adjusted
EBITDA
|
|
$
|
10,672
|
|
|
$
|
14,947
|
|
|
$
|
40,591
|
|
|
$
|
42,079
|
|
|
1 Adjusted
EBITDA, adjusted net (loss) income attributable to AAC Holdings,
Inc. common stockholders and adjusted diluted earnings per common
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, each of which are defined below. Management has chosen
to present these Non‐GAAP Disclosures to investors to enable
additional analyses of past, present and future operating
performance and as a supplemental means of evaluating operations
absent the effect of certain items that we do not consider
indicative of our ongoing core operating performance or are
non-cash items. Certain of these items may recur in the future.
Management believes the Non-GAAP Disclosures provide investors with
additional meaningful financial information that should be
considered when assessing our underlying business performance and
trends. We believe the Non-GAAP Disclosures also enhance investors'
ability to compare period-to-period financial results. 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 attributable to AAC Holdings,
Inc. common stockholders adjusted for interest expense,
depreciation and amortization expense, income tax benefit, net loss
attributable to noncontrolling interest, stock-based compensation
and related tax reimbursements, litigation settlement, certain
regulatory and California matter related expenses,
acquisition-related expense related to the AdCare acquisition
(which includes professional services for accounting, legal,
valuation services and licensing expenses), de novo start-up and
other expenses, recruitment and retention expense, employee
severance expense, change in accounting estimate relating to
partial payments accounts receivable and facility closure operating
losses and expense.
|
|
2
Management has further adjusted for the change in accounting
estimate in order to enhance investors' ability to compare
period-to-period financial results. Although the adjustment
includes revenue from partial payment accounts receivable that the
Company no longer expects to realize based on the change in
estimate, management believes that this adjustment provides
additional meaningful financial information that should be
considered when comparing our financial results for the three and
nine months ended September 30, 2018 versus the three and nine
months ended September 30, 2017 because our results for the
comparable periods in 2017 do not reflect the refinement of our
procedures to more precisely estimate the collectability of partial
payment accounts receivable.
|
AAC HOLDINGS,
INC.
|
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
|
Unaudited
|
|
(Dollars in
thousands, except share data)
|
|
|
|
Reconciliation of
Adjusted Net (Loss) Income Attributable to AAC Holdings, Inc.
Common Stockholders to
Net (Loss) Income Attributable to AAC Holdings, Inc. Common
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Net (loss) income
attributable to AAC Holdings, Inc. common stockholders
|
|
|
(11,493)
|
|
|
$
|
762
|
|
|
$
|
(14,708)
|
|
|
$
|
(1,757)
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement,
regulatory and
California matter
related expense
|
|
|
2,517
|
|
|
|
442
|
|
|
|
6,920
|
|
|
|
1,003
|
|
Acquisition-related
expense
|
|
|
1,065
|
|
|
|
470
|
|
|
|
1,518
|
|
|
|
784
|
|
De novo start-up and
other expense
|
|
|
515
|
|
|
|
584
|
|
|
|
1,155
|
|
|
|
4,866
|
|
Recruitment and
retention expense
|
|
|
420
|
|
|
|
—
|
|
|
|
1,305
|
|
|
|
—
|
|
Employee severance
expense
|
|
|
359
|
|
|
|
996
|
|
|
|
1,654
|
|
|
|
1,785
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,435
|
|
Change in accounting
estimate
|
|
|
6,000
|
|
|
|
—
|
|
|
|
6,000
|
|
|
|
—
|
|
Facility closure
operating losses and expense
|
|
|
1,020
|
|
|
|
706
|
|
|
|
3,805
|
|
|
|
706
|
|
Income tax effect of
non-GAAP adjustments
|
|
|
(2,454)
|
|
|
|
(1,248)
|
|
|
|
(4,357)
|
|
|
|
(1,248)
|
|
Adjusted net (loss)
income attributable to AAC Holdings, Inc. common
stockholders
|
|
$
|
(2,051)
|
|
|
$
|
2,712
|
|
|
$
|
3,292
|
|
|
$
|
11,574
|
|
Weighted-average
common shares outstanding - diluted
|
|
|
24,205,159
|
|
|
|
23,469,985
|
|
|
|
24,039,550
|
|
|
|
23,246,353
|
|
GAAP diluted (loss)
income per common share
|
|
$
|
(0.47)
|
|
|
$
|
0.03
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.08)
|
|
Adjusted (loss)
earnings per diluted common share
|
|
$
|
(0.08)
|
|
|
$
|
0.12
|
|
|
$
|
0.14
|
|
|
$
|
0.50
|
|
|
Management defines
adjusted net (loss) income attributable to AAC Holdings, Inc.
common stockholders as net (loss) income attributable to AAC
Holdings, Inc. common stockholders adjusted for litigation
settlement, certain regulatory and California matter related
expenses, acquisition-related expense (which includes professional
services for accounting, legal, valuation services and licensing
expenses), de novo start-up and other expenses, recruitment and
retention expense, employee severance expense, change in accounting
estimate, facility closure operating losses and expense and the
income tax effect of the non-GAAP adjustments at the then
applicable effective tax rate.
|
|
Adjusted diluted
earnings per common share represents diluted earnings per common
share calculated using adjusted net income attributable to AAC
Holdings, Inc. common stockholders as opposed to net income
attributable to AAC Holdings, Inc. common stockholders.
|
AAC HOLDINGS,
INC.
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
Unaudited
|
(Dollars in
thousands)
|
|
Reconciliation of
Total Revenues for Adoption of ASC Topic 606
|
|
|
Three months ended
September 30, 2017
|
|
|
GAAP
|
|
|
|
|
|
|
Non-GAAP
|
|
|
As
Reported
|
|
|
Adjustment for
Adoption of
ASC Topic 606
|
|
|
Comparable
Basis
|
|
Inpatient treatment
facility services
|
$
|
64,237
|
|
|
$
|
4,878
|
|
|
$
|
59,359
|
|
Outpatient facility
and sober living services
|
|
8,085
|
|
|
|
818
|
|
|
|
7,267
|
|
Client related
diagnostic services
|
|
5,626
|
|
|
|
3,986
|
|
|
|
1,640
|
|
Total client related
revenue
|
|
77,948
|
|
|
|
9,682
|
|
|
|
68,266
|
|
Non-client related
revenue
|
|
2,476
|
|
|
|
—
|
|
|
|
2,476
|
|
Total
revenues
|
$
|
80,424
|
|
|
$
|
9,682
|
|
|
$
|
70,742
|
|
|
|
|
AAC HOLDINGS,
INC.
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
Unaudited
|
(Dollars in
thousands)
|
|
Reconciliation of
Total Revenues for Adoption of ASC Topic 606
|
|
|
Nine months ended
September 30, 2017
|
|
|
GAAP
|
|
|
|
|
|
|
Non-GAAP
|
|
|
As
Reported
|
|
|
Adjustment for
Adoption of
ASC Topic 606
|
|
|
Comparable
Basis
|
|
Inpatient treatment
facility services
|
$
|
175,486
|
|
|
$
|
14,668
|
|
|
$
|
160,818
|
|
Outpatient facility
and sober living
services
|
|
20,038
|
|
|
|
1,868
|
|
|
|
18,170
|
|
Client related
diagnostic services
|
|
29,335
|
|
|
|
9,229
|
|
|
|
20,106
|
|
Total client related
revenue
|
|
224,859
|
|
|
|
25,765
|
|
|
|
199,094
|
|
Non-client related
revenue
|
|
6,646
|
|
|
|
—
|
|
|
|
6,646
|
|
Total
revenues
|
$
|
231,505
|
|
|
$
|
25,765
|
|
|
$
|
205,740
|
|
|
The tables above
present a reconciliation of total revenues after giving effect to
the adoption of ASC Topic 606 to total revenues, as reported,
for the three and nine months ended September 30, 2017. See
"Adoption of New Revenue Recognition Standard" above. Total
revenues after
giving effect to the adoption of ASC Topic 606 for the periods
presented is a non-GAAP financial metric. Management has chosen to
present this
non-GAAP financial metric as it believes it enhances investors'
ability to compare period-to-period financial results absent the
effect of certain items
that we do not consider indicative of our ongoing core operating
performance. Certain of these items may recur in the
future.
|
AAC HOLDINGS,
INC.
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
Unaudited
|
(Dollars in
thousands)
|
|
Reconciliation of
Total Revenues to Total Revenues Excluding the Change in Accounting
Estimate
|
|
|
Three months ended
September 30, 2018
|
|
|
GAAP
|
|
|
|
|
|
|
Non-GAAP
|
|
|
As
Reported
|
|
|
Adjustment for
Change in
Accounting Estimate
|
|
|
Excluding Change
in
Accounting Estimate
|
|
Inpatient treatment
facility services
|
$
|
58,464
|
|
|
$
|
(5,336)
|
|
|
$
|
63,800
|
|
Outpatient facility
and sober living
services
|
|
11,332
|
|
|
|
(664)
|
|
|
|
11,996
|
|
Client related
diagnostic services
|
|
4,681
|
|
|
|
—
|
|
|
|
4,681
|
|
Total client related
revenue
|
|
74,477
|
|
|
|
(6,000)
|
|
|
|
80,477
|
|
Non-client related
revenue
|
|
2,996
|
|
|
|
—
|
|
|
|
2,996
|
|
Total
revenues
|
$
|
77,473
|
|
|
$
|
(6,000)
|
|
|
$
|
83,473
|
|
|
|
|
|
|
|
AAC HOLDINGS,
INC.
|
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
|
Unaudited
|
|
(Dollars in
thousands, except per share data)
|
|
|
|
Net Loss
Attributable to AAC Holdings, Inc. Common Stockholders, Excluding
Adjustment for Change in Accounting Estimate
|
|
|
|
|
|
|
Three Months
Ended
September 30, 2018
|
|
Net loss attributable
to AAC Holdings, Inc. common stockholders
|
|
(11,493)
|
|
Change in accounting
estimate
|
|
6,000
|
|
Income tax effect of
change in accounting estimate
|
|
(1,210)
|
|
Adjusted net loss
attributable to AAC Holdings, Inc. common stockholders, excluding
adjustment for change in accounting estimate
|
|
(6,703)
|
|
Weighted-average
common shares outstanding - diluted
|
|
24,205,159
|
|
Adjusted loss per
diluted common share, excluding adjustment for change in accounting
estimate
|
$
|
(0.28)
|
|
|
The tables above
present a reconciliation of total revenues, excluding change in
accounting estimate, to total revenues, as reported and adjusted
loss attributable to AAC Holdings, Inc. common stockholders,
excluding adjustment for change in accounting estimate, to net loss
attributable to AAC Holdings, Inc. common stockholders for the
three months ended September 30, 2018. See "Change in Accounting
Estimate" above. Total revenues, excluding change in
accounting estimate, adjusted loss attributable to AAC Holdings,
Inc. common stockholders, excluding change in accounting estimate
and adjusted loss per diluted common share, excluding adjustment
for change in accounting estimate are non-GAAP financial metrics.
Management has chosen to present these non-GAAP financial metrics
as it believes it enhances investors' ability to compare
period-to-period financial results absent the effect of certain
items that we do not consider indicative of our ongoing core
operating performance. Certain of these items may recur in the
future.
|
View original
content:http://www.prnewswire.com/news-releases/aac-holdings-inc-reports-third-quarter-2018-results-300744516.html
SOURCE AAC Holdings, Inc.