BRENTWOOD, Tenn., Feb. 27, 2017 /PRNewswire/ -- AAC Holdings, Inc.
(NYSE: AAC) announced its results for the fourth quarter and year
ended December 31, 2016. All
comparisons included in this release are to the comparable prior
year period unless otherwise noted.
Fourth Quarter and Full Year 2016 Operational and Financial
Highlights:
- Total residential bed count increased 27% to 1,140 for the
quarter and sober living totaled 202
- Effective residential bed count increased 36% to 1,067 for the
quarter
- Client admissions increased 25% to 3,078 for the quarter and
increased 53% to 11,849 for the year
- Average daily residential census increased 25% to 835 for the
quarter and increased 46% to 818 for the year; average sober living
census was 128 for the quarter
- Outpatient visits increased 265% to 15,817 for the quarter and
increased 282% to 49,173 for the year
- Revenues increased 24% to $72.4
million for the quarter and increased 32% to $279.8 million for the year
- Net income to common stockholders was $0.5 million for the quarter, or $0.02 per diluted common share, and net loss to
common stockholders was ($0.6)
million for the year, or ($0.03) per diluted common share
- Adjusted EBITDA increased 18% to $11.1
million for the quarter and increased 8% to $47.7 million for the year (see non-GAAP
reconciliation herein)
- Adjusted earnings per diluted common share was $0.15 for the quarter and $0.71 for the year (see non-GAAP reconciliation
herein)
Amendment of Senior Secured Credit Agreement
- On February 27, 2017, the Company
amended the terms of its senior secured credit facility to, among
other items, extend the previously scheduled step down in its total
leverage covenant from 4.25x to 4.0x from March 31, 2017 to December
31, 2017, and to provide for additional Adjusted EBITDA add
backs under its covenant calculation to account for its
February 2017 reduction in
workforce
De Novo and Acquisition
Highlights:
- In February 2017, received Joint
Commission (JCAHO) accreditation for Laguna Treatment Hospital
- In December 2016, leased one
floor from New Orleans East Hospital to operate 36 in-network beds
that will provide detoxification and residential treatment
services. The beds are expected to be operational in the first half
of 2017, subject to receiving licensure, and will be operated by
Townsend's clinical staff
- Placed into operation 28 sober living beds in Las Vegas and 34 sober living beds in
Arlington in the fourth quarter of
2016 and as of December 31, 2016,
operated 114 sober living beds in Las
Vegas, 64 sober living beds in Arlington and 24 sober living beds in
Oxford
"2016 was a year of significant growth as we grew from 897 to
1,140 residential beds, and we expanded into the sober living space
with the addition of over 150 beds to facilitate our outpatient
business," noted Michael Cartwright,
Chairman and Chief Executive Officer of AAC Holdings, Inc. "The
combination of organic and acquisition growth enabled us to
increase our admissions by over 50%, while leveraging a significant
decrease in our advertising and marketing costs. With the growth in
residential and outpatient facility revenue, we were able to reduce
the percentage of total revenue from our point-of-care drug testing
and diagnostic laboratory services. However, despite the
improvement in top-line growth, the over $8
million invested in de novo start-up expenses and
approximately $8 million of expense
incurred on the California legal
matter contributed to a slight net loss to stockholders for the
year."
"Looking ahead to 2017, we remain focused on delivering
exceptional clinical quality, driving revenue and reducing our
operating costs. We expect to increase our business
development team by over 50% to drive utilization of our beds which
will in turn drive better margins at our facilities. We
expect a significant decrease of de novo start-up expenses in
2017. Our Laguna Treatment Hospital should generate
significant margin contribution in 2017 now that we have received
JCAHO accreditation, and Townsend
and Solutions should substantially increase their contribution from
last year. We also expect the standalone lab business,
including third-party lab, to deliver similar financial results as
we experienced in 2016 while continuing to decrease as a percentage
of our total revenue. In terms of reducing our operating
costs, we completed a 5% reduction of our workforce across the
company on February 3rd that we
expect will result in total savings of over $8 million in 2017."
"Looking beyond 2017, we are committed to continuing to
diversify our payor mix as we expect to further expand our
in-network beds and explore government pay options at our hospitals
and outpatient centers. Based on our current pipeline, we
expect to have over 1,600 residential and sober living beds by the
end of 2018, representing an opportunity for us to grow our
business by over 50% in the next three to five years."
Fourth Quarter 2016 compared with Fourth Quarter 2015
Revenues in the fourth quarter of 2016 increased to $72.4 million compared with $58.3 million for the same period in the prior
year. Revenues were positively impacted by acquisitions and de novo
projects, as well as an increase in average daily residential
census and outpatient visits at our 18 standalone outpatient
centers. As expected, our average daily residential revenue
declined 5% to $802 for the fourth
quarter of 2016 from $840 for the
same period in 2015. The year-over-year decline in the average
daily residential revenue was significantly impacted by a greater
percentage of client related revenues being derived from in-network
beds in 2016 as compared with the same period in the prior year
combined with a decrease in point-of-care drug testing and
diagnostic laboratory services as a percentage of client related
revenue. Point-of-care and diagnostic laboratory services as
a percentage of client related revenue were 20% for the quarter,
flat when compared to the prior year, and decreased from 28% in the
prior year to 24% for the 2016 year.
Operating expenses increased to $73.6
million in the fourth quarter of 2016 from $60.4 million in the prior year period primarily
related to the growth in our residential average daily census and
outpatient visits combined with an increase in salaries, wages and
benefits. Salaries, wages and benefits, as a percentage of total
revenues, were 50% in the fourth quarter of 2016, flat when
compared with the prior year.
Net income to stockholders was $0.5
million, or $0.02 per diluted
common share, in the fourth quarter of 2016 compared with net
income of $0.4 million, or
$0.02 per diluted common share, in
the prior year period. Adjusted EBITDA increased to $11.1 million compared with $9.4 million for the same period in the prior
year. Adjusted net income available to stockholders decreased to
$3.4 million, or $0.15 per diluted common share, compared with
$3.8 million, or $0.17 per diluted common share, for the same
period in the prior year. Adjusted net income available to
stockholders, adjusted diluted earnings per share and Adjusted
EBITDA are non-GAAP financial measures. Tables reconciling these
non-GAAP measures to the most directly comparable GAAP measures,
net income available to stockholders, diluted earnings per common
share and net income, respectively, are included in this
release.
De Novo Activity and Bed Expansion Pipeline
By the end of the fourth quarter of 2016, Laguna Treatment
Hospital was treating an average of 37 clients out of 50 staffed
beds. The facility received Joint Commission (JCAHO) accreditation
on February 14, 2017 and is licensed
for 93 beds.
At the 100-bed Oxford Treatment Center in Mississippi, an additional 24 detoxification
and 48 sober living beds are currently anticipated to be completed
by the end of the second quarter of 2017.
The Company currently anticipates having 124 sober living beds
at Resolutions Arlington opened by the end of the second quarter of
2017.
The Company continued development of a 150-bed residential
treatment center in Ringwood, New
Jersey which is expected to open in 2018.
Balance Sheet and Cash Flows
As of December 31, 2016, AAC
Holdings' balance sheet reflected cash and cash equivalents of
$4.0 million, net property and
equipment of $141.3 million and total
debt of $189.1 million. Capital
expenditures in the fourth quarter of 2016 totaled $7.3 million. Cash flows used in operations
totaled $1.2 million for the fourth
quarter of 2016 compared with cash flows provided by operations of
$0.4 million in the prior year
period. Cash expenditures related to the California matter totaled $2.5 million and $1.8
million for the fourth quarters of 2016 and 2015,
respectively. Exclusive of the cash expenditures related to
the California matter, we would
have generated positive cash flows from operations of $1.3 million for the fourth quarter of
2016. Days sales outstanding ("DSO") was 111 for the fourth
quarter of 2016 compared with 96 for the prior year period. Our
DSO's continue to be impacted by increased documentation requests
by commercial payors prior to payment and slower collections
related to laboratory services. Provision for doubtful accounts was
8.7% of total revenues for the fourth quarter of 2016 compared with
8.9% of total revenues for the prior year period.
2017 Outlook
AAC introduced its guidance for the full year 2017.
Revenues are expected to be in the range of $295 million to $305 million. This
estimate is based on average daily residential census of 890 to 900
and an average daily residential revenue of $725 to $750.
Adjusted EBITDA is expected to be in the range of $52 million to $54 million and adjusted earnings
per diluted common share is expected to be in the range of
$0.50 to $0.58. Assumptions also
include an annual effective tax rate of 37% to 39% and diluted
weighted-average common 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 and
expenses related to legal defenses.
With respect to our "2017 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 our future GAAP financial results.
Earnings Conference Call
The Company will host a conference call and live audio webcast,
both open for the general public to hear, on February 28, 2017, at 8:00
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 March 7,
2017, by dialing (412) 317-0088 and entering the replay
access code: 10100560.
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.
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 with 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
|
|
Twelve Months
Ended
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
Revenues
|
|
|
|
|
|
|
|
Client related
revenue
|
$
71,146
|
|
$
55,450
|
|
$
270,569
|
|
$
205,752
|
Other
revenue
|
1,206
|
|
2,832
|
|
9,201
|
|
6,509
|
Total
revenue
|
72,352
|
|
58,282
|
|
279,770
|
|
212,261
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
36,432
|
|
29,522
|
|
141,073
|
|
91,406
|
Client related
services
|
6,987
|
|
4,923
|
|
24,446
|
|
15,754
|
Provision for
doubtful accounts
|
6,265
|
|
5,188
|
|
21,485
|
|
18,113
|
Advertising and
marketing
|
4,682
|
|
5,294
|
|
18,275
|
|
20,821
|
Professional
fees
|
3,014
|
|
3,603
|
|
16,468
|
|
10,316
|
Other operating
expenses
|
9,009
|
|
6,664
|
|
29,627
|
|
22,708
|
Rentals and
leases
|
1,831
|
|
1,856
|
|
7,363
|
|
5,298
|
Litigation
settlement
|
202
|
|
—
|
|
1,292
|
|
2,379
|
Depreciation and
amortization
|
4,917
|
|
2,900
|
|
17,686
|
|
7,837
|
Acquisition-related
expenses
|
263
|
|
484
|
|
2,691
|
|
3,401
|
Total operating
expenses
|
73,602
|
|
60,434
|
|
280,406
|
|
198,033
|
(Loss) income from
operations
|
(1,250)
|
|
(2,152)
|
|
(636)
|
|
14,228
|
Interest
expense
|
2,325
|
|
1,181
|
|
8,175
|
|
3,607
|
Gain on contingent
consideration
|
(1,350)
|
|
—
|
|
(1,350)
|
|
—
|
Bargain purchase
gain
|
—
|
|
(1,775)
|
|
—
|
|
(1,775)
|
Other income,
net
|
(587)
|
|
(697)
|
|
(500)
|
|
(725)
|
(Loss) income before
income tax expense
|
(1,638)
|
|
(861)
|
|
(6,961)
|
|
13,121
|
Income tax (benefit)
expense
|
(335)
|
|
(223)
|
|
(1,220)
|
|
4,780
|
Net (loss)
income
|
(1,303)
|
|
(638)
|
|
(5,741)
|
|
8,341
|
Less: net loss
attributable to noncontrolling interest
|
1,781
|
|
1,086
|
|
5,152
|
|
2,833
|
Net income (loss)
attributable to AAC Holdings, Inc. stockholders
|
478
|
|
448
|
|
(589)
|
|
11,174
|
BHR Series A
Preferred Unit dividend
|
—
|
|
—
|
|
—
|
|
(147)
|
Redemption of BHR
Series A Preferred Units
|
—
|
|
—
|
|
—
|
|
(534)
|
Net income (loss)
available to AAC Holdings, Inc. common
stockholders
|
$
478
|
|
$
448
|
|
$
(589)
|
|
$
10,493
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
0.02
|
|
$
0.02
|
|
$
(0.03)
|
|
$
0.49
|
Diluted earnings per
common share
|
$
0.02
|
|
$
0.02
|
|
$
(0.03)
|
|
$
0.48
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
23,048,474
|
|
22,002,587
|
|
22,718,117
|
|
21,605,037
|
Diluted
|
23,061,065
|
|
22,047,801
|
|
22,718,117
|
|
21,661,259
|
AAC HOLDINGS,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2016
|
|
2015
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
3,964
|
|
$
18,750
|
|
Accounts receivable,
net of allowances
|
|
87,334
|
|
60,934
|
|
Prepaid expenses and
other current assets
|
|
5,181
|
|
6,840
|
|
Total current
assets
|
|
96,479
|
|
86,524
|
|
Property and
equipment, net
|
|
141,307
|
|
109,724
|
|
Goodwill
|
|
134,396
|
|
108,722
|
|
Intangible assets,
net
|
|
10,356
|
|
9,470
|
|
Deferred tax
assets
|
|
598
|
|
—
|
|
Other
assets
|
|
748
|
|
1,609
|
|
Total
assets
|
|
$
383,884
|
|
$
316,049
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
9,155
|
|
$
7,878
|
|
Accrued
liabilities
|
|
26,742
|
|
21,653
|
|
Current portion of
long-term debt
|
|
9,445
|
|
3,611
|
|
Current portion of
long-term debt – related party
|
|
—
|
|
1,195
|
|
Total current
liabilities
|
|
45,342
|
|
34,337
|
|
Deferred tax
liabilities
|
|
—
|
|
1,195
|
|
Long-term debt, net
of current portion
|
|
179,661
|
|
140,335
|
|
Other long-term
liabilities
|
|
4,093
|
|
3,694
|
|
Total
liabilities
|
|
229,096
|
|
179,561
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
165,106
|
|
141,654
|
|
Noncontrolling
interest
|
|
(10,318)
|
|
(5,166)
|
|
Total stockholders'
equity including noncontrolling interest
|
|
154,788
|
|
136,488
|
|
Total liabilities
and stockholders' equity
|
|
$
383,884
|
|
$
316,049
|
|
|
|
|
|
|
|
AAC HOLDINGS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net (loss)
income
|
|
$
(5,741)
|
|
$
8,341
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
Provision for
doubtful accounts
|
|
21,485
|
|
18,113
|
|
Depreciation and
amortization
|
|
17,686
|
|
7,837
|
|
Equity
compensation
|
|
8,823
|
|
5,757
|
|
Loss on disposal of
property and equipment
|
|
163
|
|
365
|
|
Gain on contingent
consideration
|
|
(1,350)
|
|
—
|
|
Bargain purchase
gain
|
|
—
|
|
(1,775)
|
|
Amortization of debt
issuance costs
|
|
633
|
|
261
|
|
Deferred income
taxes
|
|
(1,793)
|
|
962
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(45,838)
|
|
(46,097)
|
|
Prepaid expenses and
other assets
|
|
2,510
|
|
(1,924)
|
|
Accounts
payable
|
|
824
|
|
5,061
|
|
Accrued
liabilities
|
|
3,135
|
|
9,463
|
|
Other long term
liabilities
|
|
(394)
|
|
(171)
|
|
Net cash provided by
operating activities
|
|
143
|
|
6,193
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(37,304)
|
|
(51,525)
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
(19,150)
|
|
(90,187)
|
|
Escrow funds held on
acquisition
|
|
—
|
|
(1,100)
|
|
Purchase of
intangible assets
|
|
—
|
|
(540)
|
|
Purchase of other
assets, net
|
|
—
|
|
(50)
|
|
Net cash used in
investing activities
|
|
(56,454)
|
|
(143,402)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
revolving line of credit, net
|
|
22,000
|
|
47,000
|
|
Proceeds from
long-term debt, net
|
|
27,500
|
|
100,218
|
|
Payments on long-term
debt and capital leases
|
|
(6,210)
|
|
(27,572)
|
|
Repayment of
long-term debt — related party
|
|
(1,195)
|
|
(542)
|
|
Repayment of
subordinated notes payable
|
|
—
|
|
(945)
|
|
Payment of debt
issuance costs
|
|
(570)
|
|
(2,211)
|
|
Redemption of BHR
Series A Preferred Units
|
|
—
|
|
(8,529)
|
|
Net cash provided by
financing activities
|
|
41,525
|
|
107,419
|
|
Net change in cash
and cash equivalents
|
|
(14,786)
|
|
(29,790)
|
|
Cash and cash
equivalents, beginning of period
|
|
18,750
|
|
48,540
|
|
Cash and cash
equivalents, end of period
|
|
$
3,964
|
|
$
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAC HOLDINGS,
INC.
|
OPERATING
METRICS
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
Operating
Metrics:
|
|
|
|
|
|
|
|
|
Average daily
residential census1
|
|
835
|
|
670
|
|
818
|
|
562
|
Outpatient
visits2
|
|
15,817
|
|
4,328
|
|
49,173
|
|
12,879
|
Average daily
residential revenue3
|
|
$
802
|
|
$
840
|
|
$
800
|
|
$
940
|
Average net daily
residential revenue4
|
|
$
734
|
|
$
759
|
|
$
735
|
|
$
854
|
New
admissions5
|
|
3,078
|
|
2,462
|
|
11,849
|
|
7,763
|
Bed count at end of
period6
|
|
1,140
|
|
897
|
|
1,140
|
|
897
|
Effective bed count
at end of period7
|
|
1,067
|
|
785
|
|
1,067
|
|
785
|
Average effective bed
utilization 8
|
|
79%
|
|
84%
|
|
82%
|
|
88%
|
Days sales
outstanding (DSO)9
|
|
111
|
|
96
|
|
114
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Average effective bed
utilization represents average daily residential census divided by
the average effective beds during the quarter.
|
9
|
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 (Loss) Income
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net (loss)
income
|
$
(1,303)
|
|
$
(638)
|
|
$
(5,741)
|
|
$
8,341
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Interest
expense
|
2,325
|
|
1,181
|
|
8,175
|
|
3,607
|
|
Depreciation and
amortization
|
4,917
|
|
2,900
|
|
17,686
|
|
7,837
|
|
Income tax (benefit)
expense
|
(335)
|
|
(223)
|
|
(1,220)
|
|
4,780
|
|
Stock-based
compensation and related tax reimbursements
|
1,984
|
|
1,613
|
|
8,823
|
|
5,757
|
|
Litigation settlement
and California matter related expense
|
1,093
|
|
1,678
|
|
8,690
|
|
5,446
|
|
Acquisition-related
expense
|
406
|
|
760
|
|
3,252
|
|
3,801
|
|
De novo start-up and
other expense
|
3,395
|
|
2,777
|
|
8,663
|
|
3,369
|
|
Facility closure
operating losses and expense
|
—
|
|
1,116
|
|
771
|
|
3,114
|
|
Gain on contingent
consideration
|
(1,350)
|
|
—
|
|
(1,350)
|
|
—
|
|
Bargain purchase
gain
|
—
|
|
(1,775)
|
|
—
|
|
(1,775)
|
|
Adjusted
EBITDA
|
$
11,132
|
|
$
9,389
|
|
$
47,749
|
|
$
44,277
|
|
|
|
|
|
|
|
|
|
|
AAC HOLDINGS,
INC.
|
|
SUPPLEMENTAL
RECONCILIATION OF NON-GAAP DISCLOSURES
|
|
Unaudited
|
|
(Dollars in
thousands)
|
|
Reconciliation of
Client Related Revenue Net of De novo and Facility Closure
Operating Losses and Certain Operating Expenses to Client Related
Revenue and Certain Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
The table below
provides supplemental detail on how certain Non-GAAP adjustments
impact client related revenue and certain operating expenses.
Management believes these Non-GAAP Disclosures provide investors
with additional meaningful financial information that should be
considered when assessing our underlying business performance and
trends and enhance the investors' ability to compare
period-to-period financial results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Client related
revenue
|
$
71,146
|
|
$
55,450
|
|
$
270,569
|
|
$
205,752
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(2,137)
|
|
(4,782)
|
|
(6,245)
|
|
(4,782)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(440)
|
|
12
|
|
(3,693)
|
|
Client related
revenue net of de novo and facility closure operating
losses
|
$
69,009
|
|
$
50,228
|
|
$
264,336
|
|
$
197,277
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
36,432
|
|
29,522
|
|
141,073
|
|
91,406
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(1,984)
|
|
(1,613)
|
|
(8,823)
|
|
(5,757)
|
|
De novo start-up
expense and other(1)
|
(2,996)
|
|
(3,751)
|
|
(8,831)
|
|
(4,040)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(606)
|
|
(4)
|
|
(2,415)
|
|
Adjusted salaries,
wages, and benefits
|
$
31,452
|
|
$
23,552
|
|
$
123,415
|
|
$
79,194
|
|
|
|
|
|
|
|
|
|
|
Client related
services
|
$
6,987
|
|
$
4,923
|
|
$
24,446
|
|
$
15,754
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(404)
|
|
(410)
|
|
(1,345)
|
|
(416)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(283)
|
|
(3)
|
|
(1,206)
|
|
Adjusted client
related services
|
$
6,583
|
|
$
4,230
|
|
$
23,098
|
|
$
14,132
|
|
|
|
|
|
|
|
|
|
|
Provision for
doubtful accounts
|
$
6,265
|
|
$
5,188
|
|
$
21,485
|
|
$
18,113
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(98)
|
|
(36)
|
|
(120)
|
|
(36)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(116)
|
|
(54)
|
|
(610)
|
|
Adjusted provision
for doubtful accounts
|
$
6,167
|
|
$
5,036
|
|
$
21,311
|
|
$
17,467
|
|
|
|
|
|
|
|
|
|
|
Advertising and
marketing
|
$
4,682
|
|
$
5,294
|
|
$
18,275
|
|
$
20,821
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(849)
|
|
(1,509)
|
|
(2,091)
|
|
(1,521)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(200)
|
|
(1)
|
|
(1,055)
|
|
Adjusted advertising
and marketing
|
$
3,833
|
|
$
3,585
|
|
$
16,183
|
|
$
18,245
|
|
|
|
|
|
|
|
|
|
|
Professional
fees
|
$
3,014
|
|
$
3,603
|
|
$
16,468
|
|
$
10,316
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Litigation settlement
and California matter related expense
|
(891)
|
|
(1,678)
|
|
(7,440)
|
|
(3,067)
|
|
Acquisition-related
expense
|
(143)
|
|
(276)
|
|
(561)
|
|
(400)
|
|
De novo start-up
expense and other(1)
|
(47)
|
|
(60)
|
|
(132)
|
|
(68)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(29)
|
|
(4)
|
|
(173)
|
|
Adjusted professional
fees
|
$
1,933
|
|
$
1,560
|
|
$
8,331
|
|
$
6,608
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
$
9,009
|
|
$
6,664
|
|
$
29,627
|
|
$
22,708
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(1,060)
|
|
(1,127)
|
|
(1,973)
|
|
(1,404)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(156)
|
|
(176)
|
|
(637)
|
|
Adjusted other
operating expenses
|
$
7,949
|
|
$
5,381
|
|
$
27,478
|
|
$
20,667
|
|
|
|
|
|
|
|
|
|
|
Rentals and
leases
|
$
1,831
|
|
$
1,856
|
|
$
7,363
|
|
$
5,298
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
De novo start-up
expense and other(1)
|
(78)
|
|
(684)
|
|
(385)
|
|
(684)
|
|
Facility closure
operating losses and expense(2)
|
—
|
|
(166)
|
|
(351)
|
|
(711)
|
|
Adjusted rentals and
leases
|
$
1,753
|
|
$
1,006
|
|
$
6,627
|
|
$
3,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
De
novo start-up expenses and other primarily relate to de novo
facility net operating losses with respect to the opening of a de
novo facility and continuing for a period of time after the
facility has begun to accept clients, historically six to nine
months, as the operations and census increase to what we believe
are normalized operating levels.
|
|
|
(2)
|
Facility closure and
operating losses and expenses include both the operating losses and
expenses associated with the facility closure of The Academy
and FitRx for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Twelve Months
Ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net (loss)
income available to AAC Holdings, Inc. common
stockholders
|
$
478
|
|
$
448
|
|
$
(589)
|
|
$
10,493
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
Litigation settlement
and California matter related expense
|
1,093
|
|
1,678
|
|
8,690
|
|
5,446
|
|
Acquisition-related
expense
|
406
|
|
760
|
|
3,252
|
|
3,801
|
|
De novo start-up and
other expense
|
3,395
|
|
2,777
|
|
8,663
|
|
3,369
|
|
Facility closure
operating losses and expense
|
—
|
|
1,116
|
|
771
|
|
3,114
|
|
Gain on contingent
consideration
|
(1,350)
|
|
—
|
|
(1,350)
|
|
—
|
|
Bargain purchase
gain
|
—
|
|
(1,775)
|
|
—
|
|
(1,775)
|
|
Redemption of BHR
Series A Preferred Units
|
—
|
|
—
|
|
—
|
|
534
|
|
Income tax effect of
non-GAAP adjustments
|
(621)
|
|
(1,180)
|
|
(3,234)
|
|
(4,064)
|
|
Adjusted net income
available to AAC Holdings, Inc. common stockholders
|
$
3,401
|
|
$
3,824
|
|
$
16,203
|
|
$
20,918
|
|
Weighted-average
common shares outstanding - diluted
|
23,061,065
|
|
22,047,801
|
|
22,718,117
|
|
21,661,259
|
|
GAAP diluted earnings
per common share
|
$
0.02
|
|
$
0.02
|
|
$
(0.03)
|
|
$
0.48
|
|
Adjusted diluted
earnings per common share
|
$
0.15
|
|
$
0.17
|
|
$
0.71
|
|
$
0.97
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, adjusted net income available 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
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 income (loss) 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 and other expenses, facility closure operating
losses and expense (associated with The Academy and FitRx), gain on
contingent consideration associated with our acquisition of
Townsend, and bargain purchase
gain associated with our acquisition of Sunrise House in the fourth
quarter of 2015.
Management defines Adjusted Net Income Available to AAC
Holdings, Inc. common stockholders as net income (loss) 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 and other expenses, facility
closure operating losses and expense (associated with The Academy
and FitRx), gain on contingent consideration associated with our
acquisition of Townsend, bargain
purchase gain associated with our acquisition of Sunrise House
in the fourth quarter of 2015, 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 common share represents diluted
earnings per common 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 "2017 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
acquisition-related expenses and de novo start-up and other
expense. We expect these adjustments may have a potentially
significant impact on our future GAAP financial results.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/aac-holdings-inc-reports-fourth-quarter-and-full-year-2016-results-300414403.html
SOURCE AAC Holdings, Inc.