NASHVILLE, Tenn., Dec. 7, 2018 /PRNewswire/ -- AAC Holdings,
Inc. (the "Company" or "AAC") announced that AAC's management team
and Board of Directors have conducted a review of the Company and
its performance and remain optimistic about the underlying market
conditions, AAC's position as the largest independent provider of
drug and alcohol addiction treatment services in the U.S., and the
opportunity to create sustainable value for AAC's shareholders.
AAC participates in an addressable market that management
believes is in excess of $30 billion
with attractive underlying industry trends, contributing to market
growth in excess of 4% per annum. First and foremost, AAC is
committed to providing the best care possible for its patients and
has taken a leadership role in the industry with its landmark
patient outcomes studies. With three years of research from over
4,000 patients, AAC was able to demonstrate meaningfully
differentiated clinical outcomes compared to national benchmarks.
Notwithstanding the issues that contributed to lower than expected
revenue growth since July 2018, the
Company currently expects to be able to grow its top line revenue
in 2019 at or better than the industry growth rate long-term,
driving corresponding improvements in profitability and cash flow
generation.
The Company is poised to reap the near-term benefits of
strategic initiatives implemented during 2018. These initiatives
include:
- Key hires of Michael Nanko as
President and Chief Operating Officer, Stephen Ebbett as Chief Digital & Marketing
Office and Dr. Larry Weinstein as
Chief Medical Officer;
- The implementation of new technology used to interact with
prospective patients;
- Revising admissions compensation structure and training to
improve best practices; and
- Realigning our organizational structure to improve operational
efficiency.
AAC also announced today a cost reduction initiative to improve
operating performance across the organization. "We fully realize
that our recent performance was unacceptable," said Michael Cartwright, Chairman and Chief Executive
Officer of AAC. "We hit unanticipated headwinds in August that
caused a significant decline in call volume and led to lower
census. We have made significant investments in a corporate
infrastructure meant to support a larger business than we have
today and that is why we are taking action to streamline the
organization."
AAC's implemented cost reduction program is currently expected
to reduce the Company's total expenses on an annualized basis by
approximately $15 million and
includes an aggregate reduction of approximately 200 positions
across the Company. The actions taken include:
- The consolidation of the San
Diego outpatient and sober-living facilities into the Laguna
operations in California to
provide more efficient operations and stronger financial
performance. The Company expects this consolidation to be
fully executed prior to December 31,
2018;
- A strategic alternative for Townsend operations in Louisiana; and
- Effective November 30, 2018, a
reduction of approximately 100 positions, including corporate
functions, which is intended to align staffing levels with current
occupancy.
The Company currently expects to incur less than approximately
$1 million in one-time cash
expenditures to fully execute the initiatives outlined above, the
majority of which we expect to be incurred during 2019. These
cost reduction efforts were not included in the Company's 2018
guidance released on November 6,
2018.
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.
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SOURCE American Addiction Centers