Exhibit 99.1
| | | | | | |
| Investor Contact: | | Tripp Sullivan | | Media Contact: | | Cynthia Johnson |
| | SCR Partners | | | | (615) 587-7728 |
| | (615) 760-1104 | | | | Mediarequest@contactAAC.com |
| | IR@contactAAC.com | | | | |
AAC Holdings, Inc. Reports First Quarter 2016 Results
BRENTWOOD, Tenn. – (May 5, 2016) AAC Holdings, Inc. (NYSE: AAC) announced its results for the first quarter ended March 31, 2016. All comparisons included in this release are to the comparable prior year period unless otherwise noted.
2016 Financial Highlights:
| • | | Client admissions increased 73% to 2,623 |
| • | | Average daily residential census increased 59% to 764 |
| • | | Outpatient visits totaled 4,978 compared with 1,588 measured for the same period in the prior year |
| • | | Revenues increased 53% to $65.3 million |
| • | | Adjusted EBITDA increased 37% to $12.0 million (see non-GAAP reconciliation herein) |
| • | | Earnings per diluted share was $0.03 |
| • | | Adjusted earnings per diluted share was $0.20 (see non-GAAP reconciliation herein) |
| • | | Net income available to stockholders was $0.6 million |
| • | | Cash flows provided from operations totaled $4.3 million |
| • | | Average daily residential revenue was $832 compared with $974 for the comparable prior-year period |
De Novo and Acquisition Highlights:
| • | | 93 residential beds at Laguna Treatment Hospital expected to open mid-year, subject to receiving licensure |
| • | | 44 detoxification and residential beds at The Oxford Center’s existing location anticipated to come online in first half 2017 |
| • | | In April, completed the acquisition of Townsend in Louisiana, adding a 32-bed in-network facility, seven in-network outpatient centers and an in-network lab |
| • | | In May, completed the acquisition of Solutions Recovery in Las Vegas, adding 124 sober living beds, 80 licensed in-network detoxification, residential and halfway house beds, and two in-network outpatient centers |
Revenues in the first quarter of 2016 increased to $65.3 million compared with $42.8 million for the same period in the prior year. Adjusted EBITDA increased to $12.0 million compared with $8.8 million for the same period in the prior year. Adjusted net income available to stockholders increased to $4.4 million, or $0.20 per diluted share, compared with $3.6 million, or $0.17 per diluted share, in the prior-year. Net income available to stockholders was $0.6 million, or $0.03 per diluted share, in the first quarter of 2016 compared with $2.0 million, or $0.10 per diluted share, in the prior-year period. Adjusted net income available to stockholders and Adjusted EBITDA are non-GAAP financial measures. Tables reconciling these measures to net income available to stockholders and net income, respectively, are included in this release.
“We are getting more clients into treatment and delivering on customer satisfaction and clinical quality on a greater scale than we have ever experienced,” noted Michael Cartwright, Chairman and Chief Executive Officer of AAC Holdings, Inc. “The growth in census, the expansion of our platform with the addition of outpatient and sober living facilities, continued in-network diversification and investments in expanded lab capabilities are driving our financial results. Our pipeline remains very active, and as more attractive sources of capital become available, we expect to execute on those new growth opportunities.”
De Novo Activity and Pipeline
In April 2016, the Company began construction on an 11,000 square-foot in-network lab located in Slidell, Louisiana to replace an existing in-network lab that was part of the Townsend acquisition. The new lab is expected to be completed in the third quarter of 2016.
Renovations at Laguna Treatment Hospital, the Company’s 93-bed Chemical Dependency Rehabilitation Hospital near Laguna Beach, California, are complete. The hospital is currently awaiting approval of its licensure, which is expected to occur mid-year.
The Company has 44 additional residential beds and 48 sober living beds under development at The Oxford Centre in Mississippi that are currently expected to come online in the first half of 2017.
Acquisition Activity
On April 1, 2016, the Company completed the acquisition of Townsend for a total purchase price of $22.0 million. Located in Louisiana, Townsend operates a 32-bed in-network facility, with 20 beds licensed for detoxification and inpatient treatment, seven in-network outpatient centers that deliver intensive outpatient treatment as well as an in-network lab.
On April 18, 2016, the Company acquired a 100-room hotel in Arlington, Texas for $5.35 million. The Company plans to convert the facility into sober living beds. The Company expects the property to generate approximately $5 million in incremental revenue and approximately $2.0 million in incremental Adjusted EBITDA for the Company’s Greenhouse outpatient center in 2017.
On May 3, 2016, the Company completed the acquisition of Las Vegas-based Solutions Recovery for a total purchase price of $13.0 million. The acquisition included 124 sober living beds, 80 licensed in-network detoxification, residential and halfway house beds, and two in-network outpatient centers.
Balance Sheet and Cash Flows from Operations
As of March 31, 2016, AAC Holdings’ balance sheet reflected cash and cash equivalents of $13.2 million and total debt of $143.1 million. Capital expenditures in the first quarter of 2016 totaled $7.0 million. Cash flows provided by operations totaled $4.3 million for the first quarter of 2016 compared with cash flows used in operations of $2.5 million in the prior-year period. Days sales outstanding (DSO) was 88 for the first quarter of 2016 compared with 79 for the prior-year period and 96 for the fourth quarter of 2015.
2016 Outlook
AAC is maintaining its previously issued guidance for the full year 2016. Revenues are expected to be in the range of $265 million to $275 million. This estimate is based on average daily residential census for the year of 800, inclusive of access to Laguna Treatment Hospital; average daily residential revenue of approximately $800 to $825; and approximately $32 million to $34 million of revenue from standalone outpatient centers and related lab services from those visits, as well as from the Recovery Brands, Townsend and Solutions Recovery acquisitions.
Adjusted EBITDA is expected to be in the range of $52 million to $55 million and adjusted earnings per diluted share is expected to be in the range of $0.95 to $1.03. Assumptions also include an annual effective tax rate of 37% to 39% and diluted weighted-average 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, expenses related to legal defenses and de novo start-up expenses.
Earnings Conference Call
The Company will host a conference call and live audio webcast, both open for the general public to hear, later this morning at 9:00 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 May 12, 2016, by dialing (412) 317-0088 and entering the replay access code: 10084487.
The live audio webcast of the Company’s quarterly conference call will be available online in the Investor Relations section of the Company’s website atwww.americanaddictioncenters.org. The online replay will be available in the Investor Relations section of the Company’s website one hour after the call.
About American Addiction Centers
American Addiction Centers is a leading provider of inpatient 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) 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 acquisitions; (vii) our failure to achieve anticipated financial results from prior or pending 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 related to the recent indictment of certain of our subsidiaries and current and former employees, including a former senior executive; (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; (xv) a disruption to our business and reputational and potential economic risks associated with the civil securities claims brought by shareholders; and (xvi) 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 | |
| | | March 31, 2016 | | | December 31, 2015 | | | March 31, 2015 | |
Revenues | | | | | | | | | | | | |
Client related revenue | | $ | 62,706 | | | $ | 55,450 | | | $ | 42,823 | |
Other revenue | | | 2,642 | | | | 2,832 | | | | — | |
| | | | | | | | | | | | |
Total revenues | | | 65,348 | | | | 58,282 | | | | 42,823 | |
Operating expenses | | | | | | | | | | | | |
Salaries, wages and benefits | | | 31,971 | | | | 29,522 | | | | 18,374 | |
Advertising and marketing | | | 4,397 | | | | 5,294 | | | | 4,618 | |
Professional fees | | | 4,307 | | | | 3,603 | | | | 1,469 | |
Client related services | | | 4,919 | | | | 4,923 | | | | 2,915 | |
Other operating expenses | | | 6,546 | | | | 6,664 | | | | 4,813 | |
Rentals and leases | | | 1,532 | | | | 1,856 | | | | 700 | |
Provision for doubtful accounts | | | 5,483 | | | | 5,188 | | | | 3,382 | |
Litigation settlement | | | 108 | | | | — | | | | 20 | |
Depreciation and amortization | | | 3,915 | | | | 2,900 | | | | 1,340 | |
Acquisition-related expenses | | | 764 | | | | 484 | | | | 998 | |
| | | | | | | | | | | | |
Total operating expenses | | | 63,942 | | | | 60,434 | | | | 38,629 | |
| | | | | | | | | | | | |
Income (loss) from operations | | | 1,406 | | | | (2,152 | ) | | | 4,194 | |
Interest expense | | | 1,702 | | | | 1,181 | | | | 741 | |
Bargain purchase gain | | | — | | | | (1,775 | ) | | | — | |
Other (income) expense, net | | | (7 | ) | | | (697 | ) | | | (11 | ) |
| | | | | | | | | | | | |
(Loss) income before income tax expense | | | (289 | ) | | | (861 | ) | | | 3,464 | |
Income tax (benefit) expense | | | (20 | ) | | | (223 | ) | | | 1,345 | |
| | | | | | | | | | | | |
Net (loss) income | | | (269 | ) | | | (638 | ) | | | 2,119 | |
Less: net loss attributable to noncontrolling interest | | | 855 | | | | 1,086 | | | | 600 | |
| | | | | | | | | | | | |
Net income attributable to AAC Holdings, Inc. stockholders | | | 586 | | | | 448 | | | | 2,719 | |
BHR Series A Preferred Unit dividend | | | — | | | | — | | | | (147 | ) |
Redemption of BHR Series A Preferred Units | | | — | | | | — | | | | (534 | ) |
| | | | | | | | | | | | |
Net income available to AAC Holdings, Inc. common stockholders | | $ | 586 | | | $ | 448 | | | $ | 2,038 | |
| | | | | | | | | | | | |
Basic earnings per common share | | $ | 0.03 | | | $ | 0.02 | | | $ | 0.10 | |
Diluted earnings per common share | | $ | 0.03 | | | $ | 0.02 | | | $ | 0.10 | |
Weighted-average shares outstanding: | | | | | | | | | | | | |
Basic | | | 22,094,790 | | | | 22,002,587 | | | | 21,189,385 | |
Diluted | | | 22,113,500 | | | | 22,047,801 | | | | 21,312,788 | |
AAC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(Dollars in thousands)
| | | | | | | | |
| | | March 31,
2016 | | | December 31,
2015 | |
| | | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 13,237 | | | $ | 18,750 | |
Accounts receivable, net of allowances | | | 62,922 | | | | 60,934 | |
Prepaid expenses and other current assets | | | 5,673 | | | | 6,840 | |
| | | | | | | | |
Total current assets | | | 81,832 | | | | 86,524 | |
| | | | | | | | |
Property and equipment, net | | | 111,972 | | | | 109,724 | |
Goodwill | | | 108,722 | | | | 108,722 | |
Intangible assets, net | | | 9,136 | | | | 9,470 | |
Other assets | | | 3,333 | | | | 1,609 | |
| | | | | | | | |
Total assets | | $ | 314,995 | | | $ | 316,049 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 7,416 | | | $ | 7,878 | |
Accrued liabilities | | | 19,889 | | | | 21,653 | |
Current portion of long-term debt | | | 4,092 | | | | 3,611 | |
Current portion of long-term debt – related party | | | — | | | | 1,195 | |
| | | | | | | | |
Total current liabilities | | | 31,397 | | | | 34,337 | |
Deferred tax liabilities | | | 1,195 | | | | 1,195 | |
Long-term debt, net of current portion | | | 138,996 | | | | 140,335 | |
Other long-term liabilities | | | 4,292 | | | | 3,694 | |
| | | | | | | | |
Total liabilities | | | 175,880 | | | | 179,561 | |
| | | | | | | | |
Stockholders’ equity | | | 145,136 | | | | 141,654 | |
Noncontrolling interest | | | (6,021 | ) | | | (5,166 | ) |
| | | | | | | | |
Total stockholders’ equity including noncontrolling interest | | | 139,115 | | | | 136,488 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 314,995 | | | $ | 316,049 | |
| | | | | | | | |
AAC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(Dollars in thousands)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2016 | | | 2015 | |
Cash flows from operating activities: | | | | | | | | |
Net (loss) income | | $ | (269 | ) | | $ | 2,119 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | | | | | |
Provision for doubtful accounts | | | 5,483 | | | | 3,382 | |
Depreciation and amortization | | | 3,915 | | | | 1,340 | |
Equity compensation | | | 2,638 | | | | 1,633 | |
Amortization of debt issuance costs | | | 95 | | | | — | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (7,471 | ) | | | (11,627 | ) |
Prepaid expenses and other assets | | | (7 | ) | | | (317 | ) |
Accounts payable | | | (462 | ) | | | 618 | |
Accrued liabilities | | | 302 | | | | 104 | |
Other long term liabilities | | | 55 | | | | 221 | |
| | | | | | | | |
Net cash provided by (used in) operating activities | | | 4,279 | | | | (2,527 | ) |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Purchase of property and equipment | | | (7,017 | ) | | | (11,548 | ) |
Acquisition of subsidiaries, net of cash acquired | | | — | | | | (13,102 | ) |
Escrow funds held on acquisition | | | (550 | ) | | | (1,000 | ) |
Purchase of other assets, net | | | — | | | | (75 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (7,567 | ) | | | (25,725 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from long-term debt | | | — | | | | 73,802 | |
Payments on long-term debt and capital leases | | | (1,030 | ) | | | (25,333 | ) |
Repayment of long-term debt — related party | | | (1,195 | ) | | | (97 | ) |
Repayment of subordinated notes payable | | | — | | | | (945 | ) |
Redemption of BHR Series A Preferred Units | | | — | | | | (8,529 | ) |
| | | | | | | | |
Net cash (used in) provided by financing activities | | | (2,225 | ) | | | 38,898 | |
| | | | | | | | |
Net change in cash and cash equivalents | | | (5,513 | ) | | | 10,646 | |
Cash and cash equivalents, beginning of period | | | 18,750 | | | | 48,540 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 13,237 | | | $ | 59,186 | |
| | | | | | | | |
AAC Holdings, Inc.
Operating Metrics
Unaudited
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, 2016 | | | December 31, 2015 | | | March 31, 2015 | |
Operating Metrics: | | | | | | | | | | | | |
Average daily residential census1 | | | 764 | | | | 670 | | | | 480 | |
Outpatient visits2 | | | 4,978 | | | | 4,328 | | | | 1,588 | |
Average daily residential revenue3 | | $ | 832 | | | $ | 840 | | | $ | 974 | |
Average net daily residential revenue4 | | $ | 756 | | | $ | 759 | | | $ | 896 | |
New admissions5 | | | 2,623 | | | | 2,462 | | | | 1,515 | |
Bed count at end of period6 | | | 934 | | | | 897 | | | | 580 | |
Effective bed count at end of period7 | | | 892 | | | | 785 | | | | 580 | |
Days sales outstanding (DSO)8 | | | 88 | | | | 96 | | | | 79 | |
| 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 facilites are staffed based on planned census. |
| 8 | 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 Income
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, 2016 | | | December 31, 2015 | | | March 31, 2015 (1) | |
Net (loss) income | | $ | (269 | ) | | $ | (638 | ) | | $ | 2,119 | |
Non-GAAP Adjustments: | | | | | | | | | | | | |
Interest expense | | | 1,702 | | | | 1,181 | | | | 741 | |
Depreciation and amortization | | | 3,915 | | | | 2,900 | | | | 1,340 | |
Income tax (benefit) expense | | | (20 | ) | | | (223 | ) | | | 1,345 | |
Stock-based compensation and related tax reimbursements | | | 2,638 | | | | 1,613 | | | | 1,633 | |
Litigation settlement and California matter related expense | | | 2,325 | | | | 1,678 | | | | 20 | |
Acquisition-related expense | | | 860 | | | | 760 | | | | 998 | |
De novo start-up expense and other | | | 862 | | | | 2,777 | | | | — | |
Facility closure operating losses and expense | | | — | | | | 1,116 | | | | 584 | |
Bargain purchase gain | | | — | | | | (1,775 | ) | | | — | |
| | | | | | | | | | | | |
Adjusted EBITDA | | $ | 12,013 | | | $ | 9,389 | | | $ | 8,780 | |
| | | | | | | | | | | | |
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 | |
| | | March 31, 2016 | | | December 31, 2015 | | | March 31, 2015 (1) | |
Net income available to AAC Holdings, Inc. common stockholders | | $ | 586 | | | $ | 448 | | | $ | 2,038 | |
Non-GAAP Adjustments: | | | | | | | | | | | | |
Litigation settlement and California matter related expense | | | 2,325 | | | | 1,678 | | | | 20 | |
Acquisition-related expense | | | 860 | | | | 760 | | | | 998 | |
De novo start-up and other expenses | | | 862 | | | | 2,777 | | | | — | |
Facility closure operating losses and expense | | | — | | | | 1,116 | | | | 584 | |
Bargain purchase gain | | | — | | | | (1,775 | ) | | | — | |
Redemption of BHR Series A Preferred Units | | | — | | | | — | | | | 534 | |
Income tax effect of non-GAAP adjustments | | | (280 | ) | | | (1,180 | ) | | | (546 | ) |
| | | | | | | | | | | | |
Adjusted net income available to AAC Holdings, Inc. common stockholders | | $ | 4,353 | | | $ | 3,824 | | | $ | 3,628 | |
| | | | | | | | | | | | |
Weighted-average shares outstanding - diluted | | | 22,113,500 | | | | 22,047,801 | | | | 21,312,788 | |
| | | |
Adjusted diluted earnings per share | | $ | 0.20 | | | $ | 0.17 | | | $ | 0.17 | |
| | | | | | | | | | | | |
Adjusted EBITDA, adjusted net income available to AAC Holdings, Inc. common stockholders, and adjusted diluted earnings per 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.
Management defines Adjusted EBITDA as net (loss) income 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 expenses, facility closure operating losses and expense associated with The Academy and FitRx, 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 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 expenses, facility closure operating losses and expense associated with The Academy and FitRx, 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.
| (1) | Balances shown represent recasted amounts as disclosed in the Company’s Current Form 8-K as filed with the SEC on February 22, 2016. |
