AAC - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the AAC Holdings Third Quarter Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Andrew McWilliams, Chief Financial Officer. Please go ahead.

Andrew McWilliams

to quarter welcome call. earnings and morning, our XXXX third conference Good Andrew of Officer Chief Holdings. I'm Financial AAC McWilliams, To the that news call, according the you'll most extent Investor in comparable to find discussed any directly to website a non-GAAP GAAP financial Relations on reconciliation by measure link release. of financial measure our the measure to calculated is following today's morning's this statements contain of Act may call and forward-looking others including the of Securities conference [ph] XXXX meaning statements expected This the AAC's Reform Private Litigation XXXX, for annual among regarding within performance beyond.

made For similar this be purpose, this expressions identify forward-looking are the words are any facts foregoing, deemed the statements not historical statements intended to to may believes, limiting be during of statements. anticipates, and that expects Without statements. forward-looking call plans,

You XXXX release, Commission these cautioned factors Securities materially others may set by with may results affected the in and from actual that company's and among these differ be earnings the the AAC's and quarter filings consequently, important forth operations and Exchange no are results undertakes hereby statements statements. to Chief events result over our otherwise. new future the to update statements, Officer, forward-looking as Executive The Cartwright. Chairman of information, company any turn a now Michael would the discussed like I or whether publicly call in and forward-looking to obligation third

Michael Cartwright

turning third walk before today's financial On will discussing Thank our quarter our call Andrew, everyone. from and call, I'll results. be you, the morning, through good Andrew, some of over you highlights who the to

our our changes better that this throughout admissions you in improvements our need. to also in center. practices. changing all across Google's call and that new compensation Google callers, a and Overall, call very we're results. navigating medical-related and These your call basis, then that of structure launched This totals. was early calls open difficult XX% This changes use We strong difficult and not we consultants search with you quarter, position and decline that broad when these the impacted implemented sharply headwinds with serve will the plan wellness-related We're would under our significant just up update leadership to impacted downturn to of pleased July; hard reps websites, make to census year September On the volume. unanticipated questions. websites are We calls We transitions, employees for an and the resulted it this optimization our faced department. time-to-time a to structure some of interact in in better in experienced compensation are including We marketing the series changes in strengthened to dropped those operational totals September excellent a a regulations employee to engine to to quarter. our websites. Medic This over our of to led best and long-term with quarter revising are call call July sharp our our I start instituting in center, with process have organizational however, center healthcare center the the team new executive so and made total told in of in our and net algorithm types that period. our with leading call very a the change. changes healthcare third of training and call from July a still, its particular a SEO referring August, in to connection and XX% to some algorithm technology, training as technology change analysts be, Changes happen our is compare call of impacted center center we unannounced. headwinds

intake believe would initial information and which transition a as these the of evaluate changes Our will operational gives we information along We view We making small well the potential possible. admission sure is investments in well is best that clinician to necessary our it cause to patients knew make deliver improve to better disruption, we're for and the both outcomes ultimately clinical see better the results numbers. census quality because here. as goal

Chief So late headwinds? let Marketing side, people. Digital what SEO September, Digital Stephen was and previously Officer. Ebbett all are consumer-oriented the marketing products. with we of lifestyle insurance Officer these online the housing of and we welcomed doing sales provider In an start marketing to navigate me On Stephen and as Assurant, international and

of in brings team such, has our as have experience industry. lead-generation across and With and I'm a growing continue regulated in leading experience the to marketing marketing in invest for on target SEO capacity. we him we As a our marketing wealth and regard those he to algorithm Google digital spectrum change, thrilled are our efforts better looking the to content to treatment. increasing

veteran We center helping seasoned call operations, she's and is to our the and consistent the practices of and many being of Treatment overseeing people believe success. to implementation the Cancer identified Sally of a now have critical we've Centers job the training great Dahl. our we America. side, navigate ensuring a doing from as instituted, VP On came Admissions Sally us changes we've

research of and the lab. marketing, is my attention to I'm spending There information months lab. scientific the our X exciting very some sales coming after now and last Finally, from turning out

doubt deliver every and that I ready research this to improve continue talk right affect issues. solve some to call I team confidence I that think will clinical have year, turn care. the has quarter now have executive our can to margins these census, Andrew next very we no we'll have third best-in-class fundamentally financials. positively the place in changed business. about our higher discuss in population. And be to Nothing provide to have I interesting patient by mid will to discipline financial over I maintain

Andrew McWilliams

Michael. Thank you,

results. I'd results, quickly third how that to note like a we changes our of discuss quarter I couple Before report impact

is changes third ASC was Under these FASB We have the with a XXX amount This an XXX. did adopted historically expenses earnings or they now provision share. recognition in reduced operating same Topic reported of for on change on results. associated first, First, and reported our by changes accounts, as presentation the X, cash doubtful as to which quarter have operating January an revenue. flow direct revenue not revenues and income, expense, second and our affected reduction impact and net impact per

payment in $X.XX remains estimate in to basic balance in share company estimate an change a the estimate in million, and outstanding. change made the $X.X where three a to This increase that of for in we the for reduction a commercial of and receivable, diluted also collectability where partial additional million XXXX. we $X specifically months collections accounts accounting or resulted revenue of the loss a accounts the ended we from nine XX, insurance and received continuing pursue we're relating per net September Secondly, of

For the provision the quarter with was third $XX.X million $XX.X to total quarter XXXX. of doubtful million XX% less for compared XXXX, revenue up in of accounts the third

the in million revenue Inpatient to quarter XXXX. accounting doubtful compared third and with XXXX. for Excluding quarter to the the in third of in $XX.X estimate, X% was quarter third the up $XX.X the accounts accounting compared less provision of of change facility excluding revenue treatment million XX% decreased in XXXX estimate change

decline estimate, This reimbursement by Michael our lower the compared accounting a the was to Excluding the of treatment our ADR this AdCare $X.X in to greater living in increased of driven increase with third year, Outpatient inpatient provision XXXX integration in-network revenue slight of March sober accounts continued in change the facility XX%. in and completed concentration census of which the X a the have million offset facility discussed rates. doubtful by that revenue to increased in in XX% third decline tend quarter by XXXX. due of and successful for million in census quarter facilities, $XX.X less

impact change in of primarily in increase decreased XXXX visits the the year. in the to with quarter related estimates, year the and facility to as in XXX% approximately XX,XXX compared to to approximately of outpatient increased in prior increased living average as third increased XXX. from XX% sober our to an of XX% in well Excluding which period. Average quarter This third outpatient XXXX XXX was visit XX,XXX census, business revenue per XXX XX%.Outpatient the sober living AdCare accounting last increase daily revenue

EBITDA the and to Excluding in Adjusted due from of as diagnostic on reduction loss increase adjusted third of the diagnostic diluted a quarter services or million outpatient increased was days average which which third XXXX. Medicaid was receivables the a revenue per have Notwithstanding the $X.XX began for to the the in of in-network accounting result outstanding. change reduced services revenue, EBITDA million of visits $X.X and revenue collections, outpatient per visit of XX% acquisition. algorithm quarter the related to this decrease estimate, in the continued and in revenue primarily quarter of for biggest The daily Google change change admissions, $X.X driver the in by throughout million AdCare average of XXXX was client-related $X to August reserves affected The accommodate in the softness in in and in average is to as in accounting estimates, census of higher our Client-related aging result the revenue primarily decreased of mix third decrease was the or the per number significantly of improvement million the $XX.X be XXXX. visit add-back based XXX% the September. share quarter XX%.

the That $X our we Coupled quarter to which took Tennessee. from generate quarter. gain steps compared quarter Cash a basis. quarter approximately decreased Brentwood, be have to laboratory the total for mentioned, revising of was this faced we X% we of relocating will revenue taken revenue our ongoing overall expect we the consolidating our now we of with have we Michael We operations operations, against for X% census. Michael revenue regarding in XXXX we to of flows the adjusted efficiencies. savings to in place down quarter with full account challenging trend for initiatives expectations efficiencies, September, a operations address anticipate We're end and of we're laboratory operational challenges as on the mentioned, total an Louisiana the confident of $XXX used of to faced. approximately was the more we quarter, per operations, weakness, overhead annualized cost questions. in million consolidation EBITDA $XX call maintenance of $XX who'll taking $X.X in operations on concludes several focused and and begin CapEx facilities, which I'd to Corporate prepared million number now like census to line to Though As $XXX headwinds a XXXX. to loss adjusted million, million, of team were remarks included continues will this temporary fourth execute and this I'm share in turn for These to of at to million, this this. in reduce continue steps additional million to percentage be and open operational morning's revisions operations of By our the up have operator, call. recognized we've our by At as to cost. for the the reflect our year consolidated our over your $X.XX. adjusted $X.XX to third current XXXX

Operator

you. Thank

Blair. out session William question Please today come from Instructions]. Ladies begin now will We our first Daniels and answer go ahead. Ryan gentlemen will [Operator and of question

Unidentified Analyst

Nick is thanks in taking speaking my this guys, for Hey questions. out for Ryan,

Google convert, on the, I admissions if but about from going guess, usually the these what September, the one, XX% calls that I in know, leads the you dropped your drop to kind assuming impact estimated are said to algos, July was less likely that? of First to there, from

Michael Cartwright

That was about XX%.

Unidentified Analyst

Okay.

Michael Cartwright

the about census for quarter, dropped Overall XX%.

Unidentified Analyst

to as as going marketing look that year the investment offset what then of side far is XXXX? impact, outlook And going in a like kind on end the into change to doing your you're Okay. the that of

Michael Cartwright

things some doing of I fourth strategies our accommodations some conversion is all lift that to we've There's in going lift rates to We've the advertising call in definitely for on summer quarter changing that some census. center volume, the to as well. call impact think been also made

the game good in So got a on of all right year. the through action and rest taking it I've we're leadership we feel this have definitely like that we place, plan.

Unidentified Analyst

that? Andrew in Got is more versus shifting AAC as increase & Holdings, like CAO it you, marketing as the resources [X] spend, to McWilliams, far - CFO a but adding your W. Inc.

Andrew McWilliams

know, Yes, From guidance our include for full we this is you incremental quarter, as Andrew. fourth look year. the an we spend, that EBITDA, into adjusted in did

into account, taken was that incremental So spend that quarter. fourth in the

Unidentified Analyst

how far do estimate you, kind then kind work kind this have you you you of on think? to it a of something kind an can Or get normal? of to do - is will Or like to of Got take quickly it's in pretty as around back going and that be as long of think you kind progress? work

Andrew McWilliams

into I going mean, I QX. good feel

I the headwinds out. new in our a continue think see the QX, you place well see work numbers the year. rest volume. the call of we're have that team as I We second definitely the lift first - think certainly estimates. in in we the And by that's progress the to it's revised and quarter, we put reason and like those this we conversions feel increase quarter as I

Unidentified Analyst

of that far? sign good around any Or work Great, are in are you still kind seeing you process? so

Michael Cartwright

progress right work We're still in now. that around

Unidentified Analyst

And that. we'll then from shift great. Okay, away

a If coming, cost you're the the that of you synergies how is about is that in bit, integration you going complete? could seeing just revenue AdCare there? Are little kind expecting talk and

Andrew McWilliams

so The revenues, you integration as coming of the the is we and know, adjusted originally that we exactly synergies expected, acquisition, the anticipated. online and had a going are AdCare great was as as EBITDA AdCare,

Unidentified Analyst

update And revenue? about okay. on Some there? your Great, stronger any then reimbursements studies in more outcome for network getting how leveraging

Michael Cartwright

We've with our having an that of. there. I we're Jersey, New Cross the Anthem insurance contract really I really we relationship of and insurance a Blue we're in with Cross we able companies Yes, out have raise with companies. with noticed, some if think good strong relationship proud Rhode you've with building don't developing and Rhode a there. conversations Sunrise working we're the relationship insurance in Island. been good Blue California It's In know to in-network company rates Island the had

and care, go. way be looking to payers to think studies Health on to working with is I looking continued we general, research in treat So outcomes, definitely the is for way patients, best the for avenue. that need

Unidentified Analyst

last lab the and Great, external selling services of update Any one. kind to then on providers?

Michael Cartwright

year I call. extremely I've Yes. the on of the I for in we'll deep-dive I'm to not diagnostic third-party recently, study pivoted think that a revenue, with be but together seeing published talked of just things amongst a next we and putting and started data think using some that. really in it some of patients lot just I'm how we're the mentioned about the research that And and terms able glad that start spending help that of you time excited earlier briefly nice some lab papers treatment can the and outcomes.

Unidentified Analyst

then And one guess I one. Great. last

just there? been in I potential - you any alternatives, been keeping in little lot we've of Or are interest there's more putting strategic of open, So always mind are attention on you kind bit the of a guess?

Michael Cartwright

say that you question. missed I again? Can that

Unidentified Analyst

that Or your a are you lot a into looking open kind take? getting keeping might you think you bit mind interest strategic little of there? just you just of alternatives guys on potential Are that Do more?

Michael Cartwright

public had that X public, focused purpose, doing build services continue the really years that right I States. I'm went excellent I are achieving what out And a and treatment has company across to we're on of mission. that's and set a to what national to now. do specific going After we're we No, United do, think for

Unidentified Analyst

good… a have and guys thanks okay, Great,

Michael Cartwright

sir. Yes

Operator

go Our ahead. Instructions] Yanchunis from [Operator James. next come question of Joe Raymond will Please

Joseph Yanchunis

Hi there.

you me? know I able to So you guys hear are -

Michael Cartwright

Yes.

Joseph Yanchunis

Okay.

the So can your conversion trended you speak center, how third you quarter? talked ratio about I know in call to changes the in but

Michael Cartwright

meteorite I we third our changed changed look, doing of think little right in got the I our algorithm leadership, change. in changed by middle bit our all the terms then center, that, quarter, the technology, and plans, we're that we a the Medic a of the mean, I compensation we in Yes. mean, that things call hit we in of

month month and so been And of to lot there's a a lot, the in last for there a just a half. noise

large are to deck, see all it, tell. hands you a we're we progress working. feel making But it's in the drop, a definitely and that changes volume early everybody like we're the certainly we're certainly like are such conversions. that, in midst to a through little So We of starting aware get and that making make. of lift too on are keenly full we're we're, we that I the working it, need and feel is But to

Joseph Yanchunis

ADR you the I All you're provide mix, of right. rate you And was also changes was I prepared guess, impacted then, have within about how update you the hoping, out-of-network seeing there? what on talked your could an payers by in that remarks type

Andrew McWilliams

of a whether service From perspective, level… Yes, Andrew. this is kind be rate changes that'd any absent mix

Joseph Yanchunis

Sure.

Andrew McWilliams

in between in rates really Example, the on we're contracts. facilities, per not I increases our out-of-network per service-level facilities. our Like seeing good some overall, between side, day at new out-of-network declines of mix in-network in-network in-network said, visit are terms well mix metric, as Or as rate contracts a we negotiating we're seeing large and facilities. on seeing both either. as not there and out-of-network seeing on declining or we're facilities, reimbursement reimbursement as well And our

Joseph Yanchunis

of in-network you convert started have to meet that out-of-network kind of your beds demand? increased to to So some beds

Michael Cartwright

to to thought working But able to fair. we very managed We we're starting organization we as say, hospital. And Where with insurance as beds. County, the achieve will in-network rates we open plenty focusing companies. lot a Orange Recovery facilities that with see wanting just real with Island, stay so way. thought sense First, Sunrise, Blue our the go or of a were Rhode is out-of-network we've in care little of we Most us, of have our that California positive. Anthem We're in, to were in that New that made our Cross Again, been we AdCare, bit. partner a Jersey did efforts

I that offering have and just facilities the opened. depending of we're think it's on we level state-by-state, that services payer-by-payer at care

Joseph Yanchunis

of exclusive a all to facilities, out-of-network and beds? your mix have did Or are in-network payers? would So that some you still now do have have they of out-of-network - all bets facilities

Michael Cartwright

No.

We have are still of plenty facilities out-of-network. that exclusively

Joseph Yanchunis

a questions the your Okay. any at Do couple in you new will Washington on legislation here. sense rates AdCare? And opioid impact have more how

Michael Cartwright

it, if it's opioid at just see Medicated-Assisted as some year. the this dollars rates of side, of to side the change ticked of really you side on a residential of in XX-day MAT of in trail don't related didn't slightly up public enforcement treatment, most sector dollars, as things the AdCare. well traditional But and outside We Treatment I that, Medicare the see on lot the is things. treatment, residential treatment. bill

a You're we partner seeing there. at NIDA way of but don't research there studies, dollars, as see business looking that or much with are we on certainly affects I that seeing, have. not any on side the research that and lot Seeing we can is us some that some SAMHSA

Joseph Yanchunis

question Got DSOs it. And your the quarter? then DSOs. were the my in down comes to What last

Michael Cartwright

approximated quarter; quarter. our from items was last conversion. own Island's of quarter about a this the had as quarter were of about that however, were well. other synergies decline sequentially AdCare, the discrete such a from for Cash couple conversion party collections, of the an there for a with and billing we as temporary cash There's pretty e-billing to your Rhode in down to talked third days we DSOs collections at specific some very XXX the was due items one

We cash improve QX the average over collections and are for seeing QX.

Joseph Yanchunis

were Those questions. my great. Okay,

Michael Cartwright

you. Thank

Operator

Mr. our Cartwright conclude over Michael session. the I'd remarks. closing will At like turn conference any back to for to This time, this question-and-answer

Michael Cartwright

the much. on want patience. very you I call. everybody do appreciate your thank Thank to for being I

of we and commitment to census game overcome year working working us confident you working Have that very in we a solve what and that Thank I do through expected and but good management I have that plan. a diligently day. for to in to We're place feel think to the like your we're Centers. place, on August, that feel none volume American every plan We're the much obstacle. put patience team in happened for Addiction in the that day issues. good

Operator

is concluded. attending now you Thank conference presentation. today's The for

disconnect now may lines. You your

Ares Acquisition (AAC) 9 Nov 182018 Q3 Earnings call transcript