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Section 1: 8-K (8-K)

aac-8k_20180502.htm

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 2, 2018

 

AAC HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Nevada

 

001-36643

 

35-2496142

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

200 Powell Place

Brentwood, Tennessee

(Address of Principal Executive Offices)

 

 

37027

(Zip Code)

(615) 732-1231

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 


 

Item 2.02.  Results of Operations and Financial Condition.

 

On May 2, 2018, AAC Holdings, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the results of operations for the first quarter ended March 31, 2018. A copy of the Press Release is furnished herewith as Exhibit 99.1.

 

In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits.

 

99.1   Press Release, dated May 2, 2018


 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

           

 

 

 

 

AAC HOLDINGS, INC

 

 

 

 

 

 

By:

/s/ Michael T. Cartwright

 

 

 

Michael T. Cartwright

 

 

 

Chairman and Chief Executive Officer

 

 

Date: May 2, 2018

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

aac-ex991_6.htm

Exhibit 99.1

 

Investor Contact:

Elizabeth Saunders

Media Contact:

Joy Sutton

 

Clermont Partners

 

(615) 587-7728

 

(312) 690-6008

 

Mediarequest@contactAAC.com

 

IR@contactAAC.com

 

 

 

AAC Holdings, Inc. Reports First Quarter 2018 Results

Early stages of AdCare integration proving successful

Quarter in-line with Company expectations ahead of back half 2018 growth targets

BRENTWOOD, Tenn., May 2, 2018 - AAC Holdings, Inc. (NYSE: AAC) today announced financial results for the first quarter ended March 31, 2018 and reiterates its previously issued full year 2018 guidance.

First Quarter 2018 Operational and Financial Highlights:

(All comparisons are to the comparable prior-year period, unless otherwise noted)

 

Total revenue increased 18% to $78.5 million on a comparable accounting basis (increased 7% as reported)

 

Average daily inpatient revenue (ADR) increased 46% to $933

 

Total average daily census (ADC) increased to 1,027 compared with 956

 

Outpatient visits increased 83% to 30,313

 

Net loss attributable to AAC Holdings, Inc. common stockholders was $0.2 million, or $(0.01) per diluted common share

 

Adjusted EBITDA increased 20% to $15.1 million (see non-GAAP reconciliation herein)

 

Adjusted earnings per diluted common share was $0.13 (see non-GAAP reconciliation herein)

 

“We are off to a solid start in 2018,” said Michael Cartwright, Chairman and Chief Executive Officer of AAC Holdings, Inc. “A highlight for us this quarter was the closing of our acquisition of AdCare on March 1, and the integration since then has been going well. We also continue to be disciplined in improving our operational efficiencies, and I’m happy to see DSOs continuing to trend down to less than 100 days.”

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 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.

First 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 18% to $78.5 million compared with $66.5 million in the same period in the prior year. Total revenue as reported increased 7%.  

Inpatient treatment facility revenue, less the provision for doubtful accounts, increased 40% to $64.9 million compared with $46.3 million in the same period in the prior year. Average daily inpatient revenue increased 46% to $933 compared with $640 in the same period in the prior year.

Outpatient and sober living facility revenue, less the provision for doubtful accounts, increased 60% to $8.4 million compared with $5.3 million in the same period in the prior year. Average revenue per outpatient visit (ARV) decreased 13% to $278 compared with $318 in the same period in the prior year.

Client related diagnostic services revenue, less the provision for doubtful accounts, decreased 80% to $2.6 million compared with $13.0 million in the same period in the prior year. The decrease in client related diagnostic services is a result of previously anticipated lower reimbursements combined with a shift in the mix of client related diagnostic services from higher reimbursed tests to lower reimbursed tests.

Non-client related revenue, less the provision for doubtful accounts, increased 40% to $2.6 million compared with $1.8 million in the same period in the prior year.

Net loss attributable to AAC Holdings, Inc. common stockholders was $0.2 million, or $(0.01) per diluted common share, compared with $0.6 million, or $(0.03) per diluted common share, in the prior-year period.

Adjusted EBITDA increased 20% to $15.1 million compared with $12.7 million for the same period in the prior year. Adjusted net income attributable to AAC Holdings, Inc. common stockholders was $3.2 million, or $0.13 per diluted common share, for both the current and prior year period. 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 March 31, 2018, AAC Holdings’ balance sheet reflected cash and cash equivalents of $14.3 million, net property and equipment of $169.7 million and total debt of $303.8 million, net of debt issuance costs of $9.4 million.

Cash flows used in operations totaled $19.0 million for the first quarter of 2018 and included a $25.0 million payment related to the settlement of the Tennessee class action litigation matter. Capital expenditures in the first quarter of 2018 totaled $7.3 million.

2

 


2018 Outlook

AAC maintains its previously issued guidance, which includes AdCare from the March 1, 2018 acquisition date, as follows:

 

 

Full Year 2018 Guidance

 

 

(in millions, except per share data)

Total Revenues

 

$325 - $340

Inpatient treatment facility revenue

 

$262 - $266

Outpatient and sober living facility revenue

 

$40 - $46

Client related diagnostic services revenue

 

$12 - $15

Non-client related revenue

 

$11 - $13

 

 

 

Adjusted EBITDA

 

$68 - $72

Adjusted Earnings per Diluted Common Share

 

$0.75 - $0.80

The Company expects an annual effective tax rate of 24% to 26% and diluted weighted-average common shares outstanding of approximately 24.5 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 Thursday, May 3, 2018, at 10:00 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 May 10, 2018, by dialing 412-317-0088 and entering the replay access code, 10119636. 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.

3

 


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 or laboratories; (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 diagnostic services; (iv) our failure to successfully achieve growth through acquisitions and de novo projects; (v) our failure to achieve anticipated financial results from contemplated and prior acquisitions; (vi) maintaining compliance with applicable regulatory authorities, licensure and permits to operate our facilities and laboratories; (vii) a disruption in our business and reputational and economic risks associated with the civil securities claims brought by shareholders or claims by various parties; (viii) inability to meet the covenants in our loan documents; (ix) our inability to effectively integrate acquired facilities; and (x) 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.

4

 


AAC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Unaudited

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

Revenues

 

 

 

 

 

 

 

Client related revenue

$

75,923

 

 

$

71,219

 

Non-client related revenue

 

2,550

 

 

 

1,820

 

Total revenues

 

78,473

 

 

 

73,039

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Salaries, wages and benefits

 

40,084

 

 

 

36,772

 

Client related services

 

7,747

 

 

 

6,378

 

Provision for doubtful accounts

 

 

 

 

6,587

 

Advertising and marketing

 

2,599

 

 

 

3,775

 

Professional fees

 

3,650

 

 

 

2,642

 

Other operating expenses

 

10,588

 

 

 

8,789

 

Rentals and leases

 

2,116

 

 

 

1,885

 

Litigation settlement

 

2,791

 

 

 

 

 

Depreciation and amortization

 

5,464

 

 

 

5,469

 

Acquisition-related expenses

 

305

 

 

 

183

 

Total operating expenses

 

75,344

 

 

 

72,480

 

Income from operations

 

3,129

 

 

 

559

 

Interest expense, net

 

6,709

 

 

 

2,734

 

Other expense, net

 

9

 

 

 

34

 

Loss before income tax benefit

 

(3,589

)

 

 

(2,209

)

Income tax benefit

 

(1,494

)

 

 

(565

)

Net loss

 

(2,095

)

 

 

(1,644

)

Less: net loss attributable to noncontrolling interest

 

1,893

 

 

 

1,041

 

Net loss attributable to AAC Holdings, Inc.

      common stockholders

$

(202

)

 

$

(603

)

 

 

 

 

 

 

 

 

Basic loss per common share

$

(0.01

)

 

$

(0.03

)

Diluted loss per common share

$

(0.01

)

 

$

(0.03

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

23,744,208

 

 

 

23,163,626

 

Diluted

 

23,744,208

 

 

 

23,163,626

 


5

 


AAC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

Unaudited

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,341

 

 

$

13,818

 

Accounts receivable, net of allowances

 

 

99,581

 

 

 

94,096

 

Prepaid expenses and other current assets

 

 

3,354

 

 

 

4,022

 

Total current assets

 

 

117,276

 

 

 

111,936

 

Property and equipment, net

 

 

169,744

 

 

 

152,548

 

Goodwill

 

 

197,184

 

 

 

134,396

 

Intangible assets, net

 

 

13,712

 

 

 

8,829

 

Deferred tax assets, net

 

 

9,030

 

 

 

8,010

 

Other assets

 

 

12,468

 

 

 

12,556

 

Total assets

 

$

519,414

 

 

$

428,275

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,338

 

 

$

4,579

 

Accrued and other current liabilities

 

 

34,039

 

 

 

27,661

 

Accrued litigation

 

 

1,000

 

 

 

23,607

 

Current portion of long-term debt

 

 

7,319

 

 

 

4,722

 

Total current liabilities

 

 

45,696

 

 

 

60,569

 

Long-term debt, net of current portion and debt issuance costs

 

 

296,443

 

 

 

196,451

 

Financing lease obligation, net of current portion

 

 

24,515

 

 

 

24,541

 

Other long-term liabilities

 

 

12,277

 

 

 

10,546

 

Total liabilities

 

 

378,931

 

 

 

292,107

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

157,202

 

 

 

150,994

 

Noncontrolling interest

 

 

(16,719

)

 

 

(14,826

)

Total stockholders’ equity including noncontrolling interest

 

 

140,483

 

 

 

136,168

 

Total liabilities and stockholders’ equity

 

$

519,414

 

 

$

428,275

 


6

 


AAC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Unaudited

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

Cash flows (used in) provided by operating activities:

 

 

 

 

 

 

 

Net loss

$

(2,095

)

 

$

(1,644

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Provision for doubtful accounts

 

 

 

 

6,587

 

Depreciation and amortization

 

5,464

 

 

 

5,469

 

Equity compensation

 

798

 

 

 

2,137

 

Loss on disposal of property and equipment

 

34

 

 

 

 

Amortization of debt issuance costs

 

637

 

 

 

173

 

Deferred income taxes

 

(1,020

)

 

 

(718

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(1,129

)

 

 

(13,397

)

Prepaid expenses and other assets

 

1,485

 

 

 

406

 

Accounts payable

 

(4,739

)

 

 

4,556

 

Accrued liabilities

 

4,141

 

 

 

759

 

Accrued litigation

 

(22,300

)

 

 

 

Other long-term liabilities

 

(275

)

 

 

28

 

Net cash (used in) provided by operating activities

 

(18,999

)

 

 

4,356

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

(7,305

)

 

 

(10,687

)

Acquisition of subsidiaries

 

(65,185

)

 

 

 

Net cash used in investing activities

 

(72,490

)

 

 

(10,687

)

Cash flows provided by financing activities:

 

 

 

 

 

 

 

Payments on 2015 Credit Facility and Deerfield Facility

 

 

 

 

(2,344

)

Proceeds from 2015 Credit Facility and Deerfield Facility,

net of deferred financing costs

 

 

 

 

11,679

 

Payments on 2017 Credit Facility

 

(1,724

)

 

 

 

Proceeds from 2017 Credit Facility, net of deferred financing costs

 

94,432

 

 

 

 

Payments on capital leases and other

 

(221

)

 

 

(193

)

Payment of employee taxes for net share settlement

 

(475

)

 

 

(895

)

Net cash provided by financing activities

 

92,012

 

 

 

8,247

 

Net change in cash and cash equivalents

 

523

 

 

 

1,916

 

Cash and cash equivalents, beginning of period

 

13,818

 

 

 

3,964

 

Cash and cash equivalents, end of period

$

14,341

 

 

$

5,880

 


7

 


AAC HOLDINGS, INC.

 

OPERATING METRICS

 

Unaudited

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

Operating Metrics:

 

 

 

 

 

 

 

New admissions1

 

3,739

 

 

 

3,216

 

Average daily inpatient census2

 

773

 

 

 

802

 

Average daily sober living census3

 

254

 

 

 

154

 

Total average daily census

 

1,027

 

 

 

956

 

Average episode length (days)4

 

25

 

 

 

27

 

Average daily inpatient revenue5

$

933

 

 

$

640

 

Revenue per admission6

$

20,306

 

 

$

20,097

 

Outpatient visits7

 

30,313

 

 

 

16,550

 

Revenue per outpatient visit8

$

278

 

 

$

318

 

Client related diagnostic services9

 

4

%

 

 

23

%

Inpatient bed count at end of period10

 

1,112

 

 

 

1,128

 

Effective inpatient bed count at end of period11

 

1,108

 

 

 

1,063

 

Average effective inpatient bed utilization12

 

78

%

 

 

75

%

 

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.

8

 


AAC HOLDINGS, INC.

 

SUPPLEMENTAL RECONCILIATION OF NON-GAAP DISCLOSURES

 

Unaudited

 

(Dollars in thousands)

 

Reconciliation of Adjusted EBITDA to Net Loss Attributable to AAC Holdings, Inc. Common Stockholders

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

Net loss attributable to AAC Holdings, Inc. common stockholders

$

(202

)

 

$

(603

)

Non-GAAP Adjustments:

 

 

 

 

 

 

 

Interest expense

 

6,709

 

 

 

2,734

 

Depreciation and amortization

 

5,464

 

 

 

5,469

 

Income tax benefit

 

(1,494

)

 

 

(565

)

Net loss attributable to noncontrolling interest

 

(1,893

)

 

 

(1,041

)

Stock-based compensation and related tax reimbursements

 

798

 

 

 

2,137

 

Litigation settlement and California matter related expense

 

3,202

 

 

 

159

 

Acquisition-related expense

 

429

 

 

 

272

 

De novo start-up and other expense

 

428

 

 

 

3,354

 

Employee severance expense

 

911

 

 

 

743

 

Facility closure operating losses and expense

 

792

 

 

 

 

Adjusted EBITDA

$

15,144

 

 

$

12,659

 

 

Adjusted EBITDA, adjusted net 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 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) 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 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, employee severance expense and facility closure operating losses and expense.

9

 


AAC HOLDINGS, INC.

 

SUPPLEMENTAL RECONCILIATION OF NON-GAAP DISCLOSURES

 

Unaudited

 

(Dollars in thousands, except per share data)

 

Reconciliation of Adjusted Net Income Attributable to AAC Holdings, Inc. Common Stockholders to Net Loss Attributable to AAC Holdings, Inc. Common Stockholders

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

Net loss attributable to AAC Holdings, Inc. common stockholders

$

(202

)

 

$

(603

)

Non-GAAP Adjustments:

 

 

 

 

 

 

 

Litigation settlement and California matter related expense

 

3,202

 

 

 

159

 

Acquisition-related expense

 

429

 

 

 

272

 

De novo start-up and other expense

 

428

 

 

 

3,354

 

Employee severance expense

 

911

 

 

 

743

 

Facility closure operating losses and expense

 

792

 

 

 

 

Income tax effect of non-GAAP adjustments

 

(2,399

)

 

 

(1,158

)

Adjusted net income attributable to AAC Holdings, Inc. common stockholders

$

3,161

 

 

$

2,767

 

Weighted-average common shares outstanding - diluted

 

23,744,208

 

 

 

23,163,626

 

GAAP diluted loss per common share

$

(0.01

)

 

$

(0.03

)

Adjusted earnings per diluted common share

$

0.13

 

 

$

0.12

 

 

Management defines adjusted net income attributable to AAC Holdings, Inc. common stockholders as net income (loss) attributable 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, employee severance expense, 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.

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