Toggle SGML Header (+)


Section 1: 8-K (8-K)

aac-8k_20180801.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):  August 1, 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 August 1, 2018, AAC Holdings, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the results of operations for the second quarter ended June 30, 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 August 1, 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: August 1, 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 Second Quarter 2018 Results

Reaffirms 2018 Annual Guidance

BRENTWOOD, Tenn., August 1, 2018 - AAC Holdings, Inc. (NYSE: AAC) today announced financial results for the second quarter ended June 30, 2018 and reiterates its previously issued full year 2018 guidance.

Second Quarter 2018 Operational and Financial Highlights:

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

 

Total revenue increased 27% to $86.8 million on a comparable accounting basis (increased 11% as reported)

 

Average daily inpatient revenue (ADR) increased 12% to $841

 

Total average daily census (ADC) increased to 1,157 compared with 961

 

Outpatient visits increased 230% to 51,019

 

Net loss attributable to AAC Holdings, Inc. common stockholders was $3.0 million, or $(0.12) per diluted common share

 

Adjusted EBITDA increased 2% to $14.8 million (see non-GAAP reconciliation herein)

 

Adjusted earnings per diluted common share was $0.09 (see non-GAAP reconciliation herein)

“We are pleased with the progress we have made this year as we continue to execute to plan and make strides in transforming our sales and marketing team, including opening a new admissions center and bringing on new senior leadership," said Michael Cartwright, Chairman and Chief Executive Officer of AAC Holdings, Inc. "Operations during the quarter remained very strong with the integration of AdCare going well and the continued improvements in cash collections. We remain focused on our sales and marketing efforts and feel confident we will meet our annual guidance with continued momentum entering into 2019.”

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 for those periods 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.

Second 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 27% to $86.8 million compared with $68.5 million in the same period in the prior year. Total revenue as reported increased 11%.

Inpatient treatment facility revenue, on a comparable accounting basis, increased 21% to $66.7 million compared with $55.1 million in the same period in the prior year. ADR increased 12% to $841 compared with $752 in the same period in the prior year.

Outpatient and sober living facility revenue, on a comparable accounting basis, increased 60% to $9.0 million compared with $5.6 million in the same period in the prior year. Average revenue per outpatient visit (ARV) decreased 56% to $177 compared with $403 in the same period in the prior year.

Client related diagnostic services revenue, on a comparable accounting basis, increased 39% to $7.5 million compared with $5.4 million in the same period in the prior year.

Non-client related revenue, on a comparable accounting basis, increased 48% to $3.5 million compared with $2.4 million in the same period in the prior year.

Net loss attributable to AAC Holdings, Inc. common stockholders was $3.0 million, or $(0.12) per diluted common share, compared with $1.9 million, or $(0.08) per diluted common share, in the prior-year period.

Adjusted EBITDA increased 2% to $14.8 million compared with $14.5 million for the same period in the prior year. Adjusted net income attributable to AAC Holdings, Inc. common stockholders decreased to $2.2 million, or $0.09 per diluted common share, compared with $6.1 million, or $0.26 per diluted common share, for the same period in the prior year. 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 June 30, 2018, AAC Holdings’ balance sheet reflected cash and cash equivalents of $11.4 million, net property and equipment of $168.4 million and total debt of $302.0 million, net of debt issuance costs of $9.4 million.

Cash flows provided by operations totaled $3.3 million and maintenance capital expenditures totaled $1.1 million for the second quarter of 2018.

2

 


2018 Outlook

AAC maintains its previously issued guidance 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 now expects an annual effective tax rate of 20% to 22%, down from 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, August 2, 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 August 9, 2018, by dialing 412-317-0088 and entering the replay access code, 10122876. 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; (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, 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

 

 

Six Months Ended

 

 

June 30, 2018

 

 

June 30, 2017

 

 

June 30, 2018

 

 

June 30, 2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Client related revenue

$

83,293

 

 

$

75,692

 

 

$

159,216

 

 

$

146,911

 

Non-client related revenue

 

3,468

 

 

 

2,350

 

 

 

6,018

 

 

 

4,170

 

Total revenues

 

86,761

 

 

 

78,042

 

 

 

165,234

 

 

 

151,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

46,850

 

 

 

34,508

 

 

 

86,934

 

 

 

71,280

 

Client related services

 

8,393

 

 

 

6,646

 

 

 

16,140

 

 

 

13,024

 

Provision for doubtful accounts

 

366

 

 

 

9,496

 

 

 

366

 

 

 

16,083

 

Advertising and marketing

 

2,584

 

 

 

3,266

 

 

 

5,183

 

 

 

7,041

 

Professional fees

 

4,950

 

 

 

3,039

 

 

 

8,600

 

 

 

5,681

 

Other operating expenses

 

12,194

 

 

 

8,199

 

 

 

22,782

 

 

 

16,988

 

Rentals and leases

 

2,563

 

 

 

1,849

 

 

 

4,679

 

 

 

3,734

 

Litigation settlement

 

244

 

 

 

 

 

 

3,035

 

 

 

 

Depreciation and amortization

 

5,909

 

 

 

5,058

 

 

 

11,373

 

 

 

10,527

 

Acquisition-related expenses

 

 

 

 

42

 

 

 

305

 

 

 

225

 

Total operating expenses

 

84,053

 

 

 

72,103

 

 

 

159,397

 

 

 

144,583

 

Income from operations

 

2,708

 

 

 

5,939

 

 

 

5,837

 

 

 

6,498

 

Interest expense, net

 

7,893

 

 

 

2,846

 

 

 

14,602

 

 

 

5,580

 

Loss on extinguishment of debt

 

 

 

 

5,435

 

 

 

 

 

 

5,435

 

Other (income) expense, net

 

(98

)

 

 

(6

)

 

 

(89

)

 

 

28

 

Loss before income tax (benefit) expense

 

(5,087

)

 

 

(2,336

)

 

 

(8,676

)

 

 

(4,545

)

Income tax (benefit) expense

 

(84

)

 

 

562

 

 

 

(1,578

)

 

 

(3

)

Net loss

 

(5,003

)

 

 

(2,898

)

 

 

(7,098

)

 

 

(4,542

)

Less: net loss attributable to noncontrolling interest

 

1,990

 

 

 

982

 

 

 

3,883

 

 

 

2,023

 

Net loss attributable to AAC Holdings, Inc.

      common stockholders

$

(3,013

)

 

$

(1,916

)

 

$

(3,215

)

 

$

(2,519

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share

$

(0.12

)

 

$

(0.08

)

 

$

(0.13

)

 

$

(0.11

)

Diluted loss per common share

$

(0.12

)

 

$

(0.08

)

 

$

(0.13

)

 

$

(0.11

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

24,166,976

 

 

 

23,242,177

 

 

 

23,956,760

 

 

 

23,203,081

 

Diluted

 

24,166,976

 

 

 

23,242,177

 

 

 

23,956,760

 

 

 

23,203,081

 


5

 


AAC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

Unaudited

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

June 30

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,353

 

 

$

13,818

 

Accounts receivable, net of allowances

 

 

97,362

 

 

 

94,096

 

Prepaid expenses and other current assets

 

 

4,638

 

 

 

4,022

 

Total current assets

 

 

113,353

 

 

 

111,936

 

Property and equipment, net

 

 

168,373

 

 

 

152,548

 

Goodwill

 

 

197,184

 

 

 

134,396

 

Intangible assets, net

 

 

13,201

 

 

 

8,829

 

Deferred tax assets, net

 

 

9,572

 

 

 

8,010

 

Other assets

 

 

11,069

 

 

 

12,556

 

Total assets

 

$

512,752

 

 

$

428,275

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,613

 

 

$

4,579

 

Accrued and other current liabilities

 

 

30,487

 

 

 

27,661

 

Accrued litigation

 

 

 

 

 

23,607

 

Current portion of long-term debt

 

 

6,723

 

 

 

4,722

 

Total current liabilities

 

 

43,823

 

 

 

60,569

 

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

 

 

295,322

 

 

 

196,451

 

Financing lease obligation, net of current portion

 

 

24,488

 

 

 

24,541

 

Other long-term liabilities

 

 

12,322

 

 

 

10,546

 

Total liabilities

 

 

375,955

 

 

 

292,107

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

155,506

 

 

 

150,994

 

Noncontrolling interest

 

 

(18,709

)

 

 

(14,826

)

Total stockholders’ equity including noncontrolling interest

 

 

136,797

 

 

 

136,168

 

Total liabilities and stockholders’ equity

 

$

512,752

 

 

$

428,275

 


6

 


AAC HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Unaudited

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 2018

 

 

June 30, 2017

 

Cash flows (used in) provided by operating activities:

 

 

 

 

 

 

 

Net loss

$

(7,098

)

 

$

(4,542

)

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

operating activities:

 

 

 

 

 

 

 

Provision for doubtful accounts

 

366

 

 

 

16,083

 

Depreciation and amortization

 

11,373

 

 

 

10,527

 

Equity compensation

 

2,159

 

 

 

4,189

 

Loss on extinguishment of debt

 

 

 

 

5,435

 

Loss on disposal of property and equipment

 

34

 

 

 

 

Amortization of debt issuance costs

 

1,357

 

 

 

364

 

Deferred income taxes

 

(1,562

)

 

 

(582

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

724

 

 

 

(25,276

)

Prepaid expenses and other assets

 

1,475

 

 

 

690

 

Accounts payable

 

(1,464

)

 

 

1,286

 

Accrued and other current liabilities

 

457

 

 

 

932

 

Accrued litigation

 

(23,300

)

 

 

(406

)

Other long-term liabilities

 

(230

)

 

 

(311

)

Net cash (used in) provided by operating activities

 

(15,709

)

 

 

8,389

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

(11,196

)

 

 

(18,665

)

Acquisition of subsidiaries

 

(65,185

)

 

 

 

Net cash used in investing activities

 

(76,381

)

 

 

(18,665

)

Cash flows provided by financing activities:

 

 

 

 

 

 

 

Payments on 2015 Credit Facility and Deerfield Facility

 

 

 

 

(204,773

)

Proceeds from 2015 Credit Facility and Deerfield Facility,

net of deferred financing costs

 

 

 

 

11,679

 

Payments on 2017 Credit Facility

 

(3,448

)

 

 

 

Proceeds from 2017 Credit Facility, net of deferred financing costs

 

94,286

 

 

 

211,494

 

Payments on capital leases and other

 

(440

)

 

 

(400

)

Payments on AdCare Note

 

(250

)

 

 

 

Payment of employee taxes for net share settlement

 

(523

)

 

 

(895

)

Net cash provided by financing activities

 

89,625

 

 

 

17,105

 

Net change in cash and cash equivalents

 

(2,465

)

 

 

6,829

 

Cash and cash equivalents, beginning of period

 

13,818

 

 

 

3,964

 

Cash and cash equivalents, end of period

$

11,353

 

 

$

10,793

 


7

 


AAC HOLDINGS, INC.

 

OPERATING METRICS

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30, 2018

 

 

June 30, 2017

 

 

June 30, 2018

 

 

June 30, 2017

 

Operating Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New admissions1

 

5,242

 

 

 

3,008

 

 

 

8,981

 

 

 

6,224

 

Average daily inpatient census2

 

872

 

 

 

805

 

 

 

823

 

 

 

804

 

Average daily sober living census3

 

285

 

 

 

156

 

 

 

270

 

 

 

155

 

Total average daily census

 

1,157

 

 

 

961

 

 

 

1,093

 

 

 

959

 

Average episode length (days)4

 

21

 

 

 

28

 

 

 

23

 

 

 

28

 

Average daily inpatient revenue5

$

841

 

 

$

752

 

 

$

884

 

 

$

696

 

Revenue per admission6

$

15,890

 

 

$

25,164

 

 

$

17,728

 

 

$

23,604

 

Outpatient visits7

 

51,019

 

 

 

15,463

 

 

 

81,332

 

 

 

32,013

 

Revenue per outpatient visit8

$

177

 

 

$

403

 

 

$

214

 

 

$

373

 

Client related diagnostic services9

 

9

%

 

 

10

%

 

 

6

%

 

 

16

%

Inpatient bed count at end of period10

 

1,112

 

 

 

1,100

 

 

 

1,112

 

 

 

1,100

 

Effective inpatient bed count at end of period11

 

1,108

 

 

 

957

 

 

 

1,108

 

 

 

957

 

Average effective inpatient bed utilization12

 

79

%

 

 

80

%

 

 

78

%

 

 

78

%

 

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

 

 

Six Months Ended

 

 

 

June 30, 2018

 

 

June 30, 2017

 

 

June 30, 2018

 

 

June 30, 2017

 

Net loss attributable to AAC Holdings, Inc. common stockholders

 

$

(3,013

)

 

$

(1,916

)

 

$

(3,215

)

 

$

(2,519

)

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7,893

 

 

 

2,846

 

 

 

14,602

 

 

 

5,580

 

Depreciation and amortization

 

 

5,909

 

 

 

5,058

 

 

 

11,373

 

 

 

10,527

 

Income tax benefit

 

 

(84

)

 

 

562

 

 

 

(1,578

)

 

 

(3

)

Net loss attributable to noncontrolling interest

 

 

(1,990

)

 

 

(982

)

 

 

(3,883

)

 

 

(2,023

)

Stock-based compensation and related tax reimbursements

 

 

1,361

 

 

 

2,052

 

 

 

2,159

 

 

 

4,189

 

Litigation settlement and California matter related expense

 

 

1,201

 

 

 

402

 

 

 

4,403

 

 

 

561

 

Acquisition-related expense

 

 

24

 

 

 

42

 

 

 

453

 

 

 

314

 

De novo start-up and other expense

 

 

382

 

 

 

928

 

 

 

640

 

 

 

4,282

 

Recruitment and retention expense

 

 

715

 

 

 

 

 

 

885

 

 

 

 

Employee severance expense

 

 

384

 

 

 

46

 

 

 

1,295

 

 

 

789

 

Loss on extinguishment of debt

 

 

 

 

 

5,435

 

 

 

 

 

 

5,435

 

Facility closure operating losses and expense

 

 

1,993

 

 

 

 

 

 

2,785

 

 

 

 

Adjusted EBITDA

 

$

14,775

 

 

$

14,473

 

 

$

29,919

 

 

$

27,132

 

 

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, recruitment and retention expense, 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

 

 

Six Months Ended

 

 

 

June 30, 2018

 

 

June 30, 2017

 

 

June 30, 2018

 

 

June 30, 2017

 

Net loss attributable to AAC Holdings, Inc. common stockholders

 

$

(3,013

)

 

$

(1,916

)

 

$

(3,215

)

 

$

(2,519

)

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement and California matter related expense

 

 

1,201

 

 

 

402

 

 

 

4,403

 

 

 

561

 

Acquisition-related expense

 

 

24

 

 

 

42

 

 

 

453

 

 

 

314

 

De novo start-up and other expense

 

 

382

 

 

 

928

 

 

 

640

 

 

 

4,282

 

Recruitment and retention expense

 

 

715

 

 

 

 

 

 

885

 

 

 

 

Employee severance expense

 

 

384

 

 

 

46

 

 

 

1,295

 

 

 

789

 

Loss on extinguishment of debt

 

 

 

 

 

5,435

 

 

 

 

 

 

5,435

 

Facility closure operating losses and expense

 

 

1,993

 

 

 

 

 

 

2,785

 

 

 

 

Income tax effect of non-GAAP adjustments

 

 

496

 

 

 

1,158

 

 

 

(1,903

)

 

 

 

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

 

$

2,182

 

 

$

6,095

 

 

$

5,343

 

 

$

8,862

 

Weighted-average common shares outstanding - diluted

 

 

24,166,976

 

 

 

23,242,177

 

 

 

23,956,760

 

 

 

23,203,081

 

GAAP diluted loss per common share

 

$

(0.12

)

 

$

(0.08

)

 

$

(0.13

)

 

$

(0.11

)

Adjusted earnings per diluted common share

 

$

0.09

 

 

$

0.26

 

 

$

0.22

 

 

$

0.38

 

 

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, recruitment and retention expense, 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.

10

 

(Back To Top)