AAC Holdings, Inc. (NYSE:AAC) Q3 2018 Earnings Conference Call Transcript

Dec 06, 2018 • 09:00 am ET

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AAC Holdings, Inc. (NYSE:AAC) Q3 2018 Earnings Conference Call Transcript

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Operator
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, CFO. Please go ahead.

Executive
Andrew McWilliams

Good morning, and welcome to our third quarter 2018 earnings conference call. I'm Andrew McWilliams, CFO of AAC Holdings.

To the extent any non-GAAP financial measure is discussed in today's call, you'll find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by following the IR link to this morning's news release.

(Forward-Looking Cautionary Statements) I would now like to turn the call over to our Chairman and CEO, Michael Cartwright.

Executive
Michael Cartwright

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

This was a difficult quarter, and we're not pleased with the results. We faced some very difficult unanticipated headwinds that sharply impacted call volume. We're navigating these headwinds with process changes in our call center, better training of our employees in the center and a series of employee transitions, including a strengthened executive team leading our marketing department.

We experienced an excellent start to the third quarter with a very strong July; however, in early August, Google launched changes to its algorithm that impacted the search engine optimization position of our health care and medical-related websites. These types of broad changes to Google's algorithm happen from time-to-time and are unannounced. This particular change in health care and wellness-related websites is so hard that SEO analysts are referring to the update as the Medic change.

On a net basis, across all of our websites, this resulted in a sharp downturn in calls to our call center. Overall, calls dropped over 30% when you compare July call totals to September call totals. This led to a total census decline of just under 10% for the July to September period.

Changes we made in our call center to technology, leadership and our reps compensation plan also impacted the quarter. I have told you throughout this year that we would be, and are still, instituting significant changes in our call center to make long-term operational improvement and better serve those in need.

We implemented new technology that our admissions consultants use to interact with callers, changing some of our organizational structure and revising our call center compensation structure and training in connection with new regulations and best practices.

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