AAC Holdings, Inc. (NYSE:AAC) Q4 2018 Earnings Conference Call Transcript

Mar 13, 2019 • 09:00 am ET

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AAC Holdings, Inc. (NYSE:AAC) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the American Addiction Centers' Fourth Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Andrew McWilliams, Chief Financial Officer. Please go ahead.

Executive
Andrew W. McWilliams

Good morning, and welcome to our earnings conference call for the full year and fourth quarter of 2018. I'm Andrew McWilliams, Chief Financial Officer of AAC Holdings.

To the extent any non-GAAP financial measure is used 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 Investor Relations link to this morning's news release.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements among others regarding AAC's expected annual performance for 2019. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements.

Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors among others set forth in AAC's filings with the Securities and Exchange Commission and in the Company's fourth quarter 2018 earnings release, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements.

The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

I would now like to turn the call over to our Chairman and Chief Executive Officer, Michael Cartwright.

Executive
Michael T. Cartwright

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

I think everybody is aware that we faced a series of headwinds starting in August that impacted our results for the back half of 2018 and caused declines in admission and census, which impacted revenue. In response to the weakness, we saw at the end of 2018, we acted quickly to address the near-term weakness. First, we executed several initiatives in sales and marketing, which included leadership enhancements and organizational improvements. We then took measures to implement a series of cost savings initiatives, including corporate expenses.

These actions included the consolidation of our Las Vegas and Southern California markets, the sale of our accounts and operations in Louisiana, consolidation of our lab operations and corresponding reductions in our corporate expenses. Our cost saving initiatives will result in approximately $30 million of annualized cost savings that will benefit 2019 operating margins.

Finally, we took steps to improve our liquidity and flexibility. Recently closing in early March, a $30 million incremental term loan that provided us with