AAC Holdings, Inc. (NYSE:AAC) Q2 2019 Earnings Conference Call - Final Transcript
Aug 30, 2019 • 09:00 am ET
sequential basis adjusted EBITDA went from a loss of $12 million in the fourth quarter of 2018 to a loss of $6.5 million in the first quarter of 2019 to positive adjusted EBITDA of $3 million in the second quarter of 2019. This represents a $15 million or 125% improvement in quarterly adjusted EBITDA, since the fourth quarter of 2018. Overall, as Michael mentioned earlier on the call, while we still have a work to do, I'm pleased with the sequential momentum so far in 2019.
Turning to our 2019 guidance, our full-year guidance has revenue in the range of $255 million to $275 million and adjusted EBITDA in the range of $16 million to $21 million. Taking into account actual results through the first half of 2019, this implies revenue of $137 million to $157 million and adjusted EBITDA $20 million to $25 million in the second half of 2019.
I wanted to spend a few minutes bridging our second half 2019 adjusted EBITDA guidance of $25 million, which is detailed on Slide 7 and 8 of the earnings release supplement that we referenced earlier on this call. In the second quarter of 2019 adjusted EBITDA was $3 million, which on a run rate basis is $6 million for the second half of 2019. There's an additional $7 million of adjusted EBITDA, which is expected to come from census improvement in the second half of 2019. The census improvement assumes about a 4% increase in average daily expenses in the second half of 2019 coming off of Q2 of 2019. As referenced on Slide 5 of the earnings release supplement, through July 2019, we already have experienced a 2% increase in average daily census. We expect another $8 million to come in the form of increased revenues from client related diagnostic services.
As I mentioned earlier on the call, we recorded additional reserves through outstanding accounts receivable for client related diagnostic services, which totaled $4 million in Q2 of 2019. As this is not expected to reoccur in the second half of 2019, this results in an incremental improvement of $8 million over the remainder of 2019. The final component of the bridge to get to the $25 million of adjusted EBITDA in the second half, comes from additional operating expense reductions totaling $4 million. These are from a combination of vendor spend reductions and rationalization and decreases in salaries, wages and benefits.
I would also point out, through July 2019 we've already experienced operating expense reductions from Q2 2019
that gives us insight into operating expenses in the second half of 2019.
This concludes our prepared remarks. I'll now turn the call over to the operator for questions.