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AAC Holdings shoots higher as strong fourth quarter caps off “solid” 2017

The number of people using AAC's treatment centers soared in the fourth quarter, as did the average revenue per patient - something of a double whammy

care worker supporting patient
AAC treats people who are struggling with drug and alcohol addiction, as well as the co-occurring mental and behavioral health issues

AAC Holdings Inc (NYSE:AAC) was one of the top risers in New York early on Thursday after the rehab clinics owner reported a surge in fourth-quarter revenues.

Total revenues rose 19% to US$86.1mln in the three months ended December 31 as American Addiction Centers - largely due to its expanded outpatient and sober living offerings.

More patients, more money

The average number of people using AAC’s live-in facilities rose to 995 (Q4 2016: 962) during the period, while the amount of revenue generated from each of those patients jumped 58% to US$1,054 thanks to improved “operational efficiencies”.

Outpatients visits increased by more than a third to 21,651, while average revenue per outpatient visit rose 16% to US$418.

AAC still posted a net loss of US$18.8mln, or 80 cents a share, as a result of US$23.3mln worth of legal settlement costs and a further US$3.5mln one-time charge from the new US tax reforms.

Underlying earnings (EBITDA), adjusted for one-time items, surged 35% to US$15.1mln, or 10 cents a share.

For the year, the Tennessee-based company reported that its loss widened from US$0.6mln in 2016 to US$20.6mln, or 88 cents per share, last year. Full-year revenues rose 14% to US$317.6mln.
AAC also told investors it expects 2018 revenues to be in the range of US$325mln to US$335mln.

Pending acquisition of AdCare

“Our strong fourth quarter capped off a year of solid performance, providing excellent momentum as we head into the new year,” said chief executive and chairman Michael Cartwright.

“In 2017, we expanded our outpatient and sober living offerings, consolidated facilities in Southern California, Southern Florida and Louisiana to accelerate operational efficiencies, increased our borrowing capacity with a new US$210mln secured term loan facility and a US$55mln revolving credit facility, and announced the pending acquisition of AdCare.”

AAC shares jumped 21.4% to US$10.17 in mid-morning trade on Thursday.

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NYSE:AAC
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