AAC prepares to unveil a new vision as it tries to recover from a drop in patient numbers

AAC prepares to unveil a new vision as it tries to recover from a drop in patient numbers


The Brentwood addiction treatment company American Addiction Centers plans to unveil a new, long-term vision for the company next week.

That announcement comes as the company reports that some patient metrics are improving following a drop last year, but revenues are still much lower than in previous years.

“It’s time to lay out a new vision for the company,” CEO Michael Cartwright said on a conference call Thursday. “I will be sharing with you all our strategic vision for the next decade. It is a bold and exciting plan that will greatly expand on my original vision for the company.”

AAC plans to discuss the new vision on a conference call on Monday, May 13.

Just 23 days after releasing its fourth quarter financial results, AAC reported a net loss of about $22 million for the first quarter of 2019, down from a $1 million profit in 2018. 

The company has been struggling to attract new patients since last summer when Google made changes to its search algorithm that hurt the visibility of AAC’s websites.

To recover from those changes, the company has been increasing its digital marketing efforts. AAC increased its advertising and marketing budget from $2.6 million at the beginning of 2018 to $3.3 million in 2019.

Michael Cartwright

In a press release, Cartwright said those efforts are starting to pay off. New admissions to AAC facilities in the first quarter increased by about 24% compared to 2018. Outpatient visits also increased.

However, the total average daily census of patients decreased by about 7% during the same period. The census increased between January and March, but Cartwright said the company started from a low point.

“The census really dropped dramatically in Q4 when we lost that call volume, what happened with the Google algorithm update,” he said. “We really got to the lowest point in December. You’re starting out in January at the absolute lowest point.”

Many patients find their way to AAC facilities through the company’s directory websites, such as Recovery.org and Rehabs.com. Those websites list a 1-800 number that connects potential patients with an AAC call center.

According to Cartwright, calls to the company’s call centers have bounced back since website traffic dropped precipitously last year, but now fewer callers turn into patients.   

Earlier this week, AAC sued The National Association of Addiction Treatment Providers, an addiction industry trade group, for limiting the company’s access to online advertising.

According to the lawsuit, the trade group considers AAC’s marketing practices unethical and asked Google to prohibit advertisements from companies like AAC. The NAATP prohibits operating directory websites in its code of ethics.

Executives didn’t mention the lawsuit on the conference call Thursday morning, but Cartwright called the company’s directories an important resource for people seeking addiction treatment. He said the websites generate more than 10 million views each month.

Despite the ongoing fight with NAATP, lower patient numbers and lower revenue, Cartwright said he believes the company is moving in the right direction.

In response to an investor question about strategic alternatives, Cartwright said the whole industry is struggling and AAC will weather the storm.

“We feel like we have plenty of levers to pull with assets that we can sell to cover our situation. We feel very, very good about our situation. I wish the equity market felt as good as I did,” he said. “Considering I’m the largest shareholder, I feel pretty damn good.”

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