CEO of AAC says company ‘on right trajectory’ after poor Q4


CEO of AAC says company ‘on right trajectory’ after poor Q4

Cartwright says team ‘going a little bit away from the Internet’ with marketing; shares drop 20%

By KARA HARTNETT

NashvillePost.com

The leaders of addiction treatment provider AAC Holdings say they are making a comeback after a poor fourth quarter brought on by substantial decline to their website traffic after a Google search engine algorithm change.

For the fourth quarter of 2018, revenues at Brentwood-based AAC fell 27 percent from the same period of 2017 to $57 million. Inpatient treatment facility revenue dropped 30 percent to $47 million while outpatient and sober living facility revenue fell 35 percent to $6 million. For the year, revenue still rose about two percent to $236 million, with the acquisition of AdCare in early March 2018 helping offset the poor third- and fourth-quarter results.

As part of its response to Google’s algorithm change, AAC’s Chief Digital and Marketing Officer Stephen Ebbett — who was hired last summer — has launched initiatives to rethink the way the addiction treatment provider reaches its consumers.

aac
Michael Cartwright

“A lot of the ideas around localized marketing probably would be a better way to go,” Chairman and CEO Michael Cartwright said on the company’s earnings call Tuesday. “We’ve just changed up strategies. We’re seeing significant improvement by changing some of those strategies and tactics, going a little bit away from the Internet, a little bit more to localized business development.”

Since the alterations, Cartwright said the company has seen tremendous improvement in the first quarter much more in line with census norms.

“We’ve had a 26 percent improvement in the first quarter from the fourth quarter,” Cartwright said. “I feel like we’re on the right trajectory. And I’m hoping over time we can continue to get to 85 percent occupied and not spend more money on advertising because I think that is the wrong approach.”

The new growth comes only after the company enacted a series of cost cuts that included laying off roughly 100 people, selling its New Orleans operations and consolidating various markets — including Las Vegas and Southern California.

Cartwright also noted AAC may look to sell and lease back some of its real estate.

“There are multiple models out there that we may go down. I think it’s a little early in the conversation,” Cartwright said. “Look, we have good assets. We might do a transaction with those assets that could help reduce our cost of capital. And I think that overall would lead to a better shareholder value.”

Investors seem to be taking a wait-and-see attitude to the efforts of Cartwright and Ebbett. On Tuesday, shares of the company (Ticker: AAC) fell almost 20 percent to $1.73.

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