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AAC’s finances are still rebounding one year after Google’s search algorithm hurt visibility

By MATT BLOIS

One year after Google’s search algorithm made it harder to find information about American Addiction Centers online, the company’s finances are still rebounding.

According to a press release, the company lost about $16.3 million in the second quarter of 2019.

That’s an improvement over the company’s first quarter performance, but a much larger loss than the same quarter last year when it lost about $3 million. 

The company has also lowered its 2019 revenue guidance by $35 million since the beginning of the year. 

Brentwood-based AAC issued a press release with some financial numbers and held a conference call on Friday morning, but hadn’t filed a quarterly report with the SEC by Friday afternoon.

In the summer of 2018 Google changed its search algorithm, making it harder to find American Addiction Center websites online.

Many of the company’s clients come from directory websites it manages such as Rehabs.com and Recovery.org so the change significantly reduced patient numbers.

Those websites contain lists of treatment centers from across the country — not only AAC treatment centers — and direct visitors to AAC call centers.

The daily average number of clients at the company’s facilities fell by about 18 percent from the second quarter of 2018 to the first quarter of 2019. AAC cited Google’s updated search algorithm as the cause of the drop.

The company is climbing out of that trough. The average number of patients on a given day has increased since the beginning of the year.

However, the average number of patients during the second quarter of 2019 was still about 15 percent lower than the same period last year.

On a conference call Friday morning, CEO Michael Cartwright said the company is now starting to do more local advertising and has seen more local referrals.

The company earned $62.7 million in revenue, down about 28 percent compared to the same period last year. However, revenue has increased by about 11 percent since the beginning of the year.

The company reported that cost cutting measures are effective. It cut about $15 million over the last year, about an 18 percent reduction.

Cartwright also updated investors about company’s efforts to reduce its debt load. That could include selling off some of the company’s real estate.

“We remain committed to our strategic initiatives to improve the balance sheet and enhance value to all stakeholders by the end of the year,” Cartwright said on a conference call. “Our goal is to utilize our existing assets to reduce our senior debt by at least $100 million by the end of the year.”

In August, AAC reported that it was considering numerous investment offers. The company also announced that it was talking to a group of banks about amended a high interest rate loan signed in March because AAC has violated some of the conditions.

Shares of AAC stayed fairly level on Friday, trading at about $0.61.

By | 2019-08-30T14:59:27-05:00 August 30th, 2019|Categories: Business, BW-News|Tags: |0 Comments

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