Shares of addiction treatment company AAC Holdings lost more than 40 percent of their value Tuesday after executives reported a surprise third-quarter loss and cited Google as the main reason for a big drop in its pipeline of potential patients.
“We got hit by a little bit of a meteorite,” Chairman and CEO Michael Cartwright told analysts and investors on a Tuesday conference call, explaining that Google rolled out major changes this summer to its health and wellness search algorithms. That shuffled many of AAC’s marketing efforts out of sight and led to call center activity falling about 30 percent from July to September. That, Cartwright said, was mainly responsible for a patient census drop of almost 10 percent.
As a result, Brentwood-based AAC posted a net loss of $11.5 million in the three months ended Sept. 30. A year ago, the company earned nearly $800,000. Per diluted share, AAC’s loss was 8 cents when analysts had been expecting a profit of 21 cents.
That led investors to throughly revalue AAC’s shares (Ticker: AAC). After closing Monday’s session at $5.31, they opened this morning at $3.77 and slid steadily from there on very heavy volume. Heading into the last half hour of trading, they were changing hands at $2.97, down 44 percent on the day.
The move cut the company’s market capitalization to about $75 million. In March, the shares peaked at $12.87.
Cartwright tried to sound a positive note on his team’s conference call, saying AAC’s business prospects have not fundamentally changed.
“I have no doubt we’ll improve census, deliver higher margins and improve financial discipline,” he said .”And I have every confidence that I have the right executive team in place to solve these issues.”