American Addiction Centers (AAC) announced that it has signed two definitive agreements.
One will allow it to acquire Louisiana-based residential and outpatient provider Townsend, which is known for its “Townsend Way” treatment model. AAC will add to its portfolio Townsend’s parent company, Wetsman Forensic Medicine, and its affiliates for a price of $12.75 million in cash and $8.50 million in restricted shares of AAC common stock.
AAC has also signed a separate definitive agreement to acquire the in-network inpatient and outpatient provider Solutions Recovery, Inc. in the Las Vegas area for an aggregate $6.75 million in cash and $6.25 million of restricted shares of common stock.
Also in the announcement, AAC disclosed that the 20-bed FitRx in Nashville and 18-bed The Academy in Palm Beach, Fla., will cease operations as of December 31, 2015, because of continued unprofitability.
The Townsend deal allows AAC to enter its ninth state and brings with it an in-network lab.
“This is a strategic acquisition for AAC that enables us to continue building our in-network capacity to support existing demand while at the same time securing much-needed capabilities to service lab work from our other in-network facilities,” said Michael Cartwright, chairman and CEO of AAC Holdings, in a statement.
Founded in 2009, Townsend operates six in-network outpatient centers in Louisiana that deliver intensive outpatient treatment as well as a 20-bed in-network facility located in Scott, La., that offers detoxification and inpatient treatment. Townsend also operates an in-network lab that services these facilities. After the acquisition, founder Howard Wetsman and CEO Michael Handley will remain with Townsend along with its staff.
The deal is expected to be completed during the first half of 2016. AAC expects to generate approximately $3 million of EBITDA in the first 12 months of ownership and anticipates utilizing the in-network lab to continue servicing Townsend’s current lab customers and to begin servicing AAC’s in-network outpatient and residential facilities in Florida, New Jersey, and Rhode Island.
Solutions Recovery deal
The Solutions Recovery acquisition brings with it:
- 100 Sober Living Beds (owned)
- 70 Licensed In-Network Detox, Residential and Halfway House Beds (leased)
- 24 Sober Living Beds (leased)
- 3 Licensed, In-Network Outpatient Centers (leased)
In Las Vegas, AAC currently operates its out-of-network Desert Hope inpatient and outpatient treatment facilities. The new capacity gained from Solutions Recovery will provide detoxification, residential, and intensive outpatient treatment as well as sober living services. After the acquisition, Dave Marlon will continue as facility CEO and the Solutions Recovery staff will remain.
According to Cartwright, the acquisition was attractive because it adds sober living to the AAC offerings in the Las Vegas area.
The deal is expected to be completed during the first half of 2016, and AAC expects to generate approximately $2 million of EBITDA in the first 12 months of ownership.