INVESTOR PRESENTATION JUNE 2019 February 17, 2017 IMPORTANT - - PowerPoint PPT Presentation

February 17, 2017

INVESTOR PRESENTATION JUNE 2019

February 17, 2017

Notice to Investors

We use market data and industry forecasts and projections throughout this presentation, including data from publicly available information and industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers’ experience in the industry, and there can be no assurance that any of the forecasts or projections will be achieved. We believe that the surveys and market research others have performed are reliable, but we have not independently investigated or verified this

• information. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and

uncertainties as the other forward-looking statements contained in this presentation.

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IMPORTANT PRESENTATION INFORMATION

February 17, 2017

Forward-Looking Statements

Some of the statements made in this presentation constitute forward-looking statements within the meaning of federal securities laws. Forward- looking statements reflect our current views with respect to future events and performance. In some cases you can identify forward-looking statements by terminology such as “may,” “might, “will,” “should,” “could” or the negative thereof. Generally, the words “anticipate,” “believe,” “continues,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our pipeline, industry growth opportunities, disclosure of key performance indicators, business growth strategy and financial guidance in this presentation are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance

• r achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.

For additional discussion of risks, uncertainties and other factors, see the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and our subsequent filings with the United States Securities and Exchange Commission (the "SEC"). Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. These forward-looking statements are made only as of the date of this presentation. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

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IMPORTANT PRESENTATION INFORMATION

February 17, 2017

CURRENT STATE OF
 AMERICAN ADDICTION CENTERS

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AAC: AT A GLANCE

> AAC Holdings, Inc. (“AAC”) is the parent of American Addiction Centers, Inc.

• Operates 9 inpatient alcohol and drug addiction treatment facilities in California, Florida,

Massachusetts, Mississippi, Nevada, New Jersey, Rhode Island, and Texas

• Operates 15 standalone outpatient centers in Florida, Massachusetts, Mississippi, New Jersey,

Rhode Island, and Texas

• Operates 4 sober living facilities in Florida, Mississippi, Nevada, and Texas
• Over 1,400 detoxification, inpatient and sober living beds
• Approximately 40% compounded annual growth rate in top-line revenue since 2011
• Owns and operates an industry-leading laboratory providing toxicology, clinical diagnostic, and

genomics services

• Invested management and Board
• Headquartered in Brentwood, Tennessee

AAC IS A LEADING PROVIDER OF INPATIENT DRUG AND ALCOHOL ADDICTION TREATMENT SERVICES 
 IN THE BEHAVIORAL HEALTH SECTOR

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GEOGRAPHIC FOOTPRINT

Laguna Treatment Hospital Desert Hope Greenhouse Headquarters Oxford River Oaks Recovery First Sunrise House Addiction Labs Inpatient Facility Outpatient Facility Laboratory CSRI Sober Living Beds Corporate Headquarters

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FACILITY OVERVIEW

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Facility Beds State Levels of Care Property

River Oaks 162 FL DTX, RTC, PHP, IOP Owned Desert Hope 148 NV DTX, RTC, PHP, IOP Owned Greenhouse 130 TX DTX, RTC, PHP, IOP Owned Oxford Treatment Center 124 MS DTX, RTC, PHP, IOP Owned Sunrise House 110 NJ DTX, RTC, PHP, IOP Owned Laguna Treatment Hospital 93 CA DTX, RTC, PHP, IOP Owned Recovery First 56 FL DTX, RTC, PHP, IOP Owned/Leased AdCare - Worcester 114 MA DTX, RTC, PHP Owned AdCare - North Kingstown 59 RI DTX, RTC Owned Total Residential 996 Las Vegas Sober Living 159 NV Sober Living Leased Recovery First - Ft. Lauderdale East 83 FL Sober Living Leased Arlington Sober Living 157 TX Sober Living Leased Oxford Sober Living 48 MS Sober Living Owned Total Sober Living 447 Total 1,443

DTX: Detoxification; RTC: Residential Treatment; PHP: Partial Hospitalization; IOP: Intensive Outpatient.

Inpatient/Residential Sober Living

TIMELINE OF AAC’S SUCCESS

• AAC’s strong organic track record and disciplined approach to de novos and acquisitions have driven exceptional growth
• Significant capacity in AAC network from completed investments
• Ability to scale census with limited incremental overhead

2011 2012 2013 2014 2015 2016 2017 2018 $296 $292 $241 $170 $122 $105 $63 $27

2011 – 2018 Revenue* CAGR: 40%

Bed count 124 338 431 493 897 1,342 1,348 1,551

* AAC adopted ASU 2014-09, “Revenue from Contract with Customers” (“Topic 606”) on January 1, 2018 which resulted in adjustments related to bad debt being recorded as a direct reduction to revenue as opposed to the provision for doubtful accounts. As such, for comparability purposes, revenue for periods prior to January 1, 2018 throughout this presentation represent revenues less the applicable provision for doubtful accounts.

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WHY INVEST IN AAC TODAY

Attractive assets (including addiction and behavioral websites generating 10 million unique visitors per month), best in class diagnostic testing services, and an attractive real estate portfolio Heightened focus on near term revenue opportunities and operational efficiencies to unlock value Proven approach to best-in-class clinical care, with Outcomes Study showing 63% of patients abstinent within 12 months (comparative national benchmark is 30%) Experienced and invested management team Compelling valuation Flexible and scalable business

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RECENT OPERATIONAL HIGHLIGHTS

> Positive momentum for 2019

• Inpatient occupancy improving from 69% at December 31, 2018 to 80% at May 31, 2019

> Commenced process to generate additional value from assets

• Commenced a process to generate additional value from the assets including the real estate portfolio with the goal to

create additional liquidity, lower cost of capital, and enhance shareholder value

> Increased financial flexibility and liquidity

• Closed $30 million incremental term loan that provided additional liquidity in March 2019. Amended existing secured

credit facility to, among other items, provide increased flexibility with respect to certain financial covenants

> Significant steps taken to reduce expenses

• Q4 2018 and Q1 2019 Cost Savings Initiatives Expected to Result in Over $30 Million of Net Annualized Cost Savings and

leading to a 20% decrease in operating costs sequentially

• Reductions in corporate expenses, consolidation of the Las Vegas market, consolidation of the southern California market,

the sale of the New Orleans operations, and the consolidation of lab operations

> Unveiled 2030 strategic plan

• Transforming the business in the long-term to unlock additional value

February 17, 2017

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NEAR-TERM FOCUS

Continued focus on current operations Improve the balance sheet New revenue streams

February 17, 2017

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Q4 2018 Q1 2019 Q2 2019*

4,787 4,641 4,184

Q4 2018 Q1 2019 Q2 2019*

786 740 745

New Inpatient Admissions Average Daily Inpatient Census (ADC)

Q4 2018 Q1 2019 Q2 2019*

80% 75% 69%

Average Effective Inpatient Bed Utilization

CONTINUED FOCUS ON CURRENT OPERATIONS

* New admissions for Q2 2019 is a projected run based on actual admissions through May 31, 2019. Average Daily Census and Average Effective Inpatient Bed Utilization for Q2 2019 are based on actual results through May 31, 2019.

February 17, 2017

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CONTINUED FOCUS ON CURRENT OPERATIONS

• Filling existing beds could potentially lead to $60mm - $75mm of incremental annual revenue at incrementally high margins
• Expense savings initiatives completed in the second half of 2018 and in the first quarter of 2019 are expected to reduce operating

expenses by over $30 million annually

• These combined could potentially result in a run rate EBITDA of $20 million quarterly or 


$80 million annually

Bed Count (Inpatient + Sober Living Capacity) 1,443 1,443 1,443 Utilization Rate 85% 88% 90% Census at Utilization Rate 1,227 1,270 1,299 Q1 2019 Census 953 953 953 Census Increase 274 317 346 Additional Monthly Revenue (MM)(1) $4.9 $5.7 $6.2 Additional Annual Revenue (MM) $59 $68 $75

2015 2016 2017 2018 Q1 '19

1,443 1,521 1,574 1,121 642

Avg Daily Census Incremental bed capacity

(1) Analysis assumes $18,000 in additional monthly revenue per increase in average census

Utilization: 88% 82% 74% 75% 66%

Revenue growth opportunity Bed Capacity

February 17, 2017

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COST SAVINGS INITIATIVES

• In the fourth quarter of 2018 and in the first quarter 2019 implemented over $30 million of net annualized cost savings initiatives to

reduce operating expenses

• Second quarter of 2019 will begin to realize the full benefit of the costs savings initiatives which is $7.5 million on a quarterly basis
• Management is in the process of continuing to further reduce operating expenses and is committed to reducing operating expenses

between $5 million to $7 million on an annualized basis in the second and third quarters of 2019

Salaries wages and benefits $24.9 Client related services 4.1 Advertising 1.4 Professional fees 1.6 Other operating expenses 3.0 Rentals and leases 1.4 Total Operating Expenses $35.0 Townsend outpatient revenue

• 3.0

Net cost savings $32.0

Summary of 4th Quarter 2018 and 1st Quarter 2018 Cost Savings

($ in millions)

February 17, 2017

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IMPROVE THE BALANCE SHEET

> Q3 2019 Targeting to sell the de novo project in Ringwood, NJ which could generate up to $20 million to pay down debt and could potentially result in savings of up to $3 million annually > Q3 2019 to Q4 2019 Targeting to utilize existing assets to generate potentially $100 million to $200 million to pay down debt which could potentially result in savings of up to $9 million annually > Q3 2019 to Q4 2019 Revaluate remaining assets to potentially recapitalize the remaining balance sheet > Q2 2019 Announced engagement of Cantor Fitzgerald & Co. as financial advisor to potential strategic corporate transactions involving the company’s real estate and other assets, as well as potential recapitalization

February 17, 2017

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SIGNIFICANT EMBEDDED VALUE AND ABILITY TO DELEVER BALANCE SHEET

Current 85% Occupancy + $20M Less Debt 85% Occupancy + $200M Less Debt Forward looking EBITDA $64,000 1 $80,000 2 $66,500 3 Secured Debt Outstanding $355,000 $335,000 $155,000 Secured Debt Coverage Ratio 6 x 4 x 2 x

1 Mid-point of analyst 2020 estimates 2 Target run-rate EBITDA at 85% occupancy 3 Target run-rate EBITDA at 85% occupancy including assumed rent expense sale-leasebacks

February 17, 2017

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CURRENT CAPITALIZATION

As of March 31, 2019

($ in millions)

Cash and Cash Equivalents $18 Debt Priming Senior Secured Term Loan $30 Term Loan B 264 Revolving Credit Facility 52 Capital Leases 1 Total Secured Debt $347 Seller Note 9 Total Debt $356 Net Debt $338

February 17, 2017

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OVERVIEW OF OUTSTANDING DEBT

Tranche Maturity Call Premium Rate Balance as of March 31, 2019

($ in millions)

Priming Senior Secured Term Loan Matures Apr ‘20 Libor + 11% $30 Term Loan B Matures Jun ’23 2% thru Mar ’20 1% thru Mar ‘21 Libor + 8.75% 264 Revolving Credit Facility Matures Jun ‘22 Libor + 6% 52 Capital Leases 1 Total Secured Debt $347 Seller Note Matures Sep ‘23 5% 9 Total Debt $356

February 17, 2017

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NEW REVENUE STREAMS

Offering branded nutraceuticals through websites Mental health services at select facilities Consumer advertising on websites Direct to consumer diagnostic services

February 17, 2017

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Branded Nutraceuticals Through Websites

• Nutraceuticals in North America represent a $130 billion market
• Launching a line of nutraceuticals targeted to mental health and addiction clients currently visiting our

websites

• First nutraceutical to be offered on websites in July 2019 will be a natural sleep aid. Sleep issues

disproportionally affect those with mental health symptoms and addiction

• By the end of 2019 there will be 30+ products offered through our websites and facilities

February 17, 2017

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Increased Advertising Through Websites

• AAC operates approximately 40 websites

that generate over 10 million site visits a month

• Over 80% of the site visits are to content

related websites like MentalHelp.net

• Mental health related websites account for

approximately 20% of all website traffic

• Historically AAC has only offered limited

adverting to small addiction treatment providers

• By comparison, WebMD has 75 million

monthly site visitors and advertisers includes both consumer advertising and provider advertising

• AAC is expanding to consumer advertising to

utilize the 10 million site visits each month

February 17, 2017

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2030 STRATEGIC VISION

IN MAY, WE ANNOUNCED A NEW PLAN TO TRANSFORM OUR BUSINESS OVER THE NEXT DECADE

> Increase Occupancy in Existing Beds

• Increase occupancy to 85%+ through increased census

> Monetize the Value of the Real Estate Portfolio

• Over 1,000 owned beds across 8 states and 9 facilities

> Monetize the Value in the Websites

• Offer branded advertising and expanded provider adverting on

existing websites which receive 10 million views monthly > New Revenue Streams

• Offering branded nutraceuticals through websites
• Consumer advertising on websites
• Direct to consumer diagnostic services
• Mental health services at select facilities

We will unlock the value in our assets today To transform our business by 2030

> Expand Opportunity

• Focus on 365M distressed Americans with behavioral symptoms (e.g.,

depression, anxiety, drug addiction, alcoholism, etc.)

> Change Delivery Model

• Less reliance on inpatient and residential services and more reliance
• n outpatient and at-home services
• Emphasis on use of technology and diagnostics (e.g., Telemedicine,

Nuclear Medicine (SPECT Scans), TMS, The Bridge Device) > Direct to Consumer Offerings

• Direct to consumer offerings of diagnostic services, nutraceuticals, on-

line assessments

> Diversify Reimbursement

• Cost sharing arrangements with payors
• Direct contracts with governments, unions, EAP’s and large employers
• Population and disease management

SERVICE LINE DIVERSIFICATION

> Expand mental health as a primary diagnosis in residential and outpatient settings > Expand other service lines which includes advertising, third-party diagnostic services, and direct to consumer products and services


TARGET DECEMBER 31, 2020 SERVICE LINE MIX

CURRENT SERVICE LINE MIX

Mental Health 15% Other Services Lines 10% Diagnostic 5%

Addiction 70%

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Other Service Lines 3% Diagnostic 4%

Addiction 93%

PAYOR MIX DIVERSIFICATION

> By the end of 2020 we are targeting a further payor mix diversification


CURRENT

Government 15% Individual 20% Out-of-Network 40% In-Network 25%

TARGET DECEMBER 31, 2020

Government 11% Individual 7% Out-of-Network 66% In-Network 16%

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GREENHOUSE

APPENDIX: FACILITY OVERVIEW

OWNED FACILITY OVERVIEW

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Facility Beds Approximate Sq. Ft Levels of Care River Oaks - Riverview, FL 162 63,000 DTX, RTC, PHP , IOP Desert Hope - Las Vegas, NV 148 71,000 DTX, RTC, PHP , IOP Greenhouse - Grand Prairie, TX 130 56,000 DTX, RTC, PHP , IOP Oxford - Oxford, MS 196 73,000 DTX, RTC, PHP , IOP , Sober Living Sunrise House - Lafayette, NJ 110 32,000 DTX, RTC, PHP , IOP Laguna Treatment Hospital - Aliso Viejo, CA 93 51,000 DTX, RTC, PHP , IOP Recovery First - Fort Lauderdale, FL 56 8,000 RTC, PHP , IOP AdCare - Worcester, MA 114 93,000 DTX, RTC, PHP , IOP AdCare - North Kingstown, RI 59 24,000 DTX, RTC, PHP , IOP Ringwood - Ringwood, NJ* 150 69,000 Under Development 1,218

DTX: Detoxification; RTC: Residential Treatment; PHP: Partial Hospitalization; IOP: Intensive Outpatient *Under development

River Oaks - Riverview, FL

Desert Hope - Las Vegas, NV

Greenhouse - Grand Prairie, TX

Oxford Treatment Center - Oxford, MS

Oxford Outpatient Center - Oxford, MS

Oxford Resolutions Sober Living - Oxford, MS

Sunrise House - Lafayette, NJ

Laguna Treatment Hospital - Laguna, CA

AdCare North Kingstown - North Kingstown, RI

AdCare Worcester - Worcester, MA

Ringwood, NJ - Partially Completed