Recently, we shared a story about just how bad the recovery industry has been impacted by the COVID-19 (or coronavirus) pandemic. Due to quarantines and other hindrances, admissions to sober living homes has dropped dramatically; leading to furloughs and major financial losses. Well now, one of the country’s biggest treatment organizations is proving this point; with breaking news about a bankruptcy filing from American Addiction Centers.
A publicly traded company (known as AAC Holdings Inc.), American Addiction Centers officially filed for Chapter 11 protection last week. The business site Bloomberg covered the story, which outlines the financial free fall the company has experienced since the U.S. COVID-19 pandemic broke out four months ago.
Based in Brentwood Tennessee, American Addiction Centers operate on a national scale. They have treatment centers throughout the country, including cities like Miami, Dallas, Las Vegas and Laguna Beach. According to publicly available paperwork, the AAC parent corporation listed a debt of over $514 million.
The filing went on to say that AAC expects to emerge from this financial crisis within the next 125 days, but it is most certainly struggling now. Apparently some other factors came into play regarding their debts; including an acquisition of another large treatment company, AdCare, back in 2018.
A spokesperson for the company spoke to Bloomberg about the situation; urging followers and stockholders to have patience while they sort out their money issues.
“No layoffs or facility closures are expected as a result of the recapitalization plan,” the rep explained. “We are confident that treatment operations will remain unaffected and the centers will continue to provide patient care. All employees will continue to receive normal wages and benefits.”
Now, of course, we wish anyone in our industry the best and sincerely hope that they can continue to survive during this difficult time. But the truth of the matter is, COVID-19 is continuing to wreak economic havoc across the country. Though there is definitely hope that American Addiction Centers can pull through, many smaller recovery orgs may not be so lucky.
The “new normal” of virtual treatment meetings and social distancing does seem plausible, in theory, when we think of recovery. But the truth is, not everyone can adapt to this model very easily and there will be rough patches as patients adapt. It will certainly be interesting to follow the journey of AAC, in the hopes that they set an example of how to pull through during these trying times.