Addiction Treatment Goes Public: AAC’s Recovery-Center Empire

http://www.bloomberg.com/news/articles/2015-01-30/addiction-treatment-goes-public-aac-s-recovery-center-empire

American Addiction Centers, founded in 2011 and based in Brentwood, Tenn., is run by Michael Cartwright, a former drug addict and alcoholic who says he’s been sober for 23 years. The company owns eight facilities in six states and treats about 5,000 patients annually. In 2013 its revenue was $116 million, up from $28 million in 2011. Last October, analysts say, it became the first business focused solely on addiction treatment to go public, raising $75 million in an IPO. AAC is currently valued at about $588 million. So far, investing in some of society’s most troubled members seems to be paying off: Since October the company’s stock price has almost doubled, from $15 to $28…

Drawing on data from IBISWorld, the company’s IPO underwriters estimate there are 8,100 substance-abuse treatment enterprises across America, operating 16,700 clinics and centers. These include famous nonprofits such as the Hazelden Betty Ford Foundation, as well as Narconon International, an addiction treatment organization with ties to the Church of Scientology. At the very high end, Malibu centers like Promises and Cliffside charge the Lindsay Lohans of the world as much as $112,000 per month out-of-pocket for spa-like accommodations and services…

Cartwright guarantees that a patient who checks in for 90 days can come back for free if he relapses…

Over the centuries, doctors have subjected addicts to a range of “cures.” They’ve tried cocaine, LSD, shock therapy, lobotomies, tranquilizers, vitamins, and vegetarian diets. In the 1950s, some doctors made alcoholics huff carbon dioxide until they passed out, a method also used to treat anxiety and melancholy, according to William White, author of Slaying the Dragon: The History of Addiction Treatment and Recovery in America…

Back at American Addiction Centers’ headquarters, situated along with the call center on two floors of a nondescript brick building, Cartwright says his company has given an independent research firm $500,000 to study its outcomes…

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