SOURCE: AdCare

AdCare

June 02, 2010 08:30 ET

AdCare Health Systems to Lease Five Nursing Homes in Georgia, Adding $36 Million in Annualized Revenue

SPRINGFIELD, OH--(Marketwire - June 2, 2010) -  AdCare Health Systems, Inc. (NYSE Amex: ADK), an Ohio-based long-term care, home care and management company, has signed a definitive agreement to lease five privately held nursing homes in South Georgia.

These five facilities, which on aggregate have 615 beds that generate approximately $36 million in annualized revenue, are to be leased under a five-year term from the owner and debtor in possession with approval from a bankruptcy referee in Georgia. The agreement includes an extension option for an additional five years.

AdCare's upfront cost for the transaction is expected to be $700,000 in cash and the assumption of approximately $1.3 million in negative working capital, plus legal and accounting closing costs. As part of the agreement, AdCare will also purchase for $2 million approximately $5.5 million in existing receivables due to these facilities. The lease transaction is scheduled to close on July 1. 

AdCare estimates its annual revenue run-rate will be approximately $80 million based upon the successful closing of this transaction, plus two other previously announced acquisitions that are also expected to close around the same time. This would represent an increase of about 200% over AdCare's revenues in 2009.

"This lease is the third major deal we've signed since March, and represents one of several potential acquisitions in the pipeline we established at the beginning of the year," said Chris Brogdon, AdCare's vice chairman and chief acquisitions officer. "We expect these facilities to be very profitable for AdCare, especially as they come under our more capable management and benefit from the economies of scale we bring to the table."

"As we have outlined in our M&A strategy, we will continue to evaluate foreclosures and other poorly run facilities that we can secure at below-market prices, as well as target acquisitions of both profitable and turnaround properties to grow our business," said Brogdon.

Brogdon joined AdCare last September when the company announced a new M&A growth strategy to build upon its strong reputation for operational efficiency and high-quality living environments.

About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE Amex: ADK) develops, owns and manages assisted living facilities, nursing homes and retirement communities and provides home healthcare services. Prior to becoming a publicly traded company in November of 2006, AdCare operated as a private company for 18 years. AdCare's 900 employees provide high-quality care, management services and other services for patients and residents residing in 19 facilities, seven of which are assisted living facilities, 11 skilled nursing centers and one independent senior living community. The company owns eight of those facilities. In the ever-expanding marketplace of long-term care, AdCare's mission is to provide quality healthcare services to the elderly. For more information about AdCare, visit www.adcarehealth.com.

Safe Harbor Statement
Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law, which can be identified by the use of forward-looking terminology such as "believes," "expects," "plans" or similar expressions. Statements in this announcement that are forward-looking include, but are not limited to statements that AdCare estimates its annual revenue run-rate will be approximately $80 million upon the successful closing of this transaction and two others previously announced, and this would represent an increase of about 200% over its revenues in 2009; and that the leased facilities mentioned in this release will be very profitable for AdCare. Such forward-looking statements reflect management's beliefs and assumptions and are based on information currently available to management. The forward-looking statements involve known and unknown risks, results, performance or achievements of the company to differ materially from those expressed or implied in such statements. Such factors are also identified in the public filings made by the company with the Securities and Exchange Commission and include the company's ability to secure lines of credit and/or an acquisition credit facility, find suitable acquisition properties at favorable terms, changes in the health care industry because of political and economic influences, changes in regulations governing the industry, changes in reimbursement levels including those under the Medicare and Medicaid programs and changes in the competitive marketplace. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

Contact Information

  • Company Contact
    Chris Brogdon
    Vice Chairman and Chief Acquisitions Officer
    AdCare Health Systems, Inc.
    Tel (937) 964-8974
    Email: Email Contact

    Investor Relations
    Scott Liolios or Ron Both
    Liolios Group, Inc.
    Tel (949) 574-3860
    Email: Email Contact