SOURCE: AdCare Health Systems, Inc.

AdCare Health Systems, Inc.

August 01, 2011 08:31 ET

AdCare Health Systems Sees No Meaningful Medicare Revenue Impact From CMS 2012 Rate Changes

SPRINGFIELD, OH--(Marketwire - Aug 1, 2011) - AdCare Health Systems, Inc. (NYSE Amex: ADK), a leading provider of skilled nursing and assisted living for seniors, has determined that after reviewing the final rule on Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY2012 as issued by The Centers for Medicare & Medicaid Services (CMS) on July 29, 2011, it will not be meaningful to AdCare's 2012 Medicare revenue as compared to 2011 Medicare revenue given the company's operating and acquisition strategy.

"AdCare's acquisition strategy has been to acquire skilled nursing properties that have not traditionally concentrated on providing Medicare and post-acute services, and once acquired, to optimize patient care, occupancy and quality mix," noted Boyd Gentry, AdCare's president and chief executive officer. "However, CMS's 2012 rate changes are largely focused on the Ultra High Rehab RUG categories where payment rates range from $600 to nearly $900 per day. This level of post-acute rehabilitation services have not traditionally been provided in the facilities targeted by AdCare for acquisition, and our recent acquisitions have had an average facility Medicare rate of $331 a day at the time of acquisition. Moreover, AdCare's average facility Medicare reimbursement rate for Q1 2011 was $456 per patient day, reflecting the relatively large proportion of recently acquired, non-optimized facilities."

"Our operating team has also demonstrated that they can increase Medicare census and rates," added Gentry. "The company has increased Medicare census by 40% in facilities that we've operated for less than one year. This has resulted in an increase in quality mix to approximately 14% for the entire company, as compared to an average of 10% at the time of individual facility acquisition."

The company plans to continue pursuing an aggressive M&A program. Combining its first quarter 2011 revenue with transactions currently in the process of closing, AdCare's estimated annualized revenue run-rate is expected to exceed $268 million. This would represent an increase of more than 400% over the company's revenues in 2010, and an increase of more than 900% over revenues in 2009 when it initiated its M&A campaign.

About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE Amex: ADK) is a recognized innovator in senior living and health care facility management. AdCare develops, owns and manages assisted living facilities, nursing homes and retirement communities, as well as provides home health care services. Since its inception in 1988, AdCare's mission has been to provide the highest quality of healthcare services to the elderly. For more information about AdCare, visit www.adcarehealth.com.

Important Cautions Regarding Forward-Looking Statements
Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law. Such statements can be identified by the use of forward-looking terminology, such as "believes," "expects, " "plans," "intends," "anticipates" and variations of such words or similar expressions, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to, statements that the company expect its annualized revenue run-rate to exceed an estimated $268 million, and this would represent an increase of more than 400% over the company's revenues in 2010, and an increase of more than 900% over revenues in 2009 when the company initiated its current M&A campaign, as well as statements regarding the signing and expected closing of the transaction and the transaction being accretive to the company's earnings. Such forward-looking statements reflect management's beliefs and assumptions and are based on information currently available to management, and involve known and unknown risks, results, performance or achievements of AdCare which may differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by AdCare with the SEC and include, among others, AdCare'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. Except where required by law, AdCare undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.

Contact Information

  • Company Contacts
    Boyd Gentry
    CEO
    Chris Brogdon
    Vice Chairman & CAO
    David A. Tenwick
    Chairman of Board
    AdCare Health Systems, Inc.
    Tel (937) 964-8974
    Email Contact

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