AdCare Health Systems, Inc., a leading nursing home and assisted living company, has closed the previously announced asset purchase of a skilled nursing and assisted living community in Mountain View, Arkansas for $4.2 million.
The facilities have an aggregate of 129 beds in service that generated an estimated $5.4 million in gross annualized revenues (according to its most recent financials), and their addition is expected to be immediately accretive to AdCare’s earnings.
AdCare has initially financed the acquisition through a bank loan. This loan is expected to be refinanced with a long-term loan guaranteed by the Small Business Administration.
The company plans to continue pursuing an aggressive M&A program. Combining its current annualized run-rate with transactions currently in the process of closing, AdCare’s estimated annualized revenue run-rate is expected to exceed $300 million. This would represent an increase of more than 460% over the company’s revenues in 2010, and an increase of more than 11 times revenues in 2009 when it initiated its M&A campaign.
“This signing brings the total number of facilities we’ve purchased, leased, or managed to 42, with now six in Arkansas,” said Chris Brogdon, AdCare’s vice chairman and chief acquisitions officer. “The addition of these facilities is in line with our expansion into the Southeast, and will leverage the professional support staff we’ve already established in the region.”
According to Boyd Gentry, AdCare’s president and CEO: “This acquisition fits AdCare’s strategic objective of acquiring operations with Medicare and Managed Care upside, and we anticipate its optimization to be in line with our previous successes. As we recently reported, our optimization strategy has increased Medicare Census 37.5%, on average, for facilities acquired so far in our M&A campaign.”
“We are continuing to evaluate a number of attractive opportunities around our original home base in the Midwest as well as in the Southern regions of the U.S.,” added Gentry, “with our M&A program and the optimization of new facilities remaining our primary focus going forward.”
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