AdCare Health Systems, Inc., a leading skilled nursing and assisted living provider, has signed a definitive purchase agreement for five skilled nursing facilities in Oklahoma for $16 million.
The facilities have on aggregate 357 beds that generate an estimated $15.0 million in annualized revenues. The acquisition is anticipated to be immediately accretive to AdCare’s earnings upon closing, which is expected in early 2012.
The company expects to fund the transaction with a long-term loan guaranteed by the Small Business Administration (SBA).
“This signing brings the total number of facilities we’ve put under contract to 29 since the beginning of this year and represents our first-ever in Oklahoma,” noted Chris Brogdon, AdCare’s vice chairman and chief acquisitions officer. “These facilities are in line with our expansion into the South, and are consistent with our strategic objective of acquiring operations with significant Medicare and Managed Care upside.”
AdCare’s president and CEO, Boyd P. Gentry, added: “In fact, we expect our proven system of applying optimization techniques will translate into at least a 20-25 percent increase in revenue from these skilled nursing facilities over time.”
Since the company began an aggressive M&A program in the fall of 2009, it has purchased or leased 26 skilled nursing or assisted living facilities representing more than 2,700 beds. Combined with other transactions announced and 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 1,000% over revenues in 2009.
Let us hear your thoughts below: