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AdCare Health Systems (ADK) to Acquire Skilled Nursing and Assisted Living Center in Arkansas for $4.2 Million

AdCare Health Systems, Inc., a leading provider of skilled nursing and assisted living for seniors, has signed a definitive agreement to purchase a skilled nursing and assisted living community in Mountain View, Arkansas for $4.2 million.

The facilities have an aggregate of 129 beds that generated an estimated $5.2 million in gross annualized revenues according to its most recent financials. The transaction is expected to be immediately accretive to AdCare’s earnings when it closes as planned in the fourth quarter of 2011.

The company expects to fund the transaction with a long-term loan guaranteed by the United States Department of Agriculture (USDA). The USDA guarantee is provided through a program developed by the federal government to supply long-term financing for rural projects at favorable rates.

Combined with other transactions previously announced and in the process of closing, AdCare’s estimated annualized revenue run-rate is expected to exceed $285 million. This would represent an increase of more than 436% over the company’s revenues in 2010, and an increase of more than 969% over revenues in 2009 when it initiated its current MA campaign.

“This signing brings the total number of facilities we’ve put under contract to 24 since the beginning of this year, 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.”

“This acquisition fits our strategic objective of acquiring operations with Medicare and Managed Care upside. There is good opportunity in this already well-run building,” said Boyd Gentry, president and CEO of AdCare. “On average, AdCare has been successful at improving acquired facility Medicare and Managed Care rates and census by 17% and 40%, respectively.”

“We are continuing to evaluate a number of attractive opportunities around our original home base in the Midwest as well as in the Southeast,” added Brogdon, “with our MA program and the integration of new facilities remaining our primary focus going forward.”

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