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AdCare Health Systems (ADK) to Acquire Skilled Nursing and Assisted Living Center in Ohio for $13.5 Million

AdCare Health Systems, Inc., a leading provider of skilled nursing and assisted living, has signed a definitive agreement to purchase a skilled nursing and assisted living community in Ohio for $13.5 million.

The community has 193 beds, and generates an estimated $12 million in gross annualized revenues according to its most recent financials. After the transaction closes as planned before the end of the year, AdCare expects the facilities to be immediately accretive to its earnings.

AdCare plans to finance the acquisition of the assisted living facility with a 30-year, fixed-rated, tax-exempt bond issuance, and finance the skilled nursing facility with a traditional bank loan.

With this transaction, AdCare has now put under contract 44 facilities since its MA campaign began in the fall of 2009, representing more than 4,890 beds.

Combining AdCare’s current annualized run-rate with transactions currently in the process of closing, the company’s estimated annualized revenue run-rate is expected to exceed $280 million. This would represent an increase of more than 426% over the company’s revenues in 2010, and an increase of more than 949% over revenues in 2009 when it initiated the current MA campaign.

“Since establishing new operations in Alabama, Georgia and North Carolina, we’ve now made our first acquisition in the state of our origins,” said Chris Brogdon, AdCare’s vice chairman and chief acquisitions officer. “These new facilities will leverage the professional support staff we’ve long maintained in Ohio, as well as enhance our overall economies of scale.”

“We’re continuing to evaluate a number of attractive opportunities in the Midwest and South,” added Brogdon, “with our MA program and the integration of new facilities remaining our primary corporate focus going forward.”

According to Boyd P. Gentry, AdCare’s president and chief executive officer: “Our strategy of acquiring skilled nursing facilities is proving highly successful, not only in our closing rate and terms, but also in our post-acquisition performance. We have been targeting facilities that have not traditionally concentrated on providing post-acute services, and then once acquired, we optimize patient care, occupancy and quality mix.”

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