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AdCare Health Systems Reports Record Second Quarter 2012 Results

Aug 07, 2012 (Marketwire via COMTEX) -- AdCare Health Systems, Inc. (NYSE MKT: ADK), a leading long-term care provider, reported results for the second quarter ended June 30, 2012.

Q2 2012 Financial Highlights

  • Record revenues of $55.0 million, up 10% sequentially and up 60% from Q2 2011.
  • Same-facility revenues of $37.0 million, up 1% sequentially and up 9% vs. Q2 2011.
  • Income from operations was a record $4.0 million, up 58% sequentially and up 398% from Q2 2011.
  • Adjusted EBITDAR from continuing operations was a record $8.0 million, up 28% sequentially and 89% vs. Q2 2011.
  • Net income of $0.7 million or $0.05 per share vs. previous and year-ago quarterly loss.
  • Acquisitions completed during the quarter added more than $19 million in estimated annualized revenue run-rate.

Revenues in the second quarter of 2012 increased 60% to a record $55.0 million from $34.4 million in the same year-ago quarter. The increase in revenue was primarily due to acquisitions completed since April 1, 2011 as part of AdCare's M&A program. The company's skilled nursing facilities existing prior to April 1, 2011 also contributed to the improvement in revenue, cost savings measures and Medicaid rate improvement. A more detailed discussion and analysis of the company's performance will be available in AdCare's Form 10-Q for the quarter ended June 30, 2012 as filed with the Securities and Exchange Commission.

Income from operations in the second quarter of 2012 was a record $4.0 million, increasing 398% from $0.8 million in the second quarter of 2011. The increase in income from operations was primarily due to acquisitions, as well as revenue optimization and expense controls with newly acquired facilities and same-facilities. The company's cost of services as a percentage of patient care revenues decreased to 77.3% in the second quarter of 2012, as compared to 80.0% for the same year-ago quarter.

For earnings attributable to AdCare and its shareholders, net income in the second quarter of 2012 totaled $0.7 million or $0.05 per basic and diluted share, as compared to a net loss of $4.4 million or $(0.50) per basic and diluted share in the same year-ago quarter.

Adjusted EBITDAR from continuing operations in the second quarter of 2012 totaled a record $8.0 million, up 89% from adjusted EBITDAR from continuing operations of $4.2 million in the second quarter of 2011 (see "Use of Non-GAAP Financial Information," below, for the definition of adjusted EBITDAR, a non-GAAP financial metric, as well as an important discussion about the use this metric and its reconciliation to GAAP net income.)

Combined cash, current restricted cash and cash equivalents at June 30, 2012 totaled $13.0 million, as compared to $9.2 million at December 31, 2011.

Q2 2012 Operational Highlights

  • Completed the acquisition of three skilled nursing facilities in Arkansas, with an aggregate of 434 beds in service. Two of the facilities have an estimated $15.9 million in gross annualized revenues based upon their most recent financial statements, with the third facility having the capacity to produce $20 million in gross annual revenues primarily as the result of renovations completed during the quarter.

  • Completed acquisition of a skilled nursing facility in Arkansas, which has 77 beds in service and an estimated $3.3 million in gross annualized revenues (according to its most recent financial statements).

  • Signed purchase agreements for two skilled nursing facilities in Oklahoma, with an aggregate of 239 beds in service and an estimated $10.3 million in gross annualized revenues (based upon their most recent financial statements). Subsequent to the end of the quarter, AdCare completed the acquisition of one of the facilities, with the other expected to be completed in Q3 2012.

  • Signed a purchase agreement for a skilled nursing facility in Glennville, Georgia, which has 134 beds in service and an estimated $6.4 million in gross annualized revenues (based upon its most recent financial statements). Subsequent to the end of the quarter, AdCare completed the acquisition.

At the end of the second quarter, the company operated 48 facilities comprised of 38 skilled nursing centers, nine assisted living residences and one independent living/senior housing facility, with a total of 4,427 beds/units in service. Of these 48 facilities, 26 are owned, 12 are leased, six are consolidated variable interest entities, and four are managed for third parties. The facilities are located in Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio and Oklahoma. Subsequent to the end of the second quarter, the company completed the acquisition of two additional facilities, bringing the total number it currently operates to 50.

"Our second quarter results reflect the successful execution of our ongoing acquisition and integration program, resulting in record revenue and operating profit that has exceeded all expectations," said AdCare's president and chief executive officer, Boyd P. Gentry. "Moreover, these results demonstrate our proven ability to grow revenues organically through facility optimization, as evidenced especially in the improved performance of facilities we have held for more than 12 months."

"This optimization process begins with acquiring underperforming skilled nursing properties, then assisting the local facility leadership in improving the level of care, increasing post-acute census and realigning their payment rate," continued Gentry. "This optimization strategy increased our second quarter 'same-facility' revenues by 9% over the year-ago quarter. Our improving Q2 operating results also reflected the further adoption of a number of cost containment measures across all of our facilities. Altogether, these results demonstrate that our model is more than sustainable, and we expect further margin improvement to continue throughout the year."

Chris Brogdon, AdCare's chief acquisition officer, commented: "AdCare has put under contract 47 facilities since we began our M&A campaign in the summer of 2010 and 15 since the beginning of 2012. During the quarter, our M&A program expanded operations into the Southeast and Southern region of the U.S., established four additional facilities in Arkansas, and put two additional facilities under contract in Oklahoma and one in Georgia. We continue to expect our new facilities and these pending acquisitions to leverage our infrastructure, thereby improving our overall EBITDA margin."

"We will continue pursuing an aggressive M&A program throughout the second half of 2012," added Brogdon. "In fact, we are currently evaluating several attractive opportunities in the Southern region of the U.S."

Combining the company's current annualized run-rate with transactions in the process of closing, AdCare's estimated annualized revenue run-rate is expected to exceed $250 million. This would represent an increase of more than 65% over the company's revenues in 2011, and an increase of more than nine times revenues since initiating its M&A campaign. AdCare's expected annualized revenue run-rate does not include the potential revenues of the $20 million from the newly renovated sub-acute care facility in Arkansas.

AdCare will hold a conference call to discuss its second quarter 2012 financial results tomorrow, Wednesday, August 8, 2012 at 8:30 a.m. Eastern time. Management will host the presentation, followed by a question and answer period.

Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1-877-941-8416
International: 1-480-629-9808
Conference ID#: 4552854

The conference call will be webcast simultaneously here and available for replay via the investor section of the company's website at http://www.adcarehealth.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

A replay of the call will be available after 11:30 a.m. Eastern time on the same day and until September 8, 2012.

International replay number: 1-858-384-5517
Replay pin number: 4552854

Summary of Closed and Pending Transactions Since Start of M&A Program
ALF = Assisted Living Facility SNF = Skilled Nursing Facility ARR= Annualize Revenue Run-rate1

               
Facility Type Count Beds/
Units
Location Trans-
action
Type
ARR 1 Finance
Terms
Completion
Status
ALF 3 72
beds
Ohio Purchase (Remaining
50%)
$3.2M Cash Closed 3-31-10
ALF 1 104
Units
Hoover, AL Consol.
Variable
Interest
Entity
(CVIE)
$1.4M 1-yr
purchase
option,
expiring
June 2013
Signed
option to
purchase.
Currently
a CVIE
(Since 7/1/10)
SNF 5 600 beds Georgia Lease $38.8M 10-yr
lease
Closed 7-30-10
SNF 3 269 beds Georgia Lease $18.4M 10-yr
lease
(combined
with the
above)
Closed 9-2-10
SNF 2 304 beds Alabama Purchase $19.5M Long-term
fixed rate
loan, USDA-
backed
Closed 10-1-10
SNF 2 299 beds Atlanta, GA Lease $20.8M 12-yr
lease
with renewal
option
Closed 11-2-10
SNF 1 106 beds Sylva, NC Purchase $8.0M Long-term
fixed rate
loan
(USDA-
backed)
Closed 12-31-10
SNF 3 329 beds Atlanta & Dublin, GA Purchase $18.0M Long-term
fixed rate
loan (USDA,
SBA-
backed
and bank
loans)
Closed two 5-1-2011; Closed third on 6-1-2011
SNF 5 314 beds Oklahoma CVIE $12.7M Long-term
loan
(SBA-
backed)
Currently a CVIE (since 8-1-11)
SNF 5 482 beds Arkansas & Missouri Purchase
(four) and
Lease (one)
$27.5M Long-term
fixed rate
loan (USDA-
backed
and bank
loans),
one 36
month
lease
Closed purchases 9-8-11; closed lease 11-1-11
ALF & SNF 2 128 beds Mountain View, AR Purchase $5.4M Long-term
loan
(USDA-
backed
bank loan)
Closed 12-2-11
ALF & SNF 2 179 beds Springfield, OH Purchase $12.0M 30-year,
fixed-rated,
tax-
exempt
bond
issuance,
and bank loan
Closed 12-30-11
SNF 3 434 beds Arkansas Purchase $15.9M Bank loan Closed 3-30-12
SNF 1 77 beds Arkansas Purchase $3.3M Bank loan Closed 4-30-12
SNF 1 134 beds Glennville,
GA
Purchase $6.4M Long-term bank loan (USDA-backed) Closed 7-2-12
SNF 1 109 beds Oklahoma City, OK Purchase $4.1M Long-term bank loan (SBA-backed) Closed 7-3-12
SNF (Pending) 1 121 beds Tulsa, OK Purchase $6.2M Bank loan Closing Expected Q3-12
SNF (Pending) 1 96 beds Sumter, SC Purchase $6.7M SBA regular bank loan Closing Expected Q3-12
SNF (Pending) 5 456
beds
Oklahoma Purchase $13.2M Long-term bank loan (SBA-backed) Closing Expected Q3/Q4 2012
Total Closed 40 3,940     $215.4M    
Total Pending 7 673     $26.1M    
Grand Total 47 4,613     $241.5M    
               
               

1 Annualized Revenue Run-rate (ARR) is estimated based on the most recent financial statement provided at the time of signing the purchase or lease agreement. ARR for facilities held at least 12 months is based on most recent quarter. Actual results may vary considerably.

About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE MKT: ADK ) is a recognized innovator in senior living and health care facility management. AdCare owns and manages long-term care facilities and retirement communities, and since the company's inception in 1988, its mission has been to provide the highest quality of healthcare services to the elderly, including a broad range of skilled nursing and sub-acute care services. For more information about AdCare, visit http://www.adcarehealth.com.

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 made by Mr. Gentry that the company expects better results, and statements by Mr. Brogdon that the company continues to expect its new facilities and those pending acquisitions to improve the company's overall EBITDAR margin, as well as other statements regarding the signing and closing of expected acquisitions, and the company's expected annualized run-rate. Such forward-looking statements reflect management's beliefs and assumptions and are based upon 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 Securities and Exchange Commission 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 health care 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.

In addition, each facility mentioned in this press release is operated by a separate, wholly owned, independent operating subsidiary that has its own management, employees and assets.

References to the consolidated company and its assets and activities, as well as the use of terms such as "we," "us," "our," and similar verbiage, is not meant to imply that AdCare Health Systems, Inc. has direct operating assets, employees or revenue or that any of the facilities, the home health business or other related businesses are operated by the same entity.

Beginning with the reporting of results for the first quarter of 2011, the company began to report the measures of Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations. These are measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). The company defines: (i) Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income tax expense; depreciation and amortization (including amortization of non-cash stock-based compensation), acquisition costs (net of gains), loss on extinguishment of debt, derivative loss, other income from recovery of receivable, and retirement and salary continuation costs; and (ii) Adjusted EBITDAR from continuing operations as net income (loss) from continuing operations before interest expense; income tax expense, depreciation and amortization (including amortization of non-cash stock-based compensation), acquisition costs (net of gains), loss on extinguishment of debt, derivative loss; other income from recovery of receivable, retirement and salary continuation costs and rent cost.

Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations should not be considered in isolation or as a substitute for net income, income from operations or cash flows provided by, or used in, operations as determined in accordance with GAAP. The metrics are key measures of AdCare Health Systems' operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to the financing and capitalization of the business, fixed rent or lease payments of facilities, derivative loss, and certain acquisition related charges.

The company believes these measures are useful to investors in evaluating the company's performance, results of operations and financial position for the following reasons:

  • They are helpful in identifying trends in the company's day-to-day performance because the items excluded have little or no significance to the company's day-to-day operations;
  • They provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance; and
  • They are an indication to determine whether or not adjustments to current spending decisions are needed.

AdCare believes that the use of the measures provides a meaningful and consistent comparison of the company's underlying business between periods by eliminating certain items required by GAAP, which have little or no significance in the company's day-to-day operations.

   
   
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Amounts in 000s, except per share data)  
(Unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Revenues:                                
  Patient care revenues   $ 54,642     $ 33,872     $ 104,450     $ 64,404  
  Management revenues     363       484       726       982  
Total revenues     55,005       34,356       105,176     $ 65,386  
                                 
Expenses:                                
  Cost of services (exclusive of facility rent, depreciation and amortization)     42,227       27,104      

82,350
     

52,279
 
  General and administrative expenses     4,929       3,167       8,860       6,091  
  Facility rent expense     2,050       1,947       4,115       3,850  
  Depreciation and amortization     1,761       705       3,258       1,352  
  Salary retirement and continuation costs     -       622       -       622  
Total expenses     50,967       33,545       98,583       64,194  
Income from Operations     4,038       811       6,593       1,192  
Other Income (Expense):                                
  Interest expense, net     (3,366 )     (1,852 )     (6,320 )     (3,288 )
  Derivative gain (loss)     353       (2,588 )     763       (3,938 )
  Loss on extinguishment of debt     -       (77 )     -       (77 )
  Acquisition costs, net of gains     (524 )     (622 )     (817 )     357  
  Other income (expense)     (13 )     (19 )     (29 )     587  
Total other income (expense), net     (3,550 )     (5,158 )     (6,403 )     (6,359 )
Income (Loss) from Continuing Operations Before Income Taxes     488       (4,347 )    
190
     
(5,167
)
Income tax expense     (45 )     (124 )     (99 )     (210 )
Income (loss) from Continuing Operations     443       (4,471 )     91       (5,377 )
Loss from discontinued operations, net of tax     (160 )     (91 )    
(269
)    
(126
)
Net Income (loss)     283       (4,562 )     (178 )     (5,503 )
Net Loss Attributable to Noncontrolling Interests     396       165      
651
     
341
 
Net Income (Loss) Attributable to AdCare Health Systems, Inc.   $ 679     $ (4,397 )   $
473
    $
(5,162
)
                                 
Net Income (Loss) per Common Share - Basic:                                
  Continuing Operations   $ 0.06     $ (0.49 )   $ 0.06     $ (0.58 )
  Discontinued Operations     (0.01 )     (0.01 )     (0.02 )     (0.01 )
    $ 0.05     $ (0.50 )   $ 0.04     $ (0.59 )
                                 
                                 
Net Income (Loss) per Common Share -Diluted:                                
  Continuing Operations   $ 0.06     $ (0.49 )   $ 0.06     $ (0.58 )
  Discontinued Operations     (0.01 )     (0.01 )     (0.02 )     (0.01 )
    $ 0.05     $ (0.50 )   $ 0.04     $ (0.59 )
                                 
                                 
                                 

ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS  
(Amounts in 000s)  
(UNAUDITED)  
   
    June 30,     December 31,  
ASSETS   2012     2011  
Current Assets:                
  Cash and cash equivalents   $ 9,373     $ 7,364  
  Restricted cash and cash equivalents     3,624       1,883  
  Accounts receivable, net     26,964       18,759  
  Prepaid expenses and other     668       663  
  Assets of disposal group held for sale     38       47  
            Total Current Assets     40,667       28,716  
                 
Restricted cash and investments     5,812       4,870  
Property and equipment, net     147,093       105,143  
Intangible assets - bed licenses     2,464       1,189  
Intangible assets - lease rights, net     7,925       8,460  
Goodwill     906       906  
Escrow deposits for acquisitions     1,513       3,172  
Lease deposits     1,725       1,685  
Deferred loan costs, net     5,733       4,818  
Other assets     71       122  
            Total Assets   $ 213,909     $ 159,081  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current Liabilities:                
      Current portion of notes payable and other debt   $ 9,401     $ 4,567  
      Revolving credit facilities and lines of credit     1,900       7,343  
      Accounts payable     16,601       12,075  
      Accrued expenses     11,424       9,858  
      Liabilities of disposal group held for sale     143       240  
          Total current liabilities     39,469       34,083  
                 
Notes payable and other debt, net of current portion:                
    Senior debt, net of discounts     116,603       87,771  
    Convertible debt, net of discounts     15,035       14,614  
    Revolving credit facilities     7,064       1,308  
    Other debt     12,880       1,400  
Derivative liability     1,127       1,889  
Other liabilities     1,729       2,437  
Deferred tax liability     87       86  
        Total liabilities     193,994       143,588  
                 
Stockholders' equity:                
    Preferred stock, no par value; 1,000 shares authorized; no shares issued or outstanding     -       -  
    Common stock and additional paid-in capital, no par value; 29,000 shares authorized; 13,697 and 12,193 shares issued and outstanding     39,647       35,047  
    Accumulated deficit     (18,240 )     (18,713 )
      Total stockholders' equity     21,407       16,334  
Noncontrolling interest in subsidiaries     (1,492 )     (841 )
    Total equity     19,915       15,493  
    Total liabilities and stockholders' equity   $ 213,909     $ 159,081  
                 
                 
                 
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
TRAILING FIVE QUARTERS  
(UNAUDITED)  
   
    For the Three Months Ended  
(Amounts in 000's)   6/30/2011     9/30/2011     12/31/2011     3/31/2012     6/30/2012  
Revenues:                                        
  Patient care revenues   $ 33,872     $ 40,192     $ 45,137     $ 49,808     $ 54,642  
  Management revenue     484       330       307       363       363  
Total revenues     34,356       40,522       45,444       50,171       55,005  
Expenses:                                        
  Cost of services     27,104       32,637       37,303       40,123       42,227  
  General and administrative     3,167       3,267       3,922       3,931       4,929  
  Facility rent expense     1,947       1,938       2,008       2,065       2,050  
  Depreciation and amortization     705       836       1,749       1,497       1,761  
  Salary retirement and continuation costs     622       -       830       -       -  
Total expenses     33,545       38,678       45,812       47,616       50,967  
Income (Loss) from Operations     811       1,844       (368 )     2,555       4,038  
Other Income (Expense):                                        
  Interest expense, net     (1,852 )     (2,223 )     (2,688 )     (2,954 )     (3,366 )
  Loss on extinguishment of debt     (77 )     (58 )     (5 )     -       -  
  Derivative gain (loss)     (2,588 )     4,745       151       410       353  
  Acquisition costs, net of gains     (622 )     (1,147 )     (373 )     (293 )     (524 )
  Other income (expense)     (19 )     (19 )     (17 )     (16 )     (13 )
Total other income (expense), net     (5,158 )     1,298       (2,932 )     (2,853 )     (3,550 )
Income (Loss) from Continuing Operations                                        
Before Income Taxes     (4,347 )     3,142       (3,300 )     (298 )     488  
Income tax benefit (expense)     (124 )     (204 )     151       (54 )     (45 )
Income (Loss) from Continuing Operations     (4,471 )     2,938       (3,149 )     (352 )     443  
Loss from discontinued operations, net of tax    
(91
)     (158 )     (1,679 )     (109 )     (160 )
Net Income (Loss)     (4,562 )     2,780       (4,828 )     (461 )     283  
Net Loss Attributable to Noncontrolling Interest    
165
      748       298       255       396  
Net Income (Loss) Attributable to AdCare Health Systems, Inc.   $
(4,397
)   $ 3,528     $ (4,530 )   $ (206 )   $ 679  
                                         
                                         
                                         
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES  
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED EBITDAR FROM CONTINUING OPERATIONS  
(Amounts in 000s)  
(Unaudited)  
   
    For the Three Months Ended  
(Amounts in 000's)   6/30/2011     9/30/2011     12/31/2011     3/31/2012     6/30/2012  
                                         
Net Income (Loss)   $
(4,562
)   $ 2,780     $ (4,828 )   $ (461 )   $ 283  
  Impact of discontinued operations    
91
      158       1,679       109       160  
Net Income (Loss) from continuing operations     (4,471 )     2,938       (3,149 )     (352 )     443  
                                           
  Interest expense, net     1,852       2,223       2,688       2,954       3,366  
                                           
  Income tax (benefit) expense     124       204       (151 )     54       45  
  Amortization of stock based compensation     167       184       277       165       182  
                                           
  Depreciation and amortization     705       836       1,749       1,497       1,761  
                                           
  Acquisition costs, net of gains     622       1,147       373       293       524  
                                           
  Loss on extinguishment of debt     77       58       5       -       -  
                                           
  Derivative (gain) loss     2,588       (4,745 )     (151 )     (410 )     (353 )
  Salary retirement and continuation costs     622       -       830       -       -  
Adjusted EBITDA from continuing operations    
2,286
      2,845       2,471       4,201       5,968  
                                           
  Facility rent expense    
1,947
      1,938       2,008       2,065       2,050  
Adjusted EBITDAR from continuing operations   $
4,233
    $ 4,783     $ 4,479     $ 6,266     $ 8,018  
                                         
                                         
                                         
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES  
SUPPLEMENTARY SCHEDULES  
(Unaudited)  
   
"Same Facilities" results represent those owned and leased facilities we began to operate prior to July 1, 2011.  
   
"Recently Acquired Facilities" results represents those owned and leased facilities we began to operate subsequent to July 1, 2011.  
   
    2011   2012   Six Months YTD  
End of Period Data   Q2   Q3   Q4   Q1   Q2   6/30/11   6/30/12  
                                             
Number of Facilities  
SNF                                            
  Owned     8     12     13     14     18              
  Leased     11     11     12     12     12              
  VIE     0     5     5     5     5              
  Managed     4     4     3     3     3              
ALF                                            
  Owned     6     6     7     8     8              
  VIE     1     1     1     1     1              
  Managed     0     0     0     0     0              
IL                                            
  Managed     1     1     1     1     1              
Total     31     40     42     44     48              
                                             
Number of Operational Beds  
SNF                                            
  Owned     839     1,241     1,337     1,436     1,947              
  Leased     1,262     1,262     1,342     1,342     1,342              
  VIE     0     314     314     314     314              
  Managed     379     379     329     329     329              
ALF                                            
  Owned     196     196     228     308     308              
  VIE     104     104     104     104     104              
  Managed     0     0     0     0     0              
IL                                            
    Managed     83     83     83     83     83              
Total     2,863     3,579     3,737     3,916     4,427              
                                             
SNF + ALF % Owned     47.4 %   59.5 %   59.6 %   61.7 %   66.6 %            
SNF + ALF % Leased     52.6 %   40.5 %   40.4 %   38.3 %   33.4 %            
                                             
Revenue Mix % (a)  
  Skilled (c)     32.4 %   30.8 %   29.9 %   31.0 %   29.4 %   32.7 %   30.2 %
  Medicaid     55.9 %   56.7 %   56.9 %   54.8 %   55.6 %   55.5 %   55.2 %
Private + Other     11.7 %   12.5 %   13.2 %   14.2 %   15.0 %   11.8 %   14.6 %
                                             
Patient Days (a)  
  Skilled (c)     22,443     24,723     29,543     32,633     34,005     43,884     66,638  
  Medicaid     117,401     146,203     164,723     167,486     182,087     223,191     349,573  
  Private + Other     14,788     20,782     25,807     28,075     31,264     26,063     59,339  
Total     154,632     191,708     220,073     228,194     247,356     293,138     475,550  
                                             
Patient Day Mix % (a)  
  Skilled (c)     14.5 %   12.9 %   13.4 %   14.3 %   13.7 %   15.0 %   14.0 %
  Medicaid     75.9 %   76.3 %   74.8 %   73.4 %   73.5 %   76.1 %   73.5 %
  Private + Other     9.6 %   10.8 %   11.8 %   12.3 %   12.7 %   8.9 %   12.5 %
                                             
Revenue Rates Per Patient Day (a)  
  Skilled (c)   $ 454.32   $ 469.60   $ 430.64   $ 442.03   $ 443.46   $ 444.57   $ 442.76  
  Medicaid   $ 149.71   $ 146.44   $ 146.99   $ 152.21   $ 156.33   $ 148.44   $ 154.35  
  Private + Other   $ 195.20   $ 172.90   $ 167.20   $ 171.85   $ 170.56   $ 203.29   $ 171.17  
Weighted Average Total   $ 203.46   $ 196.80   $ 193.34   $ 203.97   $ 207.11   $ 203.50   $ 207.11  
                                             
Average Daily Census (a)  
  Skilled (c)     264     304     330     359     378     273     387  
  Medicaid     1,382     1,798     1,841     1,841     2,020     1,386     2,028  
  Private + Other     174     256     291     309     350     162     344  
Total Average Daily Census     1,821     2,357     2,459     2,508     2,748     1,821     2,759  
                                             
Occupancy (a)     86.7 %   85.4 %   82.5 %   81.1 %   76.5 %   86.8 %   78.7 %
                                             
(000s)                                            
Total Revenues (b)   $ 34,356   $ 40,522   $ 45,444   $ 50,171   $ 55,006   $ 65,386   $ 105,176  
Adjusted EBITDAR (b)   $ 4,230   $ 4,783   $ 4,480   $ 6,266   $ 8,018   $ 7,531   $ 14,284  
Adjusted EBITDA (b)   $ 2,283   $ 2,846   $ 2,472   $ 4,201   $ 5,968   $ 3,681   $ 10,169  
                                             
(a) Skilled Nursing Only - Excludes Managed Facilities  
   
(b) AdCare Consolidated Incorporating Discontinued Operations  
   
(c) Skilled is defined as Medicare A + Managed Care RUGS  
                                             
                                             

Company Contacts
Boyd Gentry, CEO
Chris Brogdon, Vice Chairman & CAO
David A. Tenwick, Chairman of Board
AdCare Health Systems, Inc.
Tel (678) 869-5116

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