SPRINGFIELD, OH, Aug 02, 2010
(MARKETWIRE via COMTEX) -- AdCare Health Systems, Inc. (NYSE Amex:
ADK),
an Ohio-based long-term care, home care and management company, has
closed on a previously announced agreement to lease five privately
held nursing homes in South Georgia that is expected to more than
double its revenue.
The five facilities have been leased under a five-year term from
the owner, with an extension option for an additional five years. The
facilities have on aggregate 615 beds that generate approximately $35
million in annualized revenue.
AdCare's upfront cost for the transaction was $700,000 in cash,
plus legal and accounting closing costs. At closing, the company
assumed approximately $1.3 million in negative working capital and
purchased for $2 million approximately $5.5 million in existing
receivables due to these facilities. In addition, AdCare provided the
lessor $1.16 million, comprised of the first month's lease payment
and a security deposit that includes an amount equal to two months
lease payment.
With the close of this transaction, AdCare estimates its revenue
run-rate will exceed $61 million annually, representing an increase
of more than 120% over the company's 2009 revenues.
"This lease is the first major transaction we closed since we
began our acquisition campaign at the end of last year," said
Chris Brogdon, AdCare's vice chairman and chief acquisitions officer.
"We expect these facilities to be very profitable for AdCare,
especially as they come under our more capable management and benefit
from the economies of scale we bring to the table."
AdCare also reported it signed an agreement to lease an additional
five nursing homes in Georgia that produce annualized revenues of
approximately $37 million, which it plans to close on September 30,
2010.
"We are also now moving quickly toward closing the other two
acquisitions we announced in the first half of 2010," noted
Brogdon. "As we have outlined in our M&A strategy, we are
also continuing to evaluate foreclosures and other poorly run
facilities that we can secure at below-market prices, as well as
target acquisitions of both profitable and turnaround properties to
grow our business."
Brogdon joined AdCare last September when the company announced a
new M&A growth strategy to build upon its strong reputation for
operational efficiency and high-quality living environments.
About AdCare Health Systems AdCare Health Systems, Inc. (NYSE
Amex: ADK)
develops, owns and manages assisted living facilities, nursing homes
and retirement communities and provides home healthcare services.
Prior to becoming a publicly traded company in November of 2006,
AdCare operated as a private company for 18 years. AdCare's 900
employees provide high-quality care, management services and other
services for patients and residents residing in 19 facilities, seven
of which are assisted living facilities, 11 skilled nursing centers
and one independent senior living community. The company owns eight
of those facilities. In the ever-expanding marketplace of long-term
care, AdCare's mission is to provide quality healthcare services to
the elderly. For more information about AdCare, visit
www.adcarehealth.com.
Safe Harbor Statement Statements contained in this press release
that are not historical facts may be forward-looking statements
within the meaning of federal law, which can be identified by the use
of forward-looking terminology, such as "believes,"
"expects," "plans," "anticipates" or
similar expressions. Statements in this announcement that are
forward-looking include, but are not limited to, statements that with
the closing of this transaction, AdCare estimates its revenue
run-rate will exceed $61 million annually, representing an increase
of more than 120% over the company's 2009 revenues; that the leased
facilities mentioned in this release will be very profitable for
AdCare; that it plans to close the newly announced additional five
leases on September 30, 2010; and that the company is moving quickly
toward closing the other two acquisitions it announced in the first
half of 2010. Such forward-looking statements reflect management's
beliefs and assumptions, and are based on information currently
available to management. The forward-looking statements involve known
and unknown risks that may make the results, performance or
achievements of the company differ materially from those expressed or
implied in such statements. Such factors are also identified in the
public filings made by the company with the U.S. Securities and
Exchange Commission, and they include, but are not limited to, the
company'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 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.