AdCare Health Systems To Acquire Two Alabama Nursing Homes For $18.5 M
Acquisitions to Increase AdCare's Revenue by 60% and Be Immediately Accretive to Earnings
Springfield, OH -(Marketwire) - AdCare Health Systems, Inc. (NYSE Amex: ADK), an Ohio-based long-term care, home care and management company, has signed a definitive purchase agreement for two privately-held nursing homes in Alabama for $18.5 million.
The facilities have a total of 312 beds and currently generate approximately $18 million in annualized revenue. The acquisitions, which represent the company's first expansion outside of Ohio, are expected to increase AdCare's annualized revenue by 60% and be immediately accretive to earnings. Management expects to close the transaction in the second quarter of 2010. "These two facilities are the first of several potential acquisitions in our pipeline, and are in line with our stated goal to grow both organically and through accretive acquisitions," said Chris Brogdon, AdCare's vice chairman and chief acquisitions officer. "We are seeing tremendous opportunities in the highly fragmented health care segments of senior assisted living, elderly nursing care and home health care services -- all of which are exhibiting strengthening demographics combined with limited facilities to meet future demand."
AdCare will finance this purchase through a local bank, with a guarantee by the United States Department of Agriculture (USDA). The guarantee is provided through a program developed by the government to supply long-term financing for rural projects at favorable rates.
"We believe the highly-favorable financing we've received is indicative of what to expect with future acquisitions," added Brogdon, "especially with the federal economic stimulus bill strengthening these federal loan guaranty programs. This should allow us to expand our operations expeditiously without being dilutive to shareholders or creating a complicated capital structure." Brogdon joined AdCare last September when the company announced an aggressive M&A growth strategy to build upon its strong reputation for operational efficiency and high-quality living environments, as well as its increasing financial strength. The company returned to profitability in the first quarter of 2009 and is expected to report its fifth consecutive year of revenue growth for 2010.
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 health care services. Prior to becoming a publicly traded company in November of 2006, AdCare operated as a private company for 18 years. AdCare's 920 employees provide high-quality care, management services and other services for patients and residents residing in 20 facilities, seven of which are assisted living facilities, 12 skilled nursing centers and one independent senior living community. The company has ownership interests in 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. 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, results, performance or achievements of the company to differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by the company with the Securities and Exchange Commission and include 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.
SOURCE: AdCare Health Systems, Inc.