ATLANTA, GA -- (Marketwire) -- 11/13/12 -- AdCare Health Systems, Inc. (NYSE MKT: ADK), a leading long-term care provider, reported results for the third quarter ended September 30, 2012.
Q3 2012 Financial Highlights
- Record revenues of $61.8 million, up 12% sequentially and up 52% from Q3 2011.
- Income from operations was a record $4.0 million, up $2.2 million from Q3 2011.
- Net income attributable to AdCare in the third quarter of 2012, before a $2.1 million non-cash derivative charge, increased to $403,000, or $0.03 per share, versus $326,000, or $0.02 per share, in the second quarter of 2012.
- Including the non-cash derivative charge, net loss attributable to AdCare in the third quarter of 2012 totaled $1.7 million or $(0.11) per share. This compares to net income of $679,000, or $0.05 per share, in the second quarter of 2012 which included a non-cash derivative gain of $353,000 (see, "About the Derivative Liability," below for more information.)
- Adjusted EBITDA from continuing operations was a record $6.5 million, up 8% sequentially and 127% versus Q3 2011.
- Acquisitions completed during the quarter added $16.7 million in estimated annualized revenue run-rate.
"Our skilled nursing acquisition and optimization strategy once again drove strong quarterly results," said AdCare's president and chief executive officer, Boyd P. Gentry. "In fact, Q3 produced records in total revenues, income from operations and Adjusted EBITDA from continuing operations, and without the non-cash derivative charge, net income would have increased over the same year-ago quarter. Our optimization strategy involves improving the level of care, occupancy and Medicare payer mix of newly acquired facilities. We expect this strategy to continue to drive strong overall Adjusted EBITDA from continuing operations, which has generated year-over-year increases since we began our M&A program in the summer of 2010."
Q3 2012 Operational Highlights
- Acquired three skilled nursing facilities: One in Georgia with 134 beds in service and an estimated $6.4 million in gross annualized revenues, and two in Oklahoma, with an aggregate of 230 beds in service and an estimated $10.3 million in gross annualized revenues.
- Signed purchase agreements for two skilled nursing facilities: One in Arkansas with a projected 70 beds in service and a projected estimated $8.5 million in gross annualized revenues (based on management expectations), and one in South Carolina with 84 beds in service and an estimated $3.8 million in gross annualized revenues.
The stated gross annualized revenues of facilities acquired or put under contract are according to their most recent financial statements, unless otherwise indicated.
Q3 2012 Summary of Financial Results
Revenues in the third quarter of 2012 increased 52% to a record $61.8 million from $40.5 million in the same year-ago quarter. The increase in revenue was primarily due to acquisitions completed since September 1, 2011 as part of AdCare's M&A program. The company's skilled nursing facilities existing prior to that date also contributed to the improvement in revenue due to 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 September 30, 2012 as filed with the Securities and Exchange Commission.
Income from operations in the third quarter of 2012 was a record $4.0 million, increasing 119% from $1.8 million in the third quarter of 2011. The increase in income from operations was due to revenue optimization and expense controls, as well as from newly acquired facilities. The company's cost of services as a percentage of patient care revenues decreased to 80.1% in the third quarter of 2012 from 81.2% in the same year-ago quarter.
Including a non-cash derivative loss of $2.1 million, net loss attributable to AdCare in the third quarter of 2012 totaled $1.7 million or $(0.11) per basic and diluted share. This compares to a net gain of $3.5 million, or $0.27 per diluted share, in the same year-ago quarter, which included a non-cash derivative gain of $4.7 million.
Adjusted EBITDA from continuing operations in the third quarter of 2012 totaled a record $6.5 million, up 8% from $6.0 million in the second quarter of 2012 (see "Use of Non-GAAP Financial Information," below for the definition of Adjusted EBITDA from continuing operations, a non-GAAP financial metric, as well as an important discussion about the use of this metric and its reconciliation to GAAP net income, the most directly comparable GAAP financial measure.)
Combined cash, current restricted cash and cash equivalents at September 30, 2012 totaled $12.7 million, as compared to $9.2 million at December 31, 2011.
Q3 Total Facility Count
At the end of the third quarter of 2012, the company, through its subsidiaries, operated or managed 51 facilities comprised of 41 skilled nursing centers, nine assisted living residences and one independent living/senior housing facility, with a total of 4,791 beds/units in service. Of these 51 facilities, 29 are owned, 12 are leased, six are consolidated variable interest entities, and four are managed for third parties. The facilities are located in Georgia, Arkansas, Ohio, Oklahoma, Alabama, North Carolina and Missouri.
Subsequent to the end of the third quarter, AdCare signed a definitive agreement to sell six assisted living facilities in Ohio for $22.3 million. The six facilities have an aggregate of 196 units in service. The transaction is expected to be complete before the end of the year. The company estimates that cash consideration received at closing will be approximately $6.7 million.
Chris Brogdon, AdCare's vice chairman, commented: "Excluding the facilities we're divesting, AdCare has put under contract 45 facilities since we began our M&A campaign and 14 since the beginning of 2012. Selling the six assisted living facilities in Ohio allows us to focus on our core skilled nursing competencies, strengthen our balance sheet, and provide capital to advance our very fruitful acquisition program."
Before the end of the year, AdCare plans to complete the acquisition of two facilities in South Carolina and one facility in Arkansas that it has already placed under contract.
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 $300 million. This would represent an increase of nearly 100% over the company's revenues in 2011, and an increase of more than 11 times revenues since initiating its M&A campaign.
Conference Call and Webcast
AdCare will hold a conference call to discuss its third quarter 2012 financial results tomorrow, Wednesday, November 14, 2012 at 8:30 a.m. Eastern time. Management will host the presentation, followed by a question and answer period.
Date: Wednesday, November 14, 2012
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1-877-941-1427
International: 1-480-629-9664
Conference ID#: 4567193
Webcast: http://edge.media-server.com/m/p/7jw73smf/lan/en
The conference call will be webcast live and available for replay via the investors section of the company's website at 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 December 14, 2012.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 4567193
Summary of Closed and Pending Transactions Since Start of M&A Program
ALF = Assisted Living Facility SNF = Skilled Nursing Facility ARR= Annualize Revenue Run-rate(1)
----------------------------------------------------------------------------
Facility Beds/ Transaction Finance Completion
Type Count Units Location Type ARR (1) Terms Status
----------------------------------------------------------------------------
Purchase
ALF 3 72 Ohio (Remaining $3.2M Cash Closed 3-
beds 50%) 31-10
----------------------------------------------------------------------------
Signed
Consol. 1-yr option to
Variable purchase purchase.
ALF 1 104 Hoover, AL Interest $1.4M option, Currently
Units Entity expiring a CVIE
(CVIE) June 2013 (Since
7/1/10)
----------------------------------------------------------------------------
600 Closed 7-
SNF 5 beds Georgia Lease $38.8M 10-yr lease 30-10
----------------------------------------------------------------------------
10-yr lease
269 (combined Closed 9-
SNF 3 beds Georgia Lease $18.4M with the 2-10
above)
----------------------------------------------------------------------------
Long-term
304 fixed rate Closed 10-
SNF 2 beds Alabama Purchase $19.5M loan, USDA- 1-10
backed
----------------------------------------------------------------------------
12-yr lease
299 with Closed 11-
SNF 2 beds Atlanta, GA Lease $20.8M renewal 2-10
option
----------------------------------------------------------------------------
Long-term
106 fixed rate Closed 12-
SNF 1 beds Sylva, NC Purchase $8.0M loan (USDA- 31-10
backed)
----------------------------------------------------------------------------
Long-term
fixed rate Closed two
329 Atlanta & loan 5-1-2011;
SNF 3 beds Dublin, GA Purchase $18.0M (USDA,SBA- Closed
backed and third on
bank loans) 6-1-2011
----------------------------------------------------------------------------
Currently
314 Long-term a CVIE
SNF 5 beds Oklahoma CVIE $12.7M loan (SBA- (since 8-
backed) 1-11)
----------------------------------------------------------------------------
Long-term
fixed rate Closed
loan (USDA- purchases
482 Arkansas & Purchase backed and 9-8-11;
SNF 5 beds Missouri (four) and $27.5M bank closed
Lease (one) loans), one lease 11-
36 month 1-11
lease
----------------------------------------------------------------------------
Long-term
128 Mountain loan (USDA- Closed 12-
ALF & SNF 2 beds View, AR Purchase $5.4M backed bank 2-11
loan)
----------------------------------------------------------------------------
30-year,
fixed-
rated, tax-
ALF & SNF 2 179 Springfield, Purchase $12.0M exempt bond Closed 12-
beds OH issuance, 30-11
and bank
loan
----------------------------------------------------------------------------
434 Closed 3-
SNF 3 beds Arkansas Purchase $15.9M Bank loan 30-12
----------------------------------------------------------------------------
77 Closed 4-
SNF 1 beds Arkansas Purchase $3.3M Bank loan 30-12
----------------------------------------------------------------------------
Long-term
134 Glennville, bank loan Closed 7-
SNF 1 beds GA Purchase $6.4M (USDA- 2-12
backed)
----------------------------------------------------------------------------
Long-term
109 Oklahoma bank loan Closed 7-
SNF 1 beds City, OK Purchase $4.1M (SBA- 3-12
backed)
----------------------------------------------------------------------------
121 Closed 8-
SNF 1 beds Tulsa, OK Purchase $6.2M Bank loan 17-12
----------------------------------------------------------------------------
Closing
SNF 1 96 Sumter, SC Purchase $6.7M SBA regular Expected
(Pending) beds bank loan Q4-12
----------------------------------------------------------------------------
Closing
SNF 1 70 Cabot, Purchase $8.5M Traditional Expected
(Pending) beds Arkansas bank loan Q4-12
----------------------------------------------------------------------------
Closing
SNF 1 84 Georgetown, Purchase $3.8M Traditional Expected
(Pending) beds SC bank loan Q4-12
----------------------------------------------------------------------------
Long-term
SNF 350 bank loan Closing
(Pending) 4 beds Oklahoma Purchase $10.5M (SBA- Expected
backed) Q1-13
----------------------------------------------------------------------------
Total
Closed 41 4,061 $221.6M
--------------------- --------
Total
Pending 7 600 $29.5M
--------------------- --------
Grand
Total 48 4,661 $251.1M
--------------------- --------
(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.
Stock Dividend
On October 22, 2012, AdCare issued a 5% stock dividend to all AdCare shareholders of record on October 8, 2012.
About the Derivative Liability
The derivative liability is the result of the Company issuing subordinated convertible notes in 2010 that include an anti-dilution provision referred to as a "ratchet" provision. The derivative liability is a non-cash item. The notes are convertible into shares of common stock of the Company at a current conversion price of $3.73 (adjusted for various stock dividends) that is subject to future reductions if the Company issues equity instruments at a lower price (the "ratchet" provision). Because there is no minimum conversion price, an indeterminate number of shares may be issued in the future. Accordingly, the Company determined an embedded derivative existed that was required to be bifurcated from the subordinate convertible notes and accounted for separately as a derivative liability recorded at fair value. Pursuant to GAAP, the Company estimates the fair value of the derivative liability using the Black-Scholes Merton option-pricing model with changes in fair value being reported in the condensed consolidated statement of operations.
The Company currently has no plans to issue equity instruments at a price lower than the conversion price of $3.73, which would trigger the ratchet provision. These notes mature in October 2013 at which time the Company will be required to redeem them for cash (unless they are earlier converted into common stock at the option of the holder). Upon conversion to common stock, the debt and derivative liability will be extinguished, the current fair market value of the common stock will be reflected as common stock and additional paid-in capital, and there may be a resulting gain or loss on the debt extinguishment. If not converted to stock, upon settlement at the date of maturity, the debt and derivative liability will result in a gain on debt extinguishment for the remaining fair value of the derivative.
About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE MKT: ADK) is a recognized provider of 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 through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services. For more information about AdCare, visit www.adcarehealth.com.
Important Cautions Regarding Forward-Looking Statements
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: (i) statements that the company expects its optimization strategy to continue to drive strong overall Adjusted EBITDA from continuing operations; (ii) statements regarding the sale of six facilities; (iii) statements regarding the company's current plans to issue equity instruments; (iv) statements regarding the signing and closing of expected acquisitions; and (v) statements regarding 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.
Use of Non-GAAP Financial Information
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 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 or gain, other non-routine adjustments (primarily a recovery of a receivable and a non-cash settlement gain), 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 non-routine adjustments (primarily a recovery of a receivable and a non-cash settlement gain), 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. Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations are 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 or gain, 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000s, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Revenues:
Patient care revenues $ 61,342 $ 40,192 $ 165,793 $ 104,596
Management revenues 428 330 1,154 1,312
--------- --------- --------- ---------
Total revenues 61,770 40,522 166,947 105,908
--------- --------- --------- ---------
Expenses:
Cost of services (exclusive
of facility rent,
depreciation and
amortization) 49,164 32,637 131,514 84,916
General and administrative 4,328 3,267 13,188 9,358
Facility rent expense 2,080 1,937 6,196 5,787
Depreciation and
amortization 2,112 836 5,370 2,188
Salary retirement and
continuation costs 38 -- 38 622
--------- --------- --------- ---------
Total expenses 57,722 38,677 156,306 102,871
--------- --------- --------- ---------
Income from Operations 4,048 1,845 10,641 3,037
--------- --------- --------- ---------
Other Income (Expense):
Interest expense, net (3,992) (2,223) (10,312) (5,511)
Acquisition costs, net of
gains (342) (1,147) (1,160) (789)
Derivative gain (loss) (2,105) 4,745 (1,342) 807
Loss on extinguishment of
debt -- (58) -- (136)
Other income (expense) 271 (20) 242 567
--------- --------- --------- ---------
Total other income
(expense), net (6,168) 1,297 (12,572) (5,062)
--------- --------- --------- ---------
Income (Loss) from Continuing
Operations Before Income Taxes (2,120) 3,142 (1,931) (2,025)
Income Tax Expense (118) (204) (217) (414)
--------- --------- --------- ---------
Income (Loss) from Continuing
Operations (2,238) 2,938 (2,148) (2,439)
Loss from discontinued
operations (202) (158) (472) (285)
--------- --------- --------- ---------
Net Income (Loss) (2,440) 2,780 (2,620) (2,724)
Net Loss Attributable to
Noncontrolling Interests 738 748 1,390 1,090
--------- --------- --------- ---------
Net Income (Loss) Attributable
to AdCare Health Systems $ (1,702) $ 3,528 $ (1,230) $ (1,634)
========= ========= ========= =========
Net Income (Loss) per Common
Share -- Basic:
Continuing Operations $ (0.10) $ 0.33 $ (0.05) $ (0.14)
Discontinued Operations (0.01) (0.01) (0.03) (0.03)
--------- --------- --------- ---------
$ (0.11) $ 0.32 $ (0.08) $ (0.17)
========= ========= ========= =========
Net Income (Loss) per Common
Share -- Diluted:
Continuing Operations $ (0.10) $ 0.28 $ (0.05) $ (0.14)
Discontinued Operations (0.01) (0.01) (0.03) (0.03)
--------- --------- --------- ---------
$ (0.11) $ 0.27 $ (0.08) $ (0.17)
========= ========= ========= =========
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in 000s)
September 30, December 31,
2012 2011
------------- -------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 9,884 $ 7,364
Restricted cash and cash equivalents 2,825 1,883
Accounts receivable, net of allowance of
$3,099 and $1,346 30,397 18,759
Prepaid expenses and other 892 663
Assets of disposal group held for sale -- 47
------------- -------------
Total current assets 43,998 28,716
Restricted cash and investments 5,748 4,870
Property and equipment, net 166,708 105,143
Intangible assets -- bed licenses, net 2,558 1,189
Intangible assets -- lease rights, net 7,658 8,460
Goodwill 906 906
Escrow deposits for acquisitions 812 3,172
Lease deposits 1,704 1,685
Deferred loan costs, net 6,630 4,818
Other assets 169 122
------------- -------------
Total assets $ 236,891 $ 159,081
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable and other
debt $ 11,991 $ 4,567
Revolving credit facilities and lines of
credit 1,363 7,343
Accounts payable 20,324 12,075
Accrued expenses 12,615 9,858
Liabilities of disposal group held for sale -- 240
------------- -------------
Total current liabilities 46,293 34,083
Notes payable and other debt, net of current
portion:
Senior debt, net of discounts 134,003 87,771
Convertible debt, net of discounts 22,746 14,614
Revolving credit facilities 9,076 1,308
Other debt 887 1,400
Derivative liability 3,231 1,889
Other liabilities 1,728 2,437
Deferred tax liability 99 86
------------- -------------
Total liabilities 218,063 143,588
------------- -------------
-- --
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;
14,657 and 12,802 shares issued and
outstanding 41,002 35,047
Accumulated deficit (19,943) (18,713)
------------- -------------
Total stockholders' equity 21,059 16,334
Noncontrolling interest in subsidiaries (2,231) (841)
------------- -------------
Total equity 18,828 15,493
------------- -------------
Total liabilities and stockholders' equity $ 236,891 $ 159,081
============= =============
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
TRAILING FIVE QUARTERS
(Amounts in 000s)
(UNAUDITED)
For the Three Months Ended
9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012
--------- ---------- --------- --------- ---------
Revenues:
Patient care
revenues $ 40,192 $ 45,137 $ 49,808 $ 54,642 $ 61,342
Management revenue 330 307 363 363 428
--------- ---------- --------- --------- ---------
Total revenues 40,522 45,444 50,171 55,005 61,770
--------- ---------- --------- --------- ---------
Expenses:
Cost of services 32,637 37,303 40,123 42,227 49,164
General and
administrative 3,267 3,922 3,931 4,929 4,328
Facility rent
expense 1,937 2,008 2,065 2,050 2,080
Depreciation and
amortization 836 1,749 1,497 1,761 2,112
Salary retirement
and continuation
costs - 830 - - 38
--------- ---------- --------- --------- ---------
Total expenses 38,677 45,812 47,616 50,967 57,722
--------- ---------- --------- --------- ---------
Income (Loss) from
Operations 1,845 (368) 2,555 4,038 4,048
--------- ---------- --------- --------- ---------
Other Income
(Expense):
Interest expense,
net (2,223) (2,688) (2,954) (3,366) (3,992)
Loss on
extinguishment of
debt (58) (5) - - -
Derivative gain
(loss) 4,745 151 410 353 (2,105)
Acquisition costs,
net of gains (1,147) (373) (293) (524) (342)
Other income
(expense) (20) (17) (16) (13) 271
--------- ---------- --------- --------- ---------
Total other income
(expense), net 1,297 (2,932) (2,853) (3,550) (6,168)
--------- ---------- --------- --------- ---------
Income (Loss) from
Continuing
Operations
Before Income Taxes 3,142 (3,300) (298) 488 (2,120)
Income tax benefit
(expense) (204) 151 (54) (45) (118)
--------- ---------- --------- --------- ---------
Income (Loss) from
Continuing
Operations 2,938 (3,149) (352) 443 (2,238)
Loss from
discontinued
operations, net of
tax (158) (1,679) (109) (160) (202)
--------- ---------- --------- --------- ---------
Net Income (Loss) 2,780 (4,828) (461) 283 (2,440)
Net Loss
Attributable to
Noncontrolling
Interest 748 298 255 396 738
--------- ---------- --------- --------- ---------
Net Income (Loss)
Attributable to
AdCare Health
Systems, Inc. $ 3,528 $ (4,530) $ (206) $ 679 $ (1,702)
========= ========== ========= ========= =========
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA FROM CONTINUING
OPERATIONS AND ADJUSTED EBITDAR FROM CONTINUING OPERATIONS
(Amounts in 000s)
(Unaudited)
For the Three Months Ended
9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012
--------- ---------- --------- --------- ---------
Net Income (Loss) $ 2,780 $ (4,828) $ (461) $ 283 $ (2,440)
Impact of
discontinued
operations 158 1,679 109 160 202
--------- ---------- --------- --------- ---------
Net Income (Loss)
from continuing
operations 2,938 (3,149) (352) 443 (2,238)
Interest expense,
net 2,223 2,688 2,954 3,366 3,992
Income tax
(benefit) expense 204 (151) 54 45 118
Amortization of
stock based
compensation 184 277 165 182 269
Depreciation and
amortization 836 1,749 1,497 1,761 2,112
Acquisition costs,
net of gains 1,147 373 293 524 342
Loss on
extinguishment of
debt 58 5 - - -
Derivative (gain)
loss (4,745) (151) (410) (353) 2,105
Other non-routine
Adjustments - - - - (282)
Salary retirement
and continuation
costs - 830 - - 38
--------- ---------- --------- --------- ---------
Adjusted EBITDA from
continuing
operations 2,845 2,471 4,201 5,968 6,456
Facility rent
expense 1,937 2,008 2,065 2,050 2,080
--------- ---------- --------- --------- ---------
Adjusted EBITDAR
from continuing
operations $ 4,782 $ 4,479 $ 6,266 $ 8,018 $ 8,536
========= ========== ========= ========= =========
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULES
(Unaudited)
2011 2012 Nine Months YTD
----------------- -------------------------- -----------------
End of
Period Data Q3 Q4 Q1 Q2 Q3 9/30/11 9/30/12
-------- -------- -------- -------- -------- -------- --------
Number of
Facilities
SNF
Owned 12 13 14 18 21
Leased 11 12 12 12 12
VIE 5 5 5 5 5
Managed 3 3 3 3 3
ALF
Owned 6 7 8 8 8
VIE 1 1 1 1 1
Managed 0 0 0 0 0
IL
Managed 1 1 1 1 1
-------- -------- -------- -------- -------- -------- --------
Total 39 42 44 48 51
Number of Operational Beds
SNF
Owned 1,241 1,337 1,436 1,947 2,311
Leased 1,262 1,342 1,342 1,342 1,342
VIE 314 314 314 314 314
Managed 379 329 329 329 329
ALF
Owned 196 228 308 308 308
VIE 104 104 104 104 104
Managed 0 0 0 0 0
IL
Managed 83 83 83 83 83
-------- -------- -------- -------- -------- -------- --------
Total 3,579 3,737 3,916 4,427 4,791
SNF + ALF %
Owned 59.5% 59.6% 61.7% 66.6% 69.4%
SNF + ALF %
Leased 40.5% 40.4% 38.3% 33.4% 30.6%
Revenue Mix (a)
Skilled
(c) 30.8% 29.9% 31.0% 29.4% 26.8% 32.0% 28.9%
Medicaid 56.7% 56.9% 54.8% 55.6% 58.4% 56.0% 56.4%
Private +
Other 12.5% 13.2% 14.2% 15.0% 14.8% 12.0% 14.7%
-------- -------- -------- -------- -------- -------- --------
Patient Days (a)
Skilled
(c) 24,723 29,543 32,633 34,005 35,463 68,607 102,101
Medicaid 146,203 164,723 167,486 182,087 206,034 369,394 555,607
Private +
Other 20,782 25,807 28,075 31,264 36,026 46,845 95,365
-------- -------- -------- -------- -------- -------- --------
Total 191,708 220,073 228,194 247,356 277,523 484,846 753,073
Patient Day Mix (a)
Skilled
(c) 12.9% 13.4% 14.3% 13.7% 12.8% 14.2% 13.6%
Medicaid 76.3% 74.8% 73.4% 73.5% 74.2% 76.2% 73.8%
Private +
Other 10.8% 11.8% 12.3% 12.8% 13.0% 9.6% 12.6%
-------- -------- -------- -------- -------- -------- --------
Revenue Rates Per Patient Days (a)
Skilled
(c) $ 469.60 $ 430.64 $ 442.03 $ 443.46 $ 437.54 $ 453.59 $ 440.95
Medicaid $ 146.44 $ 146.99 $ 152.21 $ 156.33 $ 164.42 $ 147.65 $ 158.09
Private +
Other $ 172.90 $ 167.20 $ 171.85 $ 170.56 $ 165.82 $ 189.81 $ 169.15
-------- -------- -------- -------- -------- -------- --------
Weighted
Average
Total $ 196.80 $ 193.34 $ 203.97 $ 207.11 $ 208.91 $ 200.85 $ 206.82
Average Daily Census (a)
Skilled
(c) 304 330 359 378 390 313 412
Medicaid 1,798 1,839 1,841 2,020 2,264 1,688 2,240
Private +
Other 255 290 308 350 396 214 385
-------- -------- -------- -------- -------- -------- --------
Total
Average
Daily
Census 2,357 2,459 2,508 2,748 3,050 2,215 3,037
Occupancy
(a) 85.4% 82.5% 81.1% 76.5% 77.2% 86.2% 78.1%
(000s)
Total
Revenues
(b) $ 40,522 $ 45,444 $ 50,171 $ 55,005 $ 61,770 $105,908 $166,947
Adjusted
EBITDAR (b) $ 4,782 $ 4,479 $ 6,266 $ 8,018 $ 8,536 $ 12,311 $ 22,822
Adjusted
EBITDA (b) $ 2,845 $ 2,471 $ 4,201 $ 5,968 $ 6,456 $ 6,524 $ 16,626
(a) Skilled nursing only - excludes managed facilities
(b) AdCare consolidated incorporating discontinued operation
(c) Skilled is defined as Medicare change + managed Care RUGs
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