AdCare Health Systems to Acquire Two Alabama Nursing Homes for $18.5 Million

AdCare Health Systems, Inc. (NYSE Amex: ADK), an Ohio-based long-term care, home care and management company, recently announced it has executed a definitive purchase agreement for two privately-held nursing homes in Alabama for $18.5 million.  This acquisition follows the announcement of AdCare’s private placement offering in January 2010 to fund its growth initiatives.  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. AdCare plans to finance this purchase through a local bank with a guarantee by the United States Department of Agriculture (USDA).

"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."