AdCare Acquisition Spree Continues, Closes Asset Sale for $4.2 Million

AdCare Health Systems (NYSE: ADK) has closed on the asset purchase of a skilled nursing and assisted living community in Mountain View, Arkansas for $4.2 million.

The facilities have a total of 129 beds in service that generated an estimated $5.4 million in gross annualized revenues according to recent financials, and their addition is expected to be immediately accretive to AdCare’s earnings.

“This signing brings the total number of facilities we’ve purchased, leased, or managed to 42, with now six in Arkansas,” said Chris Brogdon, vice chairman and chief acquisitions officer for AdCare. “The addition of these facilities is in line with our expansion into the Southeast, and will leverage the professional support staff we’ve already established in the region.”


The acquisitions was made through a bank loan and is expected to be refinanced with a long term loan guaranteed by the Small Business Administration.

The deal is the latest in a string of acquisitions for AdCare, which said it plans to continue pursuing a merger and acquisition program.

Combining its current annualized run-rate with transactions currently in the process of closing, AdCare’s estimated annualized revenue run-rate is expected to exceed $300 million. This would represent an increase of more than 460% over the company’s revenues in 2010, and an increase of more than 11 times revenues in 2009 when it initiated its M&A campaign.


“This acquisition fits AdCare’s strategic objective of acquiring operations with Medicare and Managed Care upside, and we anticipate its optimization to be in line with our previous successes,” said Boyd Gentry, president and CEO of AdCare. “As we recently reported, our optimization strategy has increased Medicare Census 37.5%, on average, for facilities acquired so far in our M&A campaign.”

Gentry added that the company is evaluating a number of additional deals located in the Midwest and Southern Regions of the U.S.

Written by John Yedinak

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