Long-term care provider AdCare Health Systems, Inc. (NYSE Amex:ADK) has signed purchase agreements for two Oklahoma skilled nursing facilities for a total of $11.6 million.
The facilities have an aggregate 239 beds in service, and generate an estimated $10.3 million in gross annualized revenues, according to their most recent financial statements. AdCare expects to complete the transaction within the next 90 days, and will finance the acquisitions with traditional bank loans.
“Including the two new acquisitions announced today, we have a total of 12 skilled nursing facilities we expect to close in established markets over the next 120 days,” said Boyd Gentry, AdCare’s president and chief executive officer, in a statement. “Together, these facilities have existing estimated gross annualized revenues of $49.0 million, which is prior to our optimization process that we believe will increase sub-acute census and revenues.”
AdCare’s three Arkansas acquisitions are expected to have “significant upside,” Gentry continued. The company’s M&A campaign is focused on acquiring, developing, and managing facilities where it can leverage operational efficiencies and improve profitability, even in a more “conservative” Medicare environment.
In line with this strategy, AdCare said it recently terminated an agreement announced last June to acquire or lease 15 skilled nursing facilities located in South Carolina, North Carolina, Virginia, and Tennessee, following further due-diligence and renegotiation efforts.
“AdCare will no longer pursue this acquisition as it has become significantly more expensive as consent negotiations with third-party landlords progressed,” said Gentry. “Although we tried to negotiate suitable terms, we eventually decided it was in our best interest to focus on the other numerous acquisitions we have identified which could quickly take its place.”
Despite this, Gentry said the company’s pipeline of potential acquisitions is “as robust as ever” and it remains on the look-out for further acquisition opportunities.
Written by Alyssa Gerace