AdCare Health Systems, Inc. (NYSE MKT:ADK) has entered an agreement to sell six assisted living communities in Ohio for $22.3 million to a long-time Ohio assisted living operator. The transaction is expected to close before the end of the year.
The long-term care provider will use the proceeds from the sale to finance its ongoing M&A program, which is focused on skilled nursing acquisitions.
The six communities have a total of 196 units in service and generate an estimated $8.9 million in gross annualized revenues.
“These divested facilities have operated profitably and have been valuable to our organization, but we believe there are greater opportunities in expanding our skilled nursing business,” said Boyd Gentry, AdCare’s president and chief executive officer. “During the last 18 months, our new optimization strategies have resulted in increased facility occupancy and Medicare census for both our new and existing skilled nursing facilities, as well as better reimbursement and improved patient care. This transaction will fuel an acceleration of this strategy, allowing us to apply this success on a much greater scale.”
AdCare is expected to gain approximately $9.1 million on the sale. Additionally, approximately $11.5 million in debt will be repaid by AdCare or assumed by the buyer upon closing, which further reduces the long-term care provider’s financial leverage.
Cash proceeds from the six-property sale will be an estimated $6.7 million at closing, and AdCare will provide $3.6 million in seller financing that’s expected to be repaid after March 2014.
Written by Alyssa Gerace