Future Unknown as AdCare Seeks ‘Strategic Alternative’

A former senior housing operator with a troubled past is taking steps to arrive in greener pastures.

AdCare Health Systems, Inc.’s (NYSE: ADK) board of directors is reviewing strategic alternatives for the company with the help of St. Louis-based financial advisory firm Stifel, the self-managed health care real estate investment company announced Tuesday.

“AdCare is at a pivotal time in its development and we believe Stifel, with its investment banking expertise in real estate, especially in health care real estate, will be of great help in exploring strategic alternatives for our company,” AdCare Chairman and CEO Bill McBride said in a prepared statement. 


Additionally, on April 1, AdCare commenced a new master lease of its nine Arkansas facilities to affiliates of Skyline Healthcare LLC, according to a press release. The move will increase the rental revenue from the properties going forward, and improve the credit and operational profile of AdCare’s overall portfolio, McBride said.

“We continue to make progress in our efforts to strengthen our healthcare real estate portfolio, reduce interest costs and improve cash flow,” McBride added. 

AdCare also received a financing commitment from the U.S. Department of Housing and Urban Development (HUD), subject to certain conditions, of about $3.7 million for one South Carolina property. The company anticipates closing on the new financing to occur in the first half of 2016, subject to certain conditions, McBride said.


The specific course of AdCare’s future remains to be determined, the company said, noting it has not made a decision to pursue any particular transaction or strategic alternative. Additionally, the company has not yet established a timetable for the completion of the review process.

The announcement to pursue alternatives comes following a series of hurdles for AdCare. Major accounting errors led to its former CFO Martin Brew resigning in 2013; its former CEO Boyd Gentry resigned in May 2014; and the company decided to completely exit senior housing operations to become a health care property holding and leasing company in July 2014. In December 2015, AdCare also declassified its board of directors.

Back in December 2012, AdCare owned, leased and managed 46 skilled nursing facilities, three assisted living communities and one independent living community. Of the 50 facilities, which had a total of more than 5,000 beds, AdCare owned and operated 26, leased and operated 11, and managed 13.

Written by Mary Kate Nelson

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