AdCare Health Systems, Inc. (ADK) Continues Fast Growth

The recent positive assessment of AdCare Health Systems by Stonegate Securities was based upon the strength of AdCare’s unique approach to a growing but highly fragmented market. AdCare is an Ohio-based healthcare services provider that owns, operates, and manages skilled nursing homes, assisted living facilities, and retirement communities in several states, largely in the southeast. The company has recognized and is aggressively addressing a major need in the living facilities industry, which today consists largely of independent family owned operations. These facilities are generally oriented toward low-margin long-term care, and also have inherent and costly operational inefficiencies.

AdCare’s successful approach has been to identify and acquire such operations, focusing on certain key parameters, such as targeting locations in states with relatively healthy economies. AdCare then applies a customized improvement program, carefully tailored to each facility’s needs, effectively moving it into a higher-margin acute-care Medicare-based model, as well as introducing a variety of more efficient operational standards and procedures.

The result is a gradual but steadily improving financial picture for both the individual facility and for AdCare. The company’s Medicare census has, for example, increased by over 37% at acquired facilities, and AdCare has also been able to offset recent Medicare cuts. AdCare’s seasoned management team has substantial senior living, healthcare, and real estate industry experience, and is itself incentivized to continue to grow the business through their combined ownership of approximately 25.6% of the common AdCare stock.

AdCare’s revenues continue to show steady growth, as they have for the past several years. With the recent acquisition of a number of skilled nursing centers they expect to close in the first quarter of 2012, AdCare expects its annualized revenue run-rate to exceed $355 million, which would represent an increase of 570% over revenues in 2010.

For additional information, visit the company’s website at www.AdCareHealth.com

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