AdCare Health Systems, a leading long-term care provider, agreed to sell six assisted living facilities located in Ohio for $22.3 million and is expected to close prior to December 31, 2012. Cash proceeds from the sale of the six facilities are estimated to be $6.7million. The six facilities have an aggregate of 196 units in service and an estimated $8.9 million in gross annualized revenues. The proceeds will be used to finance the company’s ongoing M&A program focused on skilled nursing facilities. Before the end of the year, AdCare plans to complete the acquisition of seven facilities in South Carolina and Oklahoma it has already placed under contract.
“This transaction bolsters our balance sheet and provides additional capital to finance our ongoing M&A activity involving skilled nursing facilities,” said Boyd Gentry, AdCare’s president and chief executive officer. “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. 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’s estimated annualized revenue run-rate is expected to exceed $300 million by combining the company’s current annualized run-rate with transactions in the process of closing. This would be an increase of nearly 100% over the company’s revenues in 2011, and an increase of more than 10 times revenues since initiating its M&A campaign. The gain on the sale is expected to be approximately $9.1 million and approximately $11.5 million in debt will be repaid by AdCare or assumed by the buyer upon closing. AdCare will provide $3.6 million in seller financing, which is expected to be repaid after March 2014.
Chris Brogdon, AdCare’s vice chairman and chief acquisitions officer, added, “We are making great progress in our efforts to integrate the new facilities acquired to date, and remain focused on additional M&A activity over the remainder of 2012 and into 2013. We are evaluating a number of opportunities that fit our acquisition strategy in the Southern region of the U.S., and believe we can accelerate our revenue growth to more effectively leverage our proven model.”
AdCare Health Systems is a provider of senior living and health care facility management. Its mission has been to provide the highest quality of healthcare services to the elderly through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services.
For more information about AdCare, visit www.adcarehealth.com
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