2014

AdCare Health Systems, Inc. Continues To Be Profitable; Reports 2009 Second Quarter Earning Results

SPRINGFIELD, Ohio, Aug. 14 /PRNewswire-FirstCall/ -- AdCare Health Systems, Inc. (NYSE AMEX: ADK), an Ohio based long term care, home care and management company, today reported financial results for its second quarter of 2009.

Revenues for the quarter ended June 30, 2009 were $6,613,127 as compared to $6,016,536 for the same quarter in 2008, an increase of $596,591. The increase was mostly due to improved occupancy in our skilled nursing centers and enhanced revenues in our home health care division. Management will continue to focus on expanding the revenue base at its home health care operations.

The net income for the quarter ended June 30, 2009 was $147,101 as compared to $22,963 for the second quarter ended June 30, 2008, an improvement of $124,138. The improvement in net income would have been significantly higher without the $413,593 gain on the acquisition of the Lincoln Lodge in the second quarter of last year. Basic and diluted net income per share for the quarter ended June 30, 2009 was $0.04 as compared to a basic and diluted net income per share of $0.01 for the same quarter ended June 30, 2008.

Revenues for the six-months ended June 30, 2009 were $12,998,016 as compared to $12,009,078 for the same period in 2008, an increase of $988,938. Net income for the six-months ended June 30, 2009 was $242,915 as compared to a loss of $116,507 for the same period in 2007, an improvement of $359,422. Again, the increase was due mostly to improved occupancy in our skilled nursing centers and assisted living facilities as well as improved revenues in our home health care division. Basic and diluted net income per share for the six-months ended June 30, 2009 was $0.07 as compared to a basic and diluted net loss per share of ($0.02) for the same six-months period ended June 30, 2008.

David A. Tenwick, Chairman of AdCare, stated that "I am extremely encouraged that the Company is moving in the right direction and profitability continues to improve despite the challenging economic environment." He continued, "The Company has made great strides in improving its financial performance. I am especially pleased with the improvement in income from Operations for the first six months of 2009, increasing to $931,286 from $154,801 for the same period last year. In addition, we continued to improve our working capital position by $815,324, since the end of last year with current assets now $275,302 more than current liabilities." He added that "AdCare is still seeking attractive acquisitions and business opportunities in the health care field that have the potential to expand our operations."

About AdCare Health Systems, Inc.

AdCare Health Systems, Inc. (Amex: ADK) develops, owns and manages assisted living facilities, nursing homes and retirement communities and provides home health care services. Prior to becoming a publicly traded company in November of 2006, AdCare operated as a private company for 18 years. AdCare's 900 employees provide high-quality care for patients and residents residing in the 14 facilities that they manage, six of which are assisted living facilities, six skilled nursing centers and two independent senior living communities. The Company has ownership interests in eight of those facilities. In the ever expanding marketplace of long term care, AdCare's mission is to provide quality healthcare services to the elderly.

Safe Harbor Statement

Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law. Such forward-looking statements reflect management's beliefs and assumptions and are based on information currently available to management. The forward-looking statements involve known and unknown risks, results, performance or achievements of the Company to differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by the Company with the Securities and Exchange Commission and include the Company's ability to secure lines of credit and/or an acquisition credit facility, find suitable acquisition properties at favorable terms, changes in the health care industry because of political and economic influences, changes in regulations governing the industry, changes in reimbursement levels including those under the Medicare and Medicaid programs and changes in the competitive marketplace. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

www.adcarehealth.com

                       ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEET

                                                   June 30,     December 31,
                                                     2009          2008
                                                     ----          ----
                           ASSETS                (Unaudited)
                           ------
    Current Assets:
    Cash                                         $1,808,604    $1,266,315
    Accounts receivable:
      Long-term care resident receivables, net    1,965,901     2,008,847
      Management, consulting and development
       receivables, net                             167,900       258,811
      Advances and receivables from affiliates       16,407        17,635
    Prepaid expenses and other                      537,277       478,534
        Total current assets                      4,496,089     4,030,142
                                                  ---------     ---------

    Restricted cash                               1,176,960     1,155,596
    Property and equipment, net                  16,462,360    16,772,660
    License, net                                  1,189,307     1,189,307
    Goodwill                                      2,679,482     2,679,482
    Other assets                                    906,269     1,012,340
                                                    -------     ---------
        Total assets                            $26,910,467   $26,839,527
                                                ===========   ===========

           LIABILITIES AND STOCKHOLDERS' EQUITY
           ------------------------------------
    Current Liabilities:
      Current portion of notes payable
       and other debt                              $729,157      $713,323
      Current portion of notes payable
       to stockholder                                 9,432         9,432
      Accounts payable                              875,325     1,009,002
      Accrued expenses                            2,606,873     2,838,407
                                                  ---------     ---------
        Total current liabilities                 4,220,787     4,570,164
                                                  ---------     ---------

    Notes payable and other debt, net of
     current portion                             16,645,776    16,974,788
    Notes payable to stockholder, net of
     current portion                                 30,623        34,626
    Other liabilities                               695,229       299,314
    Income tax payable                              191,291       170,007
        Total liabilities                        21,783,705    22,048,899

    Stockholders' equity:
      Preferred stock, no par value; 500,000
       shares authorized; no shares issued
       or outstanding                                     -             -
      Common stock and additional paid-in
       capital, no par value; 14,500,000
       shares authorized; 3,786,129 shares
       issued and outstanding                    14,835,191    14,766,967
      Accumulated deficit                       (10,002,617)  (10,245,532)
                                                -----------  ------------
        Total stockholders' equity                4,832,574     4,521,435
      Noncontrolling interest in
       subsidiaries                                 294,188       269,193
                                                    -------       -------
        Total equity                              5,126,762     4,790,628
                                                  ---------     ---------
        Total liabilities and stockholders'
         equity                                 $26,910,467   $26,839,527
                                                ===========   ===========


                  See notes to consolidated financial statements.


                        ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (Unaudited)

                                 Three-Months Ended       Six-Months Ended
                                      June 30,                June 30,
                              ----------------------  ----------------------
                                  2009        2008        2009        2008
                              ----------  ----------  ----------  ----------
    Revenues:
      Patient care revenues   $6,162,746  $5,574,114 $12,079,581 $11,142,175
      Management, consulting
       and development
       fee revenue               450,381     442,422     918,435     866,903
                              ----------  ----------  ----------  ----------
        Total revenue          6,613,127   6,016,536  12,998,016  12,009,078
                              ----------  ----------  ----------  ----------

    Expenses:
      Payroll and related
       payroll costs           3,709,728   3,697,477   7,447,457   7,284,874
      Other operating
       expenses                2,150,161   2,113,128   4,168,087   4,136,385
      Depreciation and
       amortization              225,878     206,324     451,186     433,018
                              ----------  ----------  ----------  ----------
        Total expenses         6,085,767   6,016,929  12,066,730  11,854,277
                              ----------  ----------  ----------  ----------

    Income (Loss) from
     Operations                  527,360        (393)    931,286     154,801
                              ----------  ----------  ----------  ----------
    Other Income (Expense):
      Interest income              1,098       5,096       2,406      14,228
      Interest expense, others  (299,804)   (393,358)   (593,947)   (619,710)
      Interest expense,
       related parties              (510)    (13,574)     (1,228)    (28,446)
      Other expense              (53,524)          -     (49,324)          -
                              ----------  ----------  ----------  ----------
                                (352,740)   (401,836)   (642,092)   (633,928)
                              ----------  ----------  ----------  ----------

    Gain on Acquisition                -     413,593           -     413,593
                              ----------  ----------  ----------  ----------

    Income (Loss) Before
     Income Taxes                174,620      11,364     289,194     (65,534)
    Income Tax Expense           (10,642)    (10,642)    (21,284)    (21,284)
                              ----------  ----------  ----------  ----------
    Net Income (Loss)            163,978         722     267,910     (86,818)
    Net Income (Loss)
     Attributable to
     Noncontrolling Interests    (16,877)     22,241     (24,995)    (29,689)
                              ----------  ----------  ----------  ----------
    Net Income (Loss)
     Attributable to
     AdCare Health Systems      $147,101     $22,963    $242,915   $(116,507)
                               =========   =========   =========   =========

    Net Income (Loss)
     Per Share, Basic:             $0.04       $0.01       $0.07      $(0.02)
                               =========   =========   =========   =========
    Net Income (Loss)
     Per Share, Diluted:           $0.04       $0.01       $0.07      $(0.02)
                               =========   =========   =========   =========

    Weighted Average Common Shares Outstanding,
      Basic                    3,786,129   3,786,129   3,786,129   3,786,129
                               =========   =========   =========   =========
      Diluted                  3,890,681   3,786,129   3,890,681   3,786,129
                               =========   =========   =========   =========

                  See notes to consolidated financial statements.


                     ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                      (Unaudited)

                                               Common Stock
                                  Accumulated  and Additional  Noncontrolling
                        Total       Deficit   Paid-in Capital     Interest
                        -----     ----------- ---------------  --------------

    Balance, December
     31, 2008:       $4,790,628  $(10,245,532)    $14,766,967        $269,193
                     ==========  ============     ===========        ========

      Warrants issued
       in connection
       with consulting
       agreement         15,908             -          15,908               -
      Stock option
       compensation
       expense           22,316             -          22,316               -
      Stock issuance     30,000             -          30,000               -
      Net income        242,915       242,915               -               -
      Net income
       attributable to
       noncontrolling
       interest          24,995             -               -          24,995
                         ------           ---             ---          ------
    Balance, June
     30, 2009        $5,126,762  $(10,002,617)    $14,835,191        $294,188
                     ==========  ============     ===========        ========


                  See notes to consolidated financial statements.


                    ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                    Six-Months Ended June 30,
                                                      2009             2008
                                                      ----             ----
    Cash flows from operating activities:
      Net income (loss) inclusive of
       noncontrolling interest                    $267,910         $(86,818)
      Adjustments to reconcile net income
       (loss) to net cash
      Provided by operating activities:
        Depreciation and amortization              451,186          433,018
        Warrants issued for services                37,276           55,105
        Stock option compensation expense           22,316           19,151
        Note receivable forgiveness
         exchanged for rent                              -            9,000
        Gain on acquisition                              -         (413,593)
        Changes in certain assets and liabilities:
          Accounts receivable                      135,085           78,627
          Prepaid expenses and other               (90,258)         153,084
          Other assets                             106,071              780
          Accounts payable and accrued expenses   (365,211)        (114,350)
          Income tax liability                      21,284           21,284
          Other liabilities                        395,915          (97,485)
                                                   -------          -------
      Net cash provided by operating activities    981,574           57,803

    Cash flows from investing activities:
        Proceeds from the sale of assets,
         net of associated costs                       892            2,500
        (Increase) decrease in restricted cash     (21,364)         276,693
        Purchase of property plant and
         equipment                                (131,630)        (226,160)
                                                  --------         --------
      Net cash (used in) provided by
       investing activities                       (152,102)          53,033

    Cash flows from financing activities:
        Amortization of bond issuance costs              -          144,475
        Stock issuance                              30,000                -
        Repayment of notes payable to
         stockholder                                (4,004)               -
        Prepaid financing costs                          -          111,984
        Repayment of notes payable                (313,179)        (240,588)
                                                  --------         --------
      Net cash (used in) provided by
       financing activities                       (287,183)          15,871

    Net Increase in Cash                           542,289          126,707
    Cash, Beginning                              1,266,315          926,625
                                                 ---------          -------
    Cash, Ending                                $1,808,604       $1,053,332
                                                ==========       ==========

    Supplemental Disclosure of Cash
     Flow Information:
      Cash paid during the year for interest      $292,528         $265,760
                                                  ========         ========
    Supplemental Disclosure of
     Non-Cash Activities:
      Rent in exchange of note
       receivable repayment                             $-           $9,000
                                                        ==           ======
      Acquisition of assets in exchange
       for note forgiveness                             $-       $2,808,736
                                                        ==       ==========

                  See notes to consolidated financial statements.


SOURCE AdCare Health Systems, Inc.



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