AdCare Health Systems, Inc. Reports 2008 Second Quarter Earning Results

Aug 19, 2008, 01:00 ET from AdCare Health Systems, Inc.

    SPRINGFIELD, Ohio, Aug. 19 /PRNewswire-FirstCall/ -- AdCare Health
 Systems, Inc. (Amex:   ADK), an Ohio based long term care, home care and
 management company, today reported financial results for its second quarter
 of 2008.
     Revenues for the quarter ended June 30, 2008 were $6,016,536 as
 compared to $5,872,377 for the same quarter in 2007, an increase of
 $144,159. The increase was mostly due to better occupancy at our skilled
 nursing centers and our assisted living communities and increased rentals
 at our assisted living communities.
     The net income for the quarter ended June 30, 2008 was $22,963 as
 compared to a loss of $212,880 for the second quarter ended June 30, 2007,
 an improvement of $235,843. The improvement was due primarily to a gain of
 $413,593 recognized in the acquisition of the New Lincoln Lodge, a 50 unit
 retirement and assisted living facility located in Columbus, Ohio. Basic
 and diluted net income per share for the quarter ended June 30, 2008 was
 $0.01 as compared to a basic and diluted net loss per share of ($0.05) for
 the same quarter ended June 30, 2007.
     Revenues for the six-months ended June 30, 2008 were $12,009,078 as
 compared to $11,696,726 for the same period in 2007, an increase of
 $312,352. Net loss for the six-months ended June 30, 2008 was $116,507 as
 compared to a loss of $347,657 for the same period in 2007, an improvement
 of $231,150. The improvement again was due primarily to the gain recognized
 in the acquisition of the New Lincoln Lodge in the second quarter. Basic
 and diluted net loss per share for the six-months ended June 30, 2008 was
 ($0.03) as compared to a basic and diluted net loss per share of ($0.09)
 for the same six-month period ended June 30, 2007.
     David A. Tenwick, Chairman of AdCare, stated that "the Company is
 continuing to absorb the increased costs of being a public company and
 being listed on the American Stock Exchange. So far this year, we have
 refinanced three of our assisted living properties and one of our nursing
 homes with long term HUD financings. In addition, we continue to look for
 suitable acquisitions as well as raising additional capital. We believe
 that being a listed company is helpful in looking for potential
 acquisitions and raising more capital."
     The Chairman had two additional announcements to make. Mr. Tenwick
 stated, "On August 15, 2008, J. Michael Williams, AdCare's Executive Vice
 President and COO, announced his retirement from AdCare." Mr. Tenwick
 added, "We wish Mike well and Gary Wade, in addition to his duties as
 President, will take on all of Mike's operating responsibilities." The
 second announcement from Mr. Tenwick is that at the special meeting of
 shareholders held on August 15, 2008, the shareholders approved the
 issuance of warrants to officers and directors of AdCare to purchase up to
 1,092,305 shares of common stock of AdCare. As described in the definitive
 proxy filed with the SEC on July 24, 2008, the warrants will vest over a
 period of five years.
     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 920 employees provide high-quality care for patients and
 residents residing in the 16 facilities that they manage, seven of which
 are assisted living facilities, six skilled nursing centers and three
 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.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 2008 2007 ASSETS (Unaudited) Current Assets: Cash $1,053,332 $926,625 Certificate of deposit, restricted 214,363 209,637 Accounts receivable: Long-term care resident receivables, net 2,041,199 2,115,364 Management, consulting and development receivables, net 256,086 259,778 Advances and receivables from affiliates 21,187 27,558 Prepaid expenses and other 581,074 453,219 Total current assets 4,167,241 3,992,181 Restricted Cash 712,369 973,975 Property and Equipment, Net 16,965,197 14,425,868 Note Receivable, Net - 221,413 License, Net 1,189,307 1,189,307 Goodwill 2,638,193 2,638,193 Other Assets 1,033,726 1,050,506 Total assets $26,706,033 $24,491,443 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of notes payable and other debt $724,588 $773,279 Current portion of notes payable to stockholder 9,432 9,026 Accounts payable 1,531,418 1,416,313 Accrued expenses 1,901,010 2,060,222 Forward purchase contract 900,000 900,000 Total current liabilities 5,066,448 5,158,840 Notes Payable and Other Debt, Net of Current Portion 15,217,668 12,813,338 Notes Payable to Stockholder, Net of Current Portion 801,776 810,084 Other Liabilities 480,521 559,509 Deferred Tax Liability 21,284 - Minority Interest in Equity of Consolidated Entities 291,411 255,070 Total liabilities 21,879,108 19,596,841 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; 3,786,129 shares authorized; 3,786,129 shares issued and outstanding 14,112,424 14,063,956 Accumulated deficit (9,285,499) (9,169,354) Total stockholders' equity 4,826,925 4,894,602 Total liabilities and stockholders' equity $26,706,033 $24,491,443 ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three-Months Ended Six-Months Ended June 30, June 30, 2008 2007 2008 2007 Revenues: Patient care revenues $5,574,114 $5,457,475 $11,142,175 $10,824,117 Management, consulting and development fee revenue 442,422 414,902 866,903 872,609 Total revenue 6,016,536 5,872,377 12,009,078 11,696,726 Expenses: Payroll and related payroll costs 3,697,477 3,653,871 7,284,874 7,342,447 Other operating expenses 2,113,128 1,924,627 4,136,385 3,704,381 Depreciation and amortization 206,324 169,683 433,018 340,087 Total expenses 6,016,929 5,748,181 11,854,277 11,386,915 Income (Loss) from Continuing Operations (393) 124,196 154,801 309,811 Other Income (Expense): Interest income 5,096 16,728 14,228 33,308 Interest expense, others (393,358) (289,373) (619,710) (569,945) Interest expense, related parties (13,574) (17,726) (28,446) (35,683) Minority interest in earnings (losses) of consolidated entities 22,241 (36,134) (29,689) (64,008) (379,595) (326,505) (663,617) (636,328) Gain on Acquisition 413,593 - 413,593 - Income (Loss) From Continuing Operations Before Income Taxes 33,605 (202,309) (95,223) (326,517) Income Tax Expense (10,642) - (21,284) - Income (Loss) From Continuing Operations 22,963 (202,309) (116,507) (326,517) Discontinued Operations: Loss from discontinued operations - (10,571) - (21,140) Net Income (Loss) $22,963 $(212,880) $(116,507) $(347,657) Net Income (Loss) Per Share, Basic: Continuing operations $0.01 $(0.05) $(0.03) $(0.09) Discontinued operations - - - - $0.01 $(0.05) $(0.03) $(0.09) Net Income (Loss) Per Share, Diluted: Continuing operations $0.01 $(0.05) $(0.03) $(0.09) Discontinued operations - - - - $0.01 $(0.05) $(0.03) $(0.09) Weighted Average Common Shares Outstanding, Basic 3,786,129 3,786,129 3,786,129 3,786,129 Diluted 5,609,196 3,786,129 3,786,129 3,786,129 ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six-Months Ended June 30, 2008 2007 Cash flows from operating activities: Net Loss $(116,507) $(347,657) Add back: loss from discontinued operations - (10,571) Net loss from continuing operations $(116,507) $(358,228) Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities: Depreciation and amortization 433,018 340,087 Warrants issued for services 55,105 8,123 Stock option compensation expense 19,151 6,330 Minority interest 29,689 64,008 Note receivable forgiveness exchanged for rent 9,000 18,000 Gain on acquisition (413,593) - Changes in certain assets and liabilities: Accounts receivable 78,627 (86,624) Prepaid expenses and other 153,084 (192,513) Other assets 780 (9,645) Accounts payable and accrued expenses (114,350) (65,862) Income tax liability 21,284 - Other liabilities (97,485) 75,926 Net cash provided by (used in) operating activities of continuing operations 57,803 (200,398) Net cash used in operating activities of discontinued operations - (4,278) Net cash provided by (used in) operating activities 57,803 (204,676) Cash flow from investing activities: Proceeds from the sale of assets net of associated costs 2,500 - Purchase of property plant and equipment (226,160) (569,895) Net cash used in investing activities (223,660) (569,895) Cash flows from financing activities: Amortization of bond issuance costs 144,475 69,196 Decrease in restricted cash 276,693 8,248 Proceeds from notes payable - 54,000 Cash received upon exercise of warrants - 20,000 Repayment of notes payable to stockholder - (4,646) Prepaid Financing Costs 111,984 - Repayment on notes payable (240,588) (201,524) Net cash provided by (used in) financing activities of continuing operations 292,564 (54,726) Net cash provided by (used in) financing activities of discontinued operations: Repayment on notes payable of discontinued operations - (4,739) Net cash used in financing activities 292,564 (59,465) Net Increase (Decrease) in Cash 126,707 (834,036) Cash, Beginning 926,625 2,136,414 Cash, Ending $1,053,332 $1,302,378 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for Interest $265,760 $523,939 Supplemental Disclosure of Non-Cash Activities: Rent in exchange of note receivable repayment $9,000 $18,000 Acquisition of assets in exchange for note forgiveness $2,808,736 $-

SOURCE AdCare Health Systems, Inc.