AdCare Health Systems, Inc. Reports 2008 Third Quarter Earnings Results

Nov 14, 2008, 16:38 ET from AdCare Health Systems, Inc.

SPRINGFIELD, Ohio, Nov. 14 /PRNewswire-FirstCall/ -- AdCare Health Systems, Inc. (NYSE: ADK), an Ohio based long term care, home health care and management company, today reported financial results for the third quarter of 2008.

Revenues for the quarter ended September 30, 2008 were $6,185,760 as compared to $5,906,326 for the same quarter in 2007, an increase of $279,434. The increase was mostly due to improved occupancy at the skilled nursing centers and increased rentals at the assisted living communities.

The loss from continuing operations for the quarter ended September 30, 2008 was $664,449 as compared to a loss of $212,838 for the same quarter in 2007, an increase of $451,611. This increase in loss was due primarily to an accrual of $162,000 in payroll expenses related to the retirement of the Company's former Chief Operating Officer and $223,000 in non-cash charges related to the new warrants issued to Officers and Directors which were approved by shareholders. Basic and diluted net loss from continuing operations per share for the quarter ended September 30, 2008 was ($0.18) as compared to a basic and diluted net loss from continuing operations per share of ($0.06) for the same quarter ended September 30, 2007.

Revenues for the nine-months ended September 30, 2008 were $18,194,838 as compared to $17,603,051 for the same period in 2007, an increase of $591,787. The loss from continuing operations for the nine-months ended September 30, 2008 was $780,595 as compared to a loss of $539,360 for the same period in 2007, an increase in the loss of $241,235. Basic and diluted net loss from continuing operations per share for the nine-months ended September 30, 2008 was ($0.21) as compared to a basic and diluted net loss from continuing operations per share of ($0.14) for the same nine-month period ended September 30, 2007.

During the third quarter, the Company completed the renovation of Hearth & Care of Greenfield, a 50-bed single story nursing home facility located in Greenfield, Ohio. With the addition of 10 private bedrooms and other improvements totaling 10,550 square feet, the Company was also able to refinance the facility and increase cash-on-hand and improve the balance sheet flexibility by recovering $800,000 previously invested in the renovation of the property. Red Mortgage Capital, Inc., an FHA/MAP lender, processed and funded the $2,524,800 232/223(f) refinancing at an annual interest rate of 6.50% for a period of 30 years. The Company now has long term, fixed rate HUD financing in place on seven of the eight properties in which the Company has ownership interests. The Company plans to start the process of refinancing its remaining property in the near future.

David A. Tenwick, Chairman of AdCare, stated that "the Company is now listed on the New York Stock Exchange Alternext US as a result of the New York and American Stock Exchange merger. We are excited about the change and believe the new listing can help us in the implementation of our acquisition strategy and improve our access to the capital markets. We need to grow in order to defray the cost of being a small public company in today's market. We have also re-engaged our Investment Banking Firm, GCC-Prospect Corp., to assist us in the process of evaluating several potential acquisitions and exploring other business opportunities, including new long term care management contracts and leases, which can help us to execute our growth strategy."

About AdCare Health Systems, Inc.

AdCare Health Systems, Inc. (NYSE: ADK) develops, owns and manages assisted living facilities, nursing homes and retirement communities and provides home health care services. Prior to becoming a publicly trading 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.

                         CONSOLIDATED BALANCE SHEETS

                                                September 30,   December 31,
                                                     2008           2007
                          ASSETS                  (Unaudited)
    Current Assets:
    Cash                                          $1,961,314       $926,625
    Certificate of deposit, restricted                     -        209,637
    Accounts receivable:
      Long-term care resident receivables, net     1,761,038      2,115,364
      Management, consulting and development
       receivables, net                              294,763        259,778
      Advances and receivables from affiliates        20,000         27,558
    Prepaid expenses and other                       472,696        453,219
        Total current assets                       4,509,811      3,992,181

    Restricted Cash                                1,105,973        973,975
    Property and Equipment, Net                   16,806,150     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                                   1,108,491      1,050,506
        Total assets                             $27,357,925    $24,491,443

    Current Liabilities:
      Current portion of notes payable and
       other debt                                   $604,893      $ 773,279
      Current portion of notes payable to
       stockholder                                     9,432          9,026
      Accounts payable                             1,205,740      1,416,313
      Accrued expenses                             2,549,187      2,060,222
      Forward purchase contract                      900,000        900,000
        Total current liabilities                  5,269,252      5,158,840

    Notes Payable and Other Debt, Net of
     Current Portion                              16,886,455     12,813,338
    Notes Payable to Stockholder, Net of
     Current Portion                                  38,313        810,084
    Other Liabilities                                489,689        559,509
    Deferred Tax Liability                            31,925              -
    Minority Interest in Equity of
     Consolidated Entities                           240,853        255,070
        Total liabilities                         22,956,487     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; 14,500,000
       shares authorized; 3,786,129 shares
       issued and outstanding                     14,351,387     14,063,956
      Accumulated deficit                         (9,949,949)    (9,169,354)
        Total stockholders' equity                 4,401,438      4,894,602
        Total liabilities and stockholders'
         equity                                  $27,357,925    $24,491,443

                See notes to consolidated financial statements


                                   Three-Months Ended     Nine-Months Ended
                                     September 30,          September 30,
                                  2008         2007         2008       2007
      Patient care revenues  $5,731,938   $5,468,027  $16,874,113 $16,292,143
      Management, consulting
       and development fee
       revenue                  453,822      438,299    1,320,725   1,310,908
        Total revenue         6,185,760    5,906,326   18,194,838  17,603,051

      Payroll and related
       payroll costs          4,162,908    3,746,406   11,447,782  11,088,853
      Other operating
       expenses               2,086,919    1,855,225    6,223,303   5,559,608
      Depreciation and
       amortization             222,500      170,103      655,519     510,191
        Total expenses        6,472,327    5,771,734   18,326,604  17,158,652

    (Loss) Income from
     Operations                (286,567)     134,592     (131,766)    444,399
    Other Income (Expense):
      Interest income             6,381       13,586       20,609      46,894
      Interest expense,
       others                  (352,931)    (303,431)    (972,641)   (873,377)
      Interest expense,
       related parties          (14,598)     (16,023)     (43,044)    (51,706)
      Minority interest in
       earnings of
       consolidated entities     (6,093)      (4,548)     (35,782)    (68,556)
      Other expense                   -      (37,014)           -     (37,014)
                               (367,241)    (347,430)  (1,030,858)   (983,759)

    Gain on Acquisition               -            -      413,954           -
    (Loss ) From Continuing
     Operations Before
     Income Taxes              (653,808)    (212,838)    (748,670)   (539,360)
    Income Tax Expense          (10,641)           -      (31,925)          -
    Loss From Continuing
     Operations                (664,449)    (212,838)    (780,595)   (539,360)

    Discontinued Operations:
      Income from
       operations                     -      608,625            -     587,485
    Net (Loss) Income         $(664,449)    $395,787    $(780,595)    $48,125

    Net (Loss) Income Per
     Share, Basic:
      Continuing operations      $(0.18)     $(0.06)       $(0.21)     $(0.14)
      Discontinued operations         -        0.16             -        0.16
                                 $(0.18)      $0.10        $(0.21)      $0.02
    Weighted Average
     Common Shares
      Basic                   3,786,129   3,786,129     3,786,129   3,786,129
      Diluted                 3,786,129   3,786,129     3,786,129   3,786,129

               See notes to consolidated financial statements.

SOURCE AdCare Health Systems, Inc.