AdCare Health (ADK) Completes Acquisition of Skilled Nursing and Assisted Living Center in Ohio

SPRINGFIELD, OH — (Marketwire) — 01/03/12 — AdCare Health Systems, Inc. (NYSE Amex: ADK), a leading nursing home and assisted living company, has completed the previously announced agreement to purchase a skilled nursing and assisted living community in Ohio. The final purchase price was $12.5 million — $1.0 million less than the initial purchase agreement — with the effective closing date of December 30, 2011.

The community has 179 beds in service and generates an estimated $12 million in gross annualized revenues according to its most recent financials. Its addition is expected to be immediately accretive to AdCare’s earnings.

AdCare will finance the acquisition of the assisted living facility with a 30-year, fixed-rate, tax-exempt bond issuance, and financed the skilled nursing facility with a traditional bank loan.

This transaction brings the total number of facilities AdCare’s purchased, leased, or managed to 44 facilities since its M&A campaign began in the fall of 2009, representing more than 3,900 beds in service.

The company plans to continue pursuing an aggressive M&A program. Combining its current annualized run-rate with transactions in the process of closing, AdCare’s estimated annualized revenue run-rate is expected to exceed $300 million. This would represent an increase of more than 460% over the company’s revenues in 2010, and an increase of more than 11 times revenues since initiating its M&A campaign in the fall of 2009.

“After expanding our operations to Alabama, Arkansas, Georgia, North Carolina and Oklahoma, with this acquisition we’ve built upon our home base in Ohio,” noted Chris Brogdon, AdCare’s vice chairman and chief acquisitions officer. “These new facilities will leverage the professional support staff we’ve long maintained in the state, as well as enhance our overall economies of scale.”

“We’re continuing to evaluate a number of attractive opportunities in the Midwest, as well as in the Southwest and Southeast,” added Brogdon, “with our M&A program and the integration of new facilities remaining our primary focus going forward.”

According to Boyd P. Gentry, AdCare’s president and chief executive officer: “Our strategy of acquiring skilled nursing facilities is proving highly successful, not only in our closing rate and terms, but especially in our post-acquisition performance. We have been targeting facilities that have not traditionally concentrated on providing post-acute services, and then once acquired, we increase Medicare census and occupancy, as well as optimize reimbursement and patient care.”

“Historically, it takes our operations team a year to 15 months to fully harvest this opportunity in an individual facility,” continued Boyd. “This means we still have optimization opportunities in our current portfolio, and significant upside exists in our pending acquisition pipeline.”

AdCare finishes 2011 having placed 29 new facilities under contract during the year, with the acquisition of 18 facilities completed. As previously announced, AdCare expects to complete the acquisition of at least 20 more in the first quarter of 2012, including five facilities in Oklahoma and the company’s largest transaction to-date of 15 facilities across the Southeast.

About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE Amex: ADK) is a recognized innovator in senior living and health care facility management. AdCare develops, owns and manages assisted living facilities, nursing homes and retirement communities. Since its inception in 1988, AdCare’s mission has been to provide the highest quality of healthcare services to the elderly. For more information about AdCare, visit www.adcarehealth.com.

Important Cautions Regarding Forward-Looking Statements
Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law. Such statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “plans,” “intends,” “anticipates” and variations of such words or similar expressions, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to, statements about the company’s expected annualized revenue run-rate, as well as statements regarding transactions being accretive to the company’s earnings.. Such forward-looking statements reflect management’s beliefs and assumptions and are based on information currently available to management, and involve known and unknown risks, results, performance or achievements of AdCare which may differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by AdCare with the Securities and Exchange Commission and include, among others, AdCare’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. Except where required by law, AdCare undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.

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Company Contacts
Boyd Gentry, CEO
Chris Brogdon, Vice Chairman & CAO
David A. Tenwick, Chairman of Board
AdCare Health Systems, Inc.
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