ATLANTA, May 17, 2016 /PRNewswire/ -- AdCare Health
Systems, Inc. (NYSE MKT: ADK) (NYSE MKT: ADK.PRA), a
self-managed healthcare real estate investment company that invests
primarily in real estate purposed for senior living and long-term
care, today reported results for the first quarter ended
March 31, 2016.
Business Highlights
- Entered into a Purchase and Sale Agreement with Skyline
Healthcare LLC for the sale of the Company's nine Arkansas facilities for $55.0 million, of which $52.0 million will be paid in cash at closing and
the remaining purchase price will be paid pursuant to a promissory
note issued by the purchaser and due August
1, 2018. Completion of the sale is expected to occur on or
before August 1, 2016 and is subject
to customary termination provisions and closing conditions. Net
proceeds after such sale and the repayment of related mortgage
indebtedness is approximately $25.0
million (including the promissory note).
- Completed the sale of one of its office buildings and entered
into Purchase and Sale Agreement on another office building.
Completion of the sale of the second office building is expected to
occur in the second quarter of 2016, subject to certain customary
termination provisions and closing conditions.
- Continued to make progress in its efforts to reduce G&A
expenses, and management expects a continued decline in G&A
expenses as personnel and other costs are eliminated.
- Engaged Stifel as the Company's financial advisor to assist the
Board of Directors in reviewing strategic alternatives for the
Company.
"Our work to strengthen our leased portfolio, reduce operating
expenses and improve cash flow continued during the first quarter
of 2016 with measurable progress on all fronts," commented
Bill McBride, AdCare's Chairman and
Chief Executive Officer. "We entered into an agreement to sell our
nine Arkansas facilities to our
current tenant, Skyline Healthcare, for an attractive price. Our
operational structure has been streamlined and is now more
efficient under a 100% property holding and leasing business
model."
"We continue to evaluate strategic alternatives with the
assistance of our financial advisor, while working to enhance our
portfolio to maximize shareholder value. In addition, the Board of
Directors will consider its options for the net proceeds from the
sale of the Arkansas properties in
the context of its review of strategic alternatives," continued Mr.
McBride.
Set forth below are operating metrics that management believes
measure the operating performance of the Company's leased and
subleased portfolio:
Portfolio
Operating Metrics (1)
|
For the Three
Months
Ended March 31,
2016
|
Occupancy
(%)
|
82.8%
|
Skilled Mix
(%)(2)
|
13.0%
|
Rent Coverage Before
Management Fees
|
1.4x
|
Rent Coverage After
Management Fees
|
1.0x
|
(1)
Excludes nine Arkansas facilities which are under contract for sale
and three Georgia facilities operated by affiliates of New
Beginnings Care LLC.
(2)
Skilled Mix refers to Medicare A and Managed Care RUGs.
|
Summary of Financial Results for the First Quarter Ended
March 31, 2016
Revenues from continuing operations in the first quarter of 2016
were $7.1 million, up 355% from
$1.6 million in the first quarter of
2015. The increase in revenues reflects AdCare's transition to a
healthcare property holding and leasing company and, accordingly,
an increase in leasing of facilities to third-party operators. In
accordance with accounting principles generally accepted in
the United States, the Company
recognized all rental revenues on a straight line rent accrual
basis, except rental revenues for the nine facilities leased to
affiliates of Aria Health Group, LLC, for which revenue is
recognized based on cash rent owed, and rental revenues for the
three facilities leased to affiliates of New Beginnings
Care LLC, for which revenue is recognized based on cash rent
received.
General and administrative costs decreased by $789,000, or 24%, to $2.5
million for the three months ended March 31, 2016, compared with $3.3 million for the same period in 2015. For the
three months ended March 31, 2016 and
2015, general and administrative costs includes $480,000 and $202,000 respectively, of stock based
compensation expense.
The net loss attributable to AdCare common stockholders in the
first quarter of 2016 totaled $3.7
million, or $0.19 per basic
and diluted share, compared with a net loss of $5.7 million, or $0.29 per basic and diluted share, in the first
quarter of 2015.
Cash and cash equivalents at March 31,
2016, totaled $2.3 million, as
compared with $2.7 million at
December 31, 2015. Restricted cash
and investments at March 31, 2016,
totaled $8.9 million, as compared
with $12.7 million at December 31, 2015. Total debt outstanding at
March 31, 2016, totaled $118.4 million, as compared with $122.8 million at December
31, 2015 (including $949,000
and $958,000 in liabilities of
disposal group held for sale and net of $2.5
million and $2.7 million of
deferred financing costs at March 31,
2016 and December 31, 2015,
respectively).
Conference Call and Webcast
AdCare will hold a conference call to discuss its first quarter
2016 financial results on Tuesday, May 17,
2016, at 9:30 a.m. ET.
- Date and time: Tuesday, May 17,
2016, at 9:30 a.m. ET
- Dial-in number: 1-888-572-7025 (domestic) or 1-719-325-2215
(international). Reference passcode: 3474434
- Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517
(international). Reference passcode: 3474434. The replay will be
available until May 24, 2016.
- Webcast link: http://public.viavid.com/index.php?id=119482
About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE MKT: ADK) (NYSE MKT: ADK.PRA),
is a self-managed healthcare real estate investment company that
invests primarily in real estate purposed for senior living and
long-term care through facility lease and sub-lease transactions.
The Company currently owns, leases or manages for third parties 38
facilities. 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 press release
that are forward-looking include, among other things, statements
regarding the potential sale of AdCare's Arkansas facilities and office building,
future reductions in general and administrative expenses, the Board
of Director's review of strategic alternatives, and the options for
and use of the net proceeds from the sale of the Arkansas facilities (if completed). Such
forward-looking statements reflect management's beliefs and
assumptions and are based upon 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, including AdCare's Annual
Report on Form 10-K for the year ended December 31, 2015, and AdCare's Quarterly Report
on Form 10-Q for the quarter ended March 31,
2016. There is 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.
ADCARE HEALTH
SYSTEMS, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(Amounts in
000's)
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,264
|
|
|
$
|
2,720
|
|
Restricted
cash
|
|
5,403
|
|
|
9,169
|
|
Accounts receivable,
net of allowance of $11,276 and $12,487
|
|
8,558
|
|
|
8,805
|
|
Prepaid expenses and
other
|
|
3,425
|
|
|
3,214
|
|
Assets of disposal
group held for sale
|
|
1,237
|
|
|
1,249
|
|
Total current
assets
|
|
20,887
|
|
|
25,157
|
|
Restricted cash and
investments
|
|
3,485
|
|
|
3,558
|
|
Property and
equipment, net
|
|
124,835
|
|
|
126,676
|
|
Intangible assets -
bed licenses
|
|
2,471
|
|
|
2,471
|
|
Intangible assets -
lease rights, net
|
|
3,254
|
|
|
3,420
|
|
Goodwill
|
|
4,183
|
|
|
4,183
|
|
Lease
deposits
|
|
1,414
|
|
|
1,812
|
|
Other
assets
|
|
2,714
|
|
|
1,996
|
|
Total
assets
|
|
$
|
163,243
|
|
|
$
|
169,273
|
|
LIABILITIES AND
DEFICIT
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
notes payable and other debt
|
|
$
|
46,919
|
|
|
$
|
50,960
|
|
Accounts
payable
|
|
7,046
|
|
|
8,741
|
|
Accrued
expenses
|
|
2,327
|
|
|
3,125
|
|
Liabilities of
disposal group held for sale
|
|
949
|
|
|
958
|
|
Total current
liabilities
|
|
57,241
|
|
|
63,784
|
|
Notes payable and
other debt, net of current portion:
|
|
|
|
|
Senior debt,
net
|
|
54,479
|
|
|
54,742
|
|
Bonds, net
|
|
6,618
|
|
|
6,600
|
|
Convertible debt,
net
|
|
9,010
|
|
|
8,968
|
|
Other debt,
net
|
|
413
|
|
|
531
|
|
Other
liabilities
|
|
4,096
|
|
|
3,380
|
|
Deferred tax
liability
|
|
389
|
|
|
389
|
|
Total
liabilities
|
|
132,246
|
|
|
138,394
|
|
Commitments and
contingencies (Note 14)
|
|
|
|
|
Preferred stock, no
par value; 5,000 shares authorized; 2,614 and 2,427 shares issued
and outstanding, redemption amount $65,346 and $60,273 at March 31,
2016 and December 31, 2015, respectively
|
|
58,391
|
|
|
54,714
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock and
additional paid-in capital, no par value; 55,000 shares authorized;
19,907 and 19,861 issued and outstanding at March 31, 2016 and
December 31, 2015, respectively
|
|
61,126
|
|
|
60,958
|
|
Accumulated
deficit
|
|
(88,520)
|
|
|
(84,793)
|
|
Total stockholders'
deficit
|
|
(27,394)
|
|
|
(23,835)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
163,243
|
|
|
$
|
169,273
|
|
ADCARE HEALTH
SYSTEMS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Amounts in 000's,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
Rental
revenues
|
|
$
|
6,849
|
|
|
$
|
1,340
|
|
Management fee and
other revenues
|
|
233
|
|
|
218
|
|
Total
revenues
|
|
7,082
|
|
|
1,558
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
General and
administrative expense
|
|
2,542
|
|
|
3,331
|
|
Facility rent
expense
|
|
2,179
|
|
|
487
|
|
Depreciation and
amortization
|
|
1,713
|
|
|
1,675
|
|
Other
expenses
|
|
203
|
|
|
102
|
|
Total
expenses
|
|
6,637
|
|
|
5,595
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
445
|
|
|
(4,037)
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
Interest expense,
net
|
|
1,825
|
|
|
2,490
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
680
|
|
Other
expense
|
|
42
|
|
|
288
|
|
Total other expense,
net
|
|
1,867
|
|
|
3,458
|
|
|
|
|
|
|
Loss from continuing
operations before income taxes
|
|
(1,422)
|
|
|
(7,495)
|
|
Income tax
expense
|
|
—
|
|
|
20
|
|
Loss from continuing
operations
|
|
(1,422)
|
|
|
(7,515)
|
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of tax
|
|
(528)
|
|
|
2,266
|
|
Net loss
|
|
(1,950)
|
|
|
(5,249)
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests
|
|
—
|
|
|
230
|
|
Net loss attributable
to AdCare Health Systems, Inc.
|
|
(1,950)
|
|
|
(5,019)
|
|
|
|
|
|
|
Preferred stock
dividends
|
|
(1,777)
|
|
|
(646)
|
|
Net loss attributable
to AdCare Health Systems, Inc. Common Stockholders
|
|
$
|
(3,727)
|
|
|
$
|
(5,665)
|
|
|
|
|
|
|
Net loss (income) per
share of common stock attributable to AdCare Health
Systems, Inc.
|
|
|
|
|
Basic and
diluted:
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.16)
|
|
|
$
|
(0.42)
|
|
Discontinued
operations
|
|
(0.03)
|
|
|
0.13
|
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.29)
|
|
|
|
|
|
|
Weighted average
shares of common stock outstanding:
|
|
|
|
|
Basic and
diluted
|
|
19,885
|
|
|
19,218
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/adcare-health-systems-reports-first-quarter-2016-results-300269272.html
SOURCE AdCare Health Systems, Inc.