AdCare Health Systems Reports Record Third Quarter 2012 Results
Revenues up 52% to Record $61.8 Million, Driving Record Adjusted EBITDA From Continuing Operations of $6.5 Million
(firmenpresse) - ATLANTA, GA -- (Marketwire) -- 11/13/12 -- (NYSE MKT: ADK), a leading long-term care provider, reported results for the third quarter ended September 30, 2012.
Record revenues of $61.8 million, up 12% sequentially and up 52% from Q3 2011.
Income from operations was a record $4.0 million, up $2.2 million from Q3 2011.
Net income attributable to AdCare in the third quarter of 2012, before a $2.1 million non-cash derivative charge, increased to $403,000, or $0.03 per share, versus $326,000, or $0.02 per share, in the second quarter of 2012.
Including the non-cash derivative charge, net loss attributable to AdCare in the third quarter of 2012 totaled $1.7 million or $(0.11) per share. This compares to net income of $679,000, or $0.05 per share, in the second quarter of 2012 which included a non-cash derivative gain of $353,000 (see, "About the Derivative Liability," below for more information.)
Adjusted EBITDA from continuing operations was a record $6.5 million, up 8% sequentially and 127% versus Q3 2011.
Acquisitions completed during the quarter added $16.7 million in estimated annualized revenue run-rate.
"Our skilled nursing acquisition and optimization strategy once again drove strong quarterly results," said AdCare's president and chief executive officer, Boyd P. Gentry. "In fact, Q3 produced records in total revenues, income from operations and Adjusted EBITDA from continuing operations, and without the non-cash derivative charge, net income would have increased over the same year-ago quarter. Our optimization strategy involves improving the level of care, occupancy and Medicare payer mix of newly acquired facilities. We expect this strategy to continue to drive strong overall Adjusted EBITDA from continuing operations, which has generated year-over-year increases since we began our M&A program in the summer of 2010."
Acquired three skilled nursing facilities: One in Georgia with 134 beds in service and an estimated $6.4 million in gross annualized revenues, and two in Oklahoma, with an aggregate of 230 beds in service and an estimated $10.3 million in gross annualized revenues.
Signed purchase agreements for two skilled nursing facilities: One in Arkansas with a projected 70 beds in service and a projected estimated $8.5 million in gross annualized revenues (based on management expectations), and one in South Carolina with 84 beds in service and an estimated $3.8 million in gross annualized revenues.
The stated gross annualized revenues of facilities acquired or put under contract are according to their most recent financial statements, unless otherwise indicated.
Revenues in the third quarter of 2012 increased 52% to a record $61.8 million from $40.5 million in the same year-ago quarter. The increase in revenue was primarily due to acquisitions completed since September 1, 2011 as part of AdCare's M&A program. The company's skilled nursing facilities existing prior to that date also contributed to the improvement in revenue due to cost savings measures and Medicaid rate improvement. A more detailed discussion and analysis of the company's performance will be available in AdCare's Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission.
Income from operations in the third quarter of 2012 was a record $4.0 million, increasing 119% from $1.8 million in the third quarter of 2011. The increase in income from operations was due to revenue optimization and expense controls, as well as from newly acquired facilities. The company's cost of services as a percentage of patient care revenues decreased to 80.1% in the third quarter of 2012 from 81.2% in the same year-ago quarter.
Including a non-cash derivative loss of $2.1 million, net loss attributable to AdCare in the third quarter of 2012 totaled $1.7 million or $(0.11) per basic and diluted share. This compares to a net gain of $3.5 million, or $0.27 per diluted share, in the same year-ago quarter, which included a non-cash derivative gain of $4.7 million.
Adjusted EBITDA from continuing operations in the third quarter of 2012 totaled a record $6.5 million, up 8% from $6.0 million in the second quarter of 2012 (see "Use of Non-GAAP Financial Information," below for the definition of Adjusted EBITDA from continuing operations, a non-GAAP financial metric, as well as an important discussion about the use of this metric and its reconciliation to GAAP net income, the most directly comparable GAAP financial measure.)
Combined cash, current restricted cash and cash equivalents at September 30, 2012 totaled $12.7 million, as compared to $9.2 million at December 31, 2011.
At the end of the third quarter of 2012, the company, through its subsidiaries, operated or managed 51 facilities comprised of 41 skilled nursing centers, nine assisted living residences and one independent living/senior housing facility, with a total of 4,791 beds/units in service. Of these 51 facilities, 29 are owned, 12 are leased, six are consolidated variable interest entities, and four are managed for third parties. The facilities are located in Georgia, Arkansas, Ohio, Oklahoma, Alabama, North Carolina and Missouri.
Subsequent to the end of the third quarter, AdCare signed a definitive agreement to sell six assisted living facilities in Ohio for $22.3 million. The six facilities have an aggregate of 196 units in service. The transaction is expected to be complete before the end of the year. The company estimates that cash consideration received at closing will be approximately $6.7 million.
Chris Brogdon, AdCare's vice chairman, commented: "Excluding the facilities we're divesting, AdCare has put under contract 45 facilities since we began our M&A campaign and 14 since the beginning of 2012. Selling the six assisted living facilities in Ohio allows us to focus on our core skilled nursing competencies, strengthen our balance sheet, and provide capital to advance our very fruitful acquisition program."
Before the end of the year, AdCare plans to complete the acquisition of two facilities in South Carolina and one facility in Arkansas that it has already placed under contract.
Combining the company's 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 nearly 100% over the company's revenues in 2011, and an increase of more than 11 times revenues since initiating its M&A campaign.
AdCare will hold a conference call to discuss its third quarter 2012 financial results tomorrow, Wednesday, November 14, 2012 at 8:30 a.m. Eastern time. Management will host the presentation, followed by a question and answer period.
Date: Wednesday, November 14, 2012
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1-877-941-1427
International: 1-480-629-9664
Conference ID#: 4567193
Webcast:
The conference call will be webcast live and available for replay via the investors section of the company's website at .
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.
A replay of the call will be available after 11:30 a.m. Eastern time on the same day and until December 14, 2012.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 4567193
ALF = Assisted Living Facility SNF = Skilled Nursing Facility ARR= Annualize Revenue Run-rate(1)
(1)Annualized Revenue Run-rate (ARR) is estimated based on the most recent financial statement provided at the time of signing the purchase or lease agreement. ARR for facilities held at least 12 months is based on most recent quarter. Actual results may vary considerably.
On October 22, 2012, AdCare issued a 5% stock dividend to all AdCare shareholders of record on October 8, 2012.
The derivative liability is the result of the Company issuing subordinated convertible notes in 2010 that include an anti-dilution provision referred to as a "ratchet" provision. The derivative liability is a non-cash item. The notes are convertible into shares of common stock of the Company at a current conversion price of $3.73 (adjusted for various stock dividends) that is subject to future reductions if the Company issues equity instruments at a lower price (the "ratchet" provision). Because there is no minimum conversion price, an indeterminate number of shares may be issued in the future. Accordingly, the Company determined an embedded derivative existed that was required to be bifurcated from the subordinate convertible notes and accounted for separately as a derivative liability recorded at fair value. Pursuant to GAAP, the Company estimates the fair value of the derivative liability using the Black-Scholes Merton option-pricing model with changes in fair value being reported in the condensed consolidated statement of operations.
The Company currently has no plans to issue equity instruments at a price lower than the conversion price of $3.73, which would trigger the ratchet provision. These notes mature in October 2013 at which time the Company will be required to redeem them for cash (unless they are earlier converted into common stock at the option of the holder). Upon conversion to common stock, the debt and derivative liability will be extinguished, the current fair market value of the common stock will be reflected as common stock and additional paid-in capital, and there may be a resulting gain or loss on the debt extinguishment. If not converted to stock, upon settlement at the date of maturity, the debt and derivative liability will result in a gain on debt extinguishment for the remaining fair value of the derivative.
AdCare Health Systems, Inc. (NYSE MKT: ADK) is a recognized provider of senior living and health care facility management. AdCare owns and manages, long-term care facilities and retirement communities, and since the company's inception in 1988, its mission has been to provide the highest quality of healthcare services to the elderly through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services. For more information about AdCare, visit .
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: (i) statements that the company expects its optimization strategy to continue to drive strong overall Adjusted EBITDA from continuing operations; (ii) statements regarding the sale of six facilities; (iii) statements regarding the company's current plans to issue equity instruments; (iv) statements regarding the signing and closing of expected acquisitions; and (v) statements regarding the company's expected annualized run-rate. 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 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 health care 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.
In addition, each facility mentioned in this press release is operated by a separate, wholly owned, independent operating subsidiary that has its own management, employees and assets.
References to the consolidated company and its assets and activities, as well as the use of terms such as "we," "us," "our," and similar verbiage, is not meant to imply that AdCare Health Systems, Inc. has direct operating assets, employees or revenue or that any of the facilities, the home health business or other related businesses are operated by the same entity.
Beginning with the reporting of results for the first quarter of 2011, the company began to report the measures of Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations. These are measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company defines: (i) "Adjusted EBITDA from continuing operations " as net income (loss) from continuing operations before interest expense, income tax expense; depreciation and amortization (including amortization of non-cash stock-based compensation), acquisition costs (net of gains), loss on extinguishment of debt, derivative loss or gain, other non-routine adjustments (primarily a recovery of a receivable and a non-cash settlement gain), and retirement and salary continuation costs; and (ii) "Adjusted EBITDAR from continuing operations" as net income (loss) from continuing operations before interest expense; income tax expense, depreciation and amortization (including amortization of non-cash stock-based compensation), acquisition costs (net of gains), loss on extinguishment of debt, derivative loss; other non-routine adjustments (primarily a recovery of a receivable and a non-cash settlement gain), retirement and salary continuation costs and rent cost.
Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations should not be considered in isolation or as a substitute for net income, income from operations or cash flows provided by, or used in, operations as determined in accordance with GAAP. Adjusted EBITDA from continuing operations and Adjusted EBITDAR from continuing operations are used by management to focus on operating performance and management without mixing in items of income and expense that relate to the financing and capitalization of the business, fixed rent or lease payments of facilities, derivative loss or gain, and certain acquisition related charges.
The company believes these measures are useful to investors in evaluating the company's performance, results of operations and financial position for the following reasons:
They are helpful in identifying trends in the company's day-to-day performance because the items excluded have little or no significance to the company's day-to-day operations;
They provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance; and
They are an indication to determine whether or not adjustments to current spending decisions are needed.
AdCare believes that the use of the measures provides a meaningful and consistent comparison of the company's underlying business between periods by eliminating certain items required by GAAP, which have little or no significance in the company's day-to-day operations.
(a) Skilled nursing only - excludes managed facilities
(b) AdCare consolidated incorporating discontinued operation
(c) Skilled is defined as Medicare change + managed Care RUGs
Boyd Gentry, CEO
Chris Brogdon, Vice Chairman
David A. Tenwick, Chairman of Board
AdCare Health Systems, Inc.
Tel (678) 869-5116
Ron Both or Geoffrey Plank
Liolios Group, Inc.
Tel (949) 574-3860
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Datum: 13.11.2012 - 21:01 Uhr
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