AdCare Health Systems, a leading long-term care provider successfully executing an aggressive M&A program, reported its financial results for the fourth quarter and full year ended December 31, 2011. Highlights include a 176% year-over-year gain in Q4 adjusted EBITDAR from continuing operations; record annual revenues of $151.4 million, up 198% from the previous year; record annual income from operations of $2.7 million; and record annual adjusted EBITDAR from continuing operations, up 453% year-over-year to $16.8 million.
"Our record 2011 results reflect successful execution on our M&A program, resulting in nearly tripling our revenues over last year and record growth in adjusted EBITDAR from continuing operations," stated Boyd P. Gentry, AdCare's president and chief executive officer. "Our corporate strategy of optimizing skilled nursing results through guiding local facility leadership to increase their post-acute and Medicare census has helped drive this strong performance."
The company plans to continue pursuing an aggressive M&A program. Combining its current annualized run-rate with transactions currently in the process of closing, AdCare's estimated annualized revenue run-rate is expected to exceed $350 million. This would represent an increase of more than 131% over the company's revenues in 2011 and an increase of more than 13 times its annualized revenue run-rate since it initiated its M&A campaign in the fall of 2009.
The increases in revenue were primarily due to acquisitions completed since December 31, 2010, as part of the AdCare's M&A program. The company's skilled nursing facilities that existed prior to January 1, 2011, also contributed to the improvement in revenue, driven primarily by an increase in occupancy and skilled mix. A more detailed discussion and analysis of the company's performance will be available in AdCare's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission.
Loss from operations in the fourth quarter of 2011 was $0.4 million, as compared to a loss from operations of $0.8 million in the fourth quarter of 2010. Income from operations for the full year of 2011 was a record $2.7 million, as compared to a loss from operations of $1.9 million in 2010. The increase in income from operations was primarily attributed to acquisitions and revenue improvement in acquired facilities, partially offset by salary and retirement costs of $1.5 million incurred only in 2011.
Adjusted EBITDAR from continuing operations in the fourth quarter of 2011 totaled $4.5 million, up 176% from adjusted EBITDAR from continuing operations of $1.6 million in the fourth quarter of 2010. Adjusted EBITDAR from continuing operations for the full year 2011 totaled a record $16.8 million, an increase of 453% from an adjusted EBITDAR from continuing operations of $3.0 million in 2010.
Combined cash, current restricted cash, and cash equivalents at December 31, 2011, totaled $8.7 million compared to $5.0 million at December 31, 2010.
Q4 2011 Operational Highlights
• Appointed David Rubenstein to the position of executive vice president and chief operating officer. Rubenstein brings to AdCare extensive operational experience in delivering long-term care and in implementing operating strategies that maximize facility productivity, minimize costs and increase Medicare census.
• Completed the acquisition of a skilled nursing and assisted living community in Mountain View, Arkansas, with an aggregate of 128 beds in service and an estimated $5.4 million in gross annualized revenues (according to its most recent financials). Its addition was also immediately accretive to AdCare's earnings.
• Completed the acquisition of a skilled nursing and assisted living community in Springfield, Ohio, which has 179 beds in service and an estimated $12.5 million in gross annualized revenues (according to its most recent financials). Management obtained effective control of the facilities on January 1, 2012. Its addition will be immediately accretive to AdCare's earnings.
• Signed a purchase agreement for three skilled nursing facilities in Arkansas with an aggregate of 437 beds and an estimated $15.9 million in gross annualized revenues (according to its most recent financials). The acquisition is anticipated to be completed by March 31, 2012.
• Signed a purchase agreement for five skilled nursing facilities in Oklahoma that has, on aggregate, 456 beds in service and an estimated $13.2 million in gross annualized revenues. The acquisition is anticipated to be immediately accretive to the company's earnings upon closing, which is expected in the second quarter of 2012.
• At the end of the fourth quarter, the company operated 42 facilities comprised of 33 skilled nursing centers, eight assisted living residences and one independent living/senior housing facility, with 3,737 total beds/units in service. Of these 42 facilities, 20 are owned, 12 are leased, six are consolidated variable interest entities, and four are managed for third parties. The facilities are located in Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio and Oklahoma.
Chris Brogdon, AdCare's chief acquisition officer, commented, "AdCare has put under contract 59 facilities since we began our M&A campaign in the fall of 2009 and 32 since the beginning of 2011. During the quarter, our M&A program expanded operations into the Southwest, established two additional facilities in Arkansas and Ohio, and put five additional facilities under contract in Oklahoma and five in Arkansas. We continue to expect our new facilities and these pending acquisitions to improve our overall EBITDA margin."
"We are currently evaluating several attractive opportunities in the Southern region of the U.S.," concluded Brogdon, "with accretive acquisitions and the optimization of our facilities continuing to be our major focus in 2012.
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