(By Balaseshan) AdCare Health Systems Inc. (NYSEAMEX:ADK), a provider of home health care services, said it has agreed to buy a skilled nursing facility in South Carolina for $4.2 million.
AdCare intends to finance the acquisition of the facility with a traditional bank loan. The company said this transaction supports its aggressive M&A strategy of targeting underperforming skilled nursing properties for facility optimization.
The company's optimization strategy leverages its regional teams to increase facility occupancy and Medicare census, as well as optimize reimbursement and patient care. AdCare expects this strategy to generate a significant increase in revenues.
The facility has 84 beds in service and generates an estimated $3.8 million in gross annualized revenues according to its most recent financials. The acquisition is anticipated to be completed in the fourth quarter of 2012.
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 $280 million. This would represent an increase of more than 84% over the company's revenues in 2011, and an increase of more than 10 times revenues since initiating its M&A campaign.
AdCare expects to complete the acquisition of at least eight additional facilities in the second half of 2012: the facility announced Monday, another facility in South Carolina, and six facilities in Oklahoma.
"With our M&A program and the integration of new facilities remaining our major focus in the second half of 2012, we continue to evaluate a number of opportunities that fit our acquisition strategy in the Southern region of the U.S.," said Chris Brogdon, AdCare's vice chairman and chief acquisitions officer.
ADK closed Friday's regular session at $4.70. The stock has been trading between $3.15 and $5.03 for the past 52 weeks.