Form 8-K ADCARE HEALTH SYSTEMS, For: Mar 31
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 31, 2015
AdCare Health Systems, Inc.
(Exact Name of Registrant as Specified in Charter)
Georgia | 001-33135 | 31-1332119 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
1145 Hembree Road Roswell, Georgia 30076 | ||||
(Address of Principal Executive Offices) | ||||
(678) 869-5116
(Registrant’s telephone number, including area code)
Not applicable.
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02 Results of Operations and Financial Condition.
On March 31, 2015, AdCare Health Systems, Inc. (the “Company”) announced its results of operations for the quarter and full year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1.
The information provided pursuant to this Item 2.02 of this Current Report, including Exhibits 99.1, are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, and shall not be incorporated by reference in any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except to the extent expressly set forth by specific reference in any such filings.
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company presents certain non-GAAP financial measures. Specifically, the Company presents “Adjusted EBITDAR from continuing operations” and “Adjusted EBITDA from continuing operations.” The Company defines: (i) 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 or gain, rent, and other non-routine adjustments; and (ii) 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, and other non-routine adjustments.
Adjusted EBITDAR from continuing operations and Adjusted EBITDA 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 EBITDAR from continuing operations and Adjusted EBITDA from continuing operations are used by the Company’s 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, certain acquisition related charges and other non-routine adjustments. The Company believes these non-GAAP financial 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 provide data that assists management o determine whether or not adjustments to current spending decisions are needed. |
The Company believes that the use of these non-GAAP financial measures provide a meaningful and consistent comparison of the Company’s underlying business between periods by
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eliminating certain items required by GAAP, which have little or no significance in the Company’s day-to-day operations.
Item 5.02 | Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers |
The Board of Directors made the following changes to its corporate governance:
• | Appointed Bill McBride as Chairman of the Board, effective March 25, 2015. McBride will retain his position as Chief Executive Officer and will relinquish his position as President. |
• | David Tenwick, the company’s former Chairman of the Board and founder, will continue as a Director. |
• | Michael Fox will serve as the Lead Independent Director. |
• | Effective April 1, 2015, Peter Hackett will resign as a Director after serving in this position since May 2005. |
Effective April 1, 2015, Allan J. Rimland is joining the Company as President and Chief Financial Officer.
Item 7.01 | Regulation FD Disclosure |
On March 31, 2015, the Company issued a press release announcing the declaration by the Board of Directors of the Company (the "Board") of a dividend on the Company's Common Stock. Attached as Exhibit 99.2 is the press release relating to the dividend.
The information in this Current Report on Form 8-K under Item 7.01 is being furnished pursuant to Item 7.01 of Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including, without limitation, Exhibit 99.2, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K, including, without limitation, Exhibit 99.1, shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
Item 8.01 | Other Events |
On March 31, 2015, the Board declared a cash dividend of $0.05 per share of common stock, payable on April 30, 2015 to shareholders of record as of April 15, 2015.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
99.1 Press Release dated March 31, 2015 announcing fourth quarter and full-year 2014 results
99.2 | Press Release dated March 31, 2015, announcing the declaration of a dividend on the Common Stock |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 31, 2015 | ADCARE HEALTH SYSTEMS, INC. | ||
/s/ William McBride III | |||
William McBride III | |||
Chief Executive Officer | |||
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EXHIBIT INDEX
Exhibit No. | Exhibit Description | |
99.1 | Press Release dated March 31, 2015 announcing fourth quarter and full-year | |
2014 results | ||
99.2 | Press Release dated March 31, 2015 announcing the declaration of a dividend on | |
Common Stock | ||
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Exhibit 99.1
AdCare Health Systems Reports Fourth Quarter and Full-Year 2014 Results
Substantial Progress in Transitioning to a Facilities Holding Company;
Accepts Subscriptions for $8.5 Million Convertible Note Offering;
Full-Year 2014 Adjusted EBITDAR increases 27% to $19.5 Million
ATLANTA, GA, March 31, 2015-AdCare Health Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA) a recognized provider of senior living and healthcare facility management, today reported results for the fourth quarter and year ended December 31, 2014. The company also provided an update on its transition to a healthcare facilities holding and leasing company.
Business and Financial Highlights
• | As of April 1, 2015, the company will have entered into agreements to lease, sublease, or manage 35 of its 40 healthcare facilities. With respect to these 35 healthcare facilities: |
◦ | Seventeen facilities have transferred operations to third party operators or are under a management contract, which will continue indefinitely. |
◦ | The company expects to complete transfer of operations on the ten Arkansas facilities during the second quarter of 2015, pending licensure. |
◦ | The company expects to complete transfer of operations on the one remaining North Carolina facility during the second quarter of 2015, pending licensure. |
◦ | The remaining seven healthcare facilities are expected to transition to third party operators during the second quarter of 2015, when financing approval is obtained from the U.S. Department of Housing and Urban Development. |
The remaining five facilities are pending final disposition.
• | On March 31, 2015, the company accepted subscriptions for a private placement of $8.5 million aggregate principal amount of 10% convertible subordinated notes and issued $1.7 million in principal amount of such notes (and intends on issuing the remaining accepted principal amount of such notes on or before April 30, 2015, subject to receipt of payment). The convertible subordinated notes mature on April 30, 2017 with interest payable on a quarterly basis at an annual rate of 10% and are convertible at $4.25 per share of common stock. The net proceeds from the offering will be used primarily for repayment of the company’s $6.5 million Subordinated Convertible Notes which mature on April 30, 2015. Institutional Securities Corporation served as Placement Agent for the Offering and Doucet Asset Management served as the selected dealer. |
“Our team has worked diligently and rapidly to execute the strategic vision and set the company on a direct path to creating and returning value to our shareholders,” commented Bill McBride, AdCare’s Chairman and Chief Executive Officer. “We are a different company than we were just a few months ago, with the overwhelming majority of our previously owned and operated facilities having been leased or subleased. We believe the change in business model puts the company on more solid footing and reduces the earnings and cash flow volatility risk. There are additional approvals from landlords, lenders and regulatory agencies to be obtained on a small subset of the leases, but by and large, our transition is complete and we are now focused on the task of obtaining the approvals and growing our portfolio and unlocking shareholder value.”
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Summary of Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2014
Tables reporting the full financial results, reflecting the legacy business model, are included in this press release and were also reported in the company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 31, 2015.
Revenues in the fourth quarter of 2014 were $48.7 million, up 4.1% from $46.8 million in the fourth quarter of 2013. Revenues for the twelve months ended December 31, 2014 increased by 4.0% to $193.3 million from $185.8 million in 2013.
Adjusted EBITDAR from continuing operations in the fourth quarter of 2014 totaled $4.5 million compared with $4.6 million in the fourth quarter of 2013. Adjusted EBITDAR from continuing operations for the full year 2014 totaled $19.5 million compared to $15.3 million for the full year 2013 (see “Use of Non-GAAP Financial Information” below for the definition of Adjusted EBITDAR from continuing operations, a non-GAAP financial measure, as well as an important discussion about the use of this measure and its reconciliation to GAAP net loss, the most directly comparable GAAP financial measure).
The net loss attributable to AdCare common shareholders in the fourth quarter of 2014 totaled $5.9 million, or $0.33 per basic and diluted share, compared with a net loss of $3.7 million, or $0.21 per basic and diluted share, in the fourth quarter of 2013. For the twelve months ended December 31, 2014, the net loss attributable to AdCare common stockholders was $16.2 million, or $0.90 per basic and diluted share, compared with a net loss of $14.1 million, or $0.94 per basic and diluted share, in the year ago period. Several non-recurring and non-operational expenses impacted the net loss for all periods.
Cash and cash equivalents at December 31, 2014 totaled $10.7 million, as compared with $19.4 million at December 31, 2013. Restricted cash and investments at December 31, 2014 totaled $8.8 million, as compared with $15.4 million at December 31, 2013. Total debt outstanding at December 31, 2014 totaled $151.4 million (which includes $5.2 million in liabilities of disposal group held for sale and $6.0 million in liabilities of variable interest entity held for sale), as compared with $160.3 million at December 31, 2013 (which includes $6.0 million in liabilities of variable interest entity held for sale).
In connection with the appointment of Allan J. Rimland as AdCare's President and Chief Financial Officer, Mr. Rimland will receive on April 1, 2015, a ten-year warrant to purchase 275,000 shares of AdCare's common stock with an exercise price of $4.25 per share. One-third of the shares underlying the warrant will vest on each of April 1, 2016, April 1, 2017 and April 1, 2018, with the vesting of the warrant accelerating upon termination of Mr. Rimland's employment (other than a termination by AdCare for cause or by Mr. Rimland without good reason). The warrant was approved by the Compensation Committee of the Board of Directors, as well as the entire Board, and was issued to Mr. Rimland, pursuant to Section 711(a) of the NYSE MKT Company Guide, as a material inducement to Mr. Rimland entering into employment with AdCare.
Conference Call and Webcast
AdCare will hold a conference call to discuss its fourth quarter and full-year 2014 financial results on Tuesday, March 31, 2015 at 4:30 p.m. ET.
Date and time: Tuesday, March 31, 2015 at 4:30 p.m. ET
Dial-in number: 1-888-397-5352 (domestic) or 1-719-325-2495(international)
Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). Please use passcode 9566131 to access the replay. The replay will be available until April 7, 2015.
Webcast link: www.adcarehealth.com or http://public.viavid.com/index.php?id=113662
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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 healthcare through facility lease and sub-lease transactions. The company currently owns or leases 40 facilities, primarily in the Southeast. 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, among other things, statements regarding the strategic plan to transition the company to a healthcare facilities holding and leasing company. 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 the company’s Annual Report on Form 10-K for the year ended December 31, 2014. 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.
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.
Use of Non-GAAP Financial Information
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, and other non-routine adjustments; 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 or gain, rent, and other non-routine adjustments.
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
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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 and other non-routine adjustments.
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 provide data that assists management to determine whether or not adjustments to current spending decisions are needed. |
AdCare believes that the use of these 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.
Company Contact | Investor Relations | |
Bill McBride | Brett Mass | |
Chairman of the Board and CEO | Managing Partner | |
AdCare Health Systems, Inc. | Hayden IR | |
Tel (404)781-2884 | Tel (646) 536-7331 | |
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
December 31, | ||||
2014 | 2013 | |||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ 10,735 | $ 19,374 | ||
Restricted cash and investments | 3,321 | 3,801 | ||
Accounts receivable, net of allowance of $6,708 and $4,989 | 24,294 | 23,598 | ||
Prepaid expenses and other | 1,766 | 483 | ||
Deferred tax asset | 569 | 0 | ||
Assets of disposal group held for sale | 5,813 | 400 | ||
Assets of disposal group held for use | 0 | 5,135 | ||
Assets of variable interest entity held for sale | 5,924 | 5,945 | ||
Total current assets | 52,422 | 58,736 | ||
Restricted cash and investments | 5,456 | 11,606 | ||
Property and equipment, net | 135,585 | 138,233 | ||
Intangible assets—bed licenses | 2,471 | 2,471 | ||
Intangible assets—lease rights, net | 4,087 | 4,889 | ||
Goodwill | 4,224 | 4,224 | ||
Lease deposits | 1,683 | 1,715 | ||
Deferred loan costs, net | 3,464 | 4,542 | ||
Other assets | 569 | 12 | ||
Total assets | $ 209,961 | $226,428 | ||
LIABILITIES AND EQUITY | ||||
Current Liabilities: | ||||
Current portion of notes payable and other debt | $ 2,537 | $ 12,027 | ||
Current portion of convertible debt, net of discounts | 14,000 | 11,389 | ||
Revolving credit facilities and lines of credit | 5,576 | 2,738 | ||
Accounts payable | 16,434 | 23,783 | ||
Accrued expenses | 15,653 | 13,264 | ||
Liabilities of disposal group held for sale | 5,197 | 0 | ||
Liabilities of variable interest entity held for sale | 5,956 | 6,034 | ||
Total current liabilities | 65,353 | 69,235 | ||
Notes payable and other debt, net of current portion: | ||||
Senior debt, net of discounts | 110,023 | 107,858 | ||
Bonds, net of discounts | 7,011 | 6,996 | ||
Convertible debt | 0 | 7,500 | ||
Revolving credit facilities | 1,059 | 5,765 | ||
Other debt | 0 | 0 | ||
Other liabilities | 2,129 | 1,589 | ||
Deferred tax liability | 605 | 191 | ||
Total liabilities | 186,180 | 199,134 | ||
Commitments and contingencies (Note 16) | ||||
Preferred stock, no par value; 5,000 and 5,000 shares authorized; 950 and 950 shares issued and outstanding, redemption amount $23,750 and $23,750 at December 31, 2014 and 2013, respectively | 20,392 | 20,442 | ||
Stockholders' equity: | ||||
Common stock and additional paid-in capital, no par value; 55,000 shares authorized; 19,151 and 16,016 shares issued and outstanding at December 31, 2014 and 2013, respectively | 61,896 | 48,370 | ||
Accumulated deficit | (56,067) | (39,884) | ||
Total stockholders' equity | 5,829 | 8,486 | ||
Noncontrolling interest in subsidiaries | (2,440) | (1,634) | ||
Total equity | 3,389 | 6,852 | ||
Total liabilities and equity | $ 209,961 | $226,428 | ||
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000’s, except per share data)
Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||
(Amounts in 000's) | 2014 | 2013 | 2014 | 2013 |
Revenues: | ||||
Patient care revenues | $ 47,505 | $ 45,673 | $ 189,989 | $ 182,777 |
Management revenues | 354 | 568 | 1,493 | 2,097 |
Rental revenues | 852 | 583 | 1,832 | 876 |
Total Revenues | 48,711 | 46,824 | 193,314 | 185,750 |
Expenses: | ||||
Cost of services (exclusive of facility rent, | ||||
depreciation and amortization) | 41,125 | 37,709 | 159,434 | 152,577 |
General and administrative expenses | 3,224 | 5,016 | 15,541 | 19,032 |
Audit committee investigation expense | 0 | 102 | 0 | 2,386 |
Facility rent expense | 2,223 | 1,956 | 7,080 | 6,314 |
Depreciation and amortization | 2,266 | 2,337 | 7,300 | 6,918 |
Salary retirement and continuation costs | (135) | 0 | 2,636 | 154 |
Total expenses | 48,703 | 47,120 | 191,991 | 187,381 |
Income (Loss) from Operations | 8 | (296) | 1,323 | (1,631) |
Other Income (Expense): | ||||
Interest expense, net | (3,485) | (3,523) | (10,780) | (12,351) |
Acquisition costs, net of gains | 0 | 45 | (8) | (565) |
Derivative gain | 0 | 829 | 0 | 3,006 |
Loss on extinguishment of debt | 0 | (77) | (1,803) | (109) |
Loss on legal settlement | (600) | 0 | (600) | 0 |
Loss on disposal of assets | (7) | 0 | (7) | (10) |
Other expense | (251) | (321) | (888) | (306) |
Total other expense, net | (4,343) | (3,047) | (14,086) | (10,335) |
Loss from Continuing Operations | ||||
Before Income Taxes | (4,335) | (3,343) | (12,763) | (11,966) |
Income tax expense | (367) | (118) | (132) | (142) |
Loss from Continuing Operations | (4,702) | (3,461) | (12,895) | (12,108) |
(Loss) Income from Discontinued Operations, net of tax | (838) | 206 | (1,510) | (1,255) |
Net Loss | (5,540) | (3,255) | (14,405) | (13,363) |
Net Loss Attributable to Noncontrolling Interests | 258 | 168 | 806 | 796 |
Net Loss Attributable to AdCare Health Systems, Inc. | (5,282) | (3,087) | (13,599) | (12,567) |
Preferred stock dividend | (646) | (646) | (2,584) | (1,564) |
Net Loss Attributable to AdCare Health | ||||
Systems, Inc. Common Stockholders | (5,928) | $ (3,733) | $ (16,183) | $ (14,131) |
Net (Loss) Income per Common Share attributable to | ||||
AdCare Health Systems, Inc. Common Stockholders - Basic: | ||||
Continuing Operations | $ (0.28) | $ (0.26) | $ (0.82) | $ (0.86) |
Discontinued Operations | $ (0.05) | $ 0.01 | $ (0.08) | $ (0.08) |
$ (0.33) | $ (0.25) | $ (0.90) | $ (0.94) | |
Net (Loss) Income per Common Share attributable to | ||||
AdCare Health Systems, Inc. Common Stockholders - Diluted: | ||||
Continuing Operations | $ (0.28) | $ (0.26) | $ (0.82) | $ (0.86) |
Discontinued Operations | $ (0.05) | $ 0.01 | $ (0.08) | $ (0.08) |
$ (0.33) | $ (0.25) | $ (0.90) | $ (0.94) | |
Weighted Average Common Shares Outstanding: | ||||
Basic | 18,134 | 14,962 | 17,930 | 15,044 |
Diluted | 18,134 | 14,962 | 17,930 | 15,044 |
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ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA FROM CONTINUING OPERATIONS AND ADJUSTED EBITDAR FROM CONTINUING OPERATIONS
(Amounts in 000’s)
(Unaudited)
Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||
(Amounts in 000's) | 2014 | 2013 | 2014 | 2013 |
Consolidated Statement of Operations Data: | ||||
Net Loss | (5,540) | (3,255) | (14,405) | (13,363) |
Impact from Discontinued Operations | 839 | (206) | 1,510 | 1,255 |
Loss from continuing operations (Per GAAP) | (4,701) | (3,461) | (12,895) | (12,108) |
Add back: | ||||
Interest expense, net | 3,484 | 3,522 | 10,780 | 12,351 |
Income tax expense | 367 | 118 | 132 | 142 |
Amortization of stock based compensation | 173 | 360 | 1,155 | 1,097 |
Depreciation and amortization | 2,266 | 2,337 | 7,300 | 6,918 |
Acquisition costs, net of gains | 0 | (45) | 8 | 565 |
Loss on extinguishment of debt | 0 | 77 | 1,803 | 109 |
Loss on legal settlement | 600 | 0 | 600 | 0 |
Derivative gain | 0 | (829) | 0 | (3,006) |
Loss on disposal of assets | 7 | 0 | 7 | 10 |
Audit committee investigation expense | 0 | 102 | 0 | 2,386 |
Reincorporation - Georgia | 0 | 91 | 0 | 91 |
Other expense | 251 | 321 | 888 | 306 |
Salary retirement and continuation costs | (135) | 0 | 2,636 | 154 |
Adjusted EBITDA from continuing operations | 2,312 | 2,593 | 12,414 | 9,015 |
Facility rent expense | 2,223 | 1,956 | 7,080 | 6,314 |
Adjusted EBITDAR from continuing operations | $ 4,535 | $ 4,549 | $ 19,494 | $ 15,329 |
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Exhibit 99.2
AdCare Health Systems Reports Substantial Progress in its Strategic Transition; Declares Cash Dividend and Reconstitutes Board of Directors
Board Declares Cash Dividend of $0.05 per share;
Names Bill McBride as Chairman and Allan Rimland as President and Chief Financial Officer
ATLANTA, GA, March 31, 2015-AdCare Health Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA) a recognized provider of senior living and healthcare facility management, today announced substantial progress in the company’s strategic transition from an owner and operator of healthcare facilities to a healthcare property holding and leasing company, with 35 of the company’s 40 properties leased or sub-leased. As a result of this progress, the Board of Directors declared a cash dividend on the common stock. The company also announced changes to the Board of Directors and a key addition to its senior management.
“Today marks a pivotal point in AdCare’s history, as we have substantially completed the leasing portion of the transition of our portfolio to the new business model, which we believe positions the company for improved financial performance, including increased cash flow, and permits a return of capital to our shareholders in the form of a cash dividend,” stated Bill McBride, AdCare’s Chairman of the Board and Chief Executive Officer. “Since October we have followed a rigorous and detailed plan with an aggressive timeline to achieve our primary purpose of unlocking shareholder value. As promised, we substantially completed the transition by the end of the first quarter of 2015, while the Board delivered on its commitment to declare a cash dividend as expeditiously and prudently as possible.”
Dividend Declaration
On March 31, 2015, the Board of Directors declared a cash dividend of $0.05 per share of common stock, payable on April 30, 2015 to shareholders of record as of April 15, 2015.
Management and Board of Directors Changes
Effective April 1, Allan J. Rimland, a seasoned financial executive with over 25 years of experience in investment banking and expertise within the healthcare services and related real estate industry, joined AdCare as President and Chief Financial Officer. He has over 20 years of healthcare services investment banking experience, including positions with leading bulge bracket and mid-sized investment banks. During his tenure, Rimland managed more than $100 billion in M&A and capital raising transactions. Rimland joined AdCare from Stephens Inc. where he served as Managing Director in the Healthcare Group, focusing on healthcare services companies from 2011 to until 2015.
“I have known Allan for more than two decades, and he was a banker involved in taking both of my prior companies public,” added McBride. “Allan brings significant experience in raising capital and advising on M&A transactions for clients in the senior care and healthcare REIT sectors, and this expertise will prove invaluable as we seek to grow our portfolio of properties.”
“I am excited to join AdCare at this pivotal time in the company’s evolution,” added Rimland. “AdCare is well-positioned to benefit from demographic trends that will drive demand for long-term care and senior living capacity. I look forward to helping the company grow its portfolio and create value for its shareholders.”
Board of Directors Realignment
The Board of Directors made the following changes to its corporate governance:
• | Appointed Bill McBride as Chairman of the Board, effective March 25, 2015. McBride will retain his position as Chief Executive Officer and will relinquish his position as President. He joined AdCare in October 2014 as Chief Executive Officer and President, when he was selected to lead the company through its strategic transition from an owner and operator of healthcare facilities to a facilities holding company. |
• | David Tenwick, the company’s former Chairman of the Board and founder, will continue as a Director. |
• | Michael Fox will serve as the Lead Independent Director. |
• | Effective April 1, 2015, Peter Hackett will resign as a Director after serving in this position since May 2005. |
Tenwick added, "Bill’s industry expertise and leadership talent were a critical component in the success of our company’s transition over these past several months. It is not only natural, but fitting, that we continue to leverage his strategic vision and wealth of experience as we begin this next chapter in our company’s evolution."
Conference Call Information:
AdCare will hold a conference call to discuss its fourth quarter and full-year 2014 financial results on Tuesday, March 31, 2015 at 4:30 p.m. ET.
Date and time: Tuesday, March 31, 2015 at 4:30 p.m. ET
Dial-in number: 1-888-397-5352 (domestic) or 1-719-325-2495(international)
Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). Please use passcode 9566131 to access the replay. The replay will be available until April 7, 2015.
Webcast link: http://www.adcarehealth.com or http://public.viavid.com/index.php?id=113662
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 healthcare through facility lease and sub-lease transactions. The company currently owns or leases 40 facilities, primarily in the Southeast. 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, among other things, statements regarding the strategic plan to transition the company to a healthcare facilities holding and leasing company and statements regarding returning cash to shareholders. 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 the company’s Annual Report on Form 10-K for the year ended December 31, 2014. 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.
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.
Company Contact | Investor Relations | |
Bill McBride | Brett Mass | |
Chairman of the Board and CEO | Managing Partner | |
AdCare Health Systems, Inc. | Hayden IR | |
Tel (404)781-2884 | Tel (646) 536-7331 | |
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