UNITED 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):       June 1, 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 2.01
Completion of Acquisition or Disposition of Assets

As previously disclosed, certain wholly owned subsidiaries of the Company have entered into certain sublease agreements, on varying dates, pursuant to which they would lease certain skilled nursing facilities of the Company to third-party operators. On June 1, 2015, a sublease agreement for one facility became effective and the operations of the applicable facility under such sublease agreement were transferred. The facility for which a sublease agreement became effective on June 1, 2015 is as follows:
•
Mountain Trace Rehabilitation and Nursing Center, a 106-bed skilled nursing facility located in Sylva, North Carolina

The above effective sublease agreement is in addition to certain other sublease agreements which became effective on April 1, 2015 and May 1, 2015. See the Company’s Current Reports on Form 8-K filed on April 7, 2015 and May 6, 2015, respectively, for a description of these other sublease agreements. On a cumulative basis, the Company has entered into fifteen subleases which are currently effective and under which operations of the applicable facilities have transferred (“Cumulative Subleases”).
North Carolina and South Carolina Leases

As previously disclosed on February 27, 2015, three wholly-owned subsidiaries (each, a “Symmetry Healthcare Sublessor”) of the Company entered into separate sublease agreements pursuant to which each Symmetry Healthcare Sublessor leased one skilled nursing facility located in North Carolina and two skilled nursing facilities located in South Carolina, respectively, to a wholly-owned subsidiary of Symmetry Healthcare Management, LLC (each, a "Symmetry Healthcare Sublessee"). The sublease agreements were subject to, among other things: (i) such Symmetry Healthcare Sublessee’s receipt of all licenses and other approvals from the states of North Carolina and South Carolina to operate such facilities, respectively; and (ii) approval of the mortgage lender with respect to such facility. Each sublease agreement is structured as triple net lease wherein the Symmetry Healthcare Sublessee is responsible for the day-to-day operation, ongoing maintenance, taxes and insurance for the duration of the sublease. Pursuant to each sublease agreement, the initial lease term is fifteen years with a five-year renewal option. The annual rent under all of the sublease agreements in the first year is $1.7 million in the aggregate, and the annual rent under each sublease will escalate at 3% each year through the initial term and upon renewal. In connection with entering into the sublease agreements, each Symmetry Healthcare Sublessor and Symmetry Healthcare Sublessee also entered into an operations transfer agreement with respect to the applicable North Carolina and South Carolina facilities, each containing customary terms and conditions.

On March 20, 2015, each Symmetry Healthcare Sublessor entered into a separate First Amendment to the Lease Agreement, which amended each of the separate sublease agreements to, among other things: (i) extended the commencement date of the sublease agreement for Mountain Trace Rehabilitation and Nursing Center, the skilled nursing facility located in Sylva, North Carolina (the "Related Lease") to June 1, 2015; and (ii) included a 20% monthly base rent and asset management and professional services fee escalation provision for each of the two skilled nursing facilities located in South Carolina that would have taken effect if the Related Lease did not commence by June 1, 2015.

On May 31, 2015, the Symmetry Healthcare Sublessor for the Mountain Trace Rehabilitation and Nursing Center entered into a Second Amendment to the Lease Agreement, which amended the sublease agreement to, among other things: (i) reduce the first year base rent from $59,000 to $54,000; and (ii) specify a specific rent of $59,000 for the second year of the lease rather than the prior provision that the

2

second year lease rate shall equal one hundred three percent (103%) of the base rent payable for the immediately preceding lease year.

The subleases for the two South Carolina skilled nursing facilities commenced on April 1, 2015.

The sublease for the 106-bed North Carolina skilled nursing facility, Mountain Trace Rehabilitation and Nursing Center, commenced on June 1, 2015.

Item 7.01
Regulation FD Disclosure

This Current Report on Form 8-K includes in Item 9.01 pro forma financial statements reflecting the commencement of certain subleases.
Item 9.01
Financial Statements and Exhibits

(b)
Pro Forma Financial Information. Unaudited pro forma condensed consolidated financial statements of the Company to give effect to the cumulative commencement of the fifteen subleases and is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

•
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2015
•
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2015
•
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2014

(d)    Exhibits

10.1
Lease Agreement, dated February 27, 2015, by and between Georgetown HC&R Property Holdings, LLC and Blue Ridge in Georgetown LLC (Incorporated by reference to Exhibit 10.408 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)

10.2
First Amendment to Lease Agreement, dated March 20, 2015, by and between Georgetown HC&R Property Holdings, LLC and Blue Ridge in Georgetown, LLC (Incorporated by reference to Exhibit 10.409 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)

10.3
Lease Agreement, dated February 27, 2015 by and between Sumter Valley Property Holdings, LLC and Blue Ridge of Sumter LLC (Incorporated by reference to Exhibit 10.410 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)

10.4
First Lease Amendment to Lease Agreement, dated March 20, 2015, by and between Sumter Valley Property Holdings, LLC and Blue Ridge of Sumter, LLC (Incorporated by reference to Exhibit 10.411 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)


3

10.5
Lease Agreement dated February 27, 2015 by and between Mountain Trace Nursing ADK, LLC and Blue Ridge on the Mountain LLC (Incorporated by reference to Exhibit 10.412 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)

10.6
First Amendment to Lease Agreement, dated March 20, 2015 by and between Mountain Trace Nursing ADK,LLC and Blue Ridge on the Mountain , LLC (Incorporated by reference to Exhibit 10.413 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)

10.7
Second Amendment to Lease Agreement, dated May 31, 2015 by and between Mountain Trace Nursing ADK,LLC and Blue Ridge on the Mountain, LLC

99.1
Unaudited Pro Forma Condensed Consolidated Financial Statements of AdCare Health Systems, Inc. as of March 31, 2015, for the three months ended March 31, 2015, and for the year ended December 31, 2014





4

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: June 5, 2015
ADCARE HEALTH SYSTEMS, INC.
 
 
 
 
 
 
 
 
/s/ Allan J. Rimland
 
 
 
Allan J. Rimland
 
 
President and Chief Financial Officer



5

EXHIBIT INDEX

Exhibit No.
 
Exhibit Description
 
 
 
10.1
 
Lease Agreement, dated February 27, 2015, by and between Georgetown HC&R Property Holdings, LLC and Blue Ridge in Georgetown LLC (Incorporated by reference to Exhibit 10.408 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.2
 
First Amendment to Lease Agreement, dated March 20, 2015, by and between Georgetown HC&R Property Holdings, LLC and Blue Ridge in Georgetown, LLC (Incorporated by reference to Exhibit 10.409 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.3
 
Lease Agreement, dated February 27, 2015 by and between Sumter Valley Property Holdings, LLC and Blue Ridge of Sumter LLC (Incorporated by reference to Exhibit 10.410 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.4
 
First Lease Amendment to Lease Agreement, dated March 20, 2015, by and between Sumter Valley Property Holdings, LLC and Blue Ridge of Sumter, LLC (Incorporated by reference to Exhibit 10.411 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.5
 
Lease Agreement dated February 27, 2015 by and between Mountain Trace Nursing ADK, LLC and Blue Ridge on the Mountain LLC (Incorporated by reference to Exhibit 10.412 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.6
 
First Amendment to Lease Agreement, dated March 20, 2015 by and between Mountain Trace Nursing ADK,LLC and Blue Ridge on the Mountain , LLC (Incorporated by reference to Exhibit 10.413 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014)
 
 
 
10.7
 
Second Amendment to Lease Agreement, dated May 31, 2015 by and between Mountain Trace Nursing ADK,LLC and Blue Ridge on the Mountain, LLC
 
 
 
99.1
 
Unaudited Pro Forma Condensed Consolidated Financial Statements of AdCare Health Systems, Inc. as of March 31, 2015, for the three months ended March 31, 2015, and for the year ended December 31, 2015




6



 
Exhibit 10.1

SECOND AMENDMENT TO LEASE AGREEMENT


THIS SECOND AMENDMENT TO LEASE AGREEMENT (the “ Amendment ”) is made and entered into as of the 31st day of May, 2015, by and between MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability company (“ Lessor ”) and BLUE RIDGE ON THE MOUNTAIN, LLC, a North Carolina limited liability company (“ Lessee ”).

W I T N E S S E T H:

WHEREAS , Lessor and Lessee are parties to that certain lease dated February 27, 2015, as amended by that certain First Amendment to Lease Agreement dated as of March 20, 2015 (as amended, the “ Lease ”), whereby Lessee leased certain improved property located at 417 Mountain Trace Road, Sylva, North Carolina 28779; and

WHEREAS , Lessor and Lessee desire to further amend the Lease as hereinafter set forth.
    
NOW, THEREFORE , for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, paid by each party to the other, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and benefits flowing between the parties, Lessor and Lessee, intending to be legally bound, do hereby covenant and agree as follows:

1. Capitalized Terms . Unless otherwise defined herein, all capitalized words and phrases used herein shall have the same meanings ascribed to them in the Lease.

2. Base Rent . Section 2.1 of the Lease is hereby deleted in its entirety and the following is inserted in lieu thereof:

2.1     Base Rent .
(a)      Lease Year One . During first Lease Year, Base Rent shall be Fifty-four Thousand and 00/100 Dollars ($54,000.00) per month.
(b)      Lease Year Two .     During the second Lease Year, Base Rent shall be Fifty-nine Thousand and 00/100 Dollars ($59,000.00) per month.
(c)      Lease Years 3-15 . Commencing on the first day of the third (3 rd ) Lease Year and continuing on the first day of each Lease Year thereafter through the end of the Initial Term, the Base Rent due each Lease Year shall equal one hundred three percent (103%) of the Base Rent payable for the immediately preceding Lease Year.





3. Acceptance “As-Is” No Liens . Section 8.1 of the Lease is hereby amended by deleting the last paragraph thereof in its entirety and by substituting the following in lieu thereof:

Notwithstanding any provision hereof, Lessor shall, at its sole cost and expense, repair the HVAC system (including the boiler) at the Facility to ensure that the HVAC system and boiler will be able to maintain sufficient temperatures at the Facility to meet nursing home guidelines and regulations. Such repair work will be completed during the summer of 2015 but not later than the first day on which the temperature at the Facility drops below freezing.

4. Agreement in Effect . Except as herein specifically provided, all other terms and provisions of the Lease shall remain in full force and effect, and are hereby ratified and reaffirmed by the parties.



[SIGNATURES ON FOLLOWING PAGE]


2





IN WITNESS WHEREOF , the undersigned have executed this Amendment as of the date first above written.




                    
LESSOR:
 
 
 
MOUNTAIN TRACE NURSING ADK, LLC
an Ohio limited liability company
 
 
By:
/s/ William McBride
Name:
William McBride
Title:
Manager



                    
LESSEE:
 
 
 
BLUE RIDGE ON THE MOUNTAIN LLC
a North Carolina limited liability company
 
 
By:
/s/ Levi Rudd
Name:
Levi Rudd
Title:
CEO





3



Exhibit 99.1

ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Introduction and Basis of Presentation

As previously disclosed, certain wholly owned subsidiaries of the Company have entered into certain sublease agreements, on varying dates, pursuant to which they would lease certain skilled nursing facilities of the Company to third-party operators. On June 1, 2015, a sublease agreement for one facility became effective and the operations of the applicable facility under such sublease agreement were transferred. The facility for which a sublease agreement became effective on June 1, 2015 is as follows:
•
Mountain Trace Rehabilitation and Nursing Center, a 106-bed skilled nursing facility located in Sylva, North Carolina

The above effective sublease agreement is in addition to certain other sublease agreements which became effective on April 1, 2015 and May 1, 2015. See the Company’s Current Reports on Form 8-K filed on April 7, 2015 and May 6, 2015, respectively, for a description of these other sublease agreements. On a cumulative basis, the Company has entered into fifteen subleases which are currently effective and under which operations of the applicable facilities have transferred (“Cumulative Subleases”).
North Carolina and South Carolina Leases

As previously disclosed on February 27, 2015, three wholly-owned subsidiaries (each, a “Symmetry Healthcare Sublessor”) of the Company entered into separate sublease agreements pursuant to which each Symmetry Healthcare Sublessor leased one skilled nursing facility located in North Carolina and two skilled nursing facilities located in South Carolina, respectively, to a wholly-owned subsidiary of Symmetry Healthcare Management, LLC (each, a "Symmetry Healthcare Sublessee"). The sublease agreements were subject to, among other things: (i) such Symmetry Healthcare Sublessee’s receipt of all licenses and other approvals from the states of North Carolina and South Carolina to operate such facilities, respectively; and (ii) approval of the mortgage lender with respect to such facility. Each sublease agreement is structured as triple net lease wherein the Symmetry Healthcare Sublessee is responsible for the day-to-day operation, ongoing maintenance, taxes and insurance for the duration of the sublease. Pursuant to each sublease agreement, the initial lease term is fifteen years with a five-year renewal option. The annual rent under all of the sublease agreements in the first year is $1.7 million in the aggregate, and the annual rent under each sublease will escalate at 3% each year through the initial term and upon renewal. In connection with entering into the sublease agreements, each Symmetry Healthcare Sublessor and Symmetry Healthcare Sublessee also entered into an operations transfer agreement with respect to the applicable North Carolina and South Carolina facilities, each containing customary terms and conditions.

On March 20, 2015, each Symmetry Healthcare Sublessor entered into a separate First Amendment to the Lease Agreement, which amended each of the separate sublease agreements to, among other things: (i) extended the commencement date of the sublease agreement for Mountain Trace Rehabilitation and Nursing Center, the skilled nursing facility located in Sylva, North Carolina (the "Related Lease") to June 1, 2015; and (ii) included a 20% monthly base rent and asset management and professional services fee escalation provision for each of the two skilled nursing facilities located in South Carolina that would have taken effect if the Related Lease did not commence by June 1, 2015.





On May 31, 2015, the Symmetry Healthcare Sublessor for the Mountain Trace Rehabilitation and Nursing Center entered into a Second Amendment to the Lease Agreement, which amended the sublease agreement to, among other things: (i) reduce the first year base rent from $59,000 to $54,000; and (ii) specify a specific rent of $59,000 for the second year of the lease rather than the prior provision that the second year lease rate shall equal one hundred three percent (103%) of the base rent payable for the immediately preceding lease year.

The subleases for the two South Carolina skilled nursing facilities commenced on April 1, 2015.

The sublease for the 106-bed North Carolina skilled nursing facility, Mountain Trace Rehabilitation and Nursing Center, commenced on June 1, 2015.


Pro Forma Financials

The unaudited pro forma balance sheet as of March 31, 2015 is based on the historical balance sheet of the Company as of March 31, 2015 after giving effect to the commencement of the Cumulative Subleases as of such date. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2015 and for the year ended December 31, 2014 are based on the historical statement of operations of the Company for the three months ending March 31, 2015 and for the year ending December 31, 2014, respectively, giving effect to the commencement of the Cumulative Subleases as of January 1, 2014.

The unaudited pro forma condensed consolidated financial statements presented are based on the assumptions and adjustments set forth in the notes thereto. The unaudited pro forma adjustments made in the compilation of the unaudited pro forma consolidated financial statements were directly attributable to the commencement of the Cumulative Subleases, based upon available information and assumptions, which we consider to be reasonable, and made solely for purposes of developing such unaudited pro forma financial information in compliance with the disclosure requirements of the SEC. The unaudited pro forma consolidated financial information is presented for informational purposes only and should not be considered indicative of actual results that would have been achieved had the Cumulative Subleases commenced on the dates indicated.

The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company's 2014 Annual Report on Form 10-K , filed on March 31, 2015, the Company's Current Report on Form 8-K , filed on April 7, 2015, the Company's Current Report on Form 8-K , filed on May 6, 2015, and the Company's 1st Quarter 2015 Periodic Report on Form 10-Q , filed on May 14, 2015.






ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2015
(Amounts in thousands)
 
 
 
 
Unaudited
 
 
Pro Forma
 
 
 
 
March 31, 2015
 
Adjustments
March 31, 2015
 
 
 
ASSETS
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash and cash equivalents
$
10,680

 
$
(1,834
)
(1) (2) (3) (4)
$
8,846

 
Restricted cash and investments
3,303

 
—

 
3,303

 
Accounts receivable, net
23,879

 
—

 
23,879

 
Prepaid expenses and other
2,650

 
106

(2)
2,756

 
Deferred tax asset
569

 
—

 
569

 
Assets of disposal group held for sale
7,231

 
—

 
7,231

 
Assets of variable interest entity held for sale
5,954

 
—

 
5,954

 
 
 
Total current assets
54,266

 
(1,728
)
 
52,538

 
 
 
 
 
 
 
 
 
Restricted cash and investments
4,769

 
—

 
4,769

Property and equipment, net
132,994

 
110

(4)
133,104

Intangible assets, net
6,391

 
—

 
6,391

Goodwill
4,224

 
—

 
4,224

Deferred loan costs, net
3,597

 
—

 
3,597

Other assets
2,212

 
1,894

(2)
4,106

 
 
 
Total assets
$
208,453

 
$
276

 
$
208,729

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
Current portion of notes payable and other debt
$
17,602

 
$
—

 
$
17,602

 
Accounts payable and accrued expenses
34,038

 
(564
)
(3)
33,474

 
Liabilities of disposal group held for sale
6,180

 
—

 
6,180

 
Liabilities of variable interest entity held for sale
5,958

 
—

 
5,958

 
 
 
Total current liabilities
63,778

 
(564
)
 
63,214

 
 
 
 
 
 
 
 
 
Notes payable and other debt
122,031

 
—

 
122,031

Other liabilities and security deposits
2,262

 
888

(1)
3,150

Deferred tax liability
605

 
—

 
605

 
 
 
Total liabilities
188,676

 
324

 
189,000

 
 
 
 
 
 
 
 
 
Preferred stock
20,392

 
—

 
20,392

Stockholders' equity:
 
 
 
 
 
 
Common stock and additional paid-in-capital
63,787

 
—

 
63,787

 
Accumulated deficit
(61,732
)
 
(48
)
(4)
(61,780
)
 
 
 
Total stockholders' equity
2,055

 
(48
)
 
2,007

Noncontrolling interest in subsidiary
(2,670
)
 
—

 
(2,670
)
 
 
 
Total equity
(615
)
 
(48
)
 
(663
)
 
 
 
Total liabilities and equity
$
208,453

 
$
276

 
$
208,729



Notes:
(1)     Security deposits from tenants related to certain subleased entities in accordance with the lease agreements
(2)    Lease inducement payment made to lessees
(3)    Cash paid for vacation accrual reduction due to transfer of employees to lessees
(4)    Payments make for capital expenditures and repairs & maintenance




ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2015
(Amounts in thousands, except per share data)

 
 
 
 
Unaudited
 
Adjustments
Pro Forma
 
 
 
 
Three Months Ended
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31, 2015
 
(1), (2), (3)
 
(4) (5)
 
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Patient care revenues
 
$
46,145

 
$
(25,854
)
(1)
$
—

 
$
20,291

Management revenues
 
218

 
—

 
—

 
218

Rental revenues
 
1,340

 
—

 
3,360

(4)
4,700

 
Total revenues
 
47,703

 
(25,854
)
 
3,360

 
25,209

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Cost of services
 
41,221

 
(23,192
)
(1)
—

 
18,029

General and administrative expenses
 
3,170

 
(682
)
(2)
—

 
2,488

Facility rent expense
 
1,931

 
—

 
—

 
1,931

Depreciation and amortization
 
1,706

 
—

 
—

 
1,706

 
Total expenses
 
48,028

 
(23,874
)
 
—

 
24,154

Income (Loss) from Operations
 
(325
)
 
(1,980
)
 
3,360

 
1,055

 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
Interest expense, net
 
(2,537
)
 
25

(3)
60

(5
)
(2,452
)
Loss on extinguishment of debt
 
(680
)
 
—

 
—

 
(680
)
Other expense
 
(280
)
 
—

 
—

 
(280
)
 
Total other expense, net
 
(3,497
)
 
25

 
60

 
(3,412
)
 
 
 
 
 
 
 
 
 
 
 
Loss from Continuing Operations Before Income Taxes
 
(3,822
)
 
(1,955
)
 
3,420

 
(2,357
)
Income tax expense
 
(20
)
 
—

 
—

 
(20
)
Loss from Continuing Operations
 
$
(3,842
)
 
$
(1,955
)
 
$
3,420

 
$
(2,377
)
 
 
 
 
 
 
 
 
 
 
 
Net Loss per Share attributable to AdCare
 
 
 
 
 
 
 
 
 
Health Systems, Inc. Common Stockholders-Basic:
 
 
 
 
 
 
 
 
 
 
Continuing Operations
 
$
(0.22
)
 
 
 
 
 
$
(0.15
)
 
 
 
 
 
 
 
 
 
 
 
Net Loss per Share attributable to AdCare
 
 
 
 
 
 
 
 
 
 Health Systems, Inc. Common Stockholders-Diluted:
 
 
 
 
 
 
 
 
 
 
Continuing Operations
 
$
(0.22
)
 
 
 
 
 
$
(0.15
)
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
19,218

 
 
 
 
 
19,218

 
 
Diluted
 
19,218

 
 
 
 
 
19,218


Notes:
(1)     Eliminate results of operations for the Cumulative Subleases
(2)    Eliminate management's estimated general and administrative expense related to the Cumulative Subleases
(3)     Eliminate interest expense related to lines of credit collateralized by accounts receivable for two of the cumulative subleased entities
(4)     Straight line rental revenue resulting from the Cumulative Subleases
(5)    Imputed interest payments on special rent payments received




ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(Amounts in thousands, except per share data)

 
 
 
 
Audited
 
Adjustments
Pro Forma
 
 
 
 
For the Year Ended
 
 
 
 
 
For the Year Ended
 
 
 
 
December 31, 2014
 
(1), (2), (3)
 
(4) (5)
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Patient care revenues
 
$
189,989

 
$
(107,831
)
(1)
$
—

 
$
82,158

Management revenues
 
1,493

 
—

 
—

 
1,493

Rental revenues
 
1,832

 
—

 
13,440

(4)
15,272

 
Total revenues
 
193,314

 
(107,831
)
 
13,440

 
98,923

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Cost of services
 
159,434

 
(90,928
)
(1)
—

 
68,506

General and administrative expenses
 
15,541

 
(2,894
)
(2)
—

 
12,647

Facility rent expense
 
7,080

 
—

 
—

 
7,080

Depreciation and amortization
 
7,300

 
—

 
—

 
7,300

Salary retirement and continuation costs
 
2,636

 
—

 
—

 
2,636

 
Total expenses
 
191,991

 
(93,822
)
 
—

 
98,169

Income (Loss) from Operations
 
1,323

 
(14,009
)
 
13,440

 
754

 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
Interest expense, net
 
(10,780
)
 
128

(3)
248

(5
)
(10,404
)
Acquisition costs, net of gains
 
(8
)
 
—

 
—

 
(8
)
Loss on extinguishment of debt
 
(1,803
)
 
—

 
—

 
(1,803
)
Loss on legal settlement
 
(600
)
 
—

 
—

 
(600
)
Loss on disposal of assets
 
(7
)
 
—

 
—

 
(7
)
Other expense
 
(888
)
 
—

 
—

 
(888
)
 
Total other expense, net
 
(14,086
)
 
128

 
248

 
(13,710
)
 
 
 
 
 
 
 
 
 
 
 
Loss from Continuing Operations Before Income Taxes
 
(12,763
)
 
(13,881
)
 
13,688

 
(12,956
)
Income tax expense
 
(132
)
 
—

 
—

 
(132
)
Loss from Continuing Operations
 
$
(12,895
)
 
$
(13,881
)
 
$
13,688

 
$
(13,088
)
 
 
 
 
 
 
 
 
 
 
 
Net Loss per Share attributable to AdCare
 
 
 
 
 
 
 
 
 
Health Systems, Inc. Common Stockholders-Basic:
 
 
 
 
 
 
 
 
 
 
Continuing Operations
 
$
(0.82
)
 
 
 
 
 
$
(0.83
)
 
 
 
 
 
 
 
 
 
 
 
Net Loss per Share attributable to AdCare
 
 
 
 
 
 
 
 
 
 Health Systems, Inc. Common Stockholders-Diluted:
 
 
 
 
 
 
 
 
 
 
Continuing Operations
 
$
(0.82
)
 
 
 
 
 
$
(0.83
)
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
17,930

 
 
 
 
 
17,930

 
 
Diluted
 
17,930

 
 
 
 
 
17,930


Notes:
(1)     Eliminate results of operations for the Cumulative Subleases
(2)    Eliminate management's estimated general and administrative expense related to the Cumulative Subleases
(3)     Eliminate interest expense related to lines of credit collateralized by accounts receivable for two of the cumulative subleased entities
(4)     Straight line rental revenue resulting from the Cumulative Subleases
(5)    Imputed interest payments on special rent payments received