Exhibit 99.1

ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction and Basis of Presentation

As previously disclosed, a wholly owned subsidiary of the Company (the “Highlands Sublessor”) entered into a sublease agreement on July 17, 2015, pursuant to which the Highlands Sublessor will lease one skilled nursing facility located in Arkansas to an affiliate of Aria Health Group, LLC (the “Highlands Sublessee”). Affiliates of the Company and Aria Health Group, LLC had entered into a sublease agreement, dated January 16, 2015, for the same facility but it was mutually terminated on April 30, 2015. The sublease agreement dated July 17, 2015 became effective on November 1, 2015, and the operations of the facility were transferred to the Highlands Sublessee on such date.

The facility for which the sublease agreement became effective on November 1, 2015 is as follows:

The Highlands Sublessee is part of an affiliated group of eight additional entities for which the Company has entered into separate sublease agreements with affiliates of Aria Health Group, LLC. For a description of these arrangements, see: (i) “Notes to Consolidated Financial Statements (unaudited) - Note 7. Leases - Arkansas Leases” included in “ Item 1. Financial Information” of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015; and (ii) the Company’s Current Report on Form 8-K filed with the Commission on May 6, 2015, which description is incorporated herein by reference.

The sublease agreement pertaining to the River Valley Health and Rehabilitation Center is in addition to several other sublease agreements which became effective on April 1, 2015, May 1, 2015, June 1, 2015, July 1, 2015, August 1, 2015, and September 30, 2015. See the Company’s Current Reports on Form 8-K filed on April 7, 2015, May 6, 2015, June 5, 2015, July 7, 2015, August 5, 2015, and October 6, 2015, respectively, for a description of these other sublease agreements. On a cumulative basis, the Company has entered into 23 sublease agreements (the "Cumulative Subleases") which are currently effective and under which operations of the applicable facilities have been transferred to third-party operators.

River Valley Sublease Agreement

The sublease agreement is structured as triple net lease wherein the Highlands Sublessee is responsible for the day-to-day operation, ongoing maintenance, taxes and insurance for the duration of the sublease. The initial term of the sublease agreement will expire on April 30, 2030 and may be renewed once, upon the exercise of the Highlands Sublessee’s option assuming the satisfaction of certain conditions, for an additional

five year period. The annual rent under the sublease agreement in the first year will be approximately $0.5 million, and the annual rent will escalate as follows: (i) in year two to approximately $0.6 million; (ii) by 102% of the immediately preceding year’s base rent in year three; (iii) by 103% of the immediately preceding year’s base rent in years four through six; and (iv) by 103.5% of the immediately preceding year’s base rent in years seven through fifteen. In connection with the sublease agreement, the current licensed operator of the facility, a wholly-owned subsidiary of the Highlands Sublessor, and the Highlands Sublessee also entered into an operations transfer agreement with respect to the facility, containing customary terms and conditions relating to the transfer of operations thereof.

Companions Specialized Care

As previously disclosed, on April 29, 2015, a wholly-owned subsidiary of the Company (the "Companions Seller") entered into an asset purchase agreement (the “Companions Sale Agreement”) with Gracewood Manor, LLC, an Oklahoma limited liability company (the “Companions Purchaser”), to sell Companions Specialized Care, a 102-bed skilled nursing facility located in Tulsa, Oklahoma ("Companions"). The Companions Sale Agreement was amended on May 19, 2015 and on September 30, 2015, to extend the closing date from July 1, 2015 to October 1, 2015, and from October 1, 2015 to October 31, 2015, respectively. In connection with entering into the Companions Sale Agreement, the Companions Seller and Companions Purchaser entered into an operations transfer agreement to transfer the operations of Companions concurrent with the closing of the asset purchase agreement.

On October 30, 2015, the Company completed the sale of Companions for $3.5 million less customary closing and certain real property apportionments. Proceeds were used to repay certain mortgage indebtedness and for working capital purposes. Concurrent with the closing of the sale, the operations of Companions were transferred to the Companions Purchaser.

Pro Forma Financials

The unaudited pro forma balance sheet as of June 30, 2015 is based on the historical balance sheet of the Company as of June 30, 2015 after giving effect to the commencement of the Cumulative Subleases and sale of Companions as of such date. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2015 and for the year ended December 31, 2014 are based on the historical statement of operations of the Company for the six months ending June 30, 2015 and for the year ending December 31, 2014, respectively, giving effect to the commencement of the Cumulative Subleases and sale of Companions 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 and sale of Companions, 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 and sale of Companions 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, the Company's Current Report on Form 8-K , filed on June 5, 2015, the Company's Current Report on Form 8-K , filed on July 7, 2015, the Company's Current Report on Form 8-K , filed on August 5, 2015, the Company's 2nd Quarter 2015 Periodic Report on Form 10-Q , filed on August 13, 2015, and the Company's Current Report on Form 8-K , filed on October 6, 2015.

(3)    Cash paid for vacation accrual reduction due to transfer of employees to lessees

(4)    Security deposits from tenants

(5)    Interest on lease inducements

(6) Sale of Companions

Notes:

(1)     Eliminate results of operations for the Cumulative Subleases

(2)    Straight line rental revenue resulting from the Cumulative Subleases

(4)     Imputed interest payments on special rent

(5)    Eliminate interest expense on line of credit

Notes:

(1)     Eliminate results of operations for the Cumulative Subleases

(2)    Straight line rental revenue resulting from the Cumulative Subleases

(4)     Imputed interest payments on special rent

(5)    Eliminate interest expense on line of credit

FIRST AMENDMENT TO SUBLEASE AGREEMENT

THIS FIRST AMENDMENT TO SUBLEASE AGREEMENT (this “ First Amendment ”) is made as of the 6 ^th day of October, 2015 by and among VALLEY RIVER PROPERTY HOLDINGS, LLC, a Georgia limited liability company (“ Prime Landlord ”), VALLEY RIVER NURSING, LLC, a Georgia limited liability company (“ Landlord ”) and HIGHLANDS OF FORT SMITH, LLC, a Delaware limited liability company (“ Tenant ”).

RECITALS

A.     Prime Landlord, Landlord and Tenant entered into that Sublease Agreement dated as of July 17, 2015 (the “ Lease ”). Landlord leases the Premises from Prime Landlord pursuant to the Prime Lease.

B.    Prime Landlord, Landlord and Tenant have agreed to amend the Lease on the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth herein, the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, Prime Landlord, Landlord and Tenant, intending to be legally bound, hereby agree as follows:

1. Recitals Incorporated: Certain Defined Terms . The recitals set forth above are incorporated into this First Amendment and shall be deemed to be terms and provisions hereof, the same as if fully set forth in this Section 1 . Capitalized terms that are not otherwise defined in this First Amendment shall have the same meanings ascribed to such terms in the Lease.

2.     Approval . This Amendment is subject to the approval of the lender holding a first priority mortgage on the Facility.

3.     Amendments .

1. Term . The “ Term ” of this Lease shall commence on November 1, 2015 (the “ Commencement Date ”) and shall continue until April 30, 2030. For purposes hereof, the “Lease Year One” shall mean the period beginning on the Commencement Date and ending on October 31, 2016 and “ Lease Year Two ” shall mean the period beginning on November 1, 2016 and ending on April 30, 2017. Thereafter, a “ Lease Year ” shall mean the twelve (12) month period commencing on May 1, 2016 and each anniversary thereof during each year of the Term. For purposes hereof, “ Termination Date ” shall mean the last day of the Term or the earlier date on which this Lease may be terminated as provided herein.

Tenant shall deposit with the Landlord and maintain during the Term the sum of Fifty Thousand and 00/100 Dollars ($50,000.00) as a security deposit (the “Security Deposit”) which Landlord shall hold as security for the full and faithful performance by Tenant of every material term, provision, obligation and covenant under this Lease and any Related Lease subject to the terms and conditions of this Lease.

(i) The failure of Highlands Arkansas Holdings, LLC to make any payment of principal or interest when due under that certain Second Replacement Promissory Note dated as of August 21, 2015 given in favor of AdCare Health Systems, Inc.

32.      Structural and Other Drainage-Related Issues . In addition to any other agreements of Prime Landlord or Landlord contained in this lease or the Transfer Agreement, Prime Landlord and Landlord agree to repair at their expense the structural and other drainage-related issues existing at the Facility prior to the Commencement Date (as identified in Tenant's due diligence) if such items: (i) pose a safety threat to any resident or employee of the Facility (in Tenant's reasonable judgment); (ii) are determined by any regulatory or certification body to be a life safety threat; (iii) impair daily operation of the Facility (in Tenant's reasonable judgment); or (iv) cause an increase in Tenant's insurance costs as a result of such issues. The scope and manner of repair must be approved by Prime Landlord and Tenant in writing prior to commencement of said repairs. All such required repairs shall be performed within a reasonable time frame by a contractor selected by Prime Landlord.

l .     Schedule 1 to the Lease is hereby deleted in its entirety and Schedule 1 attached to the First Amendment is substituted in lieu thereof.

3.     No Other Changes . Except as amended by the terms of this First Amendment, the Lease shall remain in full force and effect and the parties hereto hereby affirm the same.

4. No Waiver . Neither the entering into of this First Amendment nor any provision set forth herein shall be construed to be a waiver of any condition to performance under or breach of the terms of the Lease.

5. Counterparts . This First Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement. To facilitate execution and delivery of this Agreement, the parties may exchange counterparts of the executed signature pages by facsimile or other electronic transmission.

6. Entire Agreement . This First Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements.

7. Authority . The parties signing below on behalf of Prime Landlord, Landlord and Tenant represent and warrant that they have the authority and power to bind their respective party.

[Signatures on Following Page]

IN WITNESS WHEREOF, the parties have duly caused this First Amendment to Sublease Agreement to be executed as of the day and year first written above.

 

SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT

THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is made and entered into as of the 30 ^th day of September, 2015 (the “Effective Date”) by and between CSCC PROPERTY HOLDINGS, LLC , a Georgia limited liability company (“Seller”) and GRACEWOOD MANOR, LLC , an Oklahoma limited liability company (“Purchaser”).

RECITALS

Purchaser and Seller are parties to that certain Asset Purchase Agreement dated as of April 29, 2015 and First Amendment to Asset Purchase Agreement dated as of May 19, 2015 (collectively called the “Purchase Agreement”); and

Purchaser and Seller desire to amend the Purchase Agreement on the terms hereinafter set forth.

In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration paid by Purchaser to Seller, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1. Capitalized Terms . Capitalized but undefined terms used in this Amendment shall have the meanings set forth in the Purchase Agreement.

2.      Closing . Section 4 of the Purchase Agreement is hereby amended to change the date in the sixth line thereof from “October 1, 2015” to “October 31, 2015”.

3.      Earnest Money . Section 5(b) of the Purchase Agreement is hereby amended to change the amount of the Earnest Money deposit from “One Hundred Thousand and 00/100 Dollars ($100,000.00)” to “Two Hundred Thousand and 00/100 Dollars ($200,000.00)”.

4.      Conditions to Purchaser’s Obligation . The Purchase Agreement is hereby further amended by deleting Section 16q. thereof in its entirety.

5.      Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Purchase Agreement remain in full force and effect.

6.      Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall be taken to be one and the same Amendment, for the same effect as if all parties hereto had signed the same signature page, and a facsimile copy of an executed counterpart shall constitute the same as delivery of the original of such executed counterpart. Any signature page of this Amendment (whether original or facsimile) may be detached from any counterpart of this Amendment (whether original or facsimile) without impairing the legal effect of any signatures thereof and may be attached to another counterpart of this Amendment (whether original or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original or facsimile).

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the day and year first above written.