AdCare Health Systems, Inc. (NYSEMKT:ADK) Trades Higher On Narrower Q1 Net Loss

AdCare Health Systems, Inc. (NYSEMKT:ADK)

AdCare Health Systems, Inc. (NYSEMKT:ADK) escaped the wrath of the Street on its Q1 2017 net loss attributable to shareholders, narrowing to -$2.8 million from -$3.7 million as of last year same period. The operator of nursing and assisted living facilities has attributed the performance to ongoing restructuring that has allowed the company to focus on areas of growth under a new business model.

Adcare Q1 Results

Revenues in the quarter totaled $6.1 million, a drop of 13.4% from $7.1 million in Q1 2016. The decrease was a result of the sale of nine Arkansas facilities late last year. General Administrative costs, on the other hand, were down by 36.2% to $1.6 million compared to $2.5 million as of last year. Reduction in personnel, as well as non-compensation expenses, is seen as a main cause of the reduction.

AdCare Health Systems, Inc. (NYSEMKT:ADK) says interest expense in the quarter was down by 43.5% to $1 million compared to $1.8 million as of last year. The company has attributed the decrease to the payment of a $36 million debt in connection to the Arkansas facilities. Loss from continued operations also narrowed to -$413,000 compared to -$528,000.

Cash and Cash equivalents as of the end of the quarter totaled $4.2 million less than half $14 million as of December 31, 2016.

Corporate Highlights

During the quarter the company completed its first acquisition under the new business model having purchased the Meadowood facility in Alabama. The assisted living and memory care facility purchased has 106 beds and cost the company $5.5 million.

Chief executive officer, Allan Rimland, remains confident that the facility will offer attractive economics with modest operation risk. There are also plans to pursue new acquisitions with the primary focus being in the skilled nursing sector.

“We observed significant improvements in overall portfolio operating metrics during the first quarter of 2017 and expect additional improvements in these metrics over the coming quarters. We continue to believe that local and regional operators with clinical, operational and financial focus are best positioned to successfully operate our facilities,” said Mr. Rimland.

During the quarter AdCare Health Systems, Inc. (NYSEMKT:ADK) also commenced a long-term lease that allows it to operate the facility of an affiliate to C. Ross Management, LLC. The terms of the agreement include a 13-year term with initial cash rent of $450,000. The company financed the acquisition with a conventional mortgage debt of $4.1 million.

AdCare Health Systems, Inc. (NYSEMKT:ADK) was up by 19.18% in Monday’s trading session ending the day at highs of $1.18 a share.

 I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.