Attached files
| file | filename |
|---|---|
| 8-K - 8-K - REGIONAL HEALTH PROPERTIES, INC | adk8k09302015proforma.htm |
| EX-99.3 - EXHIBIT 99.3 - REGIONAL HEALTH PROPERTIES, INC | adcareinvestorpresentati.htm |
| EX-99.2 - EXHIBIT 99.2 - REGIONAL HEALTH PROPERTIES, INC | ex992subleaseagreementautu.htm |
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 (“Autumn Breeze Sublessor”) entered into a sublease agreement on October 1, 2015, pursuant to which the Autumn Breeze Sublessor will lease one skilled nursing facility located in Georgia, to affiliates of C.R. of Autumn Breeze, LLC (the "Autumn Breeze Sublessee"). The sublease agreement became effective on September 30, 2015 and the operations of the facility were transferred to the Autumn Breeze Sublessee.
The facility for which the sublease agreement became effective on September 30, 2015 is as follows:
• | Autumn Breeze Healthcare Center, a 108-bed skilled nursing facility located in Marietta, Georgia. |
The Autumn Breeze Sublessee is part of an affiliated group of six additional entities for which the Company has entered into separate sublease agreements as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015.
The sublease agreements pertaining to the Autumn Breeze Healthcare 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, and August 1, 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, and August 5, 2015, respectively, for a description of these other sublease agreements. On a cumulative basis, the Company has entered into 22 sublease agreements (the "Cumulative Subleases") which are currently effective and under which operations of the applicable facilities have been transferred to third-party operators.
Autumn Breeze Sublease Agreement
The sublease agreement is structured as triple net lease wherein the Autumn Breeze 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 September 30, 2025. The annual rent under the sublease agreement in the first year will approximate $0.8 million annually. The annual rent will escalate at $12,000 annually for years two through five of the lease term, and will escalate at 2.5% above the immediately preceding lease year's annual rent for each remaining year of the lease term. In connection with the sublease agreements, the current licensed operator (wholly-owned subsidiary of Autumn Breeze Sublessor) and the Autumn Breeze Sublessee also entered into an operations transfer agreement with respect to the applicable facility, containing customary terms and conditions relating to the transfer of operations of skilled nursing facilities.
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 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 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, 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, and the Company's 2nd Quarter 2015 Periodic Report on Form 10-Q, filed on August 13, 2015.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2015
(Amounts in thousands)
Unaudited | Pro Forma | |||||||||||||
June 30, 2015 | Adjustments | June 30, 2015 | ||||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $ | 15,340 | $ | 104 | (1) (2) (3) (4) | $ | 15,444 | |||||||
Restricted cash and investments | 8,354 | — | 8,354 | |||||||||||
Accounts receivable, net | 16,654 | — | 16,654 | |||||||||||
Prepaid expenses and other | 3,327 | 56 | (2) | 3,383 | ||||||||||
Deferred tax asset | 569 | — | 569 | |||||||||||
Assets of disposal group held for sale | 10,242 | — | 10,242 | |||||||||||
Assets of variable interest entity held for sale | 5,894 | — | 5,894 | |||||||||||
Total current assets | 60,380 | 160 | 60,540 | |||||||||||
Restricted cash and investments | 6,009 | — | 6,009 | |||||||||||
Property and equipment, net | 128,693 | — | 128,693 | |||||||||||
Intangible assets, net | 6,225 | — | 6,225 | |||||||||||
Goodwill | 4,224 | — | 4,224 | |||||||||||
Lease Deposits | 1,816 | — | 1,816 | |||||||||||
Deferred loan costs, net | 3,491 | — | 3,491 | |||||||||||
Other assets | 2,286 | 347 | (2) | 2,633 | ||||||||||
Total assets | $ | 213,124 | $ | 507 | $ | 213,631 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Current portion of notes payable and other debt | $ | 12,283 | $ | — | $ | 12,283 | ||||||||
Accounts payable and accrued expenses | 24,498 | (347 | ) | (3) | 24,151 | |||||||||
Liabilities of disposal group held for sale | 9,398 | — | 9,398 | |||||||||||
Liabilities of variable interest entity held for sale | 5,870 | — | 5,870 | |||||||||||
Total current liabilities | 52,049 | (347 | ) | 51,702 | ||||||||||
Notes payable and other debt | 118,739 | — | 118,739 | |||||||||||
Other liabilities and security deposits | 2,947 | 415 | (4) | 3,362 | ||||||||||
Deferred tax liability | 605 | — | 605 | |||||||||||
Total liabilities | 174,340 | 68 | 174,408 | |||||||||||
Preferred stock | 47,950 | — | 47,950 | |||||||||||
Stockholders' equity: | ||||||||||||||
Common stock and additional paid-in-capital | 62,036 | — | 62,036 | |||||||||||
Accumulated deficit | (68,262 | ) | 439 | (5) | (67,823 | ) | ||||||||
Total stockholders' equity | (6,226 | ) | 439 | (5,787 | ) | |||||||||
Noncontrolling interest in subsidiary | (2,940 | ) | — | (2,940 | ) | |||||||||
Total equity | (9,166 | ) | 439 | (8,727 | ) | |||||||||
Total liabilities and equity | $ | 213,124 | $ | 507 | $ | 213,631 | ||||||||
Notes:
(1) Lease inducement cash disbursements made to lessees
(2) Principal on lease inducements
(3) Cash paid for vacation accrual reduction due to transfer of employees to lessees
(4) Security deposits from tenants
(5) Interest on lease inducements
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2015
(Amounts in thousands, except per share data)
Unaudited | Pro Forma | |||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||
June 30, 2015 | Adjustments | June 30, 2015 | ||||||||||||
Revenues: | ||||||||||||||
Patient care revenues | $ | 38,088 | $ | (19,436 | ) | (1) | $ | 18,652 | ||||||
Management revenues | 474 | — | 474 | |||||||||||
Rental revenues | 5,545 | 6,685 | (2) | 12,230 | ||||||||||
Total revenues | 44,107 | (12,751 | ) | 31,356 | ||||||||||
Expenses: | ||||||||||||||
Cost of services | 33,822 | (16,077 | ) | (1) | 17,745 | |||||||||
General and administrative expenses | 5,683 | (1,751 | ) | (3) | 3,932 | |||||||||
Facility rent expense | 3,021 | — | 3,021 | |||||||||||
Depreciation and amortization | 3,473 | — | 3,473 | |||||||||||
Salary retirement and continuation costs | (47 | ) | — | (47 | ) | |||||||||
Total expenses | 45,952 | (17,828 | ) | 28,124 | ||||||||||
Income (Loss) from Operations | (1,845 | ) | 5,077 | 3,232 | ||||||||||
Other Income (Expense): | ||||||||||||||
Interest expense, net | (4,769 | ) | 137 | (4) (5) | (4,632 | ) | ||||||||
Loss on extinguishment of debt | (680 | ) | — | (680 | ) | |||||||||
Other expense | (480 | ) | — | (480 | ) | |||||||||
Total other expense, net | (5,929 | ) | 137 | (5,792 | ) | |||||||||
Loss from Continuing Operations Before Income Taxes | (7,774 | ) | 5,214 | (2,560 | ) | |||||||||
Income tax expense | (20 | ) | — | (20 | ) | |||||||||
Loss from Continuing Operations | $ | (7,794 | ) | $ | 5,214 | $ | (2,580 | ) | ||||||
Net Loss per Share attributable to AdCare | ||||||||||||||
Health Systems, Inc. Common Stockholders-Basic: | ||||||||||||||
Continuing Operations | $ | (0.40 | ) | $ | (0.13 | ) | ||||||||
Net Loss per Share attributable to AdCare | ||||||||||||||
Health Systems, Inc. Common Stockholders-Diluted: | ||||||||||||||
Continuing Operations | $ | (0.40 | ) | $ | (0.13 | ) | ||||||||
Weighted Average Shares Outstanding: | ||||||||||||||
Basic | 19,499 | 19,499 | ||||||||||||
Diluted | 19,499 | 19,499 | ||||||||||||
Notes:
(1) Eliminate results of operations for the Cumulative Subleases
(2) Straight line rental revenue resulting from the Cumulative Subleases
(3) | Eliminate management's estimated general and administrative expense related to the Cumulative Subleases |
(4) Imputed interest payments on special rent
(5) Eliminate interest expense on line of credit
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 | Pro Forma | |||||||||||||
For the Year Ended | For the Year Ended | |||||||||||||
December 31, 2014 | Adjustments | December 31, 2014 | ||||||||||||
Revenues: | ||||||||||||||
Patient care revenues | $ | 189,989 | $ | (147,567 | ) | (1) | $ | 42,422 | ||||||
Management revenues | 1,493 | — | 1,493 | |||||||||||
Rental revenues | 1,832 | 18,895 | (2) | 20,727 | ||||||||||
Total revenues | 193,314 | (128,672 | ) | 64,642 | ||||||||||
Expenses: | ||||||||||||||
Cost of services | 159,434 | (122,857 | ) | (1) | 36,577 | |||||||||
General and administrative expenses | 15,541 | (4,921 | ) | (3) | 10,620 | |||||||||
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 | (127,778 | ) | 64,213 | ||||||||||
Income (Loss) from Operations | 1,323 | (894 | ) | 429 | ||||||||||
Other Income (Expense): | ||||||||||||||
Interest expense, net | (10,780 | ) | 428 | (4) (5) | (10,352 | ) | ||||||||
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 | ) | 428 | (13,658 | ) | |||||||||
Loss from Continuing Operations Before Income Taxes | (12,763 | ) | (466 | ) | (13,229 | ) | ||||||||
Income tax expense | (132 | ) | — | (132 | ) | |||||||||
Loss from Continuing Operations | $ | (12,895 | ) | $ | (466 | ) | $ | (13,361 | ) | |||||
Net Loss per Share attributable to AdCare | ||||||||||||||
Health Systems, Inc. Common Stockholders-Basic: | ||||||||||||||
Continuing Operations | $ | (0.72 | ) | $ | (0.75 | ) | ||||||||
Net Loss per Share attributable to AdCare | ||||||||||||||
Health Systems, Inc. Common Stockholders-Diluted: | ||||||||||||||
Continuing Operations | $ | (0.72 | ) | $ | (0.75 | ) | ||||||||
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) Straight line rental revenue resulting from the Cumulative Subleases
(3) | Eliminate management's estimated general and administrative expense related to the Cumulative Subleases |
(4) Imputed interest payments on special rent
(5) Eliminate interest expense on line of credit