Advocat Announces 2012 Third Quarter Results

Advocat Announces 2012 Third Quarter Results

Adjusted EPS Triples Year-Over-Year to $0.09

BRENTWOOD, Tenn., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Advocat Inc. (Nasdaq:AVCA)
a premier provider of long term care services primarily in the Southeast and
Southwest, today announced its results for the third quarter ended September
30, 2012. The Company earned $530,000 or $0.09 per diluted common share
excluding separation costs and start-up losses, compared to $193,000 or $0.03
per diluted share in the year-ago period on the same basis. On November 5,
2012, the Company declared a quarterly dividend of 5.5 cents per common share.
The dividend will be paid January 11, 2013, to shareholders of record on
December 31, 2012.

Third Quarter 2012 Highlights

  *Adjusted EBITDA improved to $2.5 million compared to $2.3 million in the
    third quarter of 2011, an 8.5% increase. Adjusted EBITDA adds back the
    negative EBITDA from the startup of recently opened skilled nursing
    centers of $0.6 million in the third quarter of 2012 and $0.1 million
    during the third quarter of 2011. Adjusted EBITDA also excludes separation
    costs of $0.1 million in the third quarter of 2012 and $1.1 million during
    the third quarter of 2011. Adjusted EBITDA for the third quarter of 2011
    also excludes non-recurring Electronic Medical Record implementation costs
    of $0.3 million.
  *Operating income improved to $0.2 million compared to an operating loss of
    $0.8 million in the third quarter of 2011.
  *Medicaid rates have continued to increase as we saw a 0.5% increase from
    the second quarter of 2012 and a 3.3% increase compared to last year's
    third quarter. We have experienced increased patient acuity levels and
    benefited from rate increases in certain states.
  *Managed Care census increased 12.2% compared to the third quarter 2011.

CEO Remarks

Commenting on the results, Kelly Gill, Advocat's CEO, stated, "Just over one
year ago I was entrusted with the leadership of this Company. At that time we
faced significant headwinds, marked by an 11.1% Medicare rate reduction
coinciding with the costs of investments in our strategic plan. Today, I am
very pleased to report that we have faced this challenge by lowering costs,
focusing on growing acuity and realizing the benefits of those strategic
investments. This is most evident by our Adjusted EBITDA, which takes into
consideration our significant investment in start-up costs for our new nursing
centers in Kentucky and West Virginia as well as certain separation costs. For
the September quarter, Adjusted EBITDA was $2.5 million compared to $1.3
million in the quarter ended December 31, 2011, the first reporting period
after the Medicare rate reduction. For the third quarter, our Adjusted EBITDA
also increased on a year-over-year basis from $2.3 million, due in large part
to operational improvements and despite the significant reduction in our
Medicare rates between the two periods."

Mr. Gill continued, "From a development standpoint, I am very pleased to
announce the successful reopening of our newly acquired nursing center in
Clinton, Kentucky. This center had been closed for over 12 months prior to our
acquisition and has now initiated operations after successfully completing the
initial Medicare and Medicaid certification survey. Furthermore, our recently
opened Rose Terrace facility in West Virginia has completed all of its opening
activities, has now achieved over 60% occupancy and continues to admit
additional patients. As expected, this brand new, state-of-the-art nursing
center has attracted a large percentage of Medicare patients and we expect it
to continue on its path toward generating monthly positive pre-tax income
before the end of 2012. Finally, during the last week of the third quarter we
assumed the lease of Highlands Nursing and Rehabilitation Center in
Louisville, Kentucky. This facility is occupied and is expected to contribute
positively to earnings beginning in the fourth quarter."

Mr. Gill concluded, "We believe that our third quarter activities of
developing these new properties demonstrate our ability to add nursing centers
to the Company's portfolio, increase revenue, and generate favorable leverage
against our related overhead expense. We intend to continue pursuing growth
opportunities through targeted acquisitions and relationships with REIT
partners."

Other Highlights for the Third Quarter 2012

The following table summarizes key revenue and census statistics for
continuing operations for each period:

                                   Three Months Ended
                                    September 30,
                                   2012                2011
Skilled nursing occupancy           77.5%^(1)          78.1%
As a percent of total census:                          
Medicare census                     13.2%               13.7%
Managed care census                 2.3%                2.0%
As a percent of total revenues:                        
Medicare revenues                   30.1%               34.7%
Medicaid revenues                   52.8%               49.5%
Managed care revenues               4.6%                4.1%
Average rate per day:                                  
Medicare                            $416.42           $476.68
Medicaid                            $158.66           $153.53
Managed care                        $373.72           $406.02
                                                      
^(1)Skilled nursing occupancy excludes our recently opened and leased
West Virginia and Kentucky nursing centers. The two newly opened nursing
centers are licensed to operate and are in the process of growing their     
occupancy as a percentage of licensed beds.The center we leased effective
September 24, 2012 is also excluded from skilled nursing occupancy.

Patient Revenues

Patient revenues were $77.3 million in 2012 and $79.2 million in 2011. This
decrease in revenue is primarily attributable to the 11.1% cut to Medicare
rates implemented by CMS on October 1, 2011. Our newly opened West Virginia
nursing center has received its license to operate, and more recently obtained
its Medicare and Medicaid certification. The new nursing center contributed
$0.9 million in revenue as it continues to develop its total census and
Medicare and managed care census.The recently leased 154-bed skilled nursing
center in Louisville, Kentucky contributed $0.2 million in revenue in the
partial month we operated it.

The average Medicaid rate per patient day for 2012 increased 3.3% compared to
2011, resulting in an increase in revenue of $1.3 million. This average rate
per day for Medicaid patients is the result of rate increases in certain
states and increasing patient acuity levels. The average Medicare rate per
patient day for 2012 decreased 12.6% compared to 2011, resulting in a net
decrease in revenue of $3.0 million. This decrease is primarily attributable
to the October1, 2011 CMS implemented Medicare rate decrease of 11.1%.

Expenses

We have experienced a significant amount of non-recurring start-up losses
during 2012 at our two newly opened centers. We expect both of these centers
to be accretive to earnings in 2013. Our newly opened West Virginia nursing
center contributed $0.8 million in start-up and additional operating expenses
over the $0.1 million we experienced in 2011. Our newly leased Kentucky
nursing center in the reopening phase contributed $0.4 million in additional
operating costs. The recently leased 154-bed skilled nursing center in
Louisville, Kentucky contributed $0.1 million in additional operating costs in
the partial month we operated it.

Operating expense increased slightly to $60.8 million in 2012 from$60.7
million in 2011, driven primarily by the $1.3 million increase in operating
costs at the three recently added nursing centers, but offset by reductions in
wage costs. Operating expense increased to 78.6% of revenue in 2012, compared
to 76.7% of revenue in 2011 due significantly to the decrease in Medicare
rates.

The largest component of operating expenses is wages, which even with the
addition of the new centers described above, decreased to $37.5 million in
2012 from $38.5million in 2011, a decrease of $1.0million, or 2.7%. We
continued to see improvements in our labor costs as we adjust to lower
Medicare rates and lower Medicare average daily census.

Employee health insurance costs were approximately $0.2 million higher in 2012
compared to 2011. The Company is self-insured for the first $175,000 in claims
per employee each year, and we experienced a higher level of claims costs
during 2012. Employee health insurance costs can vary significantly from year
to year, and we continually evaluate the provisions of these plans.

Bad debt expense increased approximately $0.2 million in 2012 compared to
2011, driven significantly by the growth in Medicaid patients undergoing the
initial qualification process. Provider taxes increased $0.4 million primarily
as a result of Alabama's temporary provider tax increase.

Professional liability expense was $2.6 million in 2012 compared to $4.4
million in 2011, a decrease of $1.6 million. Our cash expenditures for
professional liability costs of continuing operations were $1.6 million and
$4.4 million for 2012 and 2011, respectively. Professional liability expense
and cash expenditures fluctuate from year to year based respectively on the
results of our third-party professional liability actuarial studies and on the
costs incurred in defending and settling existing claims.

General and administrative expenses were approximately $6.1 million in 2012
compared to $7.2 million in 2011, an improvement of$1.1 million.The
significant improvement relates to a decrease in separation costs of$1.1
million compared to 2011. We experienced a $0.2 million decrease in
implementation costs of Electronic Medical Records, our travel costs were $0.1
million lower and we saw a decrease in legal costs of $0.1 million in 2012.
These decreases were offset by a $0.3 million increase in consulting and legal
expenses related to our acquisition efforts.

Facility Renovations

As of September 30, 2012, the Company has completed renovations at eighteen
facilities. We are developing plans for additional renovation projects. A
total of $27.0 million has been spent on the renovation program to date, with
$19.1 million financed through Omega Healthcare Investors Inc. ("Omega"), $6.1
million financed with internally generated cash, and $1.8 million financed
with long-term debt.

Conference Call Information

A conference call has been scheduled for Thursday, November 8, 2012 at 9:00
A.M. Central time (10:00 A.M. Eastern time) to discuss third quarter 2012
results.

The conference call information is as follows:

Date:           Thursday, November 8, 2012
Time:           9:00 A.M. Central, 10:00 A.M. Eastern
Webcast Links:   www.advocat-inc.com
          
Dial in numbers: 877.674.2413 (domestic) or 708.290.1366 (International)
               The Operator will connect you to Advocat Inc.'s Conference
                 Call

A replay of the conference call will be accessible two hours after its
completion through November 15, 2012 by dialing 855.859.2056 (domestic) or
404.537.3406 (international) and entering Conference ID 53029844.

FORWARD-LOOKING STATEMENTS

The "forward-looking statements" contained in this release are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are predictive in nature and are
frequently identified by the use of terms such as "may," "will," "should,"
"expect," "believe," "estimate," "intend," and similar words indicating
possible future expectations, events or actions. These forward-looking
statements reflect our current views with respect to future events and present
our estimates and assumptions only as of the date of this release. Actual
results could differ materially from those contemplated by the forward-looking
statements made in this release. In addition to any assumptions and other
factors referred to specifically in connection with such statements, other
factors, many of which are beyond our ability to control or predict, could
cause our actual results to differ materially from the results expressed or
implied in any forward-looking statements including, but not limited to, our
ability to successfully operate the new nursing center in West Virginia, our
ability to successfully license, certify and operate the new nursing center in
Kentucky, our ability to increase census at our renovated facilities, changes
in governmental reimbursement, including the impact of the CMS final rule that
has resulted in a reduction in Medicare reimbursement as of October 2011 and
our ability to mitigate the impact of the revenue reduction, government
regulation, the impact of the recently adopted federal health care reform or
any future health care reform, any increases in the cost of borrowing under
our credit agreements, our ability to comply with covenants contained in those
credit agreements, the outcome of professional liability lawsuits and claims,
our ability to control ultimate professional liability costs, the accuracy of
our estimate of our anticipated professional liability expense, the impact of
future licensing surveys, the outcome of proceedings alleging violations of
laws and regulations governing quality of care or violations of other laws and
regulations applicable to our business, impacts associated with the
implementation of our electronic medical records plan, the costs of investing
in our business initiatives and development, our ability to control costs,
changes to our valuation of deferred tax assets, changes in occupancy rates in
our facilities, changing economic and competitive conditions, changes in
anticipated revenue and cost growth, changes in the anticipated results of
operations, the effect of changes in accounting policies as well as other risk
factors detailed in the Company's Securities and Exchange Commission filings.
The Company has provided additional information in its Annual Report on Form
10-K for the fiscal year ended December31, 2011, as well as in its other
filings with the Securities and Exchange Commission, which readers are
encouraged to review for further disclosure of other factors. These
assumptions may not materialize to the extent assumed, and risks and
uncertainties may cause actual results to be different from anticipated
results. These risks and uncertainties also may result in changes to the
Company's business plans and prospects. Advocat Inc. is not responsible for
updating the information contained in this press release beyond the published
date, or for changes made to this document by wire services or Internet
services.

Advocat provides long-term care services to patients in 48 skilled nursing
centers containing 5,538 licensed nursing beds, primarily in the Southeast and
Southwest.For additional information about the Company, visit Advocat's web
site: www.advocatinc.com.

                         -Financial Tables to Follow-

ADVOCAT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                
                                                   September30, December31,
                                                    2012          2011
                                                   (Unaudited)
ASSETS:                                                          
Current Assets                                                   
Cash and cash equivalents                           $7,357      $6,692
Receivables, net                                    26,896        25,787
Deferred income taxes                               5,819         6,041
Other current assets                                8,536         6,800
Total current assets                                48,608        45,320
                                                                
Property and equipment, net                         42,539        47,078
Deferred income taxes                               10,929        10,352
Acquired leasehold interest, net                    8,708         8,996
Other assets, net                                   4,880         4,998
TOTAL ASSETS                                        $115,664    $116,744
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY:                            
Current Liabilities                                              
Current portion of long-term debt and capitalized   $1,435      $1,131
lease obligations
Trade accounts payable                              4,810         3,871
Accrued expenses:                                                
Payroll and employee benefits                       11,249        13,475
Current portion of self-insurance reserves          8,478         8,470
Other current liabilities                           4,476         2,938
Total current liabilities                           30,448        29,885
Noncurrent Liabilities                                           
Long-term debt and capitalized lease obligations,   28,380        28,768
less current portion
Self-insurance reserves, less current portion       13,857        12,049
Other noncurrent liabilities                        17,895        18,155
Total noncurrent liabilities                        60,132        58,972
                                                                
PREFERRED STOCK                                     4,918         4,918
                                                                
SHAREHOLDERS' EQUITY                                20,166        22,969
                                                                
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $115,664    $116,744


ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                
                                    Three Months Ended  Nine Months Ended
                                     September 30,       September 30,
                                    2012      2011      2012       2011
PATIENT REVENUES, net                $77,335 $79,198 $228,938 $233,051
EXPENSES:                                                        
Operating                            60,750    60,744    180,925    179,310
Lease and rent expense               5,931     5,737     17,694     17,178
Professional liability               2,643     4,389     7,065      7,053
General and administrative           6,055     7,186     18,953     19,364
Depreciation and amortization        1,776     1,577     5,308      4,589
Asset impairment                     —         344       —          344
Total expenses                       77,155    79,977    229,945    227,838
OPERATING INCOME (LOSS)              180       (779)     (1,007)    5,213
OTHER INCOME (EXPENSE):                                          
Equity in net losses of investee     (95)      —         (127)      —
Interest expense, net                (695)     (683)     (2,098)    (1,716)
Debt retirement costs                —         —         —          (112)
                                    (790)     (683)     (2,225)    (1,828)
INCOME (LOSS) FROM CONTINUING        (610)     (1,462)   (3,232)    3,385
OPERATIONS BEFORE INCOME TAXES
BENEFIT (PROVISION) FOR INCOME TAXES 368       559       1,266      (1,048)
NET INCOME (LOSS) FROM CONTINUING    (242)     (903)     (1,966)    2,337
OPERATIONS
NET INCOME FROM DISCONTINUED                                     
OPERATIONS:
Operating income, net of taxes       92        30        7          165
Gain on disposal, net of taxes      170       —         170        —
DISCONTINUED OPERATIONS              262       30        177        165
NET INCOME (LOSS)                    20        (873)     (1,789)    2,502
Less: income attributable to         (16)      —         (109)      —
noncontrolling interests
NET INCOME (LOSS) ATTRIBUTABLE TO    4         (873)     (1,898)    2,502
ADVOCAT INC.
PREFERRED STOCK DIVIDENDS            (86)      (86)      (258)      (258)
NET INCOME (LOSS) FOR ADVOCAT INC.   $(82)   $(959)  $(2,156) $2,244
COMMON SHAREHOLDERS
NET INCOME (LOSS) PER COMMON SHARE                               
FOR ADVOCAT INC. SHAREHOLDERS:
Per common share – basic                                         
Continuing operations                $(0.06) $(0.17) $(0.40)  $0.36
Discontinued operations              0.05      —         0.03       0.03
                                    $(0.01) $(0.17) $(0.37)  $0.39
Per common share – diluted                                       
Continuing operations                $(0.06) $(0.17) $(0.40)  $0.35
Discontinued operations              0.05      —         0.03       0.03
                                    $(0.01) $(0.17) $(0.37)  $0.38
COMMON STOCK DIVIDENDS DECLARED PER  $0.055  $0.055  $0.165   $0.165
SHARE OF COMMON STOCK
WEIGHTED AVERAGE COMMON SHARES                                   
OUTSTANDING:
Basic                                5,828     5,779     5,816      5,770
Diluted                              5,828     5,779     5,816      5,915


ADVOCAT INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
                                                        
            For the Three Months Ended
             September               March 31,   December    September
            30,         June 30,    2012        31,         30,
             2012        2012                    2011        2011
            (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income   $20       $(433)    $(1,375)  $(1,135)  $(873)
(loss)
Loss
(income)
from         (262)       (8)         92          (16)        (30)
discontinued
operations
Income tax   (368)       (170)       (728)       (611)       (559)
benefit
Interest     705         704         702         640         686
expense
Depreciation
and          1,776       1,770       1,762       1,777       1,577
amortization
EBITDA       1,871       1,863       453         655         801
                                                        
EBITDA                                                   
adjustments:
Separation
and related  57          102         484         67          1,159
costs (a)
Electronic
medical      0           0           0           332         300
records
costs(b)
New facility
start-up     606         648         376         214         76
negative
EBITDA(c)
Adjusted     $2,534    $2,613    $1,313    $1,268    $2,336
EBITDA
                                                        
(a) Represents the separation and related costs of Advocat Inc.             
(b) Represents non-recurring costs for implementation of our Electronic  
Medical Records in our skilled nursing centers
(c) Represents the negative EBITDA associated with the new facility and
venture start-ups of Advocat Inc. related primarily to the start-up of
our Rose Terrace nursing center in West Virginia, our new nursing center
in Clinton, Kentucky and Advocat Inc.'s pharmacy joint venture
partnership.


ADVOCAT INC.
RECONCILIATION OF NET INCOME (LOSS) FOR ADVOCAT INC. COMMON
SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS) FOR ADVOCAT INC. COMMON
SHAREHOLDERS
(In thousands, except per share data)
                                                           
            For the Three Months Ended
            September30, June30,    March31,   December31, September30,
             2012          2012        2012        2011         2011
            (Unaudited)   (Unaudited) (Unaudited) (Unaudited)  (Unaudited)
Net income
(loss) for
Advocat Inc. $(82)       $(534)    $(1,461)  $(1,221)   $(959)
Common
shareholders
Adjustments:                                                
Separation
and related  57            102         484         67           1,159
costs (a)
Electronic
medical      0             0           0           332          300
records
costs(b)
New facility
start-up     870           895         552         282          187
losses(c)
Tax impact
of above     (315)         (349)       (363)       (204)        (494)
adjustments
(d)
Adjusted Net
income
(loss) for   $530        $114      $(788)    $(744)     $193
Advocat Inc.
common
shareholders
                                                           
Adjusted Net
income
(loss) for                                                  
AdvocatInc.
common
shareholders
Basic        $0.09       $0.02     $(0.14)   $(0.13)    $0.03
Diluted      $0.09       $0.02     $(0.14)   $(0.13)    $0.03
                                                           
WEIGHTED
AVERAGE
COMMON                                                      
SHARES
OUTSTANDING
:
Basic        5,828         5,825       5,795       5,787        5,779
Diluted      5,946         5,915       5,795       5,787        5,931
                                                           
(a) Represents the separation and related costs of Advocat Inc.                   
(b) Represents non-recurring costs for implementation of our Electronic       
Medical Records in our skilled nursing centers
(c) Represents new facility and venture start-up losses incurred by Advocat
Inc. related primarily to the start-up of our Rose Terrace nursing center in
West Virginia, our new nursing center in Clinton, Kentucky and Advocat Inc.'s
pharmacy joint venture partnership.
(d) Represents tax provision for the cumulative adjustments for each period.      


ADVOCAT INC.
FUNDS PROVIDED BY OPERATIONS
(In thousands, except per share data)
                                                                 
                                      Three Months Ended Nine Months Ended
                                       September 30,      September 30,
                                      2012      2011     2012       2011
NET INCOME (LOSS)                      $20     $(873) $(1,789) $2,502
Discontinued operations                262       29       177        165
Net income (loss) from continuing      (242)     (902)    (1,966)    2,337
operations
Adjustments to reconcile net income
(loss) from continuing operations to                              
funds provided by operations:
Depreciation and amortization          1,776     1,578    5,308      4,589
Provision for doubtful accounts        695       470      2,377      1,607
Deferred income tax provision          563       865      (435)      1,938
(benefit)
Provision for self-insured
professional liability, net of cash    890       (270)    2,066      (342)
payments
Other                                  286       636      725        1,427
FUNDS PROVIDED BY OPERATIONS           $3,968  $2,377 $8,075   $11,556
                                                                 
FUNDS PROVIDED BY OPERATIONS PER                                  
COMMON SHARE:
Basic                                  $0.68   $0.41  $1.39    $2.00
Diluted                                $0.67   $0.40  $1.36    $1.95
WEIGHTED AVERAGE COMMON SHARES                                    
OUTSTANDING :
Basic                                  5,828     5,779    5,816      5,770
Diluted                                5,946     5,931    5,917      5,915

We have included certain financial measures in this press release, including
EBITDA, Adjusted EBITDA, Adjusted Net income (loss) for Advocat Inc. common
shareholders and Funds Provided by Operations which are "non-GAAP financial
measures" using accounting principles generally accepted in the United States
(GAAP) and using adjustments to GAAP (non-GAAP). These non-GAAP measures are
not measurements under GAAP. These measurements should be considered in
addition to, but not as a substitute for, the information contained in our
financial statements prepared in accordance with GAAP. We define EBITDA as net
income (loss) adjusted for loss (income) from discontinued operations, net
interest expense, income tax and depreciation and amortization. We define
Adjusted EBITDA as EBITDA adjusted for separation and related costs and
negative EBITDA of start-up facilities and business ventures. We define
Adjusted Net income (loss) for Advocat Inc. common shareholders as Net income
(loss) for Advocat Inc. common shareholders adjusted for separation and
related costs and start-up losses associated with our new facilities and
business ventures.

Our measurements of EBITDA, Adjusted EBITDA, Adjusted Net income (loss) for
Advocat Inc. common shareholders and Funds Provided by Operations may not be
comparable to similarly titled measures of other companies. We have included
information concerning EBITDA, Adjusted EBITDA, Adjusted Net income (loss) for
Advocat Inc. common shareholders and Funds Provided by Operations in this
press release because we believe that such information is used by certain
investors as measures of a company's historical performance. Management
believes that Adjusted EBITDA and Adjusted Net income (loss) for Advocat Inc.
common shareholders are important performance measurements because they
eliminate certain nonrecurring start-up losses and separation costs.
Management believes that Funds Provided by Operations is an important
performance measurement because it eliminates the effect of actuarial
assumptions on our professional liability reserves, includes the cash effect
of professional liability payments, and does not include the effects of
deferred taxes and other non-cash items. Our presentation of EBITDA, Adjusted
EBITDA, Adjusted Net income (loss) for Advocat Inc. common shareholders and
Funds Provided by Operations should not be construed as an inference that our
future results will be unaffected by unusual or nonrecurring items.

ADVOCAT INC.
SELECTED OPERATING STATISTICS
September 30, 2012
(Unaudited)
For the Three Months Ended September 30, 2012
         As of September            Occupancy (Note 2)                                   
          30, 2012
                                                                                              Medicaid
                             Skilled                                                 Medicare Room
Region                       Nursing                                                 Roomand and
(Note 1)                     Weighted                                2012           Board    Board
          Licensed Available Average  Licensed Available             Q3              Revenue  Revenue
          Nursing  Nursing   Daily    Nursing  Nursing  Medicare    Revenue         PPD     PPD
          Beds     Beds      Census   Beds     Beds      Utilization ($inmillions) (Note 3) (Note 3)
Alabama   790      783       720      91.1%    92.0%     15.8%       15.3            $424.2 $178.6
Arkansas  1,181    1,053     825      69.9%    78.3%     14.9%       15.5            387.0    164.1
Kentucky  759      745       740      97.5%    99.3%     13.3%       16.1            427.1    187.6
Tennessee 617      576       491      79.6%    85.2%     16.8%       9.2             403.3    140.8
Texas     1,859    1,669     1,304    70.1%    78.1%     9.4%        21.2            438.9    134.5
Total     5,206    4,826     4,080    78.4%    84.5%     13.2%       77.3            $416.4 $158.7
                                                                                     
Note1: The Alabama region includes nursing centers in Alabama and Florida.The Kentucky region
includes nursing centers in Ohio and West Virginia. The Tennessee region includes one nursing center
in Kentucky.
Note2: The number of Licensed Nursing Beds is based on the licensed capacity of the facility.The
Company has historically reported its occupancy based on licensed nursing beds.The number of
Available Nursing Beds represents licensed nursing beds less beds removed from service.Available
nursing beds is subject to change based upon the needs of the facilities, including configuration of
patient rooms, common usage areas and offices, status of beds (private, semi-private, ward, etc.) and
renovations.Occupancy is measured on a weighted average basis.Licensed Nursing Beds, Available
Nursing Beds, Skilled Nursing Weighted Average Daily Census and Occupancy excludes our recently opened
West Virginia and Kentucky nursing centers.The new nursing centers are licensed to operate by the
state of West Virginia and Kentucky and during the third quarter limited its number of patients while
we completed the Medicare and Medicaid certification process.
Note3: These Medicare and Medicaid revenue rates include room and board revenues but do not  
include any ancillary revenues related to these patients.

CONTACT: Company Contact:
         Kelly J. Gill
         Chief Executive Officer
         615-771-7575
        
         Investor Relations:
         Charles Lynch
         Westwicke Partners
         443-213-0504
 
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