Advocat Announces 2012 Fourth Quarter and Year End Results

Advocat Announces 2012 Fourth Quarter and Year End Results

Portfolio Expansion Activity Accelerates

BRENTWOOD, Tenn., March 7, 2013 (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 fourth quarter ended December
31, 2012. The Company reported a loss of $0.9 million or $0.16 per diluted
common share excluding separation costs and start-up losses, compared to a
loss of $0.7 million or $0.13 per diluted share in the year-ago period on the
same basis. On February 28, 2013, the Company declared a quarterly dividend of
5.5 cents per common share. The dividend will be paid April 12, 2013, to
shareholders of record on March 31, 2013.

Fourth Quarter 2012 Highlights

  *Adjusted EBITDA declined to $0.9 million compared to $1.3 million in the
    fourth quarter of 2011, primarily due to a $2.5 million addition to
    professional liability expenses during the fourth quarter of 2012 related
    to open and settled cases from current and prior periods. Adjusted EBITDA
    excludes losses from the startup of recently opened skilled nursing
    centers and separation expenses in both 2012 and 2011 and non-recurring
    Electronic Medical Record implementation costs in 2011.
    
  *Operating income improved to a loss of $0.9 million compared to an
    operating loss of $1.1 million in the fourth quarter of 2011.Operating
    income in the fourth quarter of 2012 includes the additional professional
    liability expenses recorded during the quarter.
    
  *Medicaid rates have continued to increase as we saw a 0.5% increase from
    the third quarter of 2012 and a 2.3% increase compared to last year's
    fourth quarter. We have experienced increased patient acuity levels and
    benefited from rate increases in certain states.
    
  *Managed Care census increased 20.3% compared to the fourth quarter 2011.
    
  *As previously reported, during the first quarter of 2013, the Company
    signed a definitive agreement to acquire five skilled nursing facilities
    in Kansas.We anticipate closing this transaction early in the second
    quarter of 2013.

CEO Remarks

Commenting on the results, Kelly Gill, Advocat's CEO, stated, "The fourth
quarter of 2012 represents the first operating quarter with an
apples-to-apples comparison related to our Medicare rates following the
implementation of the CMS Final Rule in October of 2011.While our Adjusted
EBITDA for the fourth quarter was negatively impacted by professional
liability expense, revenue increased and our operating expenses declined as a
percentage of revenue.Additionally, these results represent our ability to
adapt to reimbursement challenges by streamlining our corporate costs, as
evidenced by an absolute reduction in general and administrative expenses.I
am very pleased with our operational improvements throughout 2012 and believe
they position the Company well to generate additional growth in 2013.

"To that end, I am also pleased to have announced earlier this week our
definitive agreement to acquire five facilities in Kansas," Mr. Gill
continued."This transaction will represent our largest since embarking on a
portfolio-expansion strategy in 2011 and represents more than a 50% increase
in our owned facilities.I believe our ability not only to integrate
newly-acquired facilities successfully, but also to do so with limited
incremental corporate costs, has been proven through our acquisition activity
in 2012.We anticipate closing this transaction early in the second quarter of
2013 and that these new facilities will be accretive to our earnings this
year.It is also important to note that this transaction entails our taking
full ownership of these facilities, demonstrating our flexibility as relates
to acquisition structures as we continue to focus our efforts on growing our
portfolio."

Mr. Gill concluded, "As we look forward into 2013, we will continue to seek
opportunities both to deepen and to expand our operating footprint through the
addition of new facilities, while at the same time generating organic growth
through improvements in clinical capabilities and reinvestment in our
centers."

Other Highlights for the Fourth Quarter 2012

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

                                    Three Months Ended
                                    December 31,
                                    2012                 2011
Skilled nursing occupancy            76.8%^(1)            77.3%
As a percent of total census:                            
Medicare census                      12.8%                14.3%
Managed care census                  2.5%                 2.2%
As a percent of total revenues:                          
Medicare revenues                    29.2%                32.5%
Medicaid revenues                    53.5%                51.4%
Managed care revenues                4.9%                 4.3%
Average rate per day:                                    
Medicare                             $423.37            $414.17
Medicaid                             $159.50            $155.98
Managed care                         $361.81            $390.65
                                                        
^(1)^ Skilled nursing occupancy excludes our recently opened and leased West
Virginia and Kentucky nursing centers. Two of the newly opened nursing centers
are licensed to operate and are in the process of growing their occupancy as a
percentage of licensed beds.The Kentucky center we leased effective September
24, 2012 is also excluded from skilled nursing occupancy.

Patient Revenues

Patient revenues were $79.1 millionin 2012 and $76.4 million in 2011. The
increase is primarily a result of new facilities added in 2012 – one in West
Virginia and two in Kentucky.These facilities contributed $4.3 million of
revenue in the quarter.The West Virginia facility has completed the Medicaid
and Medicare certification process and is growing census.The 154 bed leased
facility in Louisville, Kentucky, was fully operational at the time the lease
commenced.

The average Medicaid rate per patient day for 2012 increased 2.3% compared to
2011, resulting in an increase in revenue of $0.9 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 increased 2.2% compared to 2011, resulting in a net
increase in revenue of $0.5 million.

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 run rate earnings in 2013. Our newly opened West Virginia
nursing center contributed $1.1 million in start-up and additional operating
expenses over the $0.2 million we experienced in 2011. Our newly leased
Kentucky nursing center in the reopening phase contributed $0.5 million in
additional operating costs. The recently leased 154-bed skilled nursing center
in Louisville, Kentucky, contributed $1.9 million in additional operating
costs.

Operating expense increased slightly to $61.7 million in 2012 from $60.4
million in 2011.While total operating expense increased by $1.3 million, the
three recently added nursing centers contributed $3.3 million of costs in 2012
not present in 2011. Operating expense decreased to 77.9% of revenue in 2012,
compared to 79.0% of revenue in 2011 due significantly to operational
efficiency improvements at the Company's facilities.

The largest component of operating expenses is wages, which with the addition
of the new centers described above, increased to $39.0 million in 2012 from
$38.1million in 2011, an increase of $0.9million, or 2.4%. 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 lower in 2012
compared to 2011. The Company is self-insured for the first $175,000 in claims
per employee each year. 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 $0.6 million in 2012 compared to
2011, driven significantly by the growth in Medicaid patients undergoing the
initial qualification process. Provider taxes increased $0.7 million primarily
as a result of Alabama's provider tax increase.

Professional liability expense was $4.9 million in 2012 compared to $3.4
million in 2011, an increase of $1.5 million. During the fourth quarter of
2012, we recorded as part of professional liability expense $2.5 million
related to adjustments for open and settled cases from current and prior
periods.Our cash expenditures for professional liability costs of continuing
operations were $3.0 million and $1.2 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 $5.5 million in 2012
compared to $6.2 million in 2011, an improvement of $0.7 million.We
experienced a $0.2 million decrease in implementation costs of Electronic
Medical Records, a $0.2 million decrease in bonus and stock based compensation
costs, travel costs were $0.1 million lower, and we saw a decrease in legal
costs of $0.2 million in 2012.

Facility Renovations

As of December 31, 2012, the Company has completed renovations at seventeen
facilities. We are developing plans for additional renovation projects. A
total of $25.8 million has been spent on the renovation program to date, with
$19.1 million financed through Omega Healthcare Investors Inc., $6.0 million
financed with internally generated cash, and $0.7 million financed with
long-term debt.

Conference Call Information

A conference call has been scheduled for Friday, March 8, 2013 at 8:00 A.M.
Central time (9:00 A.M. Eastern time) to discuss fourth quarter 2012 results.

The conference call information is as follows:

                
Date:            Friday, March 8, 2013
Time:            8:00 A.M. Central, 9:00 A.M. Eastern
Webcast Links:   www.advocatinc.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 March 14, 2013 by dialing 855.859.2056 (domestic) or
404.537.3406 (international) and entering Conference ID 12535401.

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, 2012, 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)
                                                                
                                                    December 31, December31,
                                                    2012         2011
ASSETS:                                                          
Current Assets                                                   
Cash and cash equivalents                            $5,938     $6,692
Receivables, net                                     29,117       25,787
Deferred income taxes                                5,305        6,041
Other current assets                                 6,496        6,800
Total current assets                                 46,856       45,320
                                                                
Property and equipment, net                          41,922       47,078
Deferred income taxes                                12,352       10,352
Acquired leasehold interest, net                     8,612        8,996
Other assets, net                                    5,221        4,998
TOTAL ASSETS                                         $114,963   $116,744
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY:                            
Current Liabilities                                              
Current portion of long-term debt and capitalized    $1,436     $1,131
lease obligations
Trade accounts payable                               4,460        3,871
Accrued expenses:                                                
Payroll and employee benefits                        11,837       13,475
Current portion of self-insurance reserves           9,175        8,470
Other current liabilities                            4,285        2,938
Total current liabilities                            31,193       29,885
Noncurrent Liabilities                                           
Long-term debt and capitalized lease obligations,    28,026       28,768
less current portion
Self-insurance reserves, less current portion        14,531       12,049
Other noncurrent liabilities                         17,544       18,155
Total noncurrent liabilities                         60,101       58,972
                                                                
PREFERRED STOCK                                      4,918        4,918
                                                                
SHAREHOLDERS' EQUITY                                 18,751       22,969
                                                                
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $114,963   $116,744
                                                                


ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                
                                  Three Months Ended    Twelve Months Ended
                                  December 31,          December 31,
                                  2012       2011       2012       2011
PATIENT REVENUES, net              $79,134  $76,416  $308,072 $309,467
EXPENSES:                                                        
Operating                          61,666     60,364     242,591    239,674
Lease and rent expense             6,236      5,761      23,930     22,939
Professional liability             4,899      3,413      11,964     10,466
General and administrative         5,466      6,225      24,419     25,589
Depreciation and amortization      1,735      1,776      7,043      6,365
Asset impairment                   —          —          —          344
Total expenses                     80,002     77,539     309,947    305,377
OPERATING INCOME (LOSS)            (868)      (1,123)    (1,875)    4,090
OTHER INCOME (EXPENSE):                                          
Equity in net losses of investee   (153)      —          (280)     —
Interest expense, net              (711)      (639)      (2,809)    (2,355)
Debt retirement costs              —          —          —          (112)
                                  (864)      (639)      (3,089)    (2,467)
INCOME (LOSS) FROM CONTINUING      (1,732)    (1,762)    (4,964)    1,623
OPERATIONS BEFORE INCOME TAXES
BENEFIT (PROVISION) FOR INCOME     481        611        1,747      (437)
TAXES
NET INCOME (LOSS) FROM CONTINUING  (1,251)    (1,151)    (3,217)    1,186
OPERATIONS
NET INCOME FROM DISCONTINUED                                     
OPERATIONS:
Operating income, net of taxes     116        16         123        181
Gain on disposal, net of taxes     4          —          174        —
DISCONTINUED OPERATIONS            120        16         297        181
NET INCOME (LOSS)                  (1,131)    (1,135)    (2,920)    1,367
Less: income attributable to       (17)       —          (126)      —
noncontrolling interests
NET INCOME (LOSS) ATTRIBUTABLE TO  (1,148)    (1,135)    (3,046)    1,367
ADVOCAT INC.
PREFERRED STOCK DIVIDENDS          (86)       (86)       (344)      (344)
NET INCOME (LOSS) FOR ADVOCAT INC. $(1,234) $(1,221) $(3,390) $1,023
COMMON SHAREHOLDERS
NET INCOME (LOSS) PER COMMON SHARE                               
FOR ADVOCAT INC. SHAREHOLDERS:
Per common share – basic                                         
Continuing operations              $ (0.23)  $ (0.21)  $ (0.63)  $ 0.15
Discontinued operations            0.02       —         0.05       0.03
                                  $ (0.21)  $ (0.21)  $ (0.58)  $ 0.18
Per common share – diluted                                       
Continuing operations              $(0.23)   $(0.21)   $(0.63)   $0.14
Discontinued operations            0.02       —          0.05       0.03
                                  $(0.21)  $(0.21)  $(0.58)  $0.17
COMMON STOCK DIVIDENDS DECLARED    $0.055   $0.055   $0.22     $0.22
PER SHARE OF COMMON STOCK
WEIGHTED AVERAGE COMMON SHARES                                   
OUTSTANDING:
Basic                              5,838      5,787      5,821      5,744
Diluted                            5,838      5,787      5,821      5,906
                                                                

                
ADVOCAT INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
                
                For the Three Months Ended
                 December 31, September   June 30,    March 31,   December 31,
                2012         30,         2012        2012        2011
                              2012
                (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income       $(1,131)   $20       $(433)    $(1,375)  $(1,135)
(loss)
Loss (income)
from             (120)        (262)       (8)         92          (16)
discontinued
operations
Income tax       (481)        (368)       (170)       (728)       (611)
benefit
Interest expense 712          705         704         702         640
Depreciation and 1,735        1,776       1,770       1,762       1,776
amortization
EBITDA           715          1,871       1,863       453         654
                                                             
EBITDA                                                        
adjustments:
Separation and
related costs    15           57          102         484         67
(a)
Electronic
medical records  0            0           0           0           332
costs(b)
New facility
start-up         150          606         648         376         214
negative
EBITDA(c)
Adjusted EBITDA  $880       $2,534    $2,613    $1,313    $1,267
                                                             
(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
              December 31,  September30, June 30,    March31,   December
               2012          2012          2012        2012        31, 2011
              (Unaudited)   (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Net income
(loss) for
Advocat Inc.   $(1,234)      $(82)         $(534)      $(1,539)    $(1,221)
Common
shareholders
Adjustments:                                                   
Separation and
related costs  15            57            102         484         67
(a)
Electronic
medical        0             0             0           0           332
records
costs(b)
New facility
start-up       426           870           895         552         282
losses(c)
Tax impact of
above          (150)         (315)         (349)       (363)       (204)
adjustments
(d)
Adjusted Net
income (loss)
for            $(943)        $530          $114        $(866)      $(744)
AdvocatInc.
common
shareholders
                                                              
Adjusted Net
income (loss)
for                                                            
AdvocatInc.
common
shareholders
Basic          $(0.16)       $0.09         $0.02       $(0.15)     $(0.13)
Diluted        $(0.16)       $0.09         $0.02       $(0.15)     $(0.13)
                                                              
WEIGHTED
AVERAGE COMMON                                                 
SHARES
OUTSTANDING :
Basic          5,838         5,828         5,825       5,795       5,787
Diluted        5,838         5,946         5,915       5,795       5,787
(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 Twelve Months Ended
                                        December 31,       December 31,
                                       2012     2011      2012      2011
NET INCOME (LOSS)                       $(1,131) $ (1,135) $(2,920)  $1,367
Discontinued operations                 120      16        297       181
Net income (loss) from continuing       (1,251)  (1,151)   (3,217)   1,186
operations
Adjustments to reconcile net income
(loss) from continuing operations to                              
funds provided by operations:
Depreciation and amortization           1,735    1,777     7,043     6,365
Provision for doubtful accounts         1,204    616       3,581     2,223
Deferred income tax provision (benefit) (976)    (1,137)   (1,411)   801
Provision for self-insured professional 1,723    1,915     3,789     1,573
liability, net of cash payments
Other                                   164      189       889       1,617
FUNDS PROVIDED BY OPERATIONS            $ 2,599  $ 2,209   $ 10,674  $ 13,765
                                                                 
FUNDS PROVIDED BY OPERATIONS PER COMMON                           
SHARE:
Basic                                   $ 0.45   $ 0.38    $ 1.83    $ 2.40
Diluted                                 $ 0.44   $ 0.38    $ 1 .80   $ 2.33
WEIGHTED AVERAGE COMMON SHARES                                    
OUTSTANDING :
Basic                                   5,838    5,787     5,821     5,744
Diluted                                 5,935    5,877     5,922     5,906

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. Funds Provided by Operations is defined as net income from
operating activities adjusted for the cash effect of professional liability
and other non-cash charges.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 tax benefit and other non-cash charges.

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
DECEMBER 31, 2012
(Unaudited)
For the Three Months Ended December 31, 2012
         As of December 31,         Occupancy (Note                                      
          2012                        2)
                                                                                      Medicare Medicaid
                             Skilled                                                  Room   Room
          Licensed Available Nursing  Licensed Available              2012           and      and
Region    Nursing  Nursing   Weighted Nursing  Nursing  Medicare     Q4              Board   Board
(Note 1)  Beds     Beds      Average  Beds     Beds     Utilization Revenue        Revenue Revenue
                             Daily                                    ($inmillions) PPD     PPD
                             Census                                                   (Note   (Note
                                                                                      3)       3)
Alabama   790      783       715      90.5%    91.3%     13.4%        14.7            $ 431.41 $ 172.25
Arkansas  1,181    1,053     828      70.1%    78.6%     15.4%        15.6            388.96   165.64
Kentucky  759      745       685      90.3%    91.9%     15.6%        18.6            429.02   189.78
Tennessee 617      576       478      77.5%    83.0%     17.1%        9.2             405.41   141.86
Texas     1,859    1,669     1,293    69.6%    77.5%     9.6%         21.0            459.55   133.96
Total     5,206    4,826     3,999    76.8%    82.9%     13.4%        79.1            $ 423.37 $ 159.50
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.
          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,
Note2:   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 fourth 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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