NOTE 19. ACQUISITIONS

Summary of 2012 Acquisitions

        During the year ended December 31, 2012, the Company acquired a total of eleven skilled nursing facilities and one assisted living facility described further below. The total purchase price for each acquisition is after final closing adjustments. The Company has incurred a total of $2.0 million of acquisition costs related to these acquisitions and has recorded the cost in the "Other Income (Expense)" section of the Consolidated Statements of Operations.

Eaglewood Care Center and Eaglewood Village

        On January 1, 2012, the Company acquired the Eaglewood Care Center, a skilled nursing facility and the Eaglewood Village facility, an assisted living facility each located in Springfield, Ohio. The total purchase price was $12.4 million.

Little Rock, Northridge and Woodland Hills

        On April 1, 2012, the Company acquired the Little Rock, Northridge and Woodland Hills facilities, three skilled nursing facilities located in Little Rock, Arkansas. The total purchase price was $27.2 million.

Abington Place

        On April 30, 2012, the Company acquired Abington Place, a skilled nursing facility located in Little Rock, Arkansas. The total purchase price was $3.6 million.

Glenvue Nursing Home

        On July 2, 2012, the Company acquired Glenvue Nursing, a skilled nursing facility located in Glennville, Georgia. The total purchase price was $8.2 million.

Quail Creek Health and Rehab

        On July 3, 2012, the Company acquired Quail Creek Health and Rehab a skilled nursing facility located in Oklahoma City, Oklahoma. The total purchase price was $6.2 million with assumed fair valued indebtedness of $3.2 million.

Companions Specialized Care Center

        On August 17, 2012, the Company acquired Companions Specialized Care Center, a skilled nursing facility located in Tulsa, Oklahoma. The total purchase price was $5.9 million.

Sumter Valley Nursing and Rehab

        On December 31, 2012, the Company acquired Sumter Valley Nursing and Rehab, a skilled nursing facility located in Sumter, South Carolina. The total purchase price was $5.6 million.

Georgetown Healthcare and Rehab

        On December 31, 2012, the Company acquired Georgetown Healthcare and Rehab, a skilled nursing facility located in Georgetown, South Carolina. The total purchase price was $4.2 million.

Northwest Nursing Center

        On December 31, 2012, the Company acquired Northwest Nursing Center, a skilled nursing facility located in Oklahoma City, Oklahoma. The total purchase price was $3.0 million.

Summary of 2011 Acquisitions

        During the year ended December 31, 2011, the Company has acquired a total of fifteen skilled nursing facilities and two assisted living facilities described further below. For the year ended December 31, 2011, the Company has incurred a total of approximately $2.3 million of acquisition costs net of approximately $1.1 million, net of bargain purchase gains for a net amount of $1.2 million in the "Other Income" section of the consolidated statements of operations. Acquisition costs include non-cash charges of $0.2 million from the issuance of 36,337 shares of common stock with a per share market value of $5.68. As discussed in Note 1, Acquisition Policy, in acquisitions of facilities in states where the acquired CON/bed licenses are not transferable from the facility acquired the fair value of the CON/bed licenses are classified together as building.

        All of our 2011 acquisitions were in conjunction with our growth strategy for acquiring nursing facilities and optimizing performance. The Company issued various notes to complete these transactions.

Mountain Trace

        On January 1, 2011, Mountain Trace Nursing ADK, LLC, a wholly owned subsidiary of AdCare, commenced operations of the Mountain Trace facility, a skilled nursing facility located in Sylva, North Carolina, which was acquired on December 31, 2010, for a purchase price of $6.2 million after final closing adjustments. In connection with the acquisition, the Company recognized a total gain of approximately $1.1 million, as the transaction resulted in a bargain purchase because the seller was motivated to sell the facility in order to retire and restructure the composition of their facilities in certain of the states in which they operate.

Autumn Breeze Healthcare Center, Southland Care Center and College Park Healthcare Center

        On April 29, 2011, Erin Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the Southland Care Center, a skilled nursing facility located in Dublin, Georgia. In addition, on April 29, 2011, Mt. Kenn Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the Autumn Breeze Healthcare Center, a skilled nursing facility located in Marietta, Georgia. On May 31, 2011, CP Property Holdings, LLC, a wholly owned subsidiary of AdCare, acquired the College Park Healthcare Center, a skilled nursing facility located in College Park, Georgia. The total purchase price for all three facilities was $17.9 million after final closing adjustments.

        Through separate Operations Transfer Agreements, the Company obtained control of Autumn Breeze Healthcare and Southland Care Center effective May 1, 2011. The Company had paid $0.5 million in earnest money upon entering the purchase agreement and an additional $0.4 million to extend the closing date to April 29, 2011. A final Operations Transfer Agreement allowed the Company to obtain control of the College Park Care Center effective June 1, 2011.

The Living Center, Kenwood Manor, Enid Senior Care, Betty Ann Nursing Center, and Grand Lake Villa ("Oklahoma VIE's")

        On August 1, 2011, five skilled nursing facilities located in Oklahoma, were purchased for an aggregate purchase price of $11.2 million, after closing adjustments by companies owned and operated by Christopher Brogdon, the Company's Vice Chairman and Chief Acquisition Officer, and others. These facilities are known as the Living Center, Kenwood Manor, Enid Senior Care, Betty Ann Nursing Center and Grand Lake Villa.

        Even though the Company does not have any equity interest in these facilities, the Company determined that it is a variable interest entity as the ownership entity does not have sufficient equity at risk. Given the related party relationship with Christopher Brogdon, the common shareholder and other variable interests, the Company determined that it is the primary beneficiary and consolidation of the facilities is required. The Company initially consolidated the Oklahoma VIE's on August 1, 2011, the date of acquisition and initial operations.

Homestead Manor, River Valley Center, Benton Manor, Heritage Park Center and Rose Nursing

        On September 1, 2011, the Company acquired and obtained effective control of four skilled nursing facilities and a corporate office building located in Arkansas. In addition, effective November 1, 2011, the Company acquired the rights to a leased skilled nursing facility located in Missouri. The total purchase price for all five facilities was $19.9 million after final closing adjustments.

Stone County Nursing and Rehabilitation and Stone County Residential Care Facility

        On November 30, 2011, the Company acquired and obtained effective control of one skilled nursing facility and one assisted living facility both located in Mountain View, Arkansas. The total purchase price was $4.3 million.

Unaudited Pro forma Financial Information

        The above acquisitions have been included in the consolidated financial statements since the dates of the acquisition. Combined revenue for all 2012 acquisitions since date of acquisition is $35.1 million and resulted in loss from operations of $0.3 million for the year ended December 31, 2012.

        The following table represents pro forma results of consolidated operations as if all of the 2012 acquisitions had occurred at the beginning of the earliest fiscal year being presented, after giving effect to certain adjustments.

        The forgoing pro forma information is not indicative of what the results of operations would have been if the acquisitions had actually occurred at the beginning of the periods presented and is not intended as a projection of future results or trends.