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AdCare Health Systems, Inc. Reports Financial Results for 2008

SPRINGFIELD, Ohio, March 31, 2009 /PRNewswire-FirstCall/ — AdCare Health Systems, Inc. (NYSE AMEX: ADK), an Ohio based long term care, home care and management company today reported financial results for its year ending December 31, 2008.

Revenues for the year ended December 31, 2008 were $24,793,294 as compared to $23,667,756 in 2007, an increase of $1,125,538 or 4.8%. The improvement was primarily due to increased rental charges at the Company’s assisted living and skilled nursing facilities, maintaining occupancy levels and the acquisition of the New Lincoln Lodge, a long term care facility located in Columbus, Ohio which also resulted in a gain of approximately of $414,000.

The loss from continuing operations for the year ended December 31, 2008 was $1,076,178 as compared to the loss from continuing operations of $627,552 for 2007, which resulted in an increase in the loss of $448,626. However, a majority of the loss in 2008 is attributable to non-cash charges for warrant and option expenses of $791,835. Approximately $210,000 was expensed as unamortized financing costs associated with the HUD refinancing of four long term care properties and $170,007 was accounted for as a deferred tax expense in connection with the Assured Home Health acquisition in 2005. Also, the Company accrued $162,000 in payroll expenses related to the retirement of the COO in September of last year. We anticipate that in 2009, non-cash charges should be significantly lower than in 2008.

The net loss for the year ended December 31, 2008 was $1,076,178 as compared to a loss of $218,928 for 2007. However, the 2007 loss was reduced by recognizing a gain of $619,605 on the sale of assets in discontinued operations. Basic and diluted net loss per share for 2008 was $0.28 as compared to a basic and diluted net loss per share of $0.05 for 2007. AdCare’s net cash flow from operations for 2008 was $439,442, compared with a net cash use of $107,337 in 2007.

David A. Tenwick, Chairman of AdCare, stated, “AdCare’s loss for 2008 was greatly affected by non-cash charges, unamortized financing and deferred tax expenses. The Company also took significant steps to position itself for a positive year in 2009. Despite the tightening credit market and deterioration of the economy in general, we were able to successfully refinance three of our assisted living facilities and one of our nursing homes with long term, non-recourse HUD financings, completing the expansion and rehabilitation of our 50-bed nursing home located in Greenfield, Ohio, acquiring the remaining ownership interests in our 30-unit assisted living facility located in Van Wert, Ohio and the acquisition of the New Lincoln Lodge. We believe this demonstrates that AdCare’s balance sheet is stronger than many of our larger competitors.” Mr. Tenwick further stated, “The home health division changed and implemented its business strategy in 2008 to concentrate its operations in programs with stronger profit margins while reducing participation in home health programs that generate little marginal profit.”

About AdCare Health Systems, Inc.

AdCare Health Systems, Inc. (NYSE Alternext US: ADK) develops, owns and manages assisted living facilities, nursing homes and retirement communities and provides home health care services. Prior to becoming a publicly traded company in November of 2006, AdCare operated as a private company for 18 years. AdCare’s 920 employees provide high-quality care for patients and residents residing in the 16 facilities that they manage, seven of which are assisted living facilities, six skilled nursing centers and three independent senior living communities. The Company has ownership interests in eight of those facilities. In the ever expanding marketplace of long term care, AdCare’s mission is to provide quality healthcare services to the elderly.