8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported)

November 6, 2014 (November 6, 2014)

Diversicare Healthcare Services, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-12996	62-1559667
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1621 Galleria Boulevard, Brentwood, TN 37027

(Address of Principal Executive Offices) (Zip Code)

(615) 771-7575

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 6, 2014, the Registrant announced its results of operations for the three-month and six-month periods ended September 30, 2014. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

The information furnished pursuant to Item 2.02 herein, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

NumberExhibit

99.1        Press release dated November 6, 2014.

99.2        Investor Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Diversicare Healthcare Services, Inc.

By:/s/ James R. McKnight, Jr.

James R. McKnight, Jr.

Chief Financial Officer

Date:    November 6, 2014

EX-99.1

   Company Contact:       Kelly J. Gill       Chief Executive Officer       615-771-7575          Investor Relations:             James R. McKnight, Jr.             Chief Financial Officer             615-771-7575

Diversicare Announces 2014 Third Quarter Results

Reports Record Revenue of $90.3 million and EBITDA of $3.1 million

BRENTWOOD, TN, (November 6, 2014) –Diversicare Healthcare Services, Inc. (NASDAQ: DVCR), a premier provider of long-term care services, today announced its results for the third quarter ended September 30, 2014. The Company's revenue grew to $90.3 million, an increase of 39.8% year-over-year.

On November 5, 2014, the Board of Directors declared a quarterly dividend of $0.055 per common share payable to shareholders of record as of December 31, 2014, to be paid on January 14, 2015.

Third Quarter 2014 Highlights

• Net revenue increased 39.8% to $90.3 million in the third quarter of 2014 from $64.6 million in the third quarter of 2013, primarily due to the operations of 17 nursing centers acquired during 2013 and 2014.

• Excluding professional liability expense, facility-level operating income increased 65.9% to $17.3 million in the third quarter of 2014 from $10.4 million in the third quarter of 2013.

• General and administrative expenses decreased as a percentage of revenues to 6.2% in the third quarter of 2014 from 7.7% in the third quarter of 2013.

• EBITDA increased to $3.1 million in the third quarter of 2014 compared to $(1.2) million in 2013.

CEO Remarks

Commenting on the results, Kelly Gill, Diversicare’s CEO, stated, “This quarter marks a full year after we initiated our restructuring activities in 2013, which included the expenses related to rightsizing our overhead structure in connection with our exit of Arkansas. Our results this quarter continue to demonstrate the substantial momentum we have created through our ongoing execution of our strategic initiatives. The results show record levels of revenue in excess of $90 million as well as strong EBITDA growth in excess of $4 million compared to last year."

Mr. Gill continued, “We take pride in the fact that we have been able to report these financial results while also continuing to drive our quality delivery metrics to industry-leading levels within our peer group. I believe this is a reflection of the effectiveness of our operating platform and on the capability of our operations team to implement our strategic plan while remaining focused on our core mission, which begins with improving every life we touch."

Other Highlights for the Third Quarter 2014

The following table summarizes key revenue and census statistics for continuing operations for each period. All financial information and statistics exclude the West Virginia nursing centers which have been classified as discontinued operations for all periods ended September 30, 2014.

	Three Months Ended September 30,
	2014			2013
Skilled nursing occupancy	77.2		%	75.1		%
As a percent of total census:
Medicare census	12.3		%	10.8		%
Managed Care census	3.4		%	2.9		%
As a percent of total revenues:
Medicare revenues	29.2		%	26.6		%
Medicaid revenues	48.6		%	54.6		%
Managed Care revenues	6.6		%	5.7		%
Average rate per day:
Medicare	$	446.75		$	429.23
Medicaid	$	161.43		$	156.85
Managed Care	$	384.45		$	379.52

Patient Revenues

Patient revenues were $90.3 million for the three months ended September 30, 2014, as compared to $64.6 million in the three months ended September 30, 2013. This increase is primarily attributable to the acquisition of new facilities during the period. The following table summarizes the revenue increases attributable to our portfolio growth (in thousands):

	Three Months Ended September 30,
	2014		2013		Change
Same-store revenue	$	61,709	$	57,514	$	4,195
2013 acquisition revenue	18,593		7,117		11,476
2014 acquisition revenue	10,029		—		10,029
Total revenue	$	90,331	$	64,631	$	25,700

The overall increase in revenue of $25.7 million is primarily attributable to revenue contributions from acquisition activity in 2013 of $11.5 million, as well as the $10.0 million contribution from the seven newly leased nursing centers in 2014.

The same-store revenues increased by $4.2 million in 2014 compared to the same period in 2013 primarily attributable to improved census. The largest driver for the increase in same-store revenues is the increase in Medicare census which increased 7.5% resulting in a $1.0 million increase in revenues for the three months ended September 30, 2014, as compared to the same period in 2013. Managed Care average daily census increased 18.5% resulting in a revenue increase at our same-store nursing centers of $0.6 million. Additionally, Medicaid census increased slightly in 2014 compared to the same period in 2013, resulting in an increase of $0.1 million to revenues. These increases were offset by a decline in private pay census during the period which resulted in a decrease of $0.5 million for the three months ended September 30, 2014 compared to the same period in 2013.

The average Medicare rate per patient day at same-store nursing centers for the three months ended September 30, 2014 increased 3.4% compared to the same period in 2013, resulting in an increase in revenue of $0.5 million. The average rate per day for Medicaid patients also increased during the period by 2.5% resulting in an increase in revenue of $0.8 million.

Expenses

Operating expense increased in the third quarter of 2014 to $73.0 million as compared to $54.2 million in the third quarter of 2013, driven primarily by the $9.1 million increase in operating costs attributable to the nursing center operations acquired in 2013, as well as $8.0 million of operating expense associated with the nursing center operations assumed in 2014. The following table summarizes the expense increases attributable to our portfolio growth (in thousands):

	Three Months Ended September 30,
	2014		2013		Change
Same-store operating expense	$	49,372	$	47,645	$	1,727
2013 acquisition expense	15,647		6,541		9,106
2014 acquisition expense	7,987		—		7,987
Total expense	$	73,006	$	54,186	$	18,820

Operating expense decreased as a percentage of revenue at 80.8% for the third quarter of 2014 as compared to 83.8% for the third quarter of 2013. The largest component of operating expenses is wages. Considering the aforementioned addition of the new centers, we experienced an increase to $42.9 million in the third quarter of 2014 as compared to $32.0 million in the third quarter of 2013, an increase of $10.9 million, or 34.2%. While wages increased overall, wages as a percentage of revenue decreased in the third quarter of 2014 to 47.5% as compared to 49.5% in the third quarter of 2013, a decrease of 2.0%.

Professional liability expense was $1.7 million in the third quarter of 2014 compared to $0.9 million in the third quarter of 2013, a increase of $0.8 million. We were engaged in 48 professional liability lawsuits as of September 30, 2014, compared to 54 as of December 31, 2013. Our quarterly cash expenditures for professional liability costs of continuing operations were $1.4 million and $0.9 million for 2014 and 2013, 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. See “Liquidity and Capital Resources” for further discussion of the accrual for professional liability.

General and administrative expense was $5.6 million in the third quarter of 2014 as compared to $5.0 million in the third quarter of 2013, an increase of $0.6 million, but decreased as a percentage of revenue from 7.7% in 2013 to 6.2% in 2014. The increase in general and administrative expense is primarily attributable to expansion of regional operating teams in new operating regions as a result of acquisition and growth.

Interest expense was $0.9 million in the third quarter of 2014 and 2013. The balance remained flat as the impact of the higher debt balances as a result of the amended Mortgage Loan was factored into both the prior and current years for the full quarter.

Receivables

Our net receivables balance increased $9.4 million to $42.1 million as of September 30, 2014, from $32.7 million as of December 31, 2013. The increase is primarily attributable to newly acquired facilities and increased census. The increase in receivables also includes $8.3 million in unbilled receivables as of September 30, 2014, compared to $5.1 million at December 31, 2013. These receivables are associated with our newly acquired nursing centers that are currently undergoing the Medicare and Medicaid change in ownership certification process.

Conference Call Information

A conference call has been scheduled for Friday, November 7, 2014 at 7:30 A.M. Central time (8:30 A.M. Eastern time) to discuss third quarter 2014 results.

The conference call information is as follows:

Date:	Friday, November 7, 2014
Time:	7:30 A.M. Central, 8:30 A.M. Eastern
Webcast Links:	www.DVCR.com
Dial in numbers:	877.340.2552 (domestic) or 253.237.1159 (International) The Operator will connect you to Diversicare’s Conference Call

A replay of the conference call will be accessible two hours after its completion through November 13, 2014, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) and entering Conference ID 25961473.

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 centers in Alabama, Kansas, Kentucky, Missouri, Ohio, and Indiana, our ability to increase census at our renovated centers, changes in governmental reimbursement, including the impact of the CMS final rule that has resulted in a reduction in Medicare reimbursement as of October 2012 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 state or Federal False Claims Acts, laws and regulations governing quality of care or other laws and regulations applicable to our business including laws governing reimbursement from government payors, 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 centers, 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 December 31, 2013, 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. Diversicare Healthcare Services, 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.

As of November 6, 2014, Diversicare provides long-term care services to patients in 52 skilled nursing and senior housing centers containing 6,321 licensed beds. For additional information about the Company, visit Diversicare's web site: www.DVCR.com.

-Financial Tables to Follow-

DIVERSICARE HEALTHCARE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2014		December 31, 2013
ASSETS:
Current Assets
Cash and cash equivalents	$	3,855	$	3,781
Receivables, net	42,067		32,658
Deferred income taxes	7,757		6,579
Other current assets	3,753		4,323
Total current assets of continuing operations	57,432		47,341
Current assets of discontinued operations	390		2,870
Total current assets	57,822		50,211
Property and equipment, net	44,917		54,043
Deferred income taxes	12,130		15,912
Acquired leasehold interest, net	7,940		8,228
Other assets, net	8,422		9,350
TOTAL ASSETS	$	131,231	$	137,744
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities
Current portion of long-term debt and capitalized lease obligations	$	7,208	$	4,549
Trade accounts payable	7,863		7,177
Accrued expenses:
Payroll and employee benefits	14,200		12,255
Current portion of self-insurance reserves	12,159		11,711
Other current liabilities	6,024		5,116
Total current liabilities of continuing operations	47,454		40,808
Current liabilities of discontinued operations	136		1,359
Total current liabilities	47,590		42,167
Noncurrent Liabilities
Long-term debt and capitalized lease obligations, less current portion	42,851		43,552
Self-insurance reserves, less current portion	15,378		16,375
Other noncurrent liabilities	13,875		15,214
Total noncurrent liabilities of continuing operations	72,104		75,141
Noncurrent liabilities of discontinued operations	—		5,952
Total noncurrent liabilities	72,104		81,093
PREFERRED STOCK	—		4,918
SHAREHOLDERS’ EQUITY	11,537		9,566
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	131,231	$	137,744

DIVERSICARE HEALTHCARE SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended September 30,
	2014			2013
PATIENT REVENUES, net	$	90,331		$	64,631
Operating expense	73,006			54,186
Facility-level operating income	17,325			10,445
EXPENSES:
Lease and rent expense	6,876			4,817
Professional liability	1,743			947
General and administrative	5,582			5,006
Depreciation and amortization	1,812			1,634
Restructuring	—			944
Total expenses less operating	16,013			13,348
OPERATING INCOME (LOSS)	1,312			(2,903		)
OTHER INCOME (EXPENSE):
Equity in net income (loss) of unconsolidated affiliate	(30		)	63
Interest expense, net	(916		)	(855		)
Debt retirement costs	—			—
	(946		)	(792		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	366			(3,695		)
BENEFIT (PROVISION) FOR INCOME TAXES	(147		)	1,374
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	219			(2,321		)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Operating income (loss), net of taxes	(585		)	(2,444		)
Gain on disposal	7,522			—
Taxes on gain on disposal	(3,009		)	—
DISCONTINUED OPERATIONS	3,928			(2,444		)
NET INCOME (LOSS)	4,147			(4,765		)
Less: Loss (income) attributable to noncontrolling interest	—			(17		)
NET INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC.	4,147			(4,782		)
PREFERRED STOCK DIVIDENDS	(48		)	(86		)
NET INCOME (LOSS) FOR DIVERSICARE HEALTHCARE SERVICES, INC. COMMON SHAREHOLDERS	$	4,099		$	(4,868	)
NET INCOME (LOSS) PER COMMON SHARE FOR DIVERSICARE HEALTHCARE SERVICES, INC. SHAREHOLDERS:
Per common share – basic
Continuing operations	$	0.03		$	(0.41	)
Discontinued operations	0.65			(0.42		)
	$	0.68		$	(0.83	)
Per common share – diluted
Continuing operations	$	0.03		$	(0.41	)
Discontinued operations	0.63			(0.42		)
	$	0.66		$	(0.83	)
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.055		$	0.055
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	6,020			5,892
Diluted	6,248			5,892

DIVERSICARE HEALTHCARE SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Nine Months Ended September 30,
	2014			2013
PATIENT REVENUES, net	$	250,443		$	184,558
Operating expense	200,517			152,014
Facility-level operating income	49,926			32,544
EXPENSES:
Lease and rent expense	19,094			14,398
Professional liability	5,360			4,212
General and administrative	16,077			15,769
Depreciation and amortization	5,252			4,572
Restructuring	—			944
Total expenses less operating	45,783			39,895
OPERATING INCOME (LOSS)	4,143			(7,351		)
OTHER INCOME (EXPENSE):
Equity in net income (loss) of unconsolidated affiliate	(89		)	(152		)
Interest expense, net	(2,757		)	(2,140		)
Debt retirement costs	—			(320		)
	(2,846		)	(2,612		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	1,297			(9,963		)
BENEFIT (PROVISION) FOR INCOME TAXES	(538		)	3,947
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	759			(6,016		)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Operating income (loss), net of taxes	(1,069		)	(1,875		)
Gain on disposal	7,522			—
Taxes on gain on disposal	(3,009		)	—
DISCONTINUED OPERATIONS	3,444			(1,875		)
NET INCOME (LOSS)	4,203			(7,891		)
Less: Loss (income) attributable to noncontrolling interest	25			(51		)
NET INCOME (LOSS) ATTRIBUTABLE TO DIVERSICARE HEALTHCARE SERVICES, INC.	4,228			(7,942		)
PREFERRED STOCK DIVIDENDS	(220		)	(258		)
NET INCOME (LOSS) FOR DIVERSICARE HEALTHCARE SERVICES, INC. COMMON SHAREHOLDERS	$	4,008		$	(8,200	)
NET INCOME (LOSS) PER COMMON SHARE FOR DIVERSICARE HEALTHCARE SERVICES, INC. SHAREHOLDERS:
Per common share – basic
Continuing operations	$	0.09		$	(1.07	)
Discontinued operations	0.57			(0.32		)
	$	0.66		$	(1.39	)
Per common share – diluted
Continuing operations	$	0.09		$	(1.07	)
Discontinued operations	0.56			(0.32		)
	$	0.65		$	(1.39	)
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.165		$	0.165
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	6,004			5,878
Diluted	6,171			5,878

DIVERSICARE HEALTHCARE SERVICES, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

	September 30, 2014			June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net income (loss)	4,147			1,101			$	(1,045	)	$	(571	)	$	(4,765	)
Loss (income) from discontinued operations, net of tax	(3,928		)	(128		)	612			(352		)	2,444
Income tax provision (benefit)	147			754			(365		)	52			(1,374		)
Interest expense	916			949			892			891			855
Depreciation and amortization	1,812			1,705			1,735			1,792			1,634
EBITDA	3,094			4,381			1,829			1,812			(1,206		)
EBITDA adjustments:
Acquisition related costs (a)	124			207			110			104			123
Facility start-up negative EBITDA (b)	—			—			—			—			115
Restructuring costs (c)	—			—			—			502			944
Adjusted EBITDA	$	3,218		$	4,588		$	1,939		$	2,418		$	(24	)

(a)	Represents non-recurring costs associated with acquisition-related transactions.
(b)	Represents new facility and venture start-up losses incurred by Diversicare Healthcare Services, Inc. related primarily to the start-up of our new nursing center in Clinton, Kentucky, our five newly acquired Kansas facilities, and Diversicare Healthcare Services, Inc.’s pharmacy joint venture partnership.
(c)	Represents non-recurring restructuring costs associated with the disposition of Arkansas.

DIVERSICARE HEALTHCARE SERVICES, INC.

RECONCILIATION OF NET INCOME (LOSS) FOR DIVERSICARE HEALTHCARE

SERVICES, INC. COMMON SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS)

FOR DIVERSICARE HEALTHCARE SERVICES, INC. COMMON SHAREHOLDERS

(In thousands, except per share data)

	For Three Months Ended
	September 30, 2014			June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013
Net income (loss) for Diversicare Healthcare Services, Inc. Common shareholders	$	4,099		$	1,015		$	(1,106	)	$	(679	)	$	(4,868	)
Adjustments:
Acquisition related costs (a)	124			207			110			104			123
New facility start-up losses (b)	—			—			—			—			115
Restructuring costs (c)	—			—			—			502			944
Tax impact of above adjustments (d)	(43		)	(73		)	(38		)	(211		)	(414		)
Discontinued operations, net of tax	(3,928		)	(128		)	612			(352		)	2,444
Adjusted net income (loss) for Diversicare Healthcare Services, Inc. common shareholders	$	252		$	1,021		$	(422	)	$	(636	)	$	(1,656	)
Adjusted net income (loss) for Diversicare Healthcare Services, Inc. common shareholders
Basic	$	0.04		$	0.17		$	(0.07	)	$	(0.11	)	$	(0.28	)
Diluted	$	0.04		$	0.17		$	(0.07	)	$	(0.11	)	$	(0.28	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING :
Basic	6,020			6,015			5,975			5,960			5,892
Diluted	6,248			6,181			5,975			5,960			5,892

(a)	Represents non-recurring costs associated with acquisition-related transactions.
(b)	Represents new facility and venture start-up losses incurred by Diversicare Healthcare Services, Inc. related primarily to the start-up of our new nursing center in Clinton, Kentucky, our five newly acquired Kansas facilities, and Diversicare Healthcare Services, Inc.’s pharmacy joint venture partnership.
(c)	Represents non-recurring restructuring costs associated with the disposition of Arkansas.
(d)	Represents tax provision for the cumulative adjustments for each period.

DIVERSICARE HEALTHCARE SERVICES, INC.

FUNDS PROVIDED BY OPERATIONS

(In thousands, except per share data)

	Nine Months Ended September 30,
	2014			2013
NET INCOME (LOSS)	$	4,203		$	(7,891	)
Discontinued operations	3,444			(1,875		)
Net income (loss) from continuing operations	759			(6,016		)
Adjustments to reconcile net income (loss) from continuing operations to funds provided by operations:
Depreciation and amortization	5,252			4,572
Provision for doubtful accounts	4,235			2,785
Deferred income tax provision (benefit)	(467		)	(4,214		)
Provision for self-insured professional liability, net of cash payments	815			660
Stock based compensation	441			809
Equity in net losses of unconsolidated affiliate	88			(99		)
Debt retirement costs	—			320
Other	(468		)	(182		)
FUNDS PROVIDED BY OPERATIONS	$	10,655		$	(1,365	)
FUNDS PROVIDED BY OPERATIONS PER COMMON SHARE:
Basic	$	1.77		$	(0.23	)
Diluted	$	1.73		$	(0.23	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING :
Basic	6,004			5,878
Diluted	6,171			5,878

We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, Adjusted Net income (loss) for Diversicare Healthcare Services, 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 Diversicare Healthcare Services, Inc. common shareholders as Net income (loss) for Diversicare Healthcare Services, 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 Diversicare Healthcare Services, 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 Diversicare Healthcare Services, 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 Diversicare Healthcare Services, 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 Diversicare Healthcare Services, 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.

DIVERSICARE HEALTHCARE SERVICES, INC. SELECTED OPERATING STATISTICS (Unaudited)
Three Months Ended September 30, 2014
			As of September 30, 2014			Occupancy (Note 2)
Region (Note 1)			Licensed Nursing Beds (4)	Available Nursing Beds (4)	Skilled Nursing Weighted Average Daily Census	Licensed Nursing Beds		Available  Nursing  Beds		Medicare  Utilization		2014 Q3  Revenue ($ in millions)		Medicare  Room  and  Board  Revenue  PPD  (Note 3)		Medicaid  Room  and  Board  Revenue  PPD  (Note 3)
Alabama			925	917	823	89.0	%	89.7	%	14.3	%	17.7		$	442.10	$	172.03
Kansas			757	752	597	78.9	%	79.4	%	11.3	%	11.0		419.22		148.40
Kentucky			1,101	1,087	951	86.4	%	87.5	%	14.3	%	21.5		449.71		183.59
Ohio			426	426	298	78.8	%	78.8	%	11.3	%	8.0		475.55		181.43
Tennessee			705	651	489	69.4	%	75.1	%	15.0	%	9.8		408.62		161.14
Texas			1,849	1,726	1,256	67.9	%	72.8	%	9.2	%	22.3		479.96		139.87
Total			5,763	5,559	4,414	77.2	%	80.1	%	12.3	%	$	90.3	$	446.75	$	161.43
	Note 1:	The Alabama region includes nursing centers in Alabama and Florida. The Kentucky region includes one nursing center in Ohio and one in Indiana. The Tennessee region includes one nursing center in Kentucky. The Kansas Region includes three nursing centers in Missouri.
	Note 2:	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, and excludes a limited number of assisted living, independent living, and personal care 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.
	Note 3:	These Medicare and Medicaid revenue rates include room and board revenues, but do not include any ancillary revenues related to these patients.
	Note 4:	The Licensed and Available Nursing Bed counts above include only licensed and available SNF beds.

###

EX-99.2

Investor Update As of September 30, 2014

Forward-Looking Statements Forward-looking statements made in this presentation involve a number of risks and uncertainties, but not limited to, our ability to successfully operate the new nursing centers in Alabama, Kansas, Kentucky, Missouri, Ohio, and Indiana, our ability to increase patients served at our renovated centers, changes in governmental reimbursement, 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 state or Federal False Claims Acts, laws and regulations governing quality of care or other laws and regulations applicable to our business including laws governing reimbursement from government payers, 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 centers, 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 December 31, 2013, as well as in other filings with the Securities and Exchange Commission, which readers are encouraged to review for further disclosure of other factors that could cause actual results to differ materially from those indicated in the forward-looking statements. 2

• Joined Diversicare in 2013 as COO • 20+ years of experience in the LTC industry • Previous senior leadership positions at: ‒ Golden Living Senior Leadership 3 • Joined Diversicare In 2012 As CFO • 10 Years Of Senior Finance Positions In The Healthcare Industry • Previous Senior Leadership Positions At: ‒ NuscriptRX ‒ Take Care Health Systems ‒ I-TRAX, Inc. (CHD Meridian) • Joined Diversicare In 2010 • 25 Years+ Of Experience In The LTC Industry • Previous Senior Leadership Positions At: ‒ Beverly ‒ Living Centers Of America ‒ Skilled Healthcare • SNF – Rehab - Hospice Jay McKnight Chief Financial Officer Kelly Gill CEO, President & Director Leslie Campbell Chief Operating Officer

Investment Highlights Leading Skilled Nursing Provider Compelling Demographic Trends Management’s Strategic Vision Yielding Results Improving Patient Quality Measures, Census And Skilled Mix Demonstrated Ability To Grow And Enhance Portfolio Positively Trending Financial Results 4

Diversicare At A Glance FY13 Revenue $260M – Q3 FY14 Annualized Run Rate $361M 50 SNF’s, 1 ALF - 6,229 Licensed Beds - 9 States Headquartered In Brentwood, TN 5 NE CO OK LA FL (1) IA IL KS (5) OH (6) IN (1) MO (3) AR KY (11) TN (5) PA MS AL (6) SC NC GA VA WV TX (13)

Compelling Industry Demographics 6 • SNF’s - The Low Cost Provider Of Institutional Post-acute Care • Long Term Care Spending Continues To Increase ‒ Medicare And Medicaid Expenditures For SNF’s Expected To Grow 84% From 2011 To 2021 ‒ Annual Spending On Older Adults Is Expected To Increase By 250% By 2040 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 1980 1990 2000 2010 2020 2030 2040 2050 Age 85 and older Age 60 and older Age 65 and older Raising Demand Seniors As A Percentage Of Total US Population Stable Supply Number Of Certified Nursing Facilities 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Kaiser Family Foundation Source: Department of Health and Human Services Between 2010 – 2050 US Population Over 65 Is Projected To Double From 40.2 To 88.5 Million

Core Foundation Activities Investments Made In Internal Improvements And Scalability Position Diversicare For External Growth 7 2010 Today Expanded Focus Now On Portfolio Growth Phase 1 & Ongoing Phase 2 Platform Development Operational Improvement Facility Renovations

Results: Improved Patient Mix Medicare Average Daily Census Managed Care Average Daily Census 8 300 350 400 450 500 550 600 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 383 382 374 441 500 563 544 40 60 80 100 120 140 160 180 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 110 89 100 114 150 138 152 Skilled Care and Marketing Initiatives: • 24 Hour RN Coverage With Specialized Clinical Capability • Clinical Programs Drives Higher Acuity And Favorable Reimbursement Trends • Facility Based Sales Representatives Deploy Centrally Managed Business Development Activities • Clinical Programs Can Be Customized For Physician Needs

$380 $400 $420 $440 $460 $480 $500 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 394.23 446.75 Results: Rate Increases Driven By Higher Acuity Medicare Rate Per Day 9 Note: 2012 and prior have not been restated for the West Virginia disposition. A B A – Represents the CMS Final Rule fluctuation issued in October 2010 lasting through Q3 2011. B – Driven by 2% decrease in rates as a result of sequestration beginning April 1, 2013. • Medicare Rate Growth Driven By Acuity • 13.3% Increase From Q3 ‘10 To Q3 ‘14

$145 $150 $155 $160 $165 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 147.93 161.43 Results: Rate Increases Driven By Higher Acuity Medicaid Rate Per Day 10 • Medicaid Rates Driven By Acuity • 9.1% Increase From Q3 ‘10 To Q3 ‘14 Note: 2012 and prior have not been restated for the West Virginia disposition.

Results: Improving G&A Leverage 11 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 G&A Expense as a % of Revenue  Continued G&A Reduction Efforts In Place  Right Sized Overhead Structure For New Portfolio  Centralized Core Functions To Leverage Skilled Teams  Savings From G&A Reductions Funded Strategic Investments  G&A Increased In First Half ‘13 Due To Acquisition Activity

Revenue Growth and Cost Management Revenue Growth Through Acquisitions Facility-Level Margins Improving G&A Growth In Early ‘13 Due To Acquisition Scalability: Downward Trend Despite M&A Costs 12

Results: Improved Quality Measures 13 12.5% 18.8% 31.3% 16.7% 12.5% 0.0% 4.0% 6.0% 30.0% 60.0% 0% 10% 20% 30% 40% 50% 60% 70% 1 Star 2 Star 3 Star 4 Star 5 Star December 2008 September 2014 Five Star Awards – Quality Measures 90.0% Of Diversicare Centers Were Rated 4 Or 5 Star In Terms Of Quality Measures Compared To 29.2% As Of December 2008

Results: Platform Upgrades Implement an Electronic Medical Record (EMR) Solution Centralization of Key Processes People – Processes – Resources 14 Goal is to Position Company for Rapid Growth

Continue To Enhance Existing Portfolio 15 Continual Improvement Of Quality Measures Continue to Drive Volume Of Patients Served Improve Skilled Mix / Provide High-Acuity Services Ongoing Renovation Of Facilities

Portfolio Growth Is Now Added Focus Active Pipeline And Buyer-Friendly Market Target 5-10 New Facilities Per Year Expanded Operating Infrastructure = Scalability Flexibility On Structure = Several Sources Of Financial Capacity 16

Results: Quarterly Revenue Trends 17 * Same-store Group Represents All Centers Not Included In Respective Acquisition Groups Above. Does Not Include New Acquisitions Finalized Subsequent To Q3 2014. Qu ar terly R ev en u e (milli o n s)

Q3 2014 vs. Q2 2014 (in millions) Q3 ’14 Q2 ’14 Q3 ’14 Q2 ’14 Q3 ’14 Q2 ’14 2014 Acquisitions (7) $10.0 $3.3 $8.0 $2.3 $2.0 $1.0 2013 Acquisitions (10) $18.6 $18.6 $15.6 $15.3 $3.0 $3.3 Total for all acquisitions $28.6 $21.9 $23.6 $17.6 $5.0 $4.3 Same-store group* $61.7 $60.4 $49.4 $47.1 $12.3 $13.3 Consolidated total $90.3 $82.3 $73.0 $64.7 $17.3 $17.6 Revenue Operating Expense Operating Margin Results: New Centers And Same-Store 18 *Same-Store Group Represents All Nursing Centers Not Included In The Respective Acquisition Groups Above.

Results: Impact Of New Centers 19 Most Acquisitions Are Accretive To Earnings Within A Quarter Of Acquisitions Date – The Exceptions Being Development Opportunities Like Rose Terrace & Clinton, KY Demonstrated Platform Scalability By Increasing Revenues With A Resulting Reduction in G&A Expense As Percentage Of Revenue New Facility Integration, Including EMR, Implemented During The First Quarter Of Operations At New Facilities

Deepen and Expand Existing Footprint 20 Today 2010 • Portfolio Has Grown By 65% After Divestitures • Enhanced % Of Owned Facilities From 20% In 2010 To 25% Today • Exited Arkansas • Exited West Virginia • Entered Missouri, Kansas, and Indiana • Added Facilities in Ohio, Alabama, and Kentucky

Flexible Acquisition Structures Broaden Pipeline • Full Ownership Of Assets • Participate In Value Appreciation • Enhance Facility Ownership Fee-Simple Acquisition • Minimal Capital Required • Leverage Turnaround Capabilities • Leverage Strong REIT Relationships Assumption Of Leases 21 2010 Today 20% 25% 80% 75%

Key Financial and Operating Statistics Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Average Daily Census 3,460 3,880 3,986 4,090 4,414 Total Average Daily Census – Medicare & Managed Care 474 555 650 701 696 Skilled Mix % 13.7% 14.3% 16.3% 17.1% 15.7% Occupancy (Available Beds) 80.5% 80.3% 80.3% 81.3% 81.3% Medicare Rate Per Day $429.23 $435.63 $437.64 $438.46 $446.75 Medicaid Rate Per Day $156.85 $158.51 $157.83 $158.47 $161.43 Revenue (Millions) $64.6 $75.7 $77.8 $82.3 $90.3 Facility Level Operating Profit $10.4 $14.6 $15.0 $17.6 $17.3 G&A % of Revenue 7.7% 6.8% 6.6% 6.5% 6.2% Adjusted EBITDAR $4.8 $8.1 $7.9 $10.8 $10.1 Adjusted EBITDA $(0.1) $2.4 $1.9 $4.6 $3.2 22

Investment Highlights Leading Skilled Nursing Provider Compelling Demographic Trends Management’s Strategic Vision Yielding Results Improving Patient Quality Measures, Census and Skilled Mix Attractive Opportunity to Grow Portfolio Positively Trending Financial Results 23

Appendix A: Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR 24 (a) Represents the separation and related costs of Diversicare Healthcare Services, Inc. (b) Represents non-recurring costs associated with acquisition-related transactions. (c) Represents the negative EBITDA associated with the new facility and venture start-ups of Diversicare Healthcare Services, Inc. (d) Represents non-recurring restructuring costs associated with the disposition of Arkansas. Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income (loss) (4,765)$ (571)$ (1,045)$ 1,101 4,147 Loss (income) from discontinued operations 2,444 (352) 612 (128) (3,928) Income tax provision (benefit) (1,374) 52 (365) 754 147 Interest expense 855 891 892 949 916 Depreciation 1,634 1,792 1,735 1,705 1,812 EBITDA (1,206) 1,812 1,829 4,381 3,094 EBITDA adjustments: Separation and related costs (a) - - - - - Acquisition related costs (b) 123 104 110 207 124 New facility start-up negative EBITDA (c) 115 - - - - Restructuring (d) 944 502 - - - Adjusted EBITDA (24) 2,418 1,939 4,588 3,218 Add: lease expense 4,817 5,644 5,967 6,251 6,876 Adjusted EBITDAR 4,793$ 8,062$ 7,906$ 10,839 10,094