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 3, 2016 (November 3, 2016)

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 Operation and Financial Condition.

On November 3, 2016, the Registrant announced its results of operation for the three-month and nine-month periods ended September 30, 2016. 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 7.01. Regulation FD Disclosure.

The Registrant is furnishing its Investor presentation update for the period ended September 30, 2016, which is also contained on its website, DVCR.com. See Exhibit 99.2 to this Current Report of Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

NumberExhibit

99.1        Press release dated November 3, 2016

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 3, 2016

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 2016 Third Quarter Results

And Completes Acquisition of 22 Facilities in Mississippi and Alabama

BRENTWOOD, TN, (November 3, 2016) –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, 2016.

On October 27, 2016, the Board of Directors declared a quarterly dividend of $0.055 per common share payable to shareholders of record as of December 31, 2016, to be paid on January 13, 2017.

Acquisition Highlights

• The Company assumed operations of 22 facilities in Mississippi (10) and Alabama (12) previously operated by Golden Living, effective October 1 and November 1, 2016, respectively. The acquisition provides for a broad expansion of the Company's presence in Alabama and entrance into Mississippi.

• The portfolio is expected to contribute in excess of $185 million in annual revenues.

• Completion of this transaction increases our number of nursing centers operated to 76 and 8,453 skilled nursing beds.

Third Quarter 2016 Highlights

• Net revenue decreased 0.8% to $97.3 million in the third quarter of 2016 from $98.1 million in the third quarter of 2015 primarily attributable to the decline in skilled patient mix and occupancy.

• Net income decreased from $0.4 million in the third quarter of 2015 to a net loss of $1.0 million in the third quarter of 2016.

• The third quarter results include non-recurring acquisition expenses totaling $0.5 million. Adjusting for these items, Adjusted EBITDA of $2.2 million is reported for the quarter.

See below for a reconciliation of all GAAP and non-GAAP financial results.

CEO Remarks

Commenting on the results, Kelly Gill, Diversicare’s CEO, stated, “We are excited about our expanded presence in the state of Alabama which builds upon our entrance into the state of Mississippi last month. The combined addition of 22 centers now brings our total facility count to 76. In preparation for this sizable growth we made considerable strategic investments in our technology platform, which not only enables us to assimilate a portfolio of this scale, but also prepares us to continue our growth path in the years ahead. Since beginning our acquisition phase in the fall of 2013, we now have acquired 46 properties.

Mr. Gill continued, "While we have focused on completing this significant transaction, we have also remained mindful of the centers in our legacy portfolio. For the 2nd consecutive year, these centers have continued to provide industry-leading outcomes of Quality Measures under the CMS 5 Star system and are ranked #1 nationally as compared to our peer group. While quality of care outcomes is extremely important to our performance metrics, we also understand this continued to be a challenging quarter financially due to the softening of our skilled patient mix as well as the cost associated with the completion of the Golden Living transaction. Our skillful and dedicated operational leaders understand these challenges and are focused on improving financial performance by sharing my belief that being the industry leader in quality of care outcomes is the best and most sure pathway to being the preferred referral destination in each of the markets we serve."

Third Quarter 2016 Results

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

	Three Months Ended September 30,
	2016			2015
Skilled nursing occupancy	78.1		%	77.5		%
As a percent of total census:
Medicare census	11.4		%	11.9		%
Medicaid census	68.1		%	67.6		%
Managed Care census	3.5		%	3.7		%
As a percent of total revenues:
Medicare revenues	27.2		%	27.9		%
Medicaid revenues	50.4		%	49.9		%
Managed Care revenues	6.9		%	6.9		%
Average rate per day:
Medicare	$	455.69		$	452.48
Medicaid	$	169.51		$	168.12
Managed Care	$	388.25		$	382.52

Patient Revenues

Patient revenues were $97.3 millionand$98.1 millionfor the three months endedSeptember 30, 2016and2015, respectively, a decrease of $0.8 million. The following table summarizes the revenue fluctuations attributable to our portfolio growth (in thousands):

	Three Months Ended September 30,
	2016		2015		Change
Same-store revenue	$	93,041	$	95,307	$	(2,266	)
2015 acquisition revenue	4,272		2,798		1,474
Total revenue	$	97,313	$	98,105	$	(792	)

The overall decrease in revenues of $0.8 million is primarily driven by a decrease in our same-store centers. Declines in census related to Medicare, Medicaid and Managed Care payors resulted in decreased patient revenues by $1.7 million, $0.8 million and $0.5 million, respectively, or 7.6%, 1.8% and 8.0%, respectively. This was partially offset by an increase in Private and Medicaid payor rates, which generated additional revenues of $0.2 million and $0.3 million, respectively, or 2.6% and 0.7%, respectively.

The same-store revenue decrease was offset by incremental contributions from acquisition activity in 2015 of $1.5 million from our centers in Hutchinson, KS, Glasgow, KY, and Fulton, KY.

Expenses

Operating expense increased in the third quarter of 2016 to $79.4 million as compared to $78.5 million in the third quarter of 2015. The following table summarizes the expense increases attributable to our portfolio growth (in thousands):

	Three Months Ended September 30,
	2016		2015		Change
Same-store operating expense	$	76,067	$	76,081	$	(14	)
2015 acquisition expense	3,374		2,420		954
Total expense	$	79,441	$	78,501	$	940

Operating expense increased as a percentage of revenue at 81.6% for the third quarter of 2016 as compared to 80.0% for the third quarter of 2015. The increase is driven primarily by the $1.0 million increase in operating costs attributable to the nursing center operations acquired in 2015.

While the $0.9 million increase in operating expenses is attributable to the incremental operating expenses from the 2015 acquisitions, the same store nursing centers experienced a slight decrease in operating expenses during the third quarter of 2016 as compared to the third quarter of 2015. The health insurance premiums and wages increased for the same-store centers by $0.3 million and $0.4 million, respectively. Conversely, the same-store centers' nursing and ancillary costs decreased by $0.5 million and dietary costs decreased by $0.2 million in the third quarter of 2016 as compared to the third quarter of 2015.

Lease expense decreased in the third quarter of 2016 to $6.9 million as compared to $7.2 million in the third quarter of 2015. The decrease in lease expense was primarily attributable to the purchase of Clinton and Hutchinson in February 2016, and termination of the Avon, Ohio lease in May 2016.

Professional liability expense was $2.0 million and $2.1 million in the third quarters of 2016 and 2015, respectively. Our cash expenditures for professional liability costs of continuing operations were $1.2 million and $1.7 million for the third quarters of 2016 and 2015, 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 $7.4 million in the third quarter of 2016 as compared to $6.4 million in the third quarter of 2015, an increase of $1.0 million, and increased as a percentage of revenue from 6.5% in 2015 to 7.6% in 2016. The increase in general and administrative expense is primarily attributable to an increase in legal and consulting fees by $0.7 million and $0.2 million, respectively, in the third quarter of 2016 compared to the third quarter of 2015, related to acquisition expenses.

Depreciation and amortization expense was approximately $2.0 million in the third quarter of 2016 as compared to $1.9 million in 2015. The increase in depreciation expense relates to fixed assets at the newly leased and acquired centers.

Interest expense was $1.2 million in the third quarter of 2016 and $1.0 million in the third quarter of 2015, an increase of $0.2 million. The increase was primarily attributable to higher debt balances in 2016 as a result of higher outstanding borrowings on the revolving credit facility as a result of the purchase of Hutchinson and Clinton in the first quarter of 2016.

As a result of the above, continuing operations lost $1.5 million before income taxes for the third quarter of 2016 as compared to income of $1.2 million for the third quarter of 2015. The benefit for income taxes was $0.5 million for the third quarter of 2016, as compared to a provision of $0.5 million for the third quarter of 2015. The basic and diluted loss per common share from continuing operations were both $0.16 for the third quarter of 2016 as compared to both basic and diluted income per common share from continuing operations of $0.11 in the third quarter of 2015.

Receivables

Our net receivables balance decreased $3.8 million to $40.0 million as of September 30, 2016, from $43.8 million as of December 31, 2015. The decrease in accounts receivable is due to an increase in Medicaid collections from the centers undergoing the change in ownership process.

Conference Call Information

A conference call has been scheduled for Friday, November 4, 2016 at 7:30 A.M. Central time (8:30 A.M. Eastern time) to discuss third quarter 2016 results. The conference call information is as follows:

Date:	Friday, November 4, 2016
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) Conference ID: 7200528 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 11, 2016, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) and entering Conference ID 7200528.

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 integrate the operations of our new nursing centers in Alabama, Mississippi, Kansas and Kentucky, as well as successfully operate all of our centers, 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 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 HIPAA and 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 others. The Company has provided additional information in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, 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.

Diversicare provides long-term care services to patients in 76 skilled nursing and long-term care centers containing 8,949 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, 2016		December 31, 2015
ASSETS:
Current Assets
Cash and cash equivalents	$	3,483	$	4,585
Receivables, net	39,978		43,819
Deferred income taxes	7,405		7,999
Current assets of discontinued operations	44		36
Other current assets	5,583		3,977
Total current assets	56,493		60,416
Property and equipment, net	58,111		52,273
Deferred income taxes	14,853		11,762
Acquired leasehold interest, net	7,171		7,459
Other assets, net	3,662		5,174
TOTAL ASSETS	$	140,290	$	137,084
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities
Current portion of long-term debt and capitalized lease obligations	$	6,888	$	6,603
Trade accounts payable	10,014		10,136
Current liabilities of discontinued operations	428		345
Accrued expenses:
Payroll and employee benefits	13,698		14,404
Current portion of self-insurance reserves	9,745		10,224
Other current liabilities	6,378		5,652
Total current liabilities	47,151		47,364
Noncurrent Liabilities
Long-term debt and capitalized lease obligations, less current portion and deferred financing costs	61,816		53,297
Self-insurance reserves, less current portion	10,993		12,344
Other noncurrent liabilities	10,815		10,812
Total noncurrent liabilities	83,624		76,453
SHAREHOLDERS’ EQUITY	9,515		13,267
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	140,290	$	137,084

DIVERSICARE HEALTHCARE SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended September 30,
	2016			2015
PATIENT REVENUES, net	$	97,313		$	98,105
Operating expense	79,441			78,501
Facility-level operating income	17,872			19,604
EXPENSES:
Lease and rent expense	6,865			7,198
Professional liability	1,977			2,069
General and administrative	7,420			6,378
Depreciation and amortization	1,992			1,887
Total expenses less operating	18,254			17,532
OPERATING INCOME (LOSS)	(382		)	2,072
OTHER INCOME (EXPENSE):
Equity in net income of unconsolidated affiliate	130			97
Interest expense, net	(1,201		)	(998		)
Total other expense	(1,071		)	(901		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,453		)	1,171
BENEFIT (PROVISION) FOR INCOME TAXES	495			(502		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	(958		)	669
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
OPERATING LOSS	(17		)	(238		)
NET INCOME (LOSS)	(975		)	431
NET INCOME (LOSS) PER COMMON SHARE:
Per common share – basic
Continuing operations	$	(0.16	)	$	0.11
Discontinued operations	—			(0.04		)
	$	(0.16	)	$	0.07
Per common share – diluted	$	(0.16	)	$	0.11
Continuing operations	—			(0.04		)
Discontinued operations	$	(0.16	)	$	0.07
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.055		$	0.055
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	6,212			6,121
Diluted	6,212			6,331

DIVERSICARE HEALTHCARE SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Nine Months Ended September 30,
	2016			2015
PATIENT REVENUES, net	$	291,063		$	289,618
Operating expense	236,444			232,298
Facility-level operating income	54,619			57,320
EXPENSES:
Lease and rent expense	20,971			21,529
Professional liability	5,977			6,150
General and administrative	21,035			18,770
Depreciation and amortization	6,055			5,629
Lease termination costs	2,008			—
Total expenses less operating	56,046			52,078
OPERATING INCOME (LOSS)	(1,427		)	5,242
OTHER INCOME (EXPENSE):
Equity in net income of unconsolidated affiliate	191			280
Interest expense, net	(3,429		)	(2,997		)
Debt retirement costs	(351		)	—
Total other expense	(3,589		)	(2,717		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(5,016		)	2,525
BENEFIT (PROVISION) FOR INCOME TAXES	1,834			(1,044		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	(3,182		)	1,481
LOSS FROM DISCONTINUED OPERATIONS:
OPERATING LOSS	(54		)	(800		)
NET INCOME (LOSS)	(3,236		)	681
NET INCOME (LOSS) PER COMMON SHARE:
Per common share – basic
Continuing operations	$	(0.51	)	$	0.24
Discontinued operations	(0.01		)	(0.13		)
	$	(0.52	)	$	0.11
Per common share – diluted	$	(0.51	)	$	0.24
Continuing operations	(0.01		)	(0.13		)
Discontinued operations	$	(0.52	)	$	0.11
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.17		$	0.17
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	6,195			6,089
Diluted	6,195			6,310

DIVERSICARE HEALTHCARE SERVICES, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net income (loss)	$	(975	)	$	(2,150	)	$	(111	)	$	943		$	431
Loss from discontinued operations, net of tax	17			—			37			328			238
Income tax provision (benefit)	(495		)	(1,297		)	(42		)	(128		)	502
Interest expense	1,201			1,158			1,070			1,105			998
Depreciation and amortization	1,992			2,060			2,003			1,895			1,887
EBITDA	1,740			(229		)	2,957			4,143			4,056
EBITDA adjustments:
Acquisition related costs (a)	438			150			59			90			43
Debt retirement costs (b)	$	—		$	—		$	351		$	—		$	—
Lease termination costs (c)	$	—		$	2,008		$	—		$	—		$	—
Lease deferral costs (d)	$	—		$	—		$	146		$	—		$	—
Adjusted EBITDA	$	2,178		$	1,929		$	3,513		$	4,233		$	4,099

(a)	Represents non-recurring costs associated with acquisition-related transactions.
(b)	Represents non-recurring debt retirement costs associated with the extinguishment of the previous debt facility during the first quarter 2016.
(c)	Represents non-recurring lease termination costs related to the termination of the Avon, Ohio operating lease in May 2016.
(d)	Represents non-recurring lease deferral costs associated with the purchase of Clinton and Hutchinson in February 2016.

DIVERSICARE HEALTHCARE SERVICES, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)

(In thousands, except per share data)

	For Three Months Ended
	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Net income (loss)	$	(975	)	$	(2,150	)	$	(111	)	$	943		$	431
Adjustments:
Acquisition related costs (a)	438			150			59			90			43
Lease termination costs (b)	—			2,008			—			—			—
Lease deferral costs (c)	—			—			146			—			—
Debt retirement costs (d)	—			—			351			—			—
Tax impact of above adjustments (e)	(153		)	(755		)	(195		)	(32		)	(15		)
Discontinued operations, net of tax	17			—			37			328			238
Adjusted net income (loss)	$	(673	)	$	(747	)	$	287		$	1,329		$	697
Adjusted net income (loss) per common share
Basic	$	(0.11	)	$	(0.12	)	$	0.05		$	0.22		$	0.11
Diluted	$	(0.11	)	$	(0.12	)	$	0.05		$	0.21		$	0.11
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	6,212			6,211			6,160			6,134			6,121
Diluted	6,212			6,211			6,330			6,322			6,331

(a)	Represents non-recurring costs associated with acquisition-related transactions.
(b)	Represents non-recurring lease termination costs related to the termination of the Avon, Ohio operating lease in May 2016.
(c)	Represents non-recurring lease deferral costs associated with the purchase of Clinton and Hutchinson in February 2016.
(d)	Represents non-recurring debt retirement costs associated with the extinguishment of the previous debt facility during the first quarter 2016.
(e)	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,
	2016			2015
NET INCOME (LOSS)	$	(3,236	)	$	681
Discontinued operations	(54		)	(800		)
Net income (loss) from continuing operations	(3,182		)	1,481
Adjustments to reconcile net income (loss) from continuing operations to funds provided by operations:
Depreciation and amortization	6,055			5,629
Provision for doubtful accounts	5,785			5,425
Deferred income tax benefit	(2,329		)	204
Provision for self-insured professional liability, net of cash payments	1,853			2,063
Stock based compensation	721			924
Equity in net losses of unconsolidated affiliate	(191		)	(281		)
Debt retirement costs	351			—
Provision for leases in excess of cash payments	(1,640		)	(1,203		)
Lease termination costs, net of cash payments	1,958			—
Other	463			116
FUNDS PROVIDED BY OPERATIONS	$	9,844		$	14,358
FUNDS PROVIDED BY OPERATIONS PER COMMON SHARE:
Basic	$	1.59		$	2.36
Diluted	$	1.59		$	2.28
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING :
Basic	6,195			6,089
Diluted	6,195			6,310

We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, Adjusted Net income (loss) 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, interest expense, income tax and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted acquisition-related, debt retirement, lease termination and lease deferral costs. We define Adjusted Net income (loss) as Net income (loss) adjusted for acquisition-related costs, lease termination costs, lease deferral costs, debt retirement costs and income (loss) from discontinued operations.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) 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) 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) 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) 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, 2016
			As of September 30, 2016			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		2016 Q3  Revenue ($ in millions)		Medicare Room and Board Revenue PPD  (Note 3)		Medicaid Room and Board Revenue PPD  (Note 3)
Alabama			925	917	804	86.9	%	87.7	%	15.3	%	$	18.3	$	446.00	$	184.80
Kansas			464	498	422	90.9	%	84.7	%	11.0	%	8.0		423.71		160.33
Kentucky			1,257	1,243	1,114	88.6	%	89.6	%	14.1	%	26.4		464.42		188.53
Missouri			339	339	234	69.1	%	69.1	%	4.5	%	3.9		464.72		141.05
Ohio			284	284	248	87.2	%	87.2	%	9.5	%	7.0		471.90		190.38
Tennessee			765	711	573	74.9	%	80.6	%	14.1	%	12.2		430.99		172.93
Texas			1,845	1,722	1,197	65.0	%	69.6	%	7.0	%	21.5		489.47		146.27
Total			5,879	5,714	4,592	78.1	%	80.4	%	11.4	%	$	97.3	$	455.69	$	169.51
	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 two nursing center in Kentucky.
	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.

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EX-99.2

Nasdaq: DVCR Investor Update As of September 30, 2016

Nasdaq: DVCR Forward-looking statements made in this presentation involve a number of risks and uncertainties, but not limited to, our ability to successfully integrate the operations of our new nursing centers in Alabama, Mississippi, Kansas and Kentucky, as well as successfully operate all of our, 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 healthcare 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, 2015, 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. Forward-Looking Statements 2

Nasdaq: DVCR 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 Investment Highlights 3

Nasdaq: DVCR • Joined Diversicare in 2013 • 20+ years of experience in the LTC industry • Previous senior leadership positions at: ‒ Golden Living • Licensed Physical Therapist Executive Leadership • Joined Diversicare in 2012 • 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 4

Nasdaq: DVCR FY15 Revenue $388M – FY16 Revenue $389M Run Rate As of today – 53 SNF’s, 1 ALF – 5,879 Licensed Beds - 9 States Headquartered in Brentwood, TN NE CO OK LA FL (1) IA IL KS (6) OH (5)IN (1) MO (3) AR KY (13) TN (5) PA MS AL (7) SC NC GA VA WV TX (13) Diversicare as of September 30, 2016 5

Nasdaq: DVCR • Operating since 1989 • Traded on NASDAQ: DVCR • Publicly traded since 1994 • Added to Russell Microcap Index in 2014 • 52 week range $6.41 – $10.59 • Historically paid $0.22 annual dividend 6 Company Profile

Nasdaq: DVCR 7 Golden Living Transaction

Nasdaq: DVCR Pro Forma Revenue Run Rate with Golden Living Facilities- $575M As of today – 76 Facilities – 8,453 Skilled Nursing Beds - 10 States NE CO OK LA FL (1) IA IL KS (6) OH (5)IN (1) MO (3) AR KY (13) TN (5) PA MS (10) AL (19) SC NC GA VA WV TX (13) Diversicare at a Glance as of Today 8

Nasdaq: DVCR Facilities & Licensed Beds Growth 9 0 20 40 60 80 2012 2013 2014 2015 2016 Facilities 51 % 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2012 2013 2014 2015 2016 Licensed Beds 49 %

Nasdaq: DVCR Pro Forma Revenue Growth * Denotes 2016 Revenue Run-Rate ** Estimated Revenue Run-Rate with Golden Living Facilities 10 100,000 200,000 300,000 400,000 500,000 600,000 2012 2013 2014 2015 2016* ProForma** Revenue

Nasdaq: DVCR 11 Long Term Care Industry Overview • Compelling Demographic Trends • High Quality Clinical Outcomes • Relative Low Cost of Care

Nasdaq: DVCR 12 Compelling Industry Demographics Risi n g Deman d St able Su p pl y Sources: AHCA, CMS OSCAR Data and US Census Bureau, US Administration on Aging 15,000 15,500 16,000 16,500 17,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 Number of Skilled Nursing Facilities 0 20 40 60 80 100 1990 2000 2010 2020E 2030E 2040E 2050E 2060E Age 65+ Population (in millions)

Nasdaq: DVCR 13 • Long term care spending continues to increase ‒ Medicare and Medicaid expenditures for SNFs expected to grow 66% from 2014 to 2024 ‒ Annual spending on older adults is expected to increase 250% by 2040 Sources: Medpac and US HHS Department Compelling Industry Demographics 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E Medicare and Medicaid SNF Spending (in billions) Medicare Medicaid

Nasdaq: DVCR 14 Relative Cost Per Case of Treatment Across Post-Acute Care Providers Sources: Medpac and US HHS Department $0 $20 $40 $60 $80 $100 $120 Stroke Hip Fracture Joint Replacement Respiratory w/ Vent Tracheotomy w/ Vent $9 $11 $6 $8 $10 $34 $18 $17 $26 $26 $31 $45 $67 $75 $115 SNF IRF LTAC SNFs are recognized as high quality, low cost provider of institutional post-acute care

Nasdaq: DVCR 15 Company Overview • Mature Company • Provides a full spectrum of post-acute healthcare services • Robust operating platform capable of significant growth expansion

Nasdaq: DVCR Investments made in internal improvements and scalability position Diversicare for external growth Launched Q3 2010 Today Expanded Focus Now On Portfolio Growth Retooling: Areas of Focus Platform Development Operational Improvement Facility Renovations Key Strategic Accomplishments 16

Nasdaq: DVCR Implement an Electronic Medical Record (EMR) Solution Centralization of Key Processes People – Processes – Resources Completed – Company repositioned for rapid growth Platform Development and Operational Improvements 17

Nasdaq: DVCR 18 Key Results and Outcomes • Improved Quality Measures • Improved patient mix and reimbursement rates • Improved operating and G&A leverage • Demonstrated growth through acquisitions

Nasdaq: DVCR Results: 5 Star Quality Measures Relative to For-Profit Peer Group 19 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4 4.1 Overall QM Rating 4.02 DVCR Industry For-Profit Not-For-Profit Diversicare is the industry leader in Quality Measures outcomes.

Nasdaq: DVCR Skilled Care and Marketing Initiatives: • 24 Hour RN coverage with specialized clinical capability • Clinical programs drive higher acuity and favorable reimbursement trends • Facility based sales representatives deploy centrally managed business development activities • Clinical programs can be customized for physician needs Results: Improved Patient Mix 20 200 300 400 500 600 700 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 500 563 544 552 623 574 553 557 574 538 525 Medicare Avg Daily Census 60 80 100 120 140 160 180 200 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 150 138 152 162 182 167 171 172 180 161 159 Managed Care Avg Daily Census

Nasdaq: DVCR A – Resulting from a 2% decrease in rates as a result of sequestration beginning April 1, 2013. Results: Rate Increases Driven By Higher Acuity • Medicare rate growth driven by acuity • 17.4% Increase from FY10 Q3 to FY16 Q3 • 4.1% CAGR 21 $380 $430 $480 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 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 $388 $456 Medicare Rate Per Day Medicare Rate Per Day RUGS IV Final Rule Impact A

Nasdaq: DVCR • Medicaid rates driven by acuity • 14.7% Increase from FY10 Q3 to FY16 Q3 • 3.5% CAGR Results: Rate Increases Driven By Higher Acuity 22 $148 $170 $135 $140 $145 $150 $155 $160 $165 $170 $175 Q3 '10Q4 '10Q1 '11Q2 '11Q3 '11Q4 '11Q1 '12Q2 '12Q3 '12Q4 '12Q1 '13Q2 '13Q3 '13Q4 '13Q1 '14Q2 '14Q3 '14Q4 '14Q1 '15Q2 '15Q3 '15Q4 '15Q1 '16Q2 '16Q3 '16 Medicaid Rate Per Day

Nasdaq: DVCR Results: Growth in Operated Facilities • Our ability to integrate facilities onto our platform is proven by our continuous growth and early accretion of new facilities. • Subsequent to 2016 Q3, 22 facilities were implemented. 23 25 30 35 40 45 50 55 60 32 54

Nasdaq: DVCR Acquisitions are Accretive to earnings within a quarter of acquisitions date – the exceptions being development opportunities like new construction, major renovations, etc. Demonstrated Platform Scalability by successful implementation of new facilities New Facility Integration, including EMR, implemented during the first quarter of operations at new facilities Results: Impact Of New Centers 24

Nasdaq: DVCR Results: Revenue Impact of Acquisitions 25 * For the purposes of this chart, the “same-store group” represents all centers operated by the Company prior to January 1, 2014. $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Q1 ’14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Quarterly Revenue 2015 Acquisitions (3) 2014 Acquisitions (8) Same-store group*

Nasdaq: DVCR *Same-Store group represents all nursing centers acquired by the Company prior to January 1, 2015. Results: New Centers and Same-Store 26

Nasdaq: DVCR Results: Revenue Growth and Operating Leverage • Continued Company-wide cost reduction efforts in place o Diligent vendor management and product selection criteria o Centralized purchasing functions drive consistency through all facilities 27 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 $110.0 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Revenue and Facility-Level Operating Profit Revenue Operating Profit (%)

Nasdaq: DVCR • Continued G&A reduction efforts in place o Right-sized overhead structure for new portfolio o Centralized core functions to leverage skilled teams • Savings from G&A reductions funded strategic investments • G&A increased in the third quarter 2016 due to acquisition activity Results: G&A Leverage 28 7.6% 5.0% 6.0% 7.0% 8.0% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 G&A Expense as a % of Revenue

Nasdaq: DVCR 29 Current Areas of Focus • Continuous quality improvement • Enhancing existing portfolio • Growth through accretive acquisitions

Nasdaq: DVCR Continuous improvement of Quality Measures Continue to drive volume of patients served Improve skilled mix / provide high-acuity services Ongoing renovations of existing facilities Continue to Enhance Existing Portfolio 30

Nasdaq: DVCR Stated goal to double the Company within 5 years Target: 5-10 new facilities per year Active pipeline and buyer friendly market Expanded operating infrastructure = Scalability Structure flexibility = Several sources of financial capacity Portfolio Growth 31

Nasdaq: DVCR Today2010 Portfolio has grown by more than 60% after divestitures • Exited Arkansas and West Virginia • Entered Missouri, Kansas, Indiana and Mississippi • Added Facilities in Ohio, Alabama, and Kentucky Deepen and Expand Existing Footprint 32 OH (5) FL (1) IN (1) AL (19) KS (6) MO (3) TX (13) AR (12) TX (13) OH (1) AL (6) FL (1) WV (2) MS (10)

Nasdaq: DVCR • Full Ownership Of Assets • Participate In Value Appreciation • Enhance Facility Ownership Fee-Simple Acquisitions • Minimal Capital Required • Leverage Turnaround Capabilities • Leverage Strong REIT Relationships Assumption of Long-Term Operating Leases 2010 Today 20% 22% 80% 78% Flexible Structure Broadens Pipeline 33 Acquisition Types

Nasdaq: DVCR 34 Summary • Improved operational and financial results • Attractive investment dynamics • Repositioned for the future

Nasdaq: DVCR Key Financial and Operating Statistics Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Average Daily Census 4,651 4,662 4,645 4,595 4,592 Total Average Daily Census – Medicare & Managed Care 724 729 754 699 684 Skilled Mix % 15.6% 15.6% 16.2% 15.2% 14.9% Occupancy (Available Beds) 81.1% 79.6% 79.3% 79.1% 80.4% Medicare Rate Per Day $452.48 $457.24 $453.51 $456.91 $455.69 Medicaid Rate Per Day $168.12 $166.72 $167.34 $168.36 $169.51 Revenue (Millions) $98.1 $98.0 $97.9 $95.8 $97.3 Facility Level Operating Profit $19.6 $19.2 $19.3 $17.4 $17.9 G&A % of Revenue 6.5% 6.1% 6.9% 7.2% 7.6% Adjusted EBITDAR $11.3 $11.3 $10.8 $8.8 $9.1 Adjusted EBITDA $4.1 $4.2 $3.5 $1.9 $2.2 35

Nasdaq: DVCR 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 Investment Highlights 36

Nasdaq: DVCR Appendix A: Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR (a) Represents non-recurring costs associated with acquisition-related transactions. (b) Represents non-recurring debt retirement costs associated with the extinguishment of the previous debt facility during the first quarter 2016. (c) Represents non-recurring lease termination costs related to the termination of the Avon, Ohio operating lease in May 2016. (d) Represents non-recurring lease deferral costs associated with the purchase of Clinton and Hutchinson in February 2016. 37