##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission file No.: 1-12996
 Advocat Inc.
 (exact name of registrant as specified in its charter)
 Delaware
    
    62-1559667(State or other jurisdiction of incorporation or organization)
    
    (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)
 
 (Former name, former address and former fiscal year, if changed since last report.)
 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
 Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and a smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
 Large accelerated filero
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting Company þ(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
 5,817,387  (Outstanding shares of the issuers common stock as of April 28, 2011)




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TABLE OF CONTENTS  Part I. FINANCIAL INFORMATIONITEM 1    FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS.ITEM 6. EXHIBITSSIGNATURESEX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-10.8EX-31.1EX-31.2EX-32    Table of Contents  
 Part I. FINANCIAL INFORMATION
 
 ITEM 1
    
     FINANCIAL STATEMENTS
 ADVOCAT INC.
 INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands)
 March 31,
    
    
    December 31,2011
    
    
    2010(Unaudited)CURRENT ASSETS:Cash and cash equivalents
    
    $
    7,541
    
    
    $
    8,862Receivables, less allowance for doubtful
accounts of $2,936 and $2,822, respectively
    
    
    27,185
    
    
    
    23,801Prepaid expenses and other current assets
    
    
    3,618
    
    
    
    3,840Income tax refundable
    
    
    1,323
    
    
    
    1,439Deferred income taxes
    
    
    4,238
    
    
    
    4,207Current assets of discontinued operations
    
    
    682
    
    
    
    686Total current assets
    
    
    44,587
    
    
    
    42,835PROPERTY AND EQUIPMENT, at cost
    
    
    82,104
    
    
    
    78,690Less accumulated depreciation
    
    
    (42,903
    )
    
    
    (41,563
    )Discontinued operations, net
    
    
    1,053
    
    
    
    1,053Property and equipment, net
    
    
    40,254
    
    
    
    38,180OTHER ASSETS:Deferred income taxes
    
    
    12,382
    
    
    
    12,408Deferred financing and other costs, net
    
    
    1,590
    
    
    
    834Other assets
    
    
    4,383
    
    
    
    2,319Acquired leasehold interest, net
    
    
    9,284
    
    
    
    9,380Total other assets
    
    
    27,639
    
    
    
    24,941$
    112,480
    
    
    $
    105,956
   2




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ADVOCAT INC.
 INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(continued)
 March 31,
    
    
    December 31,2011
    
    
    2010(Unaudited)CURRENT LIABILITIES:Current portion of long-term debt and capitalized lease obligations
    
    $
    519
    
    
    $
    582Trade accounts payable
    
    
    4,384
    
    
    
    3,120Accrued expenses:Payroll and employee benefits
    
    
    11,327
    
    
    
    11,047Current portion of self-insurance reserves
    
    
    8,129
    
    
    
    7,379Other current liabilities
    
    
    3,659
    
    
    
    4,479Total current liabilities
    
    
    28,018
    
    
    
    26,607NONCURRENT LIABILITIES:Long-term debt and capitalized lease obligations, less current portion
    
    
    26,733
    
    
    
    23,819Self-insurance reserves, less current portion
    
    
    11,816
    
    
    
    11,659Other noncurrent liabilities
    
    
    17,027
    
    
    
    16,748Total noncurrent liabilities
    
    
    55,576
    
    
    
    52,226COMMITMENTS AND CONTINGENCIESSERIES C REDEEMABLE PREFERRED STOCK
$.10 par value, 5,000 shares authorized, issued and
outstanding
    
    
    4,918
    
    
    
    4,918SHAREHOLDERS EQUITY:Series A preferred stock, authorized 200,000 shares,
$.10 par value, none issued and outstanding
    
    
    
    
    
    
    Common stock, authorized 20,000,000 shares, $.01 par
value, 6,049,000 and 5,976,000 shares issued, and
5,817,000 and 5,744,000 shares outstanding,
respectively
    
    
    60
    
    
    
    60Treasury stock at cost, 232,000 shares of common stock
    
    
    (2,500
    )
    
    
    (2,500
    )Paid-in capital
    
    
    18,195
    
    
    
    17,896Retained earnings
    
    
    6,781
    
    
    
    6,749Accumulated other comprehensive loss
    
    
    (185
    )
    
    
    Total shareholders equity of Advocat Inc.
    
    
    22,351
    
    
    
    22,205Noncontrolling interests
    
    
    1,617
    
    
    
    Total shareholders equity
    
    
    23,968
    
    
    
    22,205$
    112,480
    
    
    $
    105,956
  3




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ADVOCAT INC.
 INTERIM CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts, unaudited)
 Three Months Ended March 31,2011
    
    
    2010PATIENT REVENUES, net
    
    $
    77,130
    
    
    $
    70,152EXPENSES:Operating
    
    
    60,857
    
    
    
    55,402Lease
    
    
    5,714
    
    
    
    5,602Professional liability
    
    
    1,691
    
    
    
    1,414General and administrative
    
    
    6,054
    
    
    
    4,702Depreciation and amortization
    
    
    1,556
    
    
    
    1,416Total expenses
    
    
    75,872
    
    
    
    68,536OPERATING INCOME
    
    
    1,258
    
    
    
    1,616OTHER INCOME (EXPENSE):Interest income
    
    
    3
    
    
    
    2Interest expense
    
    
    (454
    )
    
    
    (398
    )Debt retirement costs
    
    
    (112
    )
    
    
    (127
    )(563
    )
    
    
    (523
    )INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
    
    
    695
    
    
    
    1,093PROVISION FOR INCOME TAXES
    
    
    (249
    )
    
    
    (386
    )NET INCOME FROM CONTINUING OPERATIONS
    
    
    446
    
    
    
    707NET INCOME FROM DISCONTINUED OPERATIONS:Operating income (loss), net of taxes of $(4) and $206, respectively
    
    
    (8
    )
    
    
    378Loss on
disposal, net of taxes of $0 and $(96), respectively
    
    
    
    
    
    
    (177
    )DISCONTINUED OPERATIONS
    
    
    (8
    )
    
    
    201NET INCOME
    
    
    438
    
    
    
    908Less: Net Income attributable to noncontrolling interests
    
    
    
    
    
    
    NET INCOME ATTRIBUTABLE TO ADVOCAT INC.
    
    
    438
    
    
    
    908PREFERRED STOCK DIVIDENDS
    
    
    (86
    )
    
    
    (86
    )NET INCOME FOR COMMON STOCK
    
    $
    352
    
    
    $
    822NET INCOME PER COMMON SHARE:Per common share  basicContinuing operations
    
    $
    0.06
    
    
    $
    0.11Discontinued operations
    
    
    
    
    
    
    0.03$
    0.06
    
    
    $
    0.14Per common share  dilutedContinuing operations
    
    $
    0.06
    
    
    $
    0.11Discontinued operations
    
    
    
    
    
    
    0.03$
    0.06
    
    
    $
    0.14COMMON STOCK DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK
    
    $
    0.055
    
    
    $
    0.05WEIGHTED AVERAGE COMMON SHARES:Basic
    
    
    5,752
    
    
    
    5,717Diluted
    
    
    5,877
    
    
    
    5,913
  4




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ADVOCAT INC.
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands and unaudited)
 Three Months Ended March 31,2011
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    438
    
    
    $
    908Discontinued operations
    
    
    (8
    )
    
    
    201Net income from continuing operations
    
    
    446
    
    
    
    707Adjustments to reconcile net income from continuing
operations to net cash provided by operating activities:Depreciation and amortization
    
    
    1,556
    
    
    
    1,416Provision for doubtful accounts
    
    
    569
    
    
    
    488Deferred income tax provision (benefit)
    
    
    109
    
    
    
    (54
    )Provision for self-insured professional
liability, net of cash payments
    
    
    66
    
    
    
    71Stock based compensation
    
    
    201
    
    
    
    196Amortization of deferred balances
    
    
    46
    
    
    
    76Provision for leases in excess of cash payments
    
    
    113
    
    
    
    225Payment from lessor for leasehold improvement
    
    
    
    
    
    
    120Debt retirement costs
    
    
    79
    
    
    
    127Changes in other assets and liabilities affecting operating
activities:Receivables, net
    
    
    (3,732
    )
    
    
    (679
    )Prepaid expenses and other assets
    
    
    177
    
    
    
    229Trade accounts payable and accrued expenses
    
    
    1,306
    
    
    
    348Net cash provided by continuing operations
    
    
    936
    
    
    
    3,270Discontinued operations
    
    
    (12
    )
    
    
    682Net cash provided by operating activities
    
    
    924
    
    
    
    3,952CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (2,048
    )
    
    
    (649
    )Increase in restricted Cash
    
    
    (1,828
    )
    
    
    Deposits and other deferred balances
    
    
    (28
    )
    
    
    Net cash used by continuing operations
    
    
    (3,904
    )
    
    
    (649
    )Discontinued operations
    
    
    
    
    
    
    (45
    )Net cash used in investing activities
    
    
    (3,904
    )
    
    
    (694
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of debt obligations
    
    
    (20,579
    )
    
    
    (3,807
    )Proceeds from issuance of debt and capital leases
    
    
    23,430
    
    
    
    3,463Financing costs
    
    
    (879
    )
    
    
    (373
    )Exercise of stock options
    
    
    2
    
    
    
    Proceeds from issuance of restricted share units
    
    
    197
    
    
    
    62Payment of common stock dividends
    
    
    (318
    )
    
    
    (286
    )Payment of preferred stock dividends
    
    
    (86
    )
    
    
    (86
    )Contributions from noncontrolling interests
    
    
    27
    
    
    
    Payment for preferred stock restructuring
    
    
    (135
    )
    
    
    (131
    )Net cash provided by financing activities
    
    
    1,659
    
    
    
    (1,158
    )
  5




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ADVOCAT INC.
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands and unaudited)
(continued)
 Three Months Ended March 31,2011
    
    
    2010NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    $
    (1,321
    )
    
    $
    2,100CASH AND CASH EQUIVALENTS, beginning of period
    
    
    8,862
    
    
    
    8,609CASH AND CASH EQUIVALENTS, end of period
    
    $
    7,541
    
    
    $
    10,709SUPPLEMENTAL INFORMATION:Cash payments of interest, net of amounts capitalized
    
    $
    296
    
    
    $
    338Cash payments of income taxes
    
    $
    25
    
    
    $
    57
  6




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ADVOCAT INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2011 AND 2010
 BUSINESS
   CONSOLIDATION AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
    LONG-TERM DEBT AND INTEREST RATE SWAP
  7




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Interest Rate Swap transaction:
   8




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Fair Value Measurements and Disclosures
 INSURANCE MATTERS
 Professional Liability and Other Liability Insurance-
   Reserve for Estimated Self-Insured Professional Liability Claims-
    9




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Adoption of New Accounting Pronouncements  Self-Insured Professional Liability Claims-
  Other Insurance
   10




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STOCK-BASED COMPENSATION
   DISCONTINUED OPERATIONS
  EARNINGS PER COMMON SHARE
  Three Months EndedMarch 31,2011
    
    
    2010Net income per common share:Per common share  basicIncome from continuing operations
    
    $
    0.06
    
    
    $
    0.11Income (loss) from discontinued operationsOperating income, net of taxes
    
    
    
    
    
    
    0.06Loss on disposal, net of taxes
    
    
    
    
    
    
    (0.03
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    0.03Net income
    
    $
    0.06
    
    
    $
    0.14Per common share  dilutedIncome from continuing operations
    
    $
    0.06
    
    
    $
    0.11Income (loss) from discontinued operationsOperating income, net of taxes
    
    
    
    
    
    
    0.06Loss on disposal, net of taxes
    
    
    
    
    
    
    (0.03
    )Discontinued operations, net of taxes
    
    
    
    
    
    
    0.03Net income
    
    $
    0.06
    
    
    $
    0.14
  11




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##### Table of Contents



WEST VIRGINIA FACILITY
     9. EVENT SUBSEQUENT TO THE BALANCE SHEET
  12




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
  Strategic operating initiatives.
    Divestitures
 Basis of Financial Statements.
 13




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Critical Accounting Policies and Judgments
 
 Revenue Sources
   Three Months Ended March 31,2011
    
    
    2010Medicaid
    
    $
    37,881
    
    
    
    49.1
    %
    
    $
    37,674
    
    
    
    53.7
    %Medicare
    
    
    26,826
    
    
    
    34.8
    
    
    
    21,425
    
    
    
    30.5Managed care
    
    
    3,062
    
    
    
    4.0
    
    
    
    2,273
    
    
    
    3.2Private Pay and other
    
    
    9,361
    
    
    
    12.1
    
    
    
    8,780
    
    
    
    12.6Total
    
    $
    77,130
    
    
    
    100.0
    %
    
    $
    70,152
    
    
    
    100.0
    %
  Three Months Ended March 31,2011
    
    
    2010Medicaid
    
    
    2,790
    
    
    
    67.3
    %
    
    
    2,880
    
    
    
    69.1
    %Medicare
    
    
    598
    
    
    
    14.4
    
    
    
    548
    
    
    
    13.2Managed care
    
    
    80
    
    
    
    1.9
    
    
    
    66
    
    
    
    1.6Private Pay and other
    
    
    676
    
    
    
    16.4
    
    
    
    671
    
    
    
    16.1Total
    
    
    4,144
    
    
    
    100.0
    %
    
    
    4,165
    
    
    
    100.0
    %
  14




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Health Care Industry
    Medicare and Medicaid Reimbursement
  Medicare
  15




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Therapy Services.
 Medicaid
  16




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Licensure and other Health Care Laws
  17




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Contractual Obligations and Commercial Commitments
  Less than
    
    
    1 to 3
    
    
    3 to 5
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 YearsLong-term debt obligations (1)
    
    $
    35,856
    
    
    $
    2,302
    
    
    $
    4,535
    
    
    $
    29,019
    
    
    $
    Settlement obligations (2)
    
    $
    503
    
    
    $
    503
    
    
    $
    
    
    
    $
    
    
    
    $
    Series C Preferred Stock (3)
    
    $
    4,918
    
    
    $
    4,918
    
    
    $
    
    
    
    $
    
    
    
    $
    Elimination of Preferred Stock Conversion feature (4)
    
    $
    5,151
    
    
    $
    687
    
    
    $
    1,374
    
    
    $
    1,374
    
    
    $
    1,716Operating leases
    
    $
    572,279
    
    
    $
    22,690
    
    
    $
    47,028
    
    
    $
    49,309
    
    
    $
    453,252Required capital expenditures under
operating leases (5)
    
    $
    19,947
    
    
    $
    290
    
    
    $
    580
    
    
    $
    580
    
    
    $
    18,497Total
    
    $
    638,654
    
    
    $
    31,390
    
    
    $
    53,517
    
    
    $
    80,282
    
    
    $
    473,465
 
 (1)
    
    Long-term debt obligations include scheduled future payments of principal and
interest of long-term debt and amounts outstanding on our revolving line of credit and
capital lease obligations.(2)
    
    Settlement obligations relate to professional liability cases that will be paid
within the next twelve months. The liabilities are included in our current portion of
self insurance reserves.(3)
    
    Series C Preferred Stock equals the redemption value at the preferred shareholders
earliest redemption date.(4)
    
    Payments to Omega for the elimination of the preferred stock conversion feature in
connection with restructuring the preferred stock and master lease agreements. Monthly
payments of approximately $57,000 will be made through the end of the initial lease
period that ends in September 2018.(5)
    
    Includes annual expenditure requirements under operating leases.  18




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Results of Operations
   Three Months Ended March 31,(in thousands)
    
    2011
    
    
    2010
    
    
    Change
    
    
    %PATIENT REVENUES, net
    
    $
    77,130
    
    
    $
    70,152
    
    
    $
    6,978
    
    
    
    9.9EXPENSES:Operating
    
    
    60,857
    
    
    
    55,402
    
    
    
    5,455
    
    
    
    9.8Lease
    
    
    5,714
    
    
    
    5,602
    
    
    
    112
    
    
    
    2.0Professional liability
    
    
    1,691
    
    
    
    1,414
    
    
    
    277
    
    
    
    19.6General and administrative
    
    
    6,054
    
    
    
    4,702
    
    
    
    1,352
    
    
    
    28.8Depreciation and amortization
    
    
    1,556
    
    
    
    1,416
    
    
    
    140
    
    
    
    9.9Total expenses
    
    
    75,872
    
    
    
    68,536
    
    
    
    7,336
    
    
    
    10.7OPERATING INCOME
    
    
    1,258
    
    
    
    1,616
    
    
    
    (358
    )
    
    
    (22.2
    )OTHER INCOME (EXPENSE):Interest income
    
    
    3
    
    
    
    2
    
    
    
    1
    
    
    
    50.0Interest expense
    
    
    (454
    )
    
    
    (398
    )
    
    
    (56
    )
    
    
    (14.1
    )Debt retirement costs
    
    
    (112
    )
    
    
    (127
    )
    
    
    15
    
    
    
    11.8(563
    )
    
    
    (523
    )
    
    
    (40
    )
    
    
    7.6INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
    
    
    695
    
    
    
    1,093
    
    
    
    (398
    )
    
    
    (36.4
    )PROVISION FOR INCOME TAXES
    
    
    (249
    )
    
    
    (386
    )
    
    
    137
    
    
    
    35.5NET INCOME FROM CONTINUING
OPERATIONS
    
    $
    446
    
    
    $
    707
    
    
    $
    (261
    )
    
    
    (36.9
    )
 Three Months EndedMarch 31,Percentage of Net Revenues
    
    2011
    
    
    2010PATIENT REVENUES, net
    
    
    100.0
    %
    
    
    100.0
    %EXPENSES:Operating
    
    
    78.9
    
    
    
    79.0Lease
    
    
    7.5
    
    
    
    8.0Professional liability
    
    
    2.2
    
    
    
    2.0General and administrative
    
    
    7.8
    
    
    
    6.7Depreciation and amortization
    
    
    2.0
    
    
    
    2.0Total expenses
    
    
    98.4
    
    
    
    97.7OPERATING INCOME
    
    
    1.6
    
    
    
    2.3OTHER INCOME (EXPENSE):Interest income
    
    
    
    
    
    
    Interest expense
    
    
    (0.6
    )
    
    
    (0.6
    )Debt retirement costs
    
    
    (0.1
    )
    
    
    (0.2
    )(0.7
    )
    
    
    (0.8
    )INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
    
    
    0.9
    
    
    
    1.5PROVISION FOR INCOME TAXES
    
    
    (0.3
    )
    
    
    (0.5
    )NET INCOME FROM CONTINUING
OPERATIONS
    
    
    0.6
    %
    
    
    1.0
    %
 19




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Three Months Ended March 31, 2011 Compared With Three Months Ended March 31, 2010
 Patient Revenues
   Three Months EndedMarch 31,2011
    
    
    2010Skilled nursing occupancy
    
    
    77.3
    %
    
    
    77.5
    %As a percent of total census:Medicare census
    
    
    14.4
    %
    
    
    13.2
    %Managed care census
    
    
    1.9
    %
    
    
    1.6
    %As a percent of total revenues:Medicare revenues
    
    
    34.8
    %
    
    
    30.5
    %Medicaid revenues
    
    
    49.1
    %
    
    
    53.7
    %Managed care revenues
    
    
    4.0
    %
    
    
    3.2
    %Average rate per day:Medicare
    
    $
    455.36
    
    
    $
    393.64Medicaid
    
    $
    148.67
    
    
    $
    145.25Managed care
    
    $
    413.75
    
    
    $
    383.15
    Operating expense
  20




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##### Table of Contents



Lease expense
  Professional liability
  General and administrative expense
  Depreciation and amortization
  Interest expense
  21




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##### Table of Contents



Income from continuing operations before income taxes; income from continuing operations per common
share
  Liquidity and Capital Resources
 Liquidity
      22




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##### Table of Contents



Electronic Medical Records
  Dividends
  Preferred Stock
  Professional Liability
   23




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##### Table of Contents



Capital Resources
        Level atRequirement
    
    
    March 31, 2011Minimum fixed charge coverage ratio
    
    
    ≥1.05:1.00
    
    

    1.15:1.00EBITDAR (mortgaged facilities)
    
    ≥$3.3 million
    
    $4.2 million
 24




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##### Table of Contents



Lease agreement  West Virginia Nursing Center
  Center Renovations
       25




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##### Table of Contents



Forward-Looking Statements
  26




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   27




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS.
     
 ITEM 6.
    
    EXHIBITS
  28




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##### Table of Contents



SIGNATURES
  ADVOCAT INC.May 10, 2011
    By:
    /s/ William R. Council, IIIWilliam R. Council, IIIPresident and Chief Executive Officer, Principal Executive Officer and
An Officer Duly Authorized to Sign on Behalf of the RegistrantBy:
    /s/ L. Glynn Riddle, Jr.L. Glynn Riddle, Jr.Executive Vice President and Chief Financial Officer, Secretary,
Principal Accounting Officer and
An Officer Duly Authorized to Sign on Behalf of the Registrant 29




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits3.1
    
    Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit
3.1 to the Companys Registration Statement No. 33-76150 on Form S-1).3.2
    
    Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.5 to
the Companys quarterly report on Form 10-Q for the quarter ended September 30,
2006).3.3
    
    Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Companys
Registration Statement No. 33-76150 on Form S-1).3.4
    
    Bylaw Amendment adopted November 5, 2007 (incorporated by reference to Exhibit 3.4 to
the Companys annual report on Form 10-K for the year ended December 31, 2007).3.5
    
    Amendment to Certificate of Incorporation dated March 23, 1995 (incorporated by
reference to Exhibit A of Exhibit 1 to the Companys Form 8-A filed March 30, 1995).3.6
    
    Certificate of Designation of Registrant (incorporated by reference to Exhibit 3.4 to
the Companys quarterly report on Form 10-Q for the quarter ended March 31, 2001).4.1
    
    Form of Common Stock Certificate (incorporated by reference to Exhibit 4 to the
Companys Registration Statement No. 33-76150 on Form S-1).4.2
    
    Amended and Restated Rights Agreement dated as of December 7, 1998 (incorporated by
reference to Exhibit 1 to Form 8-A/A filed December 7, 1998).4.3
    
    Amendment No. 1 to the Amended and Restated Rights Agreement, dated March 19, 2005,
by and between Advocat Inc. and SunTrust Bank, as Rights Agent (incorporated by
reference to Exhibit 2 to Form 8-A/A filed on March 24, 2005).4.4
    
    Second Amendment to the Amended and Restated Rights Agreement, dated August 15, 2008,
by and between Advocat Inc. and ComputerShare Trust Company, N.A., as successor to
SunTrust Bank (incorporated by reference to Exhibit 3 to Form 8-A/A filed on August
18, 2008).4.5
    
    Third Amendment to Amended and Restated Rights Agreement, dated August 14, 2009,
between Advocat, Inc. and Computershare Trust Company, N.A, as successor to SunTrust
Bank, (incorporated by reference to Exhibit 4 to the Companys Registration Statement
on Form 8-A/A filed on August 14, 2009).10.1
    
    Eleventh Amendment to the Amended and Restated Master Lease (Master Lease) between
the Company and Sterling Acquisition Corp., an affiliate of Omega Healthcare
Investors, Inc.10.2
    
    Amended and Restated Revolving Loan and Security Agreement, dated as of February 28, 2011,
 is by and among Diversicare Management Services Co., a Tennessee corporation, and those certain other entities set forth,
 The PrivateBank and Trust Company, an Illinois banking corporation in its individual capacity, and the other financial
 institutions parties thereto, and The PrivateBank and Trust Company, an Illinois banking corporation in its capacity as
administrative agent for the Lenders10.3
    
    Amended and Restated Guaranty  dated as of February 28, 2011, by Advocat Inc.,  to and for the benefit of The PrivateBank and Trust Company10.4
    
    Term Loan and Security Agreement dated as of February 28, 2011, is by and among the
subsidiaries of the Company, The PrivateBank and Trust Company, an Illinois banking corporation in its individual
capacity and the other financial institutions parties thereto, and The PrivateBank and Trust Company, an Illinois
banking corporation in its capacity as administrative agent for the Lenders10.5
    
    Guaranty dated as of February 28, 2011, by Advocat Inc., a Delaware
corporation to and for the benefit of The PrivateBank and Trust Company,10.6
    
    Swap Agreement between the Company and The
 PrivateBank and Trust Company dated as of March 1, 2011*10.7
    
    Employment Agreement effective June 28, 2010, by and among Advocat Inc., a Delaware corporation, and William David Houghton*10.8
    
    Amendment No. 1. effective March 9, 2011 to Employment Agreement by and among Advocat Inc., a Delaware corporation, and William David Houghton31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule
13a-14(b) or Rule 15d-14(b).
 
 *
    
    Indicates management contract or
compensatory plan or arrangement