SecProbe.io

CORRESP
 1
 filename1.htm

 June 23, 2025

 VIA EDGAR

 United States Securities and Exchange Commission
 Division of Corporation Finance
 100 F Street, N.E.
 Washington, D.C. 20549
 Attn: Benjamin Holt and Jeffrey Gabor

 Re:

 Regional Health Properties, Inc.
 Registration Statement on Form S-4
 File No. 333-286975

 Acceleration Request
 Requested Date:    Wednesday, June 25, 2025
 Requested Time:  4:00 P.M. Eastern Time

 Ladies and Gentlemen:

 Pursuant to Rule 461 under the Securities Act of 1933, as amended, Regional Health Properties, Inc. (the “Company”) hereby requests that the above-referenced Registration Statement on Form S-4 (File No. 333-286975) (the
 “Registration Statement”) be declared effective at the “Requested Date” and “Requested Time” set forth above or at such later time as the Company or its counsel may orally request via telephone call to the staff of the Division of Corporation Finance
 of the Securities and Exchange Commission. Once the Registration Statement has been declared effective, please orally confirm that event with our counsel, Troutman Pepper Locke LLP, by calling Paul Davis Fancher at (404) 885-3310.

 Sincerely,

 Regional Health Properties, Inc.

 /s/ Brent S. Morrison

 Brent S. Morrison

 Chief Executive Officer and President

 cc:

 Paul Davis Fancher,
 Troutman Pepper Locke LLP

CORRESP
 1
 filename1.htm

 Troutman Pepper Locke LLP
 Bank of America Plaza, 600 Peachtree Street NE, Suite 3000
 Atlanta, GA 30308

 troutman.com

 Paul Davis Fancher
 paul.fancher@troutman.com

 June 13, 2025
 VIA EDGAR

 United States Securities and Exchange Commission
 Division of Corporation Finance
 100 F Street, N.E.
 Washington, D.C. 20549
 Attn: Benjamin Holt and Jeffrey Gabor

 Re:

 Regional Health Properties, Inc.
 Amendment No. 1 to Registration Statement on Form S-4
 Filed June 3, 2025
 File No. 333-286975

 Dear Mr. Holt and Mr. Gabor:

 This letter is being submitted in response to the comments provided by the Staff of the Division of Corporation Finance of the United States Securities and Exchange Commission (the “SEC”) set forth in your letter dated
 June 6, 2025 (the “Comment Letter”) to Brent Morrison, Chief Executive Officer and President of Regional Health Properties, Inc. (the “Company”), with respect to Amendment No.1 to Registration Statement on Form S-4 filed on June 3, 2025 (the “Form
 S-4”).

 We are authorized by the Company to provide the responses contained in this letter on its behalf. The terms “we,” “us,” and “our” in the responses refer to the Company. For your convenience, we set forth each comment
 from the Comment Letter in bold typeface and include the Company’s response below it. The numbered paragraphs in this letter correspond to the numbered paragraphs of the Comment Letter.

 Amendment No. 1 to Registration Statement on Form S-4 filed June 3, 2025

 General

 1.

 We acknowledge your response to prior comment 1. Where applicable, please revise to indicate that any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up,
 mark-down or commission and may not necessarily represent actual transactions. See Item 201(a)(1)(ii) of Regulation S-K and Item 14(d) of Form S-4.

 Company Response:

 The Company has filed an amendment to the Form S-4 to indicate that any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and
 may not necessarily represent actual transactions.

 United States Securities and Exchange Commission
 June 13, 2025
 Page 2

 Share Ownership of Certain Beneficial Owners and Management/Directors of Regional, page 249

 2.

 Please revise to indicate the effect of the merger on the amount and percentage of present holdings of Regional’s common equity, as required by Item 201(b)(2) of Regulation S-K. See Item 14(d) of
 Form S-4.

 Company Response:

 The Company has filed an amendment to the Form S-4 to provide the effect of the merger on the amount and percentage of present holdings of Regional’s common equity, as required by Item
 201(b)(2) of Regulation S-K.

 The Company appreciates the assistance the Staff has provided with its comments. If you have any questions, please do not hesitate to call me at (404) 885-3310.

 Sincerely,

 /s/ Paul Davis Fancher

 Paul Davis Fancher

 cc:

 Brent Morrison (Regional Health Properties, Inc.)

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 June 6, 2025

Brent Morrison
Chief Executive Officer and President
Regional Health Properties, Inc.
1050 Crown Pointe Parkway
Suite 720
Atlanta, GA 30338

 Re: Regional Health Properties, Inc.
 Amendment No. 1 to Registration Statement on Form S-4
 Filed June 3, 2025
 File No. 333-286975
Dear Brent Morrison:

 We have reviewed your amended registration statement and have the
following
comments.

 Please respond to this letter by amending your registration statement
and providing
the requested information. If you do not believe a comment applies to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.

 After reviewing any amendment to your registration statement and the
information
you provide in response to this letter, we may have additional comments. Unless
we note
otherwise, any references to prior comments are to comments in our May 16, 2025
letter.

Amendment No. 1 to Registration Statement on Form S-4 filed June 3, 2025
General

1. We acknowledge your response to prior comment 1. Where applicable,
please revise
 to indicate that any over-the-counter market quotations reflect
inter-dealer prices,
 without retail mark-up, mark-down or commission and may not necessarily
represent
 actual transactions. See Item 201(a)(1)(ii) of Regulation S-K and Item
14(d) of Form
 S-4.
 June 6, 2025
Page 2
Share Ownership of Certain Beneficial Owners and Management/Directors of
Regional, page
249

2. Please revise to indicate the effect of the merger on the amount and
percentage of
 present holdings of Regional's common equity, as required by Item
201(b)(2) of
 Regulation S-K. See Item 14(d) of Form S-4.

 Please contact Benjamin Holt at 202-551-6614 or Jeffrey Gabor at
202-551-2544 with
any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Real
Estate & Construction
cc: Paul Davis Fancher
</TEXT>
</DOCUMENT>

CORRESP
 1
 filename1.htm

 Troutman Pepper Locke LLP
 Bank of America Plaza, 600 Peachtree Street NE, Suite 3000
 Atlanta, GA 30308

 troutman.com

 Paul Davis Fancher
 paul.fancher@troutman.com

 June 2, 2025

 VIA EDGAR

 United States Securities and Exchange Commission
 Division of Corporation Finance
 100 F Street, N.E.
 Washington, D.C. 20549
 Attn: Benjamin Holt and Jeffrey Gabor

 Re:

 Regional Health Properties, Inc.
 Registration Statement on Form S-4
 Filed May 5, 2025
 File No. 333-286975

 Dear Mr. Holt and Mr. Gabor:

 This letter is being submitted in response to the comments provided by the Staff of the Division of Corporation Finance of the United States Securities and Exchange Commission (the “SEC”) set forth in your letter dated
 May 16, 2025 (the “Comment Letter”) to Brent Morrison, Chief Executive Officer and President of Regional Health Properties, Inc. (the “Company”), with respect to the Form S-4 filed on May 5, 2025 (the “Form S-4”).

 We are authorized by the Company to provide the response contained in this letter on its behalf. The terms “we,” “us,” and “our” in the response refer to the Company. For your convenience, we set forth the comment from
 the Comment Letter in bold typeface and include the Company’s response below it. The numbered paragraph in this letter corresponds to the numbered paragraph of the Comment Letter.

 Registration Statement on Form S-4 filed May 5, 2025

 General

 1.

 Please revise to provide the information required by Item 14 of Form S-4 for both Regional and SunLink.  In this regard, we note that Regional and SunLink incorporate by reference certain
 documents previously filed with the SEC.  However, it appears neither Regional nor SunLink “meets the requirements for use of Form S-3”, and therefore are not eligible to incorporate by reference.  Refer to General Instructions B.1.c and
 C.1.c and Item 17(a) of Form S-4.

 Company Response:

 The Company has filed an amendment to the Form S-4 to provide the information required by Item 14 of Form S-4 for both the Company and SunLink.

 United States Securities and Exchange Commission
 June 2, 2025
 Page 2

 The Company appreciates the assistance the Staff has provided with its comment. If you have any questions, please do not hesitate to call me at (404) 885-3310.

 Sincerely,

 /s/ Paul Davis Fancher

 Paul Davis Fancher

 cc:

 Brent Morrison (Regional Health Properties, Inc.)

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 May 16, 2025

Brent Morrison
Chief Executive Officer and President
Regional Health Properties, Inc.
1050 Crown Pointe Parkway
Suite 720
Atlanta, GA 30338

 Re: Regional Health Properties, Inc.
 Registration Statement on Form S-4
 Filed May 5, 2025
 File No. 333-286975
Dear Brent Morrison:

 We have conducted a limited review of your registration statement and
have the
following comment.

 Please respond to this letter by amending your registration statement
and providing
the requested information. If you do not believe a comment applies to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.

 After reviewing any amendment to your registration statement and the
information
you provide in response to this letter, we may have additional comments.

Registration Statement on Form S-4 filed May 5, 2025
General

1. Please revise to provide the information required by Item 14 of Form S-4
for both
 Regional and SunLink. In this regard, we note that Regional and SunLink
incorporate
 by reference certain documents previously filed with the SEC. However,
it appears
 neither Regional nor SunLink meets the requirements for use of Form
S-3 , and
 therefore are not eligible to incorporate by reference. Refer to General
Instructions
 B.1.c and C.1.c and Item 17(a) of Form S-4.
 We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence
of action by the staff.
 May 16, 2025
Page 2

 Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.

 Please contact Benjamin Holt at 202-551-6614 or Jeffrey Gabor at
202-551-2544 with
any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Real
Estate & Construction
cc: Paul Davis Fancher
</TEXT>
</DOCUMENT>

CORRESP
1
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REGIONAL
HEALTH PROPERTIES, INC.

454
Satellite Boulevard NW, Suite 100

Suwanee,
Georgia 30024

(678)
869-5116

May
23, 2023

BY
EDGAR

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C. 20549

    Attn:

    Dan
    Duchovny

    Office
    of Mergers and Acquisitions

    Kibum
    Park

    Office
    of Real Estate and Construction

    Re:
    Request
    for Acceleration of Effectiveness of Regional Health Properties, Inc.’s Registration Statement on Form S-4 (File No. 333-269750)
    initially filed on February 14, 2023, as amended by Amendment No. 1
    thereto filed on April 28, 2023, Amendment No. 2 thereto filed on May 18, 2023 and Amendment No. 3 thereto filed on May 22, 2023

Ladies
and Gentlemen:

Pursuant
to Rule 461 promulgated under the Securities Act of 1933, as amended, Regional Health Properties, Inc. hereby requests that the effectiveness
of the Registration Statement on Form S-4 (File No. 333-269750) (the “Registration Statement”) be accelerated so that
the Registration Statement will become effective on May 25, 2023 at 9:00 a.m., Eastern time, or as soon thereafter as practicable.

Please
call Clinton W. Rancher or Joshua Davidson of Baker Botts L.L.P. at (713) 229-1820 or (713) 229-1527, respectively, if you have any questions
regarding this request, and please notify either of them when this request for acceleration has been granted.

[Signature
on following page]

    Very
    truly yours,

    REGIONAL
    HEALTH PROPERTIES, INC.

    By:
    /s/
    Brent Morrison

    Brent
    Morrison

    Chief
    Executive Officer and President

    cc:
    Clinton
    W. Rancher, Baker Botts L.L.P.

    Joshua
    Davidson, Baker Botts L.L.P.

CORRESP
1
filename1.htm

REGIONAL
HEALTH PROPERTIES, INC.

454
Satellite Boulevard NW, Suite 100

Suwanee,
Georgia 30024

(678)
869-5116

April
27, 2023

BY
EDGAR

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C. 20549

    Attn:

    Dan
    Duchovny

    Office
    of Mergers and Acquisitions

    Kibum
    Park

    Office
    of Real Estate and Construction

    Re:

    Regional
    Health Properties, Inc.

    Registration
    Statement on Form S-4

    Filed
    on February 14, 2023

    File
    No. 333-269750

    Schedule
    13E-3 filed by Regional Health Properties, Inc.

    Schedule
    TO-I filed by Regional Health Properties, Inc.

    File
    No. 005-83967

    Filed
    on February 14, 2023

Ladies
and Gentlemen:

Set
forth below are the responses of Regional Health Properties, Inc. (“we” or the “Company”) to the
comments set forth in the comment letter of the staff of the Office of Mergers and Acquisitions (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) dated March 8, 2023 (the “Comment Letter”)
with respect to the above referenced Registration Statement on Form S-4, File No. 333-269750 (the “Registration Statement”),
filed with the Commission on February 14, 2023. In connection with this response letter, the Company has filed Amendment No. 1 to the
Registration Statement (“Amendment No. 1”) with the Commission today via EDGAR. The changes reflected in Amendment
No. 1 include those made in response to the Staff’s comments.

For
your convenience, we have summarized below in bold type each comment of the Staff contained in the Comment Letter. The Company’s
response to each comment is set forth immediately below the text of each comment. Capitalized terms used but not defined herein have
the meanings ascribed to such terms in Amendment No. 1.

    1

Registration
Statement on Form S-4

Questions
and Answers, page 4

 1. Please
                                            add a question and answer describing whether holders of Series A shares are restricted to
                                            vote their shares in any specific way based on their intent to tender or vice versa.

RESPONSE:
In response to the Staff’s comment, the Registration Statement has been revised to add the requested question and answer. Please
see page 8 of Amendment No. 1.

Special
Factors - Determination of Fairness of the Exchange Offer by the Company, page 38

 2. Please
                                            remove the language that “the Company may be deemed to be engaged in a ‘going
                                            private’ transaction” (emphasis added) as you have determined to file a Schedule
                                            13E-3.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on page 38 of Amendment No. 1.

 3. Please
                                            revise this section to state whether the board has made a fairness determination as to unaffiliated holders of Series A preferred stock.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on page 39 of Amendment No. 1.

 4. Refer
                                            to the first bullet point on page 39. Please provide support for the conclusion expressed
                                            therein.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on page 39 of Amendment No. 1.

 5. Please
                                            refer to the third bullet point on page 39. We note that except for a higher dividend, which
                                            is not payable for more than four years, the terms of the Series B preferred stock do not
                                            appear to be an improvement over the terms of the Series A. Please revise to explain why
                                            you believe this bullet point is included as supportive of the fairness determination.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on page 39 of Amendment No. 1.

 6. Please
                                            expand your disclosure in the first two bullet points on page 40 to describe how these factors
                                            were supportive of your fairness determination.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on pages 40-41 of Amendment No. 1.

 7. Please
                                            revise your disclosure to discuss all of the factors referenced in instruction 2 to Item
                                            1014 of Regulation M-A.

RESPONSE:
In response to the Staff’s comment, the Company has revised the disclosure on pages 40-41 of Amendment No. 1.

    2

The
Special Meeting, page 52

 8. We
                                            note proposal number two contains two proposals for the holders of Series A preferred stock
                                            shares: one proposal is asking shareholders to vote to increase and then decrease the number
                                            of authorized shares of preferred stock while the other requests shareholders to vote to
                                            approve the creation of the Series B preferred stock. Similarly, proposal one for the holders
                                            of Common Stock and Series E Preferred Stock contains two proposals: one proposal is asking
                                            shareholders to vote to approve several amendments to your charter relating to the Series
                                            A preferred stock while the other requests shareholders to vote to increase and then decrease
                                            the number of authorized shares of preferred stock. Please unbundle each of these proposals
                                            to allow shareholders to vote separately on material matters. Alternatively, provide us with
                                            your analysis as to why you are not required to unbundle these proposals. Please refer to
                                            Rule 14a-4(a)(3) of Regulation 14A.

RESPONSE:
The Company respectfully acknowledges the Staff’s comment and advises the Staff that the Company has reviewed Rule 14a-4(a)(3)
of Regulation 14A and guidance issued by the Staff with respect thereto and does not believe the Company is required to unbundle the
components of either the Series B Preferred Stock Proposal or the Common Charter Amendment Proposal.

In
each of the proposals in question, the Company requests the applicable class of shareholders to increase and then decrease the number
of authorized shares of preferred stock. The requested temporary increase in the number of authorized shares of preferred stock is designed
to facilitate the issuance of the Series B Preferred Stock in certain circumstances. Because the shares of Series B Preferred Stock are
consideration in the Exchange Offer and must therefore be authorized, created, designated and issued immediately prior to the completion
of the Exchange Offer, if more than 2,188,465 shares of Series A Preferred Stock are tendered and accepted for exchange by the Company
in the Exchange Offer, the Company will have exceeded its authorized number of shares of preferred stock for a moment in time until the
Exchange Offer is completed and the shares of Series A Preferred Stock tendered in the Exchange Offer are retired and restored to the
status of authorized but unissued shares of undesignated preferred stock.

Pursuant
to the guidance in Question 101.01 of the Exchange Act Rule 14a-4(a)(3) Compliance and Disclosure Interpretations, the Staff notes that
“multiple matters that are so ‘inextricably intertwined’ as to effectively constitute a single matter need not be unbundled.”
With respect to the vote of the holders of Series A Preferred Stock, the Company believes the voting items in question are “inextricably
intertwined” because the temporary increase facilitates the completion of the Exchange Offer in certain circumstances and has no
other independent purpose.

Similarly,
pursuant to the guidance in Question 101.02 of the Exchange Act Rule 14a-4(a)(3) Compliance and Disclosure Interpretations, the Staff
notes that it “would not ordinarily object to the bundling of any number of immaterial matters with a single material matter”
and that, in determining materiality, “registrants should consider whether a given matter substantively affects shareholder rights.”
With respect to the vote of the holders of Common Stock and Series E Preferred Stock, the Company believes the temporary increase is
not material to such holders and does not substantively affect their rights. Before and after the temporary increase, the Company will
have (i) authorized share capital of 60,000,000 shares, consisting of 55,000,000 shares of common stock and 5,000,000 shares of preferred
stock, and (ii) 2,811,535 shares of preferred stock outstanding. Moreover, the Series E Preferred Stock has no significant economic rights
and will be redeemed in connection with the Special Meeting. The temporary increase therefore does not substantively affect the rights
of the holders of Common Stock and Series E Preferred Stock.

For
these reasons, the Company believes that the components of each of the Series B Preferred Stock Proposal and the Common Charter Amendment
Proposal should not be considered separately, and the Company respectfully submits that the holders of Series A Preferred Stock and the
holders of Common Stock and Series E Preferred Stock should instead consider each of the Series B Preferred Stock Proposal and the Common
Charter Amendment Proposal, as applicable, as currently drafted.

*
* * * *

If
you have any questions with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact
the undersigned at (678) 368-4402 or Clinton W. Rancher of Baker Botts L.L.P. at (713) 229-1820.

    3

    Very truly yours,

    REGIONAL HEALTH PROPERTIES, INC.

    By:

    /s/ Brent Morrison

    Brent
Morrison

    Chief
Executive Officer and President

    cc:

    Joshua
    Davidson, Baker Botts L.L.P.

    Clinton
    W. Rancher, Baker Botts L.L.P.

    4

United States securities and exchange commission logo
March 8, 2023
Joshua Davidson
Partner
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Re:Regional Health Properties, Inc.
Registration Statement on Form S-4
Filed on February 14, 2023
File No. 333-269750color:white;"_
Schedule 13E-3 filed by Regional Health Properties, Inc.
Schedule TO-I filed by Regional Health Properties, Inc.
File No. 005-83967
Filed on February 14, 2023
Dear Joshua Davidson:
            We have limited our review of your registration statement to those issues we have
addressed in our comments.  In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Questions and Answers, page 4
1.Please add a question and answer describing whether holders of Series A shares are
restricted to vote their shares in any specific way based on their intent to tender or vice
versa.

 FirstName LastNameJoshua Davidson
 Comapany NameBaker Botts L.L.P.
 March 8, 2023 Page 2
 FirstName LastName
Joshua Davidson
Baker Botts L.L.P.
March 8, 2023
Page 2
Special Factors - Determination of Fairness of the Exchange Offer by the Company, page 38
2.Please remove the language that "the Company may be deemed to be engaged in a 'going
private' transaction" (emphasis added) as you have determined to file a Schedule 13E-3.
3.Please revise this section to state whether the board has made a fairness determination as
to unaffiliated holders of Series A preferred stock.
4.Refer to the first bullet point on page 39. Please provide support for the conclusion
expressed therein.
5.Please refer to the third bullet point on page 39. We note that except for a higher dividend,
which is not payable for more than four years, the terms of the Series B preferred stock do
not appear to be an improvement over the terms of the Series A. Please revise to explain
why you believe this bullet point is included as supportive of the fairness determination.
6.Please expand your disclosure in the first two bullet points on page 40 to describe how
these factors were supportive of your fairness determination.
7.Please revise your disclosure to discuss all of the factors referenced in instruction 2 to
Item 1014 of Regulation M-A.
The Special Meeting, page 52
8.We note proposal number two contains two proposals for the holders of Series A preferred
stock shares: one proposal is asking shareholders to vote to increase and then decrease the
number of authorized shares of preferred stock while the other requests shareholders to
vote to approve the creation of the Series B preferred stock. Similarly, proposal one for
the holders of Common Stock and Series E Preferred Stock contains two proposals: one
proposal is asking shareholders to vote to approve several amendments to your charter
relating to the Series A preferred stock while the other requests shareholders to vote to
increase and then decrease the number of authorized shares of preferred stock. Please
unbundle each of these proposals to allow shareholders to vote separately on material
matters. Alternatively, provide us with your analysis as to why you are not required to
unbundle these proposals. Please refer to Rule 14a-4(a)(3) of Regulation 14A.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.

 FirstName LastNameJoshua Davidson
 Comapany NameBaker Botts L.L.P.
 March 8, 2023 Page 3
 FirstName LastName
Joshua Davidson
Baker Botts L.L.P.
March 8, 2023
Page 3
            You may contact Dan Duchovny at (202) 551-3619 with any questions.
Sincerely,
Division of Corporation Finance
Office of Mergers and Acquisitions

CORRESP
1
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REGIONAL
HEALTH PROPERTIES, INC.

454
Satellite Boulevard NW, Suite 100

Suwanee,
Georgia 30024

(678)
869-5116

February
14, 2023

BY
EDGAR

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C. 20549

  Attn:
  Office of Mergers and Acquisitions

  Office of Real Estate and
  Construction

 Re: Regional
                                            Health Properties, Inc.’s Registration Statement on Form S-4 filed on February 14,
                                            2023

Ladies
and Gentlemen:

Regional
Health Properties, Inc. (the “Company”) filed with the Securities and Exchange Commission (the “Commission”)
a Registration Statement on Form S-4 (File No. 333-256667) on June 1, 2021,
as amended by Amendment No. 1 thereto filed on July 2, 2021, Amendment No.
2 thereto filed on February 11, 2022 and Amendment No. 3 thereto filed on February 22, 2022 (as amended, the “Prior Registration
Statement”), and a Schedule TO-I/13E-3 on February 11, 2022, as amended by Amendment No. 1 thereto filed on February 22, 2022.
The Prior Registration Statement was declared effective by the Commission on February 25, 2022. The Prior Registration Statement related
to a proposed exchange offer (the “Prior Exchange Offer”) of one share of the Company’s 10.875% Series A Cumulative
Redeemable Preferred Shares (the “Series A Preferred Stock”) for one newly issued share of the Company’s 12.5%
Series B Cumulative Redeemable Preferred Shares (the “Series B Preferred Stock”). The Company held a special meeting
of the holders of the Series A Preferred Stock and holders of the Company’s common stock (the “Common Stock”)
for such holders to vote on the proposals related to the Prior Exchange Offer. The Prior Exchange Offer was terminated on July 25, 2022
as a result of the failure to obtain the requisite shareholder approval for the Common Charter Amendment Proposal (as defined in the
Prior Registration Statement), which was a condition to the closing of the Proposed Exchange Offer that could not be waived.

The
Company has today filed a Registration Statement on Form S-4 (the “New Registration Statement”) with the Commission
via EDGAR. The New Registration Statement relates to a proposed exchange offer of one share of Series A Preferred Stock for one newly
issued share of Series B Preferred Stock (the “New Exchange Offer”). The terms of the New Exchange Offer are substantially
the same as the terms of the Prior Exchange Offer, except as set forth below. The Company will hold a special meeting (the “New
Special Meeting”) of the holders of the Series A Preferred Stock and the holders of the Common Stock and the Company’s
newly issued Series E Redeemable Preferred Shares (the “Series E Preferred Stock”) to vote on proposals related to
the New Exchange Offer.

The
Series B Preferred Stock Proposal (as defined in the New Registration Statement) has been revised to (i) provide that the proposed amendment
to the Company’s Amended and Restated Articles of Incorporation (as currently in effect, the “Charter”) to increase
the authorized number of shares of preferred stock to 6,000,000 shares is temporary to accommodate the closing of the New Exchange Offer
and (ii) include, as part of the proposal, a subsequent amendment to the Charter to decrease the authorized number of shares of preferred
stock to 5,000,000 shares, following the consummation of the New Exchange Offer.

In
addition, the Common Charter Amendment Proposal (as defined in the New Registration Statement) has been revised to (i) provide that the
proposed amendment to the Charter to increase the authorized number of shares of the Company to 61,000,000 shares, consisting of 55,000,000
shares of common stock and 6,000,000 shares of preferred stock, is temporary to accommodate the closing of the New Exchange Offer and
(ii) include, as part of the proposal, a subsequent amendment to the Charter to decrease the authorized number of shares of the Company
to 60,000,000 shares, consisting of 55,000,000 shares of common stock and 5,000,000 shares of preferred stock, following the consummation
of the New Exchange Offer.

Further,
on February 13, 2023, the Company’s Board of Directors declared a dividend of one one-thousandth (1/1,000th) of a share of Series
E Preferred Stock for each outstanding share of Common Stock, payable on February 28, 2023 to shareholders of record of Common Stock
as of 5:00 p.m. Eastern Time on February 27, 2023. The holders of Series E Preferred Stock have 1,000,000 votes per whole share of Series
E Preferred Stock (i.e., 1,000 votes per one one-thousandth of a share of Series E Preferred Stock) and are entitled to vote with
the Common Stock, together as a single class, on the Common Charter Amendment Proposal and the Adjournment Proposal (each as defined
in the New Registration Statement), but are not otherwise entitled to vote on the other proposals to be presented at the New Special
Meeting.

Please
call Clinton W. Rancher or Joshua Davidson of Baker Botts L.L.P. at (713) 229-1820 or (713) 229-1527, respectively, if you have any questions
regarding the foregoing.

[Signature
on following page]

    Very
truly yours,

    REGIONAL
    HEALTH PROPERTIES, INC.

    By:
    /s/
    Brent Morrison

    Brent
    Morrison

    Chief
    Executive Officer and President

    cc:
    Clinton
    W. Rancher, Baker Botts L.L.P.

    Joshua
    Davidson, Baker Botts L.L.P.

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Acceleration Request

 REGIONAL HEALTH PROPERTIES, INC.

454 Satellite Boulevard NW, Suite 100

Suwanee, Georgia 30024

(678) 869-5116

February 23, 2022

 BY EDGAR

 U.S. Securities and Exchange Commission

 Division
of Corporation Finance

 100 F Street, N.E.

 Washington, D.C.
20549

Attn:
 Nicholas Panos

 Office of Mergers and Acquisitions

 Ron Alper

 Office of Real Estate and Construction

Re:
 Request for Acceleration of Effectiveness of Regional Health Properties, Inc.’s Registration Statement on
Form S-4 (File No. 333-256667) initially filed on June 1, 2021, as amended by Amendment No. 1 thereto filed on July 2, 2021, Amendment No. 2 thereto filed on February 11, 2022,
and Amendment No. 3 thereto filed on February 22, 2022

 Ladies and Gentlemen:

Pursuant to Rule 461 promulgated under the Securities Act of 1933, as amended, Regional Health Properties, Inc. hereby requests that the
effectiveness of the Registration Statement on Form S-4 (File No. 333-256667) (the “Registration Statement”) be accelerated so that the Registration Statement will become effective on
February 25, 2022 at 9:00 a.m., Eastern time, or as soon thereafter as practicable.

 Please call Clinton W. Rancher or Joshua
Davidson of Baker Botts L.L.P. at (713) 229-1820 or (713) 229-1527, respectively, if you have any questions regarding this request, and please notify either of them when
this request for acceleration has been granted.

 [Signature on following page]

Very truly yours,

REGIONAL HEALTH PROPERTIES, INC.

By:

/s/ Brent Morrison

Brent Morrison

Chief Executive Officer and President

cc:
 Clinton W. Rancher, Baker Botts L.L.P.

 Joshua Davidson, Baker Botts L.L.P.

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1
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CORRESP

 REGIONAL HEALTH PROPERTIES, INC.

454 Satellite Boulevard NW, Suite 100

Suwanee, Georgia 30024

(678) 869-5116

February 22, 2022

 BY EDGAR

 U.S. Securities and Exchange Commission

 Division of
Corporate Finance

 100 F Street, N.E.

 Washington, D.C. 20549

Attn:
 Nicholas Panos

 Office of Mergers and Acquisitions

 Ron Alper

 Office of Real Estate and Construction

Re:
 Regional Health Properties, Inc.

Amendment No. 2 to Registration Statement on Form S-4

Filed February 11, 2022

File No. 333-256667

Schedule TO-I/13E-3

Filed February 11, 2022

File No. 005-83967

Ladies and Gentlemen:

 Set forth below are the
responses of Regional Health Properties, Inc. (“we” or the “Company”) to the oral comments of the staff of the Office of Mergers and Acquisitions (the “Staff”) of the Securities and Exchange
Commission (the “Commission”), provided telephonically by Nicholas Panos of the Staff to Joshua Davidson and Clinton W. Rancher of Baker Botts L.L.P. on February 18, 2022, with respect to the above referenced Amendment
No. 2 to Registration Statement on Form S-4, File No. 333-256667 (the “Registration Statement”), and the Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO-I/13E-3, File No. 005-83967 (the “Schedule TO”), in each case filed
with the Commission on February 11, 2022. We are submitting this response letter via EDGAR and are concurrently delivering it to the Staff via email.

In connection with this response letter, the Company has filed Amendment No. 3 to the Registration Statement (“Registration
Statement Amendment”) and Amendment No. 1 to the Schedule TO (“Schedule TO Amendment”) with the Commission today via EDGAR. The changes reflected in the Registration Statement Amendment and the Schedule TO Amendment
include those made in response to the Staff’s comments.

 For your convenience, we have summarized below in bold type each oral
comment of the Staff. The Company’s response to each comment is set forth immediately below the text of each comment. Capitalized terms used but not defined in this letter have the meanings given to them in the Registration Statement.

 1

 Schedule TO

Submission Type

1.
 Rule 301 of Regulation S-T requires that filers prepare electronic
filings in the manner prescribed by the EDGAR Filer Manual. Section 7.3.10.2 of the EDGAR Filer Manual permits a SC TO-I to be paired with a SC 13E3 for a single submission and that the Submission
Type should be SC TO-I. It appears that the Schedule TO was filed under Submission Type SC 13E3 and was not filed under Submission Type SC TO-I. Please ensure that
the Schedule TO Amendment is filed under Submission Type SC-TO-I/A.

RESPONSE: In response to the Staff’s comment, the Schedule TO Amendment has been filed under Submission Type SC TO-I/A. We confirmed that the Schedule TO was filed under SC TO-I as well as SC 13E3, as illustrated by the below screenshot taken from the classic version of the
Company’s EDGAR page. However, the Schedule TO does not appear as filed under Submission Type SC TO-I on the new version of the Company’s EDGAR page, as illustrated below. We are unable to determine
the reason for this discrepancy, but based on the foregoing the Company believes that the prior submission was compliant with Rule 301 and Section 7.3.10.2 of the EDGAR Filer Manual.

Classic EDGAR View

 New EDGAR View

 2

 Exhibits

2.
 Item 1016(a) of Regulation M-A requires filing persons to file as an
exhibit any disclosure materials furnished to security holders by or on behalf of the filing person. If the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual
Report”) will be furnished to security holders by the Company in connection with the exchange offer, please file the Annual Report as an exhibit to the Schedule TO Amendment.

RESPONSE: The Company filed the Annual Report with the Commission on February 22, 2022 and has now filed the Annual Report as
Exhibit (a)(5)(iv) to the Schedule TO Amendment.

 Registration Statement

Proxy Statement/Prospectus Cover Page

3.
 We note the legend on the cover page of the proxy statement/prospectus states “[t]he information in
this proxy statement/prospectus is not complete and may be changed.” We also recognize that a preliminary prospectus used to commence an exchange offer early under Rule 162 must include the “red herring” legend required by Item
501(b)(10) of Regulation S-K. The sample legend provided in Item 501(b)(10)(iv) that indicates information in the prospectus is “not complete and may be changed.” If the Company intends to commence
the exchange offer early, the legend should be appropriately tailored to explain that the instant proxy statement/prospectus may simply be amended. The legend should not state that the proxy statement/prospectus is not complete. Please refer to our
publicly available Telephone Interpretation Manual Supplement dated July 2001, Section I.E.2, for an example of a legend that may be used when an exchange offer is commenced early in reliance upon Rule 162.

RESPONSE: In response to the Staff’s comment, the Company confirms that the Company will not commence the Exchange Offer prior to
the Registration Statement’s becoming effective and will remove the “red herring” legend in the final proxy statement/prospectus filed with the Commission in accordance with Rule 424. We note that Rule 162 does not allow early
commencement for a going-private transaction (as defined by Rule 13e-3).

 Determination of Fairness of the
Exchange Offer by the Board of Directors

4.
 We note that the Board of Directors determined the Exchange Offer, the Series A Charter Amendments and the
Series B Charter Amendments are procedurally and substantively fair to the holders of Series A Preferred Stock. Please revise your disclosure so that the Company, who is the filing person of the Rule 13e-3
transaction statement, or the Board of Directors acting on behalf of the Company, states whether the Rule 13e-3 transaction is fair to the holders of Series A Preferred Stock. See Item 1014(a) of Regulation M-A.

 RESPONSE: In response to the Staff’s comment, the Company has
revised the disclosure on pages 42-44 of the Registration Statement Amendment to clarify that the Board of Directors, on behalf of the Company, determined that the Exchange Offer, the Series A Charter
Amendments and the Series B Charter Amendments are procedurally and substantively fair to the holders of Series A Preferred Stock.

 Conditions of the
Exchange Offer

5.
 We note your disclosure with respect to the conditions of the Exchange Offer states that “[i]f we fail
at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right.” Any waiver of such rights would constitute a material change to the information previously disclosed that would require an amendment
to the Registration Statement pursuant to Rule 13e-3(d)(2). Please confirm that the Registration Statement will be amended to comply with this rule as necessary.

RESPONSE: In response to the Staff’s comment, the Company has revised the disclosure on page 54 of the Registration Statement
Amendment to delete this sentence.

 3

 Fees and Expenses

6.
 Please revise your disclosure to include an itemized statement of all expenses incurred or estimated to be
incurred in connection with the transaction. See Item 1007(c) of Regulation M-A.

RESPONSE: In response to the Staff’s comment, the Company has revised the disclosure on page 54 of the Registration Statement
Amendment to include the itemized statement of expenses required by Item 1007(c) of Regulation M-A.

* * * * *

 If you have any
questions with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact the undersigned at (678) 368-4402 or Clinton W. Rancher of Baker Botts L.L.P. at
(713) 229-1820.

 4

Very truly yours,

REGIONAL HEALTH PROPERTIES, INC.

By:

 /s/ Brent Morrison

Brent Morrison

Chief Executive Officer and President

cc:
 Joshua Davidson, Baker Botts L.L.P.

Clinton W. Rancher, Baker Botts L.L.P.

 5

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rhe-corresp.htm

REGIONAL HEALTH PROPERTIES, INC.

454 Satellite Boulevard NW, Suite 100

Suwanee, Georgia 30024

(678) 869-5116

July 2, 2021

BY EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attn: Nicholas Panos

Office of Mergers and Acquisitions

Ron Alper

Office of Real Estate and Construction

Re: Regional Health Properties, Inc.

Registration Statement on Form S-4

Filed June 1, 2021

File No. 333-256667

Ladies and Gentlemen:

Set forth below are the responses of Regional Health Properties, Inc. (“we” or the “Company”) to the oral comments of the staff of the Office of Mergers and Acquisitions (the “Staff”) of the Securities and Exchange Commission (the “Commission”), provided telephonically by Nicholas Panos of the Staff to Joshua Davidson and Clinton W. Rancher of Baker Botts L.L.P. on June 8, 2021, with respect to the above referenced Registration Statement on Form S-4, File No. 333-256667 (the “Registration Statement”), filed with the Commission on June 1, 2021. We are submitting this response letter via EDGAR and are concurrently delivering it to the Staff via email.

In connection with this response letter, the Company has filed Amendment No. 1 to the Registration Statement (“Amendment No. 1”) with the Commission today via EDGAR. The changes reflected in Amendment No. 1 include those made in response to the Staff’s comments.

For your convenience, we have summarized below in bold type each oral comment of the Staff. The Company’s response to each comment is set forth immediately below the text of each comment.

Cover Page, Calculation of Filing Fee

1.

We note that you have calculated the filing fee using Rule 457(c) of the Securities Act of 1933 (the “Securities Act”). Rule 457(f) of the Securities Act applies in transactions where securities are offered in exchange for other securities. Please recalculate the filing fee in accordance with Rule 457(f) of the Securities Act.

RESPONSE: In response to the Staff’s comment, the Registration Statement has been revised to calculate the filing fee in accordance with Rule 457(f).

1

Cautionary Note Regarding Forward-Looking Statements

2.

The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to statements made in connection with an exchange offer. Therefore, please delete the reference to the Private Securities Litigation Reform Act of 1995.

RESPONSE: In response to the Staff’s comment, the Company has revised the disclosure on page 2 of Amendment No. 1 to delete the reference to the Private Securities Litigation Reform Act of 1995.

* * * * *

If you have any questions with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact the undersigned at (678) 368-4402 or Clinton W. Rancher of Baker Botts L.L.P. at (713) 229-1820.

2

Very truly yours,

REGIONAL HEALTH PROPERTIES, INC.

By: /s/ Brent Morrison

       Brent Morrison

       Chief Executive Officer and President

cc: Joshua Davidson, Baker Botts L.L.P.

Clinton W. Rancher, Baker Botts L.L.P.

3

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		Document

 Brent Morrison

 Direct: 678-368-4402

 Email: brent.morrison@regionalhealthproperties.com

November 15, 2017

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:    Mr. Paul Fischer

Re:     Regional Health Properties, Inc.

Post-Affective Amendment No. 1 on Form S-3

Filed October 11, 2017

File No. 333-201462

Mr. Fischer:

On behalf of Regional Health Properties, Inc. (“RHE”), we hereby respond to the Staff’s verbal comments provided to our counsel Lori A. Gelchion, with Rogers & Hardin LLP, received October 17, 2017, (the "Comments"), regarding the above referenced Post-Affective Amendment No. 1, filed October 11, 2017 on Form S-3 ("Amendment No.1").

 After filing Amendment No. 1, RHE experienced certain management changes. As a result, RHE now intends to deregister all of the securities which remain unsold under File No. 333-201462 (the "Registration Statement") and no longer intends on adopting such Registration Statement for its own purposes as contemplated by Amendment No. 1. Accordingly, Post-Effective Amendment No. 2 (which is being transmitted to the Securities and Exchange Commission in connection herewith) does not revise the filing to reflect Comments but seeks to amend the filing to deregister all unsold securities under the Registration Statement.

* * *

If you have any questions concerning the matters discussed in this letter please contact Tonya McMorris, RHE's Director of Reporting, at 678-368-4380.

Very truly yours,

/s/ Brent Morrison

Interim Chief Executive Officer and Director

CORRESP
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		CORRESP

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

December 3, 2015

Via Edgar and E-mail

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

Attention:     Mr. Larry Spirgel

Mr. Paul Fischer

Re:    AdCare Health Systems, Inc.’s Registration Statement on Form S-3 (File No. 333-207704)

Ladies and Gentlemen:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, AdCare Health Systems, Inc. (the “Company”) hereby requests that the Securities and Exchange Commission (the “Commission”) accelerate the effective date of the Company’s Registration Statement (the “Filing”) on Form S-3 (File No. 333-207704), so that it will become effective at 5:00 p.m. on December 7, 2015, or as soon thereafter as practicable.

The Company hereby acknowledges that:

1)should the Commission or the staff of the Commission (the “Staff”), acting pursuant to delegated authority, declare the Filing effective, it does not foreclose the Commission from taking any action with respect to the Filing;

2)the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the Filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the Filing; and

3)the Company may not assert Staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Yours very truly,

ADCARE HEALTH SYSTEMS, INC.

By: /s/ Allan J. Rimland

Allan J. Rimland

President & Chief Financial Officer

879930

Mail Stop 3720

December 1 , 2015

Mr. Allan Rimland
President and Chief Financial Officer
Adcare Health Systems, Inc.
1145 Hembree Road
Roswell, GA 300 76

Re: Adcare  Health Systems, Inc.
 Form 10 -K for Fiscal Year Ended December 31, 2014
Filed March 31, 2015
  File No. 001-33135

Dear Mr. Rimland :

We have completed our review of your filing.  We remind you that our comments or
changes to disclosure in response to our  comments do not foreclose the Commission from taking
any action wi th respect to the company or its  filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities l aws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Robert S. Littlepage, for

 Carlos Pacho
Senior Assistant Chief Accountant
 AD Office 11 – Telecommunications

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		CORRESP

Securities and Exchange Commission

Division of Corporation Finance

October 30, 2015

Page 1

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

October 30, 2015

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Carlos Pacho

Re:     AdCare Health Systems, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2014

Filed March 31, 2015

Form 10-Q for the Fiscal Quarter Ended June 30, 3015

Filed August 13, 2015

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby provides an additional supplemental response to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the oral comment issued by the Staff to Mr. Allan Rimland on October 29, 2015. For the convenience of the Staff, the Company has restated this Comment in italics and presented the Company’s additional response thereto below.

Note 1. Intangible Assets an Goodwill, page 84

Note 6. Intangible Assets and Goodwill, page 92

1.     In addition, tell us why you continue to retain ownership of the goodwill related to the facilities you no longer operate and why such goodwill is not allocated to the related discontinued facilities in determining your gain or loss from discontinued operations. Please refer to your basis in the accounting literature.

In July 2014, the Company approved a strategic plan to transition to a healthcare property holding and leasing company (the “New Business Model”). Under the New Business Model, all patient care

1 | Page

Securities and Exchange Commission

Division of Corporation Finance

October 30, 2015

Page 2

related revenues and expenses (the “Operating Activities”) were to be transferred to third-party operators (the “Operations Transfer”) through the execution of facility leases and subleases.

According to Accounting Standards Codification (“ASC”) 350-20-35-14 through 35-17 (FASB 142 paragraphs 34-35), the allocation of goodwill to a reporting unit should be determined by the acquisition price and the fair value of each reporting unit acquired. The purchase price is allocated to the assets and liabilities of each acquired entity and if a reporting unit has not been assigned any assets or liabilities at acquisition, then the amount of goodwill to be assigned to such a unit would be determined by applying the difference between the fair value of that reporting unit before acquisition to its fair value after acquisition, which would represent the amount of goodwill to be allocated to such a reporting unit.

Goodwill on each of the Company’s facilities was initially recorded at the time of purchase and was based on the purchase price and fair market values of the assets and liabilities acquired. Goodwill was recorded only for facilities where the Company owned real property and not to any facilities where the Company acted as a lessee. Under the New Business Model, the Company continues retaining ownership of its facilities and continues to generate cash flows through leasing and subleasing arrangements. Under the New Business Model, the Operating Activities (which include all patient care related activities) are reclassified to discontinued operations on the Company’s financial statements at the Operations Transfer date (ASC 205-20) and given that no acquisition price, fair market value, or goodwill is associated with the disposed Operating Activities at any Operations Transfer date, no additional gain or loss is recorded from disposition of such Operating Activities.

* * *

The Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in its Annual Report on Form 10-K for the year ended December 31, 2014 and its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, each as may be amended (collectively, the “Filings”); (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Filings; and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions concerning the matters discussed in this letter please contact Lori A. Gelchion, with Rogers & Hardin LLP, counsel to the Company, at 404-420-4646.

Very truly yours,

Allan Rimland

President and Chief Financial Officer

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ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

October 23, 2015

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Carlos Pacho

Re:     AdCare Health Systems, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2014

Filed March 31, 2015

Form 10-Q for the Fiscal Quarter Ended June 30, 3015

Filed August 13, 2015

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Allan Rimland, dated October 9, 2015. For the convenience of the Staff, the Company has restated in this letter in italics each Comment and presented the Company’s response thereto below the restated Comment.

Note 1. Intangible Assets and Goodwill, page 84

Note 6. Intangible Assets and Goodwill, page 92

1.     We note your response to comment 1. Since the recorded goodwill is based on your previous business model, tell us if you would have recognized goodwill impairment under that model after you approved your strategic plan in July but prior to entering into leases or subleases thereafter. In addition, tell us why you continue to retain ownership of the goodwill related to the facilities you no longer operate and why such goodwill is not allocated to the related discontinued facilities in determining your gain or loss from discontinued operations. Please refer to your basis in the accounting literature.

At December 31, 2014, using assumptions from the Company’s historical business model of owning and operating skilled nursing and assisted living facilities (the “Old Business Model”), the Company

Securities and Exchange Commission

Division of Corporation Finance

October 23, 2015

Page 2

did not recognize goodwill impairment due to qualitative factors in accordance with the “Subsequent Measurement” guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 where management deemed it more likely than not that the fair value of the reporting entities exceeded their carrying amounts. Furthermore, in July 2014, when the Company approved the new strategic plan to transition to a healthcare property holding and leasing company (the “New Business Model”), goodwill impairment was not recognized, neither before nor after entering into leases or subleases in pursuit of the New Business Model given that: (i) under the New Business Model, the Company retains ownership of the facilities that originally generated the goodwill recorded; and (ii) the goodwill recorded continues to be supported by either the continuation of cash flows under the Old Business Model, or the projected cash flows under the New Business Model’s anticipated leasing arrangements. Therefore, under both the Old Business Model and the New Business Model, the fair value of the Company’s facilities continues to support the long lived assets (inclusive of goodwill) balances recorded (ASC 350).

2.     Additionally, in testing goodwill for impairment after entering into leases or subleases, you stated that the Company used the same analysis as the long-lived asset (LLA) testing to determine the recoverability of goodwill and intangible lease rights, which entailed a projection of your “undiscounted future cash flows” as a holding entity after entering into leases or subleases. Tell us how your impairment testing complied with the guidance in ASC 350-20-35-22 to 24.

In our previous response letter to the Commission dated September 28, 2015 (“Previous Response Letter”), management made mention of testing the recoverability of long lived assets (“LLA”), which includes goodwill, through the use of undiscounted future cash flows. This reference was not meant to imply to the Commission that goodwill was tested by the use of undiscounted future cash flows. Goodwill was tested separately for impairment using various qualitative factors in accordance with the “Subsequent Measurement” guidance of ASC 350-20-35-3 where management deemed it more likely than not that the fair value of the reporting entities exceeded their carrying amounts, including goodwill.

Form 10-Q for Fiscal Quarter Ended June 30, 2015 (“Form 10-Q”)

Cash Requirements, page 13 and 45

3.

 In the last paragraph, you state, in part, that you seek to improve your operating results through a series of leasing and subleasing transactions with favorable terms and consistent and predictable cash flow. However, it appears that proceeds from your future minimum lease receivables as reported on page 17, which could be further reduced by amounts assigned to your lenders, do not appear to be sufficient to cover your annual cost of operations nor the scheduled maturities of your long-term debt. Please discuss in more detail the measures you have undertaken to streamline your operations and cost infrastructure in connection with your transition to a healthcare property holding and leasing

2 | Page

Securities and Exchange Commission

Division of Corporation Finance

October 23, 2015

Page 3

and how such measures will allow you to realize consistent and predictable cash flows as compared to your prior skilled nursing and assisted living facilities business. In addition, discuss whether or not you are on track with regards to your planned operating results and cash flows. If not, discuss the actions you are taking to meet your plans.

Under the New Business Model, all patient care related revenues and expenses were to be transferred to third-party operators through the execution of facility leases and subleases. Management anticipates completion of the Company’s transition by December 31, 2015 and expects future cash flows to be sufficient to cover the Company’s annual cost of operations as well as mandatory principal repayments on long-term debt. The following illustrates (in thousands) anticipated annual cash flows assuming a complete transition to the New Business Model per the date noted above and for the twelve months ended December 31, 2016.

 $21,146

 Future minimum lease receivables for the forward twelve months as outlined in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015

8,400

 Additional future minimum lease receivables for the forward twelve months for facilities not yet transferred at June 30, 2015

1,200

 Projected annual management fees and other income from third parties

(7,980)

 Future minimum lease payments for the forward twelve months as outlined in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015

(2,000)

 Projected mandatory principal repayments on long-term debt

(6,800)

 Projected annual cash interest (excludes $600 of non-cash amortization of deferred financing costs)

(4,000)

 Projected annual cash G&A (excludes $1,300 of non-cash stock based compensation)

(5,700)

 Annualized dividends on preferred stock

 $4,266

 Total anticipated annual cash flows under the New Business Model

The measures the Company has or will undertake to streamline operations and cost infrastructure in connection with its transition to the New Business Model include: (i) continuing to reduce and ultimately eliminate patient care revenues and related costs while increasing future minimum lease receivables; (ii) refinance or repay current maturities to reduce interest costs and reduce mandatory principal repayments through refinancing transactions with the United States Department of Housing and Urban Development (“HUD”) or other lending sources; (iii) reducing general and administrative expenses (“G&A”). Additional details of such considerations will be provided in future filings with the Commission.

With regards to the Company’s annual patient care related revenues and costs of operations, the Company is still in a process of transition and has not yet fully eliminated such revenues and costs of operations. When the process of transition to the New Business Model is completed, all patient care related revenues and costs of operations will be eliminated, including costs of services.

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Securities and Exchange Commission

Division of Corporation Finance

October 23, 2015

Page 4

While annual patient care revenues and costs will continue to decrease as the transition to the New Business Model nears completion, future minimum lease receivables from facilities leased or subleased to third-party operators will increase from those disclosed on page 17 of the Form 10-Q for the quarter ended June 30, 2015.  Page 17 illustrates that the total future minimum lease receivables from the Company’s facilities leased and subleased to third-party operators totaled $172,632, with $21,146 expected for the period ended December 31, 2016 (amounts in thousands). These amounts do not include future minimum lease receivables for the facilities that the Company continued to operate as of June 30, 2015, but have transferred or will transfer operations after such date. The combined future minimum lease receivables on all buildings that have or are expected to transfer operations subsequent to June 30, 2015, are approximately $87.0 million, or approximately $8.4 million per year. Such amounts are expected to be reflected as additional future minimum lease receivables in the appropriate schedule in the Company’s future filings with the Commission after the applicable facility operations have been transferred.

The company manages three facilities for third parties and collects a monthly fee for such services. The Company’s contract to management for third parties is expected to continue as part of the New Business Model. Also, in addition to monthly rent payments, the company collects monthly interest payments from its tenants related to approximately $2.6 million of lease inducements outstanding. Such interest on lease inducements is expected to continue for the full lease term of all applicable facilities. The annual combined total for the Company’s management fees and interest on lease inducements amount to approximately $1.2 million.

As noted in Note 7 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, total estimated future minimum lease payments on operating leases are expected to be $44,370, and for the twelve-month period ended December 31, 2016 are expected to be $7,980 (amount in thousands). This amount will not substantially change once the transition to the New Business Model is complete because the Company’s future minimum lease payments to its landlords are already fully included in the future minimum lease payments schedule in Note 7.

As discussed in the Prior Response Letter, the Company expects to refinance or repay all current maturities for the periods ended June 30, 2016 and June 30, 2017, which are listed in the schedule of maturities in Note 9 of the Form 10-Q for the quarter ended June 30, 2015, through refinancing transactions with HUD and other refinancing arrangements. Mandatory principal repayments on long-term debt are expected to average approximately $2.0 million per year through routine debt service on the Company’s senior debt after currently contemplated refinancing arrangements are completed.

Annualized interest expense for the three month ended June 30, 2015 were $7.4 million, exclusive of $1.7 million of annualized non-cash amortization of deferred financing costs. As the Company transitions into the New Business Model, management expects a continuation of deleveraging of the Company’s balance sheet. Such deleveraging is expected to cause interest expense to decline

4 | Page

Securities and Exchange Commission

Division of Corporation Finance

October 23, 2015

Page 5

to $6.8 million, exclusive of approximately $0.6 million of annual non-cash amortization of deferred financing costs.

As the transition to the New Business Model nears completion, G&A will also continue to decline from what has been historically observed. For example, on the consolidated statements of operations as presented in the Quarterly Report on Form 10-Q, quarter-over-quarter annualized G&A declined by approximately $6.7 million for the three-months ended June 30, 2015 when compared with the three-months ended June 30, 2014. Further reductions in G&A are expected in future quarters as management continues to reduce annual cash G&A to approximately $4.0 million through reductions in staffing costs, information technology related costs, contract and legal service costs, and other G&A related costs. In transitioning to the New Business Model, the Company’s G&A is expected to drop to a level that is more appropriate for a healthcare property holding and leasing company as opposed to that of an operating company. Such expected G&A amounts exclude non-cash amortization of stock based compensation, which is anticipated to be $1.3 million per annum.

Annualized dividends on preferred stock for the three months ended June 30, 2015 was approximately $5.7 million. As discussed in the Prior Response Letter, the Board of Directors reserves the right to elect not to pay dividends on common stock and to delay dividend payments on preferred stock if necessary or appropriate. Management expects to continue dividend payments on its preferred stock.

After the transition to the New Business Model is complete, most G&A costs are expected to remain static with minimal incremental staffing needs, even if additional facilities are acquired. Therefore, any future acquisitions are expected to immediately become incremental to cash flow by adding additional streams of revenues with minimal to no increase in incremental operating costs. To this end, in September 2014, the Company entered into a non-binding letter of intent to purchase a facility in Florida for $4.8 million. Management is in the process of negotiating a final definitive agreement on the purchase.

As the Company continues to transition to the New Business Model, management believes that the Company will be in a better position to realize a more consistent and predictable cash flow as compared to the cash flow under the Old Business Model. In prior years, income was generated based on a wide array of factors relevant to the nature of running a healthcare services operating business, including facility occupancy, census mix (Medicare, Medicaid and Commercial mix), billing rates, treatment costs, staffing requirements, and regulatory requirements. Under the New Business Model, the risk of income variability to the Company presented by these factors is reduced because patient care income (revenues less costs of operations) is replaced with a more steady and consistent stream of monthly rental income. Although the New Business Model has its own risks, such as the new operator’s ability to generate sufficient income to cover rent payments to the Company, the risks associated with operating the facilities are largely absorbed by the new operators and are no longer directly assumed by the Company.

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Securities and Exchange Commission

Division of Corporation Finance

October 23, 2015

Page 6

Based on the foregoing, the Company believes it is on track with its planned operating results and cash flows. As of the date of this response letter, the Company continues to operate four facilities compared to fourteen at June 30, 2015, and has entered into sale or lease/operations transfer agreements for all such facilities. The lease/operations transfer of one of these facilities is expected to occur, and the sale of one facility is expected to close, on November 1, 2015. The remaining two facilities are expected to transfer operations by December 31, 2015.

* * *

The Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in its Annual Report on F

Mail Stop 3720

October 9 , 2015

Mr. Allan Rimland
President and Chief Financial Officer
Adcare Health Systems, Inc.
Two Buckhead Plaza
3050 Peachtree Road NW
Suite 355
Atlanta, GA 30305

Re: Adcare Health Systems, Inc.
 Form 10 -K for Fiscal Year Ended December 31, 2014
Filed March 31, 2015
Form 10 -Q for Fiscal Quarter Ended June 30, 2015
Filed August 13, 2015
Response Dated September 28, 2015
  File No. 001-33135

Dear Mr. Rimland :

We have reviewed your September 28, 2015  response to our comment letter and have the
following comments.  Please comply with the following comments in future filings.  Confirm in
writing that you will do so and explain to us how you intend to comply.   In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you wil l respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.

After reviewing your response to these comments, we may have additional comments.

Note 1. Intangible Assets an Goodwill, page 8 4
Note 6. Intangible Assets and Goodwill, page 92

1. We note your response to comment 1.  Since the recorded goodwill is based on your
previous business model, tell us if you would have recognized goodwill impairment
under that model after you approved your strategic plan in July but prior to entering into
leases or subleases thereafter.  In addition, tell us why you continue to retain ownership
of the goodwill related to the facilities you no longer operate and why such goodwill is

Mr. Allan Rimland
Adcare Health Systems, Inc.
October 9 , 2015
Page 2

 not allocated to the relat ed discontinued facilities in determining your gain or loss from
discontinued operations.  Please refer to your basis in the accounting literature.

2. Additionally, in testing goodwill for impairment after entering into leases or subleases,
you stated tha t the Company used the same analysis as the long -lived asset (LLA) testing
to determine the recoverability of goodwill an d intangible lease rights, which entailed a
projection of your “undiscounted future cash flows” as a holding entity after entering into
leases or subleases.   Tell us how your impairment testing complied with the guidance in
ASC 350 -20-35-22 to 24.

Form 10 -Q for the Quarter Ended June 30, 2015
Cash Requirements, page s 13 and 45

3. In the last paragraph, you state, in part, that you seek to improve your operating results
through a series of leasing and subleasing transactions with favorable terms and
consistent and predictable cash flow.  However, it appears that proceeds from your future
minimum lease receivables as reported on page 17 , whic h could be further reduced by
amounts assigned to your lenders, do not appear to  be sufficient to cover your annual cost
of operations nor the scheduled maturities of your long -term debt.  Please discuss in more
detail the measures you have undertaken to s treamline your operations and cost
infrastructure in connection with your transition to a healthcare property holding and
leasing and how such measures will allow you to realize consistent and predictable cash
flows as compared to your prior skilled nursin g and assisted living facilities business.  In
addition, discuss whether or not you are on track with regards to your planned operating
results and cash flows.  If not, discuss the actions you are taking to meet your plans.

You may contact Kathryn Jacobs on, Senior Staff Accountant  at (202) 551 -3365 or Dean
Suehiro, Senior Staff Accountant at (202) 551 -3384 or me at (202) 551 -3810 with any questions.

Sincerely,

 /s/ Robert S. Littlepage, for

 Carlos Pacho
Senior Assistant Chief Accountant
 AD Office 11 – Telecommunications

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		CORRESP

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

September 28, 2015

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Carlos Pacho

Re:     AdCare Health Systems, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2014

Filed March 31, 2015

Form 10-Q for the Fiscal Quarter Ended June 30, 3015

Filed August 13, 2015

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Allan Rimland, dated September 15, 2015. For the convenience of the Staff, the Company has restated in this letter in italics each Comment and presented the Company’s response thereto below the restated Comment.

Description of Business, page 80

Intangible Assets and Goodwill, page 84

Note 6. Intangible Assets and Goodwill, page 92

1.

 “We note that separable bed licenses (indefinite lived intangible assets) and goodwill balances were $2.5 million and $4.2 million, respectively, for 2014 and 2013. Per your strategic plan, you will transition from an owner/ manager/ operator of skilled nursing and assisted living facilities to a healthcare property holding and leasing company. Please tell us the following:

•

 How you considered the impact of such business restructuring on the recoverability of separable bed licenses (indefinite lived intangible assets) and goodwill when you performed

Securities and Exchange Commission

Division of Corporation Finance

September 28, 2015

Page 2

your annual impairment test during the fourth quarter of 2014. We note that you had acquired such assets and goodwill under your prior business model;

Each quarter, the Company performs an analysis of facility level results by comparing the net book value (“NBV”) of long lived assets (“LLA”) to EBITDAM (revenues minus expenses before interest, taxes, depreciation, amortization, and internal management fees) for the current year based on a rolling twelve month period. The ratio of LLA / EBITDAM is evaluated quarterly and assessed as a potential indicator of impairment. A lower positive ratio indicates cash flow is sufficient to "recover" the NBV of LLA over the expected remaining useful life of the asset group. A high positive ratio or negative ratio is not necessarily an indicator of impairment, but is an indication that additional analysis is appropriate.

As part of this quarterly analysis completed as of December 31, 2014, management considered the impact of the Company’s business restructuring on the recoverability of separable bed licenses and goodwill.

Due to the Company’s strategic plan to transition to a healthcare property holding and leasing company, in conjunction with the analysis of trailing operating results mentioned above, management included in the recovery analysis a projection of undiscounted future cash flows as a holding entity after entering into leases or subleases with respect to each of the Company’s respective facilities. In doing so, management evaluated two additional scenarios which relate to the current transition from an owner/operator of healthcare facilities to a healthcare property holding and leasing company, including:

1)

 A scenario which assumes all facilities were leased for twelve full months starting January 1, 2015; and

2)

 A scenario which reflects a combination of anticipated operating results (i.e., 2015 operating budget) for a portion of the projected year combined with projected rental amounts for the remaining portion of the projected year.

Although all of the Company’s leases and subleases contain annual escalators throughout the lease terms, management used initial year one base cash rent per month for purposes of all calculations. Using these assumptions, management calculated the recoverability of its LLA, including property, plant, and equipment (“PP&E”), intangible assets (including bed licenses) and other facility level assets, and determined that impairment was not necessary.

With regards to goodwill, as of October 1st of each year, the Company completes an annual evaluation of all goodwill for impairment consideration. As a supplement to the above LLA testing, the Company uses the same analysis to determine the recoverability of goodwill and intangible lease rights. In both scenarios 1 and 2 (as described above), all entities displayed a recoverable amount in excess of combined PP&E, bed licenses, goodwill and intangible lease rights.

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Securities and Exchange Commission

Division of Corporation Finance

September 28, 2015

Page 3

In addition, as part of the analysis, management also considered capital expenditures. The Company’s lease and sublease agreements include a provision stating that the Company’s tenants are responsible for facility maintenance and capital expenditures. Given the requirements under this provision, the Company anticipates continued modest capital improvements by tenants at the facilities, but does not anticipate significant or major capital improvement costs to be incurred by the Company, and accordingly, such amounts are excluded from the calculations.

In accordance with the “Subsequent Measurement” guidance of Accounting Standards Certification (“ASC”) 350-20-35, management also assessed qualitative factors and deemed it more likely than not that the fair value of the reporting entities exceeded their carrying amount, including goodwill. In performing this consideration, management evaluated the following events and circumstances:

1)   Macroeconomic conditions;

2)       Industry and market considerations;

3)       Cost factors;

4)       Overall financial performance;

5)       Specific entity events – Change in company strategy; and

6)       Other factors.

After performing an evaluation, which takes into consideration these events and circumstances, some of the primary conclusions drawn by management were as follows:

-

 The Company maintains a continuing “in-demand” business that is expected to trend favorably, especially given the demographics of the aging “baby-boomer” population;

-

 The Company acknowledges uncertainty surrounding the process of transitioning its overall business strategy from an owner/operator of healthcare facilities to a healthcare property holding and leasing company. However, the Company deems the new business model, once attained, will contain a more stable and consistent revenue stream for each entity rather than a less stable revenue (and profitability) stream under the prior owner/operator model.

-

 The Company’s combined portfolio of skilled nursing facilities are strong performers with competitive average occupancy, Medicare and skilled managed care mix (“Quality Mix”) ratios, and reimbursement rates, which suggest that the Company’s portfolio of facilities will be attractive to third-party operators, and thus, give a positive indication to the attainability of the Company’s transition plan.

Accordingly, given the above described considerations, the Company deemed it more likely than not that the fair value of the entities was greater than their carrying amounts and thus, management concluded that there was no goodwill impairment.

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Securities and Exchange Commission

Division of Corporation Finance

September 28, 2015

Page 4

In conclusion, based on the above, no facility impairment was required at December 31, 2014, in accordance with ASC 360. Management continues to monitor the performance of each its facilities on an ongoing basis.

•

 Why you have not allocated goodwill to discontinued operations; and

As of the period ended December 31, 2014, the Company had already transferred operations on several of its facilities to third-party operators. As part of that process, management reclassified various patient care revenue and expense items on the income statements from continuing operations to discontinued operations (“Loss from Discontinued Operations, net of tax”). The Company does not reclassify items on the balance sheets for such discontinuations as long as it retains ownership of the underlying PP&E, even after the Company no longer operates the facilities. This methodology applies to all items on each facility level balance sheet, including goodwill and intangible assets (bed licenses).

As it pertains to the reclassification of goodwill impairment, during the year ended December 31, 2014, the Company entered into a representation agreement to sell one of its Oklahoma facilities resulting in all of the discontinued facility’s applicable assets and liabilities to be reclassified on the balance sheet to assets and liabilities of disposal group held for sale. In the prior year ended December 31, 2013, the discontinued Oklahoma facility, now held for sale, recorded a full impairment of goodwill due to ongoing poor profitability. That impairment charge was properly reflected in continuing operations as reflected in the Company’s Annual Report on Form 10-K for the year end December 31, 2013. As it relates to the Annual Report on Form 10-K for the year ended December 31, 2014, the Company appropriately reclassified said prior year goodwill impairment, among other income statement items, to loss from discontinued operations, net of tax for the comparative prior year period. No other goodwill impairments were incurred during 2014 as a result of management’s analysis described above. As such, the reported goodwill balances are properly reflected for both the current and comparative periods presented at December 31, 2014.

•

 Whether you expect to continue operating health care facilities in states where the bed licenses are non-transferable (not separable from the facilities) or what your continuing involvement will be with the third party operator/ sublessee. Include in your response, the nature of your involvement in maintaining the bed licenses that are required to operate the related facilities that you have sublet. We note that the change in carrying amount ($33 million at 2014) arose primarily from amortization and that there was no significant allocation to discontinued operations.

The Company does not anticipate operating any facilities after the operations of such facilities are transferred to third-party operators as part of the Company’s transition to a healthcare property holding and leasing company, but does anticipate maintaining ownership of such facilities after

4 | Page

Securities and Exchange Commission

Division of Corporation Finance

September 28, 2015

Page 5

such transfers. AdCare leases the right of use to third-party operators, but will retain ownership of all facility bed licenses for all of the Company’s subleased buildings and, therefore, amortization of such bed licenses are appropriately not reclassified to loss from discontinued operations, net of tax. Under the terms of the lease agreements, the tenants will be responsible for payment of taxes associated with the facility, which include property taxes and bed taxes.

Form 10-Q for Fiscal Quarter Ended June 30, 2015

Cash Requirements, page 13

Liquidity and Capital Resources, page 44

2.

 “We note that you have approximately $55 million of debt maturities due between 2015 and 2016 as presented on pages 20 and 21. You disclose that you "routinely have ongoing discussions with existing and potential new lenders to refinance current debt on a longer term basis.” Considering your limited borrowing capacity in your line of credit facilities and your non-compliance with debt covenants related to other credit instruments, please explain in greater detail how you expect to refinance your debt under favorable terms or expand borrowing arrangements with certain lenders. If, based on your recent actions, you are more likely to rely on private placements of preferred stock in the future, please address your ability to continue paying dividends on both common and preferred shares in addition to your debt obligations as they come due.”

Management continues to enjoy a good working relationship with the Company’s lenders and has been successful in the past at resolving financial and administrative covenant violations as well as various finance restructuring agreements. Management has discussed with the Company’s lenders various options to restructure the Company’s current debt and covenant requirements in order to minimize violations and risks from maturity in the future. As the Company continues to progress in the execution of its transition plan, management expects assets to further stabilize under new operator leadership, thus reducing the risks and occurrences associated with covenant violations as well as risks associated with debt maturities.

As noted in the notes payable and other debt footnote (Note 9) found on page 21 of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, the Company has approximately $27.7 million of current maturities due between July 1, 2015 and June 30, 2016 and approximately $54.4 million of additional debt due between July 1, 2016 and June 30, 2017. Management has been successful in raising various forms of capital to fund growth and meet its operating needs in the past, and currently has a strategic plan in place to address these pending maturities through a combination of debt refinancing transactions, sales of certain facilities, and pay-downs.

With respect to the $27.7 million of maturities listed as due from July 1, 2015 – June 30, 2016, subsequent to period end, payments of approximately $4.5 million were made to holders of current

5 | Page

Securities and Exchange Commission

Division of Corporation Finance

September 28, 2015

Page 6

convertible debt instruments from cash on hand. The Company also completed a sales transaction for one of its skilled nursing facilities in Arkansas listed as assets of disposal group held for sale with a subsequent debt repayment of approximately $3.4 million included in liabilities of disposal group held for sale. In addition, purchase and sales agreements were executed to sell one skilled nursing facility in Oklahoma listed as assets of disposal group held for sale and one assisted living facility in Alabama listed as assets of variable interest entity held for sale, with $5.0 million of liabilities of disposal group held for sale and $5.9 million of liabilities of the variable interest entity held for sale expected to be repaid through a combination of release on restricted cash and proceeds from sale at closing. Both pending sales transactions are expected to close in the fourth quarter 2015. The Company also has an additional $1.0 million of liabilities of disposal group held for sale that pertains to a Georgia office space that is expected to be repaid in the fourth quarter 2015 or first quarter 2016 through a sale of such office space assets listed in assets of disposal group held for sale. Management is also in the process of negotiating terms with one of its current lenders to refinance $2.5 million of debt listed as current portion of notes payable and other for a skilled nursing facility located in Georgia. Of the remaining $5.4 million maturing between July 1, 2015 and June 30, 2016, management expects to repay all amounts through cash from operations and cash on hand.

At June 30, 2015, the Company had approximately $54.4 million of projected debt maturing from July 1, 2016 to June 30, 2017. Approximately $45.0 million of the $54.4 million is senior secured mortgage debt with the remaining consisting of approximately $7.7 million of convertible debt and $1.7 million of various other maturities. Working within the Company’s network of lending relationships, management has signed agreements to refinance approxi

Mail Stop 3720

September 15, 2015

Mr. Allan Rimland
President and Chief Financial Officer
Adcare Health Systems, Inc.
Two Buckhead Plaza
3050 Peachtree Road NW
Suite 355
Atlanta, GA 30305

Re: Adcare Health Systems, Inc.
 Form 10 -K for Fiscal Year Ended December 31, 2014
Filed March 31, 2015
Form 10 -Q for Fiscal Quarter Ended June 30, 2015
Filed August 13, 2015
  File No. 001-33135

Dear Mr. Rimland :

We have limited our review  of your filing  to the financial statements and related
disclosures and have the following comments.  In some of our comments, we may ask you to
provide us with information so we may better understand your disclosure.

Please respond to these comments with in ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.

After reviewing your resp onse to these comments, we may have additional comments.

Description of Business, page 80
Intangible Assets and Goodwill, page 84
Note 6. Intangible Assets and Goodwill, page 92

1. We note that separable bed licenses (indefinite lived intangibl e assets) and goodwill
balances were $2.5 million and $4.2 million, respectively, for 2014 and 2013.  Per your
strategic plan, you will transition from an owner/ manager/ operator of skilled nursing
and assisted living facilities to a healthcare property h olding and leasing company.

Mr. Allan Rimland
Adcare  Health Systems, Inc.
September 15, 2015
Page 2

 Please tell us the following:

 How you considered the impact of such business restructuring on the
recoverability of separable bed licenses (indefinite lived intangible assets) and
goodwill when you performed your annual impairment test during the fourth
quarter of 2014.  We note that y ou had acquired such assets and goodwill under
your prior business model;

 Why you have not allocated goodwill to discontinued operations; and

 Whether you expect to continue operating health care facilities in states where the
bed licenses are non -transfe rable (not separable from the facilities) or what your
continuing involvement will be with the third party operator/  subles see.  Include
in your response, the nature of your involvement in maintaining the bed licenses
that are required to operate the relate d facilities that you have sublet .  We note
that the change in carrying amount ($33 million at 2014) arose primarily from
amortization and that there was no significant allocation to discontinued
operations.

Form 10 -Q for Fiscal Quarter Ended June 30 2015

Cash Requirements, page 13
Liquidity and Capital Resources, page 44

2. We note that you have approximately $55 million of debt maturities due between 2015
and 2016 as presented on pages 20 and 21.   You disclose that you "routinely have
ongoing discussions  with existing and potential new lenders to refinance current debt on
a longer term basis.”  Considering your limited borrowing capacity in your line of credit
facilities and your non -compliance with debt covenants related to other credit
instruments, plea se explain in greater detail how you expect to refinance your debt under
favorable terms or expand borrowing arrangements with certain lenders.  If, based on
your recent actions, you are more likely to rely on private placements of preferred stock
in the f uture, please address your ability to continue paying dividends on both common
and preferred shares in addition to your debt obligations as they come due.

Leased and Subleased Facilities to Third -Party Operators, page 48

3. We note the significant differen ce between your future minimum lease receivables under
your subleases and your future minimum lease payments under your Master Lease as
presented hereunder.  Please tell us whether your future minimum lease receivables
include any consideration other than sublease of the facilities (i.e., profit -sharing or
shared services).  If so, tell us the nature of the consideration.  Additionally, disclose any
rents assigned to certain of your lenders if included in such receivables.  We note your
disclosure on page 2 3.

Mr. Allan Rimland
Adcare  Health Systems, Inc.
September 15, 2015
Page 3

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provide a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with re spect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Kathryn Jacobson, Senior Staff Accountant  at (202) 551 -3365 or Dean
Suehiro, Senior Staff Accountant at (202) 551 -3384 or me at (202) 551 -3810 with any questions.

Sincerely,

 /s/ Robert S. Littlep age, for

 Carlos Pacho
Senior Assistant Chief Accountant
 AD Office 11 – Telecommunications

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		RequestforAcceleration2017NotesS-3

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

July 6, 2015

Via Edgar and E-mail

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

Attention:     Mr. Larry Spirgel

Mr. Paul Fischer

Re:    AdCare Health Systems, Inc.’s Registration Statement on Form S-3 (File No. 333-205335)

Ladies and Gentlemen:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, AdCare Health Systems, Inc. (the “Company”) hereby requests that the Securities and Exchange Commission (the “Commission”) accelerate the effective date of the Company’s Registration Statement (the “Filing”) on Form S-3 (File No. 333-205335), so that it will become effective at 4:00 p.m. on July 8, 2015, or as soon thereafter as practicable.

The Company hereby acknowledges that:

1)should the Commission or the staff of the Commission (the “Staff”), acting pursuant to delegated authority, declare the Filing effective, it does not foreclose the Commission from taking any action with respect to the Filing;

2)the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the Filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the Filing; and

3)the Company may not assert Staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Yours very truly,

ADCARE HEALTH SYSTEMS, INC.

By: /s/ Allan J. Rimland

Allan J. Rimland

President & Chief Financial Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

July 2, 2015

William McBride III
Chief Executive Officer
AdCare Health Systems, Inc.
1145 Hembree Road
Roswell, Georgia 30076

RE:  AdCare Health Systems , Inc.
Registration Statement on Form S -3
  Filed on June 29, 2015
File No. 333 -205335

Dear Mr. McBride :

This is to advise you that we have not reviewed and will not review your registration
statement .

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes the information the Securities Act
of 193 3 and all applicable Securities  Act rules require.   Since the company and its
management are  in possession of all facts relating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

In the event you request acceleration of the effective date of the pending regist ration
statement please provide  a written statement from the company acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing effective, it does not foreclose the Commission from taking any action with
respect to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility
for the adequacy and accuracy of the disclosure in the  filing; and

William McBride
AdCare Health Systems, Inc.
July 2, 2015
Page 2

  the company may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Please refer to Rules 460 and 461  regarding requests for  acceleration .  We will
consider a written request for acceleration of the effective date of the registration statement
as confirmation of the fact that those requesting acceleration are aware of their respective
responsibilities und er the Securities Act of 1933 and the Securities Exchange Act of 1934 as
they relate to the proposed public offering of the registered securities .

You may contact Paul Fischer  at 202-551-3415  with any questions.

Sincerely,

 /s/ Terry French for

 Larry Spirgel
Assistant Director

Cc:  Lori A. Gelchion , Esq.

September 2, 2014

Via E -mail
Ronald W. Fleming
Chief Financial Officer
AdCare Health Systems, Inc.
1145 Hembree Road
Roswell, GA 30076

Re: AdCare Health Systems, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed August 15, 2014
File No. 001 -33135

Dear Mr. Fleming :

We have completed our review of your filings.  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing s and the  company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure  in the filing s to be certain that the filing s include the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Celeste M. Murphy for

Larry Spirgel
Assistant Director

cc: Via E -mail
 Lori A. Gelchion
 Rogers & Hardin LLP

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		CORRESP 082914

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

August 29, 2014

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C.  20549-7010

Attention:     Mr. Larry Spirgel

Re:     AdCare Health Systems, Inc.

Preliminary Proxy Statement on Schedule 14A

Filed August 15, 2014

File No. 000-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Ronald W. Fleming, dated August 25, 2014.  For the convenience of the Staff, the Company has restated in this letter in italics each of the Comments and numbered each of the Company’s responses to correspond to the number of each of the Comments.  The Company has revised the Preliminary Proxy Statement referenced above (as revised, the “Revised Preliminary Proxy Statement”) in response to the Staff’s comments, which the Company is filing concurrently with this letter.

Background of the Decision to Transition the Company…, page 27

1.

 We note that you and your financial advisor, SunTrust Robinson Humphrey, engaged in several discussions and presentations with prospective buyers.  We further note that certain prospective buyers may have expressed minimal or no interest in acquiring your operations.  Please expand your disclosure to explain what you mean by “none of the prospective acquirers would fairly value our operations or our real estate or otherwise provide meaningful value to our shareholders.”  Based on your disclosure, it appears some prospective buyers did express an interest in your business as a whole.  Please specifically discuss why you believe the value was inadequate.  Lastly, please present financial analyses to support your decision to pursue the Additional Leasing Transactions strategy.  We note your disclosure on page 29 indicating that your working group considered financial analyses and pro forma financial information.

In response to Comment 1., the Company has included revised disclosure on pages 2, 28 and 29 of the Revised Preliminary Proxy Statement.

2.

 Please expand your disclosure to detail the status of your discussions with “certain regional third-party operators” to lease or sublease certain of your skilled nursing and assisted living facilities.

In response to Comment 2., the Company has included revised disclosure on page 29 of the Revised Preliminary Proxy Statement.

* * *

As requested by the Staff, the Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in the Revised Preliminary Proxy Statement (the “Filing”); (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Filing; and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions concerning the matters discussed in this letter please contact Lori A. Gelchion, with Rogers & Hardin LLP, counsel to the Company, at 404-420-4646.

Yours very truly,

ADCARE HEALTH SYSTEMS, INC.

By: /s/ Ronald W. Fleming

       Ronald W. Fleming

Chief Financial Officer

August 25, 2014

Via E -mail
Ronald W. Fleming
Chief Financial Officer
AdCare Health Systems, Inc.
1145 Hembree Road
Roswell, GA 30076

Re: AdCare Health Systems, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed August 15, 2014
File No. 000 -33135

Dear Mr. Fleming :

We have reviewed your filing an d have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by  amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please t ell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these  comments, we may have additional comments.

Background of the Decision to Transition the Company …, page 27

1. We note that you and your financial advisor, SunTrust Robinson Humphrey, engaged in
several discussions and presentations with prospective buyers.  We further note that
certain prospective buyers may have expressed minimal or no interest in acquiring your
operations.  Please expand your disclosure to explain what you  mean by “none of the
prospective acquirers would fairly value our operations or our real estate or otherwise
provide meaningful value to our shareholders.”  Based on your disclosure, it appears
some prospective buyers did express an interest in your busin ess as a whole.  Please
specifically discuss why you believe the value wa s inadequate.  Lastly, please present
financial analyses to support your decision to pursue the Additional Leasing Transactions
strategy.  We note your disclosure on page 29 indicatin g that your working group
considered financial analyses and pro forma financial information.

Ronald W. Fleming
AdCare Health Systems, Inc.
August 25, 2014
Page 2

 2. Please expand your disclosure to detail the status of your discussions with “certain
regional third -party operators” to lease or sublease certain of your skilled  nursing and
assisted living facilities.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Ex change Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, plea se provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commi ssion from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Emily Drazan, Attorney -Adviser, at (202) 551 -3208, or me at (202)
551-3810 if you have any questions.

Sincerely,

 /s/ Celeste M. Murphy for

Larry Spirgel
Assistant Director

cc: Via E -mail
 Lori A. Gelchion
 Rogers & Hardin LLP

October 23, 201 3

Via E -mail
Mr. Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare  Health Systems, Inc.
 Form 10-K for the fis cal year ended December 31, 2012
Filed July 8, 2013
File No. 001-33135

Dear Mr. Gentry :

We have completed our review of your filing.  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securi ties laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the
information the Securities Exchange Act of 1934 and all applicable rules requi re.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

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		SECResponse101013

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

October 16, 2013

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

 Re:

 AdCare Health Systems, Inc.

 Form 10-K for the fiscal year ended December 31, 2012

 Filed July 8, 2013

 Forms 10-Q/A for the quarterly periods ended March 31, 2012, June 30, 2012 and September 30, 2012

 Filed July 8, 2013

 Response dated October 3, 2013

 File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Boyd P. Gentry, dated October 10, 2013.  For the convenience of the Staff, the Company has restated in this letter in italics each of the Comments and numbered each of the Company’s responses to correspond to the number of each of the Comments.

Form 10-Q/A#1 for the quarterly period ended September 30, 2012

Note 2. Restatement of Previously Issued Consolidated Financial Statements, page 11

1.

 We note your response to comment 10. Tell us when the third party assurances and business advisory services firm, that assisted in management’s assessment of internal controls during 2011 and 2012, conducted its work. Tell us the quarterly reporting periods during which internal controls were assessed by this advisory firm. Tell us when the senior accounting and finance positions, cited in your August 29, 2013 response letter, became vacant, the time span over which each of those vacancies extended and the reasons why these positions were not filled. In this regard, it is still unclear to us how your principal executive and principal financial officers originally were able to conclude that there were no significant changes in your internal control over financial reporting. Please advise.

The Company engaged the third party assurance and business advisory services firm to assist management with its assessment of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2011 and 2012.  The 2011 engagement began in August 2011 and concluded in March 2012.  The 2012 engagement began in August 2012 and concluded in April 2013.  The scope of each engagement was designed to assist management in its annual assessment of internal control over financial reporting and did not include assistance with the Company’s assessment of internal control over financial reporting during the 2011 or 2012 quarterly reporting periods.

During the year ended December 31, 2012, the Company experienced vacancies in the following senior accounting and finance positions:

Position

 Original
Hire Date

 Termination
Date

 Replacement
Hire Date

 Vacancy Period

Vice President, Finance

 4/1/2011

 5/1/2012

 12/27/2012

 8 months

Vice President, Controller

 6/13/2005

 7/6/2012

 4/1/2013

 6 months

SEC Reporting Manager

 6/18/2012

 12/7/2012

 5/13/2013

 1 month

Accounting Manager

 4/11/2011

 8/31/2012

 4/5/2013

 4 months

For purposes of this response, the “vacancy period” with respect to any position listed above means the time such position was vacant from January 1, 2012 through the time the determination was made with respect to the effectiveness of internal control over financial reporting as of December 31, 2012.

The Company actively recruited for these positions during the vacancy periods, including seeking individuals with specific industry experience to fill the Vice President, Finance and Accounting Manager positions.  Offers were extended to two candidates for the Vice President, Finance position during the vacancy period but were declined.  The duties and responsibilities for the referenced positions were assigned to and performed by other personnel within the Company during the vacancy periods.  These assignments, along with the qualifications of the individuals who performed those duties and responsibilities, were as follows:

1.

 The Vice President, Finance duties and responsibilities were primarily performed by the Chief Financial Officer.  The Chief Financial Officer held a Bachelor of Science degree in accounting and was a Certified Public Accountant.  The former Vice President, Finance remained available to the Company on a consulting basis to provide assistance with complex industry-related accounting decisions.

2.

 The Vice President, Controller duties and responsibilities were primarily performed by the Assistant Controller and a new Corporate Controller, who was promoted from the Company’s Director of Accounting position. The former Vice President, Controller, held a Masters in Business Administration degree.  The Assistant Controller held a Bachelor of Science degree in finance.  The Corporate Controller held a Bachelor of Science degree in accounting and was a Certified Public Accountant.

2

3.

 The SEC Reporting Manager position was created in 2012 to assist the Vice President, Controller and Assistant Controller and, as such, was thought to only enhance internal control as well as potentially assist with the duties and responsibilities of the Vice President, Finance position.  The SEC Reporting Manager held a Bachelor of Science degree in accounting and a Masters of Business Administration degree, was a Certified Public Accountant, and had significant experience in SEC reporting and controls.  The responsibilities of this position were performed by the Assistant Controller and Corporate Controller subsequent to the time of termination in December 2012.

4.

 The Accounting Manager duties and responsibilities were performed by various staff accountants on an interim basis.

The Chief Financial Officer was primarily responsible for assessing the adequacy and sufficiency of the personnel, including the personnel performing the duties and responsibilities of any vacant position and the impact of the vacant positions, participating in internal control over financial reporting.  The assignment of duties and responsibilities from the vacant positions noted above, primarily to the Corporate Controller and Assistant Controller, appeared at the time to be appropriate based on the qualifications of those individuals.  Based on the Chief Financial Officer’s previous experience and qualifications, there was nothing to indicate that he was not competent in making such assessments of these personnel.  As such, it was believed there were no changes to the internal control over financial reporting during the quarters ended March 31, June 30, and September 30, 2012 that would have materially affected, or were reasonably likely to materially affect, internal control over financial reporting.  As a result, the Company believed at the time the applicable determinations were made that internal control over financial reporting required to be disclosed in the reports filed pursuant to the Exchange Act was effective.

During 2012, the Chief Financial Officer was primarily responsible for determining the accounting treatment of several complex or non-routine accounting transactions, which the Company later determined to be erroneous.  Consequently, the Company amended its Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30,  and September 30, 2012 to correct for such errors in accounting treatment, among other things.  These amendments corrected the following errors:

 Adjustment Description

 Qtr Ended

 Qtr Ended

 Qtr Ended

 Total

 3/31/2012

 6/30/2012

 9/30/2012

 Adjustment

1

 Medicaid Recoupment:  Adjustments to the provision for bad debts in the appropriate interim reporting period within the 2012 year.  The restatement primarily related to required adjustments resulting from the timing of recognition for state recoupments for Medicaid overpayments for certain facilities.

 $

 (402,572

 )

 $

 —

 $

 —

 $

 (402,572

 )

         % of Total Adjustments

 26.5

 %

 —

  %

 —

 %

 7.9

 %

3

2

 Arkansas Spend - Up:  The recognition of expense related to direct care compensation obligations incurred for the facilities located in Arkansas.  The recognition of the expense and obligation was initially recognized over the perceived requisite service period until the payment date.  However, the obligations should have been expensed immediately in the period incurred as the obligation related to prior services rendered.  The restatement is primarily a result of misapplication of accounting principles.

 $

 (917,787

 )

 $

 257,889

 $

 (525,404

 )

 $

 (1,185,302

 )

         % of Total Adjustments

 60.5

 %

 (20.8

 )%

 22.2

 %

 23.2

 %

3a

 Arkansas Facility:  The recognition of operating expenses incurred within the 2012 year that were incorrectly deferred or capitalized on the balance sheet prior to beginning operations at one facility.  The expenses should have been recognized in the interim reporting period in which the costs were incurred.  The restatement is primarily a result of the misapplication of accounting principles.

 $

 (21,535

 )

 $

 (401,231

 )

 $

 (201,228

 )

 $

 (623,994

 )

        % of Total Adjustments

 1.4

 %

 32.4

  %

 8.5

 %

 12.2

 %

3b

 Arkansas Facility:  The recognition of interest expense incurred within the 2012 year that was incorrectly deferred or capitalized on the balance sheet prior to beginning operations at one facility.  The expense should have been recognized in the interim reporting period in which it was incurred.  The restatement is primarily a result of the misapplication of accounting principles.

 $

 —

 $

 (269,596

 )

 $

 (82,438

 )

 $

 (352,034

 )

         % of Total Adjustments

 —

 %

 21.8

  %

 3.5

 %

 6.9

 %

4

 Compensated Absences: The correction of payroll-related operating expenses resulting from incorrect accounting for accrued vacation.

 $

 (176,140

 )

 $

 (704,498

 )

 $

 (37,430

 )

 $

 (918,068

 )

         % of Total Adjustments

 11.6

 %

 57.0

  %

 1.6

 %

 17.9

 %

5

 Oklahoma Facility:  The correction of certain operating and other costs incurred within the 2012 year that were incorrectly deferred or capitalized on the balance sheet that should have been expensed in the interim reporting period in which the costs were incurred.  The restatement primarily relate to the misapplication of accounting principles.

 $

 —

 $

 (119,498

 )

 $

 (290,502

 )

 $

 (410,000

 )

         % of Total Adjustments

 —

 %

 9.7

  %

 12.3

 %

 8.0

 %

6

 Provider Tax: Incorrect reversal of the expense associated with a state’s bed tax that should have been expensed in the interim reporting period in which the costs were incurred.

 $

 —

 $

 —

 $

 (983,823

 )

 $

 (983,823

 )

         % of Total Adjustments

 —

 %

 —

  %

 41.6

 %

 19.2

 %

7

 Bad Debt:  Recognition of certain adjustments to the provision for bad debts in the appropriate interim reporting period within the 2012 year.

 $

 —

 $

 —

 $

 (242,658

 )

 $

 (242,658

 )

         % of Total Adjustments

 —

 %

 —

  %

 10.3

 %

 4.7

 %

 Total Adjustments

 $

 (1,518,034

 )

 $

 (1,236,934

 )

 $

 (2,363,483

 )

 $

 (5,118,451

 )

 29.7

 %

 24.2

  %

 46.2

 %

 100

 %

 Total Quarterly and Total Adjustments for 2012

 $

 (2,111,842

 )

 $

 (917,780

 )

 $

 (2,805,755

 )

 $

 (6,620,387

 )

 71.9

 %

 134.8

  %

 84.2

 %

 77.3

 %

4

The errors and related adjustments identified above were the primary reason the Company amended its previously issued Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2012.  These errors were identified in connection with  the audit of the Company's financial statements for the year ended December 31, 2012, and, when identified,  called into question the adequacy, training, and qualifications of individuals who were primarily responsible for the control process.

2.

 Similarly, in light of these conditions, it is unclear to us how your principal executive and principal financial officers originally concluded that your disclosure controls and procedures were effective, as of the end of each fiscal quarter during 2012 in accordance with Item 307 of Regulation S-K and Rule 15b of Regulation 13A or Rule 15b of Regulation 15D. Please advise.

During each of the quarters ended March 31, June 30, and September 30, 2012, management performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures as required by the Exchange Act.  Management completed a Generally Accepted Accounting Principles disclosures checklist; made inquiry of appropriate personnel regarding potential disclosure items; and confirmed that the notes to the financial statements included adequate disclosure of all matters of which the Company was aware that were relevant to the Company’s ability to continue as a going concern.  During these evaluations, management did not identify any issues with the disclosure controls and procedures during any of these periods.  Based upon these evaluations, management believed at the time the applicable determinations were made, that the disclosure controls and procedures designed to ensure that information required to be disclosed in the reports filed pursuant to the Exchange Act were effective.

The Chief Financial Officer was primarily responsible for determining and disclosing the accounting treatment for complex and non-routine transactions.  The deficiencies in the skill set of the Company personnel primarily responsible for the control process and accumulating and communicating information to management was not evident until the errors noted above were identified in connection with the audit of the Company’s financial statements for the year ended December 31, 2012.

* * *

5

The Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in its Annual Report on Form 10-K for the year ended December 31, 2012 and its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2012, June 30, 2012 and September 30, 2012, each as may be amended (collectively, the “Filings”); (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Filings; and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions concerning the matters discussed in this letter please contact Lori A. Gelchion, with Rogers & Hardin LLP, counsel to the Company, at 404-420-4646.

 Very truly yours,

 /s/ Ronald W. Fleming

 Ronald W. Fleming

 Chief Financial Officer

6

October 10, 201 3

Via E -mail
Mr. Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare  Health Systems, Inc.
 Form 10-K for the fis cal year ended December 31, 2012
Filed July 8, 2013
Form s 10-Q/A for the quarterly period s ended March 31, 2012, June 30, 2012
and September 30, 2012
Filed July 8, 2013
Response dated October 3 , 2013
File No. 001-33135

Dear Mr. Gentry :

We have reviewed your response letter and have the following comments.  As not ed in
our letter dated September 27 , 2013, we have limited our review to only your financial
statements and related disclosures and do not int end to expand our review to other portions of
your documents.  In some of our comments, we may ask you to provide us with  information so
we may better understand your disclosure.

Please respond to this letter within ten business days by providing the requested
information  or by advising us when you will provide the requested response.   If you do not
believe our comments apply to your facts and circumstances , please tell us why in your response.

After reviewing  the information you provide in response  to these  comments, we may
have  additional comments.

Form 10 -Q/A#1  for the quarterly period ended September 30, 2012

Note 2. Restatement of Previously Issued Consolidated Financial Statements, page 11

1. We note your response to comment 10.   Tell us when  the third party assurances and
business advisory services firm, that assisted in management’s assessment of internal
controls during 2011 and 2012, conducted its work.   Tell us the quarterly reporting
periods during which internal controls were assessed b y this advisory firm.   Tell us when
the senior accounting and finance positions, cited in your August 29, 2013 response

Mr. Boyd P. Gentry
AdCare Health Systems, Inc.
Octo ber 10, 2013
Page 2

 letter, became vacant, the time span over which each of those vacancies extended and the
reasons why these positions were not filled.  In this regard, it is still unclear to us how
your principal executive and principal financial officers originally were able to conclude
that there were no significant changes in your internal contr ol over financial reporting.
Please advise.

2. Similarly, in light of these conditions, it is unclear to us how your principal executive and
principal financial officers originally  concluded that your  disclosure controls and
procedures were effective, as of the end of each fiscal quarter during 2012  in accordance
with Item 307 of Regulation S -K and Rule 15b of Regulation 13A or Rule 15b of
Regulation 15D.  Please advise.

You may contact Joseph M. Kempf, Senior Staff Accountant , at 202-551-3352  or Carlos
Pacho, Senior Assistant Chief Accountant, at 202 -551-3835  if you have questions regarding
comments on the financial statements and related matters.  Please contact me at (202) 551 -3810
with any other questions.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

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		SECResponseDraft9_30_2013

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

October 3, 2013

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

Re:     AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended December 31, 2012

Filed July 8, 2013

Forms 10-Q/A for the quarterly periods ended March 31, 3012, June 30,

2012, and September 30, 2012

Filed July 8, 2013

Response dated August 29, 2013

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the "Company"), the undersigned hereby responds to the comments (the "Comments") of the staff (the "Staff") of the United States Securities and Exchange Commission (the "Commission") set forth in the Staff's letter to Mr. Boyd P. Gentry, dated September 27, 2013.  For the convenience of the Staff, the Company has restated in this letter in italics each of the Comments and numbered each of the Company's responses to correspond to the number of each of the Comments. Capitalized terms used herein but not defined herein have the meanings ascribed to them in the Company’s response letter to the Commission dated August 29, 2013.

Form 10-K

Financial Statements

Principles of Consolidation, page 72

1.

 We note your response to comment one explains that the consolidation of the Oklahoma Facilities VIEs did not have the effect of increasing management’s compensation. We note from page 7 of your December 5, 2012 correspondence that there existed a principal/agent  relationship between AdCare and the Oklahoma Facilities Owners. We also note from page 147 of your December 31, 2012 Form 10-K that your former Chief Acquisitions Officer, Mr. Brogdon, served without a fixed salary prior to 2013 but instead received the substantial majority of his compensation for services for the year 2011 in the form of discretionary bonus payments and option stock incentives. We note from the first paragraph of page 150 of the Form 10-K that Mr. Brogdon currently earns a "success fee" for each completed acquisition transaction, and that Mr. Brogdon

earns no such success fee for leased or managed facilities. Confirm for us that Mr. Brogdon and other officers were not compensated for services rendered to facilitate the acquisition of the Oklahoma Facilities. Otherwise please explain how such services rendered in the Oklahoma Facilities transactions effected officer's compensation.

In response to the Staff's Comment, the Company confirms that neither Mr. Brogdon nor any other Company officer received compensation from the Company in connection with (i) the Oklahoma Owners' acquisition of the Oklahoma Facilities or (ii) the Company's consolidation of the Oklahoma Facilities in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the "2011 Form 10-K").

2.

 Further in this regard, explain for us why Mr. Brogdon's $200,000 bonus earned for 2011 was omitted from the executive compensation table on page 100 of your December 31, 2011 Form 10-K.

Mr. Brogdon's 2011 bonus was determined and approved by the Compensation Committee of the Company's Board of Directors after the 2011 Form 10-K was filed.  All of Mr. Brogdon's compensation for 2011 and 2012 is disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Form 10-Q/A#1 for the quarterly period ended September 30, 2012

Note 2. Restatement of Previously Issued Consolidated Financial Statements, page 11

3.

 We note your response to comment eight and note the following:

•

 The $34,000 adjustment increasing deferred loan costs, net as described on page 13 of your September 30, 2012 Form 10-Q/A#1 is silent regarding the $164,000 increase in interest expense for the fair value of warrants granted to non-employees as indicated in your response letter,

•

 The description of the adjustment to general and administrative expense bridging pages 12 and 13 of your September 30, 2012 Form 10-Q/A#1 is silent about an adjustment to consulting expense, and

•

 The description of the adjustment to property and equipment, net on page 13 of your September 30, 2012 Form 10-Q/A#1 is silent about inappropriately capitalized interest costs.

Accordingly it appears to us that the nature of the adjustments to interest expense and general and administrative expense are unclear. As previously requested, please revise your disclosure of "other adjustments" in the June 30 and September 30, 2012 Forms 10-Q to include an explanation of why material corrections were made to the interest expense line item.

In response to the Staff's Comment, the Company proposes to revise the disclosure of "other adjustments" in its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2012 and September 30, 2012, to explain why corrections were made to Interest expense, net, as set forth below.

2

June 30, 2012:  Interest expense, net — Adjustments totaling $350,000 and $349,000 for the three and six months ended June 30, 2012, respectively, related primarily to the following items:

The correction of interest capitalized on the balance sheet that should have been expensed in the interim reporting period in which the costs were incurred during the 2012 year was approximately $269,000 for the three and six months ended June 30, 2012.

The recognition of expense related to the fair value of warrants granted to non-employees in connection with loan financing fees of approximately $81,000 for the three and six months ended June 30, 2012.

September 30, 2012:  Interest expense, net — Adjustments totaling $140,000 and $490,000 for the three and nine months ended September 30, 2012, respectively, related primarily to the following items:

The correction of interest incorrectly capitalized on the balance sheet that should have been expensed in the interim reporting period in which the costs were incurred during the 2012 year was approximately $82,000 and $351,000 for the three months and the nine months ended September 30, 2012, respectively.

The recognition of expense related to the fair value of warrants granted to non-employees in connection with loan financing fees of approximately $83,000 and $164,000 for the three and nine months ended September 30, 2012, respectively.

The correction of $25,000 consulting expense originally recorded to Interest expense, net, reclassified to General and administrative for the three and nine months ended September 30, 2012.

Exhibit 1 and Exhibit 2 attached hereto set forth the reconciliation to Interest expense, net, in the form that the Company proposes to include in Note 2. Restatement of Previously Issued Consolidated Financial Statements in the Company's to be filed: (i) Amendment No. 2 on Form 10-Q/A for the quarter ended June 30, 2012 (the "Form 10/Q/A#2 for June 30, 2012") and (ii) Amendment No. 2 on Form 10-Q/A for the quarter ended September 30, 2012 (the "Form 10-Q/A#2 for September 30, 2012"), respectively.

4.

 We note that the correction made to costs of services, for delays in collection efforts and lack of timely follow-up on open patient accounts during 2012, required an adjustment variously stated as $721,000 and $484,000 in your response to comment nine and in the first paragraph of page 13 of your Form 10-Q/A#1 for September 30, 2012. Please reconcile and correct.

As requested by the Staff, the Company has reconciled the Cost of services for delays in collection efforts and lack of timely follow-up on open patient accounts during 2012.  The Company proposes to revise its disclosure as follows:

The timing of certain adjustments to the provision for bad debts in the appropriate interim reporting period within the 2012 year.  The issues primarily related to required adjustments resulted from the timing of recognition for state recoupments for Medicaid overpayments for certain facilities totaling $403,000 for the nine

3

months ended September 30, 2012, the delays in collection efforts and lack of timely follow-up on open patient accounts in 2012 for certain facilities totaling $441,000 and $721,000 for the three and nine months ended September 30, 2012, respectively, offset by the improper recognition of bad debt expense relating to managed care revenue discussed above in the amount of $20,000 and $212,000 for the three and nine months ended September 30, 2012, respectively.

Exhibit 2 attached hereto sets forth the reconciliation to the Cost of services in the form that the Company proposes to include in Note 2. Restatement of Previously Issued Consolidated Financial Statements in its Form 10-Q/A#2 for September 30, 2012.

5.

 Similarly we note that the correction made to general and administrative expenses for interest incorrectly capitalized on the balance sheet required an adjustment variously stated as $159,000 and $94,000 in your response to comment nine and in the sixth paragraph of page 12 of your Form 10-Q/A#1 for September 30, 2012. Please reconcile and correct.

As requested by the Staff, the Company has reconciled the disclosure of the adjustments to  the reported General and administrative expenses incorrectly capitalized on the balance sheet at September 30, 2012.  The Company proposes to revise its disclosure as follows:

The timing of the expense incorrectly capitalized on the balance sheet that should have been expensed in the interim reporting period in which the costs were incurred during the 2012 period of $85,000 and $159,000 for the three and nine months ended September 30, 2012, respectively.

Exhibit 2 attached hereto sets forth the reconciliation to the General and administrative expense in the form that the Company proposes to include in Note 2. Restatement of Previously Issued Consolidated Financial Statements in its Form 10-Q/A#2 for September 30, 2012.

6.

 Please revise your disclosure of the adjustments made to correct reported costs of services to reflect the additional information provided in your response to comment nine. Address in costs of services the $112,000 correction for untimely recorded payroll expense and the reversal of the $480,000 elimination of management fees.

In response to the Staff's Comment, the Company proposes to revise its disclosure of the adjustments to reported Costs of services to reflect (i) the additional information provided in the response to Comment nine and (ii) address in Costs of services the $112,000 correction for untimely recorded payroll expense and the reversal of the $482,000 elimination of management fees, as follows:

The timing of recognition of certain payroll related operating expenses and other necessary adjustments to related accrued liabilities to ensure proper recognition in the appropriate interim reporting period within the 2012 year.  The issues primarily relate to insufficient processes related to accounting for accrued vacation of $34,000 and $838,000 for the three and nine months ended September 30, 2012, respectively; the untimely identification and recognition of expenses associated with certain unemployment tax accrual adjustments of $41,000 and $123,000 for the three and nine months ended September 30, 2012, respectively; and the untimely recording of a payroll expense for a certain facility in the amount of $112,000 for the nine months ended September 30, 2012.

4

The adjustment of the reversal of the eliminated management fee expense associated with  the correction in the application of the Company's accounting for certain variable interest entities for approximately $159,000 and $482,000 for the three and nine months ended September 30, 2012, respectively.

Exhibit 2 attached hereto sets forth the reconciliation to the Cost of services in the form that the Company proposes to include in Note 2. Restatement of Previously Issued Consolidated Financial Statements in its Form 10-Q/A#2 for September 30, 2012.

7.

 In your amended 34 Act reports for 2012, where applicable, please make similar revisions, as requested above, to the financial statements provided for the six months ended June 30, 2012 and for three months ended March 31, June 30 and September 30, 2012.

The Form 10-Q/A#2 for March 31, 2012, the Form 10-Q/A#2 for June 30, 2012 and the Form 10-Q/A#2 for September 30, 2012 to be filed by the Company will include the revisions proposed in the Company's responses to the Staff's Comments with the relevant disclosures as necessary.  Exhibit 1 and Exhibit 2 attached hereto set forth the reconciliation to Cost of services, General and administrative and Interest expense, net, in the form which the Company proposes to include in Note 2. Restatement of Previously Issued Consolidated Financial Statements in its Form 10-Q/A#2 for June 30, 2012 and Form 10-Q/A#2 for September 30, 2012, respectively.

8.

 We note your response to comment five. You indicate in your response that certain restated financial covenant metric information has been omitted from the June 30 and September 30, 2012 debt covenant compliance tables. The (***) footnotes to these tables explain that these covenants commence in future quarters. However Sections 7.15 and 7.16 of the loan agreement dated March 30, 2012 between Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, Woodland Hills HC&R Property Holdings, LLC and The PrivateBank and Trust Company (Exhibit 10.6 to the March 31, 2012 Form 10-Q) appears to include monthly and quarterly debt compliance provisions that were in effect at June 30, 2012 and September 30, 2012. Please clarify and, if necessary, revise your response to comment five and its June 30 and September 30, 2012 debt covenant compliance tables accordingly.

The Company proposes to revise the quarterly restated financial covenant metric for March 31, 2012, June 30, 2012 and September 30, 2012 debt covenant compliance tables as set forth below.  In recent periods, including as of March 31, 2012, June 30, 2012 and September 30, 2012, the Company has not been in compliance with certain financial and administrative covenants. For each instance of such non-compliance, the Company has obtained waivers to such requirements, including, as necessary, modifications to future covenant requirements or the elimination of certain requirements in future periods.

5

Period Ended

 March 31, 2012

Credit Facility

  Balance at March 31, 2012 (000's)

 Consolidated or Subsidiary Level Covenant Requirement

 Financial Covenant

 Measurement Period

 Min/Max Financial Covenant Required

 As Reported Financial Covenant Metric Achieved

 As Restated Financial Covenant Metric Achieved

Gemino - Line of Credit

 $6,717

 Consolidated

 Fixed Charge Coverage Ratio (FCCR)

 Quarterly

 1.10

 0.53

 3.49

 *

PrivateBank - Line of Credit (Bentonville LOC)

 $1,308

 Subsidiary

 FCCR

 Quarterly

 1.05

 2.16

 0.89

 **

PrivateBank - Mortgage Note - Homestead, Valley River, Bentonville

 $11,678

 Subsidiary

 EBITDAR (000's)

 Quarterly

 $450

 $702

 $(4)

 *

 Consolidated

 DSCR

 Annual

 n/a

 n/a

 n/a

Square 1 USDA - Term Note Homestead

 $3,578

 Subsidiary

 Current ratio

 Quarterly

 1.00

 0.37

 0.27

 *

 Subsidiary

 Maximum debt to net worth

 Quarterly

 9.00

 7.57

 14.34

 *

 Subsidiary

 Tangible net worth

 Quarterly

 10.0%

 11.7%

 6.5%

 *

PrivateBank - Mortgage Note Woodland Manor

 $4,783

 Subsidiary

 Minimum quarterly EBITDAR (000's)

 Quarterly

 $250

 $301

 $280

 Subsidiary

 Minimum trailing twelve month FCCR

 Quarterly

 1.10

 1.83

 1.92

*     - Waiver or amendment for violation of covenant obtained.

**   - Loan balance was paid in full in Q3 2012. Amount was classified as current liability at Q1 2012.

Period Ended

 June 30, 2012

Credit Facility

  Balance at June 30, 2012 (000's)

 Consolidated or Subsidiary Level Covenant Requirement

 Financial Covenant

 Measurement Period

 Min/Max Financial Covenant Require

September 2 7, 201 3

Via E -mail
Mr. Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare  Health Systems, Inc.
 Form 10-K for the fis cal year ended December 31, 2012
Filed July 8, 2013
Form s 10-Q/A for the quarterly period s ended March 31, 2012, June 30, 2012
and September 30, 2012
Filed July 8, 2013
Response dated August 29, 2013
File No. 001-33135

Dear Mr. Gentry :

We have reviewed your response letter and have the following comments.  As noted in
our letter dated August 16, 2013, we have limited our review to only your financial statements
and related disclosures and do not intend  to expand our review to other portions of your
documents.  In some of our comments, we may ask you to provide us with  information so we
may better understand your disclosure.

Please respond to this letter within ten business days by amending your filings , by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your re sponse.

After reviewing  any amendment to your filings and  the information you provide in
response to these  comments, we may have  additional comments.

Form 10 -K

Financial Statements

Principles of Consolidation, page 72

1. We note your response to comment one  explains that the consolidation of the Oklahoma
Facilities VIEs did not have the effect of increasing management’s compensation.  We

Mr. Boyd P. Gentry
AdCare Health Systems, Inc.
September  27, 2013
Page 2

 note from page 7 of your December 5, 2012 correspondence that there existed a
principal/agent relationship betw een AdCare and the Oklahoma Facilities Owners.   We
also note from page 147 of your December 31, 2012 Form 10 -K that your former Chief
Acquisitions Officer, Mr. Brogdon , served without a fixed salary prior to 2013 but
instead received the substantial major ity of his compensation for services for the year
2011 in the form of discretionary bonus payments and option stock incentives.  We note
from the first paragraph of page 150 of the Form 10 -K that Mr. Brogdon currently earns a
“success fee” for each complet ed acquisition transaction, and that Mr. Brogdon earns no
such success fee for leased or managed facilities.  Confirm for us that Mr. Brogdon and
other officers were not compensated for services rendered to facilitate the acquisition of
the Oklahoma Facili ties.  Otherwise please explain how such services rendered in the
Oklahoma Facilities transactions effected officer’s compensation.

2. Further in this regard, explain for us why Mr. Brogdon’s  $200,000 bonus earned for 2011
was omitted from the executive compensation table on page 100 of your December 31,
2011 Form 10 -K.

Form 10 -Q/A#1  for the quarterly period ended September 30, 2012

Note 2. Restatement of Previously Issued Consolidated Fina ncial Statements , page 11

3. We note your response to comment eight and note the following:
 The $34,000 adjustment increasing deferred loan costs , net as described on page 13
of your September 30, 2012 Form 10 -Q/A#1 is silent regarding the $164,000 increase
in interest expense for the fair value of warrants granted to non -employees as
indicated in your response letter,
 The description of the adjustment to general and administrative  expense bridging
pages 12 and 13 of your September 30, 2012 Form 10 -Q/A#1 is s ilent about an
adjustment to consulting expense , and
 The description of the adjustment to property and equipment, net  on page 13 of your
September 30, 2012 Form 10 -Q/A#1 is silent about inappropriately capitalized
interest costs.
Accordingly it appears to us that the nature of the adjustments to interest  expense  and
general and administrativ e expens e are unclear.   As previously requested, please revise
your disclosure of “other adjustments” in the June 30 and September 30, 2012 Forms 10 -
Q to include an explanation of why material corrections were made to the interest
expense line item.

4. We note that the correction made to costs of services,  for delays in collection efforts and
lack of timely follow -up on open patient accounts during 2012, required an adj ustment
variously stated as $721,000 and $484,000 in your response to comment nine and in the
first paragraph of page 13 of your Form 10 -Q/A#1 for September 30, 2012.   Please
reconcile and correct.

Mr. Boyd P. Gentry
AdCare Health Systems, Inc.
September  27, 2013
Page 3

 5. Similarly we note that the correction made to general and  administrative expenses for
interest incorrectly capitalized on the balance sheet required an adjustment variously
stated as $159,000 and $94,000 in your response to comment nine and in the sixth
paragraph of page 12 of your Form 10 -Q/A#1 for September 30 , 2012.   Please reconcile
and correct.

6. Please revise your disclosure of the adjustments made to correct reported costs of services
to reflect the additional information provided in your response to comment nine.  Address
in costs of services  the $112,000 correction for untimely recorded payroll expense and the
reversal of the $480,000 elimination of management fees.

7. In your amended 34 Act reports for 2012, where applicable, please make similar
revisions , as requested above , to the financial statements pro vided for the six months
ended June 30, 2012 and for three months ended March 31, June 30 and September 10,
2012.

8. We note your response to comment five. You indicate in your response that certain
restated financial covenant metric information ha s been omi tted from the June 30  and
September 30, 2012 debt covenant compliance tables.    The (***) footnotes to these
tables explain that these covenants commence in future quarters.    However Sections 7.15
and 7.16 of the loan agreement dated March 30, 2012 betwee n Little Rock HC&R
Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, Woodland Hills
HC&R Property Holdings, LLC and The PrivateBank and Trust Company (Exhibit 10.6
to the March 31, 2012 Form 10 -Q) appears to include monthly and quarterly debt
compliance provisions that were in effect at June 30, 2012 and September 30,
2012.   Please clarify and, if necessary, revise your response to comment five and its June
30 and September 30, 2012 debt covenant compliance tables accordingly.

9. In this regard please similarly address the quarterly restated financial covenant metric
information for the PrivateBank -Thomasville line of credit and the Contemporary
Healthcare Capital -Companion Care line of credit omitted from the September 30, 2012
debt covenant compliance table.

10. We n ote your responses to comments two  and eight . We note that you attribute the
significant number of adjustments to the fact that you did not maintain sufficient,
adequately trained and qualified personnel with technical e xpertise in U.S. GAAP and
financial reporting in your corporate accounting function.   In this regard, tell us in detail
how you concluded in your original Form 10 -Qs filed during 2012 that your disclosure
controls and procedures and your  internal control o ver financial reporting were
effective.

Mr. Boyd P. Gentry
AdCare Health Systems, Inc.
September  27, 2013
Page 4

 You may contact Joseph M. Kempf, Senior Staff Accountant , at 202-551-3352  or Carlos
Pacho, Senior Assistant Chief Accountant, at 202 -551-3835  if you have questions regarding
comments on the financial stateme nts and related matters.  Please contact me at (202) 551 -3810
with any other questions.

Sincerely,

 /s/ Robert S. Littlepage  for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

CORRESP
1
filename1.htm

ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia 30076

August 29, 2013

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

Re:                             AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended December 31, 2012

Filed July 8, 2013

Forms 10-Q/A for the quarterly periods ended March 31, 2012, June 30, 2012 and September 30, 2012

Filed July 8, 2013

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Boyd P. Gentry, dated August 16, 2013.  For the convenience of the Staff, the Company has restated in this letter in italics each of the Comments and numbered each of the Company’s responses to correspond to the number of each of the Comments.

Form 10-K for the fiscal year ended December 31, 2012

Financial Statements

Principles of Consolidation, page 72

1.                                      Please give us your SAB 99 analysis and explain for us why inclusion of the Oklahoma Owners VIEs in the financial statements for the year ended December 31, 2011 was not material to such financial statements. Provide us with an analysis of the forgone adjustments that would have been required to de-consolidate these VIEs at December 31, 2011.

Background

In response to the Staff’s Comment, and in accordance with the Staff Accounting Bulletin No. 99, Materiality (“SAB 99”), the Company has assessed the materiality of including the Oklahoma Owners in the Company’s financial statements as of and for the year ended December 31, 2011.  For purposes of this letter, “Oklahoma Owners” means, collectively, the five entities controlled by Christopher Brogdon and his spouse, Connie Brogdon, which acquired five skilled nursing facilities located in Oklahoma (the “Oklahoma Facilities”) effective August 1, 2011.  Mr. Brogdon is the Company’s Vice Chairman of the Board and beneficial owner of greater than 10% of the Company’s common stock.

SAB 99 states that a matter is material if there is a substantial likelihood that a reasonable person would consider it important. In addition, pursuant to SAB 99, a registrant should tailor its assessment of materiality to consider factors that are relevant to the registrant’s own facts and surrounding circumstances and should consider company specific trends and performance metrics that may influence investment decisions, including the metrics that a registrant considers important enough to include in its press releases and earnings calls as well as the metrics analysts cover in their reports.

In accordance with the SAB 99’s guidance, the Company has reviewed and set forth below the relevant quantitative and qualitative considerations in formulating its conclusions.

Quantitative and Qualitative Assessment

The attached exhibits are provided in support of the quantitative materiality assessment:

Exhibit 1 — December 31, 2012 Consolidated Balance Sheet in comparison to the December 31, 2011 As Reported and Pro Forma Consolidated Balance Sheets.  For purposes of this letter, (i) “As Reported” presents the information as filed with the Commission, which consolidates the Oklahoma Owners in the Company’s consolidated financial statements, and (ii) “Pro Forma” presents the information on a deconsolidated basis,  excluding the Oklahoma Owners from the Company’s consolidated financial statements.  Also included are the dollar amount and percentage differences between As Reported and Pro Forma.

Exhibit 2 — December 31, 2012 Consolidated Statement of Operations in comparison to December 31, 2011 As Reported and Pro Forma Statement of Operations.  Also included are the dollar amount and percentage differences between As Reported and Pro Forma and reconciliations to Adjusted EBITDAR from continuing operations.

2

Balance Sheet (Dollar Amounts in 000’s):

The consolidation of the Oklahoma Owners results in the overstatement at December 31, 2011 of current assets by $1,015, or 3.5%, and current liabilities by $1,004, or 2.9%.  The differences in individual line items are all less than 5.0%, except for prepaid expenses at 5.3%, and are not deemed material.  The Company believes the dollar amount of the overstatement of prepaid expenses ($35) is not material.  The working capital ratio at December 31, 2011 is 0.84 on both an As Reported and Pro Forma basis (no change). Based on the above, the Company has concluded that the unrecorded adjustments are not material to current assets and current liabilities.

The overstatement of total assets due to the consolidation of the Oklahoma Owners is $12,733, or 8.0%, and total liabilities are overstated by $13,393, or 9.3%. These differences primarily result from the property and equipment, net, deferred loan costs, net and the long-term debt incurred by the Oklahoma Owners to acquire the Oklahoma Facilities.  Although these differences are quantitatively more than inconsequential, the Company has concluded they are not material for the qualitative considerations addressed below.  The summarized balance sheet of the Oklahoma Owners at December 31, 2011 is included in Note 20 to the Company’s financial statements as of and for the year ended December 31, 2012.

Statement of Operations (Dollar Amounts in 000’s):

Year ended December 31, 2011:

As Reported 2011 total revenues are overstated by $4,847, or 3.5%, due to the consolidation of the Oklahoma Owners.  The Company does not believe the overstatement of total revenues at 3.5% is material, and the difference does not materially impact revenue due to the sizable increase in revenue from 2011 to 2012 from acquisition growth.

As Reported 2011 total expenses are overstated by $4,279, or 3.1%, due to the consolidation of the Oklahoma Owners, which the Company does not believe is material.  As Reported 2011 total other expense, net, which consists of interest expense, net, and acquisition costs, net of gains, is overstated by $1,228, or 16.8%.  The Company does not believe this is material as these expenses do not impact Adjusted EBITDAR from continuing operations, which is the operating performance measurement reported by the Company.

As Reported 2011 operating income is overstated by $568, or 51.2%, due to the consolidation of the Oklahoma Owners. The 2011 loss from continuing operations is overstated by $660, or 10.3%, and net loss by $660, or 8.7%. Adjusted EBITDAR from continuing operations is overstated by $781, or 5.6%, due to the consolidation of the Oklahoma Owners.  There is no tax impact related to the Oklahoma Owners.  The Company believes that the unrecorded adjustments on operating income, loss from continuing

3

operations, net loss and Adjusted EBITDAR from continuing operations are not material because the dollar amounts of such adjustments are quantitatively immaterial.

Company Specific Trends and Performance Metrics that May Influence Investment Decisions and the Company’s Own Facts and Circumstances

As stated in the Company’s earnings releases, earnings calls and filings with the Commission, since mid-2010 the Company has initiated an acquisition and integration strategy.  With respect to this strategy, the Company believes that its investors and analysts have been interested in revenue growth, same-facility revenue trends, income from operations, Adjusted EBITDAR from continuing operations, the percentage of Adjusted EBITDAR from continuing operations to total revenues, payer census trends, the nature of and quantity of acquisitions closed, and the pipeline of pending acquisitions.

Although the Company has not described or commented to any significant extent on working capital ratios or debt leverage ratios, the Company believes these are balance sheet metrics that may be relevant to readers of its financial statements.

The unrecorded differences due to the consolidation of the Oklahoma Owners do not materially understate revenue growth trends.  Revenue growth in 2012 relative to 2011 is 1.46x As Reported and 1.51x on a Pro Forma basis.  In context to the relative large increase in year-over-year revenue, this variance is not material.

The unrecorded differences due to the consolidation of the Oklahoma Owners do not significantly impact same-facility revenue trends because the Oklahoma Facilities were acquired by the Oklahoma Owners in August 2011 and are excluded in the “same facility revenue” metrics.

Given the high growth through acquisition strategy, a metric often used by the Company (and monitored by investors) is the percentage of Adjusted EBITDAR from continuing operations to total revenues, which is 10.1% and 9.8% on an As Reported and Pro Forma basis, respectively.  This 0.3% variance is not material and does not materially impact the Adjusted EBITDAR from continuing operations to total revenues trend.

From a balance sheet perspective, the current ratio at December 31, 2011 is 0.84 on both an As Reported and Pro Forma basis (no change).  The debt to equity ratio at December 31, 2011 is 7.16x As Reported and 6.39x on a Pro Forma basis (i.e. the Company is heavily leveraged with or without Oklahoma Facilities debt).  This variance is not material and does not materially impact the debt leverage ratio trend.

The largest effect of the unrecorded differences due to the consolidation of the Oklahoma Owners is the overstatement of total assets ($12,733, or 8%) and total liabilities ($13,393, or 9.3%).  Although the differences are more than inconsequential, the Company believes that these

4

differences are not material because they do not impact Adjusted EBITDAR from continuing operations in a material manner (i.e., the assets and liabilities of the Oklahoma Owners which contribute to the differences primarily result in depreciation and interest expense which are not elements of Adjusted EBITDAR from continuing operations).  The Company believes that Adjusted EBITDAR from continuing operations provides a meaningful and consistent comparison of the Company’s business between periods by eliminating certain items required by GAAP which have little or no significance in the Company’s day-to-day operations.  Accordingly, the Company believes that Adjusted EBITDAR from continuing operations is a measure which is useful to investors in evaluating the Company’s performance.  As noted above, the percentage of Adjusted EBITDAR from continuing operations to total revenues is relatively unchanged at 10.1% and 9.8% on an As Reported and Pro Forma basis, respectively.

Evaluating the significance placed by an investor on the Oklahoma Facilities acquisition is difficult to evaluate.  However, it is noted that in the months leading up to the acquisition of the Oklahoma Facilities by the Oklahoma Owners (June and July 2011) the per share closing price of the Company’s common stock ranged between $4.73 and $5.90.  In the month after such acquisition, the per share closing price of the Company’s common stock ranged between $4.50 and $5.37.  Based on the foregoing market data, it would appear that the Oklahoma Facilities acquisition did not have a significant impact on the price of the Company’s common stock and that such acquisition was not viewed by investors and analysts as a significant event in the valuation of the Company.

Considerations Referenced in SAB 99

SAB 99 identifies a number of specific quantitative and qualitative factors often assessed in evaluating the materiality of a misstatement of the financial statements.  These factors are set forth below in italics followed by the Company’s response to each factor.

·                  Whether the misstatement arises from an item capable of precise measurement or whether it arises from an estimate and, if so, the degree of imprecision inherent in the estimate.

This matter relates to the application and interpretation of accounting guidance.

·                  Whether the misstatement masks a change in earnings or other trends.

As discussed above and illustrated in Exhibits 1 and 2 attached hereto, the differences due to the consolidation of the Oklahoma Owners do not significantly change or mask any trends of significance.

·                  Whether the misstatement hides a failure to meet analysts’ consensus expectations for the enterprise.

5

No.  Similar to most small CAP or smaller reporting companies, the Company does not have a significant following by analysts.  In fact, only two or three analysts follow the Company currently and there were no analysts’ expectations prior to 2012.

·                  Whether the misstatement changes a loss into income or vice versa.

The differences due to the consolidation of the Oklahoma Owners do not directionally change operating income, net loss from continuing operations, or net loss.

·                  Whether the misstatement concerns a segment.

The differences due to the consolidation of the Oklahoma Owners all impact the Company’s Skilled Nursing Facility segment.  Effective in the fourth quarter of 2012, after the disposition of the majority of the Company’s assisted living facilities, the Company no longer maintains multiple reporting segments.  Thus, relevance to segment reporting is not significant.

·                  Whether the misstatement affects the registrant’s compliance with regulatory requirements.

The misstatement due to the consolidation of the Oklahoma Owners did not affect the Company’s compliance with regulatory requirements.

·                  Whether the misstatement affects the registrant’s compliance with loan covenants or other contractual requirements.

The misstatement due to the consolidation of the Oklahoma Owners did not affect the Company’s compliance with loan covenants or other contractual requirements.

·                  Whether the misstatement has the effect of increasing management’s compensation.

The misstatement due to the consolidation of the Oklahoma Owners did not have the effect of increasing management’s compensation in 2011.

·                  Whether the misstatement involves concealment of an unlawful transaction.

The misstatement due to the consolidation of the Oklahoma Owners did not involve the concealment of an unlawful transaction.

6

Conclusion

Based on both the quantitative and qualitative considerations discussed above, the Company believes that the consolidation of the Oklahoma Owners in the Company’s consolidated financial statements as of and for the year ending December 31, 2011 is not material and, therefore, restatement of such financial statements is not required.  Furthermore, a reader of the Company’s consolidated financial statements is able to completely assess the Company’s results, with and without the consolidation of the Oklahoma Owners, because the summarized balance sheet of the Oklahoma Owners for 2011 is included in Note 20 to the Company’s financial statements as of and for the year ended December 31, 2012.  Moreover, due to the Company’s continued growth by acquisition, a comparison of the Company’s consolidated financial statements for the year ended December 31, 2012 and 2011 is not overly meaningful.

Non-GAAP Financial Information

The Company defines: (i) “Adjusted EBITDA from continuing operations “ as net income (loss) from continuing operations before interest expense, income tax expense; depreciation and amortization (including amortization of non-cash stock-based compensation), acquisition costs (net of gains), loss on extinguishment of debt, derivative loss or gain and other non-routine adjustments; and (ii) “Adjusted EBITDAR from continuing operations” as net income (loss) from continuing operations before interest expense; income tax expense, depreciation

August 16 , 201 3

Via E -mail
Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare Health Systems, Inc.
 Form 10-K for the fis cal year ended December 31, 2012
Filed July 8, 2013
Form s 10-Q/A for the quarterly period s ended March 31, 2012, June 30, 2012
and September 30, 2012
Filed July 8, 2013
File No. 001-33135

Dear Mr. Gentry :

We have reviewed your  filing s and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing s, by
providing th e requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing s and the information you provide in
response to these  comments, we may have  additional comments.

Form 10 -K for the fiscal year ended December 31, 2012

Financial Statements

Principles of Consolidation, page 72

1. Please give us your SAB 99 analysis and explain for us why inclusion of the Oklahoma
Owners VIEs in the financial statements for the year ended December 31, 2011 was not
material to such financial statements.  Provide us with an analysis of the forgone
adjustments that would have been required to de -consolidate these VIEs at December 31,
2011.

Boyd P. Gentry
AdCare Health Systems, Inc.
August 16 , 2013
Page 2

Item 9, Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting, page 138

2. We note form the final bullet point on page 139 that you have expanded your internal
audit procedures regarding the review of journal entries and non -recurring transactions,
areas that appear underlie restatements made to correct errors in your 2012 Forms 10-Q.
It is unclear to us how these matters were addressed in your disclosure of material
internal control weaknesses in the third paragraph of page control 139.  Please clarify and
revise as necessary in accordance with Item 308(a)(3) of Regulation S -K to disclose each
material weakness in your “internal control over financial reporting that was identified by
management” as of December 31, 2012.

Form 10 -Q/A for the quarterly period ended March 31 , 2012

Item 4, Controls and Procedures, page 35

3. It is unclear to us from the first full and the penultimate paragraph s of page 36 whether
management’s evaluation of  the effectiveness of  disclosure controls and procedures , in
this and subsequent amended filing s, is as of the end of each 34 Act interim repor ting
period  or as of December  31, 2012.  Please clarify.  If management’s evaluation of the
effectiveness of  disclosure controls and procedures was not performed as of the end of
this and each subsequent 34 Act interim reporting period please tell us why.  Address in
your response the numerous accounting and reporting errors affecting those periods.
Item 307 of Regulation S -K requires that management evaluat e the effectiveness of
disclosure controls and procedures “as of the end of the period covered by th e report”.

Note 2. Restatement of Previously Issued Consolidated Financial Statements, page 11

4. We note that your recent reassessment of your previous conclusion regarding the
consolidation of the “Oklahoma Owners” VIEs resulted in restatement of your 201 2
interim financial statements.   Explain for us the basis in ASC 810 for your revised
conclusion.  Identify for us the underlying facts and circumstances that caused you to
come to a conclusion different from your previously held conclusion.  Please also address
the December 20, 2012 subordination of your 5% management fee under the credit
agreement with Gemino Healthcare Finance, LLC in your response.

5. For each balance sheet date; March 31, 2012, June 30, 2012 and September 30, 2012,
please provide us  with debt covenant information that is comparable to the information
provided on pages 61 and 62 of your December 31, 2012 Form 10 -K.  Tell us the impact
the corrected amounts would have had on those debt covenants for each such interim
period.   Specify which , if any, debt covenants would have been violated.

Boyd P. Gentry
AdCare Health Systems, Inc.
August 16 , 2013
Page 3

 Form 10 -Q/A for the quarterly period ended September 30, 2012

Note 2. Restatement of Previously Issued Consolidated Financial Statements , page 11

6. With the exceptions of adjustments related to management  fees charged to certain
variable interest entities and for “changes in accrued performance -based incentive
obligation”, your material “other adjustments” presented on pages 11 through 17 appear
to be related to “timing i ssues” and appear to adversely affect your interim results of
operations.  Please explain.  Identify for us the particular weakness in disclosure controls
and procedures and the changes and weakness in  internal control that allowed such  errors
to go undetected at the original filing dates o f your 2012 interim reports.

7. Explain for us why your “accrued performance -based incentive obligation” needed to be
restated.  Identify for us the classes of employees for whom this incentive obligation was
reduced.

8. Please revise your disclosure of your “ other adjustments” in the June 30, and September
30, 2012 Forms 10 -Q/A to include an explanation of why material corrections were made
to your interest expense line item.

9. Please reconcile the component adjustments to costs of services expenses and general  and
administrative expenses for the nine months ended September 30, 2012 to the respective
$5,656,000 and $(852,000) adjustments presented on page 16.  It is not clear to us
whether the disclosure of adjustments to costs of services expenses and general and
administrative expenses on page 12 includes all material items.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In respo nding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments  do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United Stat es.

Boyd P. Gentry
AdCare Health Systems, Inc.
August 16 , 2013
Page 4

 You may contact Joseph M. Kempf, Senior Staff Accountant , at 202-551-3352  or Carlos
Pacho, Senior Assistant Chief Accountant, at 202 -551-3835  if you have questions regarding
comments on the financial statements and related matters.  Please contact me at (202) 551 -3810
with any other questions.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

CORRESP
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ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia  30076

February 19, 2013

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

Re:                             AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended December 31, 2011

Filed March 19, 2012

Form 10-Q for the quarterly period ended September 30, 2012

Filed November 13, 2012

Response dated January 4, 2013

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Boyd Gentry, dated January 25, 2013.  For the convenience of the Staff, the Company has restated in this letter each of the Comments and numbered each of the responses to correspond to the number of each of the Comments.

Form 10-Q for the quarterly period ended September 30, 2012

Note 8 - Notes payable, page 11

1.              It does not appear from your response to comment two of our letter dated December 19, 2012 that your existing loan with PrivateBank complied with the long-term classification criteria of ASC 470-10-45-14 at the time you filed your September 30, 2012 financial statements.  Two of your credit facilities with PrivateBank that were refinanced in December 2012 after your September 30, 2012 balance sheet was issued.  These December 2012 refinancing transactions do not therefore meet the long-term classification criteria of ASC 470-10-45-14a.  The one remaining credit facility with PrivateBank has not yet been refinanced and does not therefore meet the long-term classification criteria of ASC 470-10-45-14a.  As indicated in your response, your PrivateBank Letter agreement does not clearly permit a long-term refinancing of these PrivateBank facilities on a non-cancellable basis and does not therefore meet the long-

term classification criteria of ASC 470-10-45-14b.  It remains unclear to us why you should not classify your PrivateBank credit facilities as current liabilities in your June 30, 2012 and September 30, 2012 consolidated balance sheets in accordance with ASC 470-10-45-14.  Please advise.

During a conversation with the Staff on February 12, 2013, the Staff indicated that it believes the Company erred in classifying the debt owed to PrivateBank and Trust Company (“PrivateBank”) as long-term debt instead of a current liability in the Company’s consolidated balance sheets at September 30, 2012 and June 30, 2012. As requested by the Staff during this conversation, the Company sets forth below its materiality analysis pursuant to Staff Accounting Bulletin No. 99 (“SAB 99”) of the error identified by the Staff.

Background

At September 30, 2012 and June 30, 2012, the Company had outstanding a $21.2 million loan with PrivateBank (the “PrivateBank Loan”) that was classified as long-term debt in the Company’s consolidated balance sheets at such dates.  The PrivateBank Loan, with an original principal balance of $21.8 million, was a component of acquisition financing used by the Company to acquire three skilled nursing facilities in April 2012 (the “Aviv Acquisition”).  The PrivateBank Loan required monthly principal and interest payments based on a 25-year amortization schedule with the balance due in five years at March 30, 2017 (the “Original Maturity Date”).

Generally, the Company funds its acquisitions with short-term financing and thereafter seeks to refinance it with long-term alternative traditional mortgage loans (e.g., 20 to 30 year amortizing mortgage loans). After completing the Aviv Acquisition, the Company and its broker prepared and circulated a proposed financing term sheet in an effort to refinance the PrivateBank Loan under the 504 Loan Program offered by the U.S. Small Business Association (the “SBA”).  The Company was advised that, to be eligible to participate in the SBA’s 504 Loan Program, the PrivateBank Loan would need to be modified into three separate loans (one for each facility), each having a maturity of not greater than one year. In June 2012, at the Company’s request, PrivateBank modified the PrivateBank Loan into three separate facilities (with no change to the aggregate principal amount), each with a maturity date of March 30, 2013 (the “PrivateBank Modified Loans”).  The SBA refinancing discussions continued in July and August 2012. On August 2, 2012, PrivateBank provided the Company with a letter informing it that, if the PrivateBank Modified Loans were not refinanced through the SBA’s 504 Loan Program, then it would be the intent of PrivateBank to restructure the PrivateBank Modified Loans and reinstate the Original Maturity Date. The Company disclosed in the footnotes to its unaudited financial statements for the quarter ended September 30, 2012 that (i) the maturity dates of the PrivateBank Modified Loans were March 30, 2013, (ii) it was the intent of the Company to refinance the PrivateBank Modified Loans on a longer term

2

basis and (iii) PrivateBank had indicated its intent to reinstate the Original Maturity Date if the SBA refinancing did not materialize.

The SBA’s 504 Loan Program ended prior to the Company executing a refinancing thereunder, and the Company commenced discussions with other lenders to refinance the PrivateBank Modified Loans on a long-term basis.  In December 2012, the Company refinanced two of the Private Bank Modified Loans with Key Bank National Association through a loan with a maturity of February 2017 and refinanced the third PrivateBank Modified Loan with PrivateBank through a loan with a maturity of December 2016.  Upon execution of these refinancing transactions, the Company filed a Current Report on Form 8-K disclosing such transactions.

Therefore, subsequent to September 30, 2012 and June 30, 2012, the Company has, in fact, refinanced the PrivateBank Modified Loans on a long-term basis.

Materiality Assessment

SAB 99 states that a matter is material if there is a substantial likelihood that a reasonable person would consider it important. It is the Company’s understanding that the Commission expects a registrant to tailor its materiality analysis to consider factors that are relevant to the registrant’s own facts and circumstances and that registrants should consider company specific trends and performance metrics that may influence investment decisions, including the metrics that a registrant considers important enough to include in press releases and earnings calls as well as the metrics analysts cover in their reports.

As a result of classifying the PrivateBank Modified Loans as long-term debt in the Company’s consolidated balance sheets at September 30, 2012 and June 30, 2012, the current portion of long-term debt and current liabilities was understated by $21.2 million at such dates. Solely on a quantitative basis, the amount or percentage of this understatement is material to these line items in the financial statements. However, in accordance with SAB 99, the quantification of the magnitude of a misstatement is only the beginning of an analysis of materiality and cannot appropriately be used as a substitute for full analysis of all relevant considerations.  The Company also has considered the following quantitative and qualitative factors as important considerations in determining the materiality of the classification of the PrivateBank Modified Loans.

Company Specific Trends and Performance Metrics that May Influence Investment Decisions

·                                          As stated in the Company’s earnings releases, earnings calls and Commission filings, since mid-2010 the Company has initiated an acquisition and integration strategy.  With respect to this strategy, investors and analysts have been interested

3

in revenue growth, same-facility revenue trends, income from operations, non-GAAP financial information, “Adjusted EBITDAR”, payer census trends, the nature of and quantity of acquisitions closed, and the pipeline of pending acquisitions.  The classification of the PrivateBank Modified Loans as long-term debt instead of current liabilities at September 30, 2012 and June 30, 2012 had no effect on these metrics or performance trends.

·                                          In 2012, in the Company’s earnings releases and the “Management Discussion and Analysis of Financial Condition and Results of Operations” disclosures in the Company’s Commission filings, the Company has not described or commented on working capital ratios or debt maturities.  The Company’s consolidated balance sheets at September 30, 2012, March 31, 2012 and December 2011 all reflected current liabilities in excess of current assets (e.g., negative working capital).  The working capital ratio based on the June 30, 2012 consolidated balance sheet was marginally positive at 1.03:1.  Therefore, there is no trend in positive working capital.

·                                          The Company believes that a reader of the Company’s financial statements clearly understands, based on the Company’s disclosures in its Commission filings, that the Company is heavily leveraged.  The classification of the PrivateBank Modified Loans as long-term debt instead of current liabilities at September 30, 2012 and June 30, 2012 did not impact the Company’s leverage ratio at such dates (i.e. the Company’s total debt is not affected).

Factors Relevant to the Company’s Own Facts and Circumstances

·                                          The Company believes that a reader of the Company’s financial statements understands, based on the Company’s disclosures in its Commission filings, that (i) the Company is executing an acquisition strategy in which it closes a majority of its acquisitions using shorter term debt financing (i.e., debt having maturities ranging from three months to five years) and subsequently refinances such acquisition debt on a long-term basis; and (ii) the Company’s short-term acquisition debt likely will be refinanced with long-term debt or equity rather than settled through the use of the Company’s working capital. In fact, since mid-2010 the Company has refinanced short-term acquisition debt on a long-term basis on ten occasions.

·                                          The Company believes that the modification of the PrivateBank Loan to a shorter-term maturity involved certain facts and circumstances which are noteworthy in connection with this SAB 99 materiality analysis, including that: (i) the Original Maturity Date of the PrivateBank Loan was accelerated at the Company’s request in order to allow the Company to execute its short-term to long-term acquisition

4

debt refinancing strategy as the Company has done multiple times prior to June 2012; (ii) the footnotes to the Company’s unaudited financial statements for the quarter ended September 30, 2012 disclosed the intent of the Company and PrivateBank to reinstate the Original Maturity Date if the SBA refinancing did not occur; (iii) the modification of the PrivateBank Loan to a shorter term maturity did not occur as a result of financial issues or covenant failures whereby the lender required the modification; and (iv) the PrivateBank Modified Loans in fact were refinanced with maturities of 2016 or later.

·                                          The Company has disclosed in a Current Report on Form 8-K that the PrivateBank Modified Loans were refinanced on a longer term basis with maturities in 2016 and 2017.  If the Company is required to restate its unaudited financial statements for the quarters ended September 30, 2012 and June 30, 2012 to classify the PrivateBank Modified Loans as current liabilities, then the Company would clearly disclose in the related Current Report on Form 8-K (to report non-reliance on previously issued financial statements) and the amendments to the applicable Quarterly Reports on Form 10-Q, that the PrivateBank Modified Loans being reclassified to current are, in fact, now long-term and properly classified as such.  The Company believes that the “cost” of the market reaction to such a restatement would exceed the benefit to a reasonable person of being informed that the PrivateBank Modified Loans (which are now long-term) are being reclassified to a current classification in the historical quarterly filings but will once again be classified as long-term at December 31, 2012.

·                                          Generally accepted accounting principles require that debt be classified as either current or long-term in order to assist the reader of financial statements in assessing whether the registrant has sufficient resources to discharge its near-term liabilities. Classifying debt as either current or long-term provides certain factual disclosure at a specific point in time which is intended to be used to assess the likelihood of future events. In this case, the underlying facts have changed and now support a long-term classification of the PrivateBank Modified Loans. Accordingly, restating the Company’s unaudited financial statements for the quarters ended September 30, 2012 and June 30, 2012 to classify the PrivateBank Modified Loans as current liabilities will not assist the readers of such financial statements in assessing whether the Company has sufficient resources to discharge its near-term liabilities because the PrivateBank Modified Loans became classified as long-term subsequent to quarter end. Such a restatement would not serve the purposes of the requirement that debt be classified as either current or long-term.

5

Considerations Referenced in SAB 99

SAB 99 lists a number of specific quantitative and qualitative factors often assessed in evaluating the materiality of a misstatement of the financial statements.  These considerations follow (italics) with commentary specific to the classification error in question:

·                                          Whether the misstatement arises from an item capable of precise measurement or whether it arises from an estimate and, if so, the degree of imprecision inherent in the estimate.

The misstatement arises from a matter capable of specific measurement.

·                                          Whether the misstatement masks a change in earnings or other trends.

The misstatement has no impact on earnings.  As previously stated, the Company believes it does not have a consistent and historical trend of positive working capital.

·                                          Whether the misstatement hides a failure to meet analysts’ consensus expectations for the enterprise.

No, analysts’ expectations are relative to operating (profit and loss) metrics and the acquisition strategy.

·                                          Whether the misstatement changes a loss into income or vice versa.

Not applicable.

·                                          Whether the misstatement concerns a segment.

Not applicable.

·                                          Whether the misstatement affects the registrant’s compliance with regulatory requirements.

The misstatement did not affect the Company’s compliance with regulatory requirements.

·                                          Whether the misstatement affects the registrant’s compliance with loan covenants or other contractual requirements.

The classification of the PrivateBank Modified Loans as current liabilities instead of long-term debt as of September 30, 2012 and June 30, 2012 only affects the fixed charge coverage ratio under the provisions of the Company’s line of credit with Gemino

6

Healthcare Finance, LLC (“Gemino”).  With respect to June 30, 2012, that covenant failed with, and without, the PrivateBank Modified Loans included as current debt

January 25 , 201 3

Via E -mail
Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare Health Systems, Inc.
 Form 10-K for the fiscal year ended December 31, 2011
Filed March 19, 2012
Form 10 -Q for the quarterly period ended September 30, 2012
Filed November 13, 2012
Response dated January 4, 2013
File No. 001-33135

Dear Mr. Gentry :

We have  reviewed your response letter an d have the following comments.  Please provide
us with  the requested  information so we may better understand your disclosure.

Please respond to this letter within ten business days by providing the requested
information  or by advising us when you will provide the requested response.   If you do not
believe our comments apply to your facts and circumstances please tell us why in your response.

After reviewing  the information you provide in response to these  comments, we ma y
have  additional comments.

Form 10 -Q for the quarterly period ended September 30, 2012

Note 8 - Notes payable, page 11

1. It does not appear from your response to comment two of our letter dated December 19,
2012 that your existing loan with PrivateBank  complied with the long -term classification
criteria of ASC 470 -10-45-14 at the time you filed your September 30, 2012 financial
statements.  Two of your credit facilities with PrivateBank that were refinanced in
December 2012 after your September 30, 2012  balance sheet was issued.  These
December 2012 refinancing transactions do not therefore meet the long -term
classification criteria of ASC 470 -10-45-14a.  The one remaining credit facility with
PrivateBank has not yet been refinanced and does not therefor e meet the long -term
classification criteria of ASC 470 -10-45-14a.   As indicated in your response, your

Boyd P. Gentry
AdCare Health Systems, Inc.
January 25, 2013
Page 2

 PrivateBank Letter agreement does not clearly permit a long -term refinancing of these
PrivateBank facilities on a non -cancellable basis and does not th erefore meet the long -
term classification criteria of ASC 470 -10-45-14b.   It remains unclear to us why you
should not classify your PrivateBank credit facilities as current liabilities in your June 30,
2012 and September 30, 2012 consolidated balance shee ts in accordance with ASC 470 -
10-45-14.  Please advise.

Revolving Credit Facilities , page 12

2. We note that your Gemino -Bonterra credit facility, disclosed on page  12, contains debt
covenants  regarding Bonterra’s  fixed charge coverage ratio and other matters.  Tell us
whether your credit facilities , mortgage notes, bonds and other credit obligations  contain
debt covenants restricting your leverage, payment of dividends and /or other significant
matters.  As applica ble, i n future filings, please discuss the extent of headroom in the
financial covenants of your credit facilities, mortgage notes, bonds and other debt in more
detail by disclosing the significant financial and other covenants, identifying the levels
and ratios required by the covenants, and disclosing your actual levels and ratios
corresponding to each covenant.

Please file all correspondence over EDGAR.  You may contact Joseph M.  Kempf,  Senior
Staff Accountant , at 202-551-3352 , or Carlos Pacho, Senior Assistant Chief Accountant, at 202 -
551-3835 , if you have questions regarding comments on the financial statements and related
matters.  Please contact Ajay Koduri, Staff Attorney , at 202 -551-3310 or Celeste M. Murphy,
Legal Branch Chief, at 202 -551-3257 w ith any other questions.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

CORRESP
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ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia  30076

January 4, 2013

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

Re:          AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended December 31, 2011

Filed March 19, 2012

Form 10-Q for the quarterly period ended September 30, 2012

Filed November 13, 2012

Response dated December 5, 2012

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Boyd Gentry, dated December 19, 2012.  For the convenience of the Staff, the Company has restated in this letter each of the Comments and numbered each of the responses to correspond to the number of each of the Comments.  Capitalized terms used herein but not defined herein have the meanings ascribed to them in the Company’s response letter to the Commission dated December 5, 2012 (the “Initial Response Letter”).

Form 10-K for the fiscal year ended December 31, 2011

Note 19 - Variable Interest Entities, page 88

1.                                      We note from your response to comment two of our letter dated November 30, 2012 that Mr. Brogdon and his wife indirectly own only 46% of each Oklahoma Facility Owner. Identify for us who owns the remaining 54% of each Oklahoma Facility Owner. Describe for us your consideration of ASC 810-25-38C and whether those unrelated 54% owners have kick-out rights and/or participating rights that might affect your ability to direct the most significant activities of these VIEs.

Each Oklahoma Facility Owner is a limited liability company owned by the same two members:  (i) Oklahoma Financial, LLC (“Oklahoma Financial”), which owns 35% of the

membership units of each Oklahoma Facility Owner; and (ii) Oklahoma Operating, LLC (“Oklahoma Operating”), which owns 65% of the membership units of each Oklahoma Facility Owner.  As further discussed below, Connie Brogdon, the wife of Chris Brogdon (a director and significant stockholder of the Company), owns 70.8% of the membership units of Oklahoma Operating; and she is, therefore, the majority owner of the majority member of each Oklahoma Facility Owner and thereby has the power to direct the activities of the Oklahoma Facility Owners.

As stated above, Ms. Brogdon owns 70.8% of the membership units of Oklahoma Operating.  Anita Thomas  owns the remaining 29.2% of the membership units of Oklahoma Operating.  Oklahoma Financial is owned by a number of investors (collectively, the “Oklahoma Financial Investors”). Ms. Brogdon, Ms. Thomas and the Oklahoma Financial Investors indirectly own 46%, 19% and 35%, respectively, of each Oklahoma Facility Owner.

In concluding that the Company has the power to direct the activities of the Oklahoma Facility Owners that most significantly impact their economic performance, the Company considered ASC 810-25-38C and determined that the unrelated 54% owners did not have any kick-out rights and/or participating rights that might affect the Company’s ability to direct the most significant activities of the Oklahoma Facility Owners. Pursuant to the Operating Agreement of each Oklahoma Facility Owner (each, an “Owner Operating Agreement”), the business and affairs of the Oklahoma Facility Owner shall be managed by a Board of Managers (except for the Actions Reserved for Members (as hereinafter defined), which require the approval of all of the members of the Oklahoma Facility Owner). Pursuant to each Owner Operating Agreement, the Board of Managers consists of individuals who are appointed to, and may be removed from, the Board of Managers only by the affirmative vote of the members holding a majority of the issued and outstanding membership units (a “Majority Vote”). Mr. Brogdon currently serves as the sole member of the Board of Managers of each Oklahoma Facility Owner.

Similarly, the Operating Agreement of Oklahoma Operating provides that: (a) the business and affairs of Oklahoma Operating shall be managed by a Board of Managers (except for Actions Reserved for Members, which require the approval of all of the members of Oklahoma Operating); and (b) the Board of Managers of Oklahoma Operating consists of individuals who are appointed to, and may be removed from, the Board of Managers only by a Majority Vote.  Mr. Brogdon currently serves as the sole member of the Board of Managers of Oklahoma Operating.  For purposes of this letter, “Actions Reserved for Members” means, with respect to any Oklahoma Facility Owner or Oklahoma Operating, the following actions: (1) approving the merger or consideration of such limited liability company; (2) approving the dissolution of such limited liability company; (3) approving the sale, lease or exchange of any real property owned by such limited liability company; (4) approving the sale, lease or exchange of all, or substantially all, of the assets of such limited liability company; and (5) approving a fundamental change of the business purpose of such limited liability company.

2

Based on the foregoing, the Company determined that the unrelated 54% owners did not have any kick-out rights and/or participating rights that might affect the Company’s ability to direct the most significant activities of the Oklahoma Facility Owners because: (A) Oklahoma Operating (as holder of 65% of the membership units of each Oklahoma Facility Owner) has the power to determine the Board of Managers of each Oklahoma Facility Owner and to prevent the approval of any Action Reserved for Members with respect to each Oklahoma Facility Owner which Ms. Brogdon does not support; and (B) Ms. Brogdon (as holder of 70.8% of the membership units of Oklahoma Operating) has the power to determine the Board of Managers of Oklahoma Operating and to prevent the approval of any Action Reserved for Members with respect to Oklahoma Operating which Ms. Brogdon does not support.  Accordingly, the unrelated 54% owners effectively could not exercise kick-out rights or participation rights with respect to Oklahoma Operating or the Oklahoma Facility Owners without the approval and consent of Ms. Brogdon.

Form 10-Q for the quarterly period ended September 30, 2012

Note 8 - Notes payable, page 11

2.                                      It is unclear to us from your response to comment four of our letter dated November 30, 2012 whether your lender’s expressed intent is in fact an agreement with you that is not cancelable by your lender. Therefore it is unclear to us whether you have in fact an agreement with your lender that meets the criteria of ASC 470-10-45-14. Please advise and clarify.

As indicated in the Initial Response Letter, the Company received a letter from PrivateBank dated August 2, 2012, informing the Company that, if the existing loan with PrivateBank is not refinanced through the SBA 504 program, it would be the intent of PrivateBank to restructure the existing credit facility and reinstate the March 30, 2017 maturity date (the “PrivateBank Letter”).  While the Company understands that the PrivateBank Letter standing alone may not appear to strictly conform to the “financing agreement” criteria of ASC 470-10-45-14 because it does not expressly state that it is not cancelable by PrivateBank, at the time the Company issued its financial statements for the quarter ended September 30, 2012, the Company intended and believed that it had the ability to refinance its debt with PrivateBank to long-term, and the Company, in fact, has refinanced such debt to long-term subsequent to the issuance of such financial statements.  In December 2012, the Company refinanced two of the three credit facilities constituting the PrivateBank debt with KeyBank National Association (“KeyBank”), with the $16.5 million principal amount of the new facility maturing on February 27, 2015, with interest only payments due monthly until maturity.  Separately, in December 2012, the Company also modified its existing loan agreement with PrivateBank to refinance the third credit facility, with the $13.7 million principal amount under the modified loan agreement maturing on December 31, 2016.

3

Based on these refinancing transactions, the Company believes that it would be confusing and misleading to investors to reclassify the PrivateBank debt from long-term to current as of the September 30, 2012 balance sheet and, in any event, that if the Company were to reissue the September 30, 2012 balance sheet at this time, the Company would not be required under GAAP to reclassify the PrivateBank or any other debt from long-term to current.  In addition, if the Company were to reissue the September 30, 2012 balance sheet at this time, the current maturity of the KeyBank debt and the modified PrivateBank debt would be less than the current maturity of the original PrivateBank debt reflected in September 30, 2012 balance sheet as originally issued.

* * *

As requested by the Staff of the Commission, the Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in its Annual Report for the year ended December 31, 2011, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (together, the “Filings”); (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Filings; and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions concerning the matters discussed in this letter please contact Lori A. Gelchion, with Rogers & Hardin LLP, counsel the Company, at 404-420-4646.

Very truly yours,

/s/ Martin D. Brew

Martin D. Brew

Chief Financial Officer

4

December 19, 2012

Via E -mail
Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare Health Systems, Inc.
 Form 10-K for the fiscal year ended December 31, 2011
Filed March 19, 2012
Form 10 -Q for the quarterly period ended September 30, 2012
Filed November 13, 2012
Response dated December 5, 2012
File No. 001-33135

Dear Mr. Gentry :

We have  reviewed your response letter an d have the following comments.  Please provide
us with  the requested  information so we may better understand your disclosure.

Please respond to this letter within ten business days by providing the requested
information  or by advising us when you will provide the requested response.   If you do not
believe our comments apply to your facts and circumstances please tell us why in your response.

After reviewing  the information you provide in response to these  comments, we ma y
have  additional comments.

Form 10 -K for the fiscal year ended December 31, 2011

Note 19 - Variable Interest Entities, page 88

1. We note from your response to comment two of our letter dated November 30, 2012 that
Mr. Brogdon  and his wife indirectly own only 46% of each Oklahoma Facility Owner.
Identify for us who owns the remaining 54% of each Oklahoma Facility Owner.
Describe for us your consideration of ASC 810 -25-38C and whether those unrelated 54%
owners have kick -out rights and/or participating rights that might affect your ability to
direct the most significant activities of these VIEs.

Boyd P. Gentry
AdCare Health Systems, Inc.
December 19, 2012
Page 2

 Form 10 -Q for the quarterly period ended September 30, 2012

Note 8 - Notes payable, page 11

2. It is unclear to us from your response to comment four of our letter dated Novemb er 30,
2012 whether your lender ’s expressed  intent  is in fact an agreement with you that is not
cancelable by your lender.  Therefore it is unclear to us whether you have in f act an
agreement with your lender that meets the criteria of ASC 470 -10-45-14.  Please advise
and clarify.

Please file all correspondence over EDGAR.  You may contact Joseph M.  Kempf,  Senior
Staff Accountant , at 202-551-3352 , or Carlos Pacho, Senior Assi stant Chief Accountant, at 202 -
551-3835 , if you have questions regarding comments on the financial statements and related
matters.  Please contact Ajay Koduri, Staff Attorney , at 202 -551-3310 or Celeste M. Murphy,
Legal Branch Chief, at 202 -551-3257 w ith any other questions.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

CORRESP
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ADCARE HEALTH SYSTEMS, INC.

1145 Hembree Road

Roswell, Georgia  30076

December 5, 2012

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-7010

Attention:  Mr. Larry Spirgel

Re:                             AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended December 31, 2011

Filed March 19, 2012

Form 10-Q for the quarterly period ended September 30, 2012

Filed November 13, 2012

File No. 001-33135

Ladies and Gentlemen:

On behalf of AdCare Health Systems, Inc. (the “Company”), the undersigned hereby responds to the comments (the “Comments”) of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter to Mr. Boyd Gentry, dated November 30, 2012.  For the convenience of the Staff, the Company has restated in this letter each of the Comments and numbered each of the responses to correspond to the numbers of the Comments.

Form 10-K for the fiscal year ended December 31, 2011

Note 19 - Variable Interest Entities, page 88

1.                                      Tell us in detail how you concluded that you have the power to direct the activities of Riverchase (the “VIE”) that most significantly impact Riverchase’s economic performance. Refer to ASC 810-10-25-38A. Tell us in detail of the main terms of the management agreement you entered into to operate Riverchase. Tell us of Mr. Brogdon’s rights to participate in the profits and losses of Riverchase. Tell us of the business rationale for assigning after formation, 100% of the membership interests of Riverchase to Mr. Brogdon.

In 2010, the Company organized a wholly-owned subsidiary, Riverchase Village ADK, LLC (“Riverchase”), for the purpose of acquiring a senior living facility located in Hoover, Alabama known as The Park at Riverchase (the “Riverchase Facility”).  After the organization of Riverchase and prior to its acquisition of the Riverchase Facility, the

Company assigned 100% of the membership interests of Riverchase (the “Riverchase Membership Interests”) to Mr. Brogdon, a significant shareholder, director and officer of the Company (the “Assignment”).  Upon the Assignment, Mr. Brogdon became the sole member of Riverchase and, accordingly, participates in 100% of its profits and losses.

In connection with the Assignment: (i) Hearth & Home of Ohio, Inc., a wholly owned subsidiary of the Company (“Hearth & Home”), entered into an option agreement with Mr. Brogdon whereby Hearth & Home has the right to acquire the Riverchase Membership Interests from Mr. Brogdon for a purchase price of $100,000 (the “Option Agreement”); and (ii) AdCare Management Company, Inc., a wholly owned subsidiary of the Company (“AdCare Management”), entered into a management agreement with Riverchase (the “Riverchase Management Agreement”) pursuant to which AdCare Management supervises the management of the Riverchase Facility (as described in more detail below).  The Company made the Assignment because it determined that had it acquired the Riverchase Facility, then it would have been required to file with the Commission audited financial statements of the Riverchase Facility as required by Form 8-K and Regulation S-X and these financial statements were not available because the Riverchase Facility was in foreclosure and the financial information for such statements could not have been provided. The Assignment, coupled with the Option Agreement, provided (and continues to provide) the Company with the right to acquire the Riverchase Facility in the future.

Pursuant to the Riverchase Management Agreement, AdCare Management supervises the management of the Riverchase Facility, including, without limitation, its staffing, accounting, billing, collections, setting of rates and charges and general administration, for a monthly management fee equal to 5% of the monthly gross revenues of the Riverchase Facility (the “Riverchase Management Fee”).  Under the Riverchase Management Agreement, AdCare Management’s responsibilities specifically include:

·                  Hiring of employees at wage and salary rates approved from time to time by Riverchase;

·                  Termination of employees at AdCare Management’s discretion;

·                  Recommending and instituting, subject to approval of Riverchase, appropriate employee benefits;

·                  Designing and maintaining accounting, billing, patient and collection records, preparing and filing insurance claims, and any and all other necessary or desirable reports and claims related to revenue production;

2

·                  Supervising and conducting a program of regular maintenance and repair of the Riverchase Facility, except that physical improvements costing more than $5,000 shall be subject to the prior approval of Riverchase;

·                  Purchasing supplies, drugs, solutions and other items required to operate the Riverchase Facility, except that purchases costing more than $5,000 shall be subject to the prior approval of Riverchase;

·                  Supervising and providing for the operation of food service to the Riverchase Facility;

·                  Providing for the orderly payment of accounts payable, employee payroll, taxes and insurance premiums;

·                  Instituting standards and procedures for admitting patients, for charging patients for services and for collection of charges from patients and third parties;

·                  Making periodic evaluation of the performance of all departments of the Riverchase Facility; and

·                  Establishing and maintaining books of accounts.

The Riverchase Management Agreement terminates on May 31, 2015; provided, however, that: (i) after the end of the third year of the Riverchase Management Agreement, it may be earlier terminated by Riverchase upon 60 days written notice to AdCare Management; and (ii) AdCare Management may terminate the Riverchase Management Agreement at any time upon 60 days written notice to Riverchase.

Payment of the Riverchase Management Fee to AdCare Management is fully subordinated to the prior payment, as and when due, of all: (a) debt service (principal, interest and premium, if any) on the Series 2010A and Series 2010B Bonds (the “Series 2010 Bonds”) issued by The Medical Clinic Board of The City of Hoover, the proceeds of which funded Riverchase’s acquisition of the Riverchase Facility; and (b) all other sums that Riverchase may, at any time, be required to pay for deposit into any fund or account established under the Trust Indenture pursuant to which the Series 2010 Bonds were issued.

In accordance with ASC 810-10-25-38A, the Company initially assessed, and continues to assess, whether it has the power to direct the activities of Riverchase that most significantly impact its economic performance.  In conducting these assessments, the Company considered the following:

3

·                  Pursuant to the Riverchase Management Agreement, AdCare Management is responsible for all aspects of operations of the Riverchase Facility.

·                  The Company has guaranteed Riverchase’s repayment of the Series 2010 Bonds (the “Guaranty”).

·                  Pursuant to the Option Agreement, Hearth & Home may acquire the Riverchase Membership Interests from Mr. Brogdon for a purchase price of $100,000.

·                  As required under ASC 810-10-25-38A, the Company evaluated the involvement in Riverchase of parties related to the Company.  Mr. Brogdon, a significant shareholder, director and officer of the Company, is also the manager and sole member of Riverchase.  As a result of Mr. Brogdon’s relationship to the Company and Mr. Brogdon’s relationship to Riverchase, the Company believes Mr. Brogdon is a related party with respect to the Company’s arrangements (including, without limitation, the Riverchase Management Agreement, the Option Agreement and the Guaranty) regarding Riverchase.

Based on the foregoing considerations, in particular the Riverchase Management Agreement and the related party relationship with respect to Mr. Brogdon, the Company concluded that it has the power to direct the activities of Riverchase that most significantly impact its economic performance.

2.                                      Tell us whether the five skilled nursing facilities in Oklahoma are legal entities. Tell us in detail how you concluded that you have the power to direct the activities of the VIEs that most significantly impact their economic performance. Refer to ASC 810-10-25-38A. Tell us of the rights of Mr. Brogdon, through the entities that he controls, to participate in the profits and losses of the five skilled nursing facilities.

The five skilled nursing facilities located in Oklahoma (collectively, the “Oklahoma Facilities”) are each owned by a separate legal entity (each, an “Oklahoma Facility Owner” and, collectively, the “Oklahoma Facility Owners”). Mr. Brogdon is the sole manager of each Oklahoma Facility Owner, and Mr. Brogdon’s wife indirectly owns 46% of each Oklahoma Facility Owner and participates in 46% of the profits and losses of each Oklahoma Facility Owner.

Prior to Mr. Brogdon joining the Company as an officer and director, the Oklahoma Facility Owners (or affiliated entities) had entered into an agreement to purchase the Oklahoma Facilities and subsequently were approved by the Oklahoma Department of Health and Human Services (“OKDHS”) to acquire and operate the Oklahoma Facilities. After Mr. Brogdon joined the Company as an officer and director, it was the Company’s intention to acquire from the Oklahoma Facility Owners the rights to

4

purchase and operate the Oklahoma Facilities prior to their acquisition by such owners.  Due to the timing of the OKDHS approval process and pressure from the seller of the Oklahoma Facilities to close the transaction quickly, the Company was not able to acquire such rights in a timely fashion and, consequently, the Oklahoma Facility Owners acquired the Oklahoma Facilities and financed 100% of the purchase price thereof.  To date, the Oklahoma Facility Owners have not provided any capital to support the operations of the Oklahoma Facilities.

In connection with the acquisition of the Oklahoma Facilities by the Oklahoma Facility Owners, AdCare Oklahoma Management, LLC, a wholly owned subsidiary of the Company (“AdCare Oklahoma”), entered into a management agreement with the Oklahoma Facility Owners to supervise the management of the Oklahoma Facilities for a monthly management fee equal to 5% of monthly gross revenues of the Oklahoma Facilities (the “Oklahoma Management Fee”).  Pursuant to the Oklahoma Management Agreement, AdCare Oklahoma supervises the management of the Oklahoma Facilities, including, without limitation, their staffing, accounting, billing, collections, setting of rates and charges and general administration.  The specific responsibilities of AdCare Oklahoma under the Oklahoma Management Agreement are substantially similar to the specific responsibilities of AdCare Management under the Riverchase Management Agreement (which are summarized in this letter in response to Comment 1 above).

Due to the debt service requirements of, and lack of sufficient cash flow generated by, the Oklahoma Facilities, the Company has accrued for but has not received Oklahoma Management Fees totaling approximately $440,000.  Revenue from the Oklahoma Management Fees is eliminated in the Company’s financial statements in consolidation.

Since the Oklahoma Facility Owners acquired the Oklahoma Facilities and through September 30, 2012, the Company has from time to time considered and discussed the Company’s intent to acquire the Oklahoma Facilities and to negotiate an option agreement in connection therewith.

In accordance with ASC 810-10-25-38A, the Company initially assessed, and continues to assess, whether it has the power to direct the activities of the Oklahoma Facility Owners that most significantly impact their economic performance.  In conducting these assessments, the Company considered the following:

·                  Pursuant to the Oklahoma Management Agreement, the Company is responsible for all aspects of operations of the Oklahoma Facilities.

·                  As disclosed in the footnotes to the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”), the Company and the Oklahoma Facility Owners had the intention to negotiate an option agreement to provide the Company with the

5

exclusive right to acquire the Oklahoma Facilities in the future.  To date, such agreement has not been executed but such intention is periodically reevaluated by the Company and the Oklahoma Facility Owners from time to time.

·                  As required under ASC 810-10-25-38A, the Company evaluated the involvement with the Oklahoma Facility Owners of parties related to the Company.  Mr. Brogdon, a significant shareholder, director and officer of the Company, is also the manager of each Oklahoma Facility Owner and Mr. Brogdon’s wife indirectly owns 46% of each Oklahoma Facility Owner.  As a result of Mr. Brogdon’s relationship to the Company and Mr. Brogdon’s relationship to the Oklahoma Facility Owners, the Company believes Mr. Brogdon is a related party with respect to the Company’s arrangements (including, without limitation, the Oklahoma Management Agreement and the intention of the Company and the Oklahoma Facility Owners to negotiate an option agreement for the Company to acquire the Oklahoma Facilities) regarding the Oklahoma Facility Owners.

Based on the foregoing considerations, in particular the Oklahoma Management Agreement and the related party relationship with respect to Mr. Brogdon, the Company concluded that it has the power to direct the activities of the Oklahoma Facility Owners that most significantly impact their economic performance.

3.                                      Tell us in detail why you believe that since Mr. Brogdon is the managing member of each of the entities, a significant shareholder and executive officer of the Company, the potential ability exists to influence the Company to reimburse the owners of the facilities for any losses. Tell us in more detail why you believe that for this reason you should be considered the primary beneficiary of the five skilled nursing facilities.

In assessing whether the Company is the primary beneficiary of the Oklahoma Facility Owners, the Company considered whether it holds both explicit and implicit variable interests in the Oklahoma Facility Owners.  Under the Variable Interest Model described in ASC 810-10-25-44, a reporting entity that holds an implicit variable interest in a variable interest entity (a “VIE”) and is a related party to other variable interest holders shall apply the guidance in ASC 810-10-25-44 to determine whether it is the primary beneficiary of the VIE.  Pursuant to ASC 810-10-25-44, an assessment must be made to evaluate whether the aggregate variable interests held by the reporting entity (both implicit and explicit variable interests) and its related parties would, if held by a single party, identify that party as the primary beneficiary.  Then, the party within the related party group that is most closely associated with the VIE is the primary beneficiary.

Based on the considerations described in this letter in response to Comment 2 above, the Company believes that, as long as it is the intent of the Company and the

6

Oklahoma Facility Owners to enter into an arrangement whereby the Company will acquire the Oklahoma Facilities, there is an implicit variable interest because there is a possibility that the Company will be required to reimburse the Oklahoma Facility Owners for any losses with respect to the Oklahoma Facilities if such reimb

November 30, 2012

Via E -mail
Boyd P. Gentry
President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Rd, Springfield, OH
45502 -9032

Re: AdCare Health Systems, Inc.
 Form 10-K for the fiscal year ended December 31, 2011
Filed March 19, 2012
Form 10 -Q for the quarterly period ended September 30, 2012
Filed November 13, 2012
File No. 001-33135

Dear Mr. Gentry :

We have reviewed your filing an d have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these  comments, we may have  additional comments.

Form 10 -K for the fiscal year ended December 31, 2011

Note 19 - Variable Interest Entities, page 88

1. Tell us in detail how you co ncluded that you have the power to direct the activities of
Riverchase (the “VIE”) that most significantly impact Riverchase’s economic
performance.  Refer to ASC 810 -10-25-38A.  Tell us in detail of the main terms of the
management agreement you entered i nto to operate Riverchase.  Tell us of Mr. Brogdon’s
rights to participate in the profits and losses of Riverchase. Tell us of the business
rationale for assigning after formation, 100% of the membership interests of Riverchase
to Mr. Brogdon.

Boyd P. Gentry
AdCare Health Systems, Inc.
November 30, 2012
Page 2

 2. Tell us w hether the five skilled nursing facilities in Oklahoma are legal entities.  Tell us
in detail how you concluded  that you have the power to direct the activities of the VIEs
that most significantly impact their economic performance.  Refer to ASC 810 -10-25-
38A. Tell us of the rights of Mr. Brogdon, through the entities that he controls, to
participate in the profits and losses of the five skilled nursing facilities.

3. Tell us in detail why you believe that since Mr. Brogdon is the managing member of each
of the entities , a significant  shareholder and executive office of the Company, the
potential ability exists to influence the Company to reimburse the owners of the facilities
for any losses.  Tell us in more detail why you believe that for this reason you s hould be
considered the primary beneficiary of the five skilled nursing facilities.

Form 10 -Q for the quarterly period ended September 30, 2012

Note 8 - Notes payable, page 11

4. We note in the first paragraph of page 13 that on June 15, 2012, the maturity date of the
loan agreement was amended to reflect a maturity date of March 13, 2013.  In this regard,
tell us in detail how you concluded that you have the ability to re -finance the loan later
this year with long -term financing.

Note 9 - Acquisitions, page 14

5. With regard to the three acquisitions described in this note, tell us what you mean by “the
company obtained effective control .”

Liquidity and Capital Resources, page 32

6. We note you  are growing your business through acquisitions and other methods of
expansion and this growth will require additional financing.  We further note your
disclosure on page 32 that you believe you will require additional financing to satisfy
your financial o bligations and implement your expansion strategy.  In future filings,
please disclose (i) more directly whether you believe your existing cash, cash equivalents,
net cash from operations, and sources of liquidity will be sufficient to fund your
operations,  anticipated capital expenditures, and debt repayment obligations for the next
twelve months (with or without additional financing), and (ii) a more detailed discussion
of your plans to meet both short -term and long -term liquidity needs (note, we consider
long-term to be longer than 12 months).   In addition, please also present this disclosure
in the Overview section to the MD&A.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are

Boyd P. Gentry
AdCare Health Systems, Inc.
November 30, 2012
Page 3

 in possession of all facts relating to a company’s disclosure, they are responsible for the accurac y
and adequacy of the disclosures they have made.

 In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Joseph M.  Kempf,  Senior  Staff Accountant , at 202-551-3352  or Carlos
Pacho, Senior Assistant Chief Accountant, at 202 -551-3835  if you have questions regarding
comments on th e financial statements and related matters.  Please contact Ajay Koduri, Staff
Attorney , at 202 -551-3310 or Celeste M. Murphy, Legal Branch Chief, at 202 -551-3257 w ith
any other questions.

Sincerely,

 /s/ Carlos Pacho for

 Larry Spirgel
Assistant Director

cc:  Via E -mail
 Lori Gelchion, Esq.
 Rogers & Hardin LLP

August 26, 2010

Via U.S. Mail and Facsimile to 937-964-8961
 Gary L. Wade President and Chief Executive Officer
AdCare Health Systems, Inc.
5057 Troy Road Springfield, OH 45502
 Re: AdCare Health Systems, Inc.
Form 10-K for the fiscal ye ar ended Decem ber 31, 2009
  Filed March 31, 2010
  File No. 001-33135
 Dear Mr. Wade:
 We have completed our review of your fili ngs and do not have any further comments at
this time.
Sincerely,
   /s/ Kathleen Krebs  for Larry Spirgel
Assistant Director

CORRESP
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August 10, 2010

August 10, 2010

Mr. Larry Spirgel

Assistant Director

Securities and Exchange Commission

100 F. St., N.E.

Mail Stop 3720

Washington, D.C. 20549

RE:

AdCare Health Systems, Inc.

Form 10-K for the fiscal year ended

December 31, 2009

Filed March 31, 2010

File No. 001-33135

Dear Mr. Spirgel:

We have received your correspondence dated August 2, 2010 regarding the above-referenced filing.  Pursuant to your correspondence, you have asked us to confirm that we will comply with your comments in future filings.  The numbered paragraphs in this letter correspond to the numbered comments in your letter and the comments are provided in italics before each answer:

Form 10-K for Fiscal Year Ended December 31, 2009

Definitive Proxy Statement filed on April 30, 2010

Election of Directors, page 3

1.

Please discuss the specific experiences, qualifications, attributes, or skills that led to the conclusion that the person should serve as a director, Refer to Item 401(e) of Regulation S-K.

We have reviewed Item 401(e) of Regulation S-K regarding disclosure of director qualifications and will comply with such Item in all future filings.

Summary Compensation Table, page 13

2.

For the stock and option awards you have made, we note you have not disclosed the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

Refer to Items 402(n)(2)(vi() and (vii) of Regulation S-K.  Please confirm that you will comply.

We have reviewed Items 402(n)(2)(vi) and (vii) of Regulation S-K regarding disclosure of stock option awards in the Summary Compensation Table and will comply with such Items in all future filings.

Director Compensation Table, page 17

3.

Similarly, please disclose the aggregate grant date fair value of the stock and option awards you have made to your directors that are computed in accordance with FASB ASC Topic 718.  Refer to Items 402(r)(2)(iii) and (iv) of Regulation S-K.

We have reviewed Items 402(r)(2)(iii) and (iv) of Regulation S-K disclosure of stock option awards in the Director Compensation Table and will comply with such Items in all future filings.

We hereby acknowledge that:

·

The company is responsible for the adequacy and accuracy of the disclosure in the filing;

·

Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·

The company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions, please contact our attorney, Michael A. Smith at (614) 628-0788.

Sincerely,

AdCare Health Systems, Inc.

/s/ Gary L. Wade

Gary L. Wade, President and

Chief Executive Officer

August 2, 2010

Via U.S. Mail and Facsimile to 937-964-8961
 Gary L. Wade President and Chief Executive Officer AdCare Health Systems, Inc. 5057 Troy Road Springfield, OH 45502
 Re: AdCare Health Systems, Inc.
Form 10-K for the fiscal ye ar ended Decem ber 31, 2009
  Filed March 31, 2010
  File No. 001-33135
 Dear Mr. Wade:
 We have reviewed your filing and have the following comments.  Please confirm that you
will comply with our comments in future filings.
 Please respond to this letter within te n business days by providing the requested
information or advising us when you will provide the requested response.  If you do not believe our comments apply to your fact s and circumstances, please tell  us why in your response.
 After reviewing the information you provide in response to these comments, we may
have additional comments.

Form 10-K for Fiscal Year Ended December 31, 2009

 Definitive Proxy Statement filed on April 30, 2010

 Election of Directors, page 3

 1. Please discuss the specific experiences, qualificat ions, attributes, or skills that led to the
conclusion that the person should serve as a director.  Refer to Item 401(e) of Regulation S-K.
Summary Compensation Table, page 13

2. For the stock and option awards you have made, we note you have not disclosed the aggregate grant date fair value computed  in accordance with FASB ASC Topic 718.
Refer to Items 402(n)(2)(vi) and (vii) of Re gulation S-K.  Please confirm that you will
comply.

Gary L. Wade
AdCare Health Systems, Inc.  August 2, 2010 Page 2

Director Compensati on Table, page 17

 3. Similarly, please disclose the aggregate gran t date fair value of  the stock and option
awards you have made to your directors th at are computed in accordance with FASB
ASC Topic 718.  Refer to Items 402(r)(2)(iii) and (iv) of Regulation S-K.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
 In responding to our comments, please pr ovide a written statement from the company
acknowledging that:
• The company is responsible for the adequacy and accuracy of the disclo sure in the filing;

• Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

• The company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

You may contact Ajay Koduri, Attorney -Adviser, at 202-551-3310 or Celeste M.
Murphy, Legal Branch Chief, at  202-551-3257 with any questions.

Sincerely,
     /s/ Celeste M. Murphy   for Larry Spirgel
Assistant Director

CORRESP
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June 14, 2010

June 22, 2010

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C.  20549

Re:

Adcare Health Systems, Inc.

Registration Statement on Form S-3

File No. 333-166488

Dear Securities and Exchange Commission:

Pursuant to Rule 461 under the Securities Act of 1933, Adcare Health Systems, Inc. (the “Company”) hereby requests that the effective date of the above-referenced Registration Statement be accelerated so that the Registration Statement may become effective at 5:00 p.m. Eastern Time on June 23, 2010, or at such later time as the Company may request by telephone to the Commission.

The Company hereby acknowledges that:

·

Should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;

·

The action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its responsibility for the adequacy and accuracy of the disclosure in the filing; and

·

The Company may not assert staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Very truly yours,

ADCARE HEALTH SYSTEMS, INC.

By:/s/ David A. Tenwick

      David A Tenwick, Chairman

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3720
June 4, 2010
   David A. Tenwick Chairman of the Board AdCare Health Systems, Inc. 5057 Troy Road Springfield, OH  45502-9032

Re: AdCare Health Systems, Inc.
 Form S-3
Filed May 4, 2010
 File No. 333-166488

Dear Mr. Tenwick:

We have reviewed your amended filing and response letter dated May 28, 2010, and
have the following additional comments.  Wh ere indicated, we think you should revise your
document in response to these comments.  If you disagree, we will consider your explanation
as to why our comment is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.    Selling Securityholders, page 12

 Common Stock/Restricted Stock Table, page 16

1. We note your response and revised disclosure  in reply to comment one in our letter
dated May 10, 2010.  It appears from your di sclosure that the transaction you intend
to register relating to the 63,520 shares under the 2004 Stock Option Plan and the 40,200 shares under the 2005 Stock Option Plan is  the initial sale of such shares by

the company  (i.e., the issuance of shares by th e company upon exercise of the stock
option), not the later resale of  such securities by a selling securityholder.  Therefore,
revise your prospectus to remove these sh ares from your selling securityholders table
and disclose this transact ion in the portion of your prospectus relating to the
information concerning the benefit plans required by Form S-8 (page 34).  Also, revise your registration statement and lega l opinion to account for any changes in
your offering description.  If you intend to regist er the later resale of such shares after
they are issued by the company, refer to Part C. of Form S-8 for relevant guidance.

David A. Tenwick
AdCare Health Systems, Inc. June 4, 2010 Page 2 of 3  Incorporation of Certain Info rmation by Reference, page 34

2. We note your revised disclosure in response to comment four in our letter dated May
10, 2010.  Please note that Item 12(a)(2) of Form S-3 requires that you specifically
incorporate by reference all reports filed pu rsuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report on Form
10-K.  In this regard, we note that while  you reference the Form 10-Qs from fiscal
year 2009, you do not incorporate by reference the most recent Form 10-Q filed May 17, 2010.  Please revise accordingly.  Als o, for guidance on how to incorporate by
reference filings made after the date of your next amendment but prior to
effectiveness, see Question 123.05 of th e Securities Act Forms Compliance and
Disclosure Interpretations, availa ble on our website at www.sec.gov.

* * *
  As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a c over letter with your amendment that keys your responses to
our comments and provides any requested in formation.  Detailed cover letters greatly
facilitate our review.  Please understand th at we may have additional comments after
reviewing your amendment and responses to our comments.

  We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that th e filing includes all inform ation required under the
Securities Act of 1933 and that they have provi ded all information investors require for an
informed investment decision.  Since the comp any and its management are in possession of
all facts relating to a company’s disclosure, they are re sponsible for the accuracy and
adequacy of the disclosures they have made.

Notwithstanding our comments, in the event the company requests acceleration of the
effective date of the pending registration statemen t, it should furnish a letter, at the time of
such request, acknowledging that:   ‚ should the Commission or the staff, acting purs uant to delegated authority, declare the
filing effective, it does not foreclose the Co mmission from taking any action with respect
to the filing;
 ‚ the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility for
the adequacy and accuracy of the disclosure in the filing; and

David A. Tenwick
AdCare Health Systems, Inc. June 4, 2010 Page 3 of 3  ‚ the company may not assert staff comments a nd the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divisi on of Corporation Fina nce in our review of
your filing or in response to our comments on your filing.
 We will consider a written request for acceleration of the effective date of the
registration statement as confirmation of the f act that those requesti ng acceleration are aware
of their respective responsibilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934 as they relate to th e proposed public offering of the securities
specified in the above registration statement.  We will act on the request and, pursuant to delegated authority, grant accelerati on of the effective date.
We direct your attention to Rules 460 and 461 regarding requesting acceleration of a
registration statement.  Please allow adequate  time after the filing of any amendment for
further review before submitting a request for acceleration.  Please provide this request at
least two business days in advance of  the requested effective date.
  You may contact Jay Knight, Attorney-A dviser, at (202) 551-3370, Celeste Murphy,
Legal Branch Chief, at (202) 551-3257, or me at (202) 551-3810 with any other questions.
Sincerely,
  /s/ Celeste Murphy
for Larry Spirgel Assistant Director
  cc: via facsimile at (614) 221-0216

 Michael A. Smith, Esq.  (Carlile Patchen & Murphy LLP)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3720
May 10, 2010
   David A. Tenwick Chairman of the Board AdCare Health Systems, Inc. 5057 Troy Road Springfield, OH  45502-9032

Re: AdCare Health Systems, Inc.
 Form S-3
Filed May 4, 2010
 File No. 333-166488

Dear Mr. Tenwick:

We have limited our review of your filing to  those issues we have addressed in our
comments.  Where indicated, we think you should revise your document in response to these
comments.  If you disagree, we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Pl ease be as detailed as necessary in your
explanation.  In some of our comments, we may ask you to provide us with information so
we may better understand your disclosure.  Af ter reviewing this information, we may raise
additional comments.   Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requ irements and to enhance the overall disclosure
in your filing.  We look forward to working with you in these respects.  We welcome any
questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers liste d at the end of this letter.
 Selling Securityholders

 Common Stock/Restri cted Stock Table

1. At the end of this table, you refer to the registration of co mmon stock underlying
options available for granting under the 2004 Stock Option Plan and 2005 Stock Option Plan.  Please note that  to register securities i ssued under an employee benefit
plan on a Form S-3 the information concer ning the plan required by Form S-8 would
have to be included in the Form S-3 pros pectus.  For guidance, refer to Question
116.01 of the Securities Act Forms Complia nce and Disclosure Interpretations,

David A. Tenwick
AdCare Health Systems, Inc. May 10, 2010 Page 2 of 4
available on our website at www.sec.gov.  Pl ease tell us how you have complied with
this guidance or revise accordingly.
2. Please explain why you have listed as a sel ling security holder “IPO Warrants held in
street name”?  Provide your legal analysis for registering these securities in this
manner.

Plan of Distribution

3. Please revise here and in Item 14 to incl ude an estimate of all expenses paid in
connection with the securities being regist ered.  Refer to Item 511 of Regulation S-K.

Incorporated by Reference

4. Please revise to specifically incorp orate your Form 10-K/A filed April 2, 2010.
 Signature page

5. We note that your signature page does not indicate on which date each director signed the registration statement.  Include  such dates in your amendment.

Exhibit 5.1 Legal Opinion

6. It appears that counsel has inadvertently switched the terms “Primary Offering” and
“Secondary Offering”.  Please instruct your legal counsel to file a new opinion to
correct this issue.

General

7. Revise your registration statement to correct  the pagination.  In this respect, your
current disclosure often goes on multiple pages before a page number is listed.

* * *
   As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a c over letter with your amendment that keys your responses to
our comments and provides any requested in formation.  Detailed cover letters greatly
facilitate our review.  Please understand th at we may have additional comments after
reviewing your amendment and responses to our comments.

David A. Tenwick
AdCare Health Systems, Inc. May 10, 2010 Page 3 of 4    We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that th e filing includes all inform ation required under the
Securities Act of 1933 and that they have provi ded all information investors require for an
informed investment decision.  Since the comp any and its management are in possession of
all facts relating to a company’s disclosure, they are re sponsible for the accuracy and
adequacy of the disclosures they have made.
Notwithstanding our comments, in the event the company requests acceleration of the
effective date of the pending registration statemen t, it should furnish a letter, at the time of
such request, acknowledging that:   ‚ should the Commission or the staff, acting purs uant to delegated authority, declare the
filing effective, it does not foreclose the Co mmission from taking any action with respect
to the filing;
 ‚ the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility for
the adequacy and accuracy of the disclosure in the filing; and
 ‚ the company may not assert staff comments a nd the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divisi on of Corporation Fina nce in our review of
your filing or in response to our comments on your filing.

We will consider a written request for acceleration of the effective date of the
registration statement as confirmation of the f act that those requesti ng acceleration are aware
of their respective responsibilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934 as they relate to th e proposed public offering of the securities
specified in the above registration statement.  We will act on the request and, pursuant to delegated authority, grant accelerati on of the effective date.
We direct your attention to Rules 460 and 461 regarding requesting acceleration of a
registration statement.  Please allow adequate  time after the filing of any amendment for
further review before submitting a request for acceleration.  Please provide this request at
least two business days in advance of the requested effective date.

David A. Tenwick
AdCare Health Systems, Inc. May 10, 2010 Page 4 of 4   You may contact Jay Knight, Attorney-A dviser, at (202) 551-3370, Celeste Murphy,
Legal Branch Chief, at (202) 551-3257, or me at (202) 551-3810 with any other questions.
Sincerely,
  /s/ Celeste Murphy
for Larry Spirgel Assistant Director
  cc: via facsimile at (614) 221-0216

 Michael A. Smith, Esq.  (Carlile Patchen & Murphy LLP)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3720

        September 14, 2009
Via U.S. Mail and Fax

  Mr. Scott Cunningham
Chief Financial Officer
AdCare Health Systems, Inc.
5057 Troy Rd.
Springfield, OH    45502-9032

 RE: AdCare Health Systems, Inc.
Form 10-K for the fiscal ye ar ended December 31, 2008
  Filed March 31, 2009
File No. 001-33135

Dear Mr. Cunningham:
 We have completed our review of your Form 10-K and related filings and do not , at this time, have
any further comments.             S i n c e r e l y ,                                     L a r r y  S p i r g e l          A s s i s t a n t  D i r e c t o r

CORRESP
1
filename1.htm

August

August 21,
2009

Mr. Larry
Spirgel

Assistant
Director

Securities and
Exchange Commission

450 Fifth Street,
N. W.

Mail Stop
3720

Washington, DC
20549

RE:

AdCare
Health Systems, Inc.

Form
10-K for the fiscal year ended December 31, 2008

Filed
March 31, 2009

File
No. 333-131542

Dear Mr.
Spirgel:

Today we filed our first amendment to Form 10-K for the fiscal
year ended December 31, 2008, for AdCare Health Systems, Inc. (the “Company”).
 This letter sets forth the responses of the Company to the Securities and
Exchange Commission (the “SEC”) staff’s (the “Staff”) letter dated August 13,
2009 with regard to the above-referenced filings.  In response to the
Staff’s comment, we have reproduced below the comment set forth in the Staff’s
letter in italics and followed the comment with our response.  References
to “we,” “our,” or “us” mean the Company.

In connection with responding to the Staff’s comment, the Company
hereby acknowledges that: (i) the Company is responsible for the adequacy
and accuracy of the disclosure in the filings; (ii) Staff comments or
changes to disclosure in response to Staff comments do not foreclose the SEC
from taking any action with respect to the filings; and (iii) the Company
may not assert Staff comments as a defense in any proceeding initiated by the
SEC or any person under the federal securities laws of the United States.

Form 10-K for the year ending December 31, 2008

Report of Independent Registered Public Accounting Firm,
page 28

Technical requirements for accountants’ reports specify that,
besides indicating the city and state where issued, the accountant’s report
shall be signed manually.  See Rule 2-02(a) of Reg. S-X.  Please
revised and advise.

We have revised our filing to include the required signatures.
 Actual signatures are maintained on file at our corporate offices.

Should
the Staff have further questions or comments or need any further information or
clarification, please call me at 937-964-8974.

Sincerely,

/s/Scott
Cunningham

Scott
Cunningham

Chief Financial
Officer

Mail Stop 6010

         June 6, 2006

Mr. David A. Tenwick
Chairman
Adcare Health Systems, Inc.
5057 Troy Road
Springfield, Ohio 45502-9032

Re:   Adcare Health Systems, Inc.
Amendment No. 2 to Form SB -2 Registration Statement
 File No. 333-131542

Dear Mr. Tenwick:

We have reviewed your filing and have th e following comments.  Where indicated, we
think you should revise your document in response to these comments.  If you disagree, we will
consider your explanation as to why our commen t is inapplicable or a revision is unnecessary.
Please be as detailed as necessa ry in your explanation.  In some  of our comments, we may ask
you to provide us with supplemental informati on so we may better understand your disclosure.
After reviewing this information, we ma y or may not raise additional comments.

Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requir ements and to enhance the overall disclosure in
your filing.  We look forward to working with you in these respects.  We welcome any questions
you may have about our comments or on any other aspe ct of our review.  Feel free to call us at
the telephone numbers listed at  the end of this letter.

Summary - page 1

1. Please refer to the first comment in our last  letter in which we asked you to revise the
discussion of the revenues earned by the facili ties you manage for third parties to explain
the significance of this measure and the significance of the combined revenues of
facilities you own and facilities you manage.  We asked you to clarify how the revenues
recognized by the facilities you manage for th ird parties affect your revenue.  We noted
your statement that the long-term care f acilities you own had annual revenues of
$21,900,360.  We also asked you to disclose th e revenues you recognized for managing

David A. Tenwick
Adcare Health Systems, Inc.
June 6, 2006
Page 2

facilities for third parties as well as where this amount appears on your income statement.
In your response you indicate that you have deleted the discussion regarding revenues
earned from facilities that you manage for th ird parties.  However, the discussion we
commented on remains in your document exactly as it appeared in the first amendment.
Accordingly, we reissue the comment.  Please note that we do not beli eve that deletion of
a discussion of the revenue you receive from f acilities you manage for third parties is an
appropriate response to this comment.  Please explain how th e revenues earned by
facilities you manage re sult in revenues for you.  For example, are your management fees
based on a percentage of these revenues, a perc entage of profits, or are they determined
using some other calculation.  Please quantif y the revenues you earne d based on the third
parties’ revenues of $39,048,000.

2. Additionally, discussions of revenues should be balanced with a discus sion of net income
or net losses and expenses.  You need to pr ovide a balanced discus sion of your financial
condition.  It is not appropriate to selectively discuss specific aspects of your finances.  If
you discuss your revenues in the summary, we  think you also need to discuss your net
losses and expenses in order to  provide a balanced picture.

3. In light of your losses and existing defaults  on some of the covenants in your debt
agreements, we think you need to balance your discussion of your goals in the next to last
paragraph of the summary with an equally  detailed discussi on of the potential
impediments to your achievement of thes e goals.  Please revise the disclosure
accordingly.

4. Under “Use of Proceeds” on page 2, please delete the phrase “our only recently having achieved profitable operations.”  We note th at you had losses in 2005 and that your net
income in 2003 and 2004 was due primarily to th e gain recognized on the sale of real
property.

Capitalization - page 14

5. Refer to your response to comment 3.  Please ex plain to us why the increase in equity in
the line item “Common Stock” does not agree with the ”Net Proceeds” disclosed in the
“Use of Proceeds” portion of this document.

Management’s Discussion and Analysis – page 15

Overview – page 15

6. We think you need to expand this discussi on to include an explanation of how you
generate revenue in each of your several se gments.  Also, please include a table that

David A. Tenwick
Adcare Health Systems, Inc.
June 6, 2006
Page 3

shows how much revenue was generated by each segment.  The table should also include
the expenses attributable to each segment, the net income of each segment and any other
information necessary to show the financia l contributions each segment makes to your
overall financial condition.

7. In the second full paragraph of page 16 you st ate that your history of operating losses is
primarily due to start-up costs and devel oping assisted living pr operties for your own
account.  Please disclose when you made the decision to change your focus and quantify
the impact of that decision.

Liquidity and Capital Resources – page 19

8. Please expand the discussion at the top of page 22 of your failu re to comply with certain
financial covenants with WesB anco.  Please identify the fi nancial covenants you are not
in compliance with.  Disclose what the speci fic covenants require, and what your current
status is in regards to each of them.

Cash Flow - page 24

9. Refer to your response to comment 4.  We noted that the discussion of cash flows
comparing fiscal 2005 to fiscal 2004 is no l onger provided.  Please revise your liquidity
discussion to include a discussion of cash flow s for each of the last two fiscal years.
Refer to Item 303(b)(1)(ii) of Regulation S-B.

Business - page 25
10. Please revise to explain the differences betw een owning facilities and managing them for
third parties.  At a minimum, the disc ussion should address how your revenues for
managed facilities are determined and whether expenses are paid by you or the third party
owners.

Security Ownership of Certain Beneficial Owners and Management, page 44

11. In comment 5 we asked you to identify, in th e registration statement, the natural person
possessing voting and investment rights over the securities held by Ca pital City Partners,
LLC.  Your response indicates that it is in cluded in footnote 8 on page 45.  However, the
footnote does not contain this information.  Plea se revise the disclosu re as we previously
requested.

David A. Tenwick
Adcare Health Systems, Inc.
June 6, 2006
Page 4

Alternate Prospectus Pages

12. We remind you again that the blank spaces here  must be completed prior to any request
for effectiveness of the registration statemen t.  Please include this information in your
next amendment.  You need to allow suffi cient time for the staff to review this
information prior to subm itting your acceleration request.

Financial Statements, page F-1

Consolidated Statements of Changes in Owner’s Equity, page F-5

13. Refer to your response to comment 9.  Please no te that exposure drafts do not represent
authoritative literature.  Until the point in time that the exposure draft becomes approved,
the current literature would appear to be paragraphs 14 and A5-A7 of SFAS 141.  Please
provide to us you analysis of the impact th at applying current aut horitative literature to
these transactions would have to your financial statements.

Note 1.  Description of Business, page F-8

14. Refer to your response to comment 10.  Your  assertion that this “is a contingent
obligation, outside the control of the Company which is not certain to occur” does not
appear to be a sufficient argument under the auth oritative literature ci ted in our previous
response.  Please provide a detailed analys is of all of the authoritative guidance
separately, and demonstrate how you determin ed that the option to purchase the Van
Wert interests does or does not fall under the guidance.  If you should determine that the
options do fall under one of the guidance, please tell us how your accounting and
disclosure complies with the guidance, or pr ovide proposed language clarifying this fact.
Further, if you decide that ther e is authoritative literature that  is more applicable, please
cite that literature and demonstr ate how you have complied with it.

Note 4. Discontinued Operations, page F-19

15. Refer to your response to comment 12.  Please pr ovide to us a more detailed analysis of
whether consummation as defined by paragra ph 6 of SFAS 66 has been achieved.  In
particular address the impact that the failure to transfer legal title to the property has on
this determination.

Note 6. Note Receivable, page F-21

16. Refer to your response to comment 13.  Pleas e explain to us in greater detail how you
determined the amount that you feel will be u ltimately realized in relation to this note

David A. Tenwick
Adcare Health Systems, Inc.
June 6, 2006
Page 5

receivable.  Explain how the fair value of  these assets and the amount of the debt
referenced in your prior response factor into  the amount recorded in this allowance.

* * * * *

As appropriate, please amend your registration st atement in response to these comments.  You
may wish to provide us with marked copies of the amendment to expedite  our review.  Please
furnish a cover letter with your amendment that  keys your responses to our comments and
provides any requested supplemental information.  Detailed cover letters greatly facilitate our
review.  We may have additional comments after reviewing your amendment and responses to
our comments.

 You may contact Tabatha Akins at 202-551-3658 or James Atkinson at 202-551-
3674 if you have questions regarding comments on th e financial statements and related matters.
Please contact Mary K. Fraser  at 202-551-3609 or me at 202-551-3610 with any other questions.

        R e g a r d s ,

        J e f f r e y  P .  R i e d l e r
        A s s i s t a n t  D i r e c t o r

Cc: Michael A. Smith, Esq.
 Carlile Patchen & Murphy LLP
 366 East Broad Street
 Columbus, Ohio  43215

CORRESP
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filename1.htm

Adcare Health Systems    CORRESP

November 9, 2006

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

    Re:

    Adcare Health Systems, Inc.

Registration Statement on Form SB-2

File No. 333-131542

Dear Securities and Exchange Commission:

     Please be advised that Adcare Health Systems, Inc. hereby modifies our November 7, 2006 Letter
to the Securities and Exchange Commission concerning the requested time of effectiveness and
concurs with the request of Newbridge Securities Corporation, as Underwriter, that the
above-referenced Registration Statement become effective at 5:00 p.m. today.

    Very truly yours,

    Adcare Health Systems, Inc.

    By:

    /s/ David A. Tenwick

    David A. Tenwick, Chairman

CORRESP
1
filename1.htm

Adcare Health     CORRESP

November 7, 2006

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

    Re:

    Adcare Health Systems, Inc.

    Registration Statement on Form SB-2

    File No. 333-131542

Dear Securities and Exchange Commission:

     Pursuant to Rule 461 under the Securities Act of 1933, Adcare Health Systems, Inc. (the
“Company”) hereby requests that the effective date of the above-referenced Registration Statement
be accelerated so that the Registration Statement may become effective at 10:00 a.m. Eastern Time
on Thursday November 9, 2006, or at such later time as the Company may request by telephone to the
Commission.

     The Company additionally request that the Registration Statement on Form 8-A filed along with
this Letter be accelerated so that the Registration Statement on Form 8-A may become effective
concurrently with the effectiveness of the Registration Statement on Form SB-2.

     The Company hereby acknowledges that:

    •

    Should the Commission or the staff, acting pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from taking any
action with respect to the filing;

    •

    The action of the Commission or the staff, acting pursuant to delegated
authority, in declaring the filing effective, does not relieve the Company from its
responsibility for the adequacy and accuracy of the disclosure in the filing; and

Securities and Exchange Commission

November 7, 2006

Page 2

    •

    The Company may not assert staff comments and the declaration of effectiveness
as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

    Very truly yours,

    ADCARE HEALTH SYSTEMS, INC.

    BY:

    /s/ David A. Tenwick

    David A. Tenwick, Chairman

CORRESP
1
filename1.htm

Adcare Health     CORRESP

November 7, 2006

Securities and Exchange Commission

450 Fifth Street, N.W.

Judiciary Plaza

Washington, D.C. 20549

    Re:

    AdCare Health Systems, Inc

    Registration Statement on Form SB-2

    File No. 333-131542

Ladies and Gentlemen:

     Pursuant to Rule 461 of the Securities Act of 1933, as amended (the “Securities Act”), the
undersigned underwriters of the proposed public offering (the “Offering”) of AdCare Health
Systems, Inc (the “Company”), hereby join the Company in requesting that the effective date for the
above-referenced Registration Statement be accelerated so that it will be declared effective by
5:00 p.m., Washington D.C. time, on November 9, 2006 or as soon thereafter as is practicable.

     In accordance with Rule 460 under the Securities Act, and in connection with the foregoing,
please note that the undersigned has effected from October 20, 2006 through the date hereof
approximately the following distribution of the Preliminary Prospectus dated October 20, 2006:

     2500 copies to prospective underwriters, institutional investors, dealers and others.

     The undersigned confirm that they have complied with and will continue to comply with, and
that they have been informed by participating underwriters and dealers that they have complied with
and will continue to comply with, Rule 15c2-8 under the Securities Exchange Act of 1934, as
amended, in connection with the Offering.

Very yours truly,

By: Newbridge Securities Corporation

    By:

Name:

    /s/ Douglas Aguililla

Douglas Aguililla

    Title:

    Director of Investment Banking

CORRESP
1
filename1.htm

      Writer's
        Direct Line: (614) 628-0788

      Writer's
        E-Mail Address: mas@cpmlaw.com

    September
      11, 2006

    Mr.
      Jeffrey P. Riedler

    Assistant
      Director

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      03-04

    Washington,
      D.C. 20549

              Re:

              AdCare
                Health Systems, Inc.

              Amendment
                No. 4 to Form SB-2

              File
                No. 333-131542

    Dear
      Mr.
      Riedler:

    Today
      we
      filed our fourth Amended Registration Statement for AdCare Health Systems,
      Inc.
      (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
      copies and three (3) clean copies of amended Registration Statement on Form
      SB-2
      of AdCare which incorporates, among other things, changes made to the
      Registration Statement as a result of comments contained in your letter of
      July
      6, 2006. The numbered paragraphs in this letter correspond to the numbered
      comments in your letter and the comments are provided in italics before each
      answer.

    Graphics

              1.

              We
                note that a page of graphics now appears between the cover page and
                the
                summary and as an alternate back cover page for the selling shareholders
                prospectus. If you retain these pages you will need to explain, on
                the
                appropriate page, what this facility is, what the graphics purport
                to
                show, whether this facility is unique or representative of all your
                facilities and any other information necessary to provide an appropriate
                context for the photos.

    We
      have added captions to the graphics contained on the inside front cover and
      inside back cover of the Prospectus in which we more fully identify the
      properties and indicate the extent to which they are representative of other
      properties of the company.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          2

    Summary

    About
      Us, page 2

              2.

              Please
                expand the discussion in the fourth and fifth paragraphs to include
                the
                percentage of your aggregate revenue and net income attributable
                to each
                of your segments in each of the last two fiscal years and interim
                period
                to date. You currently state, in the fourth paragraph, that 92% of
                your
                revenue in the management and facility/based care segment is derived
                from
                facilities which you own and operate, but you do not indicate what
                time
                period you are referring to.

    We
      have expanded the disclosure in the fourth paragraph of Summary to indicate
      the
      period referenced and to indicate the percentages of our revenue and income
      (loss) derived from our facility/based care segment and our home-based care
      segment.

              3.

              Please
                provide factual support for the claims you make in the eighth paragraph
                on
                page 2. Mark the supporting data to show the location of the information
                you are relying on and tie the support to the specific claim in the
                prospectus that the data is intended to support. In this regard,
                please
                note that you should limit your discussion of the size of the “senior
                living facilities market” to the specific portion(s) of the market that
                you operate in.

    We
      have supplementally provided backup for the factual statements made in the
      paragraph in question. Also, please note that pursuant to your request, we
      have
      segregated from the $140 billion Senior Housing and Care Industries market
      that
      portion of the market in which AdCare operates. Also, please note that while
      our
      initial source came from the American Senior Housing Association, the
      information provided by the American Senior Housing Association that publication
      was citing the attached supplemental information by the National Investment
      Center for Seniors Housing and Care Industries. We have changed our reference
      accordingly.

              4.

              You
                use the terms “fully integrated” and “fully integrated senior living
                company” in the first and ninth paragraphs of page 2, but it is unclear
                what these terms mean. Please either delete them, or explain what
                they
                mean.

    We
      have deleted the terms “fully integrated” and “fully integrated senior living
      company.”

    Cash
      Flow, page 26

              5.

              Refer
                to your response to comment 9. We note in your revised discussion
                for the
                comparative annual periods that you attribute the cash provided by
                operating activities in 2004 primarily to the sale of Marion Hearth
&
                Home. Please explain to us how the sale of assets described here
                is an
                operating activity. Further include a better discussion of why the
                cash
                generated from operations decreased so significantly between the
                periods.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          3

    The
      original statement relating the cash provided by operating activities to the
      sale of Marion Hearth & Home was an error, which has been corrected to read
      that, “[d]uring 2004, the cash provided by operating activities was primarily
      the result of high occupancy in our properties and successful accounts
      receivable collection activities.” We have also expanded the discussion of
      issues relating cash produced by operating activities on page 29 of the
      registration statement.

    Alternate
      Prospectus

              6.

              For
                each non-natural person listed in the table, please identify the
                natural
                person who possesses investment and voting rights over the securities
                owned by that entity. Also, tell us whether any of the selling persons
                are
                broker/dealers and if so, the circumstances under which they obtained
                the
                shares they are selling.

    The
      requested information has been included on the Alternative Prospectus
      page.

    Financial
      Statements, page F-1

    Consolidated
      Statements of Changes in Owner’s Equity, page F-5

              7.

              Please
                refer to your response to prior comment 13. Your response appears
                to
                indicate that you are relying on footnote eight of paragraph 14.
                Please
                note that the exposure draft discussed in this footnote is a proposed
                exposure draft, and has not been approved. Additionally, please note
                that
                exposure drafts are not authoritative literature. As such, it is
                not
                appropriate to base your accounting on this guidance. Further, it
                does not
                appear that the payments you made to acquire the additional equity
                interests would fall under the types of transfers of net assets or
                exchanges of equity interests between entities under common control.
                Refer
                to paragraph D11 of SFAS 141. Please revise your financial statements
                to
                account for these payments using purchase accounting, or provide
                further
                support for your accounting treatment. Also tell us the amounts paid
                and
                how you calculated the amount recorded in this line item. Refer to
                paragraphs 14 and A6 of SFAS
                141.

    The
      Company has restated the financial statements to use purchase accounting with
      respect to these payments. These payments relate to the obligation to purchase
      minority interests in Van Wert, the subject of the questions in comment 8,
      below. In connection with the restatement at the adoption of SFAS 150, these
      payments have been accounted for as a component of the liability for the forward
      purchase contract. In 2004, these payments totaled approximately $85,000 and
      have been reflected as a reduction of the liability carried at December 31,
      2003. The amount paid for the interests was calculated to equal the payment
      made
      by the interest holders to acquire the interests initially. Please see the
      response to comment #8 below for more information concerning this
      item.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          4

    Note
      1. Description of Business, page F-8

              8.

              Refer
                to your response to comment 14. We are unable to agree with your
                assertion
                that this represents an embedded derivative based primarily on the
                fact
                that the contract is not able to be net settled or effectively net
                settled
                due to the lack of a ready market for these subsidiary shares. It
                does
                seem to us that this obligation represents a put option by the majority
                owners based on the fact that, once the offer is tendered, you will
                be
                obligated to purchase any shares that they request at that time. This
                instrument would seem to clearly fall within the guidance of paragraph
                11
                of SFAS 150. Please revise your financial statements to reflect the
                appropriate accounting for such instruments, or explain to us why
                you feel
                that this guidance does not
                apply.

    The
      Company agrees that the accounting guidance in paragraph 11 of SFAS 150 applies
      to the offer to purchase the minority interests that the Company has agreed
      to
      make no later than October 2008 to the minority interest holders of Van Wert.
      In
      addition, the equity interests acquired in 2003 and 2004 relate to repurchases
      of minority interests in Van Wert. The Company has restated the consolidated
      financial statements to apply SFAS 150 and SFAS 141 to these transactions.
      In
      applying the previously referenced accounting literature, the Company relied,
      in
      part, on the guidance contained in paragraph 20 of the status section of EITF
      00-6. The Company measured the fair value of the minority interests at inception
      of the investment and compared that to the carrying value of the minority
      interests at the date of the application of SFAS 150, October 2003. The
      difference was reflected as a fair value adjustment to the real property in
      the
      amount of $250,000 with the remainder recorded as goodwill. The Company
      performed an impairment analysis at each date, December 31, 2004 and 2005
      and determined no impairment charge should be recorded. Please refer to Note
      2
      to the consolidated financial statements on pages F-9 through F-12 for further
      details about the impact of this restatement. Changes were also made to pages
      F-2 through F-7. An excerpt containing the above-noted pages is attached hereto
      as Exhibit A.

    Note
      4. Discontinued Operations, page F-19

              9.

              Please
                refer to your response to comment 12. It remains unclear to us how
                the
                consummation has been completed in this transaction. Your assertion
                in
                this response that the transfer of title is perfunctory seems inconsistent
                with statement in this note that seems to infer that the purchaser
                has the
                “option to vacate the property prior to July 1, 2006,” which would seem to
                invalidate the sale. Please reconcile this apparent inconsistency
                and
                clarify any other terms of the agreement that might indicate that
                consummation is not complete such as what happens if the buyer defaults
                on
                the payment of the land
                contract.

        Mr.
          Jeffrey P. Riedler

        September
          11, 2006

        Page
          5

    The
      Company has concluded that the land contract does not meet all criteria outlined
      in SFAS 66 relating to the definition of consummation. As a result, the Company
      has restated the consolidated financial statements to reflect the application
      of
      the deposit method of accounting to the land contract transaction. Please refer
      to Note 2 to the consolidated financial statements for the details of the impact
      of this restatement. Changes were also made to pages F-2 through F-7, F-21,
      F-22
      and F-23. An excerpt containing pages F-2 through F-7 is attached hereto as
      Exhibit A. An excerpt containing pages F-24 through F-25 is also attached hereto
      as Exhibit B.

    Note
      6. Note Receivable, page F-21

              10.

              Please
                refer to your response to comment 16. Your disclosure in the document
                states that you “received an unsecured promissory note.” Your discussion
                in your response seems to be predicated on the fact that the note
                is
                really secured by the property in questions. Please revise your disclosure
                to clarify how this unsecured note is supported by the
                property.

    Note
      7 on page F-24 has been revised to delete the term “unsecured” and the process
      to estimate the reserve has been described in more detail.

    Very
      truly yours,

    CARLILE
      PATCHEN & MURPHY LLP

    Michael
      A. Smith

Mail Stop 6010

         August 3, 2006

Mr. David A. Tenwick
Chairman
Adcare Health Systems, Inc.
5057 Troy Road
Springfield, Ohio 45502-9032

Re:   Adcare Health Systems, Inc.
Supplemental Letter of Response dated July 21, 2006
 File No. 333-131542

Dear Mr. Tenwick:

We have reviewed your submission and have the following comments on the financial
statement comments we agreed to address supplementally.  This letter does not address any other
matters contained in your supplemental response to us.  Any information contained in your letter that is not addressed below should be addressed in the letter of response you include with your next pre-effective amendment.  Where indicat ed, we think you should revise your document in
response to these comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure.  After reviewing this information, we may or may not raise additional comments.

Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Management’s Discussion and Analysis of Financial Condition, page 16

David A. Tenwick Adcare Health Systems, Inc. August 3, 2006 Page 2

Liquidity and Capital Resources, page 22

1. We note that your liquidity and capital resources discussion does not address the offer to purchase the minority interests.  As this event represents a known uncertainty that could materially impact liquidity, please provide a discussion of the possible impact on the company’s liquidity, capital resources and results of operations.

Financial Statements, page F-1

Note 1.  Description of Business, page F-8

2. Refer to your responses to our prior comments number seven and eight.  Please clarify the following:
a. Please clarify and revise your disclosure to clarify how you determined the fair value of the options to purchase the minority interest, and how that fair value has changed since the inception of the obligation.  Include a discussion of the key assumptions and methodologies used in your determination at each reporting date.
b. We note that you did not change any of the beginning balances for December 31, 2003 which included the line item “Acquisition of additional investment in subsidiary in excess of book value” in that year.  Please explain to us how you included the revised accounting described without affecting these balances.
c. Please ensure your proposed disclosure complies with paragraph 27 of SFAS 150.

Note 6. Note Receivable, page F-21

3. Please refer to your response to comment number ten.  It appears that you are relying on the benefits of retaining the title to the land as a basis for determining the risk surrounding the ability to collect on the promissory note.  Please revise your disclosure to clarify this fact.

* * * * *

 As appropriate, please amend your registration statement in response to these comments.  You may wish to provide us with marked copies of the amendment to expedite our review.

David A. Tenwick Adcare Health Systems, Inc. August 3, 2006 Page 3
Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested supplemental information.  Detailed cover letters greatly facilitate our review.  We may have additional comments after reviewing your amendment and responses to our comments.

You may contact Tabatha Akins at 202-551-3658 or James Atkinson at 202-551-3674 if
you have questions regarding comments on the financial statements and related matters.  Please contact Mary K. Fraser at 202-551-3609 or me at 202-551-3610 with any other questions.

        R e g a r d s ,

        J e f f r e y  P .  R i e d l e r
        A s s i s t a n t  D i r e c t o r

Cc: Michael A. Smith, Esq.
 Carlile Patchen & Murphy LLP
 366 East Broad Street
 Columbus, Ohio  43215

CORRESP
1
filename1.htm

      Writer's
        Direct Line: (614) 628-0788

        Writer's
          E-Mail Address: mas@cpmlaw.com

    July
      21,
      2006

    Mr.
      Jeffrey P. Riedler

    Assistant
      Director

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      03-04

    Washington,
      D.C. 20549

              Re:

                AdCare
                  Health Systems, Inc.
Amendment
                  No. 4 to Form SB-2
File
                  No. 333-131542

    Dear
      Mr.
      Riedler:

    Today
      we
      filed our fourth Amended Registration Statement for AdCare Health Systems,
      Inc.
      (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
      copies and three (3) clean copies of amended Registration Statement on Form
      SB-2
      of AdCare which incorporates, among other things, changes made to the
      Registration Statement as a result of comments contained in your letter of
      July
      6, 2006. The numbered paragraphs in this letter correspond to the numbered
      comments in your letter and the comments are provided in italics before each
      answer.

    Graphics

            1.

              We
                note that a page of graphics now appears between the cover page and
                the
                summary and as an alternate back cover page for the selling shareholders
                prospectus. If you retain these pages you will need to explain, on
                the
                appropriate page, what this facility is, what the graphics purport
                to
                show, whether this facility is unique or representative of all your
                facilities and any other information necessary to provide an appropriate
                context for the photos.

    We
      have
      added captions to the graphics contained on the inside front cover and inside
      back cover of the Prospectus in which we more fully identify the properties
      and
      indicate the extent to which they are representative of other properties of
      the
      company.

      Mr.
        Jeffrey P. Riedler

        July
          21,
          2006

        Page
          2

    Summary

    About
      Us, page 2

            2.

              Please
                expand the discussion in the fourth and fifth paragraphs to include
                the
                percentage of your aggregate revenue and net income attributable
                to each
                of your segments in each of the last two fiscal years and interim
                period
                to date. You currently state, in the fourth paragraph, that 92% of
                your
                revenue in the management and facility/based care segment is derived
                from
                facilities which you own and operate, but you do not indicate what
                time
                period you are referring to.

    We
      have
      expanded the disclosure in the fourth paragraph of Summary to indicate the
      period referenced and to indicate the percentages of our revenue and income
      (loss) derived from our facility/based care segment and our home-based care
      segment.

            3.

              Please
                provide factual support for the claims you make in the eighth paragraph
                on
                page 2. Mark the supporting data to show the location of the information
                you are relying on and tie the support to the specific claim in the
                prospectus that the data is intended to support. In this regard,
                please
                note that you should limit your discussion of the size of the “senior
                living facilities market” to the specific portion(s) of the market that
                you operate in.

    We
      have
      supplementally provided backup for the factual statements made in the paragraph
      in question. Also, please note that pursuant to your request, we have segregated
      from the $140 billion Senior Housing and Care Industries market that portion
      of
      the market in which AdCare operates. Also, please note that while our initial
      source came from the American Senior Housing Association, the information
      provided by the American Senior Housing Association that publication was citing
      the attached supplemental information by the National Investment Center for
      Seniors Housing and Care Industries. We have changed our reference accordingly.

            4.

              You
                use the terms “fully integrated” and “fully integrated senior living
                company” in the first and ninth paragraphs of page 2, but it is unclear
                what these terms mean. Please either delete them, or explain what
                they
                mean.

    We
      have
      deleted the terms “fully integrated” and “fully integrated senior living
      company.”

    Cash
      Flow, page 26

            5.

              Refer
                to your response to comment 9. We note in your revised discussion
                for the
                comparative annual periods that you attribute the cash provided by
                operating activities in 2004 primarily to the sale of Marion Hearth
&
                Home. Please explain to us how the sale of assets described here
                is an
                operating activity. Further include a better discussion of why the
                cash
                generated from operations decreased so significantly between the
                periods.

              The
                original statements relating the cash
                provided by operating activities to the sale of Marion Hearth and
                Home was
                an error, which has been corrected to read that, "[d]uring 2004,
                the cash
                provided by operating activities was primarily the result of high
                occupancy in our properties and successful accounts receivable collection
                activities."

      Mr.
        Jeffrey P. Riedler

      July
        21,
        2006

      Page
        3

Alternate
      Prospectus

            6.

              For
                each non-natural person listed in the table, please identify the
                natural
                person who possesses investment and voting rights over the securities
                owned by that entity. Also, tell us whether any of the selling persons
                are
                broker/dealers and if so, the circumstances under which they obtained
                the
                shares they are selling.

    The
      requested information has been included on the Alternative Prospectus
      page.

    Financial
      Statements, page F-1

    Consolidated
      Statements of Changes in Owner’s Equity, page F-5

            7.

              Please
                refer to your response to prior comment 13. Your response appears
                to
                indicate that you are relying on footnote eight of paragraph 14.
                Please
                note that the exposure draft discussed in this footnote is a proposed
                exposure draft, and has not been approved. Additionally, please note
                that
                exposure drafts are not authoritative literature. As such, it is
                not
                appropriate to base your accounting on this guidance. Further, it
                does not
                appear that the payments you made to acquire the additional equity
                interests would fall under the types of transfers of net assets or
                exchanges of equity interests between entities under common control.
                Refer
                to paragraph D11 of SFAS 141. Please revise your financial statements
                to
                account for these payments using purchase accounting, or provide
                further
                support for your accounting treatment. Also tell us the amounts paid
                and
                how you calculated the amount recorded in this line item. Refer to
                paragraphs 14 and A6 of SFAS 141.

              The
                Company has restated the financial
                statements to use purchase accounting with respect to these payments.
                These payments relate to the obligation to purchase minority interests
                in
                Van Wert, the subject of the questions in comment 8.  In connection
                with the restatement at the adoption of SFAS 150 these payments have
                been
                accounted for as a component of the liability for the forward purchase
                contact. In 2004 these payments totaled approximately $85,000 and
                have
                been reflected as a reduction of the liability carried at December
                31,
                2003. The amount paid for the interests was calculated to equal the
                payment made by the interest holders to acquire the interests initially.
                Please see the response to comment #8 below for more information
                concerning this item.

      Mr.
        Jeffrey P. Riedler

      July
        21,
        2006

      Page
        4

    Note
      1. Description of Business, page F-8

            8.

              Refer
                to your response to comment 14. We are unable to agree with your
                assertion
                that this represents an embedded derivative based primarily on the
                fact
                that the contract is not able to be net settled or effectively net
                settled
                due to the lack of a ready market for these subsidiary shares. It
                does
                seem to us that this obligation represents a put option by the majority
                owners based on the fact that, once the offer is tendered, you will
                be
                obligated to purchase any shares that they request at that time.
                This
                instrument would seem to clearly fall within the guidance of paragraph
                11
                of SFAS 150. Please revise your financial statements to reflect the
                appropriate accounting for such instruments, or explain to us why
                you feel
                that this guidance does not
                apply.

    The
      Company agrees that the accounting guidance in paragraph 11 of SFAS 150 applies
      to the offer to purchase the minority interests that the Company has agreed
      to
      make no later than October 2008 to the minority interest holders of Van Wert.
      In
      addition, the equity interests acquired in 2004 relate to repurchases of
      minority interests in Van Wert. The Company has restated the consolidated
      financial statements to apply SFAS 150 and SFAS 141 to these transactions.
      In
      applying the previously referenced accounting literature, the Company relied,
      in
      part, on the guidance contained in paragraph 20 of the status section of EITF
      00-6. The Company measured the fair value of the minority interests at inception
      of the investment and compared that to the carrying value of the minority
      interests at the date of the application of SFAS 150, October 2003. The
      difference was reflected as a fair value adjustment to the real property in
      the
      amount of $250,000 with the remainder recorded as goodwill. The Company
      performed an impairment analysis at each date, December 31, 2004 and 2005
      and determined no impairment charge should be recorded. Please refer to Note
      2
      to the consolidated financial statements on pages F-9 through F-11 for
      further details about the impact of this restatement. Changes were also made
      to
      pages F-2 through F-7. An excerpt containing the above-noted pages is attached
      hereto as Exhibit A.

    Note
      4. Discontinued Operations, page F-19

            9.

              Please
                refer to your response to comment 12. It remains unclear to us how
                the
                consummation has been completed in this transaction. Your assertion
                in
                this response that the transfer of title is perfunctory seems inconsistent
                with statement in this note that seems to infer that the purchaser
                has the
                “option to vacate the property prior to July 1, 2006,” which would seem to
                invalidate the sale. Please reconcile this apparent inconsistency
                and
                clarify any other terms of the agreement that might indicate that
                consummation is not complete such as what happens if the buyer defaults
                on
                the payment of the land
                contract.

    The
      Company has concluded that the land contract does not meet all criteria outlined
      in SFAS 66 relating to the definition of consummation. As a result, the Company
      has restated the consolidated financial statements to reflect the application
      of
      the deposit method of accounting to the land contract transaction. Please refer
      to Note 2 to the consolidated financial statements for the details of the
      impact of this restatement. Changes were also made to pages F-2 through F-7,
      F-21, F-22 and F-23. An excerpt containing pages F-2 through F-7 is attached
      hereto as Exhibit A. An excerpt containing pages F-21 through F-23 is also
      attached hereto as Exhibit B.

    Note
      6. Note Receivable, page F-21

            10.

              Please
                refer to your response to comment 16. Your disclosure in the document
                states that you “received an unsecured promissory note.” Your discussion
                in your response seems to be predicated on the fact that the note
                is
                really secured by the property in questions. Please revise you disclosure
                to clarify how this unsecured note is supported by the
                property.

    Note
      7 on
      page F-23 has been revised to delete the term “unsecured.”

      Mr.
        Jeffrey P. Riedler

      July
        21,
        2006

      Page
        5

                Very
                  truly yours,

                CARLILE
                  PATCHEN & MURPHY LLP

              By:

                Michael
                A. Smith

    EXHIBIT
      A

                  ADCARE
                    HEALTH
                    SYSTEMS,
                    INC.

                  AND SUBSIDIARIES

                  CONSOLIDATED
                    BALANCE SHEETS

                  March
                    31,

                  December
                    31,

                  2006

                  2005

                  (Restated)

                  (Restated)

                  (Unaudited)

                 ASSETS

                  Current
                    Assets:

                  Cash
                    and cash equivalents (includes restricted cash of
                    $190,000)

                  $

                  854,804

                  $

                  1,403,877

                  Accounts
                    receivable:

                  Long-term
                    care resident receivables, net

                  1,911,448

                  1,909,245

                  Management,
                    consulting and development receivables, net

                  267,526

                  256,898

Mail Stop 6010

         July 6, 2006

Mr. David A. Tenwick
Chairman
Adcare Health Systems, Inc.
5057 Troy Road
Springfield, Ohio 45502-9032

Re:   Adcare Health Systems, Inc.
Amendment No. 3 to Form SB-2 Registration Statement
 File No. 333-131542

Dear Mr. Tenwick:

We have reviewed your filing and have the following comments.  Where indicated, we
think you should revise your document in response to these comments.  If you disagree, we will
consider your explanation as to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure.
After reviewing this information, we may or may not raise additional comments.

Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions
you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Graphics

1. We note that a page of graphics now appears between the cover page and the summary and as an alternate back cover page for the selling shareholders prospectus.  If you retain
these pages you will need to explain, on the appropriate page, what this facility is, what
the graphics purport to show, whether this facility is unique or representative of all your facilities and any other information necessary to provide an appropriate context for the
photos.

David A. Tenwick
Adcare Health Systems, Inc.
July 6, 2006
Page 2

Summary

About Us – page 2

2. Please expand the discussion in the fourth and fifth paragraphs to include the percentage
of your aggregate revenue and net income attributable to each of your segments in each
of the last two fiscal years and interim period to date.  You currently state, in the fourth
paragraph, that 92% of your revenue in the management and facility/based care segment is derived from facilities which you own and operate, but you do not indicate what time
period you are referring to.

3. Please provide factual support for the claims you make in the eighth paragraph on page 2.
Mark the supporting data to show the location of the information you are relying on and
tie the support to the specific claim in the prospectus that the data is intended to support.
In this regard, please note that you should limit your discussion of the size of the “senior living facilities market” to the specific portion(s) of the market that you operate in.

4. You use the terms “fully integrated” and “fully  integrated senior living company” in the
first and ninth paragraphs of page 2, but it is unclear what these terms mean.  Please
either delete them, or explain what they mean.

Cash Flow, page 26

5. Refer to your response to comment 9.  We note in your revised discussion for the
comparative annual periods that you attribute the cash provided by operating activities in
2004 primarily to the sale of Marion Hearth & Home.  Please explain to us how the sale
of assets described here is an operating activity.  Further include a better discussion of why the cash generated from operations decreased so significantly between the periods.

Alternate Prospectus Pages

6. For each non-natural person listed in the table, please identify the natural person who possesses investment and voting rights over the securities owned by that entity.  Also, tell
us whether any of the selling persons are broker/dealers and if so, the circumstances
under which they obtained the shares they are selling.

Financial Statements, page F-1

David A. Tenwick
Adcare Health Systems, Inc.
July 6, 2006
Page 3

Consolidated Statements of Changes in Owner’s Equity, page F-5

7. Please refer to your response to prior comment 13.  Your response appears to indicate
that you are relying on footnote eight of paragraph 14.  Please note that the exposure
draft discussed in this footnote is a proposed exposure draft, and has not been approved.
Additionally, please note that exposure drafts are not authoritative literature.  As such, it is not appropriate to base your accounting on this guidance.  Further, it does not appear
that the payments you made to acquire the additional equity interests would fall under the
types of transfers of net assets or exchanges of equity interests between entities under common control. Refer to paragraph D11 of SFAS 141.  Please revise your financial
statements to account for these payments using purchase accounting, or provide further
support for your accounting treatment.  Also tell us the amounts paid and how you calculated the amount recorded in this line item.  Refer to paragraphs 14 and A6 of SFAS
141.

Note 1.  Description of Business, page F-8

8. Refer to your response to comment 14.  We are unable to agree with your assertion that
this represents an embedded derivative based primarily on the fact that the contract is not
able to be net settled or effectively net settled due to the lack of a ready market for these
subsidiary shares.  It does seem to us that this obligation represents a put option by the majority owners based on the fact that, once the offer is tendered, you will be obligated to
purchase any shares that they request at that time.  This instrument would seem to clearly
fall within the guidance of paragraph 11 of SFAS 150.  Please revise your financial statements to reflect the appropriate accounting for such instruments, or explain to us
why you feel that this guidance does not apply.

Note 4. Discontinued Operations, page F-19

9. Please refer to your response to comment 12.  It remains unclear to us how the
consummation has been completed in this transaction.  Your assertion in this response
that the transfer of title is perfunctory seems inconsistent with statement in this note that
seems to infer that the purchaser has the “option to vacate the property prior to July 1, 2006,” which would seem to invalidate the sale.  Please reconcile this apparent
inconsistency and clarify any other terms of the agreement that might indicate that
consummation is not complete such as what happens if the buyer defaults on the payment of the land contract.

Note 6. Note Receivable, page F-21

David A. Tenwick
Adcare Health Systems, Inc.
July 6, 2006
Page 4

10. Please refer to your response to comment 16.  Your disclosure in the document states that
you “received an unsecured promissory note.”  Your discussion in your response seems
to be predicated on the fact that the note is really secured by the property in question.
Please revise your disclosure to clarify how this unsecured note is supported by the property.

* * * * *

 As appropriate, please amend your registration statement in response to these comments.  You may wish to provide us with marked copies of the amendment to expedite our review.
Please furnish a cover letter with your amendment that keys your responses to our comments and
provides any requested supplemental information.  Detailed cover letters greatly facilitate our review.  We may have additional comments after reviewing your amendment and responses to
our comments.

You may contact Tabatha Akins at 202-551-3658 or James Atkinson at 202-551-3674 if
you have questions regarding comments on the financial statements and related matters.  Please contact Mary K. Fraser at 202-551-3609 or me at 202-551-3610 with any other questions.

        R e g a r d s ,

        J e f f r e y  P .  R i e d l e r
        A s s i s t a n t  D i r e c t o r

Cc: Michael A. Smith, Esq.
 Carlile Patchen & Murphy LLP
 366 East Broad Street
 Columbus, Ohio  43215

CORRESP
1
filename1.htm

      Unassociated Document

    June
      22,
      2006

    Mr.
      Jeffrey P. Riedler

    Assistant
      Director

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      03-04

    Washington,
      D.C. 20549

              Re:

              AdCare
                Health Systems, Inc.

              Amendment
                No. 3 to Form SB-2

              File
                No. 333-131542

    Dear
      Mr.
      Riedler:

    Today
      we
      filed our third Amended Registration Statement for AdCare Health Systems, Inc.
      (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
      copies and three (3) clean copies of amended Registration Statement on Form
      SB-2
      of AdCare which incorporates, among other things, changes made to the
      Registration Statement as a result of comments contained in your letter of
      June
      6, 2006. The numbered paragraphs in this letter correspond to the numbered
      comments in your letter and the comments are provided in italics before each
      answer.

    Summary,
      page 1

            1.

              Please
                refer to the first comment in our last letter in which we asked you
                to
                revise the discussion of the revenues earned by the facilities you
                manage
                for third parties to explain the significance of this measure and
                the
                significance of the combined revenues of facilities you own and facilities
                you manage. We asked you to clarify how the revenues recognized by
                the
                facilities you manage for third parties affect your revenue. We noted
                your
                statement that the long-term care facilities you own had annual revenues
                of $21,900,360. We also asked you to disclose the revenues you recognized
                for managing facilities for third parties as well as where this amount
                appears on your income statement. In your response you indicate that
                you
                have deleted the discussion regarding revenues earned from facilities
                that
                you manage for third parties. However, the discussion we commented
                on
                remains in your document exactly as it appeared in the first amendment.
                Accordingly, we reissue the comment. Please note that we do not believe
                that deletion of a discussion of the revenue you receive from facilities
                you manage for third parties is an appropriate response to this comment.
                Please explain how the revenues earned by facilities you manage result
                in
                revenues for you. For example, are your management fee based on a
                percentage of these revenues, a percentage of profits, or are they
                determined using some other calculation. Please quantify the revenues
                you
                earned based on the third parties’ revenues of
                $39,048,000.

    We
      have
      revised the summary page beginning on page 1 of the Registration Statement
      to
      delete all revenue information. In the place of the revenue information, we
      have
      included a detailed discussion of the operation of our two business segments
      and
      how income/losses are generated within those business segments.

            2.

              Additionally,
                discussions of revenues should be balanced with a discussion of net
                income
                or net losses and expenses. You need to provide a balanced discussion
                of
                your financial condition. It is not appropriate to selectively discuss
                specific aspects of your finances. If you discuss your revenues in
                the
                summary, we think you also need to discuss you net losses and expenses
                in
                order to provide a balanced
                picture.

    Please
      see response to item 1 above.

            3.

              In
                light of your losses and existing defaults on some of the covenants
                in
                your debt agreements, we think you need to balance your discussion
                of your
                goals in the next to last paragraph of the summary with an equally
                detailed discussion of the potential impediments to your achievement
                of
                these goals. Please revise the disclosure
                accordingly.

    As
      indicated with respect to item 1 above, we have revised the summary beginning
      on
      page one of the registration statement. The third and fourth paragraphs of
      the
      new language which we added explain the historic financial position of the
      Company and the steps that are being taken to improve operations and
      parties.

            4.

              Under
                “Use of Proceeds” on page 2, please delete the phrase “our only recently
                having achieved profitable operations.” We note that you had losses in
                2005 and that your net income in 2003 and 2004 was due primarily
                to the
                gain recognized on the sale of real
                property.

    Per
      our
      discussions, the “only recently having achieved profitable operations” language
      is not included anywhere within the Registration Statement.

    Capitalization,
      page 14

            5.

              Refer
                to your response to comment 3. Please explain to us why the increase
                in
                equity in the line item “Common Stock” does not agree with the “Net
                Proceeds” disclosed in the “Use of Proceeds” portion of this
                document.

    There
      was
      a typographical error within Amendment 2 which has been corrected in Amendment
      3. This section, along with the “Use of Proceeds” sections has also been revised
      to reflect a reduction in the fees to be paid to the underwriter.

    Management’s
      Discussion and Analysis, page 15

    Overview,
      page 15

            6.

              We
                think you need to expand this discussion to include an explanation
                of how
                you generate revenue in each of your several segments. Also, please
                include a table that shows how much revenue was generated by each
                segment.
                The table should also include the expenses attributable to each segment,
                the net income of each segment and any other information necessary
                to show
                the financial contributions each segment makes to your overall financial
                condition.

    We
      have
      included new language in the third paragraph on page 16 of the Registration
      Statement which better explains the methods by which the registrant generates
      revenue. A table showing the net income (loss) of our business segment
      immediately follows this paragraph.

            7.

              In
                the second full paragraph of page 16 you state that your history
                of
                operating losses is primarily due to start-up costs and developing
                assisted living properties for your own account. Please disclose
                when you
                made the decision to change your focus and quantify the impact of
                that
                decision.

    We
      have
      included a new paragraph, immediately following the table referenced with
      respect to item 6 above, which explains the change of business focus beginning
      in 2003 and the resulting impact on the financial performance of the
      Company.

    Liquidity
      and Capital Resources, page 19

            8.

              Please
                expand the discussion at the top of page 22 of your failure to comply
                with
                certain financial covenants with WesBanco. Please identify the financial
                covenants you are not in compliance with. Disclose what the specific
                covenants require, and what your current status is in regards to
                each of
                them.

    We
      have
      included new language beginning on page 22 of the Registration Statement
      identifying financial covenants that are/were out of compliance and the current
      status of those covenants.

    Cash
      Flow, page 24

            9.

              Refer
                to your response to comment 4. We noted that the discussion of cash
                flows
                comparing fiscal 2005 to fiscal 2004 is no longer provided. Please
                revise
                your liquidity discussion to include a discussion of cash flows for
                each
                of the last two fiscal years. Refer to Item 303(b)(1)(ii) of Regulation
                S-B.

    We
      have
      revised the discussion of Cash Flow beginning on page 25 to include a comparison
      of 2005 and 2004.

    Business,
      page 25

            10.

              Please
                revise to explain the differences between owning facilities and managing
                them for third parties. At a minimum, the discussion should address
                how
                your revenues for managed facilities are determined and whether expenses
                are paid by you or the third party
                owners.

    We
      have
      added a new paragraph beginning on page 29 of the Registration Statement that
      explains the difference in revenues between the various components of our two
      business segments as well as the differences between our two business
      segments.

    Security
      Ownership of Certain Beneficial Owners and Management, page
      44

            11.

              In
                comment 5 we asked you to identify, in the registration statement,
                the
                natural person possessing voting and investment rights over the securities
                held by Capital City Partners, LLC. Your response indicates that
                it is
                included in footnote 8 on page 45. However, the footnote does not
                contain
                this information. Please revise the disclosure as we previously
                requested.

    We
      have
      revised footnote 8 on page 50 of the Registration Statement to clarify that
      Timothy Crawford, CEO of CCSM Partners, LLC, the manager of Capital City
      Partners, LLC, is the individual responsible for voting those
      shares.

    Alternate
      Prospectus Pages

            12.

              We
                remind you again that the blank spaces here must be completed prior
                to any
                request for effectiveness of the registration statement. Please include
                this information in your next amendment. You need to allow sufficient
                time
                for the staff to review this information prior to submitting your
                acceleration request.

    We
      have
      included information as to the names of the prospective sellers. The remaining
      information will be added prior to requesting effectiveness.

    Financial
      Statements, page F-1

    Consolidated
      Statements of Changes in Owner’s Equity, page F-5

            13.

              Refer
                to your response to comment 9. Please note that exposure drafts do
                not
                represent authoritative literature. Until the point in time that
                the
                exposure draft becomes approved, the current literature would appear
                to be
                paragraphs 14 and A5-A7 of SFAS 141. Please provide to us your analysis
                of
                the impact that applying current authoritative literature to these
                transactions would have to your financial
                statements.

    The
      payments referenced in this comment were treated as equity transactions pursuant
      to paragraph 14 of FAS 141. These payments were all made to individuals/entities
      under common control. Paragraph 14 calls for transactions with entities under
      common control to be treated as equity transactions. FAS 141, paragraph 11
      provides that purchase accounting should not be applied to transactions between
      entities under common control.

    Note
      1. Description of Business, page F-8

            14.

              Refer
                to your response to comment 10. Your assertion that this “is a contingent
                obligation, outside the control of the Company which is not certain
                to
                occur” does not appear to be a sufficient argument under the authoritative
                literature cited in our previous response. Please provide a detailed
                analysis of all of the authoritative guidance separately, and demonstrate
                how you determined that the option to purchase the Van Wert interests
                does
                or does not fall under the guidance. If you should determine that
                the
                options do fall under one of the guidance, please tell us how your
                accounting and disclosure complies with the guidance, or provide
                proposed
                language clarifying this fact. Further, if you decide that there
                is
                authoritative literature that is more applicable, please cite that
                literature and demonstrate how you have complied with
                it.

    The
      Company evaluated the obligation to offer to purchase the Van Wert interests
      as
      a potential imbedded derivative pursuant to the guidance in FAS 133. The Company
      has concluded that the offer is tantamount to an option and, as such, is subject
      to derivative accounting. The Company further concluded that because there
      is no
      obligation on the part of the interest holder to agree to sell the interest,
      and
      the purchase price will be fair value at the time of the offer, there is no
      value or cost to the Company associated with the option. The purchase price
      will
      be at fair value as the contract calls for the price to be the greater of
      original cost or fair value at the date of the offer. The primary underlying
      asset of Van Wert is as a long term care facility, including title to the real
      property. The company developed and built the facility in 1999 and currently
      operates it. Based on management’s knowledge of the long term care and real
      estate markets in which it operates, recent sales and appraisals of comparable
      properties, and an analysis of current replacement cost, they concluded that
      fair value currently exceeds cost and is expected to continue to do so. As
      a
      result, there is no fair value inherent in the option and therefore no
      accounting implication beyond disclosure in the notes to financial statements.
      The Note has been changed to include a discussion of the derivative accounting
      treatment.

    Note
      4.
      Discontinued Operations, page F-19

            15.

              Refer
                to your response to comment 12. Please provide to us a more detailed
                analysis of whether consummation as defined by paragraph 6 of SFAS
                66 has

CORRESP
1
filename1.htm

      Unassociated Document

    Writer's
      Direct Line: (614) 628-0788

      Writer's
        E-Mail Address: mas@cpmlaw.com

    May
      18,
      2006

    Mr.
      Jeffrey T. Weaver
Assistant
      Director

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      03-04

    Washington,
      D.C. 20549

              Re:

              AdCare
                Health Systems, Inc.

              Amendment
                No. 2 to Form SB-2

              File
                No. 333-131542

    Dear
      Mr.
      Weaver:

    Today
      we
      filed our second Amended Registration Statement for AdCare Health Systems,
      Inc.
      (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
      copies and three (3) clean copies of amended Registration Statement on Form
      SB-2
      of AdCare which incorporates, among other things, changes made to the
      Registration Statement as a result of comments contained in your letter of
      April
      25, 2006. The numbered paragraphs in this letter correspond to the numbered
      comments in your letter and the comments are provided in italics before each
      answer.

    Summary,
      page 1

              1.

              Please
                revise the discussion of the revenues earned by the facilities you
                manage
                for third parties to explain the significance of this measure and
                the
                significance of the combined revenues of facilities you own and facilities
                you manage. Also, clarify how the revenues recognized by the facilities
                you manage for third parties affect your revenue. We note your statement
                that the long-term care facilities you own had annual revenues of
                $21,900,360. What were the revenues you recognized for managing facilities
                for third parties and where is this amount shown on your income
                statement?

      Mr.
        Jeffrey T. Weaver

      May
        17,
        2006

      Page
        2

    We
      have
      deleted the discussion regarding revenues earned from facilities that we manage
      for third parties.

    Summary
      Financial Information, page 3

              2.

              Refer
                to your response to our prior comment number seven. Please revise
                your
                disclosure to separately present the income from continuing and
                discontinued operations as well as the impact of the “Return to Minority
                Interests” line item that significantly impacts your EPS calculation.
                Additionally, present separately the earnings per share for continuing
                and
                discontinued operations in this
                section.

    The
      disclosure has been revised in response to your request.

    Capitalization,
      page 13

              3.

              Refer
                to your response to comment 18. We were unable to identify where
                you
                adjusted this presentation. It appears that you still provide the
                same two
                columns and do not provide an interim column to reflect only the
                effects
                of the offering. Please revise you presentation to include a column
                that
                reflects only the offering prior to the additional pro forma columns
                that
                you present.

    The
      disclosure has been revised in response to your request.

    Liquidity
      and Capital Resources, page 19

              4.

              Refer
                to your response to comment 20. Your discussion of operating cash
                flows
                still seems to focus on what happened in the cash flow statement
                as a
                result of reconciling items. For instance your reference to the cash
                gain
                in 2004 seems to indicate that you included this cash gain within
                operations. Your reference to the increase in total receivables as
                a
                result of the Assured acquisition also infers that the addition of
                these
                receivables at acquisition impacted your cash flows, which would
                not
                appear to be the case. Please revise your discussion to better reflect
                actual cash flows from operations including these preceding points
                in lieu
                of referencing reconciling items in the statement of cash
                flows.

        Mr.
          Jeffrey T. Weaver

        May
          17,
          2006

        Page
          3

    The
      discussion regarding Liquidity and Capital Resources on page 20 of the
      Registration Statement has been revised pursuant to your request.

    Security
      Ownership of Certain Beneficial Owners and Management, page
      44

              5.

              We
                note your response to comment 34. Please revise your registration
                statement to include this
                information.

    We
      revised footnote 8 on page 45 of the Registration Statement to address this
      issue.

    Selling
      Shareholders, page AA-3

              6.

              We
                note your response to comment 47. Please note, if any of the selling
                shareholders are broker dealers, they must be identified as broker
                dealers
                and as underwriters. If any of the selling shareholders are affiliates
                of
                broker dealers, please identify them as such and include representations
                that the securities were purchased in the ordinary course and there
                were
                no agreements to distribute the securities. If the selling shareholders
                are not able to make these representations, they should also be identified
                as underwriters.

    If
      any of
      the selling shareholders are broker dealers, we will identify them as broker
      dealers and as underwriters in the prospectus. If any of the selling
      shareholders are affiliates of broker dealers, we will identify them as such
      and
      include representations that the securities were purchased in the ordinary
      course and there were no agreements to distribute the securities. If the selling
      shareholders are not able to make a representation that they are not broker
      dealers, we will identify them as underwriters in the prospectus.

    Financial
      Statements, page F-1

    Consolidated
      Statements of Operations, page F-4

              7.

              Refer
                to your response to our prior comment number 37. Please clarify for
                us why
                you feel that treating this return of earnings to the minority interest
                holders in a manner similar to a preferred share dividend is appropriate.
                Include specific reference to any authoritative literature upon which
                you
                relied in arriving at the accounting treatment.

        Mr.
          Jeffrey T. Weaver

        May
          17,
          2006

        Page
          4

    The
      accounting literature (SFAS 128) provides that calculations of earnings per
      share should be limited to earnings applicable to common or residual shares.
      In
      making such calculations, the claims of senior securities or preferential rights
      to earnings should be deducted from earnings for the period or added to losses
      for the period before computing earnings per share. The distributions in
      question were preferential distributions to the minority interest. As a result,
      the Company believes that loss attributable to common stockholders should be
      increased by this distribution.

    Consolidated
      Statements of Changes in Owner’s Equity, page F-5

              8.

              We
                have reviewed your response to our prior comment number 36 and have
                the
                following comments:

              a.

              According
                to your disclosure on F-8, you issued 191,000 shares. This does not
                agree
                to the disclosure here which states that 45,800 shares were issued
                in
                conjunction with the acquisition of the remaining interest in SPI.
                Please
                clarify this inconsistency.

              b.

              Tell
                us how the shares issued to shareholders to acquire related entity
                resulted in the issuance of treasury
                stock.

              c.

              Include
                how you determined the fair value to assign to the shares that you
                issued
                in connection with the “Shares issued to acquire related entity”
                transaction.

              d.

              Explain
                how you determined the value assigned to the “Treasury shares contributed
                by related party” and where you applied the related credit.

              e.

              Explain
                how the amounts included in the line items “Beneficial conversion on
                convertible debentures” and “Warrants issued in connection with debt”
                reconcile to the amounts included in your respond to comment
                45.

    Senior
      Property Investment LLC (SPI), by virtue of a contribution from its members
      owned 50,000 (post split) shares of AdCare at the time the exchange of AdCare
      shares for debt and equity interests of the Members took place. In previous
      periods the AdCare shares owned by SPI were reflected as treasury shares when
      SPI was consolidated with AdCare. In addition, AdCare had shares held in
      treasury. As a result, the 191,000 (post split) AdCare shares that were
      transferred to the SPI Members in exchange for debt and equity interests came
      to
      145,200 from treasury and 45,800 were newly issued shares. Due to the fact
      that
      all SPI members are stockholders of AdCare this transaction was recorded at
      historical cost. The SPI members received 191,000 AdCare shares in exchange
      for
      their equity interests in SPI and in full satisfaction of the $432,000 of debt.
      The disclosure with respect to this issue on page F-9 has been
      clarified.

        Mr.
          Jeffrey T. Weaver

        May
          17,
          2006

        Page
          5

    The
      debt
      to the Members which was exchanged for the AdCare shares had market interest
      rates. The debt resulted from cash loaned by the Members to SPI. Therefore,
      the
      face value of the notes was considered to be the fair value of the debt. The
      Company calculated the per share price, based on the number of AdCare shares
      exchanged and the carrying value of the debt and equity exchanged, to be $5.00
      per share. This is in excess of the fair value of the AdCare shares on
      December 31, 2005, which management believed was approximately $5.00
      per share post split. The recording of the transaction resulted in an increase
      in stockholders’ equity equal to the $432,000 of debt satisfied. This is due to
      the fact that SPI had previously been consolidated with AdCare and therefore
      the
      carrying value of the equity interests was already included in the financial
      statements.

    The
      beneficial conversion and the warrants issued in connection with the mezzanine
      financing have been separated on the statement of stockholders’ equity to make
      the presentation easier to reconcile and more transparent to the
      reader.

              9.

              Refer
                to your response to our prior comment number 38. Your response seems
                to
                indicate that a portion of this amount relates to an additional investment
                in the subsidiary partnered with Van Wert, and that a portion of
                this
                payment represents an extension of a put obligation. Please explain
                to us
                why you have accounted for each of these transactions as you did
                through
                equity.

    The
      Company considered the value of the extension of the right to offer to purchase
      the equity interests of the minority interests to be of immaterial value and
      allocated the amount paid to the minority interest holders to the additional
      equity interests acquired. This was treated as an equity transaction through
      the
      guidance of the exposure draft SFAS “Consolidated Financial Statements,
      Including Accounting and Reporting of Noncontrolling Interests in Subsidiaries.”
That exposure draft provides that changes in ownership interests that do not
      result in the loss of control would be treated as equity transactions.
      Differences between the fair value (amount paid) and the adjustment of the
      noncontrolling interest would be reflected in equity attributable to the
      controlling interest (paid in capital). This is the manner in which the Company
      has recorded these transactions.

        Mr.
          Jeffrey T. Weaver

        May
          17,
          2006

        Page
          6

    Note
      1. Description of Business, page F-8

              10.

              Refer
                to your response to our prior comment number 39. It does not appear
                that
                your analysis is based on the appropriate guidance. Please give us
                your
                analysis as to whether this obligation is subject to the requirements
                of
                SFAS 150, SFAS 133, EITF 00-6, or EITF D-98 and if applicable, how
                your
                accounting and disclosures comply with the guidance. If you believe
                that
                the options are not subject to this literature, please explain
                why.

    In
      connection with Van Wert the Company has the obligation to offer to purchase
      the
      minority interests on or before December 31, 2008. The minority interests have
      no obligation to accept the offer. This is a contingent obligation, outside
      the
      control of the Company which is not certain to occur. As a result, the Company
      does not believe a true option exists and therefore that SFAS 150, SFAS 133,
      EITF 00-6 and EITF D-98 are not applicable. The underlying minority interests
      are reflected in the consolidated financial statements as minority interests
      in
      the liability section of the balance sheet. As a result, disclosure only is
      the
      appropriate financial reporting response.

    Note
      2. Summary of Significant Accounting Policies, page F-9

    Principles
      of Consolidation, page F-9

              11.

              Refer
                to your response to our prior comment number 40. Please revise your
                discussion in this policy note to provide a more detailed discussion
                of
                the reasons why you feel that you meet the consolidation criteria
                under
                that guidance. Include specifically the key points in your analysis
                that
                led you to this determination.

    Footnote
      has been expanded to included additional disclosure relating to the Company’s
      evaluation of its application

Mail Stop 6010
         April 25, 2006
  David A. Tenwick, Chairman Adcare Health Systems, Inc. 5057 Troy Road Springfield, Ohio  45502-9032
Re:   Adcare Health Systems, Inc.
Amendment No. 1 to Form SB-2  Filed on April 10, 2006
 File No. 333-131542

Dear Mr. Tenwick:
We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to pr ovide us with supplemental information so
we may better understand your disclosure.  Af ter reviewing this information, we may or
may not raise additional comments.
 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our  comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.
 Summary, page 1

 1. Please revise the discussion of the reve nues earned by the fa cilities you manage
for third parties to explain the significance of this measure and the significance of
the combined revenues of facilities you own and facilities you manage.  Also, clarify how the revenues rec ognized by the facilities you manage for third parties
affect your revenue.  We note your statemen t that the long-term care facilities you

Mr. David A. Renwick
April 25, 2006 Page 2

own had annual revenues of $21,900,360.  What were the revenues you
recognized for managing facilities for third parties and where is this amount shown on your income statement?
 Summary Financial Information, page 3

 2. Refer to your response to our prior comme nt number seven.  Please revise your
disclosure to separately present the income from conti nuing and discontinued
operations as well as the impact of the “Return to Minority Interests” line item
that significantly impacts your EPS calcu lation. Additionally, present separately
the earnings per share for continuing and discontinued operations in this section.
 Capitalization, page 13

 3. Refer to your response to comment 18.  We were unable to identify where you
adjusted this presentation.  It appears that you still provide the same two columns
and do not provide an interim column to re flect only the effects of the offering.
Please revise your presentation to include a column that reflects only the offering
prior to the additional pro form a columns that you present.

Liquidity and Capital Resources, page 19
 4. Refer to your response to comment 20.  Your discussion of operating cash flows
still seems to focus on what happened in the cash flow statement as a result of
reconciling items.  For instance your refe rence to the cash gain in 2004 seems to
indicate that you included this cash gain w ithin operations.  Y our reference to the
increase in total receivables as a result of  the Assured acquisition also infers that
the addition of these receivables at ac quisition impacted your cash flows, which
would not appear to be the case.  Please revise your discussi on to better reflect
actual cash flows from operations incl uding these preceding points in lieu of
referencing reconciling items in the statement of cash flows.
  Security Ownership of Certain Bene ficial Owners and Management, page 44

 5. We note your response to comment 34.  Pl ease revise your registration statement
to include this information.
 Selling Shareholders, page AA-3

 6. We note your response to comment 47.  Please note, if any of the selling
shareholders are broker dealers, they must  be identified as broker dealers and as
underwriters.  If any of the selling share holders are affiliates of broker dealers,
please identify them as such and include representations that the securities were purchase in the ordinary course and ther e were no agreements to distribute the
securities.  If the selling shareholders ar e not able to make these representations,
they should also be identified as underwriters.

Mr. David A. Renwick
April 25, 2006 Page 3

 Financial Statements, page F-1

 Consolidated Statements of Operations, page F-4

 7. Refer to your response to our prior comme nt number 37.  Please clarify for us
why you feel that treating this  return of earnings to the minority interest holders in
a manner similar to a preferred share divi dend is appropriate.  Include specific
reference to any authorita tive literature upon which you relied in arriving at the
accounting treatment.
 Consolidated Statements of Changes in Owner’s Equity, page F-5

8. We have reviewed your response to our prior comment number 36 and have the
following comments:
a. According to your disclosure on F-8, you issued 191,000 shares.  This
does not agree to the disclosure here  which states that 45,800 shares were
issued in conjunction with the acquisition of the remaining interest in SPI.
Please clarify this inconsistency.
b. Tell us how the shares issued to shar eholders to acquire related entity
resulted in the issuan ce of treasury stock.
c. Include how you determined the fair va lue to assign to the shares that you
issued in connection with the “Share s issued to acquire related entity”
transaction.
d. Explain how you determined the value assigned to the “Treasury shares
contributed by related pa rty” and where you applied the related credit.
e. Explain how the amounts included in th e line items “Beneficial conversion
on convertible debentures” and “Warrant s issued in connection with debt”
reconcile to the amounts included in your response to comment 45.

9. Refer to your response to our prior comment  number 38.   Your response seems to
indicate that a portion of this amount rela tes to an additional investment in the
subsidiary partnered with Van Wert, and th at a portion of this payment represents
an extension of a put obligation.  Please explain to us why you have accounted for each of these transaction as you did through equity.
 Note 1.  Description of Business, page F-8

 10. Refer to your response to our prior comment  number 39.  It does not appear that
your analysis is based on the appropriate guidance.  Please give us your analysis
as to whether this obligation is subjec t to the requirements of SFAS 150, SFAS
133, EITF 00-6, or EITF D-98 and if applicable, how your accounting and disclosures comply with the guidance.  If you believe that the options are not
subject to this litera ture, please explain why.

Mr. David A. Renwick
April 25, 2006 Page 4

Note 2. Summary of Significant Accounting Policies, page F-9
 Principles of Consolidation, page F-9

 11. Refer to your response to our prior comme nt number 40.  Please revise your
discussion in this policy note to provide a more detailed discussion of the reasons
why you feel that you meet the consolidati on criteria under that guidance.  Include
specifically the key points in your analys is that led you to this determination.
 Note 4. Discontinued Operations, page F-18

 12. Refer to your response to our prior comme nt number 42.   Please provide the
following information to us related to the sale of this property:
• Provide to us a detailed analysis under  the guidance of SFAS 66 of whether or
not this transaction constitutes a sale  under the provision of that guidance.
• Provide to us your calculation of the deferred gain on this sale.
• Tell us and disclose in greater detail  the specific circumstances under which
the other party can return these assets to you.  Also include what happens to
any payments already received by you in that event.
• Provide to us your analysis under the guidance of EITF 03-13 that supports
the inclusion of these operations as  discontinued opera tions within your
financial statements.
 Note 6. Note Receivable, page F-21

 13. Refer to your response to our prior comme nt number 43.  Please clarify why you
did not reserve the entire notes receivabl e in 1999, and how you determined that
the allowance for collectibility was adequate at that time.  Further, clarify why the
allowance is adequate at this point in time given that he has only made minimal
payments through this point in time.  In clude specifically w hy how the appraisal
and the evaluation of the propert y factored into that decision.
 Note 9. Convertible Debentures, page F-26

 14. Refer to your response to comment 44.  We  were unable to identify the changes
that you made in response to this comme nt.  We note that this note currently
references disclosure in not e 8, formerly note 7, that has been pulled apparently
due to the fact that it was extinguished.  Please revise your disclosure to include a
discussion of this extinguishment along w ith how you determined any gain or loss
associated with the extinguishment of this debt.

* * *

Mr. David A. Renwick
April 25, 2006 Page 5

 As appropriate, please amend your registration statement in response to these comments.
You may wish to provide us with marked copies of the amendm ent to expedite our
review.  Please furnish a cover letter with  your amendment that keys your responses to
our comments and provides any requested supplemental information.  Detailed cover
letters greatly facilitate our review.  We may have additional comments after reviewing
your amendment and responses to our comments.

You may contact Tabatha Akins at 2 02-551-3658 or James Atkinson at 202-551-
3674 if you have questions regarding comments on the financial statements and related
matters.  Please contact Mary K. Fras er at 202-551-3609, Suzanne Hayes at 202-551-
3675 or me at 202-551-3710 with any other questions.

         R e g a r d s ,             J e f f r e y  P .  R i e d l e r          A s s i s t a n t  D i r e c t o r

 Cc: Michael A. Smith  Carlile Patchen & Murphy  366 East Broad Street  Columbus, Ohio 43215

CORRESP
1
filename1.htm

      Unassociated Document

                Writer's
                  Direct Line: (614) 628-0788

                Writer's
                  E-Mail Address: mas@cpmlaw.com

            April
              10,
              2006

            Mr.
              Jeffrey T. Weaver

            Assistant
              Director

            Securities
              and Exchange Commission

            450
              Fifth
              Street, N.W.

            Mail
              Stop
              03-04

            Washington,
              D.C. 20549

                      Re:

                      AdCare
                        Health Systems, Inc.

                      Form
                        SB-2 Registration Statement

                      File
                        No. 333-131542

            Dear
              Mr.
              Weaver:

            We
              have
              today filed an Amended Registration Statement for AdCare Health Systems,
              Inc.
              (“AdCare”) pursuant to EDGAR. As a courtesy, we are enclosing three (3) marked
              copies and three (3) clean copies of Amended Registration Statement
              on Form SB-2
              of AdCare which incorporates, among other things, changes made to the
              Registration Statement as a result of comments contained in your letter
              of March
              3, 2006. The numbered paragraphs in this letter correspond to the numbered
              comments in your letter and the comments are provided in italics before
              each
              answer.

                    1.

                      Please
                        disclose the date when the units will separate and the common
                        stock and
                        the warrants will trade
                        separately.

            The
              Registration Statement has been amended to indicate that the Units
              will begin to
              trade separately 90 days after the date of the Prospectus.

                    2.

                      Please
                        revise the statement that you expect to list the units on
                        the American
                        Stock Exchange. You may state that you intend to apply for
                        listing on the
                        exchange or that you have applied for listing, whichever
                        is
                        accurate.

            The
              Registration Statement has been amended to indicate that AdCare has
              applied for
              listing on the American Stock Exchange.

                    3.

                      Please
                        provide third-party support for your claim that you “enjoy and excellent
                        reputation” for your management capabilities, or in the alternative,
                        delete the claim.

            We
              have
              deleted the claim.

              ________________________________366
                East
                Broad Street —
                Columbus, Ohio 43215 —
                ph:
                614.228.6135 —
                fx:
                614.221.0216 —
                www.cpmlaw.com

              Mr.
                Jeffrey T. Weaver

              April
                10,
                2006

              Page
                2

                    4.

                      In
                        a number of places in the summary and throughout the document
                        you make
                        claims regarding market share, the size of the market of
                        your services and
                        facilities, and other similar information. See, for example,
                        the fifth
                        paragraph on page 2 and the sixth paragraph on page 25. Please
                        provide us with copies of the documents you are relying on
                        in support of
                        these claims. Mark the documents to show the location of
                        the information
                        you cite.

            We
              have
              supplementally included with this letter marked documents which support
              factual
              statements contained in the Registration Statement regarding the size
              of the
              market and population served by AdCare.

                    5.

                      We
                        note that you have disclosed your revenue base for the nine
                        month period
                        ended September 30, 2005. Please balance this disclosure by
                        quantifying your expenses for the
                        period.

            We
              have
              revised the disclosure on the Summary page of the Prospectus to clarify
              that a
              portion of the revenues being referenced are revenues of the facilities
              managed
              by AdCare and are not the revenues of AdCare itself. We have provided
              expense
              information with respect to our “owned” facilities but we cannot provide
              information as to the expenses of “managed” facilities. The importance of this
              information is twofold. First, AdCare receives management fees based
              on the
              revenues of the facilities that are managed but not owned (management
              fees are
              not based on expenses). Second, we have enclosed this information to
              help
              demonstrate AdCare’s capacity to manage a larger business operation than is
              indicated solely by looking at AdCare’s revenues.

                    6.

                      Similarly,
                        balance the discussion of your strategy and future plans
                        by identifying
                        the risks and obstacles you will encounter in implementing
                        your future
                        plans.

            We
              have
              included additional language in the Summary page of the Prospectus
              indicating
              some of the challenges and risks associated with AdCare’s growth
              plans.

                    7.

                      Please
                        revise this presentation to clearly reflect the impact of
                        the discontinued
                        operations on your financial information.

            We
              added
              the line Income (Loss) before Discontinued Operations to the Summary
              Financial
              Information. We have also included a footnote in the Summary Financial
              Information on page 3 to clarify the impact on the 2004 income of the
              discontinued operations. This footnote is not applicable to income
              in
              2005.

                    8.

                      Please
                        revise your presentation here to remove the “Adjusted”
                        column.

            We
              have
              deleted the “Adjusted” column as requested.

              Mr.
                Jeffrey T. Weaver

              April
                10,
                2006

              Page
                3

                    9.

                      Please
                        quantify the disclosure in the risk factor to the extent
                        practicable. Your
                        discussion should highlight the fact that you had negative
                        working capital
                        as of September 30, 2005.

            We
              have
              revised the risk factor on page 4 to emphasize the potential challenges
              of
              borrowing additional funds given the negative working capital of AdCare
              as of
              December 31, 2005.

                    10.

                      Please
                        expand the disclosure to briefly describe the current state
                        of the Ohio
                        economy and indicate whether you have experienced any adverse
                        consequences
                        to date from the concentration of your business in Ohio.
                        If you have, you
                        should also briefly describe the adverse consequences you
                        experienced.

            We
              have
              revised the risk factor on page 5 to generally discuss the economy
              in the state
              of Ohio and to clarify that it has not caused adverse impact to date,
              but may do
              so in the future.

                    11.

                      Disclose
                        the percentages of your revenue that come from each of Medicare,
                        Medicaid
                        and from other third party payors in each of the two most
                        recent fiscal
                        years.

            We
              have
              added the requested information regarding the percentages of revenue
              for
              Medicare, Medicaid and other third party payors.

                    12.

                      You
                        say that there are administrative rulings and interpretations
                        of the
                        Medicare and Medicaid program statutes that may further affect
                        payments.
                        Please briefly identify them and describe the potential adverse
                        consequences you might experience as a
                        result.

            We
              have
              revised this risk factor to expand the discussion of proposed changes
              in the
              Medicare and Medicaid programs and their potential impact on
              AdCare.

                    13.

                      Please
                        identify your most significant competitors in each area of
                        your business
                        and discuss the basis on which you compete with them. Also,
                        if you have
                        experienced any adverse consequences to date as a result
                        of the
                        competition you discuss, you should briefly describe the
                        consequences
                        here.

            We
              have
              expanded this risk factor to disclose specific competitors and adverse
              consequences which have occurred in the past as a result of
              competition.

                    14.

                      If
                        you have experienced difficulties in hiring and retaining
                        the necessary
                        personnel in the past, you should revise the risk factors
                        to discuss these
                        experiences.

            We
              have
              clarified this risk factor to indicate that AdCare has not had any
              difficulty in
              hiring employees in the past, but the risk remains viable.

              Mr.
                Jeffrey T. Weaver

              April
                10,
                2006

              Page
                4

                    15.

                      Please
                        disclose the percentage of your revenue attributable to management
                        contracts in each of the two most recent fiscal years. Also,
                        disclose the
                        percentage of your home healthcare contracts that were renewed
                        in each of
                        the two most recent fiscal years, and whether you have renewed
                        or lost any
                        of your management contracts during the two most recent fiscal
                        years.

            We
              have
              revised this risk factor to disclose the percentage of revenue attributable
              to
              management contracts and to clarify that AdCare has not had any management
              contracts cancelled within the past two years.

                    16.

                      Please
                        expand your discussion of the debts you will repay to disclose
                        the
                        maturity of each loan. Also disclose the uses to which you
                        put the
                        proceeds of the debts to be
                        repaid.

            We
              have
              expanded the discussion and quantified the debts that are expected
              to be repaid
              out of the Offering proceeds.

                    17.

                      Please
                        expand your discussion of the funds to be used for “working capital and
                        for general corporate purposes” to be more specific about the uses you
                        might use the funds for.

            We
              have
              added a footnote which provides additional detail concerning the expected
              use of
              Offering proceeds for “working capital and general corporate
              purposes.”

                    18.

                      Please
                        revise this presentation to include the effects of only the
                        offering. You
                        can then provide the additional tables that include the effects
                        of the two
                        scenarios after that.

            We
              have
              revised the capitalization table on page 14 of the Registration Statement
              to
              indicate only the effects of the Offering.

                    19.

                      Please
                        revise this presentation to more clearly present the effects
                        that you are
                        trying to articulate by offsetting the numbers that must
                        be combined to
                        arrive at the “Pro Forma Net Tangible Book Value Per
                        Share.”

            We
              have
              revised the Dilution section on page 15 of the Registration Statement
              to make
              the presentation more clear. The previous discussion was somewhat complicated
              by
              the fact that we were using September 30, 2005 financial information,
              while
              attempting to incorporate sales of stock and other events that occurred
              subsequent to that date but prior to the filing of the Registration
              Statement. A
              new Dilution section now reflects information through December 31,
              2005.

                    20.

                      Your
                        discussion related to the decrease in operating cash flows
                        is confusing.
                        Please expand for us how the acquisition of accounts receivable
                        related to
                        a purchase business combination affected your cash flows
                        from receivables.
                        Further revise the discussion to better address the actual
                        activities that
                        affect your cash flows from operations instead of this apparent

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 6010

									March 3, 2006

David A. Tenwick, Chairman
Adcare Health Systems, Inc.
5057 Troy Road
Springfield, Ohio  45502-9032

Re:  	Adcare Health Systems, Inc.
Form SB-2 Registration Statement
	File No. 333-131542

Dear Mr. Tenwick:

      We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Prospectus Cover Page

1. Please disclose the date when the units will separate and the
common stock and the warrants will trade separately.

2. Please revise the statement that you expect to list the units
on
the American Stock Exchange.  You may state that you intend to
apply
for listing on the exchange or that you have applied for listing,
whichever is accurate.

Summary - page 2

3. Please provide third-party support for your claim that you
"enjoy
an excellent reputation" for your management capabilities, or in
the
alternative, delete the claim.

4. In a number of places in the summary and throughout the
document
you make claims regarding market share, the size of the market for
your services and facilities, and other similar information.  See,
for example, the fifth paragraph on page 2 and the sixth paragraph
on
page 25.  Please provide us with copies of the documents you are
relying on in support of these claims.  Mark the documents to show
the location of the information you cite.

5. We note that you have disclosed your revenue base for the nine
month period ended September 30, 2005.  Please balance this
disclosure by quantifying your expenses for the period.

6. Similarly, balance the discussion of your strategy and future
plans by identifying the risks and obstacles you will encounter in
implementing your future plans.

Summary Financial Information - page 3

7. Please revise this presentation to clearly reflect the impact
of
the discontinued operations on your financial information.

8. Please revise your presentation here to remove the "Adjusted"
column.

Risk Factors - page 4

We may need additional financing to complete our long term
acquisition and expansion plans, and we do not have commitments
for
additional financing. - page 4

9. Please quantify the disclosure in this risk factor to the
extent
practicable.  Your discussion should highlight the fact that you
had
negative working capital as of September 30, 2005.

Our business is concentrated in Ohio, making it subject to
increased
risks as a result of potential declines in the Ohio economy. -
page 5

10. Please expand the disclosure to briefly describe the current
state of the Ohio economy and indicate whether you have
experienced
any adverse consequences to date from the concentration of your
business in Ohio.  If you have, you should also briefly describe
the
adverse consequences you experienced.

Changes in the reimbursement rate from methods of payment from
Medicare and Medicaid may adversely affect our revenues and
operating
margins. - page 5

11. Disclose the percentages of your revenue that come from each
of
Medicare, Medicaid and from other third party payors in each of
the
two most recent fiscal years.

12. You say that there are administrative rulings and
interpretations
of the Medicare and Medicaid program statutes that may further
affect
payments.  Please briefly identify them and describe the potential
adverse consequences you might experience as a result.

We encounter intense competition from competitors, many of whom
have
greater resources than Adcare. - page 6

13. Please identify your most significant competitors in each area
of
your business and discuss the basis on which you compete with
them.
Also, if you have experienced any adverse consequences to date as
a
result of the competition you discuss, you should briefly describe
the consequences here.

Our business is very labor intensive, we operate in smaller
markets
with limited personnel resources, and our success is tied to our
ability to attract and retain qualified employees. - page 7

14. If you have experienced difficulties in hiring and retaining
the
necessary personnel in the past, you should revise the risk factor
to
discuss these experiences.

Our business is largely dependent on short-term management
contracts
that may not be renewed from year to year. - page 7

15. Please disclose the percentage of your revenue attributable to
management contracts in each of the two most recent fiscal years.
Also, disclose the percentage of your home healthcare contracts
that
were renewed in each of the two most recent fiscal years, and
whether
you have renewed or lost any of your management contracts during
the
two most recent fiscal years.

Use of Proceeds - page 11

16. Please expand your discussion of the debts you will repay to
disclose the maturity of each loan.  Also disclose the uses to
which
you put the proceeds of the debts to be repaid.

17. Please expand your discussion of the funds to be used for
"working capital and for general corporate purposes" to be more
specific about the uses you might use the funds for.

Capitalization, page 12

18. Please revise this presentation to include the effects of only
the offering.  You can then provide the additional tables that
include the effects of the other two scenarios after that.

Dilution, page 13

19. Please revise this presentation to more clearly present the
effects that you are trying to articulate by offsetting the
numbers
that must be combined to arrive at the "Pro Forma Net Tangible
Book
Value Per Share."

Management`s Discussion and Analysis of Financial Conditions, page
14

Liquidity and Capital Resources, page 16

20. Your discussion related to the decrease in operating cash
flows
is confusing.  Please expand for us how the acquisition of
accounts
receivable related to a purchase business combination affected
your
cash flows from receivables.  Further revise the discussion to
better
address the actual activities that affect your cash flows from
operations instead of this apparent reference to the cash flow
statement.  Given the impact of your accounts receivables, provide
a
discussion of your days sales outstanding related to these
receivables.

21. Please provide a more thorough discussion of all of your note
payables, as the payment of these obligations will provide
investors
increased transparency of your future cash flows and a greater
understanding of your cash requirements.  Your disclosure here
appears to only address certain short and long term obligations.

Business - page 20

Business Divisions - page 23

22. Please refer to the pie chart showing your current mix of
revenues for the period ended September 30, 2005.  Please provide
a
similar chart showing expenses for each revenue source.  Also
consider providing similar charts for each of the two previous
fiscal
years.

Portfolio of Owned and Managed Facilities - page 23

23. Please explain what the headings "date" and "develop" mean in
the
table on this page.

24. Please include occupancy information for each of the last two
fiscal years.

25. In footnote 1 you refer to "Net Lease."  Please explain the
meaning and significance of this term.

Growth Strategy - page 24

26. Refer to the last paragraph on this page.  Please expand the
disclosure to include the basis for your belief that "limited
capital
resources" impedes the growth and exit prospects for small private
operators and explain how this presents an attractive opportunity
to
expand your base of senior living operations.  We note in this
regard
that elsewhere in this document you essentially describe yourself
as
a small private operator, so the basis for your opportunities are
not
clear.

27. Under "Assisted Living" on page 27, please explain what the
phrases "passively encouraging socialization" and "infusion
therapy"
mean.

Demographic Trends - page 28

28. Under "Facility Supply/Demand Imbalance" on page 28 you
indicate
that a slowdown in construction and lack of construction financing
since 1999 has led to a reduction in the supply of new units being
constructed.  It is unclear whether this slowdown occurred in the
localities in which your facilities are located, or in your
industry
in general.  Please expand the disclosure to include specific
information about the localities in which your facilities are
located.  You should quantify the discussion to the extent
practicable and include a discussion of your own experiences.

Competition

29. Please identify the long-term care providers with which your
facilities compete, identifying those which are larger or have
greater financial and marketing resources than you do.  Also
identify
the ones that are non-profits.  Please also disclose and discuss
whether new long-term care facilities are currently being
constructed
or are planned in the localities where your facilities are
located.
Your current disclosure is very generic and does not provide an
adequate picture of your competitive situation.

Government Regulation

30. Please expand the disclosure to discuss in reasonable detail
how
the new Medicaid reimbursement system will differ from the current
one.

31. Please briefly describe the types of nursing home acquisitions
that require governmental approval as well as the process for
obtaining the approval.

Underwriter`s Board Rights - page 35

32. Please tell us whether the compensation to the underwriter`s
designee will be considered underwriting compensation.

Executive Compensation

33. Please update the disclosure to include information for the
fiscal year ended December 31, 2005.

Security Ownership of Certain Beneficial Owners and Management

34. Please identify the natural person possessing voting and
investment rights over the securities held by Capital City
Partners,
LLC.

Financial Statement Comments

General

35. Your financial statements are now stale.  Please update your
financial statements and related disclosures in accordance with
Rule
310(g) of Regulation S-B.

Financial Statements, page F-1

Consolidated Balance Sheets, page F-3

36. Please tell us what the "Members deficiency" account
represents,
and how it differs from the "Accumulated deficit" account.
Further
explain how you determined to allocate net income between the two
accounts, and why that is appropriate.  Cite any accounting
literature relied on in your determination.

Consolidated Statements of Operations, page F-4

37. Please tell us what "return to members" represents and why it
is
not included on the statements of changes in owner`s equity.

Consolidated Statements of Changes in Owner`s Equity, page F-5

38. Please explain to us what the "Acquisition of additional
investment in subsidiary in excess of book value" represents and
how
it was accounted for.  Include specific references to the
literature
that supports this accounting treatment.

Note 1.  Description of Business, page F-8

39. Please describe to us in greater detail the agreement that you
have made to offer to purchase the Van Wert minority interest.
Include a discussion of the accounting literature upon which you
relied in determining the accounting treatment to apply to this
offer
to purchase.

Note 2. Summary of Significant Accounting Policies, page F-9

Principles of Consolidation, page F-9

40. Please tell us how you determined that it was appropriate to
consolidate the entities identified in this note.  Specifically
address the criteria in FIN 46R upon which you relied in your
determination.

Segments, page F-13

41. We note in your discussion in this document of the acquisition
of
Assured Health.  These revenues seem to be distinct from the
revenues
provided by your communities based on the discussion on page 21.
Please revise the disclosure to provide separately revenue from
distinct services.  Refer to paragraph 37 of SFAS 131.

Note 3. Discontinued Operations, page F-18

42. Please explain why you continue to recognize "Income (Loss)
from
Operations" in all periods presented related to the operation of
MedCenter.  Explain how this apparent continued involvement does
not
affect your decision to classify this disposition as discontinued
operations.  Also explain to us how you arrived at the amount of
gain
recognized related to the installment sale method in the 2004
period.

Note 5. Note Receivable, page F-20

43. Please revise your disclosure to more specifically address the
timing of when you recorded the allowance.  Include what has
happened
with respect to cash receipts since that date, and why the
allowance
is adequate.

Note 7.  Notes Payable - Stockholders, page F-24

44. Please explain to us how you determined the settlement price
and
associated gain or loss that appears to be different than the
stated
terms when this debt was extinguished in the current year.

Note 8. Convertible Debentures, page F-26

45. Please provide to us your analysis of whether a beneficial
conversion feature did or did not exist at the time of issuance
for
each of these debenture issuances.  Reference EITF 98-5 and 00-27
in
your response.

Note 14.  Related Party Transactions, page F-33

46. Please explain to us how you valued and accounted for the
warrants issued to the officers in exchange for their guarantee of
your term loan.

Alternate Prospectus Pages

47. Please complete the blank spaces in these pages, including the
identity of the selling shareholders.  This information must be
included in the document at the time of effectiveness.

48. Please revise the cover page to provide a price or price
range.
You may also state that the shares will sell at prevailing market
prices or privately negotiated prices if and when your shares are
listed on the American Stock Exchange.

Item 27.  Exhibits

49. We note that you have filed the Form of Secured promissory
Debenture dated _____,2005 and Form of Warrant to Purchase Common
Stock dated _____, 2005.  Please revise to file the actual
executed
documents.

Signatures

50. Please identify and provide the signatures of your chief
executive officer and your controller or chief accounting officer.

*	*	*	*	*

As appropriate, please amend your registration statement in
response
to these comments.  You may wish to provide us with marked copies
of
the amendment to expedite our review.  Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information.  Detailed cover
letters greatly facilitate our review.  We may have additional
comments after reviewing your amendment and responses to our
comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

	Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledg