<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
--------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ----------------
Commission file number 0-15693
--------------
QUEST HEALTH CARE FUND VII, L.P.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1697905
-------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1355 Peachtree St., Suite 1900, Atlanta, GA 30309
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (404) 607-1950
-----------------------------
Formerly: Southmark/CRCA Health Care Fund VII, L.P.
-------------------------------------------------------------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
There are no exhibits
TOTAL OF 14 PAGES
1
<PAGE> 2
QUEST HEALTH CARE FUND VII, L.P.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,291,067 $ 1,469,459
Accounts receivable, net of allowance
for doubtful accounts of $73,758 and
$262,636 at June 30, 1995 and
December 31, 1994, respectively 998,372 2,623,217
Prepaid expenses 63,979 772,199
---------- ----------
Total current assets 2,353,418 4,864,875
---------- ----------
PROPERTY AND EQUIPMENT, at cost
Land 233,770 800,577
Buildings and improvements 2,380,901 10,651,257
Equipment and furnishings 744,034 1,978,261
---------- ----------
3,358,705 13,430,095
Less accumulated depreciation and amortization 2,257,189 6,449,142
---------- ----------
Net property and equipment 1,101,516 6,980,953
---------- ----------
OTHER ASSETS
Restricted escrow and other deposits - 392,864
---------- ----------
TOTAL ASSETS $ 3,454,934 $12,238,692
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
2
<PAGE> 3
QUEST HEALTH CARE FUND VII, L.P.
BALANCE SHEETS
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
------------- ------------
1995 1994
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 14,105 $ 103,468
Trade accounts payable 339,111 988,831
Accrued compensation 199,376 631,748
Accrued insurance - 399,807
Accrued interest - 41,587
Estimated third party settlements 84,899 287,013
Estimated sales tax settlement (Note 4) 279,691 352,602
Other 104,247 299,643
Payable to Quest and affiliates 39,224 29,176
---------- ----------
Total current liabilities 1,060,653 3,133,875
LONG-TERM DEBT, less current maturities 17,265 1,843,803
---------- ----------
Total liabilities 1,077,918 4,977,678
---------- ----------
PARTNERS' EQUITY
Limited Partners 2,515,534 7,403,755
General Partner (138,518) (142,741)
---------- ----------
Total partners' equity 2,377,016 7,261,014
---------- ----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 3,454,934 $12,238,692
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
3
<PAGE> 4
QUEST HEALTH CARE FUND VII, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Operating revenue $2,829,865 $5,689,559 $ 8,637,658 $11,408,450
Interest income 10,330 13,557 31,047 22,804
Gain on sales 347,943 - 548,389 -
--------- --------- --------- ---------
Total revenues 3,188,138 5,703,116 9,217,094 11,431,254
--------- --------- ---------- ----------
EXPENSES:
Wages & salaries 1,451,564 2,640,272 3,990,842 5,233,178
Payroll tax & employee benefits 281,193 609,092 864,955 1,156,680
Supplies 297,283 538,076 845,212 1,061,218
Other operating expenses 367,046 657,135 974,482 1,360,718
Ancillary services 304,988 430,998 794,539 870,190
Health benefits 47,665 56,198 147,855 107,143
Management fees 148,211 313,304 452,784 624,172
Management fees-affiliate 28,410 45,705 80,862 93,694
Property taxes 22,791 36,912 58,363 76,346
Interest 1,501 54,985 26,479 101,662
Depreciation and amortization 32,468 176,155 132,984 351,532
Partnership administration 243,757 130,356 425,453 297,259
--------- --------- --------- ---------
Total expenses 3,226,877 5,689,188 8,794,810 11,333,792
--------- --------- ---------- ----------
Net income (loss) $ (38,739) $ 13,928 $ 422,284 $ 97,462
========= ========= ========= =========
Net income (loss) per Limited
Partnership Unit $ ( .14) $ .05 $ 1.50 $ .35
========= ========= ========= =========
Weighted average Limited Partnership
Units outstanding 279,278 279,278 279,278 279,278
========= ========= ========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
4
<PAGE> 5
QUEST HEALTH CARE FUND VII, L.P.
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993 $ (71,279) $14,478,482 $14,407,203
Net income 975 96,487 97,462
--------- ---------- ----------
Balance at June 30, 1994 $ (70,304) $14,574,969 $14,504,665
========= ========== ==========
Balance at December 31, 1994 $(142,741) $7,403,755 $7,261,014
Net income 4,223 418,061 422,284
Distributions - (5,306,282) (5,306,282)
--------- ---------- ----------
Balance at June 30, 1995 $(138,518) $2,515,534 $2,377,016
========= ========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
5
<PAGE> 6
QUEST HEALTH CARE FUND VII, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from residents and
government agencies $ 8,963,161 $11,465,025
Cash paid to suppliers and
employees (8,767,411) (10,721,324)
Interest received 31,047 22,805
Interest paid (26,479) (102,467)
Property taxes paid (95,626) (72,245)
---------- ---------
Net cash provided by operating activities 104,692 591,794
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 5,070,998 40,326
Payment for purchases of property
and equipment (28,180) (30,524)
Reduction of restricted escrow and other - 58,990
Funding of restricted accounts (4,495) 47,006
----------- ---------
Net cash provided by investing activities 5,038,323 115,798
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (5,306,282) -
Bond proceeds - 1,830,000
Bonds paid off - (1,830,000)
Bond refinancing costs - (55,409)
Principal payments on long-term debt (15,125) (72,709)
---------- ---------
NET CASH USED IN FINANCING ACTIVITIES (5,321,407) (128,118)
---------- ---------
Increase (decrease) in cash and cash
equivalents (178,392) 579,474
Cash and cash equivalents at beginning of
period 1,469,459 1,157,911
---------- ---------
Cash and cash equivalents at end of period $ 1,291,067 $1,737,385
========== =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
6
<PAGE> 7
QUEST HEALTH CARE FUND VII, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 422,284 $ 97,462
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 132,984 351,532
Gain on sale of property (548,389) 2,174
Abandoned development costs 92,304 -
Changes in assets and liabilities
Accounts receivable 325,503 56,575
Prepaid and other current assets (81,108) 83,099
Accounts payable and accrued
liabilities (248,934) 5,447
Payable to Quest and affiliates 10,048 (4,495)
--------- ---------
Net cash provided by
operating activities $ 104,692 $ 591,794
========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
7
<PAGE> 8
QUEST HEALTH CARE FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
NOTE 1
During interim periods, Quest Health Care Fund VII, L.P. (the "Partnership")
follows the accounting policies set forth in its Annual Report on Form 10-K
filed with the Securities and Exchange Commission. Users of financial
information provided for interim periods should refer to the annual financial
information and footnotes contained in the Annual Report on Form 10-K when
reviewing the interim financial results presented herein.
In the opinion of management, the accompanying unaudited interim financial
statements, prepared in accordance with the instructions for Form 10-Q, contain
all material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, results of operations,
changes in partners' equity and cash flows of the Partnership for the
respective interim periods presented. The results of operations for such
interim periods are not necessarily indicative of results of operations for a
full year.
Certain amounts included in the 1994 Financial Statements have been reclassed
to conform with the 1995 presentation.
NOTE 2
The Partnership maintains cash accounts with a variety of unrelated banks, all
of which are insured by the Federal Deposit Insurance Corporation (FDIC). At
June 30, 1995, the Partnership maintained cash balances at these banks
aggregating $1,176,510 in excess of the $100,000 FDIC insured maximum.
NOTE 3
Quest, in an effort to continue certain health benefits for facility employees,
created an employee benefit trust (the "Trust") in compliance with the
guidelines promulgated pursuant to VEBA and ERISA. Amounts contributed under
the Trust plan by Partnership employees and the Partnership are strictly for
the benefit of employees of the participating employers, payment of excess loss
reinsurance, life insurance and accidental death and dismemberment and claims
and plan administration and employee medical claims. Quest has engaged a
claims precertification organization to review all claims made by the
Partnership's employees. Approximately $147,855 was accrued under this
arrangement in the first six months of 1995. The Trust is administered by an
affiliate of Quest; however, no profits accrue to the benefit of either the
affiliate or Quest.
Quest Administrative Services, L.P. (QASLP), an affiliate of Quest, provides
management services to the Partnership facilities. Total accruals to QASLP for
the first six months of 1995 were $80,862.
8
<PAGE> 9
QUEST HEALTH CARE FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
Note 4
In December 1994, the Partnership received a Notice and Demand for Payment from
the Idaho State tax commission resulting from sales tax audits for
approximately $470,135 related to periods prior to 1989. Of this amount,
approximately $119,113 of liability was assumed by the purchaser of the
facilities sold on April 30, 1995. The Company is discussing a settlement of
this matter and has recorded a provision in the Partnership's Financial
Statements. Management is of the opinion that the final resolution will not
have a material adverse effect on the Partnership's financial position and that
the reserve is adequate.
Note 5
In February 1995, the Partnership sold its Partnership interest in one facility
to an unaffiliated third party and recognized a gain of $200,000. The
Partnership was relieved of the mortgage obligations secured by the facility of
$1,830,000, received cash of $1,700,000 and was relieved of any obligations
relating to Medicaid or Medicare settlements, audit adjustments and prior
reimbursement recapture by Medicare.
In addition, the Partnership sold its interests in four facilities to a
different unaffiliated third party. The contract provided for adjusting
working capital, as defined, to exclude interpartnership accounts and the
current portion of long term debt and to reflect a 25% discount on accounts
receivable at closing for the sale of the Partnership interests in the four
facilities. The contract also provided for cash consideration adjustments
based on changes in working capital including the change in the 25% discount
proportionate to changes in accounts receivable occurring between December 31,
1994 and the date of closing. Closing of this sale occurred as of April 30,
1995. The Partnership made a final determination of adjusted working capital
when the Partnership's accountants completed certain special procedures. Total
cash received by the Partnership was $3,370,998. The balance sheet of the
Partnership reflects the effects of the sale of the Partnership's interests in
the five facilities. The Partnership is seeking to liquidate the Partnership's
interests in its three remaining facilities.
Distributions of $2,792,780 or $10/unit were made to limited partners in March
1995. A second distribution of $2,513,502 or $9/unit was made to the limited
partners in June 1995.
In February 1995, the limited partners of the Partnership received hostile
tender offer materials offering to purchase the units of certain limited
partners of the Partnership. The unfriendly bidder amended its tender offer
materials three times requiring the Partnership to respond to the offer at a
cost to the Partnership. The expense of the printed materials and legal advice
necessary to represent the Partnership's belief regarding this offer exceeded
$160,000.
The hostile tender offer expired on April 28, 1995. Notice of termination was
filed by the offeror on May 1, 1995.
9
<PAGE> 10
Note 6
The following pro forma condensed financial information does not purport to
present what actual financial position and results of operations would have
been if the transactions previously described had occurred on such dates or to
project results for any future period. It is management's belief that all
adjustments necessary to reflect the effects of the sales described in Note 5
have been made.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (B)
For the Six Months Ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
-------------- -------------- -------------
<S> <C> <C> <C>
Revenues: $ 8,669 $ (5,301)(A) $ 3,368
---------- ------------ ----------
Expenses:
Wages and salaries $ 3,991 $ (2,537)(A) $ 1454
Operating expenses 3,627 (2,140)(A) 1487
Management fees 453 (287)(A) 166
Management fees-affiliate 81 (49)(A) 32
Property taxes and interest 85 (52)(A) 33
Depreciation and amortization 133 (92)(A) 41
Partnership administration 425 - 425
---------- ------------ ---------
8,795 (5,157) 3,638
---------- ------------ ----------
Net income (loss) (B) $ (126) $ (144) $ (270)
========== =========== =========
</TABLE>
(A) The pro forma adjustments remove the revenues and expenses directly
related to the five nursing homes sold.
(B) The historical statement of operations for the period ended June 30,
1995 includes a gain of $548, in thousands, from the sale of five
facilities. This amount is not included in the above pro forma
condensed statement of operations due to the non recurring nature.
Note 7
In March 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 121 - "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.", which is effective for
fiscal years beginning after December 15, 1995. Since the Partnership has
recognized impairment losses and the losses were discussed in the 1993 and 1994
Annual Reports on Form 10-K, effectively adjusting the carrying value of its
long-lived assets to estimated net realizable value, no significant adjustment
from net realizable value to fair value is expected.
10
<PAGE> 11
PART I
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
Results of Operations:
In February 1995, the Partnership sold its interest in one facility for a gain
of approximately $200,000. The Partnership was relieved of mortgage
obligations secured by the facility exceeding $1,830,000, and received cash of
$1,700,000. As a result of the sale of the facility and cash on hand; the
Partnership distributed $2,792,780 or $10/unit to the limited partners in March
of 1995.
At April 30, 1995 the Partnership sold its interests in four facilities to
another unaffiliated third party. An initial distribution from this sale of
$2,513,502 or $9/unit was made in June 1995.
Revenues:
During the six months ended June 30, 1995, the Partnership sold its interests
in five facilities. Therefore, revenues and expenses are not directly
comparable to the same period in 1994. On a pro forma basis the three
remaining facilities -- Valley Convalescent, Mountain View and Valley Living
increased revenues $141,506 and $343,198 for the three and six months ended
June 30, 1995. The majority of this increase was in Valley Convalescent as a
result of increased Medicare utilization.
All resident receivables are recorded at their original face amount and are due
and payable under "normal" market terms and conditions. In the event of
non-collection, the ultimate loss to the Partnership would be limited to the
recorded balance of the receivables as shown in the balance sheet.
The significant components of accounts receivable at June 30, 1995 and December
31, 1994 are:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Medicaid 48% 50%
Private Pay 15% 14%
VA, Medicare and Other 37% 36%
------- -------
100% 100%
======= =======
</TABLE>
Payments by both the state and federal governments are normally received within
60-90 days. The sources of patient revenues for periods ended June 30, 1995
and 1994 are:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Medicaid 62% 65%
Private Pay 13% 13%
VA, Medicare and Other 25% 22%
------- -------
100% 100%
======= =======
</TABLE>
Expenses:
On a proforma basis, for the three and six month periods ended June 30, 1995,
expenses increased $107,871 and $267,749; respectively. These expenses are
primarily related to the increased Medicare utilization at Valley Convalescent.
The Partnership's facilities have shown improvement despite market competition
and government reimbursement changes. Valley Convalescent located in
California has improved census and Medicare utilization. Higher revenue was
achieved despite the fact that the State of California did not increase
reimbursements in 1995. Valley Living, in Idaho, has improved census and
controlled expenses and currently generates positive cash flow. Mountain View
continues to suffer the consequence of the new facility in town and it may be
necessary to close the facility.
11
<PAGE> 12
In February 1995, the Partnership sold its Partnership interest in one facility
to an unaffiliated third party and recognized a gain of $200,000. The
Partnership was relieved of the mortgage obligations secured by the facility of
$1,830,000, received cash of $1,700,000 and was relieved of any obligations
relating to Medicaid or Medicare settlements, audit adjustments and prior
reimbursement recapture by Medicare.
In addition, the Partnership sold its interests in four facilities to a
different unaffiliated third party. The contract provided for adjusting
working capital, as defined, to exclude interpartnership accounts and the
current portion of long term debt and to reflect a 25% discount on accounts
receivable at closing for the sale of the Partnership interests in the four
facilities. The contract also provided for cash consideration adjustments
based on changes in working capital including the change in the 25% discount
proportionate to changes in accounts receivable occurring between December 31,
1994 and the date of closing. Closing of this sale occurred as of April 30,
1995. The Partnership made a final determination of adjusted working capital
when the Partnership's accountants completed certain special procedures. Total
cash received by the Partnership was $3,370,998. The balance sheet of the
Partnership reflects the effects of the sale of the Partnership's interests in
the five facilities. The Partnership is seeking to liquidate the Partnerships
interests in its three remaining facilities.
Neither the general partner nor its affiliates will receive any remuneration or
distributions of sales proceeds.
Liquidity and Capital Resources:
At June 30, 1995, the Partnership held cash and cash equivalents of $1,291,067.
This is a decrease of $178,392 since December 31, 1994 and reflects the
collection of sales proceeds from five facilities and distributions to the
limited partners of $5,306,282 during the period. There are no major capital
improvements planned at the remaining facilities.
Another significant event in 1994 affecting the value of the Partnership was
the State of Idaho seeking a $470,135 deficiency lien against the Partnership's
Idaho properties for periods from 1976 through 1988, under a theory of
successor liability. The Partnership acquired its interests in these
properties in June 1987. Although the Partnership believes it has a number of
meritorious defenses to the claims of the State of Idaho, an expense has was
accrued in the fourth quarter of 1994 in the amount of $352,602. Any
settlement with the state for an amount less than this accrual will result in a
gain to the Partnership. Conversely, any settlement in excess of this accrual
will result in an additional loss to the Partnership. The purchaser of the
facility, referred to above, assumed $119,113 of this liability before
adjustment. The reserve attributable to the remaining facilities if $279,691.
In February 1995, the limited partners of the Partnership received hostile
tender offer materials offering to purchase the units of certain limited
partners of the Partnership. The unfriendly bidder amended its tender offer
materials three times requiring the Partnership to respond to the offer at a
cost to the Partnership. The expense of the printed materials and legal advice
necessary to represent the Partnership's belief regarding this offer exceeded
$160,000.
Medicare is a federal entitlement program and Medicaid (the source of the
majority of the Partnership's revenues) represents an entitlement program
administered differently by each state which is partially funded by the Federal
government. In August 1993, Congress enacted Title XIII of OBRA 93. This act,
among other things taxed social security benefits received by the elderly and
further limited payments under state Medicaid programs for which federal
matching would be permitted. In October 1993, the HCFA implemented a freeze on
Medicare reimbursement, for at least two years, on routine cost limits, certain
Part B ancillaries and prospective payment system rates. In addition, HCFA
eliminated the return on equity component of the reimbursement rate. Further,
by the end of 1993, several states because of federal actions and/or budgetary
difficulties, had either taken action to curtail the growth in entitlement
programs and/or had indicated that future action was possible. Despite the
fact that health care reform proposals at the federal level are dead,
activities at the state level continue and are encouraged by HCFA. In 1995,
the latest idea appears to be "block grants" to the states. What this means to
nursing facilities cannot currently be determined by management of the
Partnership.
12
<PAGE> 13
The Partnership has no established credit lines with outside lending sources
and relies solely on cash flow and cash resources to conduct Partnership
business. There are no material commitments for capital improvements at the
remaining facilities.
The Partnership's continued existence is dependent upon its ability to: (i)
generate sufficient cash flow to meet its obligations on a timely basis; and
(ii) obtain additional sources of funding as may be required.
In March 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 121 - "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.", which is effective for
fiscal years beginning after December 15, 1995. Since the Partnership has
recognized impairment losses and the losses were discussed in the 1993 and 1994
Annual Reports on Form 10-K, effectively adjusting the carrying value of its
long-lived assets to estimated net realizable value, no significant adjustment
from net realizable value to fair value is expected.
PART II. OTHER INFORMATION
ITEMS 1-5
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits.
Exhibit 27 - Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K.
None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
QUEST HEALTH CARE
FUND VII, L.P.
(Registrant)
By: QUEST RESCUE PARTNERS - 7, L.P.
General Partner
By: QUEST RESCUE PARTNERS - 7 CORP.
Date: August 21, 1995 By:/s/ Stuart C. Berry
------------------ -----------------------------
Executive Vice-President/CFO
By:/s/ Michael G. Hunter
-----------------------------
President
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF QUEST HEALTH CARE FUND VII, L.P. FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,291,067
<SECURITIES> 0
<RECEIVABLES> 1,072,130
<ALLOWANCES> 73,758
<INVENTORY> 0
<CURRENT-ASSETS> 2,353,418
<PP&E> 3,358,705
<DEPRECIATION> 2,257,189
<TOTAL-ASSETS> 3,454,934
<CURRENT-LIABILITIES> 1,060,653
<BONDS> 17,265
<COMMON> 0
0
0
<OTHER-SE> 2,377,016
<TOTAL-LIABILITY-AND-EQUITY> 3,454,934
<SALES> 0
<TOTAL-REVENUES> 9,217,094
<CGS> 0
<TOTAL-COSTS> 8,794,810
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 28,169
<INTEREST-EXPENSE> 26,479
<INCOME-PRETAX> 422,284
<INCOME-TAX> 0
<INCOME-CONTINUING> 422,284
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 422,284
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
</TABLE>
