FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended June 30, 2000 Commission file number 000-17596
Meridian Healthcare Growth and Income Fund Limited Partnership
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1549486
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
N/A
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS 2
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Partners' Capital 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 13
Part II. Other Information
Item 1. through Item 6. 13
Signatures 14
</TABLE>
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Cautionary Statement Regarding Forward Looking Statements
Certain statements contained herein, including certain statements in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" concerning the Fund's business outlook or future economic
performances, anticipated profitability, revenues, expenses or other financial
items together with other statements that are not historical facts are
"forward-looking statements" as that term is defined under the Federal
Securities Law. Forward-looking statements are necessarily estimates reflecting
the best judgement of the party making such statements based upon correct
information and involve a number of risks, uncertainties and other factors which
could cause actual results to differ materially from those stated in such
statements. Risks, uncertainties and factors which could affect the accuracy of
such forward looking statements are identified in the Fund's Prospectus and the
Fund's Registration Statement filed by the Fund with the Securities and Exchange
Commission, and forward looking statements contained herein or in other public
statements of the Fund should be considered in light of those factors. There can
be no assurance that factors will not affect the accuracy of such forward
looking statements.
-2-
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30,
2000 December 31,
(Unaudited) 1999
---------------- ----------------
Assets
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 2,648 $ 2,511
Accounts receivable, net 7,890 7,224
Estimated third-party payor settlements 560 342
Prepaid expenses 526 478
---------------- ----------------
Total current assets 11,624 10,555
---------------- ----------------
Property and equipment, net of accumulated depreciation 32,911 33,346
---------------- ----------------
Other assets
Loan aquisition costs, net 422 -
Goodwill, net 4,618 4,745
---------------- ----------------
5,040 4,745
---------------- ----------------
Total assets $ 49,575 $ 48,646
================ ================
Liabilities and Partners' Capital
Current liabilities
Current portion of long-term debt $ 445 $ 22,605
Accrued compensation and related costs 496 778
Accounts payable and other accrued expenses 2,644 2,926
Estimated third party payor settlements 2,338 1,934
---------------- ----------------
Total current liabilities 5,923 28,243
---------------- ----------------
Long term debt 23,449 -
Deferred management fee payable 917 894
Loan payable to the Development General Partner 1,163 1,137
---------------- ----------------
25,529 2,031
---------------- ----------------
Partners' capital
General partners (135) (132)
Assignee limited partners; 1,540,040
units issued and outstanding 18,258 18,504
---------------- ----------------
Total partners' capital 18,123 18,372
---------------- ----------------
Total liabilities and
partners' capital $ 49,575 $ 48,646
================ ================
</TABLE>
See accompanying notes to consolidated financial statements
-3-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands except per unit amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------ -----------------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
Revenues
<S> <C> <C> <C> <C>
Medicaid and Medicare patients $ 11,099 $ 10,049 $ 21,866 $ 19,785
Private patients 2,619 2,547 5,119 5,083
Investment and other income 83 30 153 65
---------------- ---------------- ---------------- ----------------
13,801 12,626 27,138 24,933
---------------- ---------------- ---------------- ----------------
Expenses
Operating, including $1,988, $1,567,
$4,080 and $2,845 to related parties 10,656 9,766 21,396 19,316
Management and administration fees
to related parties 897 820 1,762 1,620
General and administrative 277 237 497 488
Depreciation and amortization 585 487 1,131 984
Interest expense 500 407 948 822
---------------- ---------------- ---------------- ----------------
12,915 11,717 25,734 23,230
---------------- ---------------- ---------------- ----------------
Net earnings $ 886 $ 909 $ 1,404 $ 1,703
================ ================ ================ ================
Net earnings per unit of assignee
limited partnership interest-basic
(computed based on 1,540,040
units) $ 0.57 $ 0.58 $ 0.90 $ 1.09
============== ============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
-4-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Statements of Partners' Capital
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
Dollars in thousands
<TABLE>
<CAPTION>
Assignee
General Limited
Partners Partners Total
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1999 $ (132) $ 18,504 $ 18,372
Net earnings 14 1,390 1,404
Distributions to partners (17) (1,636) (1,653)
---------------- ---------------- ----------------
Balance at June 30, 2000 $ (135) $ 18,258 $ 18,123
================ ================ ================
Balance at December 31, 1998 $ (128) $ 18,941 $ 18,813
Net earnings 17 1,686 1,703
Distributions to partners (17) (1,636) (1,653)
---------------- ---------------- ----------------
Balance at June 30, 1999 $ (128) $ 18,991 $ 18,863
================ ================ ================
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMTIED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
2000 1999
--------------- ----------------
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 1,404 $ 1,703
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 1,131 984
Minority interest in net earnings of operating
partnerships 17 19
Increase in loan payable to Development General Partner 26 25
Increase in deferred management fee payable 23 23
Change in other assets and liabilities
Accounts receivable (683) (185)
Estimated third-party payor settlements 186 44
Prepaid expenses (48) 175
Accrued compensation and related costs (282) (201)
Accounts payable and other accrued expenses (281) (899)
--------------- ----------------
Net cash provided by operating activities 1,493 1,688
--------------- ----------------
Cash flows from investing activities-
additions to property and equipment (479) (617)
--------------- ----------------
Cash flows from financing activities
Deferred financing fees (84) -
Loan acquisition costs (429) -
Net proceeds from issuance of long-term debt 24,000 -
Repayment of long-term debt (22,711) (376)
Distributions to partners (1,653) (1,653)
--------------- ----------------
Net cash used in financing activities (877) (2,029)
--------------- ----------------
Net (decrease) increase in cash and cash equivalents 137 (958)
Cash and cash equivalents
Beginning of period 2,511 2,928
--------------- ----------------
End of period $ 2,648 $ 1,970
=============== ================
</TABLE>
See accompanying notes to consolidated financial statements
-6-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
June 30, 2000
(Unaudited)
NOTE 1 - THE FUND AND BASIS OF PREPARATION
The Fund owns 98.99% limited partnership interests in each of the seven
operating partnerships. The Fund through its seven operating partnerships,
derives substantially all of its revenue from extended healthcare provided to
nursing center residents including room and board, nursing care, drugs and other
medical services.
The accompanying consolidated financial statements of Meridian Healthcare Growth
and Income Fund Limited Partnership (the "Fund") do not include all of the
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles. The
unaudited interim consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. All such adjustments are of a normal
recurring nature. The unaudited interim financial information contained in the
consolidated financial statements should be read in conjunction with the
consolidated financial statements contained in the 1999 Annual Report.
NOTE 2 - RELATED PARTY TRANSACTIONS
On June 22, 2000, Genesis Health Ventures, Inc. (Genesis) and certain of its
subsidiaries and affiliates filed petitions for Chapter 11 bankruptcy protection
with the U.S. Bankruptcy Court in Wilmington, Delaware. Meridian Healthcare,
Inc., which manages the Fund's nursing centers under the terms of management
agreements described below, is a wholly-owned subsidiary of Genesis and was
named as a debtor affiliate in the bankruptcy filing. Certain other subsidiaries
of Genesis which supply the Fund's nursing centers with drugs, medical supplies,
and other services as described below were also included in the bankruptcy
filing. The Fund does not expect that the Genesis bankruptcy filing will have an
impact on its operations, results of operations or financial position.
The Fund is obligated to pay the Administrative General Partner an annual
administration fee of the greater of $75,000 per year or 1/2 of 1% of the Fund's
annual revenues. The nursing centers owned by the operating partnerships are
managed by Meridian Healthcare, Inc., an affiliate of the Development General
Partner, under the terms of ten year management agreements which provide for
management fees equal to 6% of the annual revenues of each nursing center.
Certain of the operating partnerships also purchase drugs and medical supplies
and other services from affiliates of the Development General Partner. Such
purchases are in turn billed to patients or third party payors at prices which
on average approximate the nursing center's cost.
Transactions with these related parties for the three and six months ended June
30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June. 30, 2000 June. 30, 1999 June. 30, 2000 June. 30, 1999
<S> <C> <C> <C> <C>
Management and administration fees $ 897,000 $ 820,000 $1,762,000 $1,620,000
Drug and medical supplies purchases 835,000 760,000 1,722,000 1,370,000
Nursing and rehabilitation services 1,153,000 807,000 2,358,000 1,475,000
Interest expense on borrowings 24,000 23,000 49,000 46,000
</TABLE>
The Development General Partner loaned the Fund $597,000, as required by the
Cash Flow Deficit Guaranty Agreement, to support the operating deficits
generated by the Moorsesville, Salisbury and Woodlands nursing centers during
each center's first two years of operations subsequent to the Fund's acquisition
of partnership interests. Loans outstanding under an arrangement, including
accumulated interest from inception of the loan at 9% per annum, were $1,163,000
at June 30, 2000 and $1,137,000 at December 31, 1999. The Fund is obligated to
repay these loans when certain specified financial criteria are met, the most
significant of which is the payment of a preferred return to the assignee
limited partners as defined in the Fund's partnership agreement.
-7-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
June 30, 2000
(Unaudited)
NOTE 3 - DEBT
The Fund closed its mortgage loan refinancing with a new bank for loans totaling
$24,000,000 on June 12, 2000. The renewal terms became effective on June 12,
2000 and provide for a term of five years at an interest rate of 9.75%. Monthly
payments of $229,886 are based on a 25-year amortization schedule with a balloon
payment due at the end of the 5-year term. Prior to the effective date of the
new loan terms on June 12, 2000, the mortgage loans bear interest at LIBOR plus
1.55%.
The Fund also replaced its $4,000,000 line of credit facility with the same
lender under the terms similar to the mortgage loan terms above.
NOTE 4 - NET EARNINGS PER UNIT OF ASSIGNEE LIMITED PARTNERSHIP INTEREST
Net earnings per unit of assignee limited partnership interest is disclosed on
the Consolidated Statements of Operations and is based upon 1,540,040 units.
-8-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Fund closed its mortgage loan refinancing with a new bank for loans
totaling $24,000,000 on June 12, 2000. The renewal terms became effective on
June 12, 2000 and provide for a term of five years at an interest rate of 9.75%.
Monthly payments are based on a 25-year amortization schedule with a balloon
payment due at the end of the 5-year term.
The Fund also replaced its $4,000,000 line of credit facility with the same
lender under terms similar to the mortgage loan terms described above.
The Fund's working capital (excluding long-term debt) increased $1,419,000
to $6,146,000 at June 30, 2000 as compared to $4,727,000 at March 31, 2000. This
increase was due primarily to surplus loan proceeds available from the
refinancing of the Fund's long term debt. The Fund expects to utilize
approximately $800,000 of surplus refinancing proceeds for improvements to the
four Maryland facilities and will retain the balance as reserves. The Fund has
sufficient liquid assets and other available credit resources to satisfy its
operating expenditures and anticipated routine capital improvements at each of
the seven nursing home facilities.
Cash flow from operating activities was $1,493,000 for the six-month period
ended June 30, 2000 as compared to $1,688,000 for the same period of 1999.
Cash used from investing activities for the six-month period ended June 30,
2000 was $479,000 and included improvements to the Fund's seven operating
facilities. Similar improvements made during the first half of 1999 were
$617,000.
Cash flows from financing activities through the first half of 2000
included proceeds from the issuance of the Fund's new long-term debt of
$24,000,000, repayment of long term debt of $22,711,000, an extension fee paid
to the prior lender of $84,000, new loan acquisition costs of $429,000 and
distributions to partners totaling $1,653,000.
The Fund believes that the short-term liquidity needs will be met through
expected cash flow from operations and available working capital from the
existing line of credit.
Between 1988 and 1999 the Development General Partner loaned the Fund
$597,000 to support operating deficits generated by the Mooresville, Salisbury
and Woodlands nursing centers during each centers' first two years of operation.
Loans outstanding under this arrangement, including interest at 9% per annum,
were $1,163,000 at June 30, 2000.
On August 10, 2000 the Fund will make its second quarter 2000 distribution
to partners of $826,410. This distribution was fully funded by second quarter
2000 operations. Management believes that the 2000 budget suggests operations
from the seven nursing centers will be sufficient to fund a similar quarterly
distribution throughout the year.
The major challenge to the Fund in the foreseeable future is to control
operating expenses in light of Medicare's conversion to the Prospective Payment
System, to maintain a quality mix of patients and to increase the overall census
at each of the facilities.
-9-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
On June 22, 2000, Genesis Health Ventures, Inc. (Genesis) and certain of
its subsidiaries and affiliates filed petitions for Chapter 11 bankruptcy
protection with the U.S. Bankruptcy Court in Wilmington Delaware. Meridian
Healthcare, Inc., which manages the Fund's nursing centers under the terms of
management agreements described in note 2 of the Fund's June 30, 2000 unaudited
consolidated financial statements, is a wholly-owned subsidiary of Genesis and
was named as a debtor affiliate in the bankruptcy filing. Certain other
subsidiaries of Genesis which supply the Fund's nursing centers with drugs,
medical supplies, and other services were also included in the bankruptcy
filing. The Fund does not expect that the Genesis bankruptcy filing will have an
impact on its operations, results of operations or financial position.
Three Months Ended June 30, 2000 versus Three Months ended June 30, 1999
Net earnings were $886,000 for the three months ended June 30, 2000 as
compared to $909,000 for the same period in the prior year representing a
decrease of $23,000 or 3.0%.
The Fund's second quarter 2000 revenues of $13,801,000 increased $1,175,000
or 9.3% over the same period in 1999. Medicare and Medicaid revenues increased
$1,050,000 with the remaining increase coming from the Private Patients and
Investment and other Income.
The $1,050,000 increase in Medicaid and Medicare revenue for the three
months ended June 30, 2000 as compared to the same period in 1999 is primarily
the result of a Medicaid rate increase and an increase in the number of Medicare
days. Medicaid revenue for the three months ended June 30, 2000 increased
$313,000 over the same period in 1999. This increase is primarily due to an
overall Medicaid rates increase of approximately 10.8% driven primarily by the
four Maryland centers. The Maryland centers received their annual rate
adjustment in July of 1999 and a second Medicaid rate increase in October 1999
which was implemented to reflect a modification to the state reimbursement
program. Medicare revenue increased $737,000 for the second quarter of 2000
compared to the same period in the prior year. The increase in Medicare revenue
is primarily due to the increase in Medicare census and the increased
utilization of Medicare Part B services. The Medicare census increased 1,755
days or approximately 16.0% for the second quarter of 2000 as compared to the
second quarter of 1999. Medicare Part B revenue of $190,152 increased $105,000
or 123.4% due to an increase in Part B utilization.
Second quarter 2000 expenses of $12,915,000 increased $1,198,000 or 10.2%
from the three months ended June 30, 1999.
Operating expenses increased $890,000 primarily due to a increase in the
cost of nursing services and ancillary costs. Nursing expenses overall increased
$446,000 for the second quarter 2000 compared to the same period in 1999. This
increase is due to increased salary and wages and an increase in the utilization
of temporary nurse staffing. For the quarter ended June 30, 2000 compared to the
same period in the prior year nursing salary and wages increased $106,000 and
temporary nurse staffing expenses increased $325,000. The increases in salary
and wages and the increased utilization of temporary nurse staffing is the
result of an overall shortage of nurses within the healthcare industry.
Ancillary expenses overall increased $248,000 for the second quarter of 2000
compared to the same period in 1999. This increase is primarily due to growth in
the Medicare census and the increased utilization of Medicare Part B services.
The remaining increase in operating cost is primarily due to general
inflationary cost increases.
Management and administrative fees increased $77,000 or 9.4% for the second
quarter of 2000 as compared to the same period in 1999. This growth in these
fees is caused by increased management fees expense. The growth in the
management fee is a result of increases in revenues as the management fee is
calculated as a percentage of the Fund's net revenues.
-10-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of operations (continued)
General and Administrative expense of $277,000 increased $40,000 or
approximately 16.9% for the second quarter of 2000 compared to the second
quarter of 1999. This increase is due to an increase in the cost of
administrative purchased services and the cost incurred during the quarter for a
medical director and legal fees.
Depreciation and amortization expense of $585,000 increased $98,000 for the
three months ended June 30, 2000 compared to the same period in the prior year.
Amortization expense increased $56,000 to recognize the amortization of the cost
of a mortgage extension. Depreciation expense increased $42,000 for the second
quarter of 2000 compared to the second quarter of 1999 due to the depreciation
of capital additions.
Interest expense for the second quarter of 2000 compared to the second
quarter of 1999 increased $93,000 or 22.8%. This increase is a result of
increases in the Fund's variable interest rate on the mortgage notes and
refinancing of the mortgage increasing the initial principal balance to
$24,000,000 at a higher interest rate. The refinancing was effective June 12,
2000.
Six Months Ended June 30, 2000 versus Six Months Ended June 30, 1999
Net earnings for the six Months ended June 30, 2000 were $1,404,000 representing
a decrease of $299,000 or 17.6% compared to the same period in 1999.
Fund revenues of $27,138,000 increased $2,205,000 or 8.8% during the six
months ended June 30, 2000 as compared to the same period in the prior year.
Medicaid and Medicare revenue increased $2,081,000 for the six month period
ended June 30, 2000 compared to the same period in 1999.
The $2,081,000 increase in Medicaid and Medicare revenue for the six months
ended June 30, 2000 as compared to the same period in 1999 is primarily the
result of a Medicaid rate increase and a increase in the number of Medicare
days. Medicaid revenue for the six months ended June 30, 2000 increased $735,000
over the same period in 1999. This increase is primarily due to an overall
Medicaid rates increase of approximately 10.6% driven primarily by the four
Maryland centers. The Maryland centers received their annual rate adjustment in
July of 1999 and a second Medicaid rate increase in October 1999 which was
implemented to reflect a modification to the state reimbursement program.
Medicare revenue increased $1,346,000 for the first half of fiscal year 2000
compared to the same period in the prior year. The increase in Medicare revenue
is primarily due to the increase in Medicare census and the increased
utilization of Medicare Part B services. The Medicare census increased 3,706
days or 17.7% for the six months end June 30, 2000 compared to the six months
ended June 30, 1999. Medicare Part B revenue of $322,953 increased $196,756 or
155.9% due to an increase in Part B utilization.
Overall expenses increased $2,504,000 or 10.8% to $25,734,000 for the six
months ended June 30, 2000 as compared to $23,230,000 for the same period in
1999.
Operating expenses of $21,396,000 increased $2,080,000 or 10.8% for the six
months ended June 30, 2000 as compared to the six months ended June 30, 1999.
This increase is primarily due to the increased cost of nursing services and
ancillary costs. Nursing costs increased $881,000 for the six months ended June
30, 2000 as compared to the same period in 1999. This increase is primarily due
to increases in salary and wages and the increased utilization of temporary
nurse staffing. Salary and wage expense for nurses increased $121,000 and
temporary nurse staffing expense increased $746,000 for the six months ended
June 30, 2000 compared to the same period in the prior year. The increases in
nursing salary and wages and utilization of temporary nurse staffing is a result
of an overall shortage of nurses within the healthcare industry. Ancillary
expenses increased $763,000 or 28.4% for the six months ended June 30, 2000
compared to the same period in 1999. This increase is primarily due to the
increase in the Medicare census and the increased utilization of Part B
ancillary services. The remaining increase in operating costs is primarily due
to annual inflationary increases.
-11-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of operations (continued)
Management and administrative fees increased $142,000 or 8.8% for the six
months ended June 30, 2000 as compared to the same period in 1999. This growth
in these fees is caused by increased management fees expense. The growth in the
management fee is a result of increases in revenues as the management fee is
calculated as a percentage of the Fund's net revenues.
Interest expense increased $126,000 for the six months ended June 30, 2000
as compared to the same period in the prior year. The increase is the result of
increases in the Fund's variable interest rate on the mortgage notes and the
refinancing of the mortgage increasing the beginning principal balance to
$24,000,000 at a higher interest rate. The refinancing was effective June 12,
2000.
Legislative and Regulatory Issues
Legislative and regulatory action has resulted in continuing changes in the
Medicare and Medicaid reimbursement programs. The changes have limited, and are
expected to continue to limit, payment increases under these programs. Also, the
timing of payments made under the Medicare and Medicaid programs is subject to
regulatory action and governmental budgetary constraints; in recent years, the
time period between submission of claims and payment has increased. Within the
statutory framework of the Medicare and Medicaid programs, there are substantial
areas subject to administrative rulings and interpretations which may further
affect payments made under those programs. Further, the federal and state
governments may reduce the funds available under those programs in the future or
require more stringent utilization and quality reviews of eldercare centers or
other providers. There can be no assurances that adjustments from Medicare or
Medicaid audits will not have a material adverse effect on the Fund.
-12-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Fund's long-term debt was converted to a fixed interest mortgage loan
effective June 12, 2000 and therefor there is no longer any exposed market risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities and Use of Proceeds
Inapplicable
Item 3. Defaults upon Senior Securities
Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
Item 5. Other Information
Inapplicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: Financial Data Schedule
b) Reports on Form 8-K: None
-13-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
DATE: 8/10/00 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Healthcare, Inc.
Administrative General Partner
DATE: 8/10/00 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown-Healthcare, Inc.
Administrative General Partner
-14-
