<PAGE>   1
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                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C 20549

[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 OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

Commission File Number 333-43549

                        EXTENDICARE HEALTH SERVICES, INC.

             (Exact Name of Registrant as Specified in its Charter)

         DELAWARE                         8051                   98-0066268
      (State or other                (Primary Standard        (I.R.S. Employer
      Jurisdiction of            Industrial Classification      Identification
Incorporation or Organization)          Code Number)                Number)

                            111 WEST MICHIGAN STREET
                            MILWAUKEE, WI 53203-2903
              (Address of Principal Executive Offices and Zip Code)

                                 (414) 908-8000
              (Registrant's telephone number, including area code)
                       SEE TABLE OF ADDITIONAL REGISTRANTS

--------------------------------------------------------------------------------


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
        ---     ---

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<PAGE>   2



                        EXTENDICARE HEALTH SERVICES, INC.
                                      INDEX

<TABLE>
<CAPTION>

     PART I.                                      FINANCIAL INFORMATION                                       PAGE
     ------                                       ---------------------                                       ----
<S>           <C>                                                                                             <C>
  Item 1      Condensed Financial Statements:



              Consolidated  Statements of Operations  for the three months and six months ended June 30, 2000     3
              and 1999

               Consolidated Balance Sheets June 30, 2000 and December 31, 1999                                    4

               Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999              5

               Notes to Condensed Consolidated Financial Statements                                               6


  Item 2      Management's Discussion and Analysis of Financial Condition and Results of Operation                8



  Item 3      Quantitative and Qualitative Disclosures about Market Risk                                          15


 PART II.     OTHER INFORMATION

  Item 1      Legal Proceedings                                                                                   17


  Item 2      Change in Securities                                                                                17


  Item 3      Defaults Upon Senior Securities                                                                     17


  Item 4      Submission of Matters to a Vote of Security Holders                                                 17


  Item 5      Other Information                                                                                   17


  Item 6      Exhibits and Reports on Form 8-K                                                                    17


SIGNATURES                                                                                                        18

</TABLE>






                                       2


<PAGE>   3



                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        EXTENDICARE HEALTH SERVICES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         THREE MONTHS      THREE MONTHS       SIX MONTHS         SIX MONTHS
                                                               ENDED          ENDED              ENDED             ENDED
                                                         JUNE 30, 2000    JUNE 30, 1999      JUNE 30, 2000      JUNE 30, 1999
                                                         -------------    -------------      --------------     -------------
<S>                                                      <C>              <C>                <C>                <C>
         REVENUES:
           Nursing and assisted living centers               $ 228,008        $ 234,164           $ 451,411       $ 462,010
           Medical supplies and outpatient therapy               2,414           12,971               4,980          24,386
           Other                                                 1,697            1,996               3,618           4,276
                                                             ---------        ---------           ---------       ---------
                                                               232,119          249,131             460,009         490,672

         COSTS AND EXPENSES:
           Operating                                           204,389          212,894             409,667         424,048
           General and administrative                           11,186           11,346              22,083          20,869
           Lease costs                                           4,145            5,155               8,563           9,800
           Depreciation and amortization                        11,466           12,769              22,885          25,476
           Interest expense                                     11,598           12,625              23,936          25,007
           Interest income                                        (421)            (464)               (631)           (818)
           Loss (gain) on disposal of assets and
            other items                                          1,531             (276)              1,726            (276)
                                                             ---------        ---------           ---------       ---------


         LOSS BEFORE PROVISION FOR INCOME TAXES                (11,775)          (4,918)            (28,220)        (13,434)


         Provision for income taxes                              3,892            1,656               9,815           4,364
                                                             ---------        ---------           ---------       ---------

         LOSS BEFORE MINORITY INTERESTS                         (7,883)          (3,262)            (18,405)         (9,070)

         Minority interests                                          -                6                   -              21
                                                             ---------        ---------           ---------       ---------

         NET LOSS                                            $  (7,883)       $  (3,256)          $ (18,405)      $  (9,049)
                                                             =========        =========           =========       =========

         PER COMMON SHARE:

          Net (loss) earnings per common share               $      (8)       $      (3)          $     (19)      $     (10)
                                                             =========        =========           =========       =========


         The  accompanying  notes are an integral part of these condensed  consolidated  financial statements.

</TABLE>





                                       3


<PAGE>   4



                        EXTENDICARE HEALTH SERVICES, INC.

                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2000 AND DECEMBER 31, 1999
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                ASSETS                                         JUNE 30, 2000             DECEMBER 31, 1999
                                                                               -------------             -----------------
                                                                                (UNAUDITED)
<S>                                                                           <C>                        <C>
 CURRENT ASSETS:
   Cash and cash equivalents                                                       $    2,731                   $    2,941
   Accounts receivable, less
        allowances of $27,198 and $24,949, respectively                               141,256                      148,348
   Inventories, supplies and prepaid expenses                                          12,579                        8,882
   Deferred state income taxes                                                          4,546                        4,185
   Debt service trust funds                                                               152                        1,934
   Due from shareholder -
       Federal income taxes receivable                                                  1,977                       47,813
       Deferred Federal income taxes                                                   19,622                       19,684
                                                                                   ----------                   ----------
       Total current assets                                                           182,863                      233,787

 PROPERTY AND EQUIPMENT, NET                                                          588,636                      610,343
 GOODWILL AND OTHER INTANGIBLE ASSETS, NET                                             85,058                       87,143
 OTHER ASSETS                                                                          43,237                       43,175
                                                                                   ----------                   ----------
                                                                                   $  899,794                   $  974,448
                                                                                   ==========                   ==========

                       LIABILITIES AND SHAREHOLDER'S EQUITY

 CURRENT LIABILITIES:
   Accounts payable, accrued liabilities and due to shareholder                    $  136,961                      145,235
   Current maturities of long-term debt                                                13,855                       21,705
   Bank indebtedness                                                                        -                        5,895
   Income taxes payable                                                                 1,820                        1,174
                                                                                   ----------                   ----------
       Total current liabilities                                                      152,636                      174,009


 ACCRUAL FOR SELF-INSURED LIABILITIES                                                  23,702                          -

 LONG-TERM DEBT                                                                       460,517                      508,450

 OTHER LONG-TERM LIABILITIES                                                            7,707                        8,451

 DUE TO SHAREHOLDER AND AFFILIATES
       Deferred Federal income taxes and other                                         31,775                       39,846

 DEFERRED STATE INCOME TAXES                                                            4,292                        5,141

 MINORITY INTERESTS                                                                        98                          656

 SHAREHOLDER'S EQUITY:
  Common stock, $1 par value, 1,000 shares authorized,
       947 shares issued and outstanding                                                    1                            1
  Additional paid-in capital                                                          208,787                      208,787
  Accumulated other comprehensive loss                                                 (3,513)                      (3,090)
  Retained earnings                                                                    13,792                       32,197
                                                                                   ----------                   ----------
       Total shareholder's equity                                                     219,067                      237,895
                                                                                   ----------                   ----------
                                                                                   $  899,794                   $  974,448
                                                                                   ==========                   ==========

                  The accompanying notes are an integral part of these condensed consolidated financial statements.

</TABLE>



                                        4


<PAGE>   5



                        EXTENDICARE HEALTH SERVICES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                          SIX MONTHS                     SIX MONTHS
                                                                            ENDED                          ENDED
                                                                        JUNE 30, 2000                  JUNE 30, 1999
                                                                        -------------                  -------------
<S>                                                                    <C>                            <C>
OPERATING ACTIVITIES:
Net loss                                                                  $(18,405)                       $ (9,049)
Adjustments to reconcile net loss to net cash
      Provided from operating activities:
      Depreciation and amortization                                         23,863                          26,527
      Provision for uncollectible accounts receivable                        4,745                           7,163
      Provision for self-insured liabilities                                24,000                            --
      Payment of self-insurance liability claims                              (298)                           --
      Loss  on disposal of assets and other items                            1,726                            (609)
      Deferred income taxes                                                 (8,936)                         (1,947)
      Minority interests                                                      --                               (21)

Changes in assets and liabilities:
      Accounts receivable                                                      106                           9,310
      Inventories, supplies and prepaid expenses                            (3,593)                            236
      Debt service trust funds                                               1,782                              30
      Accounts payable and accrued liabilities                              (6,970)                        (22,542)
      Income taxes payable/receivable                                          646                          (3,420)
                                                                          --------                        --------
       Cash provided from operating activities                              18,666                           5,678

INVESTING ACTIVITIES:
      Payments for purchase of property and equipment                       (6,110)                        (13,658)
      Proceeds from sale of property and equipment                           3,176                           4,465
      Income taxes recovered (paid) on disposal of assets                    47283                         (25,000)
      Changes in other non-current assets                                   (1,787)                         (3,282)
                                                                          --------                        --------
       Cash provided from (used for) investing activities                   42,562                         (37,475)


FINANCING ACTIVITIES:
      Proceeds from issuance of long-term debt                               3,048                          50,000
      Other long-term liabilities                                             (745)                         (4,269)
      Payments of long-term debt                                           (57,287)                        (13,585)
      Bank indebtedness                                                     (5,895)                           --
      Distribution of minority interests' earnings                            (559)                            (51)
                                                                          --------                        --------
       Cash (used for) provided from financing activities                  (61,438)                         32,095
                                                                          --------                        --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                              (210)                            298

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD                                2,941                           1,084
                                                                          --------                        --------
CASH AND CASH EQUIVALENTS END OF PERIOD                                   $  2,731                        $  1,382
                                                                          ========                        ========


            The accompanying notes are an integral part of these condensed consolidated financial statements.

</TABLE>


                                       5

<PAGE>   6



              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in Thousands)
                                   (Unaudited)

1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The accompanying financial statements reflect the operations of Extendicare
Health Services, Inc. ("Extendicare" or the "Company"). Extendicare, a Delaware
corporation is a wholly owned subsidiary of Extendicare Inc., a Canadian
Corporation.

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the Company and
its majority-owned subsidiaries. All transactions between Extendicare and its
majority-owned subsidiaries have been eliminated.

The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. The accompanying
condensed consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
the footnotes required by generally accepted accounting principles for complete
statements. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ended
December 31, 1999 contained in the Company's Annual Report in Form 10-K.




                                       6



<PAGE>   7



2- RECENTLY ISSUED ACCOUNTING STANDARD

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133's effective date
was delayed one year under recently issued SFAS 137. Thus, the effective date
for SFAS 133 is for all fiscal quarters of fiscal years beginning after June 15,
2000. SFAS No. 133 requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is not expected to significantly impact
the Company's reporting and disclosures.

3- COMMITMENTS AND CONTINGENCIES

Capital Expenditures

    As of June 30, 2000, the Company had capital expenditure purchase
commitments outstanding of approximately $3,835.

Reimbursement

    The Company is unable to predict whether the Federal or any state government
will adopt changes in their reimbursement systems, or if adopted and
implemented, what effect such initiatives would have on the Company. Limitations
on Medicare and Medicaid reimbursement for health care services are continually
proposed. Changes in applicable laws and regulations could have an adverse
effect on the levels of reimbursement from governmental, private, and other
sources.

Insurance

    The Company insures certain risks with affiliated insurance subsidiaries of
Extendicare, Inc. The cost of general and professional liability insurance
premiums was the most significant insurance expense charged to the Company by
the affiliates. In 2000 and 1999, the premiums charged to the Company for this
general and professional liability coverage increased significantly due to
adverse claims development experienced by the affiliates. Consequently,
effective January 1, 2000, the Company's per claim retained risk increased
significantly, which could have a material effect on the future operating
results and liquidity of the Company.

Litigation

    The Company and its subsidiaries are defendants in actions brought against
them from time to time in connection with their operations. While it is not
possible to estimate the final outcome of the various proceedings at this time,
such actions generally are resolved within amounts provided.

The U.S. Department of Justice and other Federal agencies are increasing
resources dedicated to regulatory investigations and compliance audits of
health-care providers. The Company is diligent to these regulatory efforts.



                                       7

<PAGE>   8



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATION

    The Company is one of the largest providers of long-term care and related
services in the United States. The Company operated 190 nursing (19,523
operational beds) and 46 assisted living and retirement facilities (2,085 units)
at June 30, 2000. The Company's facilities are located in 14 states.

SIGNIFICANT EVENTS IN 2000 AND 1999

    The following is a summary of significant events in the six months ended
June 30, 2000 and June 30, 1999, respectively.

LOSS ON DISPOSAL OF ASSETS AND OTHER ITEMS

    On June 30, 2000, the lease at one of the Company's nursing homes (75
operational beds) expired and was not renewed. Certain equipment assets of the
Company were sold for $.1 million.

    The Company sold a previously closed nursing facility on May 15, 2000 for
$2.0 million and another previously closed nursing facility on June 9, 2000 for
$0.7 million. The sales resulted in pretax losses of $0.5 million and $1.1
million, respectively. On February 29, 2000, the Company sold seven outpatient
therapy facilities for $0.6 million. The sale resulted in a pretax loss of $0.1
million. The Company applied the net after-tax proceeds of $2.0 million to
reduce debt.

    The Company sold six nursing facilities (763 operational beds) for $40.5
million on December 30, 1999; two nursing facilities (150 operational beds) for
$4.8 million on September 30, 1999; and one nursing facility (248 operational
beds) for $4.3 million on June 30, 1999. The sales resulted in an aggregate
pretax loss of $35.4 million. In addition, on November 30, 1999 the Company sold
its home health operation for $12.7 million resulting in a pretax loss $1.6
million. The Company applied the net after-tax proceeds from these dispositions
of $44.8 million to reduce debt in the following periods: $3.1 million in July;
$4.6 million in October; $10.0 million in November and $27.1 million in
December.

RESULTS OF OPERATIONS

    The following table sets forth details of revenues and earnings as a
percentage of total revenues:

<TABLE>
<CAPTION>
                                                                       THREE MONTHS        SIX MONTHS
                                                                           ENDED             ENDED
                                                                          JUNE 30           JUNE 30
                                                                    ------------------ -------------------
                                                                      2000     1999      2000      1999
                                                                    -------- --------  --------  --------
<S>                                                                 <C>      <C>       <C>       <C>
             Revenues
               Nursing and assisted living centers.............        98.2%    94.0%     98.1%     94.2%
               Medical supplies and outpatient therapy.........         1.0      5.2       1.1       5.0
               Other...........................................         0.8      0.8       0.8       0.8
                                                                      -----    -----     -----     -----
                                                                      100.0    100.0     100.0     100.0
             Operating and general and administrative costs....        92.9     90.0      93.8      90.7
             Lease, depreciation and amortization..............         6.7      7.2       6.8       7.2
             Interest, net.....................................         4.8      4.9       5.1       4.9
             Loss (gain) on disposal of assets and other items.         0.7     (0.1)      0.4      (0.1)
                                                                      -----    -------   -----     -------
             (Loss) before taxes...............................        (5.1)    (2.0)     (6.1)     (2.7)
             (Benefit) from income taxes.......................        (1.7)    (0.7)     (2.1)     (0.9)
                                                                      -----    ------    -----     ------
               Net (loss)......................................        (3.4)    (1.3)     (4.0)     (1.8)
                                                                      =====    ======    =====     ======
</TABLE>


REVENUES

    The Company's revenues are derived through the provision of healthcare
services in its network of facilities, including long-term care services such as
skilled nursing care, assisted living and other specialized medical services
such as subacute care, rehabilitative therapy and, prior to November, 1999, the
provision of medical equipment, supplies and services. Nursing and assisted
living center revenues are derived from the provision of routine and ancillary
services for the Company's residents. Medical supplies and outpatient therapy
revenues are derived from providing medical supplies and outpatient therapy
services to outpatients and individuals in their own home.






                                       8



<PAGE>   9


The Company derives its revenue from Medicare, Medicaid and private pay sources.
The following table sets forth the Company's private pay, Medicare and Medicaid
sources of revenue by percentage of total revenue:

<TABLE>
<CAPTION>
                                                 THREE MONTHS       SIX MONTHS
                                                     ENDED             ENDED
                                                    JUNE 30           JUNE 30
                                              ------------------ ------------------
                                                2000      1999     2000     1999
                                              --------  -------- -------- --------
<S>                                          <C>      <C>       <C>       <C>
                   Private Pay..........         37%       35%      37%      36%
                   Medicare.............         21%       24%      21%      23%
                   Medicaid.............         42%       41%      42%      41%

</TABLE>


    Effective January 1, 1999, all of the Company's facilities were on the
Medicare Prospective Payment System (PPS), most of which were subject to the
three-year phase-in provisions. On November 16, 1999, Congress and the President
reached agreement on a package of Medicare program revisions that restored some
of the long-term care industry funding that had been eliminated or excluded by
the Balanced Budget Act. The Balanced Budget Refinement Act ("BBRA"), signed
into law on November 29, 1999, made numerous revisions over the next three years
to both Medicare Part A and Part B which affect the Company. The Part A
revisions included a 20% increase in the revenue value for the Federal component
of the blended rate (homes subject to the full Federal rate) for 15 of the 44
RUGs categories. The increase was initially for a six month period commencing
April 1, 2000 but during July 2000 was extended for an additional 12 months. A
favorable impact on revenue through June 30, 2000 is estimated at $2.2 million.
In addition, the revenue values for the Federal component of the blended rate
for all of the RUGs will be increased by 4% with an effective date of October 1,
2000 through September 30, 2002. The 4% is in addition to the PPS annual
inflation update of the HCFA market basket minus 1 point. Also, effective
January 1, 2000, facilities receiving a phase-in PPS rate will be given the
option of moving to the full Federal PPS rate. The Company has identified 18
facilities that will benefit from the full Federal PPS rate and has filed the
necessary applications for this to occur. Certain other Part A changes, of
lesser significance to the Company, are included in the BBRA. The Part B
revision is the placement of a two year moratorium on the $1,500 cap on speech,
physical and occupational therapy. The moratorium is effective on January 1,
2000 and applies to home health, therapy clinics, and nursing homes. The Part B
revision has a favorable impact on the Company's revenue.

    Average occupancy in nursing facilities for the six months ended June 30,
2000 and 1999 was 87.1% and 85.8%, respectively; and for assisted living
facilities, 84.2% and 78.3%, respectively.

Medical supplies and outpatient therapy revenue decreased $19.4 million
resulting from the disposal of operations in 2000 and 1999.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999

REVENUES

    Revenues in the three months ended June 30, 2000 were $232.1 million,
representing a decrease of $17.0 million (6.8%) from $249.1 million in the three
months ended June 30, 1999. The decrease in revenues of $17.0 million included
reductions in nursing and assisted living centers revenues of $6.1 million,
medical supplies and outpatient therapy revenues of $10.6 million and other
revenues of $0.3 million.

    The decrease in nursing and assisted living centers revenues of $6.1 million
included a decrease of $16.1 million from divestitures, net of the opening of
newly constructed facilities. Revenues from facilities which the Company
operated during each of 2000 and 1999 ("same-facility"), increased $10.0 million
(4.6%) when comparing periods. Same-facility revenues increased approximately
$2.4 million as a result of the accrual in June for blood glucose revenue for
the period of October 1, 1997 through June 30, 2000 due to favorable rulings
regarding reimbursement litigation with the Company's intermediary. The
remaining $7.6 million increase in same-facility revenues was due to improvement
in mix and increased rates. The Company's average daily Medicare Part A rate
declined to $302 in the second quarter of 2000 compared to $323 in the
comparable 1999 period. This was offset by improvements in the Medicaid and
private pay rates.

    The decrease in medical supplies and outpatient therapy revenues of $10.6
million (81.4%) resulted from divestitures during 2000 and 1999. The most
significant impact was $7.8 million attributable to the home health operation
divestiture, which took place in the fourth quarter of 1999.

OPERATING AND GENERAL AND ADMINISTRATIVE COSTS



                                       9


<PAGE>   10


    Operating and general and administrative costs decreased $8.7 million or
3.9% between periods. The decrease included decreases in costs relating to
divestitures and closed operations, net of acquisitions and newly constructed
facilities, of approximately $25.6 million. The remaining increase in operating
and general and administrative costs of $16.9 million (8.7%) included an
increase in wage-related costs of $14.2 million, offset partially by a decrease
in costs of $11.0 million due to the reduction in contract therapists, and an
increase in insurance expense and liability costs of $13.7 million. The increase
in wage-related costs included increases of $13.8 million due to staffing of
internal therapists at the nursing facilities replacing the contract therapists,
along with incentives to attract and retain qualified personnel and an increase
in workers' compensation costs of $0.4 million due to higher premiums in 2000.
Insurance and liability claim costs increased $13.7 million due to first-time
liability deductibles and increased premiums due to claim experience.

LEASE COSTS, DEPRECIATION AND AMORTIZATION

    Total lease costs and depreciation and amortization decreased $2.3 million
when comparing 2000 to 1999. Lease costs decreased $1.0 million including $0.6
million as a result of divestitures and $0.4 million due to capitalization of a
computer lease obligation which had been accounted for as an operating lease
during the second quarter of 1999. Depreciation and amortization expense
decreased $1.3 million primarily due to the related goodwill of the 1999
divestitures of the home health operation and six nursing facilities in Florida.

INTEREST

    Net interest expense decreased $1.0 million to $11.2 million in the three
months ended June 30, 2000 compared with $12.2 million in the comparable period
in 1999. The decrease was primarily due to a decease in the average debt level
to $479.8 million during the second quarter of 2000 compared to $585.9 million
during the second quarter of 1999 resulting from the Company's use of various
2000 and 1999 divestiture proceeds to pay-down debt. This was partially offset
by an increase in the weighted average interest rate of all long-term debt to
9.67% during the second quarter of 2000 compared to approximately 8.62% during
the second quarter of 1999.

LOSS ON DISPOSAL OF ASSETS AND OTHER ITEMS

    The Company sold a previously closed nursing facility on May 15, 2000 and
another previously closed nursing facility on June 9, 2000 for $2.0 million and
$0.7 million, respectively. The sales on the two facilities resulted in a pretax
loss of $1.5 million. In 1999, the Company sold a nursing facility for $4.3
million resulting in a pretax gain of $0.6 million. In addition, the Company
recorded $0.3 million in severance costs related to certain staff reductions in
1999.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND RENT ("EBITDAR")

    EBITDAR declined to $16.5 million in the second quarter of 2000 from $24.9
million in the comparable period in 1999 and represented 7.1% and 10.0%,
respectively, of revenue. While the Company succeeded in reducing costs in
excess of reductions in Medicare PPS rates, declines in EBITDAR were realized
primarily due to loss of earnings from asset dispositions in 2000 and 1999 and
increased insurance costs.

START-UP COSTS

    The Company has absorbed pre-tax start-up losses associated with newly
constructed facilities in the second quarter of 2000 of $0.6 million compared to
$1.3 million in the second quarter of 1999. The $0.7 million decrease when
comparing periods was due to the timing of facility openings in 2000 versus
1999.






                                       10



<PAGE>   11


INCOME TAXES

    Income tax benefits in the three months ended June 30, 2000 increased to
$3.9 million from $1.6 million benefit in the comparable period in 1999 as a
result of increased losses.


NET LOSS

    The net loss in the three months ended June 30, 2000 was $7.9 million
compared to a net loss of $3.3 million in the comparable period in 1999. The net
loss prior to loss on disposal of assets and other items was $6.9 million for
the three months ended June 30, 2000 compared to net loss of $3.4 million in the
comparable period in 1999, a decrease of $3.5 million.


SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

REVENUES

    Revenues in the six months ended June 30, 2000 were $460.0 million,
representing a decrease of $30.7 million (6.2%) from $490.7 million in the six
months ended June 30, 1999. The decrease in revenues of $30.7 million included
reductions in nursing and assisted living centers revenues of $10.6 million,
medical supplies and outpatient therapy revenues of $19.4 million and other
revenues of $0.7 million.

    The decrease in nursing and assisted living centers revenues of $10.6
million included a decrease of $32.0 million from divestitures, net of the
opening of newly constructed facilities. Revenues from facilities, which the
Company operated during each of 2000, and 1999 ("same-facility"), increased
$21.4 million (5.1%) when comparing periods. Same-facility revenues increased
approximately $2.4 million as a result of one more day in 2000 when compared to
1999. Same-facility revenues, on a same-day basis, increased $19.0 million
including $2.4 million as a result of the accrual for blood glucose revenue for
the period of October 1, 1997 through June 30, 2000 due to favorable rulings
regarding reimbursement litigation with the Company's intermediary. The
remaining $16.6 million increase is primarily due to improvement in mix and
increased rates. The Company's average daily Medicare Part A rate declined to
$296 in the second quarter of 2000 compared to $323 in the comparable 1999
period. This was offset by improvements in the Medicaid and private pay rates.

    The decrease in medical supplies and outpatient therapy revenues of $19.4
million (79.6%) resulted from divestitures during 2000 and 1999 (primarily home
health operations of $15.6 million).

OPERATING AND GENERAL AND ADMINISTRATIVE COSTS

    Operating and general and administrative costs decreased $13.2 million or
3.0% between periods. The decrease included decreases in costs relating to
divestitures and closed operations, net of acquisitions and newly constructed
facilities, of approximately $50.5 million. The remaining increase in operating
and general and administrative costs of $37.3 million (9.7%) included an
increase in wage-related costs of $32.8 million, offset partially by a decrease
in costs of $23.1 million due to the reduction in contract therapists, and an
increase in insurance expense and liability costs of $27.6 million. The increase
in wage-related costs included increases of $31.6 million due to staffing of
internal therapists at the nursing facilities replacing the contract therapists,
along with incentives to attract and retain qualified personnel and an increase
in workers' compensation costs of $1.2 million due to higher premiums in 2000.
Insurance and liability claim costs increased $27.6 million due to first-time
liability deductibles and increased premiums due to claim experience.

LEASE COSTS, DEPRECIATION AND AMORTIZATION

    Total lease costs and depreciation and amortization decreased $3.8 million
when comparing 2000 to 1999. Lease costs decreased $1.2 million as a result of
divestitures. Depreciation and amortization expense decreased $2.6 million
primarily due to the related goodwill of the 1999 divestitures of the home
health operation and six nursing facilities in Florida.

INTEREST



                                       11


<PAGE>   12



    Net interest expense decreased $0.9 million to $23.3 million in the six
months ended June 30, 2000 compared with $24.2 million in the comparable period
in 1999. The decrease was primarily due to a decrease in the average debt level
to $503.0 million during the first six months of 2000 compared to $586.0 million
during the first six months of 1999 resulting from the Company's use of various
2000 and 1999 divestiture proceeds and income tax refund to pay-down debt. This
was partially offset by an increase in the weighted average interest rate of all
long-term debt to approximately 9.52 % during the first six months of 2000
compared to approximately 8.53% during the first six months of 1999. Less
favorable investment earnings and fewer investments in 2000 compared to 1999
also affected net interest expense.

LOSS (GAIN) ON DISPOSAL OF ASSETS AND OTHER ITEMS

    The Company sold a previously closed nursing facility for $2.0 million on
May 15, 2000 and another previously closed nursing facility for $0.7 million on
June 9, 2000 resulting in losses of $0.5 million and $1.1 million, respectively,
before taxes. The Company sold seven outpatient therapy facilities for $0.6
million on February 29, 2000 resulting in a pre-tax loss of $0.1 million. The
sale of a Florida Certificate of Need during 2000 resulted in a pretax gain of
$0.3 million while severance costs for non-essential personnel resulted in a
loss of $0.4 million. In 1999 the Company sold a nursing facility for $4.3
million resulting in a pretax gain of $0.6 million and recorded $0.3 million in
severance costs related to certain staff reductions.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND RENT ("EBITDAR")

    EBITDAR declined to $28.3 million in the first six months of 2000 from $45.8
million in the comparable period in 1999 and represented 6.1% and 9.3%,
respectively, of revenue. While the Company succeeded in reducing costs in
excess of reductions in Medicare PPS rates, declines in EBITDAR were realized
primarily due to loss of earnings from asset dispositions in 2000 and 1999 and
increased insurance costs.

START-UP COSTS

    The Company has absorbed pre-tax start-up losses associated with newly
constructed facilities in the first six months of 2000 of $1.0 million compared
to $2.6 million in the first six months of 1999. The $1.6 million decrease when
comparing periods was due to the timing of facility openings in 2000 versus
1999.



                                       12



<PAGE>   13


INCOME TAXES

    Income tax benefit in the six months ended June 30, 2000 increased to a $9.8
million from $4.4 million in the comparable period in 1999 as a result of
increased losses.


NET LOSS

    The net loss in the six months ended June 30, 2000 was $18.4 million
compared to a net loss of $9.0 million in the comparable period in 1999. The net
loss prior to loss on disposal of assets and other items was $17.3 million for
the six months ended June 30, 2000 compared to net loss of $9.2 million in the
comparable period in 1999, a decrease of $8.1 million.

POTENTIAL ASSET DISPOSITION

    The Company is presently negotiating the sale of certain assets in Florida.
The dispositions are subject to a number of contingencies, including approval of
the Company's banking group. If completed, the sales will likely result in a
loss to the Company in the range of $10 million to $30 million. The Company has
not recorded a further write-down of the assets at June 30, 2000 because of the
uncertainty of completion of the sales and the fact that projected cash flows of
the assets are sufficient to recover their carrying value.

LIQUIDITY AND CAPITAL RESOURCES

    The Company had cash and cash equivalents of $2.7 million at June 30, 2000
and $2.9 million at December 31, 1999. Cash flow generated from operations
before working capital changes was $26.7 million for the six months ended June
30, 2000 compared with cash flow generated from operations of $22.1 million in
the comparable period of 1999. The increase in cash flow from operations is the
result of an increase in operating earnings before provision for self-insured
liabilities.

    Overall cash from operating activities was $18.7 million for the six months
ended June 30, 2000 as compared to $5.6 million in the first six months of 1999.
The Company experienced a decrease in working capital since December 31, 1999,
excluding cash and borrowings included in current liabilities, of $43.1 million.

    The decrease in working capital resulted from a decrease in taxes
recoverable of $46.2 million, a decrease in accounts receivable of $7.1 million,
and a $1.8 million decrease in current trust funds. These decreasing components
of working capital were partially offset by an increase in inventories, supplies
and prepaid expenses of $3.7 million, a $6.4 million decrease in accounts
payable and accrued liabilities, and a decrease in insurance due to affiliates
and other amounts due to shareholder of $1.4 and $0.5 million, respectively.

    Taxes recoverable decreased from $70.5 million at December 31, 1999 to $24.3
million at June 30, 2000, representing a decrease of $46.2 million. The decrease
was due to a tax refund of $47.3 million partially offset by a current year tax
benefit of $1.1 million.

    Accounts receivable at June 30, 2000, were $141.2 million compared with
$148.3 million at December 31, 1999, representing a decrease of $7.1 million.
The reduction in accounts receivable included a $1.7 million decrease within the
nursing operations and a decline of $5.4 million within the medical supplies and
outpatient therapy operations. Billed patient care and other receivables
decreased $9.1 million while third-party payer settlement receivables increased
$7.4 million within the nursing operations. The decrease in billed patient care
receivables of $9.1 million included a decrease of $10.2 million due to an
improvement in collection efforts by the Company between periods. The remaining
increase of $1.1 million reflects an increase of $9.8 million due to rate
increases, partially offset by a decrease of $8.7 million due to the sale or
closure of nursing facilities. The increase in settlement receivables of $7.4
million between periods included increases of $1.6 million for anticipated
Medicare reimbursement for uncollectible coinsurance amounts and $10.6 million
as a result of Medicare cost report settlements. These increases were offset by
collections from Medicare for 1999 uncollectible coinsurance amounts of $2.9
million, $1.3 million as a result of Medicaid settlements and $0.6 million of
collections from Pennsylvania for prior years rate increases. The decrease in
medical supplies and outpatient therapy receivables of $5.4 million between
periods is due to a reduction in home health receivables of $6.5 million
resulting from the sale of this operation in November, 1999, partially offset by
an increase of other receivables of $1.1 million.

    Property and equipment decreased $21.7 million from December 31, 1999 to a
total of $588.6 million at June 30, 2000. The decrease was the result of
depreciation expense of $21.1 million, asset disposals of $5.3 million and a
decrease in equipment of $1.2 million resulting from the buy-out of a capital
lease. These decreases were offset by capital expenditures and asset transfers
of $5.9 million.




                                       13


<PAGE>   14

    Total borrowings, including bank indebtedness and both current and long-term
maturities of debt, totaled $474.4 million at June 30, 2000 for a decrease of
$61.7 million from December 31, 1999. The decrease was attributable to the use
of $25.0 million from a tax refund and $2.0 from the sale of a nursing facility
to paydown the Tranche A and Tranche B term loans, the payment of a mortgage
loan of $1.7 million using funds from a previously established trust fund,
draw-downs on the Revolving Credit Facility of $18.0 million and the use of
operating cash to reduce bank indebtedness and the current debt for scheduled
repayments. The weighted average interest rate of all long-term debt was 8.71%
at June 30, 2000 and such debt had maturities ranging from 2000 to 2014.

    During the second quarter of 1999, the Company amended its Senior Credit
Facility. The terms of the amendments to the Credit Facility included a
provision by which the Company waived its right to $25.0 million of the
Revolving Credit Facility, and increased the applicable interest rate margins to
the pricing matrix pertaining to the Company's Revolving Credit Facility and
Tranche A Term Loan, such that the interest rate would range from 0.75% to 2.75%
for Eurodollar loans and 0.50% to 2.00% for base rate loans. The applicable
margin for the Tranche B Term Loan increased to 3.00% for Eurodollar loans and a
range of 1.25% to 2.75% for base rate loans. As of June 30, 2000, the applicable
margin under the Revolving Credit Facility and Tranche A Term Loan were 2.50%
for Eurodollar loans and 1.75% for base rate loans, and the applicable margin
under the Tranche B Term Loan was 3.00% for Eurodollar loans and 2.50% for base
rate loans. On March 16, 2000 the Company negotiated specific terms in the
Credit Facility relating to the accounting of provisions for Medicare cost
report settlements and non-cash provisions for general and professional
liability claims.

    At June 30, 2000 the Company had a $200 million Revolving Credit Facility,
of which the Company waived access to $25 million, pursuant to the terms
negotiated in the second quarter of 1999. Borrowing availability under this line
of credit totaled $35.5 million at June 30, 2000 (net of letters of credit in
the amount of $36.5 million and the $25.0 million undrawn and unavailable
requirement per the amendment to the Senior Credit Facility).






                                       14



<PAGE>   15



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Qualitative Disclosures

Objectives and Context

The Company uses variable-rate debt to finance its operations. In particular, a
portion of the Company's long-term debt obligation is based upon floating LIBOR
rates. These debt obligations expose the Company to variability in interest
payments due to changes in interest rates. If interest rates increase, interest
expense increases. Conversely, if interest rates decrease, interest expense also
decreases.


Management believes that due to both the current divestiture strategy and
interest rate environment that it is prudent to limit the variability of a
portion of its interest payments. It is the Company's objective to hedge between
50 to 80 % of total variable-rate debt.

Furthermore, the Company also holds stock and stock warrants obtained in
connection with the 1998 sale of the Company's pharmacy operations. In effect,
these holdings can be considered contingent purchase price whose value, if any,
may not be realized for several years. These stock and warrant holdings are
subject to various trading and exercise limitations and will be held until such
time that management believes the market opportunity is appropriate to trade or
exercise such holdings.

Financing Strategies

To meet these objectives, management enters into various types of derivative
instruments to manage fluctuations in cash flows resulting from interest rate
risk. These instruments consist of interest rate swaps. The interest rate swaps
change the variable rate cash-flow exposure on the long-term interest payments
to fixed-rate cash flows by entering into receive-variable, pay-fixed interest
rate swaps. Under the interest rate swaps, the Company receives variable
interest rate payments and makes fixed interest rate payments, thereby creating
fixed-rate long-term debt.


With respect to the stock and warrant holdings, management monitors the market
to adequately determine the appropriate market timing to act in order to
maximize the value of these instruments. With the exception of the above
holdings, the Company does not enter into derivative instruments for any purpose
other than cash flow hedging purposes. That is, the Company does not speculate
using derivative instruments and does not engage in trading activity of any
kind.

Risk Management Policies

The Company assesses interest rate cash flow risk by continually identifying and
monitoring changes in interest rate exposures that may adversely impact expected
future cash flows and by evaluating hedging opportunities.

Quantitative Disclosures

The Company is a party to several interest rate swap agreements to reduce the
impact of changes in interest rates on certain of its floating rate long-term
debt. The first agreement, entered into in 1995, effectively changes the
Company's interest rate exposure on $32 million of floating rate Industrial
Development Bonds due in 2014 to a fixed rate of 4.155% through October 2000.
During 1998, the Company entered into five agreements (each $50 million of
notional value) with three banks which effectively changes the interest rates on
LIBOR based borrowings to fixed rates ranging from 5.53% to 5.84% plus
applicable margins, for periods over three to seven years. The differential
between the fixed rates and the variable rate interest to be paid or received
will be accrued as interest rates change and recognized over the life of the
agreement. The Company may be exposed to credit loss in the event of
non-performance by the banks under the swap agreements but does not anticipate
such non-performance. In 1999, the Company terminated three agreements (each $50
million in notional value) reducing its hedging period from seven to four years.
The first two agreements were disposed of at no cost or material gain to the
Company. The third termination resulted in a cash payment to the Company of $0.3
million which is being amortized over the term of the underlying credit
agreement. Management will continue to monitor the interest rate exposure and
adjust hedging levels to reflect outstanding debt levels. Interest income for
the quarter ended June 30, 2000 includes $0.2 million of net income, resulting
in year-to-date income of $0.3 million. The component of this amount relating to
the hedges' ineffectiveness was not deemed material.



                                       15



<PAGE>   16



Since the Company has not adopted Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities," changes
in the fair value of interest rate swaps designed to hedge the variability of
cash flows associated with the floating-rate, long-term debt obligations are not
reported in accumulated other comprehensive income (AOCI). In addition, the
Financial Accounting Standards Board has voted to delay the effective date of
this statement to years beginning after June 15, 2000. If this statement were
adopted as of June 30, 2000, AOCI would reflect a gain of $1.6 million based
upon quoted market prices provided by the financial institutions which are
counterparts to the swaps. Changes in the fair values of the stock and warrant
holdings are reported in AOCI net of related deferred tax accruals required
under Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The amount reflected in AOCI
for 2000 related to stock and warrant holdings equals a loss of $0.7 million.
The estimated net amount of the gains or losses that are expected to be
reclassified into earnings within the next 12 months is uncertain due to the
uncertainty of stock market conditions and the interest rate environment.

As of June 30, 2000, the maximum length of time over which the Company is
hedging its exposure to the variability in future cash flows associated with
variable-rate, long-term debt is four years from the inception date of the swap
agreement.

The table below presents principal (or notional) amounts and related weighted
average interest rates by year of maturity for the Company's debt obligations
and interest rate swaps.

<TABLE>
<CAPTION>

                           ----------------------------------------------------------------------------------------
                                                                                                           FAIR
                           2000      2001        2002       2003       2004       THEREAFTER   TOTAL       VALUE
                           ----------------------------------------------------------------------------------------
<S>                       <C>       <C>         <C>        <C>        <C>        <C>          <C>         <C>
Long-term Debt
   Fixed Rate              4,439     1,770       675        676        259        207,712      215,531     203,960
   Average Interest Rate   9.28%     9.30%       9.30%      9.31%      9.31%      9.31%        9.30%
   Variable Rate           4,366     9,690       10,901     113,915    83,651     36,318       258,841     240,282
   Average Interest Rate   8.77%     8.76%       8.74%      8.33%      5.13%      5.13%        7.47%
Interest Rate Swaps
   Variable to Fixed       32,000    0           50,000     50,000     0          0            132,000     1,633
   Average Pay Rate        5.28%     5.63%       5.63%      5.735%     0.00%      0.00%        5.57%
   Average Receive
    Rate                   6.32%     6.83%       6.83%      6.83%      0.00%      0.00%        6.70%

</TABLE>



The above table incorporates only those exposures that exist as of June 30, 2000
and does not consider those exposures or positions which could arise after that
date or future interest rate movements. As a result, the information presented
above has limited predictive value. The Company's ultimate results with respect
to interest rate fluctuations will depend upon the exposures that arise during
the period, the Company's hedging strategies at the time and interest rate
movements.






                                       16


<PAGE>   17



PART II

                                OTHER INFORMATION

ITEM 1. Legal Proceedings

    There are no material pending legal proceedings other than litigation
    arising in the ordinary course of business. Management believes, on the
    basis of information furnished by legal counsel, that none of these actions
    will have a material effect on the financial position results of operations
    of the Company.

ITEM 2. Change in Securities

    None

ITEM 3. Defaults Upon Senior Securities

    None

ITEM 4. Submission of Matters to a Vote of Security Holders

    None

ITEM 5. Other Information

    None

ITEM 6. Exhibits and Reports on Form 8-K

(a) List of Exhibits:

   11.0 Computation of earnings per share for the three months and six months
        ended June 30, 2000.

   27.0 Financial Data Schedule

(b) Reports on Form 8-K

    There were no reports on Form 8-K filed during the three months ended June
30, 2000.




                                       17




<PAGE>   18



                        EXTENDICARE HEALTH SERVICES, INC.

                                  EXHIBIT INDEX

Exhibit No.        Description


    11.0 Computation of earnings per share for the three months and six months
         ended June 30, 2000.

    27.0 Financial Data Schedule

                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

EXTENDICARE HEALTH SERVICES, INC.

Date: August 14, 2000                  By: /s/  Mark W. Durishan
                                        Mark W. Durishan
                                        Vice President, Chief Financial Officer,
                                        Treasurer and Director (principal
                                        financial officer and principal
                                        accounting officer)



                                       18