<PAGE>   1
                                                                   EXHIBIT 99.1


                  SYNCARE, INC. AND SUBSIDIARIES

                  Consolidated Financial Statements

                  June 30, 1996

                  (With Independent Auditors' Report Thereon)



<PAGE>   2











                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
SynCare, Inc.:


We have audited the accompanying consolidated balance sheet of SynCare, Inc. and
subsidiaries (the Company) as of June 30, 1996 and the related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SynCare, Inc. and
subsidiaries as of June 30, 1996 and the results of their operations and their
cash flows for the year then ended in conformity with generally accepted
accounting principles.







Orange County, California
September 11, 1996


                                       
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                         SYNCARE, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                  June 30, 1996




                                     ASSETS

<TABLE>
<S>                                                                   <C>       
Current assets:
   Cash and cash equivalents                                          $   53,335
   Accounts receivable, less allowance for doubtful accounts           1,184,840
    of $100,000 (note 2)
   Prepaids                                                               11,708
                                                                      ----------
        Total current assets                                           1,249,883

Furniture and equipment                                                   50,056
Other noncurrent assets                                                   31,959
                                                                      ----------
         Total Assets                                                 $1,331,898
                                                                      ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities                           $  488,336
   Income tax payable (note 5)                                            81,067
   Deferred tax liability, net (note 5)                                    5,172
   Amount due to Medicare (note 3)                                       548,219
                                                                      ----------
        Total current liabilities                                      1,122,794
                                                                      ----------
Shareholders' equity:
   Common stock, no par value.  Authorized 1,000 shares;
    issued and                                                               500
    outstanding 2 shares
   Retained earnings                                                     208,604
                                                                      ----------
        Total shareholders' equity                                       209,104

Commitments and contingent liabilities (notes 6 and 8)

Subsequent event (note 9)
                                                                      ----------
        Total liabilities and shareholders' equity                    $1,331,898
                                                                      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       
<PAGE>   4
                         SYNCARE, INC. AND SUBSIDIARIES

                      Consolidated Statement of Operations

                            Year ended June 30, 1996




<TABLE>
<S>                                                                   <C>       
Revenues:
   Net patient service revenue (note 2)                               $4,765,502
   Other income                                                            8,247
                                                                      ----------
        Net revenues                                                   4,773,749
                                                                      ----------
Operating expenses:
   Therapist services                                                  2,923,226
   General and administrative                                          1,537,325
   Pension (note 6)                                                      148,589
   Provision for doubtful accounts                                        50,000
   Depreciation and amortization                                          23,566
   Interest expense                                                       39,551
                                                                      ----------
        Total operating expenses                                       4,722,257
                                                                      ----------
        Income before income tax expense                                  51,492

Income tax expense (note 5)                                               41,450
                                                                      ----------
        Net income                                                    $   10,042
                                                                      ==========
        Net income per share                                          $    5,021
                                                                      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       
<PAGE>   5
                         SYNCARE, INC. AND SUBSIDIARIES

                 Consolidated Statement of Shareholders' Equity

                            Year ended June 30, 1996




                                                                     
<TABLE>
<CAPTION>
                                       COMMON STOCK                      TOTAL
                                     ----------------     RETAINED    SHAREHOLDERS'
                                     SHARES    AMOUNT     EARNINGS       EQUITY
                                     ------    ------     --------    -------------
<S>                                     <C>     <C>        <C>           <C>    
Balance at July 1, 1995                 2       $500       198,562       199,062


Net income                              -         --        10,042        10,042
                                      ---       ----       -------       -------

Balance at June 30, 1996                2       $500       208,604       209,104

                                      ===       ====       =======       =======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       
<PAGE>   6
                         SYNCARE, INC. AND SUBSIDIARIES

                      Consolidated Statement of Cash Flows

                            Year ended June 30, 1996




<TABLE>
<S>                                                                   <C>      
Cash flows from operating activities:
   Net income                                                         $  10,042
   Adjustments to reconcile net income to net cash provided by
    operating activities:
      Depreciation                                                       23,566
      Provision for doubtful accounts                                    50,000
      Provision for deferred taxes                                       35,383
      Changes in assets and liabilities:
       Increase in accounts receivable, net                             (98,535)
       Increase in prepaids                                              (2,031)
       Increase in other assets                                         (27,446)
       Increase in accounts payable and accrued liabilities             138,759
       Increase in income tax payable                                    81,067
       Decrease in amount due to Medicare                              (128,607)
                                                                      ---------
            Net cash provided by operating activities                    82,198

Cash flows from investing activities - capital expenditures             (47,004)
                                                                      ---------
            Net increase in cash and cash equivalents                    35,194

Cash and cash equivalents at beginning of year                           18,141
                                                                      ---------
Cash and cash equivalents at end of year                              $  53,335
                                                                      =========
Supplemental cash flow disclosure:
   Cash paid for income taxes                                         $   1,600
   Cash paid for interest                                                39,551
                                                                      =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       
<PAGE>   7
                         SYNCARE, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                  June 30, 1996


(1)  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION
     Syncare, Inc. is the parent company for ProMotive Rehabilitation Services,
     Inc. (Geri Care), BayCare Rehabilitative Services, Inc. (BayCare) and Pro
     Motion Rehabilitation, Inc. (Pro Motion). SynCare, Inc. was incorporated on
     July 25, 1995 to be a holding company for Geri Care, BayCare and Pro
     Motion. Pro Motion was incorporated on August 6, 1991 as a provider of
     physical, occupational and/or speech therapy services on an outpatient
     basis. Pro Motion has service contracts with various Skilled Nursing
     Facilities (SNF) throughout Southern California. Geri Care and BayCare,
     incorporated on June 18, 1992 and August 9, 1995 respectively, provide
     rehabilitation services to residents of assisted living facilities. Geri
     Care and BayCare are Medicare certified and operate exclusively as Medicare
     service providers. Syncare, Inc. is owned and operated by the President and
     Vice President who are the sole shareholders of SynCare, Inc. and
     previously owned its subsidiaries (collectively referred to as the
     Company). The Company's main source of revenue is generated through
     providing physical, occupational and speech therapy services. The
     consolidated financial statements for the year ended June 30, 1996 include
     the activities of the aforementioned companies for the period they were in
     existence during the year ended June 30, 1996.

     PRINCIPLES OF CONSOLIDATIONS
     The consolidated financial statements include the accounts of the Company
     and its subsidiaries. All significant intercompany balances and
     transactions have been eliminated in consolidation.

     NET PATIENT SERVICE REVENUE
     Net patient service revenue is reported at the estimated net realizable
     amounts due from patients, third-party payors and others for services
     rendered, including estimated retroactive adjustments under reimbursement
     agreements with third-party payors. Such contractual adjustments are
     accrued on an estimated basis the period the related services are rendered.
     Net patient service revenue is adjusted as required in subsequent periods
     based on final settlements.

     USE OF ESTIMATES
     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.

     CASH AND CASH EQUIVALENTS
     For purposes of reporting cash flows, the Company considers all highly
     liquid investments purchased with an original maturity of three months or
     less to be cash equivalents.


                                       
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     FURNITURE AND EQUIPMENT
     Furniture and equipment are stated at historical cost, less accumulated
     depreciation. Depreciation is computed using the straight-line method over
     the estimated useful lives of the assets as follows:

                   Furniture and equipment          3 to 7 years
                   Automobiles                      3 to 5 years

     Furniture and equipment consists of the following:

<TABLE>
<S>                                    <C>    
     Furniture and equipment           $54,221
     Automobiles                        44,640
                                       -------
                                        98,861
     Less accumulated depreciation     (48,805)
                                       -------
                                       $50,056
                                       =======
</TABLE>

     INCOME TAXES
     Income taxes are accounted for under the asset and liability method.
     Deferred tax assets and liabilities are recognized for the future tax
     consequences attributable to differences between the financial statement
     carrying amounts of existing assets and liabilities and their respective
     tax bases and operating loss and tax credit carryforwards. Deferred tax
     assets and liabilities are measured using enacted tax rates expected to
     apply to taxable income in the years in which those temporary differences
     are expected to be recovered as settled. The effect on deferred tax assets
     and liabilities of a change in tax rates is recognized in income in the
     period that includes the enactment date.


(2)  NET PATIENT SERVICE REVENUE AND THIRD-PARTY REIMBURSEMENT

     Approximately 80% of net patient service revenue for the year ended June
     30, 1996 was derived under Federal and state third-party reimbursement
     programs. The Company is reimbursed at a tentative rate with final
     settlement determined after submission of annual cost reports by the
     Company and audits thereof by the Medicare fiscal intermediary. Management
     has provided for its best estimate of amounts due upon settlement of cost
     reports, however, the ultimate outcome of such settlements may be different
     than amounts provided. The Company's Medicare cost reports have been
     audited by the Medicare fiscal intermediary through June 30, 1994.

     The Company has also entered into payment agreements with certain
     commercial insurance carriers, health maintenance organizations and
     preferred provider organizations. The basis for payment to the Company
     under these agreements includes discounts from established charges. Such
     discounts are recorded in the period the services are rendered.

Both governmental and private pay sources have instituted cost-containment
measures designed to limit payments made to providers of health services, and
there can be no assurance that future measures designed to limit payments made
to providers will not adversely affect reimbursements to the Company.
Furthermore, government reimbursement programs are subject to statutory and
regulatory changes, retroactive rate adjustments, administrative rulings and
government funding restrictions, all of which could materially decrease the
services covered or the rates paid to the Company for its services. In the
opinion of management, retroactive adjustments, if any, would not be material to
the financial position or results of operations of the Company.


                                       
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(3)   AMOUNT DUE TO MEDICARE

     Final settlement for third-party reimbursement programs is determined after
     submission of the annual cost reports by the Company and audits thereof by
     the Medicare fiscal intermediary. Based on an audit of the cost report for
     the fiscal year ended June 30, 1994 and the "as filed" cost report for the
     fiscal year ended June 30, 1995, it was determined that the Company had
     been overpaid by Medicare. This overpayment has been accrued for by the
     Company in the accompanying balance sheet as the amount due to Medicare.


(4)  OPERATING LEASES

     The Company is committed to operating leases for office space that require
     annual minimum lease payments as follows:

<TABLE>
<S>                                          <C>     
                           1997              $175,217
                           1998               140,496
                           1999               140,496
                           2000               140,496
                           2001                70,248
                                             --------
                                             $666,953
                                             ========
</TABLE>

     Lease expense was $152,136 for the year ended June 30, 1996.

(5)  INCOME TAXES

     The provision for income tax expense for the year ended June 30, 1996
     consists of the following:

<TABLE>
<S>                                          <C>     
                           Current:
                              Federal        $ 63,539
                              State            17,528
                                             --------
                                               81,067
                                             --------
                           Deferred:
                              Federal         (32,272)
                              State            (7,345)
                                             --------
                                              (39,617)
                                             --------
                                             $ 41,450
                                             ========
</TABLE>

     Federal statutory rate of 34% to the Company's provision for income taxes
     is as follows:

<TABLE>
<S>                                                           <C>    
           Income tax expense at statutory rate               $17,507
              
           State income tax expense, net of Federal income
              tax benefit                                      11,569
           Tax penalties                                        8,017
           Other                                                4,357
                                                              -------
                                                              $41,450
                                                              =======
</TABLE>


                                       
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     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and liabilities at June 30, 1996 are
     presented below:

<TABLE>
<S>                                                    <C>     
                 Deferred tax assets:
                    Allowance for doubtful accounts    $ 43,300
                    Cost report reserve                  59,321
                    State tax                             5,959
                    Accrued vacation                     20,569
                                                       --------
                                                        129,149
                    Less valuation allowance            (59,321)
                                                       --------
                                                         69,828
                 Deferred tax liability - reserve
                    for penalties and interest           75,000
                                                       --------
                          Net deferred tax liability   $  5,172
                                                       ========
</TABLE>

     Based on the Company's current and expected pretax earnings, management
     believes it is more likely than not that the Company will realize certain
     of the benefits of the existing deferred tax assets as of June 30, 1996.
     Recognition of the remaining balances will require generation of future
     taxable income. There can be no assurance that the Company will generate
     any earnings or any specific level of earnings in future years. Certain tax
     planning or other strategies could be implemented, if necessary, to
     supplement income from operations to fully realize recorded net tax
     benefits.


(6)  SIMPLIFIED EMPLOYEE PENSION PLAN

     The Company has a Simplified Employee Pension (SEP) plan, whereby
     contributions to each eligible employee's, account are made at the
     Company's discretion and range between 0% to 15% of the employees' gross
     wages. An employee becomes eligible to participate in the plan upon
     completing one year of continuous employment with the Company. The Company
     is to make 100% of the contributions and the employee is not required to
     match contributions in any way. Furthermore, all contributions vest
     immediately and are entirely self directed by the employees. Contributions
     by the Company to the SEP were $148,589 for the year ended June 30, 1996.
     At June 30, 1996, the Company had accrued a contribution of $77,287 which
     is included in accounts payable and accrued liabilities in the accompanying
     consolidated balance sheet.



(7)  DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following disclosure of the estimated fair value of financial
     instruments is made in accordance with the requirements of Statement of
     Financial Accounting Standards No. 106 (SFAS 107), "Disclosure about Fair
     Value of Instruments." The estimated fair value amounts have been
     determined using available market information and appropriate valuation
     methodologies. However, considerable judgment is necessarily required to
     interpret market data to develop the estimates of fair value. Accordingly,
     the estimates presented herein are not necessarily indicative of the
     amounts that could be realized in a current market exchange. The use of
     different market assumptions or estimation methodologies may have a
     material impact on the estimated fair value amounts. The carrying amounts
     reported in the consolidated balance sheet for cash and cash equivalents,
     accounts receivable, accounts payable and accrued liabilities and amounts
     due to Medicare approximate fair value due to the short-term nature of
     these instruments.


                                       
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(8)  CONTINGENCIES

     The Company is involved in certain litigation arising in the ordinary
     course of business. Management believes that settlement of this litigation
     will not have a material adverse impact on the consolidated financial
     statements.

(9)  SUBSEQUENT EVENT

     On August 22, 1996, ARV Health Care Inc., a wholly-owned subsidiary of ARV
     Assisted Living, Inc. (ARVAL), entered into an agreement to acquire all of
     the Company's outstanding stock. The purchase price to be paid by ARVAL
     shall be based on the initial valuation of the Company plus the net asset
     value of the Company at the time of closing; provided, however, that the
     purchase price does not exceed $1,500,000. Thirty days after the closing
     date (the second closing date), the initial value, net asset value and
     purchase price is to be recalculated using updated financial and other
     information.