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


                                    FORM 10-Q

(Mark One)


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


For the quarterly period ended     March  31, 2000
                              -----------------------------
                                       OR

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


For the transition period from                         to
                               ------------------------  ----------------------




                      Commission file number      333-64679
                                            ---------------


                        Harborside Healthcare Corporation


                  Delaware                              04-3307188
--------------------------------------------------------------------------------
(State or other  jurisdiction of            (IRS employer identification no.)
 incorporation  or  organization)


    One Beacon Street, Boston, Massachusetts               02108
--------------------------------------------------------------------------------
       (Address of principal executive offices)         (Zip Code)


                                 (617) 646-5400
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)



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

Number of shares of common stock, par value $0.01 per share outstanding as of
May 9, 2000:  7,261,332.


<PAGE>



               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                                Table of Contents
<TABLE>
<CAPTION>


                                                                            Page

<S>                                                                          <C>
Part I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Condensed Consolidated Balance Sheets
                     December 31, 1999 and March 31, 2000                     3

                  Condensed Consolidated Statements of Operations
                     For the Three Months Ended
                     March 31, 1999 and 2000                                  4

                  Condensed Consolidated Statement of Changes
                     in Stockholders' Deficit for the Three Months
                     Ended March 31, 2000                                     5

                  Condensed Consolidated Statements of Cash Flows
                     For the Three Months Ended March 31, 1999 and 2000       6

                  Notes to Condensed Consolidated Financial Statements        7

Item 2.           Management's Discussion and Analysis of Financial           14
                     Condition and Results of Operations

Item 3.           Quantitative and Qualitative Disclosures About Market Risk  20

Part II           OTHER INFORMATION                                           21

                  Signatures                                                  22


</TABLE>


                                      -2-
<PAGE>



PART I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS
-------

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                         (Unaudited)
                                                            December 31,  March 31,
                                                                1999         2000
                                                             ---------    ---------
<S>                                                          <C>          <C>
                      ASSETS
Current assets:

  Cash and cash equivalents ..............................   $   1,386    $   1,127
  Accounts receivable, net of allowances for doubtful
     accounts of $3,098 and $3,655,  respectively ........      50,168       51,009
  Prepaid expenses and other .............................      19,940       20,014
  Prepaid income taxes ...................................       2,608        2,721
  Deferred income taxes ..................................       2,400        2,400
                                                             ---------    ---------
     Total current assets ................................      76,502       77,271

 Restricted cash .........................................       2,420        2,559
 Property and equipment, net .............................     166,326      165,949
 Deferred financing and other non-current assets, net ....      15,546       14,899
 Other assets, net .......................................       3,100        2,800
 Note receivable .........................................       7,487        7,487
 Deferred income taxes ...................................      11,852       13,099
                                                             ---------    ---------
   Total assets ..........................................   $ 283,233    $ 284,064
                                                             =========    =========

                    LIABILITIES
Current liabilities:
  Current maturities of long-term debt ...................   $     227    $     233
  Current portion of capital lease obligation ............       4,633        4,727
  Note payable to affiliate ..............................       5,000        5,000
  Accounts payable .......................................       9,328       10,217
  Employee compensation and benefits .....................      14,021       13,919
  Other accrued liabilities ..............................       5,508        5,596
  Accrued interest .......................................         572          251
  Current portion of deferred income
                                                                   677          636
                                                             ---------    ---------
    Total current liabilities ............................      39,966       40,579

 Long-term portion of deferred income ....................       2,427        2,299
 Long-term debt ..........................................     166,018      169,117
 Long-term portion of capital lease obligation ...........      50,067       49,729
                                                             ---------    ---------
    Total liabilities ....................................     258,478      261,724
                                                             ---------    ---------

Exchangeable  preferred  stock,  redeemable,
  $.01 par value with a  liquidation value of
  $1,000 per share; 500,000 shares authorized;
  48,277 and 49,901 issued and outstanding, respectively .      48,277       49,901
                                                             ---------    ---------

        STOCKHOLDERS' DEFICIT
Common stock, $.01 par value, 19,000,000 shares
  authorized, 7,261,332 shares issued and outstanding ....         146          146
Additional paid-in capital ...............................     198,603      196,973
Less common stock in treasury, at cost, 7,349,832 shares .    (183,746)    (183,746)
Accumulated deficit ......................................     (38,525)     (40,934)
                                                             ---------    ---------
    Total stockholders' deficit ..........................     (23,522)     (27,561)
                                                             ---------    ---------
    Total liabilities and stockholders' deficit ..........   $ 283,233    $ 284,064
                                                             =========    =========


</TABLE>

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

                                      -3-
<PAGE>



               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                             For the three months ended
                                                 March 31,    March 31,
                                                   1999        2000
                                                --------    --------

<S>                                             <C>         <C>
Total net revenues ..........................   $ 71,704    $ 78,976
                                                --------    --------

Expenses:
 Facility operating .........................     62,705      63,533

 General and administrative .................      4,792       4,475
 Service charges paid to former affiliate ...        296         275
 Amortization of prepaid management fee .....        300         300
 Depreciation and amortization ..............      2,541       2,642
 Facility rent ..............................      5,611       5,676
                                                --------    --------
    Total expenses ..........................     76,245      76,901
                                                --------    --------

Income (loss) from operations ...............     (4,541)      2,075


Other:
 Interest expense, net ......................      4,800       5,744
 Other expense ..............................         63         280
                                                --------    --------

Loss before income taxes ....................     (9,404)     (3,949)
Income tax benefit ..........................     (3,668)     (1,540)
                                                --------    --------

Net loss ....................................     (5,736)     (2,409)
Preferred stock dividends ...................     (1,427)     (1,630)
                                                --------    --------
Loss applicable to common shares ............   $ (7,163)   $ (4,039)
                                                ========    ========

Loss per common share (Note C):
     Basic and diluted ......................   $  (0.99)   $  (0.56)
                                                ========    ========
</TABLE>


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


                                      -4-
<PAGE>




               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                                   (Unaudited)
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                Additional
                                                       Common    Paid-In      Treasury   Accumulated
                                                       Stock     Capital        Stock      Deficit       Total


<S>                                                  <C>        <C>        <C>         <C>          <C>
Stockholders' deficit, December 31, 1999 ...........  $    146   $ 198,603  $ (183,746) $  (38,525)  $  (23,522)

Preferred stock dividends ..........................      --        (1,630)         --         --        (1,630)

Net loss for the three months ended
  March 31, 2000 ...................................      --          --            --      (2,409)      (2,409)
                                                      --------   ---------  ----------  ----------   ----------

Stockholders' deficit, March 31, 2000 ..............  $    146   $ 196,973  $ (183,746) $  (40,934)  $  (27,561)
                                                      ========   =========  ==========  ==========   ==========
</TABLE>


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



                                      -5-
<PAGE>



               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                 (dollars in thousands)
<TABLE>
<CAPTION>


                                                                            For the three months ended
                                                                                        March 31,
                                                                                ----------------------
                                                                                     1999       2000
Operating activities:
<S>                                                                                <C>        <C>
Net loss .......................................................................   $(5,736)   $(2,409)
 Adjustments to reconcile net loss
  to net cash provided by operating activities:
  Depreciation of property and equipment .......................................     1,664      2,031
  Amortization of deferred financing and other non-current assets ..............       873        611
  Amortization of prepaid management fee .......................................       300        300
  Amortization of deferred income ..............................................      (168)      (169)
  Accretion of senior subordinated discount notes ..............................     2,844      3,158
  Amortization of loan costs and fees (included in rental and interest expense)         14         36
  Accretion of interest on capital lease obligation ............................       828        894
                                                                                   -------    -------
                                                                                       619      4,452
Changes in operating assets and liabilities:
  (Increase)  decrease in accounts receivable ..................................       876       (841)
  Increase in prepaid expenses and other .......................................    (3,100)       (74)
  Increase in deferred income taxes ............................................      --       (1,247)
  Increase in accounts payable .................................................     3,600        889
  Increase (decrease) in employee compensations and benefits ...................     2,345       (102)

Increase (decrease) in accrued interest ........................................        60       (321)
  Increase in other accrued liabilities ........................................       865         88
  Increase in prepaid income taxes .............................................    (3,573)      (113)
                                                                                   -------    -------
Net cash provided by operating activities ......................................     1,692      2,731
                                                                                   -------    -------
Investing activities:
  Additions to property and equipment ..........................................    (4,397)    (1,654)
  Additions to deferred financing and other non-current assets .................    (1,058)      --
  Transfers (to) restricted cash, net ..........................................      (194)      (139)
                                                                                   -------    -------
  Net cash used by investing activities ........................................    (5,649)    (1,793)
                                                                                   -------    -------
Financing activities:
  Borrowings under revolving line of credit ....................................     7,000       --
  Payments of long-term debt ...................................................       (75)       (53)
  Principal payments of capital lease obligation ...............................    (1,046)    (1,138)
  Dividends paid on exchangeable preferred stock ...............................        (6)        (6)
                                                                                   -------    -------
Net cash provided (used) by financing activities ...............................     5,873     (1,197)
                                                                                   -------    -------
Net increase (decrease) in cash and cash equivalents ...........................     1,916       (259)
Cash and cash equivalents, beginning of period .................................       896      1,386
                                                                                   -------    -------
Cash and cash equivalents, end of period .......................................   $ 2,812    $ 1,127
                                                                                   =======    =======

Supplemental Disclosure:
  Interest paid ................................................................   $ 1,382    $ 2,185
                                                                                   =======    =======
  Income taxes paid ............................................................   $    47    $    21
                                                                                   =======    =======
  Accretion of preferred stock dividends .......................................   $ 1,421    $ 1,624
                                                                                   =======    =======
</TABLE>

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


                                      -6-
<PAGE>



               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


A.  General

  Harborside Healthcare Corporation and its subsidiaries (the "Company") operate
long-term care facilities and, until  September  1999,  provided  rehabilitation
therapy services to non-affiliated long-term care facilities (See Note D). As of
March 31, 2000, the Company owned twenty-two  facilities,  operated twenty-seven
additional facilities under various leases and managed one facility. The Company
accounts for its investment in one 75% owned facility using the equity method of
accounting.

B.  Basis of Presentation

  The accompanying  unaudited condensed consolidated financial statements should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto  included  in the  Company's  filing  on Form  10-K for the  year  ended
December 31, 1999.  In the opinion of  management,  the  accompanying  unaudited
financial  statements  reflect  all  adjustments   (consisting  of  only  normal
recurring accruals) necessary to present fairly the Company's financial position
as of March 31, 2000, the results of its operations for the three-month  periods
ended  March 31,  1999 and 2000 and its cash flows for the  three-month  periods
ended March 31, 1999 and 2000.  The results of  operations  for the  three-month
period ended March 31, 2000 are not necessarily  indicative of the results which
may be expected for the full year. See "Management's  Discussion and Analysis of
Financial  Condition  and  Results of  Operations"  included  elsewhere  in this
report.

C.  Loss Per Common Share

  The following  table sets forth the  computation of basic and diluted loss per
common share for the three months ended March 31, 1999
 and 2000:
<TABLE>
<CAPTION>

                                                      1999           2000
                                                  -----------    -----------
Numerator:
<S>                                               <C>            <C>
    Net loss ..................................   $(5,736,000)   $(2,409,000)
    Preferred Stock dividends .................    (1,427,000)    (1,630,000)
                                                  -----------    -----------
Loss applicable to common shares ..............   $(7,163,000)   $(4,039,000)
                                                  ===========    ===========

Denominator:
    Denominator for basic  and diluted loss per
     common share - weighted average shares ...     7,261,000      7,261,000
                                                  ===========    ===========

Basic and diluted loss per common share .......   $     (0.99)   $     (0.56)
                                                  ===========    ===========
</TABLE>

     For the three month  periods  ended  March 31,  1999 and 2000,  670,813 and
625,510,  respectively, of stock options were not included in the computation of
diluted loss per common share because to do so would have been antidilutive.

D.  Restructuring Costs

  During the third  quarter of 1999,  the Company  terminated  its  contracts to
provide  rehabilitative  therapy  services  to  non-affiliated   long-term  care
facilities.  The  Company,  through  a  wholly-owned  subsidiary,  had  provided
physical,  speech and occupational therapy services to non-affiliated  long-term
care  facilities  since  1995.  Significant  changes  in  the  contract  therapy
business,  primarily related to reductions in Medicare reimbursement for therapy
services  caused by the Balanced  Budget Act of 1997 led to this  decision.  The
Company continues to provide  rehabilitation  therapy services to long-term care
facilities which it owns and operates.

  The Company's therapy services  restructuring plan required the termination of
approximately sixty rehabilitation therapy services employees and the closure of
two regional  offices.  During the third quarter of 1999, the Company recorded a
restructuring  charge of  approximately  $5.7 million  under this plan,  most of
which were  non-cash  in nature.  The  restructuring  charge  consisted  of $2.5
million of  uncollectible  accounts  receivable,  $1.5  million  of  unamortized
goodwill,  $0.7 million of employee costs and approximately  $1.0 million due to
the write-off of other assets. As of March 31, 2000, the Company's restructuring
reserve was fully utilized.
                                      -7-
<PAGE>


E. Condensed Consolidating Financial Information

 Certain of the Company's  subsidiaries are precluded from guaranteeing the debt
of the parent  company (the  "Non-Guarantors"),  based on current  agreements in
effect.  The  Company's  remaining   subsidiaries  (the  "Guarantors")  are  not
restricted from serving as guarantors of the parent company debt. The Guarantors
are comprised of Harborside  Healthcare  Limited  Partnership,  Belmont  Nursing
Center Corp., Orchard Ridge Nursing Center Corp.,  Oakhurst Manor Nursing Center
Corp.,  Riverside  Retirement  Limited  Partnership,  Harborside  Toledo Limited
Partnership,  Harborside Connecticut Limited Partnership,  Harborside of Florida
Limited  Partnership,   Harborside  of  Ohio  Limited  Partnership,   Harborside
Healthcare  Baltimore  Limited  Partnership,  Harborside  of  Cleveland  Limited
Partnership,  Harborside of Dayton Limited Partnership, Harborside Massachusetts
Limited Partnership,  Harborside of Rhode Island Limited Partnership, Harborside
North  Toledo  Limited  Partnership,   Harborside  Healthcare  Advisors  Limited
Partnership,  Harborside  Toledo  Corp.,  KHI  Corporation,  Harborside  Danbury
Limited  Partnership,  Harborside  Acquisition Limited Partnership V, Harborside
Acquisition Limited  Partnership VI, Harborside  Acquisition Limited Partnership
VII, Harborside  Acquisition Limited  Partnership VIII,  Harborside  Acquisition
Limited  Partnership IX, Harborside  Acquisition Limited Partnership X, Sailors,
Inc.,  New  Jersey  Harborside  Corp.,   Bridgewater   Assisted  Living  Limited
Partnership, Maryland Harborside Corp., Harborside Homecare Limited Partnership,
Harborside  Rehabilitation  Limited Partnership,  Harborside  Healthcare Network
Limited Partnership and Harborside Health I Corporation.

 The information  which follows presents the condensed  consolidating  financial
position as of December 31, 1999 and March 31, 2000; the condensed consolidating
results of operations for the three-month periods ended March 31, 1999 and 2000;
and the consolidating  cash flows for the three-months  ended March 31, 1999 and
2000 of (a) the parent company only ("the Parent"), (b) the combined Guarantors,
(c) the combined Non-Guarantors,  (d) eliminating entries and (e) the Company on
a consolidated basis.


                                      -8-
<PAGE>


E. Condensed Consolidating Financial Information (Continued)

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                      Condensed Consolidating Balance Sheet
                             As of December 31, 1999
                                   (Unaudited)
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                          Parent     Guarantors Non-Guarantors Elimination  Consolidated
ASSETS
Current assets:
<S>                                                      <C>          <C>          <C>          <C>          <C>
   Cash and cash equivalents .........................   $    --      $     355    $   1,031    $    --      $   1,386
   Accounts receivable, net of allowance .............        --         34,423       15,745         --         50,168
   Intercompany receivable ...........................     137,614         --           --       (137,614)        --
   Prepaid expenses and other ........................       3,590       14,096        2,254         --         19,940
   Prepaid income taxes ..............................       2,608         --           --           --          2,608
   Deferred income taxes .............................       2,150          250         --           --          2,400
                                                         ---------    ---------    ---------    ---------    ---------
Total current assets .................................     145,962       49,124       19,030     (137,614)      76,502

Restricted cash ......................................        --          1,826          594         --          2,420
Investment in limited partnership ....................      15,584         --          4,044      (19,628)        --
Property and equipment, net ..........................        --        146,976       19,350         --        166,326
Deferred financing and other
  non-current assets, net ............................      10,749        3,416        1,381         --         15,546
Other assets, net ....................................       3,100         --           --           --          3,100
Note receivable ......................................        --          7,487         --           --          7,487
Deferred income taxes ................................          71       11,781         --           --         11,852
                                                         ---------    ---------    ---------    ---------    ---------
Total assets .........................................   $ 175,466    $ 220,610    $  44,399    $(157,242)   $ 283,233
                                                         =========    =========    =========    =========    =========

LIABILITIES
Current liabilities:
   Current maturities of long-term debt   ............    $   --      $      22    $     205    $    --      $     227
   Current portion of capital lease
     obligation ......................................        --          4,633         --           --          4,633
   Note payable to affiliate .........................       5,000         --           --           --          5,000
   Accounts payable ..................................        --          6,879        2,449         --          9,328
   Intercompany payable ..............................        --        109,511       11,766     (121,277)        --
   Employee compensation and benefits ................        --         10,687        3,334         --         14,021
   Other accrued liabilities .........................        --          4,663          845         --          5,508
   Accrued interest ..................................       4,342       12,584         --        (16,354)         572
   Current portion of deferred income ................        --           --           --            677          677
                                                         ---------    ---------    ---------    ---------    ---------
Total current liabilities ............................       9,342      148,979       18,599     (136,954)      39,966

Long-term portion of deferred income .................        --            893        2,211         (677)       2,427
Long-term debt .......................................     132,243        1,517       15,904       16,354      166,018
Long-term  portion of capital lease obligation .......        --         50,067         --           --         50,067
                                                         ---------    ---------    ---------    ---------    ---------
Total liabilities ....................................     141,585      201,456       36,714     (121,277)     258,478
                                                         ---------    ---------    ---------    ---------    ---------

Exchangeable  preferred  stock,  redeemable,
  $.01 par value with a  liquidation value of
  $1,000 per share; 500,000 shares authorized;
  48,277 shares issued and outstanding ...............      48,277         --           --           --         48,277
                                                         ---------    ---------    ---------    ---------    ---------

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value; 19,000,000
   shares authorized; 7,261,332 shares issued
   and outstanding ...................................         146        2,569        3,885       (6,454)         146
Additional paid-in capital ...........................     198,377         --           --            226      198,603
Less common stock in  treasury, at
   cost, 7,349,832 shares ............................    (183,746)        --           --           --       (183,746)
Partners' equity .....................................        --         24,755        7,074      (31,829)        --
Accumulated deficit ..................................     (29,173)      (8,170)      (3,274)       2,092      (38,525)
                                                         ---------    ---------    ---------    ---------    ---------
Total stockholders' equity (deficit) .................     (14,396)      19,154        7,685      (35,965)     (23,522)
                                                         ---------    ---------    ---------    ---------    ---------
Total liabilities and stockholders' equity (deficit)     $ 175,466    $ 220,610    $  44,399    $(157,242)   $ 283,233
                                                         =========    =========    =========    =========    =========
</TABLE>


                                      -9-
<PAGE>



E. Condensed Consolidating Financial Information (Continued)

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                      Condensed Consolidating Balance Sheet
                              As of March 31, 2000
                                   (Unaudited)
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                          Parent   Guarantors  Non-Guarantors Elimination  Consolidated
ASSETS
Current assets:
<S>                                                     <C>          <C>          <C>          <C>          <C>
   Cash and cash equivalents ........................   $    --      $     446    $     681    $    --      $   1,127
   Accounts receivable, net of allowance ............        --         36,367       14,642         --         51,009
   Intercompany receivable ..........................     137,742         --           --       (137,742)        --
   Prepaid expenses and other .......................       4,010       13,731        2,273         --         20,014
   Prepaid income taxes .............................       2,721         --           --           --          2,721
   Deferred income taxes ............................       2,150          250         --           --          2,400
                                                        ---------    ---------    ---------    ---------    ---------
Total current assets ................................     146,623       50,794       17,596     (137,742)      77,271

Restricted cash .....................................        --          1,931          628         --          2,559
Investment in limited partnership ...................      15,584         --          4,044      (19,628)        --
Property and equipment, net .........................        --        146,606       19,343         --        165,949
Deferred financing and other
  non-current assets, net ...........................      10,298        3,284        1,317         --         14,899
Other assets, net ...................................       2,800         --           --           --          2,800
Note receivable .....................................        --          7,487         --           --          7,487
Deferred income taxes ...............................          71       13,028         --           --         13,099
                                                        ---------    ---------    ---------    ---------    ---------
Total assets ........................................   $ 175,376    $ 223,130    $  42,928    $(157,370)   $ 284,064
                                                        =========    =========    =========    =========    =========


LIABILITIES
Current liabilities:
   Current maturities of long-term debt .............   $    --      $      22    $     211    $    --      $     233

   Current portion of capital lease
     obligation .....................................        --          4,727         --           --          4,727
   Note payable to affiliate ........................       5,000         --           --           --          5,000
   Accounts payable .................................        --          7,738        2,479         --         10,217
   Intercompany payable .............................        --        110,370       10,857     (121,227)        --
   Employee compensation and benefits ...............        --         11,242        2,677         --         13,919
   Other accrued liabilities ........................        --          4,558        1,038         --          5,596
   Accrued interest .................................       5,313       14,450         --        (19,512)         251
   Current portion of deferred income ...............        --           --           --            636          636
                                                        ---------    ---------    ---------    ---------    ---------
Total current liabilities ...........................      10,313      153,107       17,262     (140,103)      40,579


Long-term portion of deferred income ................        --            816        2,119         (636)       2,299
Long-term debt ......................................     132,243        1,513       15,849       19,512      169,117
Long-term portion of capital lease obligation .......        --         49,729         --           --         49,729
                                                        ---------    ---------    ---------    ---------    ---------
Total liabilities ...................................     142,556      205,165       35,230     (121,227)     261,724
                                                        ---------    ---------    ---------    ---------    ---------


Exchangeable  preferred  stock,  redeemable,
  $.01 par value with a  liquidation value of
  $1,000 per share; 500,000 shares authorized;
  49,901 shares issued and outstanding ............        49,901         --           --           --         49,901
                                                        ---------    ---------    ---------    ---------    ---------

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value; 19,000,000
    shares authorized; 7,261,332 shares issued
    and outstanding .................................         146        2,569        3,885       (6,454)         146
Additional paid-in capital ..........................     196,747         --           --            226      196,973
Less common stock in treasury, at
   cost, 7,349,832 shares ...........................    (183,746)        --           --           --       (183,746)

Partners' equity ....................................        --         24,755        7,074      (31,829)        --

Accumulated deficit .................................     (30,228)      (9,359)      (3,261)       1,914      (40,934)
                                                        ---------    ---------    ---------    ---------    ---------

Total stockholders' equity (deficit) ................     (17,081)      17,965        7,698      (36,143)     (27,561)
                                                        ---------    ---------    ---------    ---------    ---------
Total liabilities and stockholders' equity (deficit)    $ 175,376    $ 223,130    $  42,928    $(157,370)   $ 284,064
                                                         =========   =========    =========    =========    =========

</TABLE>


                                      -10-
<PAGE>



E. Condensed Consolidating Financial Information (Continued)

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                Condensed Consolidating Statements of Operations
                    For the three months ended March 31, 1999
                                   (Unaudited)
                             (dollars in thousands)

For the three months ended March 31, 1999:
<TABLE>
<CAPTION>

                                                    Parent    Guarantors Non-Guarantors Elimination Consolidated

<S>                                                 <C>         <C>         <C>         <C>         <C>
Total net revenues ..............................   $      7    $ 53,436    $ 23,149    $ (4,888)   $ 71,704
                                                    --------    --------    --------    --------    --------


Expenses:
  Facility operating ............................       --        47,689      19,904      (4,888)     62,705
  General and administrative ....................         10       4,782        --          --         4,792
  Service charges paid to  former affiliate .....       --           296        --          --           296
  Amortization of prepaid management fee ........        300        --          --          --           300
  Depreciation and amortization .................        374       1,745         422        --         2,541
  Facility rent .................................       --         3,468       2,143        --         5,611
  Management fees paid to affiliates ............       --        (1,402)      1,402        --          --
                                                    --------    --------    --------    --------    --------
Total expenses ..................................        684      56,578      23,871      (4,888)     76,245
                                                    --------    --------    --------    --------    --------
Loss from operations ............................       (677)     (3,142)       (722)       --        (4,541)

Other:
  Interest expense, net .........................        697       3,673         430        --         4,800
  Other expense .................................       --          --          --            63          63
                                                    --------    --------    --------    --------    --------

Loss before income taxes ........................     (1,374)     (6,815)     (1,152)        (63)     (9,404)
Income tax benefit ..............................       (536)     (2,658)       (449)        (25)     (3,668)
                                                    --------    --------    --------    --------    --------
Net loss ........................................   $   (838)   $ (4,157)   $   (703)   $    (38)   $ (5,736)
                                                    ========    ========    ========    ========    ========


               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                Condensed Consolidating Statements of Operations
                    For the three months ended March 31, 2000
                                   (Unaudited)
                             (dollars in thousands)

For the three months ended March 31, 2000:

                                                     Parent   Guarantors Non-Guarantors Elimination Consolidated

Total net revenues ..............................   $   --      $ 54,048    $ 25,175    $   (247)   $ 78,976
                                                    --------    --------    --------    --------    --------


Expenses:
  Facility operating ............................       --        43,182      20,598        (247)     63,533
  General and administrative ....................          6       4,469        --          --         4,475
  Service charges paid to former affiliate ......       --           275        --          --           275
  Amortization of prepaid management fee ........        300        --          --          --           300
  Depreciation and amortization .................        452       1,717         473        --         2,642
  Facility rent .................................       --         3,515       2,161        --         5,676
  Management fees paid to affiliates ............       --        (1,499)      1,499        --          --
                                                    --------    --------    --------    --------    --------
Total expenses ..................................        758      51,659      24,731        (247)     76,901
                                                    --------    --------    --------    --------    --------
Income (loss) from operations ...................       (758)      2,389         444        --         2,075

Other:
  Interest expense, net .........................        972       4,350         422        --         5,744
  Other expense .................................       --          --          --           280         280
                                                    --------    --------    --------    --------    --------

Income (loss) before income taxes ...............     (1,730)     (1,961)         22        (280)     (3,949)
Income taxes (benefit) ..........................       (675)       (772)          9        (102)     (1,540)
                                                    --------    --------    --------    --------    --------
Net income (loss) ...............................   $ (1,055)   $ (1,189)   $     13    $   (178)   $ (2,409)
                                                    ========    ========    ========    ========    ========
</TABLE>

                                      -11-
<PAGE>

  E. Condensed Consolidating Financial Information (Continued)


               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                 Condensed Consolidating Statement of Cash Flows
                    For the three months ended March 31, 1999
                                   (Unaudited)
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                         Parent  Guarantors Non-Guarantors Elimination Consolidated
Operating activities:

<S>                                                     <C>        <C>        <C>        <C>        <C>
Net cash provided (used) by operating activities:  ..   $ (5,258)  $ 5,832    $   120    $   998    $ 1,692
                                                        --------   -------    -------    -------    -------

Investing activities:
     Additions to property and equipment ............      --       (3,145)      (778)      (474)    (4,397)
     Additions to deferred financing and other
     non-current assets .............................    (1,737)       678          1       --       (1,058)

     Transfers (to) from restricted cash, net .......      --          373        (43)      (524)      (194)
                                                        --------    -------    -------    -------    -------

Net cash used by investing activities ...............    (1,737)    (2,094)      (820)      (998)    (5,649)
                                                        --------    -------    -------    -------    -------

Financing activities:
     Borrowings under revolving line of credit ......     7,000       --         --         --        7,000
     Payments of long-term debt .....................      --         (119)        44       --          (75)
     Principal payments of capital lease obligation                 (1,046)      --         --       (1,046)
     Dividends paid on exchangeable preferred stock .        (6)      --         --         --           (6)
                                                        --------    -------    -------    -------    -------
Net cash (used) provided by financing activities ....     6,994     (1,165)        44       --        5,873
                                                        -------     -------    -------    -------    -------

Net increase (decrease) in cash and cash equivalents         (1)     2,573       (656)      --        1,916
Cash and cash equivalents, beginning of period ......        51         99        746       --          896
                                                        -------    -------    -------     -------    -------

Cash and cash equivalents, end of period   ..........   $    50    $ 2,672    $    90     $  --      $ 2,812
                                                        =======    =======    =======     =======    =======


Supplemental Disclosure:
Interest paid .......................................   $   201    $ 1,057    $   124     $  --      $ 1,382
                                                        =======    =======    =======     =======    =======
Income taxes paid ...................................   $    47    $   --     $  --       $  --      $    47
                                                        =======    =======    =======     =======    =======
Accretion of preferred stock dividends ..............   $ 1,421    $   --     $  --       $  --      $ 1,421
                                                        =======    =======    =======     =======    =======
</TABLE>




                                      -12-
<PAGE>



E. Condensed Consolidating Financial Information (Continued)


               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
                 Condensed Consolidating Statement of Cash Flows
                    For the three months ended March 31, 2000
                                   (Unaudited)
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                         Parent Guarantors Non-Guarantors  Elimination Consolidated
Operating activities:
<S>                                                     <C>        <C>        <C>        <C>       <C>
Net cash provided by operating activities:  .........   $     6    $ 2,638    $    87    $  --     $ 2,731
                                                        -------    -------    -------    -------   -------

Investing activities:
     Additions to property and equipment ............      --       (1,269)      (385)      --      (1,654)
     Transfers (to) restricted cash, net ............      --         (105)       (34)      --        (139)
                                                        -------    -------    -------    -------   -------
Net cash used by investing activities ...............      --       (1,374)      (419)      --      (1,793)
                                                        -------    -------    -------    -------   -------

Financing activities:
     Payments of long-term debt .....................      --          (35)       (18)      --         (53)
     Principal payments of capital lease obligation                 (1,138)      --         --      (1,138)
     Dividends paid on exchangeable preferred stock .        (6)      --         --         --          (6)
                                                        -------    -------    -------    -------   -------
Net cash used by financing activities ...............        (6)    (1,173)       (18)      --      (1,197)
                                                        -------    -------    -------    -------   -------

Net increase (decrease) in cash and cash equivalents       --           91       (350)      --        --
                                                                                                      (259)
Cash and cash equivalents, beginning of period ......      --          355      1,031       --       1,386
                                                        -------    -------    -------    -------   -------
Cash and cash equivalents, end of period $ ..........      --      $   446    $   681    $  --     $ 1,127
                                                        =======    =======    =======    =======   =======

Supplemental Disclosure:
Interest paid .......................................   $   370    $ 1,654    $   161    $  --     $ 2,185
                                                        =======    =======    =======    =======   =======
Income taxes paid ...................................   $    21    $  --      $  --      $  --     $    21
                                                        =======    =======    =======    =======   =======
Accretion of preferred stock dividends ..............   $ 1,624    $  --      $  --      $  --     $ 1,624
                                                        =======    =======    =======    =======   =======
</TABLE>


                                      -13-
<PAGE>


Item 2.
------

                           MANAGEMENT'S DISCUSSION AND
                       ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

  This Management's  Discussion and Analysis of Financial  Condition and Results
of Operations  contains  forward-looking  statements  including those concerning
Management's  expectations  regarding  future  financial  performance and future
events.   These   forward-looking   statements  involve   significant  risk  and
uncertainties, including those described herein and included under "Special Note
Regarding   Forward-Looking   Statements"  below.   Actual  results  may  differ
materially from those anticipated by such forward-looking statements.

OVERVIEW

  Harborside  Healthcare  Corporation,  ("Harborside"  or  the  "Company")  is a
leading provider of high-quality  long-term care and specialty  medical services
in the eastern United  States.  The Company has focused on  establishing  strong
local market positions with high-quality  facilities in four principal  regions:
the  Southeast   (Florida),   the  Midwest  (Ohio  and  Indiana),   New  England
(Connecticut,   Massachusetts,   New   Hampshire   and  Rhode  Island)  and  the
Mid-Atlantic  (New  Jersey and  Maryland).  As of March 31,  2000,  the  Company
operated 50  facilities  (22 owned,  27 leased and one managed)  with a total of
6,124  licensed  beds.  As  described  in  Note  A to  the  unaudited  condensed
consolidated financial statements included elsewhere in this report, the Company
accounts  for its  investment  in one of its owned  facilities  using the equity
method.  The Company provides a broad continuum of medical  services  including:
(i)  traditional  skilled  nursing  care and (ii)  specialty  medical  services,
including a variety of subacute care programs such as orthopedic rehabilitation,
CVA/stroke care, cardiac recovery,  pulmonary  rehabilitation and wound care, as
well as distinct  programs for the provision of care to Alzheimer's  and hospice
patients.  As part of its  subacute  services,  the Company  provides  physical,
occupational  and speech  rehabilitation  therapy  services at  Company-operated
facilities. Beginning in 1995 and continuing through September 1999, the Company
also   provided   rehabilitation   therapy   services   under   contracts   with
non-affiliated  long-term care  facilities  through a  wholly-owned  subsidiary.
During the third quarter of 1999,  the Company  terminated  all of its contracts
with  non-affiliated   facilities  and  ceased  providing  therapy  services  to
non-affiliated  facilities.  During  the  third  quarter  of 1999,  the  Company
recorded a $5.7  million  charge in  connection  with the  termination  of these
rehabilitation therapy contracts with non-affiliated facilities.  (See Note D to
the Company's unaudited  condensed  consolidated  financial  statements included
elsewhere in this report.)

The  following  table  sets  forth the  number of  facilities  and the number of
licensed beds operated by the Company:

<TABLE>
<CAPTION>

                                                      As of March 31,
                                                      ---------------
                                                    1999         2000
                                                    ----         ----

<S>                                               <C>          <C>
Facilities operated (1) ...................           50           50
Licensed beds (1) .........................        6,124        6,124

The following table sets forth certain operating data for the periods indicated:

                                          For the three months ended March 31,

                                                    1999         2000
                                                 ---------    ---------

                  Patient days (2):
                    Private and other ........     124,030      114,969
                    Medicare .................      50,741       62,693
                    Medicaid .................     303,790      309,266
                                                 ---------    ---------
                  Total .......................    478,561      486,928
                                                 =========    =========

                  Total net revenues:
                    Private and other ........        30.8%        26.9%
                    Medicare .................        21.0%        24.7%
                    Medicaid .................        48.2%        48.4%
                                                 ---------    ---------
                  Total ......................       100.0%       100.0%
                                                 =========    =========

                  Average Occupancy Rate (3) .        90.6%        90.8%
                  Quality Mix (4) ............        51.8%        51.6%
</TABLE>


(1)  Includes one managed  facility with 106 licensed beds on March 31, 1999 and
     March 31, 2000.
(2)  "Patient Days" includes billed bed days for the facilities  operated by the
     Company  excluding billed bed days of the managed facility and the facility
     accounted for using the equity method of accounting.
(3)  "Average  occupancy  rate" is computed by dividing the number of billed bed
     days by the total number of available  licensed bed days during each of the
     periods indicated. This calculation includes all facilities operated by the
     Company excluding the managed facility.
(4)  "Quality  Mix"  consists  of the  percentage  of the  Company's  total  net
     revenues  which are derived from  Medicare,  commercial  insurers and other
     private payors.


                                      -14-
<PAGE>



RESULTS OF OPERATIONS

  The Company's  total net revenues  include net patient service  revenues,  and
beginning in 1995,  rehabilitation  therapy service revenues from contracts with
non-affiliated  long-term care  facilities  until the third quarter of 1999 when
these  contracts  were  terminated.  (See  Note  D to  the  Company's  condensed
consolidated  financial  statements  included  elsewhere  in this  report.)  The
Company  derives its net patient  service  revenues  primarily  from private pay
sources, the federal Medicare program for certain elderly and disabled patients,
and state Medicaid programs for indigent  patients.  Private net patient service
revenues are recorded at established per diem billing rates. Net patient service
revenues to be reimbursed under contracts with third-party payors, primarily the
Medicare and Medicaid programs, are recorded at amounts estimated to be realized
under these contractual arrangements.

  The Company's  facility  operating  expenses consist  primarily of payroll and
employee benefits related to nursing, housekeeping and dietary services provided
to patients, as well as maintenance and administration of the facilities.  Other
significant  facility  operating  expenses  include  the cost of  rehabilitation
therapy services, medical and pharmacy supplies, food, utilities,  insurance and
taxes.  The  Company's  general and  administrative  expenses  include all costs
associated with its regional and corporate operations.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 2000

  Total Net Revenues.  Total net revenues increased by $7,272,000 or 10.1%, from
$71,704,000  in the first quarter of 1999 to $78,976,000 in the first quarter of
2000.  The increase in total revenues from 1999 to 2000 was primarily the result
of higher  occupancy  and higher  average  revenues per patient day. The average
occupancy  rate at all of the Company's  facilities  increased from 90.6% during
the first quarter of 1999 to 90.8% during the first quarter of 2000. Average net
patient service revenues per patient day at the Company's  facilities  increased
from  $146.67 in the first  quarter  of 1999 to $160.21 in the first  quarter of
2000.  The Company's  average  Medicare Part A per diem rate increased from $287
per  Medicare  patient  day in the first  quarter  of 1999 to $298 per  Medicare
patient day in the first quarter of 2000,  while the Company's  average per diem
Medicaid rate  increased from $114.35 in the first quarter of 1999 to $123.72 in
the first quarter of 2000. In accordance  with provisions of the Balanced Budget
Refinement Act of 1999,  the Company  elected to have fourteen of its facilities
waive their  remaining  transition  period  available under  Medicare's  current
prospective  payment  reimbursement  system.  Effective  January 1, 2000,  these
fourteen  facilities began to be reimbursed at the Federal per diem payment rate
for paid Medicare days.  Primarily as a result of this  election,  the Company's
average  Medicare Part A payment rate increased  from $287 per Medicare  patient
day during the first quarter of 1999 to $298 per Medicare patient day during the
first  quarter of 2000.  The  Company's  quality  mix of private,  Medicare  and
insurance  revenues  was 51.8%  for the three  months  ended  March 31,  1999 as
compared to 51.6% during the same period of 2000.

  Facility  Operating   Expenses.   Facility  operating  expenses  increased  by
$828,000,  or 1.3%, from $62,705,000 in the first quarter of 1999 to $63,533,000
in the first  quarter of 2000.  Salaries and wages  decreased  by  approximately
$900,000,  or 2.7%, from the first quarter of 1999 to the first quarter of 2000,
primarily  as a result of  workforce  reduction  actions  taken during the first
quarter of last year.  This reduction in salaries and wages was almost  entirely
offset  by  higher  employee  benefit  costs  (health   insurance  and  workers'
compensation expense) incurred during the first quarter of 2000 as compared with
the prior year period.  The overall  increase in operating  expenses in 2000 was
the result of higher  expenditures  for  purchased  services  (such as  infusion
therapy,  radiology,  laboratory and ambulance  services) and all other expenses
combined.

  General and Administrative;  Service Charges Paid to Former Affiliate. General
and administrative  expenses  decreased by $317,000,  or 6.6% from $4,792,000 in
the first quarter of 1999 to $4,475,000 in the first quarter of 2000. During the
first  quarter  of 1999,  the  Company  recorded  a  $700,000  charge  for costs
associated  with the  termination of an acquisition  which the Company had begun
reviewing  in the latter half of 1998.  Excluding  the  non-recurring  charge in
1999,  the net  increase  in general  and  administrative  expenses in the first
quarter of 2000 is the result of higher benefit costs. The Company  reimburses a
former affiliate for data processing  services  provided to the Company.  During
the first quarter of 1999,  such  reimbursements  totaled  $296,000  compared to
$275,000 during the first quarter of 2000.

  Depreciation and  Amortization.  Depreciation and amortization  increased from
$2,541,000  in the first  quarter of 1999 to  $2,642,000 in the first quarter of
2000 primarily due to the amortization of costs in connection with obtaining the
amendment of the Company's New Credit Facility in the first quarter of 1999.

  Amortization of Prepaid  Management Fees.  Amortization of prepaid  management
fees was  $300,000  during the first  quarter  of 1999 and the first  quarter of
2000.

  Facility  Rent.  Facility  rent  expense for the first  quarter  increased  by
$65,000 from $5,611,000 in 1999 to $5,676,000 in 2000.

  Interest Expense, net. Interest expense, net, increased from $4,800,000 in the
first quarter of 1999 to $5,744,000 in the first quarter of 2000.  This increase
is the result of higher  outstanding  balances in 2000 with  respect to both the
Company's 11% Senior Subordinated  Discount Notes (the "Discount Notes") and its
revolving credit facility. The Company issued $99.5 million of Discount Notes in
August 1998.  The interest  associated  with the Discount  Notes  accretes until
August 1, 2003 and then  becomes  payable  in cash,  semi-annually  in  arrears,
beginning  on February 1, 2004.  As of March 31, 2000,  the  Discount  Notes had
accreted to a balance of $119 million.  Additionally,  as of March 31, 1999, the
Company had $19,750,000  outstanding on its revolving credit facility as opposed
to  $32,750,000  as of March  31,  2000.  The  Company  has not made  additional
borrowings on its revolving credit facility since July 7, 1999.

  Income Tax  Benefit.  As a result of losses  incurred in the first  quarter of
1999 and 2000,  income tax benefits of $3,668,000 and $1,540,000,  respectively,
were recognized for those periods.

  Net Loss. The net loss decreased from  $5,736,000 in the first quarter of 1999
to $2,409,000 in the first quarter of 2000.

                                      -15-
<PAGE>

 LIQUIDITY AND CAPITAL RESOURCES

 The Company's  primary cash needs are for acquisitions,  capital  expenditures,
working capital,  debt service and general corporate  purposes.  The Company has
historically  financed  these  requirements  primarily  through a combination of
internally  generated cash flow,  mortgage  financing and operating  leases,  in
addition to funds borrowed  under a credit  facility.  In addition,  in 1996 the
Company financed the acquisition of four facilities  located in Ohio by means of
leases  which are  accounted  for as  capital  leases  for  financial  reporting
purposes.  The Company's  existing leased  facilities are leased from either the
owner of the facilities, from a real estate investment trust which has purchased
the  facilities  from the owner,  or through  synthetic  lease  borrowings.  The
Company's  existing  facility leases generally  require it to make monthly lease
payments and pay all property operating costs. The Company generally  negotiates
leases which provide for extensions  beyond the initial lease term and an option
to  purchase  the leased  facility.  In some cases,  the option to purchase  the
leased  facility is at a price based on the fair market value of the facility at
the time the option is  exercised.  In other  cases,  the lease for the facility
sets forth a fixed purchase option price which the Company  believes is equal to
the fair market value of the facility at the inception date of such lease,  thus
allowing the Company to realize the value  appreciation  of the  facility  while
maintaining financial flexibility.

  In  connection  with the  leveraged  recapitalization  completed on August 11,
1998, the Company  obtained gross proceeds of $99.5 million through the issuance
of 11% Senior  Subordinated  Discount Notes (the "Discount  Notes") due 2008 and
$40 million  through the  issuance of 13.5%  Exchangeable  Preferred  Stock (the
"Preferred  Stock")  mandatorily  redeemable  in 2010.  Interest on the Discount
Notes accretes at 11% per annum until August 1, 2003 and then becomes payable in
cash, semi-annually in arrears,  beginning on February 1, 2004. Dividends on the
Preferred Stock are payable,  at the option of the Company, in additional shares
of the Preferred Stock until August 1, 2003.  After that date dividends may only
be paid in cash.  The Company  does not expect to pay any cash  dividends on the
Preferred  Stock  prior to August 1, 2003.  In August  1998,  the  Company  also
entered into a new $250 million  collateralized credit facility (the "New Credit
Facility").  The terms of the New Credit Facility provide up to $75 million on a
revolving  credit basis plus an additional  $175 million  initially  funded on a
revolving  basis  that  converts  to a term  loan  on an  annual  basis  on each
anniversary  of the  closing.  During  the first  four  years of the New  Credit
Facility,  any or all of the full $250  million  of  availability  under the New
Credit  Facility may be used for synthetic lease  financings.  Proceeds of loans
under the New Credit  Facility  may be used for  acquisitions,  working  capital
purposes, capital expenditures and general corporate purposes. Interest is based
on either LIBOR or prime rates of interest (plus applicable  margins  determined
by the Company's leverage ratio) at the election of the Company.  The New Credit
Facility contains various  financial and other restrictive  covenants and limits
aggregate  borrowings under the New Credit Facility to a predetermined  multiple
of EBITDA.

    As noted above,  the Company,  through a wholly-owned  limited  partnership,
  leases and operates four facilities in Ohio (the "Cleveland Facilities") which
  it acquired in 1996 through  capital  leases.  Each lease is guaranteed by the
  Company. The guaranty provides that failure by the Company to have a specified
  minimum  consolidated net worth at the end of any two consecutive  quarters is
  an event of  default  under the  guaranty,  which in turn would be an event of
  default  under each  lease.  During the third  quarter  of 1999,  the  Company
  recorded a $5.7 million  restructuring  charge to terminate  its  contracts to
  provide  rehabilitation  therapy  services to  non-affiliated  long-term  care
  facilities.   As  a  result  of  this  restructuring   charge,  the  Company's
  consolidated net worth as of September 30, 1999 (as calculated for purposes of
  this requirement) had fallen below the required level. The Company anticipated
  that its net worth would  continue to be below the required  level at December
  31, 1999,  as a result of which the Company  would have been in default  under
  each of these leases and could have faced the loss of these operations. Such a
  default could also have  triggered  cross-defaults  under the Company's  other
  lease and debt  obligations.  In December of 1999, the Company paid $5 million
  to the landlord of the Cleveland  Facilities  and obtained an option (the "New
  Option") to acquire these facilities.  The Company borrowed $5 million from an
  affiliate of Investcorp S.A. to fund this payment. The Company already held an
  option to acquire these  facilities  during a limited period beginning July 1,
  2001.  The New Option allows the Company to exercise its right to purchase the
  Cleveland  Facilities  beginning  as of the  date of the New  Option.  The New
  Option requires the Company to complete the acquisition  prior to December 31,
  2000. The New Option provides a waiver of the net worth  requirement until the
  earlier of the lapse of the New  Option or  December  31,  2000.  The  Company
  intends  to  exercise  the New  Option by June 30,  2000 and then  assign  its
  purchase rights to an investment entity organized by Investcorp and enter into
  an operating  lease of the Cleveland  Facilities by December 31, 2000.  The $5
  million  payment made to obtain the New Option will be applied to the purchase
  price of the  Cleveland  Facilities,  or forfeited if the  acquisition  is not
  completed.  If the Company  cannot  complete the  refinancing of the Cleveland
  Facilities by December 31, 2000, the Company would also be required to make an
  additional  payment of  $3,000,000  to the  landlord,  and the  Company  could
  potentially face the loss of the Cleveland Facilities.  Although no assurances
  can be given in this  regard,  the  Company  believes  that it will be able to
  complete the refinancing of the Cleveland  Facilities within the required time
  period.

  During the first quarter of 1999, the Company  determined that its anticipated
financial  results  for  that  quarter  would  cause  the  Company  to be out of
compliance  with certain  financial  covenants of the New Credit  Facility.  The
Company's  reduced level of earnings before  interest,  taxes,  depreciation and
amortization  ("EBITDA")  during the first quarter of 1999 was  attributable  to
transitional difficulties associated with the implementation of the new Medicare
prospective  payment  system  which  became  effective  at all of the  Company's
facilities on January 1, 1999. Such transitional  difficulties resulted in lower
than expected  revenues,  primarily due to fewer than expected  Medicare patient
days,  lower  Medicare  Part A rates,  reduced  revenues  from therapy  services
provided to non-affiliated  long-term care centers,  and a reduction in revenues
from the provision of Medicare Part B services at the Company's own  facilities.
In response,  during the first quarter of 1999, the Company initiated additional
facility-based  training directed towards the documentation  requirements of the
revised Medicare  reimbursement system. The Company also continued to refine its
admission and assessment  protocols in order to increase patient  admissions and
introduced a series of targeted  initiatives to lower operating  expenses.  Such
initiatives  included  wage and staffing  reductions  (primarily  related to the
delivery of  rehabilitative  therapy  services  and indirect  nursing  support),
renegotiation  of vendor  contracts and ongoing  efforts to reduce the Company's
reliance on outside nurse agency personnel.  All of the staffing reductions were
implemented,  on or prior to,  April 1,  1999.  Effective  March 30,  1999,  the
Company obtained an amendment (the "Amendment") to the New Credit Facility which
limits  borrowings  under the New Credit Facility to an aggregate of $58,500,000
(exclusive of undrawn  letters of credit  outstanding  as of March 30, 1999) and
which modified certain financial covenants.  Beginning with the first quarter of
1999,  the  Amendment  replaced the original  financial  covenants  with one new
financial  covenant,  a  minimum  cumulative  amount  of  EBITDA.  The  original
financial  covenants provided maximum ratios of total indebtedness to EBITDA and
senior  indebtedness to EBITDA,  and a minimum debt service  coverage ratio. The
Amendment requires minimum amounts of EBITDA, measured quarterly, but calculated
on a rolling twelve-month basis, through December 31, 2000. As long as the


                                      -16-
<PAGE>

Company meets or exceeds the required minimum  cumulative amounts of EBITDA, the
Company  may access the New Credit  Facility  for  general  corporate  purposes,
subject to the  reduced  amount of  availability.  As of March 31,  2000,  total
borrowings  under the New Credit  Facility were  approximately  $52,019,000  and
consisted of  $32,750,000  of revolver  loans,  $13,700,000  of synthetic  lease
obligations and $5,569,000 of undrawn  letters of credit.  As of March 31, 2000,
the Company had  approximately  $9,000,000  of funding  available  under the New
Credit  Facility  and was not in default of the  financial  covenants of the New
Credit  Facility.  The Amendment  provides  minimum  EBITDA targets only through
December 31, 2000.  However,  the Amendment  also provides that the Company will
have  access to the New Credit  Facility if the  Company is in  compliance  with
specified maximum ratios of total indebtedness to EBITDA, senior indebtedness to
EBITDA,  and a minimum debt service coverage ratio, such ratios to be calculated
by annualizing  the actual  amounts of EBITDA  achieved by the Company in either
(a) the second and third quarters of 2000, or (b) the third and fourth  quarters
of 2000.  Continued  access to the New Credit  Facility is then dependent on the
Company  maintaining  compliance  with financial ratio  requirements.  Since the
covenant allowing the Company to maintain  compliance through the achievement of
required minimum  cumulative  amounts of EBITDA expires as of December 31, 2000,
the Company  must be able to achieve  compliance  with the  alternate  financial
ratios by that date, or it may have to seek additional  modifications to the New
Credit Facility.

  The Company's operating  activities during the first quarter of 1999 generated
net cash of $1,692,000  as compared to generating  net cash of $2,731,000 in the
first quarter of 2000, an improvement  of  $1,039,000.  Although cash flows from
operations in 2000 increased as the result of a lower net loss and higher levels
of non-cash expenses in 2000 (including depreciation, amortization and accretion
of interest on the  Company's  Discount  Notes),  most of this  improvement  was
offset by an increase in the Company's operating assets.

  Net cash used by investing  activities  decreased from  $5,649,000  during the
first quarter of 1999 to $1,793,000 for the same period in 2000. The primary use
of cash for investing purposes during 1999 was to fund additions to property and
equipment  associated with the maintenance of the Company's existing  facilities
and the development of its data processing  capabilities.  Additionally,  during
the first quarter of 1999,  approximately  $1,000,000 was expended in connection
with obtaining the amendment of the Company's New Credit  Facility.  The primary
use of cash for investing purposes during 2000 was to fund additions to property
and  equipment  associated  with  the  maintenance  of  the  Company's  existing
facilities and the development of its data processing capabilities.  The Company
has made a  concerted  effort  to  minimize  its  capital  expenditures  without
compromising the quality of its facilities.

  Net cash provided by financing  activities decreased from net cash provided of
$5,873,000  in 1999 to net cash used of  $1,197,000  in 2000.  This decrease was
primarily due to the fact that during the first three months of 1999 the Company
borrowed  $7,000,000  under  the  New  Credit  Facility  as  compared  to no new
borrowings  during the first three months of 2000.  The Company has not drawn on
its revolving credit facility since July 7, 1999.

  In addition to the Discount  Notes,  as of March 31, 2000, the Company had two
mortgage loans outstanding  totaling  $17,595,000 and $32,750,000 in advances on
its New Credit Facility.  One mortgage loan had an outstanding principal balance
of $16,060,000 of which  $15,140,000 is due at maturity in 2004. This loan bears
interest at an annual rate of 10.65% plus  additional  interest equal to 0.3% of
the  difference  between the annual  operating  revenues  of the four  mortgaged
facilities  and  actual  revenues  during  the  twelve-month  base  period.  The
Company's  other  mortgage  loan,  which  encumbers  a single  facility,  had an
outstanding  principal  balance of  $1,535,000  at December 31,  1999,  of which
$1,338,000 is due in 2010.

  Harborside  expects  that  its  capital   expenditures  for  2000,   excluding
acquisitions  of new long-term care  facilities,  will  aggregate  approximately
$5,000,000.   Harborside's   expected  capital   expenditures   will  relate  to
maintenance capital  expenditures,  systems  enhancements,  special construction
projects  and other  capital  improvements.  Harborside  expects that its future
facility  acquisitions  will be financed  with  borrowings  under the New Credit
Facility, direct operating leases or assumed debt. Harborside may be required to
obtain additional equity in order to finance any significant acquisitions in the
future.

  On November 29, 1999,  the  "Consolidated  Appropriations  Act (the "CAA") was
signed into law.  The CAA was  designed  to mitigate  some of the effects of the
BBA. The CAA allowed skilled nursing  facilities to elect transition to the full
federal per diem rate at the beginning of their cost reporting  periods for cost
periods beginning on or after January 1, 2000. Using the election allowed by the
CAA, the Company chose to move fourteen  facilities to the full federal per diem
rate  effective  January 1, 2000.  As a result,  the  Company  now uses the full
federal  per diem rate to  calculate  Medicare  revenue at  twenty-three  of its
skilled nursing facilities.  Additionally, the CAA will temporarily increase the
federal per diem rates by 20% for fifteen acuity  categories  beginning on April
1,  2000.  These  increased  rates  will stay in  effect  until the later of (a)
October 1, 2000 or (b) the date HCFA  implements  a revised PPS system that more
accurately  reimburses the costs of caring for medically complex  patients.  The
CAA also provides for a four percent  increase in the federal per diem rates for
all acuity  categories for a two-year period beginning  October 1, 2000. The CAA
also  excluded  costs for  certain  supplies  and  services  that were  formerly
required to be reimbursed by a skilled nursing facility's PPS rate. The CAA also
eliminated  the  annual  provider  limitations  on Part B  therapy  charges  per
beneficiary  for fiscal  2000 and 2001.  As a result of the number of  variables
involved  (including  facility specific  occupancy,  the acuity  distribution of
Medicare patients, and the length of time the temporary increases in the federal
per diem rate  stay in  effect),  the  Company  cannot  at this time  accurately
quantify the dollar impact of the CAA on the Company's financial position or the
results of its operations.

SEASONALITY

  The  Company's  earnings  generally  fluctuate  from quarter to quarter.  This
seasonality  is related to a combination of factors which include the timing and
amount of Medicaid rate  increases,  seasonal  census cycles,  and the number of
days in a given fiscal quarter.

                                      -17-
<PAGE>

INFLATION

  The  healthcare  industry is labor  intensive.  Wages and other labor  related
costs are  especially  sensitive to inflation.  Certain of the  Company's  other
expense  items,  such as supplies  and real estate  costs are also  sensitive to
inflationary  pressures.  Shortages in the labor market or general  inflationary
pressure could have a significant effect on the Company. In addition,  suppliers
pass along rising costs to the Company in the form of higher prices.  When faced
with  increases  in  operating  costs,  the Company  has sought to increase  its
charges  for  services  and  its  requests  for  reimbursement  from  government
programs.  The Company's  private pay  customers  and third party  reimbursement
sources may be less able to absorb increased prices for the Company's  services.
The Company's  operations could be adversely affected if it is unable to recover
future cost increases or experiences  significant  delays in increasing rates of
reimbursement  of its labor or other costs from  Medicare and  Medicaid  revenue
sources.

The Year 2000 Issue

  The Company  undertook a  comprehensive  effort to evaluate and address  risks
that could have arisen in connection with the inability of computer  programs to
recognize  dates that followed  December 31, 1999 (the "Year 2000  Issue").  The
Company  has  not  observed  any  significant   problems  with  its  information
technology systems or equipment.  The Company has noted no problems with similar
systems operated by third parties doing business with the Company, including its
suppliers,  state Medicaid  agencies and fiscal  intermediaries  responsible for
administering payments on behalf of the Medicare program.


                                      -18-
<PAGE>


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

  Certain  statements in this Form 10-Q,  including  information set forth under
the caption  "Management's  Discussion  and Analysis of Financial  Condition and
Results  of  Operations",  constitute  "Forward-Looking  Statements"  within the
meaning of the Private  Securities  Litigation  Reform Act of 1995 (the  "Reform
Act"). The Company desires to take advantage of certain "safe harbor" provisions
of the Reform Act and is including this special note to enable the Company to do
so. Forward-looking statements included in this Form 10-Q, or hereafter included
in other  publicly  available  documents  filed with the Securities and Exchange
Commission,  reports to the Company's  stockholders and other publicly available
statements  issued or released by the Company  involve known and unknown  risks,
uncertainties, and other factors which could cause the Company's actual results,
performance  (financial or operating) or achievements to differ  materially from
the  future  results,  performance  (financial  or  operating)  or  achievements
expressed or implied by such  forward-looking  statements.  The Company believes
the following important factors could cause such a material difference to occur:

1.   The Company's  ability to grow through the  acquisition  and development of
     long-term care facilities or the acquisition of ancillary businesses.

2.   The  Company's  ability to identify  suitable  acquisition  candidates,  to
     consummate or complete  construction  projects, or to profitably operate or
     successfully integrate enterprises into the Company's other operations.

3.   The  occurrence  of changes in the mix of payment  sources  utilized by the
     Company's patients to pay for the Company's services.

4.   The  adoption of cost  containment  measures by private pay sources such as
     commercial insurers and managed care  organizations,  as well as efforts by
     governmental reimbursement sources to impose cost containment measures.

5.   Changes  in the  United  States  healthcare  system,  including  changes in
     reimbursement  levels and the method of  reimbursement,  under Medicaid and
     Medicare, and other changes in applicable government regulations that might
     affect the profitability of the Company.

6.   The  Company's   continued  ability  to  operate  in  a  heavily  regulated
     environment  and to  satisfy  regulatory  authorities,  thereby  avoiding a
     number of  potentially  adverse  consequences,  such as the  imposition  of
     fines,  temporary suspension of admission of patients,  restrictions on the
     ability to acquire  new  facilities,  suspension  or  decertification  from
     Medicaid  or  Medicare  programs,  and in extreme  cases,  revocation  of a
     facility's  license or the closure of a facility,  including as a result of
     unauthorized activities by employees.

7.   The  Company's  ability to secure the capital and the related  cost of such
     capital  necessary  to fund  its  future  growth  through  acquisition  and
     development, as well as internal growth.

8.   Changes in certificate of need laws that might increase  competition in the
     Company's  industry,  including,  particularly,  in the states in which the
     Company currently operates or anticipates operating in the future.

9.   The Company's ability to staff its facilities  appropriately with qualified
     healthcare personnel, including in times of shortages of such personnel and
     to maintain a satisfactory relationship with labor unions.

10.  The level of  competition  in the  Company's  industry,  including  without
     limitation,  increased competition from acute care hospitals,  providers of
     assisted  and  independent  living and  providers  of home  healthcare  and
     changes in the regulatory system in the state in which the Company operates
     that facilitate such competition.

11.  The continued  availability and pricing of insurance for the inherent risks
     of liability in the healthcare industry.

12.  Price increases in  pharmaceuticals,  durable  medical  equipment and other
     items.

13.  The Company's  reputation for delivering  high-quality care and its ability
     to attract and retain  patients,  including  patients with  relatively high
     acuity levels.

14.  Changes in general  economic  conditions,  including  changes that pressure
     governmental  reimbursement  sources  to  reduce  the  amount  and scope of
     healthcare coverage.


  The  foregoing  review of  significant  factors  should  not be  construed  as
exhaustive or as an admission  regarding the adequacy of disclosures  previously
made by the Company.

                                      -19-
<PAGE>


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------

  Most of the Company's  debt  obligations  bear interest at fixed rates and are
not affected by changes in market interest rates; however,  borrowings under the
Company's New Credit Facility are sensitive to changes in interest rates.  Under
the New Credit  Facility  interest  is based on either  LIBOR or prime  rates of
interest (plus applicable margins determined by the Company's leverage),  at the
Company's election. As the prime and LIBOR rates of interest increase,  interest
expense  associated with the Company's  borrowings under the New Credit Facility
would also increase.

  The Company did not  experience  significant  changes in interest rates during
the three months ended March 31, 2000. As part of the Company's risk  management
program,  the Company continuously reviews its overall exposure to interest rate
risk and  evaluates  the benefits of interest  rate  hedging  through the use of
derivative  instruments,  such as  interest  rate  swaps.  By  entering  into an
interest rate swap,  the Company can  effectively  transform  variable rate debt
into  fixed  rate  debt.  The  Company  did not  have  any  interest  rate  swap
arrangements  outstanding  during the three month periods ending March 31, 1999
or March 31, 2000.




                                      -20-
<PAGE>



                           PART II - OTHER INFORMATION


Item 1.     Legal Proceedings
                 None

Item 2.     Changes 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.


                                      -21-
<PAGE>





                                   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.



                          Harborside Healthcare Corporation



                          By:   /s/ Stephen L. Guillard
                          -----------------------------
                                    Stephen L. Guillard
                                    President, and Chief Executive Officer


                          By:   /s/ William H. Stephan
                          ----------------------------
                                    William H. Stephan
                                    Senior Vice President and
                                    Chief Financial Officer









DATE:   May 10, 2000






                                      -22-
<PAGE>