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               September 30, 1997
                               -------------------------------------------------

                                       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 01-14358
                                                --------

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


470 Atlantic Avenue, Boston, Massachusetts                 02210
--------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)


                                 (617) 556-1515
--------------------------------------------------------------------------------
              (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        No   X
                                       -----     -----

Number of shares of common stock, par value $0.01 per share outstanding as of
November 4, 1997: 8,005,165.

<PAGE>
   

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                                Table of Contents


                                                                        Page

Part I.     Financial Information

            Condensed Consolidated Balance Sheets                     
               December 31, 1996 and September 30, 1997                   3

            Condensed Consolidated Statements of Operations
               For the Three Months and Nine Months Ended
               September 30, 1996 and 1997                                4

            Condensed Consolidated Statements of Changes
               in Stockholders Equity for the Nine Months
               Ended September 30, 1997                                   5

            Condensed Consolidated Statements of Cash Flows
               For the Nine Months Ended September 30, 1996 and 1997      6

            Notes to Condensed Consolidated Financial Statements          7

            Management's Discussion and Analysis of Financial
               Condition and Results of Operations                       10

Part II     Other Information                                            17

            Signatures                                                   18

                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS
------

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                (dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                      December 31,      September 30,
                                                                         1996                1997
                                                                      ------------      -------------
<S>                                                                    <C>                  <C>   
                   ASSETS                                                                (Unaudited)
Current assets:
  Cash and cash equivalents                                            $   9,722            11,934
  Accounts receivable, net of allowances for doubtful
    accounts of $1,860 and $2,102,  respectively                          22,984            28,315
  Prepaid expenses and other                                               3,570             6,694
  Demand note due from limited partnership                                 1,369               -
  Deferred income taxes                                                    1,580             1,580
                                                                       ---------          --------
    Total current assets                                                 39,225             48,523
 Restricted cash                                                           3,751             4,095
 Investment in limited partnership                                       256 128
 Property and equipment, net                                              95,187            94,753
 Intangible assets, net                                                    3,004             7,383
 Deferred income taxes                                                       376               376
                                                                       ---------         ---------
    Total assets                                                       $ 141,799         $ 155,258
                                                                       =========         =========

                   LIABILITIES
Current liabilities:
  Current maturities of long-term debt                                 $     169         $    182
  Current portion of capital lease obligation                              3,744            3,847
  Accounts payable                                                         6,011            4,323
  Employee compensation and benefits                                       8,639            9,875
  Other accrued liabilities                                                2,177            5,650
  Accrued interest                                                            19              172
  Current portion of deferred income                                         368              605
  Income taxes payable                                                     1,272              831
                                                                       ---------         --------
    Total current liabilities                                             22,399           25,485
 Long-term portion of deferred income                                      2,948            3,718
 Long-term portion of capital lease obligation                            53,533           52,665
 Long-term debt                                                           18,039           23,666
                                                                       ---------         --------
    Total liabilities                                                     96,919          105,534
                                                                       ---------         --------

                   STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 30,000,000 shares
  authorized, 8,000,000 and 8,005,165 shares
  issued and outstanding, respectively                                        80               80
Additional paid-in capital                                                48,340           48,397
Retained earnings                                                         (3,540)           1,247
                                                                       ---------        ---------
    Total stockholders' equity                                            44,880           49,724
                                                                       ---------        ---------
    Total liabilities and stockholders' equity                         $ 141,799        $ 155,258
                                                                       =========        =========
</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
                        (Combined prior to June 14, 1996)
                                   (Unaudited)
                (dollars in thousands, except per share amounts)
                                   ----------
<TABLE>
<CAPTION>
                                            For the three months ended                For the nine months ended
                                                   September 30,                             September 30,
                                            ---------------------------             ----------------------------
                                               1996            1997                    1996              1997
                                               ----            -----                   ----              ----
<S>                                         <C>              <C>                      <C>             <C>     
Total net revenues                          $ 45,903         $ 57,964                 $117,706        $155,640
                                            --------         --------                 --------        --------
Expenses:
  Facility operating                          36,622           46,556                   94,548         124,073

  General and administrative                   1,985            2,756                    5,415           7,479
  Service charges paid to affiliate              161              177                      526             531
  Special compensation and other                 -                -                      1,716              -
  Depreciation and amortization                  915              989                    2,030           2,871
  Facility rent                                2,565            3,031                    7,663           8,340
                                            --------         --------                ---------        --------
    Total expenses                            42,248           53,509                  111,898         143,294
                                            --------         --------                ---------        --------

 Income from operations                        3,655            4,455                    5,808          12,346
Other:
  Interest expense, net                        1,383            1,614                    3,193           4,370
  Income (loss) on investment in
    limited partnership                          (40)              68                      327             129
                                            --------         --------                ---------        --------
Income before income taxes
  and extraordinary loss                       2,312            2,773                    2,288           7,847
Income taxes                                     902            1,081                      502           3,060
                                            --------         --------                ---------        --------
Income before extraordinary loss               1,410            1,692                    1,786           4,787
Extraordinary loss on early  retirement
  of debt, net of taxes of $843                   -               -                     (1,318)           -
                                            --------         --------                ---------        --------
                                                                                                          -
Net income                                  $  1,410         $  1,692                $     468        $  4,787
                                            ========         ========                =========        ========


Net income per share                        $   0.18         $   0.21                                 $   0.60
                                            ========         ========                                 ========

Pro forma data:
  Historical income before income
    taxes and extraordinary loss                                                     $   2,288          
  Pro forma income taxes                                                                   492          
                                                                                     --------
  Pro forma income before
   extraordinary loss                                                                    1,796          
 Extraordinary loss, net                                                                (1,318)           
                                                                                     ---------
 Pro forma net income                                                                $     478          
                                                                                     =========
Pro forma net income  per share:
 Pro forma income before
    extraordinary loss                                                               $    0.31          
 Extraordinary loss, net                                                                  0.23           
                                                                                     ---------
 Pro forma net loss                                                                  $    0.08          
                                                                                     =========

  Weighted average number of
    common and common equivalent shares
    used in per share computations          8,016,000        8,044,000               5,852,000       8,032,000
</TABLE>

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

                                       4
<PAGE>

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)
                             (dollars in thousands)
                                   ----------
<TABLE>
<CAPTION>

                                                           Additional
                                               Common        Paid-In       Retained
                                                Stock        Capital       Earnings         Total
                                                -----        -------       --------         -----
<S>                                            <C>           <C>           <C>            <C>    
Stockholders' equity, December 31, 1996        $    80       $48,340       $(3,540)       $44,880

Exercise of stock options                         --              57          --               57

Net income for the nine  months ended
   September 30, 1997                             --            --           4,787          4,787
                                               -------       -------       -------        -------

Stockholders' equity, September 30, 1997       $    80       $48,397       $ 1,247        $49,724
                                               =======       =======       =======        =======
</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
                        (Combined prior to June 14, 1996)
                                   (Unaudited)
                             (dollars in thousands)

                                                        For the nine months 
                                                        ended September 30,
                                                        -------------------
                                                          1996         1997
                                                       --------    --------
Operating activities:
 Net income                                            $    468    $  4,787
 Adjustments to reconcile net income
  to net cash provided by operating activities:
  Minority interest                                         234        --
  Extraordinary loss,  net                                1,318        --
  Depreciation of property and equipment                  1,770       2,568
  Amortization of intangible assets                         260         303
  Amortization of deferred income                          (271)       (291)
  Loss from investment in limited partnership               327         129
  Amortization of loan costs and fees                        87          66
  Deferred interest                                         (86)       --
  Common stock grant                                        225        --
  Accretion of interest on capital lease obligation         710       2,185
  Other                                                       1        --
                                                       --------    --------
                                                          5,043       9,747
Changes in operating assets and liabilities:
  (Increase) in accounts receivable                     (11,126)     (5,331)
  (Increase) in prepaid expenses and other               (3,845)     (3,124)
  (Increase) in deferred income taxes                      (400)       --
  Increase (decrease) in accounts payable                 1,564      (1,688)
  Increase in employee compensation and benefits          4,444       1,236
  Increase (decrease) in accrued interest                    (6)        153
  Increase in other accrued liabilities                   1,327       3,473
  Increase (decrease) in income taxes payable               902        (441)
                                                       --------    --------
  Net cash provided (used) by operating activities       (2,097)      4,025
                                                       --------    --------

Investing activities:
  Additions to property and equipment                    (3,711)     (2,134)
  Additions to intangibles                               (1,009)     (4,749)
  Transfers to restricted cash, net                        (687)       (344)
  Repayment of demand note                                 --         1,369
  Net cash used by investing activities                  (5,407)     (5,858)

Financing activities:
  Issuance of long-term debt                               --         5,775
  Payment of long-term debt                             (25,248)       (135)
  Debt prepayment penalty                                (1,517)       --
  Principal payments of capital lease obligation           (873)     (2,950)
  Note payable to an affiliate                           (2,000)       --
  Receipt of cash in connection with lease                3,685       1,298
  Exercise of stock options                                --            57
  Dividend distribution                                    (140)       --
  Distribution to minority interest                     (33,727)       --
  Purchase of equity interests                              803        --
  Proceeds of initial public offering, net               37,731        --
                                                       --------    --------
Net cash provided (used) by financing activities        (21,286)      4,045
                                                       --------    --------
Net increase (decrease) in cash and cash equivalents    (28,790)      2,212
Cash and cash equivalents, beginning of period           40,157       9,722
                                                       --------    --------
Cash and cash equivalents, end of period               $ 11,367    $ 11,934
                                                       ========    ========

Supplemental Disclosure:
  Interest paid                                        $  3,173    $  2,561
                                                       ========    ========
  Income taxes paid                                    $   --      $  3,501
                                                       ========    ========
Noncash investing and financing activities:
  Property and equipment additions by capital lease    $ 57,625
                                                       ========    ========



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


                                       6
<PAGE>

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        (Combined prior to June 14, 1996)
                                   (Unaudited)

A. General

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 Annual Report or Form 10-K for the year ended December
31, 1996. 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
September 30, 1997, the results of its operations for the three-month and
nine-month periods ended September 30, 1997 and 1996 and its cash flows for the
nine-month periods ended September 30, 1997 and 1996. The results of operations
for the three-month and nine-month periods ended September 30, 1997 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.


B.  Basis of Presentation

The Company was incorporated as a Delaware corporation on March 19, 1996 and was
formed as a holding company, in anticipation of an initial public offering (the
"Offering", to combine under the control of a single corporation the operations
of various business entities (the "Predecessor Entities") which were all under
the majority control of several related stockholders. Immediately prior to the
Offering, the Company executed an agreement (the "Reorganization Agreement")
which resulted in the transfer of ownership of the Predecessor Entities to the
Company prior to completion of the Offering in exchange for 4,400,000 shares of
the Company's common stock. The Company's financial statements for periods prior
to the Offering have been prepared by combining the historical financial
statements of the Predecessor Entities, similar to a pooling of interests
presentation. On June 14, 1996, the Company completed the issuance of 3,600,000
shares of common stock through the Offering resulting in net proceeds to the
Company (after deducting underwriters' commissions and other offering expenses)
of $37,160,000. The consolidated financial statements include the accounts of
Harborside Healthcare Corporation and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been eliminated in
consolidation.


C.  Investment in Limited Partnership

The Company holds a 75% partnership interest in Bowie Center Limited Partnership
(the "Partnership") which the Company accounts for using the equity method.
Although the Company owns a majority interest in the Partnership, the Company
only holds a 50% voting interest in the Partnership and accordingly, it does not
exercise control over the operations of the Partnership.

The results of operations of the Partnership are summarized below:

                                          For the nine months ended
                                          -------------------------
                                                September 30,
                                             1996           1997
                                         -----------    -----------
          Net operating revenues         $ 6,047,000    $ 6,258,000
          Net operating expenses           5,992,000      6,036,000
          Net income (loss)                 (437,000)      (172,000)

The financial position of the Partnership is as follows:

                                           As of September 30, 1997
                                           ------------------------
     Current assets                               $2,821,000
     Non-current assets                            4,771,000
     Current liabilities                           1,237,000
     Non-current liabilities                       6,184,000
     Partners' equity                                171,000

                                    continued

                                       7
<PAGE>

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
                        (Combined prior to June 14, 1996)
                                   (Unaudited)

D.  Special Compensation and Other

During the first nine months of 1996, the Company incurred $1,716,000 of
non-recurring expenses associated with its corporate reorganization and its
initial public offering. Substantially all of these non-recurring expenses
related to special compensation arrangements with key members of management in
connection with the reorganization of the Company's ownership structure which
preceded the completion of its initial public offering.


E.  Income Taxes

Prior to the implementation of the Reorganization Agreement, the Predecessor
Entities (primarily partnerships and subchapter S corporations) operated under
common control but were not directly subject to federal or state income taxes
and, accordingly, no provision for income taxes was made in the Company's
historical financial statements prior to the implementation date of the
Reorganization Agreement. A pro forma income tax expense has been reflected for
each period presented prior to the reorganization date, as if the Company had
always owned the Predecessor Entities. The pro forma income tax expense was
computed using an estimated effective tax rate of 39%. The rate was derived by
using the statutory federal income tax rate of 34% plus an average of the
various state statutory income tax rates (net of federal benefits) where the
Company operates.

With the implementation of the Reorganization Agreement, the Company inherited
the tax basis of the Predecessor Entities and recognized a deferred tax asset of
$400,000. This amount resulted from the expected future tax consequences of
temporary differences between the carrying amounts of the transferred assets and
liabilities used for financial reporting purposes and the inherited tax bases
and was reflected as an income tax benefit in the three month period ended June
30, 1996.


F.  Acquisitions

As of July 1, 1997, the Company acquired the assets of Access Rehabilitation
("Access"), a therapy company with headquarters in the Boston, Massachusetts
area and servicing long-term care facilities in Florida, Massachusetts and Rhode
Island. The Company acquired approximately $2,100,000 of accounts receivable and
recognized approximately $2,186,000 of goodwill in connection with this
acquisition.

As of August 1, 1997, the Company acquired four long-term care facilities with
401 beds in the Boston area. The Company financed this acquisition through an
operating lease with a real estate investment trust (the "REIT"). The lease
provides for annual rental payments of $1,576,000 in the initial twelve-month
period and annual increases based on the changes in the consumer price index
thereafter. The lease has an initial term of ten years and eight consecutive
five-year renewal terms at the Company's option. In conjunction with the lease,
the Company was granted a right of first refusal and an option to purchase the
facilities as a group, which option is exercisable at the end of the initial
lease term and at the conclusion of each renewal term. The purchase option is
exercisable at the greater of the fair market value of the facilities at the
time of exercise.

As of September 1, 1997, the Company acquired three long-term care facilities
with 341 beds in the Dayton, Ohio area (the "Dayton Facilities"). The Company
financed this acquisition through a synthetic leasing facility provided by the
Company's bank group (see Note H).

As of July 1, 1996, a subsidiary of the Company began leasing four long-term
care facilities in Ohio (the "Ohio Facilities"). 

                                       8
<PAGE>

               HARBORSIDE HEALTHCARE CORPORATION AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
                        (Combined prior to June 14, 1996)
                                   (Unaudited)

F.   Acquisitions (continued)

The following unaudited pro forma condensed consolidated statement of earnings
presents the condensed results of operations of the Company after giving effect
to the acquisition of the Ohio Facilities and the Massachusetts Facilities for
the nine month periods ended September 30, 1996 and 1997, as if these
acquisitions had occurred as of January 1, 1996. The pro forma financial results
are not necessarily indicative of the actual results of operations which might
have occurred or of the results of operations which may occur in the future.


                                                     For the nine months 
                                                   ended September 30, 1996
                                                   ------------------------
                                                       1996           1997
                                                       ----           ----
Total net revenues                                   $ 148,524    $ 166,742
Income before income taxes and extraordinary loss        3,295        8,531
Pro forma net income before extraordinary loss           2,410        5,205
Pro forma net income                                     1,092        5,205
Pro forma net income per common share
       using 5,852,000 and 8,032,000 common 
       and common common equivalent shares           $    0.19     $   0.65

G.   Long-term debt

In April of 1997, the Company obtained a three-year $25,000,000 revolving credit
facility (the "Credit Facility") from a commercial bank. On August 28, 1997, the
Company amended the Credit Facility to add three additional banks as parties to
the Credit Facility, extend the maturity date and made certain additional
amendments to the terms of the agreement. Borrowings under this facility are
collateralized by patient accounts receivable and certain other assets. The
facility matures in September 2002 and provides for prime or LIBOR interest rate
options. As of September 30, 1997, the interest rate for amounts outstanding
under this facility was approximately 7.3%. The Credit Facility contains
covenants which, among other things, require the Company to maintain certain
financial ratios and imposes certain limitations or prohibitions on the
Company's ability to incur indebtedness, pay dividends, make investments or
dispose of assets. As of September 30, 1997, $5,600,000 was outstanding on the
facility and was classified as long-term debt.

H.   Synthetic Leasing Facility

On August 28, 1997, the Company obtained a $25,000,000 synthetic leasing
facility (the "Leasing Facility") from the same group of banks which provided
the credit facility. The Company used most of the funds available through the
Leasing Facility to acquire the Dayton Facilities in September 1997.
Acquisitions made through the Leasing Facility are accounted for financial
reporting purposes as operating leases with an initial lease term of five years.
Annual rent for properties acquired through the Leasing Facility is determined
based on the purchase price of the facilities acquired and an interest rate
factor which can be based on LIBOR, or at the Company's option, the agent bank's
prime rate. As of September 30, 1997, the interest rate for amounts outstanding
under this facility was approximately 7.3%. The Company has the right to
purchase faciliites acquired through the Leasing Facility for an amount equal to
the purchase price paid by the banks at the date of acquisition. If the Company
does not exercise its right to acquire properties acquired through the Leasing
Facility, the Company has agreed to guarantee most of the purchase price paid by
the banks.

                                    continued

                                       9
<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 provides high quality long-term care, subacute
care and other specialty medical services in four principal regions: the
Southeast, the Midwest, New England and the Mid-Atlantic. As of September 30,
1997, the Company operated 38 facilities (13 owned and 25 leased) with a total
of 4,606 licensed beds. Additionally, the Company manages two facilities with
178 licensed beds. The Company provides traditional skilled nursing care, a wide
range of subacute care programs (such as orthopedic, CVA/stroke, cardiac,
pulmonary and wound care), as well as distinct programs for the provision of
care to Alzheimer's and hospice patients. In addition, the Company provides
rehabilitation therapy at Company- operated and non-affiliated facilities. As of
September 30, 1997, the Company provided rehabilitation therapy services to
patients at 93 non-affiliated long-term care facilities. The Company seeks to
position itself as the long-term care provider of choice to managed care and
other private referral sources in its target markets by achieving a strong
regional presence and by providing a full range of high quality, cost effective
nursing and specialty medical services.

The Company was created in March 1996, in anticipation of an initial public
offering (the "Offering"), in order to combine under its control the operations
of various long-term care facilities and ancillary businesses (the "Predecessor
Entities") which had operated since 1988. The Company completed the Offering on
June 14, 1996 and issued 3,600,000 shares of common stock at $11.75 per share.
The owners of the Predecessor Entities contributed their interests in such
Predecessor Entities to the Company and received 4,400,000 shares of the
Company's common stock.

The Company's financial statements for periods prior to the Offering have been
prepared by combining the historical financial statements of the Predecessor
Entities, similar to a pooling of interests presentation. The Company's
financial statements prior to the date of the Offering do not include a
provision for Federal or state income taxes because the Predecessor Entities
(primarily partnerships and subchapter S corporations) were not directly subject
to Federal or state income taxation. The Company's consolidated financial
statements for periods prior to the date of the Offering include a pro forma
income tax expense for each period presented, as if the Company had always owned
the Predecessor Entities. See Note E to the financial statements included
elsewhere in this report.

One of the Predecessor Entities was the general partner of the Krupp Yield Plus
Limited Partnership ("KYP"), which owned seven facilities (the "Seven
Facilities") until December 31, 1995. The Company held a 5% interest in KYP
while the remaining 95% was owned by the limited partners of KYP (the
"Unitholders"). Effective December 31, 1995, KYP sold the Seven Facilities and a
subsidiary of the Company began leasing the facilities from the buyer. Prior to
December 31, 1995 the accounts of KYP were included in the Company's
consolidated financial statements and the interest of the Unitholders was
reflected as minority interest. In March of 1996, a liquidating distribution was
paid to the Unitholders.

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

                                         As of September 30,
                                   ------------------------------
Facilities:                         1996                     1997
                                   -----                     ----
   Owned (1)                          13                       13
   Lease                              17                       25
                                   -----                    -----
      Total (2)                       30                       38
                                   =====                    =====

Licensed beds:
   Owned (1)                       1,720                    1,720
   Leased                          1,980                    2,886
                                   -----                    -----
      Total (2)                    3,700                    4,606
                                   =====                    =====

(1)   Includes the Larkin Chase Center, which is owned by Bowie Center Limited
      Partnership, a joint venture in which the Company has a 75% ownership
      interest and a non-affiliated investor has a 25% ownership interest. 
(2)   In 1997, excludes 2 managed facilities with 178 licensed beds.

                                       10
<PAGE>

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

<TABLE>
<CAPTION>
                                    For the three months                For the nine months ended
                                      ended September 30,                    September 30,
                                  ---------------------------         ---------------------------
                                    1996               1997              1996             1997
                                  ---------         ---------         ---------         ---------
<S>                                  <C>              <C>               <C>               <C>    
Patient days:
  Private and other                  92,863           100,782           243,476           276,943
  Medicare                           29,807            31,978            77,024            98,946
  Medicaid                          182,277           215,999           470,359           586,364
                                  ---------         ---------         ---------         ---------
      Total                         304,947           348,759           790,859           962,253
                                  =========         =========         =========         =========

Average Occupancy rate (1)             92.6%             92.0%             92.5%             91.9%

Total net revenues:
    Private and other                  35.1%             35.8%             36.0%             34.3%
   dicare                              25.9%             23.8%             26.1%             26.9%
  Medicaid                             39.0%             40.4%             37.9%             38.8%
                                  ---------         ---------         ---------         ---------
         Total                        100.0%            100.0%            100.0%            100.0%
                                  =========         =========         =========         =========

<FN>
(1)   "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.
</FN>
</TABLE>


RESULTS OF OPERATIONS

The Company's total net revenues include net patient service revenues and
rehabilitation therapy service revenues from contracts with non-affiliated
long-term care facilities. 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 payers, 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 facility operating expenses also include the general and
administrative costs associated with the operation of the Company's
rehabilitation therapy business. The Company's general and administrative
expenses include all costs associated with its regional and corporate
operations.

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997

TOTAL NET REVENUES. Total net revenues increased by $12,061,000 or 26.3%, from
$45,903,000 in the third quarter of 1996 to $57,964,000 in the third quarter of
1997. This increase resulted primarily from the acquisition of the Harford
Gardens facility on March 1, 1997, the four Massachusetts facilities on August
1,1997 and the three Dayton, Ohio facilities on September 1, 1997; the
generation of revenues from rehabilitation therapy services provided to
additional non-affiliated long-term care facilities; and increased net patient
service revenues per patient day at the Company's "same store" facilities. Of
such increase, $1,954,000 or 16.2% of the increase resulted from the operation
of the Harford Gardens facility, $3,149,000 or 26.1% of the increase resulted
from the operation of the Massachusetts facilities and $1,104,000 or 9.2% of the
increase resulted from the operation of the Dayton, Ohio facilities. The Company
began providing rehabilitation therapy services at non-affiliated long-term care
facilities during 1995. Revenues generated by providing rehabilitation therapy
services at non-affiliated long-term care facilities increased by $2,751,000,
from $2,946,000 in the third quarter of 1996 to $5,697,000 in the third quarter
of 1997. The remaining $3,103,000 or 25.7% of such increase, is largely
attributable to higher average net patient service revenues per patient day at
the Company's "same store" facilities and primarily due to increased levels of
care provided to patients with medically complex conditions. Average net patient
service revenues per patient day at "same store" facilities increased from
$130.98 during the third quarter of 1996 to $138.64 during the third quarter of
1997. Partially offsetting this increase was a reduction in occupancy at "same
store" facilities from 92.6% during the third quarter of 1996 to 91.8% during
the third quarter of 1997. The average occupancy rate at all of the Company's
facilities decreased from 92.6% during the third quarter of 1996 to 92.0% during
the third quarter of 1997. The Company's quality mix of private, Medicare and
insurance revenues was 61.0% for the three months ended September 30, 1996 as
compared to 59.6% in the same period of 1997. The decrease in the quality mix
percentage was primarily due to the acquisition of the Harford Gardens,
Massachusetts and Dayton, Ohio facilities.

                                       11
<PAGE>

FACILITY OPERATING EXPENSES. Facility operating expenses increased by
$9,934,000, or 27.1%, from $36,622,000 in the third quarter of 1996 to
$46,556,000 in the third quarter of 1997. The operation of Harford Gardens
accounted for $1,458,000, or 14.7% of this increase, the operation of the
Massachusetts facilities accounted for $2,324,000 or 23.4% and the operation of
the Dayton, Ohio facilities accounted for $731,000 or 7.4%. Operating expenses
associated with additional non-affiliate therapy contracts increased by
$2,418,000, accounting for 24.3% of the total increase. The remainder of the
increase in facility operating expenses, $3,003,000, is due to increases in the
costs of labor, medical supplies and rehabilitation therapy services purchased
from third parties at "same store" facilities.

GENERAL AND ADMINISTRATIVE; SERVICE CHARGES PAID TO AFFILIATE. General and
administrative expenses increased by $771,000, or 38.8% from $1,985,000 in the
third quarter of 1996 to $2,756,000 in the third quarter of 1997. This increase
resulted from the acquisition of the new facilities resulting in the expansion
of regional and corporate support, and additional travel, consulting and systems
development expenses associated with the Company's growth. The Company
reimburses an affiliate for rent and other expenses related to its corporate
headquarters as well as for certain data processing and administrative services
provided to the Company. During the third quarter of 1996, such reimbursements
totaled $161,000 compared to $177,000 during the third quarter of 1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$915,000 in the third quarter of 1996 to $989,000 in the third quarter of 1997
primarily as a result of building improvements and investment in new computers
and software.

FACILITY RENT. Facility rent expense for the third quarter increased by $466,000
from $2,565,000 in 1996 to $3,031,000 in 1997. The increase in rent expense is
the result of the acquisition of new facilities in 1997.

INTEREST EXPENSE, NET. Interest expense, net, increased from $1,383,000 in the
third quarter of 1996 to $1,614,000 in the third quarter of 1997. This net
increase is primarily due to additional interest expense resulting from the
acquisition of Access Rehabilitation on July 1, 1997.

LOSS ON INVESTMENT IN LIMITED PARTNERSHIP. The Company accounts for its
investment in Bowie Center Limited Partnership using the equity method. The
Company recorded income of $40,000 in the third quarter of 1996 as compared to
loss of $68,000 during the third quarter of 1997 in connection with this
investment.

INCOME TAX BENEFIT. Income tax expense increased from $902,000 in the third
quarter of 1996 to $1,081,000 in the third quarter of 1997.

NET INCOME. Net income was $1,410,000 in the third quarter of 1996 as compared
to income of $1,692,000 in the third quarter of 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997 TOTAL NET REVENUES. Total net revenues increased by $37,934,000 or 32.2%,
from $117,706,000 for the first nine months of 1996 to $155,640,000 for the
first nine months of 1997. This increase resulted primarily from the acquisition
of the four Ohio Facilities on July 1, 1996; the Harford Gardens facility on
March 1, 1997, the four Massachusetts facilities on August 1,1997 and the three
Dayton, Ohio facilities on September 1, 1997; and the generation of revenues
from rehabilitation therapy services provided to additional non-affiliated
long-term care facilities and increased net patient service revenues per patient
day at the Company's "same store" facilities. Of such increase, $17,624,000 or
46.5% of the increase resulted from the operation of the Ohio Facilities (during
the period prior to July 1, 1997, at which time they became part of the Asame
store@ facilities); $4,281,000 or 11.3% of the increase resulted from the
operation of the Harford Gardens facility; $3,149,000 or 8.3% of the increase
resulted from the operation of the Massachusetts facilities; and $1,104,000 or
2.9% of the increase resulted from the operation of the Dayton, Ohio facilities.
Revenues generated by providing rehabilitation therapy services at
non-affiliated long-term care facilities increased by $4,935,000, from
$7,530,000 for the first nine months of 1996 to $12,465,000 for the first nine
months of 1997. The remaining $6,841,000, or 18.0% of such increase, is largely
attributable to higher average net patient service revenues per patient day at
the Company's "same store" facilities, primarily resulting from increased levels
of care provided to patients with medically complex conditions. Average net
patient service revenues per patient day at "same store" facilities increased
from $126.55 during the first nine months of 1996 to $134.60 during the first
nine months of 1997. Partially offsetting this increase was a reduction in
occupancy at "same store" facilities from 92.5% during the first nine months of
1996 to 91.3% during the first nine months of 1997. The average occupancy rate
at all of the Company's facilities decreased from 92.5% during the first nine
months of 1996 to 91.9% during the first nine months of 1997. The Company's
quality mix of private, Medicare and insurance revenues was 62.1% for the nine
months ended September 30, 1996 as compared to 61.2% in the same period of 1997.
The slight decrease in the quality mix percentage was primarily due to the
acquisition of new facilities.

                                       12
<PAGE>

FACILITY OPERATING EXPENSES. Facility operating expenses increased by
$29,525,000, or 31.2%, from $94,548,000 for the first nine months of 1996 to
$124,073,000 for the first nine months of 1997. The operation of the Ohio
Facilities accounted for $13,186,000, or 44.7% (during the period prior to July
1, 1997, at which time they became part of the "same store" facilities) of this
increase, the operation of Harford Gardens accounted for $3,205,000, or 10.9% of
this increase, the operation of the Massachusetts facilities accounted for
$2,324,000 or 7.9% of this increase and the operation of the Dayton, Ohio
facilities accounted for $731,000 or 2.5%. of this increase. Operating expenses
associated with additional non-affiliate therapy contracts accounted for
$4,486,000, or 15.2% , of the total increased in costs. The remainder of the
increase in facility operating expenses, $5,593,000, is primarily due to
increases in the costs of labor, medical supplies and rehabilitation therapy
services purchased from third parties at "same store" facilities.

GENERAL AND ADMINISTRATIVE; SERVICE CHARGES PAID TO AFFILIATE. General and
administrative expenses increased by $2,064,000, or 38.1%, from $5,415,000 for
the first nine months of 1996 to $7,479,000 for the first nine months of 1997.
This increase resulted from the acquisition of new facilities resulting in the
expansion of regional and corporate support, and additional travel, consulting
and systems development expenses associated with the Company's growth. The
Company reimburses an affiliate for rent and other expenses related to its
corporate headquarters as well as for certain data processing and administrative
services provided to the Company. During the first nine months of 1996, such
reimbursements totaled $526,000 compared to $531,000 in 1997.

SPECIAL COMPENSATION AND OTHER. In connection with the Offering and corporate
reorganization, the Company recorded $1,716,000 of non-recurring charges for the
first nine months of 1996. Of this amount, $1,524,000 consisted of compensation
earned by key members of management as a result of the successful Offering and
the corporate restructuring which preceded the Offering.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$2,030,000 for the first nine months of 1996 to $2,871,000 for the first nine
months of 1997 primarily as a result of the acquisition of the Ohio facilities
on July 1, 1996.

FACILITY RENT. Facility rent expense for the first nine months increased by
$677,000 from $7,663,000 in 1996 to $8,340,000 in 1997. The increase in rent
expense is due to the acquisition of new facilities.

INTEREST EXPENSE, NET. Interest expense, net, increased from $3,193,000 for the
first nine months of 1996 to $4,370,000 for the first nine months of 1997. This
net increase is primarily due to additional interest expense resulting from the
acquisition of Access Rehabilitation on July 1, 1997.

LOSS ON INVESTMENT IN LIMITED PARTNERSHIP. The Company accounts for its
investment in Bowie Center Limited Partnership using the equity method. The
Company recorded a loss of $327,000 for the first nine months of 1996 as
compared to a loss of $129,000 during the first nine months of 1997 in
connection with this investment.

EXTRAORDINARY LOSS ON EARLY RETIREMENT OF DEBT. During the second quarter of
1996, the Company repaid $25,000,000 of long-term debt using proceeds from the
Offering. In connection with this early repayment, the Company recorded an
extraordinary loss of $2,161,000 ($1,318,000, net of related tax benefit) as the
result of a prepayment penalty paid to the lender and the write-off of deferred
financing costs.

INCOME TAX BENEFIT. Income tax expense increased from $502,000 for the first
nine months of 1996 to $3,060,000 for the first nine months of 1997. Prior to
the date of the Offering, the Company's financial statements do not include a
provision for Federal or state income taxes because the Predecessor Entities
were not subject to Federal or state income taxation. The contribution of the
Predecessor Entities interests as part of the Company's corporate reorganization
caused the Company to recognize a non-recurring tax benefit of $400,000 during
the second quarter of 1996 as a result of inherited book-tax differences.

NET INCOME. Net income was $468,000 for the first nine months of 1996 as
compared to $4,787,000 for the first nine months of 1996.

                                       13
<PAGE>

 LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations and acquisitions growth
through a combination of mortgage financing and operating leases. Leased
facilities are leased from either the seller of the facilities or from a real
estate investment trust which has purchased the facilities from the seller. In
addition, in 1996 the Company financed the acquisition of the Ohio Facilities
from the seller by means of a lease which is accounted for as a capital lease
for financial reporting purposes. The Company's existing facility leases
generally require it to make monthly lease payments, establish escrow funds to
serve as debt service reserve accounts, 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. The Company
expects that various forms of leasing arrangements will continue to provide it
with an attractive form of financing to support its growth. In April of 1997,
the Company obtained a three-year $25 million revolving credit facility from a
commercial bank. Borrowings under this facility will be used to provide working
capital for existing operations and acquisitions and to finance a portion of
future acquisitions. During September 1997, the Company increased the number of
commercial banks party to its revolving credit facility from one to four,
amended certain terms of the revolving credit facility (including financial
covenants) and extended its maturity date through September 1, 2002.
Additionally, the Company also arranged a $25,000,000 synthetic leasing facility
with the same group of commercial banks. The leasing facility will be used to
finance the acquisition of long-term care facilities. Substantially all of the
$25,000,000 commitment was used in connection with the acquisition of the Dayton
facilities. The Company expects to expand its credit facilities as the need
arises. From time to time, the Company expects to pursue certain expansion and
new development opportunities associated with existing facilities. In connection
with a Certificate of Need received by its Ocala facility, the Company commenced
construction of a ninety-bed addition and a rehabilitation therapy area during
the third quarter of 1997. The costs of this project are estimated to be
approximately $4,200,000. The Company has been and will continue to be dependent
on third-party financing to fund its acquisition strategy, and there can be no
assurances that such financing will be available to the Company on acceptable
terms, or at all. The Company expects that cash on hand and generated through
operations, as well as funds available through the credit facilities will be
sufficient to meet its operating requirements through the remainder of 1997.

At September 30, 1997, the Company had three mortgage loans outstanding for
$18,248,000 and $5,600,000 in advances from its long-term revolving credit
facility. One mortgage loan had an outstanding principal balance of $16,512,000
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 a twelve-month base period. The Company's other mortgage
loans, which are encumbered by specific facilities, had aggregate principal
balances of $1,736,000 at September 30, 1997, of which $1,338,000 is due in
2010.

The Company's operating activities during the first nine months of 1996 used net
cash of $2,097,000 as compared to generating net cash of $4,025,000 in 1997, an
increase of $6,122,000. Most of the increase in cash provided by operations was
the result of increased net income combined with relatively smaller increases in
accounts receivable.

Net cash used by investing activities was $5,407,000 during the first nine
months of 1996 as compared to $5,858,000 used in 1997. The primary use of
invested cash during these periods related to additions to property and
equipment ($3,711,000 in 1996 compared to $2,134,000 in 1997), additions to
intangible assets ($1,009,000 in 1996 compared to $4,749,000 in 1997) and the
repayment of demand note in 1997 of $1,369,000.

Net cash provided used by financing activities was $21,286,000 in 1996 as
compared to $4,045,000 provided in 1997. The early retirement of debt and the
incurrence of a related prepayment penalty required the use of $26,517,000 in
1996. During the first nine months of 1996, the Company received $37,731,000 in
net proceeds from the Offering and a cash payment of $3,685,000 from the
landlord in connection with the leasing of the New Hampshire Facilities. During
1996 the Company also received $803,000 from the sale of equity interests to an
officer and a director of the Company. In March of 1996 a liquidating
distribution of $33,727,000 was paid to the Unitholders. During 1997, the
Company borrowed $5,600,000 from its revolving credit facility, most of which
was used to finance the acquisition of Access Rehabilitation, made principal
payments of $2,950,000 on its capital lease obligation and received cash
payments totaling $1,298,000 from its landlords in connection with the lease of
the Massachusetts and Dayton Facilities.

                                       14
<PAGE>

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.

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.

                                       15
<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 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 de-certification 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 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.

                                       16
<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 

            On August 1, 1997 the Company acquired four long-term care
            facilities with 401 beds in the Boston, Massachusetts area. The
            Company financed this acquisition through an operating lease with a
            real estate investment trust. The Combined Financial Reports for
            Cushman Management Associates, Inc. (the acquired entity) are
            included as Exhibit 99.1 to this report.

Item 6.     Exhibits and Reports on Form 8-K

            (a) Exhibits

              Number        Description

              10.1          First Amendment to Revolving Credit Agreement among
                            Harborside Healthcare Corporation and the other
                            Borrowers specified therein, the Lenders party
                            therto and Chase Manhattan Bank, as Administrative
                            Agent, dated as of August 1, 1997

              10.2          Second Amendment to Revolving Credit Agreement among
                            Harborside Healthcare Corporation and the other
                            Borrowers specified therein, the Lenders party
                            therto and Chase Manhattan Bank, as Administrative
                            Agent, dated as of August 28, 1997

              27.1          Financial Data Schedule

              99.1          Financial Statements of Cushman Management
                            Associates and Affiliates

            (b) Reports on 8-K
                None

                                       17
<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
                             Chairman, President, and Chief Executive Officer


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

DATE:   November 14, 1997

                                       18