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


                                    FORM 10-Q


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

                  For the quarterly period ended March 31, 1997

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

             For the Transition period from _________ to _________.

                         Commission file number 0-28656

                             KARRINGTON HEALTH, INC.
             (Exact name of registrant as specified in its charter)

             Ohio                                   31-1461482
(State or other jurisdiction of                    (IRS Employer
incorporation or organization)                  Identification No.)

                             919 Old Henderson Road
                              Columbus, Ohio 43220
                    (Address of principle executive offices)

                                 (614) 451-5151
              (Registrant's telephone number, including area code)



     Indicated by check mark whether  registrant (1) has filed all reports 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  registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

                             Yes __X__     No _____

     Shares of Registrant's common shares, without par value, outstanding at May
9, 1997 was 6,837,363.


<PAGE>


                             KARRINGTON HEALTH, INC.

                                AND SUBSIDIARIES
                                      INDEX



Part I.  Financial Information


   Item 1.   Financial Statements

             Consolidated Balance Sheets..................................  1

             Consolidated Statements of Operations
             Three Months Ended March 31, 1997 and 1996...................  2

             Consolidated Statements of Cash Flows
             Three Months Ended March 31, 1997 and 1996...................  3

             Notes to Consolidated Financial Statements.................. 4-6

   Item 2.   Management's Discussion and Analysis of Financial 
             Condition and Results of Operations......................... 7-10


Part II. Other Information


   Item 6.   Exhibits..................................................... 11

             Signatures................................................... 12



Note: Items 1-5 of Part II are omitted because they are not applicable.


<PAGE>


Part I.  Financial Information
Item 1.  Financial Statements



                             KARRINGTON HEALTH, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                                     ASSETS

                                                    March 31,      December 31,
                                                      1997             1996
                                                  ______________________________
                                                   (Unaudited)
Current assets:
     Cash and cash equivalents                    $  7,990,483     $ 12,283,185
     Accounts receivable                               158,253          105,315
     Amounts due from affiliates                       769,650          678,893
     Prepaid expenses                                  139,590          170,254
                                                  ------------     ------------
         Total current assets                        9,057,976       13,237,647
Property and equipment -- net                       60,042,305       52,011,748
Other assets -- net                                  3,958,960        4,300,546
                                                  ------------     ------------

     Total assets                                 $ 73,059,241     $ 69,549,941
                                                  ============     ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued liabilities     $    873,031     $    788,981
     Construction payables                           2,648,826        3,181,560
     Notes payable - bank                            2,600,000             --
     Payroll and related taxes                         448,269          735,337
     Unearned resident fees                            529,422          325,111
     Interest payable                                   54,421          158,103
     Current portion of long-term obligations          374,668          242,211
                                                  ------------     ------------
         Total current liabilities                   7,528,637        5,431,303
Long-term obligations                               34,442,984       32,758,692
Deferred income taxes                                  574,000          683,000
Shareholders' equity:
     Common shares                                  31,984,712       31,984,712
     Accumulated deficit                            (1,471,092)      (1,307,766)
                                                  ------------     ------------
         Total shareholders' equity                 30,513,620       30,676,946
                                                  ------------     ------------

Total liabilities and shareholders' equity        $ 73,059,241     $ 69,549,941
                                                  ============     ============



                             SEE ACCOMPANYING NOTES.

                                      -1-
<PAGE>



                             KARRINGTON HEALTH, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations
                   Three Months Ended March 31, 1997 and 1996

                                   (Unaudited)

                                                         Three Months Ended
                                                             March 31,
                                                        1997            1996
                                                      --------        --------

Revenues:
     Residence operations                          $ 2,939,488      $ 1,822,164
     Development and management fees                   194,152          122,006
                                                   -----------      -----------
         Total revenues                              3,133,640        1,944,170
Expenses:
     Residence operations                            2,075,198        1,311,952
     General and administrative                        890,182          574,894
     Rent expense                                       47,592           15,575
     Depreciation and amortization                     375,113          294,158
                                                   -----------      -----------
         Total expenses                              3,388,085        2,196,579
                                                   -----------      -----------

Operating loss                                        (254,445)        (252,409)

Interest expense                                      (148,990)        (314,784)
Interest income                                        155,060             --
Equity in net earnings
  (loss) of unconsolidated entities                    (23,951)          16,499
                                                   -----------      -----------

Loss before income taxes                              (272,326)        (550,694)

Deferred income taxes                                  109,000             --
                                                   -----------      -----------

Net loss                                           $  (163,326)     $  (550,694)
                                                   ===========      ===========
Per share information:
Net loss per share                                 $      (.02)     $      (.13)
Weighted average common shares outstanding           6,700,000        4,350,000



                             SEE ACCOMPANYING NOTES.

                                      -2-
<PAGE>
<TABLE>

                             KARRINGTON HEALTH, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                   Three Months Ended March 31, 1997 and 1996

                                   (Unaudited)

                                                                         Three Months Ended
                                                                              March 31,
                                                                        1997            1996
                                                                      --------        --------
<S>                                                               <C>               <C>         
Operating activities
Net loss                                                          $   (163,326)     $  (550,694)
Adjustments to reconcile net loss to net cash
  used in operating activities:
     Depreciation and amortization                                     375,113          294,158
     Deferred income taxes                                            (109,000)            --
     Straight-line rent expense                                          4,343            3,534
     Equity in net (earnings) loss of unconsolidated entities           23,951          (16,499)
     Change in operating assets and liabilities:
         Accounts receivable                                          (143,695)          15,851
         Prepaid expenses                                               30,664          (15,716)
         Accounts payable and accrued liabilities                       84,050          246,764
         Other liabilities                                            (186,439)        (207,213)
                                                                  ------------      -----------
     Net cash used in operating activities                             (84,339)        (229,815)



Investing activities
Purchases of property and equipment                                 (8,831,976)      (3,291,406)
Decrease in restricted cash balances                                   670,289             --
Distributions from unconsolidated entity                                  --            100,000
Payments of pre-opening costs                                         (255,514)        (130,469)
Payments for organization costs and other                             (182,650)         (45,282)
                                                                  ------------      -----------

     Net cash used in investing activities                          (8,599,851)      (3,367,157)


Financing activities
Proceeds from note payable - bank                                    2,600,000             --
Proceeds from mortgages                                              1,889,231        2,512,691
Repayment of mortgages                                                 (76,825)         (43,976)
Proceeds from debentures due partner                                      --          1,029,633
Payment for financing fees                                             (20,918)          (2,956)
                                                                  ------------      -----------
     Net cash provided by financing activities                       4,391,488        3,495,392
                                                                  ------------      -----------
Decrease in cash and cash equivalents                               (4,292,702)        (101,580)
Cash and cash equivalents at beginning of period                    12,283,185          144,833
                                                                  ------------      -----------
Cash and cash equivalents at end of period                        $  7,990,483      $    43,253
                                                                  ============      ===========
Supplemental disclosure of cash flow information

Cash paid for interest                                            $    941,077      $   467,369
                                                                  ============      ===========


                             SEE ACCOMPANYING NOTES.
</TABLE>

                                      -3-
<PAGE>



                             KARRINGTON HEALTH, INC.
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          For the Unaudited Three Months Ended March 31, 1997 and 1996


1.   Basis of Presentation

     The  consolidated  financial  statements  as of March 31,  1997 and for the
three  months  ended  March 31,  1997 and 1996 are  unaudited;  however,  in the
opinion of management,  all  adjustments  (consisting  of only normal  recurring
items)  necessary  for  a  fair  presentation  of  the  consolidated   financial
statements  for these interim  periods have been  included.  The results for the
interim  period  ended  March 31,  1997 are not  necessarily  indicative  of the
results to be  obtained  for the full  fiscal year  ending  December  31,  1997.
Certain  information and note disclosures  which would duplicate the disclosures
normally included in annual financial  statements have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.


2.   Per Share Information

     The net loss per  share  for the  three  months  ended  March  31,  1997 is
computed based on the weighted average number of shares  outstanding  during the
period. For the three months ended March 31, 1996, a proforma net loss per share
calculation  is presented.  The proforma net loss per share is computed based on
the weighted  average  number of shares  outstanding  during the period based on
4,350,000 common shares outstanding  following the July 1996  reorganization and
the 2,350,000  common shares issued as a result of the Company's  initial public
offering in July 1996.

     In February 1997, the FASB issued Statement No. 128,  "Earnings Per Share,"
which  eliminates  the  presentation  of primary  earnings  per share  (EPS) and
requires the  presentation  of basic EPS (the  principal  difference  being that
common stock equivalents are not considered in the computation of basic EPS). It
also  requires  dual  presentation  of basic and  diluted EPS on the face of the
income statement for all entities with complex capital  structures.  The Company
is required to adopt  Statement  No. 128 for its year ending  December 31, 1997,
but is  not  permitted  to  apply  its  provisions  to  1997  interim  financial
statements. Basic EPS calculated under the provisions of Statement No. 128 would
not  differ  from the net  loss  per  share  as  disclosed  in the  accompanying
statements of operations.


3.   Revolving Credit Agreements

     In February 1997, the Company  entered into a $3,000,000  revolving  credit
agreement expiring on March 31, 1998. Interest is payable monthly and accrues at
the bank's prime rate or LIBOR plus 2% if certain  financial ratios are met. The
company is required to pay a commitment fee of .25% on the unused portion of the
total credit allowed under the agreement and is required to maintain minimum net
worth and current ratio amounts.  At March 31, 1997,  $2,600,000 was outstanding
under this agreement.

     In March  1997,  the  Company  entered  into a  $5,000,000  line of  credit
expiring  February 25, 1998.  Interest is payable  monthly and, at the Company's
option,  accrues at the bank's  prime rate or LIBOR rate plus 2%. The Company is
required to  maintain a minimum  current  ratio  amount and may borrow up to the
lesser of $5,000,000 or the Company's total  aggregate  balance of cash and cash
equivalents  at the time of borrowing.  No amounts were  outstanding  under this
line of credit as of March 31, 1997 (see Note 7).


                                      -4-
<PAGE>

4.   Long-Term Obligations

     The Company  entered into  non-binding  financing  commitment  letters with
Meditrust Mortgage Investments, Inc. ("MMI"), an affiliate of Meditrust (a large
health care REIT). Under the letters, MMI is to provide up to approximately $100
million in  financing  for one  existing and  approximately  13 new  residences,
subject to various terms and conditions.  The financings,  which may be mortgage
or lease financings,  are to be entered into on a residence-by-residence  basis,
and  are to be for  terms  of up to 14  years  (with  two  additional  five-year
extension periods for the lease  transactions).  Interest during construction is
to float at 2% above the prime rate. On completion of each  residence,  payments
are to be set at an  amount  equal to 3.25%  over the  yield at that time on the
ten-year  U.S.  Treasury  notes.  Additional  interest  or  lease  payments  are
contingent  on  increased  revenues  of a financed  residence  during  specified
periods. As of March 31, 1997, the Company has completed mortgage agreements for
one existing and three new residences totaling $22 million.

5.   Investments in Unconsolidated Entities

     The Company and Catholic Health Initiatives ("CHI"), have entered into five
joint  venture  agreements  to  develop,  own and operate  six  assisted  living
residences in Ohio,  New Mexico and  Colorado.  Each project is owned jointly by
the Company and CHI, with the Company typically owning  approximately 20% of the
equity of the  project.  As of March 31,  1997,  the Company has  guaranteed  $1
million of joint venture debt financing.

     As of March 31, 1997, three residences were open (one stabilized  residence
and  two  residences  in  the  fill-up  phase),   three  residences  were  under
construction,  and eight other sites were under  development.  One residence was
open at March 31, 1996.  Summarized income statement  information of these joint
ventures is presented below.


                                                          Three months ended
                                                                March 31,
Statements of Operations                                 1997             1996
                                                       --------         --------

Residence revenues                                   $ 1,069,255        $503,730

Operating expenses                                       877,648         330,709

Depreciation and amortization expense                    194,542          42,555

Interest expense                                         189,795          97,470
                                                     -----------        --------
    Total expenses                                     1,261,985         470,734
                                                     -----------        --------
Net income (loss)                                    $  (192,730)       $ 32,996
                                                     ===========        ========



6.   Incentive Stock Plan

     The Company has adopted the 1996  Incentive  Stock Plan (the  "Plan")  that
provides for the grant of  incentive  and  non-qualified  stock  options,  stock
appreciation  rights,  restricted  stock,  performance  shares and  unrestricted
common shares.  The Plan also provides for the purchase of common shares through
payroll  deductions  by  employees  of the  Company who have  satisfied  certain
eligibility  requirements.  The maximum number of shares  available for issuance
under the Plan is 550,000.

     In  June  1996,  the  Company  granted  non-qualified  options  to  certain
officers,  key employees and  non-employee  directors to acquire  169,000 common
shares.  These options  became  effective  July 19, 1996 with an exercise  price
equal to the initial public  offering price of $13.00 per share.  In March 1997,
the Company granted non-qualified options to certain officers and a key employee
to acquire  24,500  common  shares at an exercise  price of $11.00.  The 139,500
employee options have a ten-year term with 25% of the options vesting on each of
the second through the fifth  anniversaries  of the date of grant.  Non-employee


                                      -5-
<PAGE>


directors  received grants of non-qualified  options to purchase an aggregate of
54,000  common  shares  which are  exercisable  beginning  six months  after the
effective  date of grant with a ten-year  term.  In  addition,  each  continuing
non-employee  director  will  receive  on the day after each  annual  meeting of
shareholders,  a grant of a non-qualified  stock option to purchase 2,000 common
shares of the Company at an exercise price equal to the fair market value of the
shares on the date of grant.  As of March 31,  1997,  options for 54,000  common
shares were exercisable. No options have been exercised.

7.   Subsequent Events

     On April 30, 1997,  the Company  completed  the  acquisition  of Kensington
Management  Group,  Inc.  (Kensington) of Golden Valley,  Minnesota.  Kensington
operates  innovative  Alzheimer's  care  communities  under the name  Kensington
Cottages which provide  Alzheimer's  care programs using medical  directors with
geriatric and dementia specialties.

     Kensington's  annualized revenues  approximate $10 million, and it operates
or has under  construction 12 residences with 406 licensed beds in three states.
Development is in progress for 112 additional  beds on its Rochester,  Minnesota
campus,  and for the establishment of new campus  communities with approximately
100 beds each in Jacksonville, Florida, and Phoenix, Arizona.

     The aggregate  purchase price  approximated  $28 million,  including  cash,
approximately  137,000 of the Company's  common shares,  and  approximately  $23
million in new and assumed bank debt financing.  Approximately $3 million of the
cash paid was borrowed under the Company's $5 million line of credit  agreement.
The  transaction  will be accounted for using the purchase method of accounting.
Accordingly, the Company will include the operating results of Kensington in its
consolidated statement of operations subsequent to April 30, 1997.


                                      -6-
<PAGE>


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

The  following  discussion  of results of  operations  and  financial  condition
contains forward-looking information that involves risks and uncertainties.  The
Company's actual results could differ materially from those anticipated. Factors
that could cause or contribute to such differences  include, but are not limited
to,  development  activity  and  construction  process  risks,  availability  of
financing  for  development,  government  regulations,  competition,  and issues
related to managing rapid growth and business expansion.

OVERVIEW

     At March 31,  1997,  the  Company had 10 assisted  living  residences  open
(including  three  residences  jointly-owned  with  CHI),  16  residences  under
construction,  15 sites under contract and 15 additional sites in various stages
of development. Subsequent to March 31, 1997, the Company signed contracts for 6
additional  sites  and  began  construction  on  2  additional  residences.  The
Company's  acquisition of Kensington  Management  Group,  Inc.  (Kensington) was
completed  on April 30,  1997.  At the time of  acquisition,  Kensington  had 12
residences  open or under  construction  with 406 licensed beds in three states.
Kensington  operates  Alzheimer's  care  communities  under the name  Kensington
Cottages.

     The Company  derives its revenues  from two primary  sources:  (i) resident
fees for the  delivery of assisted  living  services  and (ii)  development  and
management fee income for development  and management  services to residences in
which the  Company  does not own a  controlling  interest.  Residence  operating
revenues  include  fees  from  basic  care,   community  fees,   extended  care,
Alzheimer's  care and other services  provided to residents.  Community fees are
one-time  fees  payable by a resident  upon  admission,  and  extended  care and
Alzheimer's  care fees are paid by residents who require personal care in excess
of services  provided under the basic care program.  Development  and management
fee income  consists of development  fees  recognized  over the  development and
construction  period and  management  fees which are a percentage of the managed
residence's total operating revenues.

     The  Company  categorizes  operating  expenses as  follows:  (i)  residence
operations,  which includes labor,  food, media advertising and marketing costs,
and other direct general  operating  expenses;  (ii) general and  administrative
expenses, consisting of corporate and support functions; (iii) rent expense; and
(iv) depreciation and amortization.  In anticipation of its growth,  the Company
made significant  investments in the number of staff at its headquarters  during
1996.


                                      -7-
<PAGE>


RESULTS OF OPERATIONS

     The  following   table  sets  forth   certain  data  from  the   respective
consolidated statements of operations as a percentage of total revenues:



                                                          Three months ended
                                                               March 31,
                                                         1997            1996
                                                       --------        --------

Total revenues                                           100.0%          100.0%

Expenses:
     Residence operations                                 66.2            67.5
     General and administrative                           28.4            29.6
     Rent expense                                          1.5              .8
     Depreciation and amortization                        12.0            15.1
                                                      --------        --------
         Total expenses                                  108.1           113.0
                                                      --------        --------

Operating loss                                            (8.1)%         (13.0)%
                                                      ========        ========

Resident days                                           27,485          19,032
Average stabilized occupancy percentage                   95.4%           93.9%
End of period:
     Company owned:
         Number of residences                                7               5
         Number of units                                   373             245
     Total system, including joint ventures:
         Number of residences                               10               6
         Number of units                                   515             298



THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

     Total  revenue  increased  $1.2 million,  or 61.2%,  to $3.1 million in the
first quarter of 1997 from $1.9 million in the first  quarter of 1996  primarily
due to the  growth  in  resident  revenues.  Resident  revenues  increased  $1.1
million,  or 61.3%,  primarily  due to the opening of new  residences  (total of
$730,000),  an increase of $141,000 resulting from higher average daily resident
rates and the increased  occupancy of a residence which was in the fill-up phase
in 1996.  The average daily  resident rate increased 8.3% to $97.36 in the first
quarter of 1997 compared to $89.92 for the same period in 1996  primarily due to
an increase in the average daily basic care rate.  Revenues from residences open
throughout both periods increased 21.9% while revenues of stabilized  residences
open throughout both periods increased 12.8%.

     Development and management fees increased  $72,000,  or 59.1% from $122,000
in the first quarter of 1996 to $194,000 in the first quarter of 1997  primarily
due to development fees associated with residences in which the Company does not
own a controlling interest.

     Residence operations expenses increased $763,000, or 58.2%, to $2.1 million
in the first  quarter of 1997 from $1.3 million in the first quarter of 1996. As
a percentage of total revenues,  residence  operations  expenses  decreased from
67.5% in the first quarter of 1996 to 66.2% in the same period of 1997 primarily
due to the 1997  residences  in the fill-up  phase were closer to  stabilization
and,  to a lesser  extent,  an  increase  in  operating  margins  of  stabilized
residences.

     General  and  administrative  expenses  increased  $315,000,  or 54.8%,  to
$890,000 in the first quarter of 1997 from $575,000 in the first quarter of 1996
primarily due to increased  compensation,  payroll taxes and related benefits of
$200,000 as a result of hiring additional  management and staff at the Company's
headquarters  to implement the Company's  growth plans.  The Company expects the

                                      -8-
<PAGE>


rate of increase in its general and administrative expenses will decrease as new
staff needs have been reduced by recent hires. In addition,  the Company expects
its general and  administrative  expenses  will  decrease as a percentage of its
total  operating  revenues due to anticipated  economies of scale resulting from
the Company's development program.

     Depreciation and amortization  increased $81,000,  or 27.5%, to $375,000 in
the first quarter of 1997 from  $294,000 in the first quarter of 1996  primarily
due to the opening of the new  residences  (total of  $135,000)  offset by lower
pre-opening cost amortization on stabilized residences.

     Interest expense decreased  $166,000,  or 52.7%, from $315,000 in the first
quarter  of 1996 to  $149,000  in the first  quarter  of 1997  primarily  due to
capitalization  of  interest  related  to  the  Company's   increased  level  of
construction activity and the payoff of related party debt in July 1996.

     Interest income resulted primarily from the investment of the Company's net
proceeds from its initial public offering in July 1996.

LIQUIDITY AND CAPITAL RESOURCES

     In July  1996,  the  Company  completed  its  initial  public  offering  of
2,350,000  common  shares.  The net proceeds to the Company  were  approximately
$27.8 million.  Approximately  $5.7 million of the net proceeds were used to pay
the  outstanding  principal  and  accrued  interest of  subordinated  debentures
payable to a partner.  The balance of the net proceeds are being used to finance
the development and acquisition of additional assisted living residences and for
working  capital  and  general  corporate  purposes.  The Company has no current
agreements or  understandings  with respect to any  acquisition  of  residences.
Pending such uses,  the Company has  invested  the net  proceeds in  short-term,
investment grade, interest-bearing securities or certificates of deposit.

     The Company has entered into non-binding  financing commitment letters with
Meditrust Mortgage Investments, Inc. ("MMI"), an affiliate of Meditrust (a large
health care REIT). Under the letters, MMI is to provide up to approximately $100
million in  financing  for one  existing and  approximately  13 new  residences,
subject to various terms and conditions.  The financings,  which may be mortgage
or lease financings,  are to be entered into on a residence-by-residence  basis,
and  are to be for  terms  of up to 14  years  (with  two  additional  five-year
extensions periods for the lease transactions).  Interest during construction is
to float at 2% above the prime rate. On completion of each  residence,  payments
are to be set at an  amount  equal to 3.25%  over the  yield at that time on the
ten-year  U.S.  Treasury  notes.  Additional  interest  or  lease  payments  are
contingent  on  increased  revenues  of a financed  residence  during  specified
periods. As of March 31, 1997, the Company has completed mortgage agreements for
one existing and three new residences totaling $22 million.

     For the three  months  ended  March 31,  1997 and 1996,  cash flows used by
operating activities were $84,000 and $230,000,  respectively.  The Company used
$9.3 million and $3.4 million,  respectively, to fund residence development, and
received $4.4 million and $3.5  million,  respectively,  in cash from  financing
activities.  At March 31,  1997,  the  Company had  restricted  cash of $715,000
recorded in other assets on the consolidated balance sheet.

     In 1997 through 1999, the Company plans to open or acquire approximately 71
new Company-owned  residences and 9 jointly-owned  residences bringing the total
number of  residences  to 89. To date,  the Company has 29 of the 71  residences
open or under  construction  including  the recently  completed  acquisition  of
Kensington  Management Group, Inc. which has 10 residences open and 2 residences
under  construction.  The Company has 21 additional  sites under  contract.  The
Company has been, and will continue to be,  dependent on  third-party  financing
for its development program.

     The Company estimates that newly developed  residences will generally range
in cost from $6.0 to $7.5 million,  with the  development  cycle taking up to 24
months, from site identification to residence opening. There can be no assurance

                                      -9-
<PAGE>


that  financing for the Company's  development  program will be available to the
Company on  acceptable  terms,  if at all.  Moreover,  to the extent the Company
acquires  properties that do not generate positive cash flow, the Company may be
required to seek additional capital for working capital and liquidity purposes.

     The  Company  expects  that  the net  proceeds  from its  public  offering,
together  with  existing  financing  commitments  and  additional  financing the
Company  anticipates  will  be  available,   will  be  sufficient  to  fund  its
development  programs  for  the  next 9  months.  Additional  financing  will be
required  to  complete  the  Company's  growth  plans and to  refinance  certain
existing indebtedness.

BUSINESS ACQUISITION

     The Company's acquisition of Kensington Management Group, Inc. (Kensington)
was completed on April 30, 1997. At the time of acquisition, Kensington had open
or under  construction  12 residences with 406 licensed beds in three states and
annualized   revenues  of  approximately   $10  million.   Kensington   operates
Alzheimer's care communities  under the name Kensington  Cottages.  The purchase
price was approximately $28 million.  The Company issued  approximately  137,000
common shares, assumed debt of approximately $1.7 million,  incurred new debt of
approximately $21.7 million and made cash payments of approximately $3.1 million
(approximately  $3 million of which was  borrowed  under its $5 million  line of
credit  agreement).  The Company has entered into a financing  agreement  with a
lender for $27.6  million of new debt,  including  an amount for new  residences
under  development.  The Company will file a Form 8-K containing the audited and
proforma financial statements of Kensington as required by Regulation S-X.


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<PAGE>


Part II.  Other Information


Items 1-5 Are Not Applicable

Item 6.  Exhibits

Exhibit Number    Description

27.1   Financial Data Schedule,   which  is  submitted   electronically  to  the
       Securities and Exchange Commission for information only and not filed.


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<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.

Dated May 13, 1997


                                          KARRINGTON HEALTH, INC.
                                               (Registrant)

                                      /s/ Richard R. Slager
                                          ______________________________________
                                          Richard R. Slager
                                          Chief Executive Officer

                                      /s/ Alan B. Satterwhite
                                          ______________________________________
                                          Alan B. Satterwhite
                                          Chief Financial Officer


<PAGE>


                                INDEX TO EXHIBITS


Exhibit Number    Description

27.1   Financial Data Schedule, which is submitted electronically to the
       Securities and Exchange Commission for information only.


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