=================================================================

                                 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 September 30, 1996

                                      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
November 6, 1996 was 6,700,000.

       =================================================================


<PAGE>

                            KARRINGTON HEALTH, INC.

                                     INDEX



Part I.  Financial Information


  Item 1. Financial Statements
          Consolidated Balance Sheets....................................  1

          Consolidated Statements of Operations
          Three and Nine Months Ended September 30, 1995 and 1996........  2

          Consolidated Statements of Cash Flows
          Nine Months Ended September 30, 1995 and 1996..................  3

          Notes to Consolidated Financial Statements...................  4-5

  Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations..........................  6-9


Part II.  Other Information


         Item 6. Exhibits................................................ 10

                 Signatures.............................................. 11



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 AFFILIATES

                          Consolidated Balance Sheets

                                    ASSETS

                                                    December 31,   September 30,
                                                        1995            1996
                                                    ---------------------------
                                                                    (Unaudited)

Current assets:
    Cash and cash equivalents                       $   144,833    $ 18,397,677
    Accounts receivable                                 243,914         107,051
    Amounts due from affiliates                         523,278         904,692
    Prepaid expenses                                     98,821         210,519
                                                    -----------    ------------
        Total current assets                          1,010,846      19,619,939
Property and equipment -- net                        24,879,363      38,615,023
Other assets -- net                                     786,233       3,749,493
                                                    -----------    ------------

    Total assets                                    $26,676,442    $ 61,984,455
                                                    ===========    ============

                            LIABILITIES AND EQUITY

Current liabilities:
    Accounts payable and accrued liabilities        $   614,713    $    995,053
    Construction payables                               810,334       1,849,219
    Payroll and related taxes                           410,590         357,411
    Unearned resident fees                              414,821         241,696
    Interest payable                                    129,699         134,663
    Current portion of long-term obligations            205,485         251,128
                                                    -----------    ------------
        Total current liabilities                     2,585,642       3,829,170
Long-term obligations                                18,249,893      26,325,370
Deferred income taxes                                                 1,100,000
Equity:
    Common shares                                          --        32,025,358
    Partners' equity                                  5,840,907            --
    Accumulated deficit                                    --        (1,295,443)
                                                    -----------    ------------
        Total equity                                  5,840,907      30,729,915
                                                    -----------    ------------

    Total liabilities and equity                    $26,676,442    $ 61,984,455
                                                    ===========    ============



                            SEE ACCOMPANYING NOTES.

                                       1

<PAGE>

<TABLE>

                            KARRINGTON HEALTH, INC.
                                AND AFFILIATES

                     Consolidated Statements of Operations
            Three and Nine Months Ended September 30, 1995 and 1996

                                  (Unaudited)



                                                 Three Months Ended             Nine Months Ended
                                                    September 30                  September 30
                                             --------------------------    --------------------------
                                                 1995           1996           1995           1996
                                               --------       --------       --------       -------- 
<S>                                          <C>            <C>            <C>            <C>        
Revenues:
    Residence operations                     $ 1,571,573    $ 2,403,331    $ 4,482,733    $ 6,242,125
    Development and management fees              126,681         67,321        292,609        493,308
                                             -----------    -----------    -----------    -----------
        Total revenues                         1,698,254      2,470,652      4,775,342      6,735,433

Expenses:
    Residence operations                       1,048,171      1,696,036      3,088,564      4,488,088
    General and administrative                   461,764        669,387      1,098,929      1,927,484
    Depreciation and amortization                232,884        468,374        659,960      1,055,243
                                             -----------    -----------    -----------    -----------
        Total expenses                         1,742,819      2,833,797      4,847,453      7,470,815
                                             -----------    -----------    -----------    -----------

Operating loss                                   (44,565)      (363,145)       (72,111)      (735,382)

Interest expense                                (239,929)      (213,422)      (728,155)    (1,047,356)
Interest income                                     --          239,846           --          239,846
Equity in net earnings
  (loss) of unconsolidated entity                (25,230)        15,756        (77,889)        32,379
                                             -----------    -----------    -----------    -----------

Loss before income taxes                        (309,724)      (320,965)      (878,155)    (1,510,513)

Deferred income taxes                               --       (1,100,000)          --       (1,100,000)
                                             -----------    -----------    -----------    -----------

Net loss                                     $  (309,724)   $(1,420,965)   $  (878,155)   $(2,610,513)
                                             ===========    ===========    ===========    ===========

Proforma information:
Net loss per share                           $      (.07)   $      (.23)   $      (.20)   $      (.52)
Weighted average common shares outstanding     4,350,000      6,240,200      4,350,000      4,984,700


</TABLE>


                            SEE ACCOMPANYING NOTES.

                                       2

<PAGE>

<TABLE>

                            KARRINGTON HEALTH, INC.
                                AND AFFILIATES

                     Consolidated Statements of Cash Flows
                 Nine Months Ended September 30, 1995 and 1996

                                  (Unaudited)

                                                                   Nine Months Ended
                                                                     September 30,
                                                             -----------------------------
                                                                  1995           1996
                                                             -------------   -------------
<S>                                                          <C>             <C>          
Operating activities
Net loss                                                     $   (878,155)   $ (2,610,513)
Adjustments to reconcile net loss to net cash
  used in operating activities:
    Write-off of intangible assets                                 95,000            --
    Depreciation and amortization                                 659,960       1,055,243
    Deferred income taxes                                            --         1,100,000
    Straight-line rent expense                                      9,389          13,836
    Equity in net (earnings) loss of unconsolidated entity         77,889         (32,379)
    Change in operating assets and liabilities:
        Accounts receivable                                       (88,053)       (244,551)
        Prepaid expenses                                          (20,054)       (111,698)
        Accounts payable and accrued liabilities                   46,191         380,340
        Other liabilities                                         (92,283)       (221,340)
                                                             ------------    ------------

    Net cash used in operating activities                        (190,116)       (671,062)

Investing activities
Increase in assets whose use is limited                          (239,000)     (1,132,314)
Purchases of property and equipment                            (7,329,186)    (13,317,550)
Equity contribution to unconsolidated entities                       --        (1,171,039)
Payments of pre-opening costs                                    (197,389)       (517,742)
Payments for organization costs and other                         (21,050)       (125,902)
                                                             ------------    ------------

    Net cash used in investing activities                      (7,786,625)    (16,264,547)

Financing activities
Net proceeds from public offering                                    --        27,499,521
Proceeds from mortgages                                        15,366,744      12,961,243
Repayment of mortgages                                         (7,439,460)     (4,820,119)
Proceeds from debentures due partner                                 --         5,501,535
Repayment of debentures due partner                                  --        (5,535,375)
Payment for financing fees                                       (211,678)       (758,119)
Proceeds from partner's capital contribution                      750,000            --
Distributions from unconsolidated entity                             --           339,767
                                                             ------------    ------------

    Net cash provided by financing activities                   8,465,606      35,188,453
                                                             ------------    ------------

Increase in cash                                                  488,865      18,252,844
Cash at beginning of period                                       137,062         144,833
                                                             ------------    ------------

Cash at end of period                                        $    625,927    $ 18,397,677
                                                             ============    ============

Supplemental disclosure of cash flow information

Cash paid for interest                                       $  1,060,860    $  1,623,938
                                                             ============    ============

</TABLE>


                            SEE ACCOMPANYING NOTES.

                                       3

<PAGE>


                            KARRINGTON HEALTH, INC.
                  Notes to Consolidated Financial Statements
   For the Unaudited Three and Nine Months Ended September 30, 1995 and 1996


1.  Basis of Presentation

     Karrington  Health,  Inc.  was  incorporated  in April 1996 to become the
parent  of  Karrington   Operating   Company   (Karrington   Operating)   upon
consummation of the  reorganization  transactions  which occurred  immediately
prior to the effective date of the Company's  initial public  offering in July
1996  (see Note 2).  Hereinafter,  all  references  to the  "Company"  include
Karrington  Operating and Karrington Health, Inc.  Karrington  Operating is an
Ohio General Partnership.

     The  consolidated  financial  statements as of September 30, 1996 and for
the three and nine months  ended  September  30, 1995 and 1996 are  unaudited;
however, in the opinion of management,  all adjustments  (consisting of normal
recurring adjustments except for those adjustments relating to the adoption of
AICPA SOP 93-7 "Reporting on Advertising  Costs" in the first quarter of 1995)
necessary for a fair presentation of the consolidated financial statements for
these interim  periods have been included.  The results for the interim period
ended September 30, 1996 are not  necessarily  indicative of the results to be
obtained  for  the  full  fiscal  year  ending  December  31,  1996.   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.  Initial Public Offering

     The Company  consummated an initial  public  offering of 2,350,000 of its
authorized and unissued common shares on July 18, 1996 at $13.00 per share. Of
the net proceeds  from the  offering  ($27.8  million),  a portion was used to
retire  $5.7  million of  subordinated  debentures  payable to a partner.  The
balance  of the net  proceeds  will be used to  finance  the  development  and
acquisition of additional  assisted living residences,  as well as for working
capital and general corporate purposes.


3.  Long-Term Obligations

     In May 1996, the Company  entered into a $5,800,000 loan agreement with a
county  industrial  development  authority for the  permanent  financing of an
assisted living residence in Pittsburgh, Pennsylvania. The loan bears interest
at a weekly rate  determined by the  remarketing  agent (4.0% at September 30,
1996).  Annual  principal  payments  are due on July 1, 1998  through  2021 in
amounts ranging from $100,000 to $300,000.

     In September  1996, the Company entered into two mortgage loan agreements
totaling $11.6 million for construction and permanent  financing on residences
in Indianapolis,  Indiana. Interest during construction floats at 2% above the
prime rate. On the completion of each  residence,  interest rates are set at a
rate equal to 3.25% over the yield at the time on the ten-year  U.S.  Treasury
Notes with the same maturity date.  Principal and interest  payments begin one
year  after   completion  of  the  residences  and  are  based  on  a  25-year
amortization  schedule.  Additional  interest  payments are based on increased
revenues of these  residences  during specific  periods.  The entire principal
balances are due in September, 2010.


                                       4

<PAGE>



     At September 30, 1996, there was $1.4 million of restricted cash recorded
in other assets on the consolidated balance sheet.  Approximately  $850,000 of
this total is for  project  development  expenditures.  The  remaining  amount
represents collateral under various loan agreements.


4.  Investments in Joint Ventures

     During 1995,  the Company  entered into a joint  development  arrangement
with Catholic Health  Initiatives  (CHI).  Pursuant to this  arrangement,  the
Company  expects to develop,  construct and operate up to six assisted  living
residences by 1998. As of September 30, 1996,  construction was in progress on
residences in Albuquerque, New Mexico, Colorado Springs, Colorado, Cincinnati,
Ohio and Dayton,  Ohio.  For the nine months ended  September  30,  1996,  the
Company  made equity  contributions  of  approximately  $1.2 million for these
projects  (recorded  in  other  assets  on the  consolidated  balance  sheet).
Effective  July 18, 1996,  these ventures  entered into  financing  agreements
totaling $23 million for construction and permanent financing.


5.  Incentive Stock Plan

     The Company has adopted the 1996 Incentive  Stock Plan (the "Plan").  The
Plan  provides for the grant of incentive  and  non-qualified  stock  options,
stock  appreciation   rights,   restricted  stock,   performance  shares,  and
unrestricted  common shares to key associates.  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.  No shares
have been issued under the Plan.

     The Company  has  granted  non-qualified  options to  employees  totaling
115,000 common shares.  These options were granted as of the effective date of
the initial public offering with an exercise price equal to the initial public
offering price of $13.00 per share.  The 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. In addition,  non-employee  directors  received,  on the
first business day after the effective  date of the initial  public  offering,
grants of  non-qualified  options to purchase an  aggregate  of 54,000  common
shares at an exercise price equal to the public offering price. These director
options will become  exercisable  beginning six months after the date of grant
with a ten-year term.


6.  Tax Status

     As a partnership,  Karrington  Operating recorded no provision for income
taxes.  Partnership  income and losses  were  allocated  to the  partners  for
inclusion  in  their  respective  income  tax  returns.  As a  result  of  the
reorganization  (described  above),  the Company will apply the  provisions of
Statement of Financial  Accounting  Standards No. 109,  Accounting  for Income
Taxes. Deferred income taxes are provided for differences in the basis for tax
proposes  and  for  financial  accounting  purposes  of  recorded  assets  and
liabilities,   principally,   depreciable  property  and  certain  capitalized
development  costs.  A net  deferred  income tax  provision  and  liability of
approximately  $1,100,000  was recorded in the third quarter of 1996 primarily
as a result of the reorganization.

                                       5

<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 September 30, 1996, the Company had 7 assisted living  residences open
(including  one  residence  jointly-  owned  with  CHI),  8  residences  under
construction,  and 17 residences in various stages of development.  All 17 new
residences  in  development  are under  contract and  construction  starts are
expected  for 10 of these new  assisted  living  residences  before the end of
1996.  Subsequent to September  30, 1996,  the Company  opened two  additional
jointly-owned residences,  signed contracts for two additional sites and began
construction on one additional residence.

     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;   and  (iii)
depreciation and amortization. In anticipation of its growth, the Company made
significant investments in the number of staff at its headquarters in 1995 and
the first three quarters of 1996.


                                       6

<PAGE>



Results of Operations

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

<TABLE>
                                            Three months ended         Nine months ended
                                               September 30,             September 30,
                                           ---------------------     ---------------------
                                             1995         1996         1995         1996
                                           --------     --------     --------     --------
<S>                                         <C>          <C>          <C>          <C>   
Total revenues                               100.0%       100.0%       100.0%       100.0%

Expenses:
    Residence operations                      61.7         68.6         64.7         66.6
    General and administrative                27.2         27.1         23.0         28.6
    Depreciation and amortization             13.7         19.0         13.8         15.7
                                          --------     --------     --------     --------
        Total expenses                       102.6        114.7        101.5        110.9
                                          --------     --------     --------     --------

Operating loss                                (2.6)%      (14.7)%       (1.5)%      (10.9)%
                                          ========     ========     ========     ========

Resident days                               16,934       22,573       49,632       61,892
Average stabilized occupancy percentage       97.9%        93.9%        96.4%        93.3%
End of period:
    Number of residences                         3            6            3            6
    Number of units                            160          312          160          312

</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995

     Total revenue  increased  $772,000,  or 45%, to $2.5 million in the third
quarter of 1996 from $1.7 million in the third  quarter of 1995  primarily due
to the growth in resident revenues.  Resident revenues increased $832,000,  or
53%,  primarily  due to the  opening  of three  residences  in  October  1995,
February  1996, and August 1996 (total of $784,000) and an increase of $95,000
resulting  from  higher  average  daily  resident  rates,  offset  by a slight
decrease of $47,000 due to occupancy  levels.  The average daily resident rate
increased 7% to $95 in the third  quarter of 1996 compared to $89 for the same
period in 1995  primarily  due to an increase in the average  daily basic care
rate.

     Development and management fees decreased  $59,000,  or 47% from $127,000
in the third quarter of 1995 to $67,000 in the third quarter of 1996 primarily
due to development  fees  associated with residences in which the Company does
not own a controlling interest.

     Residence  operations expenses increased $648,000,  or 62%, to $1,696,000
in the third quarter of 1996 from  $1,048,000 in the third quarter of 1995. As
a percentage of residence operations  revenues,  residence operations expenses
increased  from 67% in the third  quarter of 1995 to 71% in the same period of
1996  primarily  due  to  the  opening  of  three  new  residences  reflecting
operations expenses which are higher as a percent of total revenues during the
first year of operations of a residence.

     General  and  administrative  expenses  increased  $208,000,  or 45%,  to
$669,000 in the third  quarter of 1996 from  $462,000 in the third  quarter of
1995  primarily  due to  increased  compensation,  payroll  taxes and  related
benefits of $165,000 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  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.


                                       7

<PAGE>



     Depreciation and amortization increased $235,000, or 101%, to $468,000 in
the third quarter of 1996 from $233,000 in the third quarter of 1995 primarily
due to the opening of the three new residences discussed above.

     Interest  income resulted from the investment of $22.1 million in initial
public offering proceeds (after debt retirement) received in late July 1996.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1995

     Total revenue increased $1,960,000,  or 41%, to $6.7 million in the first
nine  months of 1996  from  $4.8  million  in the  first  nine  months of 1995
primarily due to the growth in resident revenues.  Resident revenues increased
$1,759,000,  or 39%,  primarily  due to the  opening  of three  residences  in
October 1995,  February  1996,  and August 1996 (total of  $1,599,000)  and an
increase of $279,000  resulting  from higher  average  daily  resident  rates,
offset by a slight decrease of $119,000 due to occupancy  levels.  The average
daily  resident rate increased 8% to $93 in the first nine months of 1996 from
$86 in the first  nine  months of 1995  primarily  due to an  increase  in the
average daily basic care rate.

     Development and management fees increased  $201,000,  or 69%, to $493,000
in the first nine  months of 1996 from  $293,000  in the first nine  months of
1995 primarily due to development  fees associated with an increased number of
residences in which the Company does not own a controlling interest.

     Residence operations expenses increased $1,400,000, or 45%, to $4,488,000
in the first nine months of 1996 from  $3,089,000  in the first nine months of
1995  primarily  due  to  the  opening  of  three  new  residences  (total  of
$1,450,000).  As a percentage  of  residence  operations  revenues,  residence
operations expenses increased from 69% in the first nine months of 1995 to 72%
in the first nine months of 1996  primarily  due to new  residences  opened in
October 1995, February 1996, and August 1996 as operations expenses are higher
as a percent of revenues during the first year of operations.

     General  and  administrative  expenses  increased  $829,000,  or 75%,  to
$1,927,000 in the first nine months of 1996 from  $1,099,000 in the first nine
months of 1995  primarily  due to increased  compensation,  payroll  taxes and
related benefits of $647,000 as a result of hiring  additional  management and
staff at the Company's  headquarters to implement the Company's  growth plans,
including the addition of a manager-in-training program in the Spring of 1995,
increased incentive compensation and compensation increases for existing staff
and management.

     Depreciation and amortization  increased $395,000,  or 60%, to $1,055,000
in the first nine  months of 1996 from  $660,000  in the first nine  months of
1995 primarily due to the opening of three new residences (total of $558,000).
This increase was offset by a decrease of $158,000 as a result of the adoption
of AICPA SOP 93-7 in the first  quarter  of 1995 and a change in  estimate  in
1995  relating  to the  amortization  period of  pre-opening  costs  which was
reduced from three years to one year.

     Interest expense increased  $319,000,  or 44%, to $1,047,000 in the first
nine months of 1996 from  $728,000 in the first nine months of 1995  primarily
due to the opening of three new residences.

     Interest  income resulted from the investment of $22.1 million in initial
public offering proceeds (after debt retirement) received in late July 1996.

                                       8

<PAGE>



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 will be 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  intends  to  invest  the net  proceeds  in
short-term,  investment grade,  interest-bearing securities or certificates of
deposit.

     In May, 1996, the Company entered into non-binding  financing  commitment
letters  with a large  health  care REIT to  provide up to  approximately  $88
million in financing  for one existing and  approximately  12 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 with the same maturity  date.  Additional
interest  or lease  payments  are based on  increased  revenues  of a financed
residence during specified periods.

     In May 1996, the Company  entered into a $5,800,000 loan agreement with a
county  industrial  development  authority for the  permanent  financing of an
assisted living residence in Pittsburgh, Pennsylvania. The loan bears interest
at a weekly rate determined by the  remarketing  agent (3.65% as of August 28,
1996).  Annual  principal  payments  are due on July 1, 1998  through  2021 in
increasing amounts of $100,000 to $300,000.

     In September  1996, the Company entered into two mortgage loan agreements
totaling $11.6 million for construction and permanent  financing on residences
in Indianapolis,  Indiana. Interest during construction floats at 2% above the
prime rate. On the completion of each  residence,  interest rates are set at a
rate equal to 3.25% over the yield at the time on the ten-year  U.S.  Treasury
Notes with the same maturity date.  Principal and interest  payments begin one
year  after   completion  of  the  residences  and  are  based  on  a  25-year
amortization  schedule.  Additional  interest  payments are based on increased
revenues of these  residences  during specific  periods.  The entire principal
balances are due in September, 2010.

     Effective  July 18, 1996,  four newly formed  unconsolidated  entities in
which  the  Company  owns  interests  ranging  from 20% to 35%,  entered  into
financing  agreements  totaling  $23 million for  construction  and  permanent
financing for five assisted living residences.

     For the nine months ended September 30, 1995 and 1996, cash flows used by
operating  activities  were $190,000 and $671,000,  respectively.  The Company
used  $7,787,000  and  $16,265,000,  respectively,  to  acquire  property  and
equipment  and  other  assets,   and  received   $8,466,000  and  $35,188,000,
respectively,  in cash from financing  activities.  At September 30, 1996, the
Company had  restricted  cash of $1.4 million  recorded in other assets on the
consolidated balance sheet.

     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  and  acquisition  programs  for at  least  the  next  18  months.
Additional  financing will be required to complete the Company's  growth plans
and to refinance certain existing indebtedness.

                                       9

<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.

                                      10

<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 November 8, 1996


                            KARRINGTON HEALTH, INC.
                                 (Registrant)


                                             _________________________________
                                             Richard R. Slager
                                             Chief Executive Officer


                                             _________________________________
                                             Alan B. Satterwhite
                                             Chief Financial Officer

                                      11


<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.

                                      12