SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


        Date of Report (date of earliest event reported): March 31, 1997

                     MEADOWBROOK REHABILITATION GROUP, INC.


             (Exact name of registrant as specified in its charter)

     Delaware                    0-19726                         94-3022377
  ---------------            ---------------                ---------------
  (State or other            (Commission File             (I.R.S.  Employer
  jurisdiction of                Number)             Identification Number)
  incorporation)

          2200 Powell Street,  Suite 800,  Emeryville,  CA           94608 
          ------------------------------------------------       ----------
             (Address of principal  executive  offices)          (zip code)


               Registrant's telephone number, including area code:
                                 (510) 420-0900






<PAGE>
Item 2.  Acquisition or Disposition of Assets

     On March 31,  1997,  Meadowbrook  Rehabilitation  Group,  Inc.,  a Delaware
Corporation  (the  "Company"),  sold the  business  and  assets  of  Meadowbrook
Rehabilitation  Group of  Georgia,  Inc.  (the  "Subsidiary"),  a  wholly  owned
subsidiary of the Company,  to Restore  Rehabilitation  Group,  Inc. The Company
also  sold  all  of  the  outstanding  stock  of the  Subsidiary  in a  separate
transaction with the same purchaser.  The Subsidiary  operated a neurobehavioral
program  in  leased  space  within a 294 bed acute  care  hospital  in  Atlanta,
Georgia.  The Subsidiary  also operated a subacute  rehabilitation  program in a
dedicated  hospital based unit in Lithia  Springs,  Georgia,  under a management
agreement.  Finally, the Subsidiary operated a post-acute rehabilitation program
located in a facility owned by the Subsidiary in Decatur, Georgia.

     The Company received  $1,250,000 for the sale of the business and assets of
the  Subsidiary.  The  Company  received  $50,000  for  the  sale  of all of the
outstanding stock of the Subsidiary.  The selling price for the stock,  business
and assets of the Subsidiary was  determined  based on arms-length  negotiations
between the parties.  There was no material  relationship  between the purchaser
and the Company or any of the Company's  affiliates,  any director or officer of
the Company or any  associate  of any such  director or  officer,  although  the
Company  notes that a minority  shareholder  in the  purchaser  was formerly the
principal day-to-day manager of the Subsidiary's operations for the Company.

<PAGE>


Item  7.      Financial Statements and Exhibits.


         (b)  Pro Forma financial information required pursuant to Article 11 of
              Regulation S-X.

              The  following  Pro Forma  financial  statements  are included
              following the signature page to this Form 8-K:

              Introduction to the Pro Forma Condensed Consolidated financial
              information.

              Pro Forma Condensed  Consolidated Balance Sheet as of December
              31, 1996, (unaudited).

              Pro Forma Condensed Consolidated  Statements of Income for the
              twelve months ended June 30, 1996 and for the six months ended
              December 31, 1996, (unaudited).

              Notes to Pro Forma Condensed Consolidated financial information
              (unaudited).

         (c)  Exhibits:

              Exhibit 2.0   Agreement  of  Purchase  and Sale,  dated  March 17,
                            1997,  between Restore  Rehabilitation  Group, Inc.,
                            Meadowbrook    Rehabilitation   Group,   Inc.,   and
                            Meadowbrook  Rehabilitation  Group of Georgia,  Inc.
                            The Agreement  references  all exhibits  attached to
                            such  Agreement  of  Purchase  and  Sale,  but omits
                            copies  of  such   exhibits.   Upon   request,   the
                            Registrant  agrees to furnish  supplementally to the
                            Commission a copy of any omitted exhibit.

<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 hereunto duly authorized.

     Dated: April 14, 1997.

                                          MEADOWBROOK REHABILITATION
                                          GROUP, INC.


                                          By:   /s/ Harvey Wm. Glasser, M.D.
                                          _____________________________________
                                                  Harvey Wm. Glasser, M.D.
                                          President and Chief Executive Officer


<PAGE>


Item 7(b)         Meadowbrook Rehabilitation Group, Inc. reflecting the sale of
                  Meadowbrook Rehabilitation Group of Georgia, Inc. 
                  Introduction  to unaudited  Pro Forma  Consolidated  Financial
                  information.

                  The following  pages present the unaudited Pro Forma Condensed
                  Consolidated  Balance  Sheet of the Company as of December 31,
                  1996,  and the  unaudited  Pro  Forma  Condensed  Consolidated
                  Statements  of Income of the  Company  for the  twelve  months
                  ended June 30,  1996 and the six  months  ended  December  31,
                  1996. The Pro Forma Condensed  Consolidated  Balance Sheet was
                  prepared   assuming   that  the   Company's   disposition   of
                  Meadowbrook  Rehabilitation Group of Georgia,  Inc. took place
                  on the last day of each  period,  and the Pro Forma  Condensed
                  Consolidated  Statements of Income were prepared assuming that
                  the  disposition  took place as of the beginning of the twelve
                  months  ended June 30,  1996 and at the  beginning  of the six
                  months ended December 31, 1996, respectively.

                  The unaudited financial  information furnished herein reflects
                  all  adjustments for the twelve months ended June 30, 1996 and
                  the  six  months  ended   December  31,  1996,   respectively,
                  consisting only of normal recurring  adjustments which, in the
                  opinion  of  management,  are  necessary  to fairly  state the
                  Company's financial position and the results of its operations
                  for the periods presented.

                  The unaudited pro forma financial information does not purport
                  to   present   the   consolidated   financial   position   and
                  consolidated  results of  operations  of the  Company  had the
                  Company's  disposition of Meadowbrook  Rehabilitation Group of
                  Georgia,  Inc. actually  occurred on the dates indicated;  nor
                  does it  purport  to be  indicative  of  results  that will be
                  attained in the future.

                  The  pro  forma  financial   information  should  be  read  in
                  conjunction   with  the  Company's   historical   Consolidated
                  Financial  Statements  and  Notes  thereto  contained  in  the
                  Company's Form 10-K for the fiscal year ended June 30, 1996.


<PAGE>

<TABLE>
<CAPTION>

                                       MEADOWBROOK REHABILITATION GROUP, INC. AND SUBSIDIARIES

                                           PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

                                                                                     As of December 31,
                                                         --------------------------------------------------------------------------

                                                                                       Pro Forma
                                                          Pre-Disposition              Adjustments                 Post-Disposition
                                                            Meadowbrook                 (Note 2)                      Meadowbrook
                                                                           ---------------------------------
                                                              1996             Debit               Credit        Ref      1996
                                                           -------------   -------------       -------------    ----  -------------
<S>                                                      <C>                   <C>                   <C>         <C>   <C>         
CURRENT ASSETS:
   Cash and cash equivalents                             $  2,979,105          1,300,000                         (A)   $  4,279,105
   Net Patient accounts receivable                          5,023,483                                                     5,023,483
   Due from intermediaries                                    222,844                                                       222,844
   Prepaid expenses and other assets                        1,228,868                                 2,416      (A)      1,226,452
                                                           -------------                                              -------------

      Total current assets                                  9,454,300                                                    10,751,884
                                                           -------------                                              -------------
PROPERTY AND EQUIPMENT, (net)                               2,130,047                               746,392      (A)      1,383,655

GOODWILL AND INTANGIBLE ASSETS                              1,837,029                                                     1,837,029
                                                           -------------                                              -------------
         TOTAL ASSETS                                    $ 13,421,376                                                  $ 13,972,568
                                                           =============                                              =============

CURRENT LIABILITIES:                                        3,981,163             21,150             50,000      (A)      4,010,013

LONG-TERM LIABILITIES                                         481,305              9,377                         (A)        471,928
                                                           -------------                                              -------------

      Total Liabilities                                     4,462,468                                                     4,481,941
                                                           -------------                                              -------------
MINORITY INTEREST                                                   0                                                             0

STOCKHOLDERS' EQUITY
   Common Stock                                                19,302                                                        19,302
   Paid-in capital                                         17,908,122                                                    17,908,122
   Retained earnings (deficit)                             (8,968,516)                              531,719      (A)    (8,436,797)
                                                           -------------                                              -------------

      Total stockholders' equity                            8,958,908                                                     9,490,627
                                                           -------------    -------------      -------------          -------------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 13,421,376       $  1,330,527       $  1,330,527            $ 13,972,568
                                                         ==============     =============      =============           ============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                       MEADOWBROOK REHABILITATION GROUP, INC. AND SUBSIDIARIES

                                        PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME



                                                                         Year Ended June 30
                                                   ----------------------------------------------------------------------
                                                                             Pro Forma
                                                   Pre-Disposition          Adjustments                 Post-Acquisition
                                                     Meadowbrook              (Note 2)                      Meadowbrook
                                                       1996            Debit         Credit      Ref           1996    
                                                   ---------------   ----------    -----------  ----      -------------
<S>                                                  <C>             <C>            <C>         <C>        <C>         
OPERATING REVENUES:
   Net patient revenues                              $23,622,560     $6,068,071     $184,000    (A,B)      $17,738,489 
                                                   ---------------                                        -------------
      Net operating revenues                          23,622,560                                            17,738,489 

OPERATING EXPENSES:
   Salaries and employee benefits                     15,189,173                   4,204,456    (A,C)       10,984,717 
   Other operating expenses                            9,108,509                   1,847,827    (A,C)        7,260,682 
                                                   --------------                                        --------------
      Total operating expenses                        24,297,682                                            18,245,399 
                                                   --------------                                        --------------

      Income (loss) from operations                     (675,122)                                             (506,910)
                                                   --------------                                        --------------

OTHER (INCOME) EXPENSE:
   Gain on sale of assets                                      0                                                     0 
   Interest (income) expense                            (113,834)                     65,000    (D)           (178,834)
                                                   --------------                                        --------------

      Net other (income) expense                        (113,834)                                             (178,834)

      Income  (loss) before income taxes                (561,288)                                             (328,076)

INCOME TAX PROVISION (BENEFIT)                                 0                                                     0 
                                                   --------------                                        --------------

     NET INCOME (LOSS) BEFORE MINORITY INTEREST         (561,288)                                             (328,076)

MINORITY INTEREST                                         29,016                                                29,016 
                                                   --------------    ----------    -----------           ------------- 

     NET INCOME (LOSS)                                  (590,304)     6,068,071    6,301,283                  (357,092)
                                                   ==============    ==========   ============           ============= 
NET INCOME (LOSS) PER SHARE (primary and fully diluted)   ($0.31)                                               ($0.18)

WEIGHTED AVERAGE COMMON AND COMMON
   EQUIVALENT SHARES OUTSTANDING                       1,930,349                                             1,930,349 
                                                   ==============                                        ==============

</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                       MEADOWBROOK REHABILITATION GROUP, INC. AND SUBSIDIARIES

                                        PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME



                                                                                 Six Months Ended December 31
                                                            -----------------------------------------------------------------------
                                                                                       Pro Forma
                                                            Pre-Acquisition           Adjustments                  Post-Acquisition
                                                             Meadowbrook               (Note 2)                        Combined
                                                                1996            Debit         Credit        Ref           1996
                                                           ---------------   ----------    -----------      ---      --------------
<S>                                                         <C>              <C>              <C>           <C>        <C>       
OPERATING REVENUES:
   Net patient revenues                                     $11,504,711      $3,213,452       $92,000       (A,B)      $8,383,259
                                                            --------------                                           --------------
      Net operating revenues                                 11,504,711                                                 8,383,259

OPERATING EXPENSES:
   Salaries and employee benefits                             8,101,472                     2,227,233       (A,C)       5,874,239
   Other operating expenses                                   4,589,414                       867,101       (A,C)       3,722,313
                                                           --------------                                            --------------
      Total operating expenses                               12,690,886                                                 9,596,552
                                                           --------------                                            --------------

      Income (loss) from operations                          (1,186,175)                                               (1,213,293)
                                                           --------------                                            --------------

OTHER (INCOME) EXPENSE:
   Gain on sale of assets                                       (45,857)                                                  (45,857)
   Interest (income) expense                                    (29,588)                       32,500       (D)           (62,088)
                                                           --------------                                            --------------

      Net other (income) expense                                (75,445)                                                 (107,945)

      Income  (loss) before income taxes                     (1,110,730)                                               (1,105,348)

INCOME TAX PROVISION (BENEFIT)                                        0                                                         0
                                                           --------------                                            --------------

     NET INCOME (LOSS) BEFORE MINORITY INTEREST              (1,110,730)                                               (1,105,348)

MINORITY INTEREST                                                     0                                                         0
                                                           --------------    ----------    -----------              ---------------

     NET INCOME (LOSS)                                       (1,110,730)      3,213,452     3,218,834                  (1,105,348)
                                                           ==============    ==========    ===========              ===============
NET INCOME (LOSS) PER SHARE (primary and fully diluted)          ($0.58)                                                   ($0.57)

WEIGHTED AVERAGE COMMON AND COMMON
   EQUIVALENT SHARES OUTSTANDING                              1,930,244                                                 1,930,244
                                                           ==============                                           ===============

<PAGE>


<FN>


                     Meadowbrook Rehabilitation Group, Inc.
    Reflecting the Sale of Meadowbrook Rehabilitation Group of Georgia, Inc.

         Notes to Pro Forma Condensed Consolidated Financial Information

1.                The amounts  reflected  in these notes are based on  estimates
                  which  are  subject  to  change.   The   following  pro  forma
                  adjustments  were  made to the  December  31,  1996  Condensed
                  Consolidated  Balance Sheet to reflect the sale of Meadowbrook
                  Rehabilitation Group of Georgia, Inc. for cash.

         (A)      To  record  the  sale  of  certain  assets  and the  stock  of
                  Meadowbrook Rehabilitation Group of Georgia, Inc.

2.                The following pro forma adjustments were made to the Condensed
                  Consolidated  Statements of Income for the twelve months ended
                  June 30, 1996 and the six months ended December 31, 1996.

         (A)      Elimination   of  all  operating   revenue  and  expenses  for
                  Meadowbrook Rehabilitation Group of Georgia, Inc.

         (B)      Increased  revenue  due to  increased  Medicare  reimbursement
                  based on higher overall Medicare utilization.

         (C)      Reduction of Corporate office salaries and wages and operating
                  expenses.

         (D)      Increase in Meadowbrook  Rehabilitation Group, Inc.'s interest
                  income due to higher cash balances.

</FN>
</TABLE>