UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 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 June 30, 1998

                                     or

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


          For the transition period from ________________ to _______________


                      Commission File Number:  34-22090

                        THE MULTICARE COMPANIES, INC.
           (Exact name of registrant as specified in its charter)

             Delaware                                   22-3152527
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

                            101 East State Street
                     Kennett Square, Pennsylvania 19348
        (Address, including zip code, of principal executive offices)

                               (610) 444-6350
             (Registrant's telephone number including area code)

Indicate  by  check  mark whether the registrant (1) has  filed  all  reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding 12 months (or for such shorter period  that  the
registrant  was required to file such reports), and (2) has been  subject  to
such filing requirements for the past 90 days:

                 YES       [ x ]            NO       [    ]

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.

              Class                              Outstanding at August 13, 1998
     Common Stock ($.01 Par Value)                            100
<PAGE>

                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

                              Table of Contents

                                                                           Page

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS................  1

Part I:   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets
          June 30, 1998 (Unaudited) and September 30, 1997...............  2

          Consolidated Statements of Operations
          Three  and  nine  months ended
          June 30, 1998 and 1997  (Unaudited)............................  3

          Consolidated Statements of Cash Flows
          Nine months ended June 30, 1998 and 1997 (Unaudited)...........  4

          Notes to Consolidated Financial Statements.....................  5-9

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations .....................................  10-16

Part II:  OTHER INFORMATION..............................................  17

          SIGNATURES ....................................................  18
<PAGE>

                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

          CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Certain oral statements made by management from time to time and certain
statements  contained herein, including certain statements  in  "Management's
Discussion  and  Analysis of Financial Condition and Results  of  Operations"
such  as  statements  concerning the Medicaid and Medicare  program  and  the
Company's ability to meet its liquidity needs and control costs and  expected
future capital expenditure requirements and other statements contained herein
regarding   matters  that  are  not  historical  facts  are   forward-looking
statements  within the meaning of the Securities Act of 1933.   Because  such
statements  involve  risks  and  uncertainties,  actual  results  may  differ
materially   from   those  expressed  or  implied  by  such   forward-looking
statements.   Factors  that could cause actual results to  differ  materially
include,  but are not limited to, those discussed herein and in the Company's
other  periodic  reports filed with the Securities and  Exchange  Commission,
including  the  following:  the occurrence of changes in the mix  of  payment
sources  utilized  by  the  Company's customers  to  pay  for  the  Company's
services;  the adoption of cost containment measures by private  pay  sources
such  as  commercial  insurers and managed care  organizations,  as  well  as
efforts  by  governmental  reimbursement sources to impose  cost  containment
measures;  changes in the Unites States healthcare system, including  changes
in  reimbursement  levels under Medicaid and Medicare, and other  changes  in
applicable   government   regulations  that  might   affect   the   Company's
profitability;  the  Company's continued ability  to  operate  in  a  heavily
regulated environment and to satisfy regulatory authorities, thereby avoiding
a  number  of  potentially adverse consequences, such as  the  imposition  of
fines,  temporary  suspension of admission of patients, restrictions  on  the
ability  to  acquire  new  facilities,  suspension  or  decertification  from
Medicaid  or  Medicare  programs,  and, in extreme  cases,  revocation  of  a
facility's  license or the closure of a facility, including as  a  result  of
unauthorized  activities by employees; the Company's  ability  to  staff  its
facilities appropriately with qualified healthcare personnel and to  maintain
a  satisfactory  relationship with labor unions; the level of competition  in
the  Company's industry including, without limitation, increased  competition
from  acute care hospitals, providers of assisted and independent living  and
providers of home health care and changes in the regulatory system,  such  as
changes  in  certificate  of need laws in the states  in  which  the  Company
operates  or  anticipates  operating  in  the  future  that  facilitate  such
competition;  the continued availability of insurance for inherent  risks  of
liability in the healthcare industry; the Company's reputation for delivering
high-quality  care  and its ability to attract and retain patients;  and  the
Company's ability to secure capital and the related cost of such capital.
<PAGE>

                       PART I:  FINANCIAL INFORMATION

                      Item 1.     Financial Statements
<TABLE>
                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

                         Consolidated Balance Sheets

                      (In thousands, except share data)
<CAPTION>
                                                June 30,      September 30,
                                                    1998               1997
                                             (Unaudited)       (Predecessor
                                                                   Company)
<S>                                          <C>                 <C>
Assets
Current Assets:
Cash and cash equivalents                    $     10,119        $     2,118
Accounts receivable, net                          143,658            119,522
Prepaid expenses and other
 current assets                                    25,685             21,808
Deferred taxes - current portion                   22,118              2,806
Total current assets                              201,580            146,254

Property, plant and
 equipment, net                                   720,747            460,800

Goodwill, net                                     763,580            171,324
Other assets                                       58,362             44,755
                                                1,744,269            823,133

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable                             $     29,802        $    28,863
Accrued libilities                                 83,757             64,944
Current portion of long-term debt                  29,642                625
Total current liabilities                         143,201             94,432

Long-term debt                                    755,681            423,421
Deferred taxes                                     85,452             42,106
Other                                              10,699                ---

Stockholders' Equity:
Preferred stock, par value $.01, at
 September 30, 1997, 7,000,000 shares
 authorized, none issued                              ---                ---
Common stock, par value $.01, 100
 and 70,000,000 shares authorized at June 30,
 1998 and September 30, 1997,  respectively;
 100 and 31,731,963 issued and outstanding
 at June 30, 1998 and September 30,
 1997, respectively                                   ---                317
Additional paid-in-capital                        745,000            170,858
Retained earnings                                   4,236             91,999
Total stockholders' equity                        749,236            263,174
                                                1,744,269            823,133
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 2
<TABLE>
                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

                    Consolidated Statements of Operations

                                 (Unaudited)

                               (In thousands)

<CAPTION>
                                  Three Months Ended         Nine Months Ended
                                       June 30,                    June 30,
                                  1998         1997          1998         1997
                                       (Predecessor                 (Predecessor
                                           Company)                     Company)
<S>                           <C>          <C>           <C>          <C>
Net revenues                  $ 170,703    $ 179,164     $ 526,645    $ 493,296

Expenses:
Operating expense               127,305      135,598       396,425      372,703
Corporate, general and
administrative expense              ---        8,901           ---       23,872
Management fee                   10,242          ---        32,097          ---
Depreciation and
 amortization expense            10,960        7,213        33,834       20,379
Lease expense                     3,452        4,207        10,141       11,594
Interest expense, net            15,610        6,984        45,322       20,385
Debenture conversion expense        ---          ---           ---          785
Total expenses                  167,569      162,903       517,819      449,718

Earnings before income taxes
and extraordinary item            3,134       16,261         8,826       43,578

Income taxes                      1,623        6,080         4,590       16,295
Earnings before
extraordinary item                1,511       10,181         4,236       27,283
Extraordinary item - loss on
extinguishment of debt,
net of tax benefit                  ---          ---           ---        2,219

Net income                        1,511       10,181         4,236       25,064
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

                    Consolidated Statements of Cash Flows

                                 (Unaudited)

                               (In thousands)
<CAPTION>
                                                         Nine months ended
                                                              June 30,
                                                                  (Predecessor
                                                                      Company)
<S>                                               <C>              <C>
                                                        1998             1997
Cash flows from operating activities:
    Net cash provided by operating activities     $       7,352    $    52,927

Cash flows from investing activities:
  Assets and operations acquired                           ---        (85,059)
  Capital expenditures                                 (25,036)       (43,002)
  Other assets                                         (28,304)        (8,191)
  Proceeds from repayment of construction
  advances                                                 ---          13,100
    Net cash used in investing activities              (53,340)      (123,152)

Cash flows from financing activities:
  Proceeds from issuance of common stock                   ---          51,942
  Proceeds from exercise of stock options
   and stock purchase plan                                 ---           1,323
  Equity contribution                                  745,000             ---
  Proceeds from sale of pharmacy business               50,000             ---
  Proceeds from sale of therapy business                24,000             ---
  Purchase of shares in tender offer                 (921,326)             ---
  Proceeds from long-term debt                       2,190,122         446,681
  Repayments of long-term debt                     (1,450,628)       (427,245)
  Debt and other financing obligation
   repayments in connection with merger              (453,725)             ---
  Severance, option payouts and
   transaction fees in connection with
   merger                                            (107,872)             ---
  Debt issuance costs                                 (21,582)         (1,076)
    Net cash provided by financing activities           53,989          71,625

    increase in cash and cash equivalents                8,001           1,400

Cash and cash equivalents at beginning of period         2,118           1,893
Cash and cash equivalents at end of period       $      10,119     $     3,293
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 4

                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES

                 Notes to Consolidated Financial Statements

                                June 30, 1998

                                 (Unaudited)

                      (In thousands, except share data)

(1)  Organization and Basis of Presentation

     The  Multicare  Companies,  Inc. and Subsidiaries  ("Multicare"  or  the
     "Company")  own,  operate  and manage skilled nursing  facilities  which
     provide  long-term  care  and  specialty medical  services  in  selected
     geographic regions within the eastern and midwestern United States.   In
     addition,  the  Company operates assisted living  facilities  and  other
     ancillary healthcare businesses.

     The  financial  information as of June 30, 1998, and for the  three  and
     nine  months  ended June 30, 1998 and 1997, is unaudited  and  has  been
     prepared  in conformity with the accounting principles and practices  as
     reflected  in  the Company's audited annual financial  statements.   The
     unaudited financial statements contain all adjustments, consisting  only
     of  normal  recurring  adjustments,  necessary  to  present  fairly  the
     financial position as of June 30, 1998 and the operating results for the
     three  and  nine months ended June 30, 1998 and 1997 and the cash  flows
     for  the  nine months ended June 30, 1998 and 1997.  Results for interim
     periods  are not necessarily indicative of those to be expected for  the
     year.

     The  preparation  of financial statements in conformity  with  generally
     accepted accounting principles requires management to make estimates and
     assumptions  that affect the reported amounts of assets and  liabilities
     and  disclosure of contingent assets and liabilities at the date of  the
     financial  statements and the reported amounts of revenues and  expenses
     during  the  reporting period.  Actual results could differ  from  these
     estimates.

     Certain  information  and  footnote  disclosures  normally  included  in
     financial  statements  prepared in accordance  with  generally  accepted
     accounting  principles have been condensed or omitted.  It is  suggested
     that these consolidated financial statements be read in conjunction with
     the consolidated financial statements and notes thereto incorporated  in
     the  Company's Annual Report on Form 10-K for the nine month  transition
     period ended September 30, 1997.

     All  purchase  accounting  entries have been pushed  down  from  Genesis
     ElderCare Corp. and recorded on the consolidated financial statements of
     Multicare.   The operations of Multicare before the Merger  (as  defined
     below) are referred to as the Predecessor Company.

(2)  Tender Offer and Merger and Recent Acquisitions

     On  October  9,  1997, Genesis ElderCare Acquisition Corp. ("Acquisition
     Corp."),  a  wholly-owned  subsidiary  of  Genesis  ElderCare  Corp.,  a
     Delaware   corporation   formed  by  Genesis   Health   Ventures,   Inc.
     ("Genesis"),  The  Cypress Group L.L.C. (together with  its  affiliates,
     "Cypress"), TPG Partners II, L.P. (together with its affiliates, "TPG"),
     and Nazem, Inc. (together with its affiliates, "Nazem"), acquired 99.65%
     of  the shares of common stock of Multicare, pursuant to a tender  offer
     commenced  on June 20, 1997 (the "Tender Offer").  On October 10,  1997,
     Genesis   ElderCare  Corp.  completed  the  merger  (the  "Merger")   of
     Acquisition  Corp.  with  and  into Multicare  in  accordance  with  the
     Agreement and Plan of Merger (the "Merger Agreement") dated as  of  June
     16,  1997  by  and  among  Genesis ElderCare Corp.,  Acquisition  Corp.,
     Genesis  and  Multicare.   Upon consummation of  the  Merger,  Multicare
     became a wholly-owned subsidiary of Genesis ElderCare Corp.

     In  connection  with the Merger, Multicare and Genesis  entered  into  a
     management  agreement  (the "Management Agreement")  pursuant  to  which
     Genesis manages Multicare's operations.  The Management Agreement has  a
     term  of five years with automatic renewals for two years unless  either
     party terminates the Management Agreement.
<PAGE> 5

     Genesis  earns a fee of six percent of Multicare's net revenues for  its
     services  under the Management Agreement provided that payment  of  such
     fee  in respect of any month in excess of the greater of (i) $1,992  and
     (ii)  four  percent  of Multicare's consolidated net revenues  for  such
     month,  shall  be subordinate to the satisfaction of Multicare's  senior
     and  subordinate debt covenants; and provided, further, that payment  of
     such  fee  shall be no less than $23,900 in any given year.   Under  the
     Management  Agreement,  Genesis  is  responsible  for  Multicare's  non-
     extraordinary  sales,  general and administrative expenses  (other  than
     certain  specified  third-party expenses), and  all  other  expenses  of
     Multicare  are  paid by Multicare.  Genesis also entered into  an  asset
     purchase  agreement  (the "Therapy Sale Agreement") with  Multicare  and
     certain  of its subsidiaries pursuant to which Genesis acquired  all  of
     the  assets  used in Multicare's outpatient and inpatient rehabilitation
     therapy business for $24,000 subject to adjustment (the "Therapy  Sale")
     and  a  stock  purchase agreement (the "Pharmacy Sale  Agreement")  with
     Multicare  and  certain subsidiaries pursuant to which Genesis  acquired
     all  of  the outstanding capital stock and limited partnership interests
     of certain subsidiaries of Multicare that are engaged in the business of
     providing  institutional pharmacy services to third parties for  $50,000
     subject to adjustment (the "Pharmacy Sale").  The Company completed  the
     Pharmacy Sale effective January 1, 1998.

     Genesis  ElderCare  Corp.  (the "Multicare Parent")  paid  approximately
     $1,492,000 to (i) purchase the shares pursuant to the Tender  Offer  and
     the Merger, (ii) pay fees and expenses to be incurred in connection with
     the   completion  of  the  Tender  Offer,  Merger  and   the   financing
     transactions   in   connection  therewith,   (iii)   refinance   certain
     indebtedness  of  Multicare  and  (iv) make  certain  cash  payments  to
     employees.    Of   the   funds  required  to  finance   the   foregoing,
     approximately  $745,000 were furnished to Acquisition Corp.  as  capital
     contributions by the Multicare Parent from the sale by Genesis ElderCare
     Corp.  of  its Common Stock ("Genesis ElderCare Corp. Common Stock")  to
     Cypress,  TPG,  Nazem  and Genesis.  Cypress, TPG  and  Nazem  purchased
     shares  of Genesis ElderCare Corp. Common Stock for a purchase price  of
     $21,000,  $199,500  and  $10,500, respectively,  and  Genesis  purchased
     shares  of Genesis ElderCare Corp. Common Stock for a purchase price  of
     $325,000  in consideration for approximately 44% of the Common Stock  of
     the Multicare Parent.  The balance of the funds necessary to finance the
     foregoing  came  from  (i) the proceeds of loans  from  a  syndicate  of
     lenders  in the aggregate amount of $525,000 and (ii) $246,800 from  the
     sale  of 9% Senior Subordinated Notes due 2007 (the "9% Notes") sold  by
     Acquisition Corp. on August 11, 1997.

     In  connection with the Merger, Genesis, Cypress, TPG and Nazem  entered
     into  an  agreement (the "Put/Call Agreement") pursuant to which,  among
     other  things, Genesis will have the option, on the terms and conditions
     set  forth  in the Put/Call Agreement, to purchase (the "Call")  Genesis
     ElderCare  Corp. Common Stock held by Cypress, TPG and Nazem  commencing
     on  October 9, 2001 and for a period of 270 days thereafter, at a  price
     determined  pursuant  to the terms of the Put/Call Agreement.   Cypress,
     TPG  and  Nazem  will have the option, on the terms and  conditions  set
     forth  in  the  Put/Call Agreement, to require Genesis to purchase  (the
     "Put")  such Genesis ElderCare Corp. Common Stock commencing on  October
     9,  2002  and for a period of one year thereafter, at a price determined
     pursuant to the Put/Call Agreement.

     The  prices determined for the Put and Call are based on a formula  that
     calculates the equity value attributable to Cypress', TPG's and  Nazem's
     Genesis  ElderCare  Corp. Common Stock, plus a portion  of  the  Genesis
     pharmacy  business  (the  "Calculated Equity  Value").   The  Calculated
     Equity  Value  will  be  determined based upon  a  multiple  of  Genesis
     ElderCare   Corp.'s  earnings  before  interest,  taxes,   depreciation,
     amortization   and  rental  expenses,  as  adjusted  ("EBITDAR")   after
     deduction of certain liabilities, plus a portion of the EBITDAR  related
     to the Genesis pharmacy business.  The multiple to be applied to EBITDAR
     will  depend  on  whether the Put or the Call is being  exercised.   Any
     payment to Cypress, TPG or Nazem under the Call or the Put may be in the
     form of cash or Genesis common stock at Genesis' option.
<PAGE> 6

     Upon  exercise  of the Call, Cypress, TPG and Nazem will  receive  at  a
     minimum  their  original  investment plus a 25% compound  annual  return
     thereon  regardless  of  the Calculated Equity  Value.   Any  additional
     Calculated  Equity  Value  attributable to Cypress',  TPG's  or  Nazem's
     Genesis ElderCare Corp. Common Stock will be determined on the basis set
     forth  in the Put/Call Agreement which provides generally for additional
     Calculated  Equity Value of Genesis ElderCare Corp. to be divided  based
     upon  the  proportionate  share  of the  capital  contributions  of  the
     stockholders  to Genesis ElderCare Corp.  Upon exercise of  the  Put  by
     Cypress,  TPG or Nazem, there will be no minimum return to Cypress,  TPG
     or  Nazem;  any  payment to Cypress, TPG or Nazem  will  be  limited  to
     Cypress',  TPG's or Nazem's share of the Calculated Equity  Value  based
     upon  a  formula set forth in the terms of the Put/Call Agreement  which
     provides  generally  for the preferential return  of  the  stockholders'
     capital  contributions (subject to certain priorities), a  25%  compound
     annual  return on Cypress', TPG's and Nazem's capital contributions  and
     the  remaining  Calculated Equity Value to be  divided  based  upon  the
     proportionate share of the capital contributions of the stockholders  to
     Genesis ElderCare Corp.

     Cypress',  TPG's  and  Nazem's  rights  to  exercise  the  Put  will  be
     accelerated upon an event of bankruptcy of Genesis, a change of  control
     of   Genesis  or  an  extraordinary  dividend  or  distribution  or  the
     occurrence of the leverage recapitalization of Genesis.  Upon  an  event
     of  acceleration  or the failure by Genesis to satisfy  its  obligations
     upon exercise of the Put, Cypress, TPG and Nazem will have the right  to
     terminate  the Stockholders' Agreement and Management Agreement  and  to
     control the sale or liquidation of Genesis ElderCare Corp.  In the event
     of  such sale, the proceeds from such sale will be distributed among the
     parties as contemplated by the formula for the Put option exercise price
     and  Cypress, TPG and Nazem will retain a claim against Genesis for  the
     difference, if any, between the proceeds of such sale and the Put option
     exercise price.

     In December 1996, the Company completed the acquisition of The ADS Group
     ("ADS").   The  Company paid approximately $10,000,  repaid  or  assumed
     approximately  $29,800  in  debt,  financed  $51,000  through  a   lease
     facility, and issued 554,973 shares of its common stock for ADS.   Total
     goodwill approximated $30,700.

     The following 1997 pro forma financial information has been prepared  as
     if  the  ADS acquisition, the Merger, the Therapy Sale and the  Pharmacy
     Sale  had  been consummated on October 1, 1996.  The following 1998  pro
     forma financial information has been prepared as if the Pharmacy  Sale
     had been completed on October 1, 1997.   The  pro  forma financial
     information  does  not necessarily  reflect  the  results  of operations
     that would have occurred had the transactions occurred at the beginning
     of  the  respective  periods  presented  and  is  based  upon preliminary
     allocations of the purchase prices to property,  plant  and equipment and
     goodwill that are subject to change.
<TABLE>
<CAPTION>
                                                     Nine months ended
                                                          June 30,
                                                      1998        1997
<S>                                                <C>         <C>
Net revenues                                       $ 509,601   $ 453,417
Earnings (loss) before extraordinary item              3,396    (12,125)
Net income (loss)                                      3,396    (14,344)
</TABLE>
<PAGE> 7

 (3) Commitments and Contingencies

     Legislative and regulatory action has resulted in continuing  change  in
     the  Medicare  and Medicaid reimbursement programs which  has  adversely
     impacted  the  Company. The changes have limited, and  are  expected  to
     continue  to  limit, payment increases under these programs.  Also,  the
     timing  of  payments  made under the Medicare and Medicaid  programs  is
     subject to regulatory action and governmental budgetary constraints;  in
     recent  years, the time period between submission of claims and  payment
     has  increased.  Implementation  of the  Company's  strategy  to  expand
     specialty  medical services to independent providers should  reduce  the
     impact of changes in the Medicare and Medicaid reimbursement programs on
     the  Company as a whole. Within the statutory framework of the  Medicare
     and   Medicaid  programs,  there  are  substantial  areas   subject   to
     administrative  rulings  and interpretations which  may  further  affect
     payments  made  under  those programs. Further, the  federal  and  state
     governments may reduce the funds available under those programs  in  the
     future  or  require  more stringent utilization and quality  reviews  of
     eldercare  centers.

     Pursuant to the Balanced Budget Act of 1997 (the "Act"), beginning on or
     after   July  1,  1998,  Medicare  reimbursement  for  skilled   nursing
     facilities  will  be on a prospective payment system  ("PPS").   Skilled
     nursing facilities will be paid a per diem rate for all covered  Part  A
     skilled  nursing  facility services as well as many services  for  which
     payment  may be made under Part B during a period when a beneficiary  is
     provided  covered skilled nursing facility care.  The per diem  rate  is
     adjusted based upon the resource utilization group of a resident.   This
     payment  will  cover  rehabilitation  and  non-rehabilitation  ancillary
     services; however, the per diem rate will not cover physician,  nursing,
     physician  assistant and certain related services.  For the first  three
     cost  reporting periods beginning on or after July 1, 1998, the per diem
     will  be based on a blend of a facility specific rate and a federal  per
     diem  rate.   In subsequent periods, and for facilities first  receiving
     payments for Medicare services on or after October 1, 1995, the  federal
     per diem rate will be used without any facility specific blending.

     The Act also required consolidated billing for skilled nursing
     facilities.  The skilled nursing facility must submit all Medicare
     claims for Part A and Part B services received by its residents with the
     exception of physician, nursing, physician assistant and certain related
     services.  Medicare will pay the skilled nursing facilities directly for
     all services on the consolidated bill and outside suppliers of services
     to residents of the skilled nursing facilities must collect payment from
     the skilled nursing facility. Due to system related problems, the Health
     Care Financing Administration announced publicly in July 1998 that this
     requirement of the Act would be postponed indefinitely.

     The  Act  also  repealed  the Boren Amendment  which  required  Medicaid
     payments to nursing facilities to be "reasonable and adequate" to  cover
     the  costs  of efficiently and economically operated facilities.   Under
     the  Act,  states must now use a public notice and comment  process  for
     determining  Medicaid  rates and give interested  parties  a  reasonable
     opportunity   to  comment  on  proposed  rates,  rate  methodology   and
     justifications.  It is unclear what impact the Balanced  Budget  Act  of
     1997 will have on the Company.

     The Company is from time to time subject to claims and suits arising  in
     the  ordinary  course of business.  In the opinion  of  management,  the
     ultimate  resolution  of  pending legal  proceedings  will  not  have  a
     material effect on the Company's consolidated financial statements.

(4)  Financing Obligations

     In  February 1998, ElderTrust ("ETT"), a Maryland real estate investment
     trust  sponsored  by  Genesis,  made  term  loans  totaling  $12,865  to
     subsidiaries of the Company with respect to the lease-up of two assisted
     living  facilities.  The loans have a fixed annual rate of  interest  of
     10.5%  and mature every three years from the date of the loans,  subject
     to  the right of the Company to extend the term for up to three one-year
     extension  periods in the event the facility has not reached "stabilized
     occupancy" (as defined) as of the third anniversary of the loan  (or  at
     the end of any extension period, if applicable).
<PAGE> 8

     In  1998, ETT also made construction loans in the amount of $6,000 to  a
     subsidiary  of  the Company to fund construction of an  assisted  living
     facility being developed by the Company.  The note bears interest  at  a
     fixed annual rate of 10.5%, and will mature on the third anniversary  of
     the loan, subject to the right of the Company to extend the term for  up
     to  three one-year extension periods in the event the facility  has  not
     reached "stabilized occupancy" (as defined) as of such third anniversary
     (or  at  the end of any extension period, if applicable).

     ETT  is  obligated to purchase and leaseback the three  facilities  that
     secure  the  term and construction loans being made to the Company  upon
     the  earlier  of  the  facility  reaching stabilized  occupancy  or  the
     maturity of the loan secured by the facility provided, however, that the
     Company will not be obligated to sell any facility if the purchase price
     for  the  facility would be less than the applicable loan  amount.   The
     purchase agreements provide for a cash purchase price in an amount which
     will  result  in an annual yield of 10.5% to ETT.  If acquired  by  ETT,
     these  facilities  would  be leased to the Company  under  minimum  rent
     leases.   The initial term of any minimum rent lease will be ten  years,
     and  the Company will have the option to extend the term for up  to  two
     five-year extension periods upon  12  months notice to ETT.  Minimum
     rent for the first  lease  year under  any  minimum  rent lease will be
     established by  multiplying  the purchase price for the applicable
     facility times 10.5%, and the increase each year by an amount equal to
     the lesser of (i) 5% of the increase  in the  gross  revenues for such
     facility (excluding any  revenues  derived from ancillary healthcare
     services provided by Genesis or its affiliates to   residents  of  the
     applicable  facility)  during  the  immediately preceding  year  or (ii)
     one-half of the increase in the Consumer  Price Index during the
     immediately preceding year.  During the last four years of  the  term
     (as extended, if applicable), the Company is required  to make  minimum
     capital expenditures equal to $3 per residential  unit  in each assisted
     living facility covered by a minimum rent lease.

     The Company enters into interest rate swap agreements to manage interest
     costs  and  risks associated with changing interest rates.  In  November
     1997,  the  Company entered into swap agreements with notional principal
     amounts   totaling  $100,000.   These  agreements  effectively   convert
     underlying  variable-rate  debt  based on  LIBOR  into  fixed-rate  debt
     whereby the Company makes quarterly payments at a weighted average fixed
     rate  of 5.64% and receives quarterly payments at a floating rated based
     on three month LIBOR (approximately 5.69% at August 5, 1998).
<PAGE> 9

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

General

Prior  to the Merger, Multicare had experienced significant growth, primarily
through  acquisitions  of long-term care facilities and ancillary  businesses
and  increased  utilization  of  specialty medical  services.   It  had  been
Multicare's  strategy to expand through construction and development  of  new
facilities   and  selective  acquisitions  with  geographically  concentrated
operations.   In  December 1996, the Company acquired The  ADS  Group,  which
owns,  operates  or  manages  over  50  long-term  care  and  assisted-living
facilities with over 4,200 licensed beds, principally in Massachusetts.

Under Genesis' management, the Company's strategy is to integrate the talents
of  physicians  with case management, comprehensive discharge  planning  and,
where  necessary,  home  support services, to  provide  cost  effective  care
management to achieve superior outcomes and return the Company's customers to
the community.  Genesis' management believes that achieving improved customer
outcomes  will result in increased utilization of specialty medical  services
and  a  broader base of repeat customers in the Company's network.  Moreover,
the Company believes that this strategy will lead to continued high levels of
occupancy of available beds, high quality payor mix and same store growth  in
net revenues and EBITDAR.  Genesis' management will also focus on the revenue
and  cost  opportunities  presented through the further  integration  of  the
Company's recent acquisitions.

The Tender Offer and Merger

On June 16, 1997, Multicare entered into an Agreement and Plan of Merger (the
"Merger  Agreement") with Genesis ElderCare Corp. (the "Parent") and  Genesis
ElderCare  Acquisition  Corp.,  a  wholly owned  subsidiary  of  Parent  (the
"Acquisition Corp."), pursuant to which Acquisition Corp. offered to  acquire
all  outstanding  shares of common stock (the "Shares")  of  Multicare  at  a
purchase  price of $28.00 per Share, net to the seller in cash  (the  "Tender
Offer").   The  Tender  Offer  expired on  Wednesday,  October  8,  1997  and
Acquisition  Corp.  accepted for purchase the Shares that  had  been  validly
tendered and not withdrawn.  The Shares accepted pursuant to the Tender Offer
constituted  approximately  99.65%  of  Multicare's  issued  and  outstanding
Shares.   On  October 10, 1997, pursuant to the Merger Agreement, Acquisition
Corp.  was  merged with and into Multicare (the "Surviving Corporation")  and
the  remaining  Shares  not previously purchased in  the  Tender  Offer  were
canceled,  extinguished and converted into the right  to  receive  $28.00  in
cash.   As a result of the Merger, Parent is the record and beneficial  owner
of  all  Shares  of  the Surviving Corporation.  Parent is owned  by  Genesis
Health  Ventures, Inc., a Pennsylvania corporation ("Genesis"),  The  Cypress
Group L.L.C. (together with its affiliates, "Cypress"), TPG Partners II, L.P.
(together  with  its  affiliates, "TPG") and Nazem, Inc. (together  with  its
affiliates, "Nazem") and their affiliates.

On  October  9,  1997,  Multicare,  Genesis  and  Genesis  ElderCare  Network
Services,  Inc.,  a  wholly-owned  subsidiary  of  Genesis,  entered  into  a
management  agreement (the "Management Agreement") pursuant to which  Genesis
manages Multicare's operations.  The Management Agreement has a term of  five
years  with  automatic renewals for two years unless either party  terminates
the  Management Agreement.  Genesis earns a fee of six percent of Multicare's
net  revenues  for its services under the Management Agreement provided  that
payment of such fee in respect of any month in excess of the greater  of  (i)
$1.9  million and (ii) four percent of Multicare's consolidated net  revenues
for  such  month,  shall  be subordinate to the satisfaction  of  Multicare's
senior and subordinate debt covenants; and provided, further, that payment of
such  fee  shall be no less than $23.9 million in any given year.  Under  the
Management   Agreement,   Genesis  is  responsible   for   Multicare's   non-
extraordinary sales, general and administrative expenses (other than  certain
specified third-party expenses), and all other expenses of Multicare are paid
by Multicare.

On  October  10, 1997, Genesis entered into an asset purchase agreement  with
Multicare and certain of its subsidiaries pursuant to which Genesis  acquired
all of the assets used in Multicare's outpatient and inpatient rehabilitation
therapy business for $24 million subject to adjustment (the "Therapy Sale").

On  October  10,  1997, Genesis entered into a stock purchase agreement  with
Multicare and certain of its subsidiaries pursuant to which Genesis  acquired
all  of  the  outstanding capital stock and limited partnership interests  of
certain  subsidiaries  of  Multicare that are  engaged  in  the  business  of
providing  institutional pharmacy services to third parties for $50  million,
subject  to  adjustment  (the "Pharmacy Sale").  The  Company  completed  the
Pharmacy Sale effective January 1, 1998.
<PAGE> 10

Results of Operations

Net  revenues.   Net  revenues  for the three  months  ended  June  30,  1998
decreased $8.5 million from the same period last year to $170.7 million.  Net
revenues  for  the nine months ended June 30, 1998 increased  6.8%  or  $33.3
million from the same period last year to $526.6 million.

The decrease in revenues in the third quarter of fiscal 1998 is comprised  of
approximately $18.0 million relating to internal growth, offset by a decrease
of  approximately  $26.5 million relating to the prior  year  impact  of  the
results  of the pharmacy and therapy businesses due to the Pharmacy Sale  and
Therapy  Sale.  The increase in revenues for the nine months ended  June  30,
1998  consisted of approximately $64.7 million of internal growth  and  $11.8
million  for  results  of  recent acquisitions, offset  by  a  $43.2  million
decrease  relating to the exclusion of results for the pharmacy  and  therapy
businesses  due the Pharmacy Sale and the Therapy Sale.  The internal  growth
of  revenues  resulted mainly from increases in payor rates  and  changes  in
census mix, and development and opening of additional beds.

The Company's quality mix of private, Medicare and insurance revenues was 60%
of net revenues for the three and nine months ended June 30, 1998 compared to
61%  in  the similar periods of last year.  Occupancy rates were 91% and  92%
for the three and nine months ended June 30, 1998 compared to 92% and 91%  in
the similar periods of last year.

Operating  Expense.  Operating expenses for the three months ended  June  30,
1998 were $127.3 million compared to $135.6 million last year.  This decrease
is  comprised of approximately $13.9 million resulting primarily from  higher
salaries, wages and benefits and expanded nursing staffing levels to  support
higher acuity patients, offset by a decrease of $22.2 million relating to the
exclusion  of  results  for the pharmacy and therapy businesses  due  to  the
Pharmacy  Sale and the Therapy Sale.  Operating expenses for the nine  months
ended  June 30, 1998 increased 6.4% from the comparable period last  year  to
$396.4 million.  The increase includes approximately $5.5 million relating to
results  of  recent  acquisitions, offset by  a  decrease  of  $35.4  million
relating  to the exclusion of results for the pharmacy and therapy businesses
due to the Pharmacy Sale and the Therapy Sale.  The remainder of the increase
resulted  primarily  from higher salaries, wages and  benefits  and  expanded
nursing  staffing levels to support higher patient acuities and more  complex
product lines such as subacute and Alzheimers care.

Management  Fee  and  Corporate,  General  and  Administrative  Expense.   In
connection   with  the  Management  Agreement,  Genesis  manages  Multicare's
operations for a fee of approximately six percent of Multicare's revenues and
is responsible for Multicare's general and administrative expenses.  The 1997
corporate,  general and administrative expenses include resources devoted  to
operations, finance, legal, risk management and information systems.

Lease  Expense.   Lease  expense for the three months  ended  June  30,  1998
decreased 18% to $3.5 million.  Lease expense for the nine months ended  June
30,  1998  decreased 12.5% to $10.1 million.  In connection with the  Merger,
the  Company  paid  off its synthetic lease facility with proceeds  from  the
Senior Facilities.

Depreciation and Amortization.  Depreciation and amortization expense for the
three and nine months ended June 30, 1998 increased 52% and 66% from the same
periods  last  year  to $11.0 million and $33.8 million,  respectively.   The
increase  is due to depreciation on the allocation of the purchase  price  to
property, plant and equipment and to amortization of goodwill relating to the
Merger.

Interest  Expense, Net.  Net interest expense for the three and  nine  months
ended  June 30, 1998 increased $8.6 million and $24.9 million from  the  same
periods  in  fiscal  1997  to $15.6 million and $45.3 million,  respectively.
This  is  a  result  of  incremental borrowings under  the  Company's  Senior
Facilities and 9% Notes incurred to finance the Merger.

Income Tax Expense.  The provision for income taxes increased to 52% of  pre-
tax  income in the nine months ended June 30, 1998 from 37% of pre-tax income
from  the  similar  period last year.  The increase relates  to  higher  non-
deductible goodwill amortization resulting from the Merger.
<PAGE> 11

Liquidity and Capital Resources

The  Company maintains adequate working capital from operating cash flows and
lines  of  credit  for  continuing operations, debt service  and  anticipated
capital  expenditures.  At June 30, 1998, the Company had working capital  of
$58.4 million, compared to $51.8 million at September 30, 1997.

Cash  flow provided by operations was $7.4 million for the nine months  ended
June  30, 1998 compared to cash flow from operations of $52.9 million in  the
comparable  period  of 1997.  The decrease in operating  cash  flows  results
primarily  from  the decline in earnings which is attributable  to  increased
interest  expense and the Genesis management fee and the timing of  payments,
offset  by the elimination of corporate, general and administrative expenses.
Net  accounts  receivable were $143.7 million at June 30,  1998  compared  to
$119.5  million  at  September  30,  1997.   The  increase  in  net  accounts
receivable  is  attributable  to  the  timing  of  third-party  interim   and
settlement  payments  and the utilization of specialty medical  services  for
higher  acuity level patients, offset by a decrease relating to the  Pharmacy
Sale  and  Therapy  Sale.  Legislative and regulatory action  and  government
budgetary  constraints could change the timing of payments and  reimbursement
rates  of  the  Medicare and Medicaid programs in the future.  These  changes
could  have  a  material  adverse effect on the  Company's  future  operating
results and cash flows.

In connection with the Merger, Multicare entered into three term loans and  a
revolving   credit  facility  of  up  to  $525  million,  in  the   aggregate
(collectively, the "Senior Facilities"), provided by a syndicate of banks and
other  financial  institutions (collectively, the "Lenders")  led  by  Mellon
Bank, N.A., as administrative agent (the "Administrative Agent"), pursuant to
a  certain  credit agreement (the "Long Term Credit Agreement") dated  as  of
October  14, 1997.  The Senior Facilities are being used for the  purpose  of
(i)  refinancing  certain  short term facilities in the  aggregate  principal
amount of $431.6 million which were funded on October 9, 1997 to acquire  the
Shares  in the Tender Offer, refinance certain indebtedness of Multicare  and
pay  fees and expenses related to the transactions, (ii) funding interest and
principal  payments on such facilities and on certain remaining  indebtedness
and (iii) funding working capital and general corporate purposes.

The Senior Facilities consist of:  (1) a $200 million six-year term loan (the
"Tranche  A  Term Facility"); (2) a $150 million seven-year  term  loan  (the
"Tranche B Term Facility"); (3) a $50 million term loan maturing on  June  1,
2005  (the  "Tranche C Term Facility"); (4) a $125 million six-year revolving
credit facility (the "Revolving Credit Facility"); and (5) one or more  Swing
Loans  (collectively,  the  "Swing  Loan  Facility")  in  integral  principal
multiples  of  $500,000  up to an aggregate unpaid principal  amount  of  $10
million.  The Tranche A Term Facility, Tranche B Term Facility and Tranche  C
Term   Facility  are  subject  to  amortization  in  quarterly  installments,
commencing  at the end of the first calendar quarter after the  date  of  the
consummation  of  the  Merger  (the "Closing Date").   The  Revolving  Credit
Facility  will  mature six years after the Closing Date.   All  net  proceeds
received  by  Multicare  from  (i) the sale of assets  of  Multicare  or  its
subsidiaries other than sales in the ordinary course of business  (and  other
than  the  sales of Multicare's rehabilitation therapy business and  pharmacy
business to the extent that there are amounts outstanding under the Revolving
Credit  Facility) and (ii) any sale of common stock or debt securities (other
than  the  9% Notes and the Equity Contributions) of Multicare in respect  of
common  stock  will be applied as a mandatory prepayment.  Fifty  percent  of
Excess  Cash  Flow  must  be applied to the Senior Facilities  and  shall  be
payable annually.

The  Senior  Facilities are secured by a first priority security interest  in
all  of  the  (i) stock of Multicare, (ii) stock, partnership  interests  and
other  equity  of all of Multicare's present and future direct  and  indirect
subsidiaries  and (iii) intercompany notes among Parent and any  subsidiaries
or among any subsidiaries.

Loans  under  the Senior Facilities bear, at Multicare's option, interest  at
the  per  annum Prime Rate as announced by the Administrative Agent,  or  the
applicable Adjusted LIBO Rate.  Loans under the Tranche A Term Facility  bear
interest  at  a  rate equal to LIBO Rate plus a margin up to 2.5%  (currently
8.19%); loans under the Tranche B Term Facility bear interest at a rate equal
to  LIBO  Rate plus a margin up to 2.75% (currently 8.44%); loans  under  the
Tranche  C  Term Facility bear interest at a rate equal to LIBO Rate  plus  a
margin  up  to  3.0%  (currently 8.69%); loans  under  the  Revolving  Credit
Facility bear interest at a rate equal to LIBO Rate plus a margin up to  2.5%
(currently (8.19%); and loans under the Swing Loan Facility bear interest  at
the  Prime  Rate (currently 8.5%) unless otherwise agreed to by the  parties.
Subject to meeting certain financial covenants, the above-referenced interest
rates may be reduced.
<PAGE> 12

The  Long  Term Credit Agreement contains a number of covenants  that,  among
other  things,  restrict  the ability of Multicare and  its  subsidiaries  to
dispose of assets, incur additional indebtedness, make loans and investments,
pay  dividends,  engage  in  mergers  or consolidations,  engage  in  certain
transactions  with  affiliates and change control of  capital  stock,  prepay
debt,  make  material changes in accounting and reporting  practices,  create
liens  on  assets,  give a negative pledge on assets, make  acquisitions  and
amend  or  modify  documents.  In addition, the Long  Term  Credit  Agreement
requires  that Multicare and its affiliates maintain the Management Agreement
as well as comply with certain financial covenants.

On  August  11,  1997,  Acquisition  Corp.  sold  to  Morgan  Stanley  &  Co.
Incorporated,  Montgomery Securities, L.P. and First  Union  Capital  Markets
Corp. (collectively, the "Placement Agents") $250 million principal amount of
its  9% Senior Subordinated Notes due 2007 (the "9% Notes") which were issued
pursuant to an Indenture dated as of August 7, 1997 (the "Indenture") by  and
between Acquisition Corp., as issuer, and PNC Bank, National Association,  as
trustee.   The 9% Notes bear interest at 9% per annum from August  11,  1997,
payable  semiannually on February 1 and August 1 of each year, commencing  on
February 1, 1998.

The 9% Notes are unsecured general obligations of the issuer, subordinated in
right  of payment to all existing and future Senior Indebtedness, as  defined
in  the  Indenture, of the issuer, including indebtedness  under  the  Senior
Facilities.  The 9% Notes rank pari passu in right of payment with any future
senior  subordinated indebtedness of the issuer and are senior  in  right  of
payment to all future subordinated indebtedness of the issuer.  The 9%  Notes
are  redeemable at the option of the issuer, in whole or in part, at any time
on  or  after August 1, 2002, initially at 104.5% of their principal  amount,
plus  accrued interest, declining ratably to 100% of their principal  amount,
plus  accrued interest, on or after August 1, 2004.  The 9% Notes are subject
to mandatory redemption at 101%.  Upon a Change in Control, as defined in the
Indenture, the issuer is required to make an offer to purchase the  9%  Notes
at  a  purchase price equal to 101% of their principal amount,  plus  accrued
interest.   The  Indenture contains a number of covenants that,  among  other
things,  restrict  the  ability  of the issuer  of  the  9%  Notes  to  incur
additional  indebtedness, pay dividends, redeem capital stock,  make  certain
investments, issue the capital stock of its subsidiaries, engage  in  mergers
or  consolidations  or  asset  sales, engage  in  certain  transactions  with
affiliates,  and  create  dividend  and  other  restrictions  affecting   its
subsidiaries.

Upon  the  consummation of the Merger, Multicare assumed all  obligations  of
Acquisition  Corp.  with respect to and under the 9% Notes  and  the  related
Indenture.

In February 1998, ElderTrust ("ETT"), a Maryland real estate investment trust
sponsored  by  Genesis, made term loans to subsidiaries of the  Company  with
respect to the lease-up of two assisted living facilities.  The loans have  a
fixed  annual rate of interest of 10.5% and mature three years from the  date
of  the loans, subject to the right of the Company to extend the term for  up
to three one-year extension periods in the event the facility has not reached
"stabilized occupancy" (as defined) as of the third anniversary of  the  loan
(or at the end of any extension period, if applicable).

In  February 1998, ETT also made one construction loan to a subsidiary of the
Company  to fund construction of an assisted living facility being  developed
by the Company.  The note bears interest at a fixed annual rate of 10.5%, and
will mature on the third anniversary of the loan, subject to the right of the
Company to extend the term for up to three one-year extension periods in  the
event  the  facility has not reached "stabilized occupancy" (as defined) as
of such  third anniversary (or at the end of any extension period, if
applicable).

ETT  is  obligated to purchase and leaseback the three facilities that secure
the term and construction loans being made to the Company upon the earlier of
the  facility reaching stabilized occupancy or the maturity of the loan
secured by  the facility provided, however, that the Company will not be
obligated to sell  any facility if the purchase price for the facility would
be less  than the  applicable  loan amount.  The purchase agreements  provide
for  a  cash purchase price in an amount which will result in an annual yield
of 10.5%  to ETT.   If  acquired by ETT, these facilities would be leased to
the  Company under  minimum rent leases.  The initial term of any minimum
rent lease  will be  ten years, and the Company will have the option to
extend the term for up to  two  five-year extension periods upon 12 months
notice to  ETT.   Minimum rent  for  the  first  lease  year  under any
minimum  rent  lease  will  be established  by  multiplying the purchase price
for the  applicable  facility times 10.5%, and the increase each year by an
amount equal to the less of (i) 5%  of  the  increase in the gross revenues
for such facility (excluding  any revenues  derived from ancillary healthcare
services provided by  Genesis  or its   affiliates  to  residents  of  the
applicable  facility)  during   the immediately  preceding year or (ii)
one-half of the increase in the  Consumer Price  Index  during the immediately
preceding year.  During  the  last  four years  of  the term (as extended, if
applicable), the Company is required  to
<PAGE> 13

make  minimum  capital expenditures equal to $3,000 per residential  unit  in
each assisted living facility covered by a minimum rent lease.

Legislative  and regulatory action has resulted in continuing change  in  the
Medicare and Medicaid reimbursement programs which has adversely impacted the
Company.  The  changes have limited, and are expected to continue  to  limit,
payment  increases under these programs. Also, the timing  of  payments  made
under the Medicare and Medicaid programs is subject to regulatory action  and
governmental budgetary constraints; in recent years, the time period  between
submission  of  claims  and  payment  has increased.  Implementation  of  the
Company's  strategy  to  expand  specialty medical  services  to  independent
providers  should reduce the impact of changes in the Medicare  and  Medicaid
reimbursement  programs  on  the Company as a  whole.  Within  the  statutory
framework of the Medicare and Medicaid programs, there are substantial  areas
subject  to  administrative  rulings and interpretations  which  may  further
affect  payments  made under those programs. Further, the federal  and  state
governments may reduce the funds available under those programs in the future
or  require  more  stringent  utilization and quality  reviews  of  eldercare
centers.

Pursuant  to  the  Balanced Budget Act of 1997 (the "Act"), beginning  on  or
after  July  1,  1998, Medicare reimbursement for skilled nursing  facilities
will  be on a prospective payment system ("PPS").  Skilled nursing facilities
will  be paid a per diem rate for all covered Part A skilled nursing facility
services as well as many services for which payment may be made under Part  B
during  a  period  when  a  beneficiary is provided covered  skilled  nursing
facility  care.   The  per  diem rate is adjusted  based  upon  the  resource
utilization group of a resident.  This payment will cover rehabilitation  and
non-rehabilitation ancillary services; however, the per diem  rate  will  not
cover  physician, nursing, physician assistant and certain related  services.
For  the  first  three cost reporting periods beginning on or after  July  1,
1998, the per diem will be based on a blend of a facility specific rate and a
federal  per  diem  rate.  In subsequent periods, and  for  facilities  first
receiving  payments for Medicare services on or after October  1,  1995,  the
federal per diem rate will be used without any facility specific blending.

The Act also required consolidated billing for skilled nursing facilities.
The skilled nursing facility must submit all Medicare claims for Part A and
Part B services received by its residents with the exception of physician,
nursing, physician assistant and certain related services.  Medicare will pay
the skilled nursing facilities directly for all services on the consolidated
bill and outside suppliers of services to residents of the skilled nursing
facilities must collect payment from the skilled nursing facility. Due to
system related problems, the Health Care Financing Administration announced
publicly in July 1998 that this requirement of the Act would be postponed
indefinitely.

The Act also repealed the Boren Amendment which required Medicaid payments to
nursing  facilities  to be "reasonable and adequate" to cover  the  costs  of
efficiently and economically operated facilities.  Under the Act, states must
now  use  a public notice and comment process for determining Medicaid  rates
and  give  interested parties a reasonable opportunity to comment on proposed
rates,  rate methodology and justifications.  It is unclear what  impact  the
Balanced Budget Act of 1997 will have on the Company.

The Company believes that its liquidity needs can be met by expected operating
cash  flow  and availability of borrowings under its credit facilities.   At
July  31,  1998, there is approximately $465.3 million outstanding under  the
Senior  Facilities and approximately $37.0 million available under the Senior
Facilities  after  giving  effect to approximately $3.1  million  outstanding
letters of credit.

The  Company anticipates its capital requirements for the construction of new
facilities  and  the  expansion  and renovation  of  existing  facilities  to
approximate  $10  million  over  the next twelve  months  based  on  existing
construction commitments and plans.

Seasonality

The  Company's  earnings generally fluctuate from quarter to  quarter.   This
seasonality is related to a combination of factors which include  the  timing
of Medicaid rate increases, seasonal census cycles and the number of calendar
days in a given quarter.
<PAGE> 14

Impact of Inflation

The  healthcare industry is labor intensive. Wages and other labor costs  are
especially sensitive to inflation and marketplace labor shortages.  To  date,
the  Company  has offset its increased operating costs by increasing  charges
for  its  services and expanding its services. Multicare has also implemented
cost control measures to limit increases in operating costs and expenses  but
cannot  predict its ability to control such operating cost increases  in  the
future.

Year 2000 Issues

The  Company is aware of the issues associated with the programming  code  in
many  existing  computer systems (the "Year 2000" issue)  as  the  millennium
approaches.   The Company has conducted a review of its computer  systems  to
identify  hardware and software affected by the Year 2000 issue.  This  issue
affects computer systems having date sensitive programs that may not properly
recognize  the  Year  2000.   Systems that do  not  properly  recognize  such
information could generate erroneous data or cause a system to fail resulting
in business interruption.

With  respect  to  its existing computer systems, the Company  is  upgrading,
generally,  in order to meet the demands of its expanding business.   In  the
process, the Company is taking steps to identify, correct and/or reprogram and
test  its existing systems for Year 2000 compliance.  It is anticipated  that
all  new  system upgrades or reprogramming efforts will be completed  by  mid
calendar  year  1999,  allowing  adequate  time  for  testing.   The  Company
presently  believes  that  with  modification  to  existing  software  and
conversions to new software, the Year 2000 issue can be mitigated.   However,
given the complexity of the Year 2000 issues, there can be no assurances that
the   Company  will  be  able  to  address  the  problem  without  costs  and
uncertainties  that might affect future financial results or  cause  reported
financial  information not to be necessarily indicative of  future  operating
results or future financial condition.

The Company has incurred, and expects to incur additional, internal costs  as
well  as other expenses to address the necessary software upgrades, training,
data  conversion, testing and implementation related to the Year 2000  issue.
Such  costs are being expensed as incurred.  The Company does not expect  the
amounts  required to be expensed to have a material effect on  its  financial
position or results of operations.  The Year 2000 issue is expected to affect
the  systems  of various entities with which the Company interacts  including
payors,  suppliers and vendors.  There can be no assurance that data produced
by  systems  of other entities on which the Company's systems  rely  will  be
converted  on a timely basis or that a failure by another entity's system  to
be  Year  2000  compliant  will not have a material  adverse  effect  on  the
Company.

New Accounting Pronouncements

In  June  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of Financial Accounting Standards No. 130, Reporting Comprehensive
Income  ("Statement 130").  This Statement requires that all items  that  are
required  to  be  recognized  under accounting  standards  as  components  of
comprehensive income be reported in a financial statement that  is  displayed
with  the  same prominence as other financial statements.  This Statement  is
effective  for fiscal years beginning after December 15, 1997.   The  Company
plans  to adopt this accounting standard as required.  The adoption  of  this
standard  will have no impact on the Company's earnings, financial  condition
or  liquidity,  but  will  require the Company to  classify  items  of  other
comprehensive  income  in a financial statement and display  the  accumulated
balance of other comprehensive income separately in the equity section of the
balance sheet.

In  June  1997,  the  FASB  also  issued Statement  of  Financial  Accounting
Standards  No. 131, Disclosures about Segments of an Enterprise  and  Related
Information  ("Statement  131").   Statement  131  supersedes  Statement   of
Financial  Standards No. 14, Financial Reporting for Segments of  a  Business
Enterprise,  and  establishes new standards for reporting  information  about
operation  segments  in  annual financial statements  and  requires  selected
information about operating segments in interim financial reports.  Statement
131  also  establishes standards for related disclosures about  products  and
services,  geographic areas and major customers.  Statement 131 is  effective
for  periods beginning after December 15, 1997, or the Company's fiscal  year
end  September 30, 1999.  This Statement will have no impact on the Company's
financial   statements,  results  of  operations,  financial   condition   or
liquidity.
<PAGE> 15

In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5, Reporting on the Costs of Start-up Activities
("the Statement").  This statement requires costs of start-up activities,
including organizational costs, to be expensed as incurred.  Start-up
activities are defined as those one-time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new process in an existing facility, or
commencing a new operation.  This Statement is effective for fiscal years
beginning after December 15, 1998.  The Company has not yet quantified the
impact the adoption may have on its consolidated financial statements.

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("Statement
133").   Statement  133  establishes accounting and reporting  standards  for
derivative instruments, including certain derivative instruments embedded  in
other contracts, and for hedging activities.  Statement 133 requires that  an
entity  recognize  all  derivatives as either assets or  liabilities  in  the
statement  of  financial position and measure the instrument at  fair  value.
The  accounting  changes  in the fair value of a derivative  depends  on  the
intended use of the derivative and the resulting designation.  This Statement
is  effective  for all fiscal quarters beginning after June  15,  1999.   The
Company  intends to adopt this accounting standard as required.  The adoption
of  this  standard is not expected to have a material impact on the Company's
earnings or financial position.
<PAGE> 16

                         PART II:  OTHER INFORMATION

Item 1.   Legal Proceedings.  Not Applicable.

Item 2.   Changes in Securities and Use of Proceeds.  Not Applicable.

Item 3.   Defaults Upon Senior Securities.  Not Applicable.

Item 4.   Submission  of  Matters  to a  Vote  of  Security  Holders.   Not
          Applicable.

Item 5.   Other Information.  Not Applicable.

Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits

        Exhibit No.  Description

          27          Financial Data Schedule.

     (b)         Reports on Form 8-K.  Not Applicable.
<PAGE> 17

                                 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.

                           THE MULTICARE COMPANIES, INC.

Date:  August 13, 1998      /s/ George V. Hager, Jr.
                           George  V.  Hager, Jr. Senior Vice  President  and
                           Chief Financial Officer
<PAGE> 18