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

                                  Form 10-K
            Annual Report Pursuant to Section 13 or 15(d) of the
                       Securities Exchange Act of 1934
                 For the fiscal year ended December 31, 1996

                       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
    incorporation or organization)          Identification no.)


        411 Hackensack Avenue                     07601
        Hackensack, New Jersey                  (Zip Code)
(Address of principal executive offices)

     Registrant's telephone number, including area code: (201) 488-8818

         Securities registered pursuant to Section 12(b) of the Act:

                             Title of each class
                     Common Stock, par value $.01 share

                  Name of each exchange on which registered
                           New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act:
                                    None


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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [    ].


The aggregate market value of the voting stock held by non-affiliates of the
Registrant: At March 27, 1997 (based on the closing price of such stock as
reported by The New York Stock Exchange): $338,222,553.

          Class                  Outstanding at March 27, 1997
Common Stock $.01 Par Value            30,781,459 shares

                     DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for its Annual
Meeting of Stockholders to be held May 14, 1997 are incorporated by reference
into Part III of this report and portions of the Registrant's 1996 Annual
Report to stockholders are incorporated by reference into Part II of this
report.

<PAGE>                         1

                                   Part I

              Special Note Regarding Forward-Looking Statements

Certain  statements in this Form 10-K, including information set forth  under
"Item  1.  Business", "Item 3. Legal Proceedings", and "Item 7.  Management's
Discussion  and  Analysis of Financial Condition and Results of  Operations",
constitute  "Forward-Looking Statements" within the meaning  of  the  Private
Securities  Litigation Reform Act of 1995 (the "Reform Act").  The  Multicare
Companies,  Inc. ("Multicare" or the "Company") desires to take advantage  of
certain  "safe  harbor" provisions of the Reform Act and  is  including  this
special  note  to  enable  the Company to do so.  Forward-looking  statements
included in this Form 10-K, or hereafter included in other publicly available
documents filed with the Securities and Exchange Commission, reports  to  the
Company's  stockholders  and other publicly available  statements  issued  or
released  by the Company involve known and unknown risks, uncertainties,  and
other  factors  which  could cause the Company's actual results,  performance
(financial or operating) or achievements to differ materially from the future
results,  performance  (financial  or operating)  achievements  expressed  or
implied  by  such  forward-looking  statement.   The  Company  believes   the
following important factors could cause such a material difference to occur:

(1)  The Company's ability to grow through the acquisition and development of
long-term care facilities or the acquisition of ancillary businesses.

(2)   The  Company's ability to identify suitable acquisition candidates,  to
consummate  or  complete construction projects, or to profitably  operate  or
successfully integrate enterprises into the Company's other operations.

(3)   The occurrence of changes in the mix of payment sources utilized by the
Company's patients to pay for the Company's services.

(4)  The adoption of cost containment measures by private pay sources such as
commercial  insurers and managed care organizations, as well  as  efforts  by
governmental reimbursement sources to impose cost containment measures.

(5)   Changes  in the United States healthcare system, including  changes  in
reimbursement  levels  under  Medicaid and Medicare,  and  other  changes  in
applicable government regulations that might affect the profitability of  the
Company.

(6)   The  Company's  continued ability to operate  in  a  heavily  regulated
environment and to satisfy regulatory authorities, thereby avoiding a  number
of  potentially  adverse  consequences, such  as  the  imposition  of  fines,
temporary suspension of admission of patients, restrictions on the ability to
acquire  new  facilities,  suspension or  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.

(7)  The Company's ability to secure the capital and the related cost of such
capital  necessary  to  fund  its  future  growth  through  acquisition   and
development, as well as internal growth.

(8)   Changes in certificate of need laws that might increase competition  in
the  Company's industry, including, particularly, in the states in which  the
Company currently operates or anticipates operating in the future.

(9)   The  Company's  ability  to  staff its  facilities  appropriately  with
qualified  healthcare  personnel, including in times  of  shortages  of  such
personnel and to maintain a satisfactory relationship with labor unions.

(10)  The  continued  active  involvement of  the  Company's  key  management
personnel, including particularly, Moshael J. Straus and Daniel E. Straus, co-
chief executive officers of the Company.

(11)  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

<PAGE>                         2

in  the  regulatory  system in the state in which the Company  operates  that
facilitate such competition.

(12)  The  continued  availability of insurance for  the  inherent  risks  of
liability in the healthcare industry.

(13)  Price increases in pharmaceuticals, durable medical equipment and other
items.

(14)  The  Company's  reputation for delivering  high-quality  care  and  its
ability  to  attract and retain patients, including private pay patients  and
patients with relatively high acuity levels.

(15)  Changes in general economic conditions, including changes that pressure
governmental  reimbursement  sources  to  reduce  the  amount  and  scope  of
healthcare coverage.

Item 1.  Business

GENERAL

INTRODUCTION

Multicare  is  a  leading provider of high quality long-term care,  specialty
medical  services  and  assisted  living residences  in  selected  geographic
regions. The Company's long-term care services include skilled nursing  care,
Alzheimer's  care  and related support activities traditionally  provided  in
long-term care facilities. Multicare's specialty medical services consist  of
(i)  rehabilitation  therapies  such  as occupational,  physical  and  speech
therapy and stroke and orthopedic rehabilitation, (ii) subacute care such  as
ventilator  care, intravenous therapy, and various forms of  coma,  pain  and
wound management, and (iii) institutional pharmacy services through which the
Company  provides prescription drugs, infusion therapies and certain  medical
supplies  to the Company's patients and to patients at unaffiliated long-term
care facilities. The Company was organized as a Delaware corporation in March
1992.

As  of  December 31, 1996, the Company operated 151 long-term care facilities
(including  11  assisted living facilities) and two outpatient rehabilitation
centers  (82  owned, 28 leased and 43 managed) in Connecticut, Illinois,  New
Jersey,  Ohio, Massachusetts, Pennsylvania, Rhode Island, Vermont,  Virginia,
West  Virginia  and  Wisconsin with 15,673 beds.  In  addition,  the  Company
provided consulting services to an additional 14 facilities with 1,688  beds.
The  Company's institutional pharmacies serve over 24,000 beds at  March  31,
1997.

Multicare has established a strong competitive position in the markets it
serves by providing high quality long-term care and specialty medical
services.  As a result, the Company has achieved high occupancy rates, a
favorable payor mix and sustained growth in revenue and operating profits.
Multicare's overall occupancy rate was 91% for the year ended December 31,
1996.  The Company achieved a quality mix (defined as revenues derived from
non-Medicaid patient sources) of 65% of net patient revenues for the year
ended December 31, 1996, as compared to 66% for the year ended December 31,
1995.

Multicare has maintained its strong operating performance through effective
managerial and financial control systems and geographic market concentration
of its facilities in selected markets.  These factors permit the Company to
achieve operating efficiencies through economies of scale and reduced
corporate overhead.  The Company's margins before interest, taxes,
depreciation, amortization and rent (EBITDAR) were 20% in 1996, 1995, and
1994.

SIGNIFICANT TRANSACTIONS

In December 1996, the Company acquired The A.D.S Group (A.D.S), an affiliated
group of long-term care companies operating 22 long-term care facilities with
2,930 beds, 20 hospital based subacute units with 514 beds and eight assisted
living  facilities  with  821  beds, all but one  of  which  are  located  in
Massachusetts.  A.D.S also provides consulting services to an  additional  14
facilities with 1,668 beds and operates several ancillary businesses.  In

<PAGE>                         3

December  1996,  the  Company completed the acquisition  of  the  assets  and
operations of three long-term care facilities in Rhode Island with  373  beds
which  the  Company had been managing since December 1995  when  the  Company
acquired  the assets and operations of two related long-term care  facilities
with  356  beds in Connecticut.  In February 1996, the Company  acquired  the
outstanding  capital stock of Concord Health Group, Inc., which  operates  11
long  term care facilities with approximately 1,600 beds, including  assisted
living  facilities,  and several ancillary businesses  in  Pennsylvania.   In
December 1995, the Company acquired the outstanding capital stock of Glenmark
Associates,  Inc., a long-term care provider that operates 21 facilities  and
several   ancillary   businesses  with  approximately  1,700   beds   located
principally in West Virginia. In 1996, the Company completed the construction
of  two  new  skilled nursing facilities which are currently managed  by  the
Company. Three additional facilities under construction are scheduled to open
in  1997.   In  addition,  the  Company opened its  first  newly  constructed
assisted  living  facility during the fourth quarter  of  1996  and  has  two
assisted living facilities under construction.

INDUSTRY BACKGROUND

The  long-term care industry encompasses a broad range of healthcare services
provided  to  the elderly and to other patients with medically complex  needs
who  can be cared for outside of the acute care hospital environment.   Long-
term  care  facilities  offer  skilled nursing care,  routine  rehabilitation
therapy  and  other  support  services, primarily  to  elderly  patients.  In
addition,  long-term care facilities may provide a broad range  of  specialty
medical  services. The Company believes that demand for the services provided
by  long-term  care facilities will increase substantially  during  the  next
decade  due  primarily to demographic trends, advances in medical  technology
and  emphasis  on  healthcare cost containment. At the same time,  government
restrictions and high construction and start-up costs are expected  to  limit
the  supply  of  long-term  care facilities.  In  addition,  a  trend  toward
consolidation  in  the  industry is expected  to  provide  the  Company  with
opportunities for future growth.

COMPANY STRATEGY

Multicare has implemented an operating strategy and growth strategy  designed
to  sustain and enhance the Company's competitive position and to foster  its
expansion  into  targeted geographic areas. The Company's operating  strategy
focuses  on  providing  high  quality long-term care  and  specialty  medical
services on a cost-effective basis. The Company seeks to maximize revenue and
operating profit by seeking to position itself as a premier provider  in  its
markets thereby achieving high occupancy rates and a favorable payor mix. The
Company  employs  rigorous managerial and financial controls  which  seek  to
contain  costs without compromising the quality of care provided. The Company
also  attempts  to  acquire or develop facilities that  are  concentrated  in
selected  geographic  regions to enable it to achieve operating  efficiencies
through economies of scale and reduced corporate overhead.

The   Company's   growth   strategy  emphasizes   (i)   the   expansion   and
diversification  of  its operations by selectively acquiring  and  developing
long-term   care  facilities,  assisted-living  residences,  pharmacies   and
specialty  medical service providers in targeted geographic  areas  and  (ii)
further   development  of  post-acute  or  non-acute  services  in   selected
geographic  areas to create a continuum of services through the expansion  of
assisted  living, home health care, hospital-based subacute  care  and  other
related  care.  The Company has grown substantially through acquisitions  and
through  its ability to integrate newly acquired operations into its existing
operations  and  to  increase  their profitability  by  implementing  revenue
enhancement  and cost control programs.  There can be no assurance,  however,
that   future   suitable  acquisition  candidates  will  be   located,   that
acquisitions  can  be consummated or that added facilities  can  be  operated
profitably  or  integrated successfully into the Company's operations.  As  a
result  of  acquisitions  recently consummated and  the  Company's  continued
expansion of its specialty medical services, the Company is now able to offer
directly  to  many  of  its  patients, rather than  relying  on  third  party
providers,  pharmacy,  rehabilitation,  therapy,  subacute  care  and   other
specialized services, which has enabled the Company to better respond to  the
needs of its patients and to control the costs related to such services.

     The following summarizes the key elements of the Company's strategy:

Provide High Quality Care. In order to provide quality care to its residents,
the  Company seeks to employ highly qualified administrators and nurses,  and
to retain the services of qualified medical directors. Regional quality

<PAGE>                         4

assurance professionals and committees at the facility level (composed of the
facility  administrator  and  the facility's  senior  medical  professionals)
continually  monitor the quality of care provided to ensure  compliance  with
Company  and governmental standards. The Company believes that its commitment
to  providing high quality care and services has enhanced the reputation  and
the competitive position of its facilities in the markets they serve.

Achieve Operating Efficiencies. Multicare has maintained its strong operating
performance  through effective managerial and financial control  systems  and
geographic concentration. The Company believes that concentrating  its  long-
term  care facilities within selected geographic regions enables the  Company
to  achieve  operating  efficiencies  through  economies  of  scale,  reduced
corporate  overhead and more effective management supervision  and  financial
controls.  Geographic concentration also allows the Company to establish more
effective   working  relationships  with  referral  sources  and   regulatory
authorities  in  the  states in which it operates. The  Company's  management
philosophy stresses close oversight of facility operations by individuals  in
three  levels  of  management  (facility,  divisional  and  corporate).   The
Company's centralized, automated financial reporting system enables corporate
financial  personnel to monitor key operating and financial data  and  budget
variances on a timely basis.

Maintain  High  Occupancy  Rates and Quality Mix. An  important  strategy  in
expanding  the revenues and profitability of the Company's facilities  is  to
maintain high occupancy and achieve a favorable payor mix. The Company  seeks
to  achieve  this  by:  (i)  expanding the breadth and  quality  of  services
offered,  including  the  addition of pharmacy and  other  specialty  medical
services  and  (ii)  maintaining  marketing  programs  designed  to  increase
occupancy, improve quality mix and develop additional referral sources.

Expand   Specialty  Medical  Services.  Specialty  medical  services  include
subacute  care  for  medically  complex  patients,  intensive  rehabilitation
therapies and in-house pharmacy services. These services are usually provided
at higher profit margins than routine services and compete with significantly
higher  cost hospital care. The Company operates units dedicated to  subacute
care  within  certain  of  its  long-term care  facilities,  in  addition  to
providing  subacute services throughout the majority of its  facilities.  The
Company  also  operates two outpatient rehabilitation  centers.  The  Company
provides  therapies including physical, occupational and speech  services  at
all  its  skilled  nursing facilities and respiratory  services  at  selected
facilities.  Multicare  currently owns and operates institutional  pharmacies
that service in excess of 24,000 patients.

Acquire Additional Facilities. In its existing regions, the Company seeks  to
strengthen  its operations base through acquiring or constructing  individual
facilities.  The Company believes that expansion into new geographic  regions
can  be  achieved most economically through the acquisition of multi-facility
operations. In identifying and selecting acquisition candidates, the  Company
takes  into consideration opportunities for revenue expansion, either through
quality  improvements  or changes in the mix of services  offered,  and  cost
control,  as  well  as  community demographics, historical  occupancy  rates,
existing   payor  mix,  reputation,  regulatory  compliance  history,   state
reimbursement policies and the physical condition and appearance. The Company
believes   it  has  been  successful  to  date  in  improving  the  operating
performance  of  acquired  facilities  through  increased  occupancy   rates,
expansion of the scope of specialty medical services offered, improved  payor
mix,  modernization and renovation and introduction of its buying  power  and
management and financial control systems.

Construct  and  Expand  Facilities.  The  Company  maintains  a  construction
division  that  is  responsible  for  the supervision  of  new  construction,
renovation and additions. The Company's construction capabilities  enable  it
to  capitalize  on  new  development opportunities  in  its  markets  and  to
effectively  expand and renovate its existing facilities  when  permitted  by
law.  The  Company completed and is currently managing two newly  constructed
skilled  nursing  facilities during 1996 and has three additional  facilities
under construction scheduled to open in 1997. In addition, the Company opened
its  first  newly  constructed assisted living  facility  during  the  fourth
quarter  of  1996 and has two assisted living facilities under  construction.
The Company does not act as a general contractor, but has in-house architects
and  has  developed  a facility prototype for use at its new  facilities.  In
selecting  development  sites,  the  Company  takes  into  account  community
demographics,  historical occupancy rates of facilities  in  the  same  area,
state reimbursement policies and site conditions.

<PAGE>                         5

PATIENT SERVICES

Basic Patient Services

Basic  patient services are those traditionally provided to elderly  patients
in  long-term care facilities and assisted-living residences with respect  to
daily  living activities and general medical needs. The Company provides  24-
hour skilled nursing care by registered nurses, licensed practical nurses and
certified nursing aides in all of its skilled nursing facilities. Each  long-
term  care  facility is managed by an on-site licensed administrator  who  is
responsible for the overall operations of the facility, including quality  of
care. The medical needs of patients are supervised by a medical director  who
is a licensed physician. While treatment of patients is the responsibility of
patients'  attending  physicians who are not employed  by  the  Company,  the
medical director monitors all aspects of patient treatment. The Company  also
provides  a  broad  range  of  support services including  dietary  services,
therapeutic  recreational  activities,  social  services,  housekeeping   and
laundry   services,   pharmaceutical  and  medical  supplies,   and   routine
rehabilitation  therapy.  Each long-term care facility  offers  a  number  of
activities  designed  to  enhance the quality of  life  for  patients.  These
activities include entertainment events, musical productions, arts and crafts
and  programs encouraging community interaction with patients and  visits  to
the  facility.   The  Company  provides housing, personal  care  and  support
services  as  well as certain routine nursing services in its assisted-living
residences.

The  Company  currently  provides specialized care for  Alzheimer's  patients
under  the  supervision  of  specially trained skilled  nursing,  therapeutic
recreation and social services personnel. The Company's Alzheimer's  programs
include music therapy, gross and fine motor activity, reality orientation and
cognitive  stimulation  designed to counter the hyperactivity,  memory  loss,
confusion and reduced learning ability experienced by Alzheimer's patients.

Specialty Medical Services

Specialty  medical  services are provided to patients with medically  complex
needs  who generally require more intensive treatment and a higher  level  of
skilled nursing care. These services typically generate higher profit margins
than  basic  patient services because the higher complexity of the  patients'
medical  conditions  results  in a need for  increased  levels  of  care  and
ancillary services.

Institutional  Pharmacy  Services. The Company operates  seven  institutional
pharmacies  which  currently serve a total of approximately 24,000  patients.
The pharmacies provide long-term healthcare facilities and other institutions
a  variety  of  products and services including prescription drugs,  pharmacy
consulting, and enteral, urological and intravenous therapies. The  Company's
concentration of facilities in certain targeted geographic regions enables it
to  provide these services to its facilities in those regions as well  as  to
facilities not operated by the Company.

Subacute  Care.  Subacute care includes services provided  to  patients  with
medically  complex  conditions  who  require  ongoing  nursing  and   medical
supervision  and  access to specialized equipment and services,  but  do  not
require  many  of  the  other services provided by an  acute  care  hospital.
Services in this category include ventilator care, intravenous therapy, wound
care management, traumatic brain injury care, post-stroke CVA (cardiovascular
accident)  care,  CAPD  (continuous  ambulatory  peritoneal  dialysis),  pain
management, hospice care, and tracheotomy and other ostomy care. The  Company
provides a range of subacute care services to patients at its facilities. The
Company  plans  to  continue  to  expand its subacute  care  capabilities  by
supplementing  and expanding currently available services and  by  developing
expertise in additional services.

Rehabilitation   Therapies.  The  Company  provides  rehabilitation   therapy
programs  at  substantially all of its facilities. To complement the  routine
rehabilitation therapy services provided to its long-term care patients,  the
Company  has developed specialized rehabilitation therapy programs  to  serve
patients  with  complex care needs, such as motor vehicle and other  accident
victims,  persons  suffering from job-related injuries and disabilities,  and
joint-replacement   patients.  The  Company  employs  full   time   physical,
occupational,  and  speech therapists at a majority of  its  facilities.  The
Company  also  offers  respiratory  services  at  selected  facilities.    In
addition,  the  Company operates two outpatient rehabilitation facilities  in
New Jersey and Illinois.

<PAGE>                         6

OPERATIONS

General.  The  day-to-day  operations of each  long-term  care  facility  are
managed by an on-site state licensed administrator who is responsible for the
overall operation of the facility, including quality of care, marketing,  and
financial  performance.  The  administrator  is  assisted  by  an  array   of
professional and non-professional personnel (some of whom may be  independent
providers),  including  a  medical director, nurses and  nursing  assistants,
social  workers, therapists, dietary personnel, therapeutic recreation staff,
and  housekeeping,  laundry and maintenance personnel.  The  business  office
staff  at  each  facility  manage  the day-to-day  administrative  functions,
including data processing, accounts payable, accounts receivable, billing and
payroll.

The  facilities  operated  by  the Company are currently  divided  into  five
divisions,  each  of  which is supervised by a team  including  a  divisional
director,  a  divisional  controller, a  marketing  director,  an  operations
performance  director, and a clinical services director. The  divisional  and
facility  personnel are supported by a corporate staff based at the Company's
New   Jersey  headquarters.  Corporate  personnel  are  responsible  for  the
establishment  of policies and procedures, training, goals,  and  strategies;
quality   assessment  and  assurance  oversight;  reimbursement,  accounting,
information   technology,  cash  management,  and  treasury  functions;   the
development  of  monitoring systems and operational procedures;  construction
and development programs; human resources management; and the development and
implementation of new programs.

Management   and  Financial  Controls.  Consistent  with  its   strategy   of
maintaining  strict  control  over  costs,  the  Company  has  developed   an
integrated  structure  of  management  and  financial  systems  and  controls
intended  to  maximize  operating efficiency. The Company  stresses  frequent
communication among facility, divisional and corporate personnel  and  active
involvement by management in the day-to-day operations of the facilities. The
Company's  integrated  management and financial  information  systems  enable
management  to  monitor key operations and financial data on a timely  basis.
Key  operating data, such as payables and billing data, cash collections  and
admissions/discharge   data,  are  entered  into  the   system   daily   from
workstations located at each facility. This information forms the basis for a
variety  of  management  and financial reports, including  monthly  financial
statements.

Quality   Assurance.  The  Company  has  developed  a  comprehensive  quality
assurance program involving personnel at all levels and designed to  maintain
standards  of  care  at  each  of  the Company's  facilities.  Each  facility
maintains a quality assurance committee comprised of facility management  and
senior medical professionals. The committee is responsible for monitoring and
evaluating all aspects of the facility's operations, including patient  care,
physical  environment, staff appearance, patient rights, patient  activities,
and  dietary  regimen. Facility administrators and divisional  directors  are
encouraged to play an active role in quality assurance by maintaining a high-
profile  presence  and  closely monitoring all  aspects  of  operations.  The
Company  believes its quality assurance process is unique in that the  scored
internal  assessment  tools that measure quality and quantify  standards  are
used  by  both facility staff and corporate evaluators. The tools incorporate
federal  guidelines,  standards  of  practice,  and  corporate  policies  and
procedures. State guidelines are included as applicable during the evaluation
process.  All medical and other consulting personnel are required to  prepare
and submit reports at the end of each scheduled visit identifying any patient
care  or  other  quality  related issues.  Patient satisfaction  surveys  are
conducted  periodically and provide a confidential method  for  patients  and
their  families to comment on the Company's patient care services.  Discharge
interviews  allow the Company to assess patient satisfaction and  to  isolate
potential patient care issues.

Marketing.  The Company engages in local and divisional marketing efforts  to
promote and maintain occupancy rates, to improve its quality mix and to enter
into  and  maintain arrangements with managed care providers.  The  Company's
marketing  activities are overseen by a corporate vice president of marketing
who  oversees the marketing efforts of the Company's marketing directors  and
facility  admissions  directors  and administrators,  who  together  seek  to
establish   relationships  with  referring  physicians,  hospital   discharge
planners,  managed  care companies, social workers, community  organizations,
local  attorneys, bank trust officers, and senior citizens', Alzheimer's  and
other  support  groups. The Company believes that many of  the  services  and
programs  provided by its facilities supplement formal marketing  efforts  by
promoting a facility's reputation in the community as the provider of  choice
in  the  local  markets. For example, the availability of  specialty  medical
services  can be a key factor in the selection of a long-term care  facility.
In  addition,  each  facility  offers a variety  of  community  programs  and
activities which are designed primarily as a service to the community and  as
a means to enhance the quality of patient life. The Company believes these

<PAGE>                         7

programs also contribute to increased occupancy by making the facility a more
attractive choice to prospective residents.

SOURCES OF REVENUES

The  Company  derives its revenues principally by providing  skilled  nursing
services  and specialty medical services which include institutional pharmacy
services, rehabilitation therapies, subacute care, sales of medical supplies,
home health care and other specialized services. The sources of the Company's
revenues  are  a  combination  of  private payment  sources,  state  Medicaid
programs  for indigent patients and the Federal Medicare program for  certain
elderly  and  disabled patients. The Company's skilled nursing  revenues  are
determined by a number of factors, including the licensed bed capacity of its
facilities;  the occupancy rates at its facilities; the mix of  patients  and
the  rates  of  reimbursement among payor categories (private,  Medicaid  and
Medicare);  and  the extent to which certain ancillary services  the  Company
provides to patients in its facilities are utilized by the patients and  paid
for  by  the  respective  payment sources. The Company employs  reimbursement
specialists  to  monitor  applicable  cost  ceilings  and  other   regulatory
developments,  to comply with all reporting requirements and  to  assist  the
Company in recovering reimbursement payments. While the Company believes that
it  has  been successful in meeting applicable cost ceilings and in obtaining
reimbursement, there can be no assurance that reimbursement rates will remain
at  present  levels. In particular, cost containment proposals  at  both  the
Federal  and state levels may have an adverse effect on the Company's ability
to recover its costs of providing services to Medicaid and Medicare patients.
See "--Governmental Regulation."

The  following  table identifies the Company's net revenues  attributable  to
each of its revenue sources for the periods indicated below.
<TABLE>
<CAPTION>
                              Net  Revenues
                          Year ended December 31,
                            1994   1995   1996
<S>                         <C>    <C>    <C>
Private and other           39%    41%    40%
Medicaid                    38%    34%    35%
Medicare                    23%    25%    25%
    Total                   100%   100%   100%
</TABLE>

Private Pay and Other. Private pay revenues include payments from individuals
who  pay  directly for services without governmental assistance  and  include
payments   from   commercial  insurers,  Blue  Cross  organizations,   health
maintenance   organizations,  preferred  provider   organizations,   workers'
compensation programs and other similar payment sources. The Company's  rates
for  private  pay  patients  are typically higher  than  rates  for  patients
eligible for assistance under state-administered reimbursement programs.  The
private  pay  rates charged by the Company are influenced  primarily  by  the
rates  charged  by other providers in the local market and  by  Medicaid  and
Medicare reimbursement rates. Competitor analyses are undertaken periodically
to  discern  local  market pricing. Specialty medical  services  are  usually
reimbursed  under casualty and health insurance coverages. The acuity  levels
for  these  insurance  patients are generally higher and  require  additional
staff  and  increased utilization of facility resources, resulting in  higher
payment rates. Individual cases are either negotiated on a case by case basis
with  the  insurer or the rates are prescribed through managed care  contract
provisions.  Also  included  are  revenues derived  from  pharmacy  services,
management fees, and certain other ancillary businesses.

Medicaid.  Substantially  all  of  the facilities  operated  by  the  Company
participate  in the Medicaid program. Under the Federal Medicaid statute  and
related regulations, state Medicaid programs must provide facility rates that
are   reasonable  and  adequate  to  cover  the  costs  of  efficiently   and
economically operated facilities providing services in conformity with  state
and  Federal  standards. Furthermore, payments must be sufficient  to  enlist
enough  providers  so  that  service under  the  state's  Medicaid  plan  are
available  to  recipients  at least to the extent  that  those  services  are
available  to  the general population. The Medicaid programs  in  the  states
within  which the Company operates pay a per diem rate for providing services
to  Medicaid patients based upon historical costs adjusted for inflation  and
subject  to  restrictive  limitations. The reimbursement  methodologies  upon
which  reimbursement is based may be either prospective or  retrospective  in
nature.  Reimbursement rates are determined by the state, while  the  Federal
government retains the right to approve or disapprove individual state plans.
Medicaid programs in certain states in which the Company operates currently

<PAGE>                         8

include  incentive allowances for providers whose costs are less than certain
ceilings and who meet other requirements. See "--Governmental Regulation."

Medicare.  Substantially  all  of  the  Company's  facilities  are  certified
Medicare  providers.  Medicare is a federally funded and administered  health
insurance program primarily designed for individuals who are age 65  or  over
and  are  entitled to receive Social Security benefits. The Medicare  program
consists  of  two  parts. The first part (Part A) covers  inpatient  hospital
services  and services furnished by other institutional healthcare providers,
such  as  long-term  care facilities. The second part  (Part  B)  covers  the
services  of  doctors, suppliers of medical items and services,  and  various
types  of  outpatient services. Part B services include physical, speech  and
occupational therapy, medical supplies, certain intensive rehabilitation  and
psychiatric  services, ancillary diagnostic services, and other  services  of
the type provided by long-term care or acute care facilities. Part A coverage
is  limited  to  a  specified term (generally 100 days in  a  long-term  care
facility)  and  requires beneficiaries to share some of the cost  of  covered
services  through  the  payment of a deductible and a  co-insurance  payment.
There are no limits on duration of coverage for Part B services, but there is
an annual deductible and a co-insurance requirement for most services covered
by Part B.

The  Medicare program is a retrospective program. An interim rate based  upon
historical cost factors is paid by Medicare during the cost reporting  period
and  a  cost  settlement is made based on actual costs for the period.  Final
settlements  are  subject  to  an  audit of the  filed  cost  report  whereby
adjustments may result in additional payments being made to the Company or in
recoupments  from  the Company. Under the Medicare program,  the  Company  is
reimbursed for its direct costs plus an allocation of indirect costs up to  a
regional  limit.  As the Company expands its specialty medical services,  the
costs  of  care  for  these  patients are expected  to  exceed  the  regional
reimbursement  limits.  As a result, the Company has submitted  and  will  be
required  to  submit further exception requests to recover the  excess  costs
from  Medicare.   There is no assurance the Company will be able  to  recover
such  excess  costs  under pending or any future requests.   The  failure  to
recover these excess costs in the future would adversely affect the Company's
financial position and results of operations.

To  date,  adjustments  from Medicare and Medicaid  audits  have  not  had  a
material  adverse  effect on the Company.  There can  be  no  assurance  that
future adjustments will not have a material adverse effect on the Company.

COMPETITION

The  Company competes with other long-term care and assisted-living providers
on  the basis of the breadth and quality of services, the quality, appearance
and  reputation of its facilities and price. The Company also competes in the
recruitment  of  qualified  healthcare  personnel  and  the  acquisition  and
development of additional facilities or residences. The Company's current and
potential competitors include national, regional and local long-term care and
assisted-living providers as well as acute care hospitals and  rehabilitation
hospitals,  some  of  whom  have significantly greater  financial  and  other
resources  than  the Company. The Company also faces competition  from  other
local  pharmaceutical  distributors and  providers  of  home  healthcare.  In
addition,  certain  competitors are operated by not-for-profit  organizations
and similar businesses which can finance capital expenditures on a tax-exempt
basis  or receive charitable contributions unavailable to the Company.  There
can be no assurance that the Company will not encounter increased competition
in  the  future which could adversely affect the Company's operating results,
particularly  if  existing restrictive policies relating to the  issuance  of
Certificates of Need are relaxed.

The  Company expects competition for the acquisition and development of long-
term  care  facilities to increase in the future as the demand for  long-term
care  increases. Construction of new (or the expansion of existing) long-term
care  facilities  near  the Company's facilities could adversely  affect  the
Company's business. State regulations generally require a Certificate of Need
before  a  new  long-term  care  facility can be  constructed  or  additional
licensed  beds  can  be added to existing facilities.   Certificate  of  Need
legislation is currently in place in all states in which the Company operates
except  in  Pennsylvania where the existing certificate of  need  legislation
expired  on December 18, 1996. A bill has been introduced in the Pennsylvania
legislature  to re-establish Certificate of Need requirements;  however,  the
Company  has been advised that there is little likelihood  such bill will  be
passed.  In Ohio, the current Certificate of Need legislation for the long-

<PAGE>                         9

term  care  industry  has  a  "sunset provision" which  will  result  in  the
legislation  expiring  as of July 1, 1997.  A bill  which  would  extend  the
Certificate  of Need legislation for two years until June 30, 1999  has  been
passed  by  the  Ohio House of Representatives and, as of the  date  of  this
filing,  is still under discussion in the Ohio Senate.  The Company  believes
that  Certificate of Need regulations reduce the possibility of  overbuilding
and promote higher utilization of existing facilities. However, a relaxation,
expiration or elimination of Certificate of Need requirements could  lead  to
an  increase  in competition. In addition, as cost containment measures  have
reduced  occupancy rates at acute care hospitals, a number of these hospitals
have  converted portions of their facilities into subacute units. Competition
from  acute  care  hospitals could adversely affect the Company  and  certain
states  in  which  the Company operates have considered  or  are  considering
action that could facilitate such competition.

GOVERNMENTAL REGULATION

The  Federal government and all states in which the Company operates regulate
various  aspects of the Company's business. In addition to the regulation  of
rates  by governmental payor sources, the development and operation of  long-
term care facilities and the provision of long-term care services are subject
to  Federal, state and local licensure and certification laws which  regulate
with  respect  to a facility, among other matters, the number  of  beds,  the
services  provided, the distribution of pharmaceuticals, equipment,  staffing
requirements,  operating policies and procedures, fire  prevention  measures,
and  compliance with building and safety codes and environmental laws.  There
can  be no assurance that Federal, state or local governments will not impose
additional restrictions which might adversely affect the Company's ability to
provide its services and receive reimbursement of its expenses.

All  of  the facilities operated by the Company are licensed under applicable
state  laws and have the required Certificates of Need from responsible state
authorities.

Substantially  all of the Company's facilities are certified or  approved  as
providers under the Medicaid and Medicare programs. Further, the Company  has
no  reason to believe that any individual providers of healthcare services at
the  Company's facilities do not meet applicable licensing requirements. Both
initial  and  continuing  qualification  of  a  long-term  care  facility  to
participate   in   such   programs  depend  upon  many   factors,   including
accommodations,  equipment,  services,  non-discrimination  policies  against
indigent patients, patient care, quality of life, residents' rights,  safety,
personnel,  physical  environment, and adequacy of policies,  procedures  and
controls.  Licensing, certification and other applicable standards vary  from
jurisdiction  to  jurisdiction  and are revised  periodically.  State  and/or
Federal agencies survey or inspect all long-term care facilities on a regular
basis  to  determine  whether  such facilities are  in  compliance  with  the
requirements  for  participation in government sponsored  third  party  payor
programs.  Failure to comply with these standards could result in the  denial
of  reimbursement, the imposition of fines, temporary suspension of admission
of  new  patients,  the  issuance of a provisional license  for  a  facility,
suspension  or  decertification  from  the  Medicaid  or  Medicare   program,
restrictions  on  the ability to acquire new facilities  or  expand  existing
facilities  and,  in  extreme  cases, the  imposition  of  limitations  on  a
facility's license, the appointment of third-party temporary management for a
facility,  revocation  of the facility's license or closure  of  a  facility.
There can be no assurance that the facilities owned, leased or managed by the
Company,  or  the  provision of services and supplies by  the  Company,  will
initially meet or continue to meet the requirements for participation in  the
Medicaid or Medicare programs or state licensing authorities. Changes in  the
Federal survey regulations which became effective July 1, 1995 allow for  the
exercise  of  broad  discretion by the Federal and state governments  in  the
survey process.

The  Company believes that its facilities are in substantial compliance  with
all  statutes,  regulations,  standards and requirements  applicable  to  its
business. However, the compliance history of a prior operator may be used  by
state  or  Federal  regulators  in determining  possible  actions  against  a
successor  operator,  and in the ordinary course of business,  the  Company's
facilities  receive notices of deficiencies following surveys for failure  to
comply  with various regulatory requirements. In most cases, the Company  and
the reviewing agency will agree upon corrective measures to be taken to bring
the  facility  into  compliance. From time to time, survey deficiencies  have
resulted  in  various penalties against certain facilities and  the  Company.
These penalties have included monetary fines, temporary bans on the admission
of new patients and the placement of restrictions on the Company's ability to
obtain or transfer certificates of need in certain states. To date, no survey
deficiencies or any resulting penalties have had any material adverse  affect
on  the  Company's operations, however, there can be no assurance that future
surveys will not result in penalties or sanctions which could have a material
adverse affect on the Company.

<PAGE>                         10

The  Company is also subject to Federal and state laws which govern financial
and referral arrangements between healthcare providers. Federal laws, as well
as  the law of certain states, prohibit direct or indirect payments, or  fee-
splitting  arrangements between healthcare providers, that  are  designed  to
induce or encourage the referral of patients to, or the recommendation of,  a
particular  provider for medical products or services or the purchase,  sale,
or  lease  of any service or product for which payment may be made under  the
Medicare  or Medicaid programs. These laws include the Federal "anti-kickback
law" which prohibits, among other things, the offer, payment, solicitation or
receipt  of  any form of remuneration in return for the referral of  Medicare
and  Medicaid  patients.  A  wide  array of relationships  and  arrangements,
including  ownership interests in a company by persons who are in a  position
to  refer  patients  and  personal  service agreements  have,  under  certain
circumstances,  been alleged to violate these provisions.   Certain  discount
arrangements  may  also violate the law. A violation  of  the  Federal  anti-
kickback  law  could  result  in the loss of eligibility  to  participate  in
Medicare or Medicaid, or in criminal and civil penalties.

In addition, the Federal government and some states restrict certain business
relationships between physicians and other providers of healthcare  services.
Effective  January  1,  1995, the Stark law prohibits any  physician  with  a
financial  relationship  (defined  as  a  direct  or  indirect  ownership  or
investment interest or compensation arrangement) with an entity from making a
referral for a "designated health service" to that entity, and prohibits that
entity  from billing for such services. "Designated health services"  do  not
include  skilled nursing services, but do include many services which nursing
facilities provide to their patients including clinical laboratory  services,
therapy and enteral and parenteral nutrition.

All  but  one  of  the  states  in which the Company  operates  have  adopted
Certificate  of  Need or similar laws which generally require  that  a  state
agency  approve certain acquisitions and changes in ownership  and  determine
that  a  need exists prior to the addition or reduction of beds or  services,
the  implementation  of  other  changes, the incurrence  of  certain  capital
expenditures  or,  in  certain  states, the closure  of  a  facility.   State
approvals  are  generally  issued  for a specified  maximum  expenditure  and
require  implementation of the proposal within a specified  period  of  time.
Failure to obtain the necessary state approval can result in the inability of
the  facility  to provide the service, operate the facility, or complete  the
acquisition, addition or other change, and may also result in the  imposition
of   sanctions  or  other  adverse  action  on  the  facility's  license  and
reimbursement.   See  "_Competition"  for  a  discussion  of  the  status  of
Certificate  of  Need  legislation in certain states  in  which  the  Company
operates.

On August 21, 1996, President Clinton signed the Health Insurance Portability
and Accountability Act ("HR 3103"). HR 3103 contains a variety of significant
healthcare  fraud and abuse provisions, including creation of  a  coordinated
federal  healthcare  fraud  and abuse program; establishment  of  a  Medicare
integrity program; expansion of current healthcare fraud and abuse sanctions;
creation  of  a  healthcare fraud criminal sanction; creation of  a  criminal
penalty  for  fraudulent disposition of assets in order  to  obtain  Medicaid
benefits; and expansion of the authority to impose, and increasing the amount
of, civil monetary penalties.

There  are numerous legislative and executive initiatives at the Federal  and
state  levels  for healthcare reform with a view toward, among other  things,
slowing the overall rate of growth in healthcare expenditures. The Company is
unable to predict the impact of healthcare reforms on the Company; however it
is  possible that such proposals could have a material adverse effect on  the
Company.

The  Company  is also subject to a wide variety of Federal, state  and  local
environmental and occupational health and safety laws and regulations.  Among
the  types of regulatory requirements faced by health care providers are: air
and  water  quality  control  requirements;  waste  management  requirements;
specific  regulatory  requirements applicable  to  asbestos,  polychlorinated
biphenyls, and radioactive substances; requirements for providing  notice  to
employees and members of the public about hazardous materials and wastes; and
certain other requirements.

In its role as owner and/or operator of properties or facilities, the Company
may  be  subject to liability for investigating and remedying  any  hazardous
substances  that  have  come to be located on the  property,  including  such
substances  that  may  have  migrated off, or  emitted,  discharged,  leaked,
escaped  or  been transported from, the property. Ancillary to the  Company's
operations  are,  in  various  combinations,  the  handling,  use,   storage,
transportation,  disposal and/or discharge of hazardous,  infectious,  toxic,
radioactive,  flammable and other hazardous materials, wastes, pollutants  or
contaminants. Such activities may result in damage to individuals, property

<PAGE>                         11

  or  the environment; may interrupt operations and/or increase their  costs;
may  result in legal liability, damages, injunctions or fines; may result  in
investigations,  administrative proceedings, penalties or other  governmental
agency  actions;  and  may  not be covered by  insurance.  There  can  be  no
assurance  that the Company will not encounter such risks in the future,  and
such  risks may have a material adverse effect on the operations or financial
condition of the Company.

EMPLOYEES

As  of  December 31, 1996, the Company employed approximately 14,800 persons.
Approximately 2,100 employees at 28 of the Company's facilities  are  covered
by  collective bargaining agreements. The Company believes that  it  has  had
good relationships with its employees and with the unions that represent  its
employees, but it cannot predict the effect of continued union representation
or organizational activities on its future operations.

The  healthcare  industry has at times experienced a  shortage  of  qualified
healthcare personnel. While the Company has been able to retain the  services
of  an  adequate  number  of  qualified personnel  to  staff  its  facilities
appropriately  and maintain its standards of quality care, there  can  be  no
assurance that continued shortages will not in the future affect the  ability
of  the  Company  to  attract  and maintain an adequate  staff  of  qualified
healthcare  personnel.  A lack of qualified personnel  at  a  facility  could
result  in significant increases in labor costs at such facility or otherwise
adversely affect operations at such facility. Any of these developments could
adversely  affect  the  Company's operating results or expansion  plans.  The
Company  competes  with  other healthcare providers and  with  non-healthcare
providers for both professional and non-professional employees.

INSURANCE

The  provision of healthcare services entails an inherent risk of  liability.
The  Company  maintains  liability  insurance  providing  coverage  which  it
believes  to  be  adequate.  In  addition, the  Company  maintains  property,
business  interruption,  and  workers' compensation  insurance  covering  all
facilities  in  amounts  deemed adequate by the  Company.  There  can  be  no
assurance  that  any  future  claims will  not  exceed  applicable  insurance
coverage  or that the Company will be able to continue its present  insurance
coverage on satisfactory terms, if at all.

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

Name                 Age  Position
Moshael J. Straus    44   Chairman of the Board of Directors,
                          Co-Chief Executive Officer
Daniel E. Straus     40   President, Co-Chief Executive Officer and Director
Stephen R. Baker     41   Executive Vice President, Chief Operating Officer
and Director
Susan S. Bailis      51   Senior Vice President, A.D.S /Multicare
Bradford C. Burkett  36   Senior Vice President, General Counsel
                          and Secretary
Thomas P. Foy        46   Senior Vice President, Government Relations
                          and Business Development
Andrew Horowitz      35   Senior Vice President, Ancillary Services
Joel Jaffe           50   Senior Vice President, Treasurer
Mark R. Nesselroad   41   Senior Vice President, Acquisitions, Construction
and Development
Robert S. Anderson   35   Vice President, Finance
Kevin P. Breslin     30   Vice President, Acquisitions
Ronald G. Clarendon  53   Vice President, Employee Relations
Janice M. Greer      57   Vice President, Professional Services
Keith F. Helmer      41   Vice President, Operations
Kent R. Hugill       44   Vice President, Marketing
Barbara A. Marte     57   Vice President, Product Development
                          and Enhancement

<PAGE>                         12

Certain  additional  information concerning the above persons  is  set  forth
below:

Moshael J. Straus, the brother of Daniel E. Straus, was a co-founder  of  the
Company in 1984 and since 1978, was involved in the business of the Company's
predecessors.   Mr. Straus has been co-principal owner of the  Company  since
its  establishment.  He assumed the positions of  Chairman of  the  Board  of
Directors  and  Co-Chief Executive Officer of the Company in September  1992.
Mr. Straus has been a member of the Board of Directors since 1992.

Daniel  E. Straus, the brother of Moshael J. Straus, was a co-founder of  the
Company   in  1984  and  since 1978, was involved  in  the  business  of  the
Company's  predecessors.   Mr.  Straus has been  co-principal  owner  of  the
Company  since its establishment.  He assumed the positions of President  and
Co-Chief  Executive Officer of Multicare in September 1992.  Mr.  Straus  has
served on the Board of Directors since 1992.

Stephen  R.  Baker  has  served as Executive Vice President  responsible  for
finance  and operations of the Company since August 1994, and served  as  its
Senior  Vice  President  and Chief Financial Officer  of  the  Company  since
December  1992.  Prior to joining Multicare, he was a partner at  the  public
accounting firm of KPMG Peat Marwick LLP where he was employed for 16  years.
Mr.  Baker is a Certified Public Accountant.  Mr. Baker has been a member  of
the Board of Directors since May 1994.

Susan  S. Bailis has served as Senior Vice President, A.D.S/Multicare and  as
President of  the Company's subsidiaries that operate or manage the Company's
business  in  Massachusetts,  Rhode Island,  Vermont  and  Connecticut  since
December  1996.   Prior to joining Multicare, Ms. Bailis was since  1986  the
President  of  The  A.D.S  Group, a privately  held  long-term  care  company
headquartered in Newton, Massachusetts which was acquired by the  Company  in
December 1996.

Bradford C. Burkett was named a Senior Vice President in 1996, has served  as
Vice  President, General Counsel and Secretary of the Company since May  1995
and  joined  the Company as its Vice President and Deputy General Counsel  in
June  1994.   Mr.  Burkett became Secretary of the Company  in  August  1994.
Prior  to June 1994, Mr. Burkett was engaged in the private practice  of  law
with  the  New  York City firm of Kaye Scholer Fierman Hays &  Handler  since
1985.

Thomas  P.  Foy  joined  the Company in July 1994 as Senior  Vice  President,
Government Relations and Business Development.  Prior to such time,  Mr.  Foy
served  as  Senior  Vice  President  at Hill  International,  a  construction
consulting company since January 1990.  Mr. Foy served as a New Jersey  State
Senator from 1990 to 1992 and a New Jersey Assemblyman from 1984 to 1990.

Andrew  Horowitz has served as Senior Vice President, Ancillary  Services  of
the  Company  since February 1997 and joined the Company as its  Director  of
Pharmacy  Operations  in  January  1995.  Prior  to  joining  Multicare,  Mr.
Horowitz was since 1988 the Executive Vice President and a principal owner of
Scotchwood Pharmacy, a New Jersey based institutional pharmacy business which
was acquired by the Company in January 1995.

Joel Jaffe has served as Senior Vice President, Treasurer of the Company
since May 1995.  Prior to joining Multicare, he was a partner at the public
accounting firm of KPMG Peat Marwick LLP where he was employed for 27 years.
He is a Certified Public Accountant.

Mark  R.  Nesselroad  has  served  as Senior  Vice  President,  Acquisitions,
Construction and Development of the Company since February 1997 and as  chief
executive  officer  of the Company's subsidiary that operates  the  Company's
business in West Virginia since joining the Company in December 1995.   Prior
to joining Multicare, Mr. Nesselroad was a co-founder and since 1984 had been
the  chief  executive officer of Glenmark Associates, Inc., a privately  held
long-term care operator in West Virginia which was acquired by the Company in
December 1995.

<PAGE>                         13

Robert S. Anderson served as Vice President, Finance of a predecessor of  the
Company  since October 1988 and assumed the same position of Vice  President,
Finance of the Company in September 1992.  He joined Multicare Management  in
October 1986 as Corporate Controller. He is a Certified Public Accountant.

Kevin  P.  Breslin has served as Vice President, Acquisitions of the  Company
since May 1995 and joined the Company as its Director of Financial Accounting
in  April  1993.  Prior to joining the Company, he was employed at KPMG  Peat
Marwick LLP for 4 years.  He is a Certified Public Accountant.

Ronald  G.  Clarendon  served  as Vice President,  Employee  Relations  of  a
predecessor  of the Company since August 1991 and assumed the  same  position
with  Multicare in September 1992.  Prior to 1991, Mr. Clarendon  specialized
in all facets of labor relations with Western Union Corporation.

Janice  M. Greer has served as Vice President, Professional Services  of  the
Company  since  February  1997 and joined the  Company  as  its  Director  of
Professional Services in September 1994.  Prior to joining Multicare she  was
the  Corporate Director of Quality Assurance for Aaron Enterprises,  a  long-
term  care  assisted living and retirement living company in North  Carolina,
from  February  1993  through 1994.  Previously she was employed  at  Beverly
Enterprises  from 1982 until 1993 where she served in a variety of  positions
relating to quality assurance.

Keith  F.  Helmer  joined the Company in January 1997 as its Vice  President,
Operations.   Prior  to joining Multicare, Mr. Helmer was employed  at  Arbor
Health  Care  Company where he served as Vice President  of  Operations  from
September  1995  until  December  1996, and as  Regional  Vice  President  of
Operations from September 1994 through September 1995.   Previously,  he  was
the  Vice  President  of  Operations at Connecticut Subacute  Corporation,  a
subacute,  rehabilitation  and  extended care  management  corporation,  from
January 1993 until April 1994.

Kent  R. Hugill has served as Vice President, Marketing of the Company  since
February  1997 and joined the Company as its Corporate Director of  Marketing
in  December 1995. Prior to joining Multicare, Mr. Hugill was since 1995  the
Vice  President,  Sales and Marketing, at Assurqual, Inc., a  Baltimore-based
information, technology and consulting company.  From 1988 until 1995 he  was
employed  at Health Care and Retirement Corporation in Toledo, Ohio where  he
served in a variety of positions including Director of Marketing and Regional
Operations Manager.

Barbara  A.  Marte  has  served as Vice President,  Product  Development  and
Enhancement  of  the Company since January 1995.  Prior  to  such  time,  she
served  as  Director of Subacute Services of the Company since January  1994.
Ms.  Marte  was  previously a Director of Subacute  Development  for  Beverly
Enterprises, Inc. from 1991 through 1993. Prior to 1991, for more  than  five
years,  Ms.  Marte served in various corporate and marketing  positions  with
Genesis Health Ventures, Inc.

ITEM 2.  PROPERTIES

As of December 31, 1996, the Company operated 151 long-term care facilities
and  two  outpatient  rehabilitation centers (82  owned,  28  leased  and  43
managed). The Company has sought to retain ownership of a significant portion
of its real estate and it believes this provides the Company with substantial
financing flexibility.

The  Company has granted security interests in substantially  all  of  its
assets  to  secure  its  credit  facilities.  Twenty-five  of  the  Company's
facilities  are  leased  by  the  respective operating  entities  from  third
parties. One of the Company's Connecticut facilities and one of the Company's
New  Jersey facilities are leased from related parties owned by the principal
stockholders of the Company and one of the Company's New Jersey facilities is
leased  from  a related party 50% owned by certain principal stockholders  of
the  Company.   The  inability of the Company to make rental  payments  under
these leases could result in loss of the leased property through eviction  or
other proceedings. Certain facility leases do not provide for non-disturbance
from  the mortgagee of the fee interest in the property and consequently each
such  lease  is  subject to termination in the event  that  the  mortgage  is
foreclosed following a default by the owner.

<PAGE>                         14

The Company considers its properties to be in good operating condition
and suitable for the purposes for which they are being used.

The following table summarizes by state certain information regarding
the Company's facilities and outpatient rehabilitation centers at  December
31, 1996 (excluding 14 facilities with 1,668 beds at which the Company
provides quality assurance consulting services):
<TABLE>
<CAPTION>
                     Owned (1)     Leased        Managed          Total
              Facilities Beds Facilities Beds Facilities Beds Facilities Beds
<S>                <C>   <C>      <C>   <C>      <C>     <C>     <C>    <C>

Massachusetts      6     876      5      742     38      2,557   49     4,175

New Jersey         13    1,425    8      1,294   ---     ---     21     2,719

Pennsylvania       13    1,520    ---    ---     3       654     16     2,174

West Virginia      16    1,464    4     331      1       62      21     1,857

Ohio               10    896      4     250      ---     ---     14     1,146

Connecticut        5     766      2     250      1       90      8      1,106

Illinois           10    857      1     92       ---     ---     11     949

Wisconsin          5     710      2     231      ---     ---     7      941

Rhode Island       3     373      ---   ---      ---     ---     3      373

Virginia           ---   ---      2     175      ---     ---     2      175

Vermont            1     58       ---   ---      ---     ---     1      58
                   82    8,945    28    3,365    43      3,363   153    15,673
</TABLE>

(1) Includes 7 facilities with 889 beds which are not wholly owned.


ITEM 3.  LEGAL PROCEEDINGS

The  Company  is a party to claims and legal actions arising in the  ordinary
course of business. Management does not believe that any litigation to  which
the  Company is currently a party will have a material adverse effect on  the
Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.
                                   PART II

ITEMS 5 THROUGH 8.

   Information required by Items 5 through 8 of Form 10-K is included in  the
Company's  1996 Annual Report to stockholders and is incorporated  herein  by
reference as indicated below:

Item    No.                                     Page

5       Market for Registrant's Common Equity
        and Related Stockholder Matters         29, 31
6       Selected Financial Data                 13
7       Management's Discussion and Analysis
        of Financial Condition and
        Results of Operations                   14-17
8       Financial Statements and
        Supplementary Data                      18-30

<PAGE>                         15

ITEM  9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOUSRE

None.

                                    PART III

ITEMS 10 THROUGH 13.

Information required by Items 10 through 13 of Form 10-K, is  included  in
the  definitive Proxy Statement to be filed on or before April 30, 1997,  for
the  Company's 1997 Annual Meeting of Stockholders and is incorporated herein
by reference.

                                   Part IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
                                                                Page
(a)    1.Financial Statements
        All financial statements as set forth under
        Item 8 are incorporated by reference from the
        1996 Annual Report to stockholders.

      2.Financial Statement Schedule
        Independent Auditors' Report on Financial
        Statement Schedule                                      F-1
        Schedule II - Valuation and Qualifying Accounts         F-2

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are not applicable and, therefore, omitted.

      3.Exhibits
        Exhibit
        No.            Description
        (1)  2     Reorganization and Subscription Agreement, dated as of
                   August 21, 1992, among The Multicare Companies, Inc.,
                   Daniel E. Straus, Moshael J. Straus, Adina S. Rubin
                   and Bethia S. Quintas
        (2)  3.1   Restated Certificate of Incorporation of The Multicare
                   Companies, Inc.
             3.2   Certificate of Amendment of Restated Certificate of
                   Incorporation of The Multicare Companies, Inc.
        (2)  3.3   By-laws of The Multicare Companies, Inc.
        (1)  4.1   Indenture for Senior Subordinated Notes
        (5)  4.2   Fiscal Agency Agreement for Subordinated Convertible
                   Debentures
        (1)  10.1  Lease, dated July 29, 1986, between Jackson Health Care
                   Associates and Health Resources of Jackson, Inc.
        (2)  10.2  Amended and Restated Amendment of Lease, dated as of
                   November 18, 1992 between Straus Associates and Health
                   Resources of Colchester, Inc.
        (2)  10.3  Amended and Restated 1993 Stock Option Plan
        (3)  10.4  Amendments dated March 15 and April 4, 1994 to the
                   Amended and Restated 1993 Stock Option Plan
        (3)  10.5  Non-Employee Directors' Stock Option Plan
        (4)  10.6  First Amendment Agreement dated as of October 19, 1995
                   among The Multicare Companies, Inc., Subsidiary Co-
                   Borrowers, Subsidiary Guarantors, and The Chase
                   Manhattan Bank, N.A.
        (5)  10.7  The Multicare Companies, Inc. Employee Stock Purchase Plan
        (5)  10.8  The Multicare Companies, Inc. Directors Retainer and
                   Meeting Fee Plan

<PAGE>                         16

        (5)  10.9  The Multicare Companies, Inc. Key Employee Incentive
                   Compensation Plan
        (5)  10.10 Amended and Restated Credit Agreement dated as of March
                   31, 1995 among The Multicare Companies, Inc.,
                   Subsidiary Co-Borrowers, Subsidiary Guarantors and The
                   Chase Manhattan Bank, N.A.
        (5)  10.11 Loan Agreement dated October 13, 1992 between Meditrust
                   Mortgage Investments, Inc. and various Glenmark entities
        (5)  10.12 First Amendment to Loan Agreement dated as of November 30,
                   1995
        (5)  10.13 Intercreditor Agreement dated December 1, 1995 between
                   The Chase Manhattan Bank, N.A. , Meditrust Mortgage
                   Investments, Inc. and Meditrust of West Virginia, Inc.
        (5)  10.14 Second Amendment to Loan Agreement entered into
                   effective as of November 30, 1995
        (5)  10.15 Agreement and Plan of Merger Among HRWV, Inc., Glenmark
                   Associates, Inc., Glenmark Holding Company Limited
                   Partnership, Mark R. Nesselroad and Glenn T. Adrian
        (5)  10.16 Facility Lease Agreement dated as November 30, 1995
                   between Meditrust of West Virginia, Inc. and Glenmark
                   Limited Liability Company
        (5)  10.17 Second Amendment Agreement dated as of February 22,
                   1996 among The Multicare Companies, Inc. Subsidiary Co-
                   Borrowers, Subsidiary Guarantors, The Banks Signatory
                   hereto, and The Chase Manhattan Bank, N.A., as Agent
        (6)  10.18 Agreement and Plan of Merger, dated as of January 15,
                   1996, among The Multicare Companies, Inc., CHG
                   Acquisition Corp., and Concord Health Group, Inc.
        (7)  10.19 Second Amended and Restated Credit Agreement, dated as
                   of May 22, 1996,among The Multicare Companies, Inc.,
                   the Subsidiary Co-Borrowers, the Subsidiary Guarantors,
                   the Banks Signatory thereto and The Chase Manhattan
                   Bank, N.A., as Agent
        (7)  10.20  Acquisition Agreement, dated as of June 17, 1996, by
                    and among A.D.S/Multicare, Inc. and Alan D. Solomont,
                    David Solomont, Ahron M. Solomont, Jay H. Solomont,
                    David Solomont, Susan S. Bailis and the Seller Entities
                    signatory thereto (the "A.D.S Acquisition Agreement")
        (7)  10.21  Amendment No. 1, dated August 12, 1996, to the A.D.S
                    Acquisition Agreement.
        (8)  10.22  Amendment No. 2, dated as of September 25, 1996 to the
                    A.D.S Acquisition Agreement.
        (8)  10.23  Amendment No. 3, dated as of October 29, 1996 to the
                    A.D.S Acquisition Agreement.
        (8)  10.24  Amendment No. 4, dated as of December 11, 1996 to the
                    A.D.S Acquisition Agreement.
        (8)  10.25  Third Amended and Restated Credit Agreement dated as of
                    December 11, 1996 among The Multicare Companies, Inc.
                    and certain of its Subsidiaries, and Nationsbank, N.A.
                    as Administrative Agent.
        (8)  10.26  Master Lease, Open End Mortgage and Purchase Option
                    dated as of December 11, 1996 among Academy Nursing
                    Home, Inc., Nursing and Retirement Center of the
                    Andovers, Inc., Prescott Nursing Home, Inc., Willow
                    Manor Nursing Home, Inc., and A.D.S/Multicare, Inc.
        (8)  10.27  Appendix A to Participation Agreement, Master Lease,
                    Supplements, LoanAgreement, and Lease Facility
                    Mortgages.
        (8)  10.28  Participation Agreement, dated as of December 11, 1996
                    among The Multicare Companies, Inc., as Guarantor,
                    Various Subsidiaries of The Multicare Companies, Inc.
                    as Lessees, Selco Service Corporation, as Lessor,
                    Various Financial Institutions as Tranche B Lenders,
                    Nationsbank, N.A., as Lease Agent for the Lenders, and
                    Nationsbank, N.A., as Collateral Agent for the Secured
                    Parties.
            10.29   The Multicare Companies, Inc. Non-qualified Stock
                    Purchase Plan.

<PAGE>                         17

            10.30   Employment Agreement, dated as of January 1, 1995,
                    between The Multicare Companies, Inc. and Daniel E.
                    Straus.
            10.31   Employment Agreement, dated as of January 1, 1995,
                    between The Multicare Companies, Inc. and Moshael J.
                    Straus.
            10.32   Employment Agreement, dated as of January 1, 1995,
                    between The Multicare Companies, Inc. and Stephen R.
                    Baker.
            10.33   Employment Agreement, dated as of January 1, 1995,
                    between The Multicare Companies, Inc. and Paul J.
                    Klausner.
            10.34   Employment Agreement, dated as of January 1995, between
                    Care 4, L.P., and Andrew Horowitz.
            10.35   Employment Agreement, dated as of December 1995,
                    between Glenmark Associates, Inc. and Mark R.
                    Nesselroad.
            10.36   Amendment, dated July 19, 1996, to Agreement and
                    Plan of Merger among HRWV, Inc., Glenmark Associates,
                    Inc., Glenmark Holding Company Limited Partnership,
                    Mark R. Nesselroad and Glenn T. Adrian.
            11      Computation of Earnings Per Share
            13      1996 Annual Report to stockholders
            21      Subsidiaries of the Registrant
            23      Consent of KPMG Peat Marwick LLP, Independent Certified
                    Public Accountants
            27      Financial Data Schedule

(1)  Incorporated by reference from Registration Statement  No.  33-51176  on
Form S-1 effective November 18, 1992.
(2)  Incorporated by reference from Registration Statement  No.  33-65444  on
Form S-1 effective August 18, 1993.
(3)  Incorporated  by  reference  from Registration  Statement  No.  33-79298
effective June 22, 1994.
(4)  Incorporated  by reference from Quarterly Report on Form  10-Q  for  the
quarterly period ended September 30, 1995.
(5)  Incorporated by reference from Annual Report on Form 10-K for  the  year
ended December 31, 1995.
(6) Incorporated by reference from the Tender Offer Statement on Schedule 14D-
1  of CHG Acquisition Corp., and The Multicare Companies, Inc., dated January
22, 1996.
(7)  Incorporated by Reference from Registration Statement No.  333-12819  on
Form S-3 effective October 24, 1996.
(8) Incorporated by reference from Current Report on Form 8-K, dated December
26, 1996.

(b)  Reports on Form 8-K.

On  October 22, 1996 the Company filed a current report on Form 8-K reporting
the Company announced in a press release its 1996 third quarter earnings.

On  December  26,  1996,  the  Company filed a current  report  on  Form  8-K
reporting  that the Company (i) announced in a press release the Company  had
completed  the acquisition of The A.D.S Group; (ii) completed the acquisition
of  three  facilities in Rhode Island; and (iii)amended and restructured  its
$350 credit facility and entered into a new lease facility
with Nationsbank, N.A., as agent.

<PAGE>                       18

                        Independent Auditors' Report


The Board of Directors
The Multicare Companies, Inc.:


Under  date  of  February  4, 1997, we reported on the  consolidated  balance
sheets  of The Multicare Companies, Inc. and subsidiaries as of December  31,
1995  and  1996,  and  the  related consolidated  statements  of  operations,
stockholders' equity, and cash flows for each of the years in the  three-year
period  ended  December 31, 1996, as contained in the 1996 annual  report  to
stockholders.  These consolidated financial statements and our report thereon
are  incorporated by reference in the annual report on Form 10-K for the year
1996.   In  connection  with  our audits of the  aforementioned  consolidated
financial  statements, we also have audited the related  financial  statement
schedule  as  listed  in  the accompanying index.  This  financial  statement
schedule   is   the   responsibility  of  the  Company's   management.    Our
responsibility is to express an opinion on this financial statement  schedule
based on our audits.

In  our  opinion,  such  financial statement  schedule,  when  considered  in
relation  to  the basic consolidated financial statements taken as  a  whole,
presents fairly, in all material respects, the information set forth therein.




                  KPMG Peat Marwick LLP


Short Hills, New Jersey
February 4, 1997

                                                                  SCHEDULE II

<TABLE>


                        THE MULTICARE COMPANIES, INC.
                              AND SUBSIDIARIES
 .
                      Valuation and Qualifying Accounts

                  Years ended December 31, 1994, 1995, 1996

                               (In thousands)



<CAPTION>
Classifications          Balance     Charged     Charged                Balance
                            at       to costs    to other               at end
                       beginning of    and       accounts  Deductions     at
                          period     expenses      (1)         (2)      Period
<S>                      <C>          <C>        <C>          <C>     <C>

Year ended December
31, 1996: Allowance
or doubtful accounts     $ 5,241      4,760      2,502        97      11,531

Year ended December
31, 1995: Allowance
for doubtful accounts    $ 2,726      3,483      ---          968     5,241

Year ended December
31, 1994: Allowance
for doubtful accounts    $ 1,642      1,712      ---          628     2,726
</TABLE>

(1) Represents amounts related to acquisitions
(2) Represents amounts written-off as uncollectible.

<PAGE>                         F-2

Pursuant  to  the  requirements of Section 13  or  15(d)  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.

              By:  /S/ DANIEL E. STRAUS
                   Daniel E. Straus
                   President and Co-Chief Executive Officer

March 27, 1997

Pursuant  to  the requirements of the Securities Exchange Act of  1934,  this
report  has  been  signed below by the following persons  on  behalf  of  the
Registrant and in the capacities and on the dates indicated.


Signature                     Title                          Date

MOSHAEL J. STRAUS      Chairman of the Board,            March 27, 1997
Moshael J. Straus      Co-Chief Executive Officer
                       and Director
                       (Principal Executive Officer)

DANIEL E. STRAUS       President, Co-Chief Executive     March 27, 1997
Daniel E. Straus       Officer and Director
                       (Principal Executive Officer)

STEPHEN R. BAKER       Executive Vice President,         March 27, 1997
Stephen R. Baker       Chief Financial Officer and
                       Director (Principal Accounting
                       Officer)

PAUL J. KLAUSNER       Director                          March 27, 1997
Paul J. Klausner

STUART H. ALTMAN       Director                          March 27, 1997
Stuart H. Altman

CONSTANCE B.
GIRARD-DICARLO         Director                          March 27, 1997
Constance B.
Girard-diCarlo

MENACHEM ROSENBERG     Director                          March 27, 1997
Menachem Rosenberg

GEORGE R. ZOFFINGER    Director                          March 27, 1997
George R. Zoffinger