<PAGE>

                                    FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


(Mark One)
{ X }  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  September 30, 1997

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

For the transition period from                     to


For Quarter Ended September 30, 1997     Commission file number   000-17596

                 Meridian Healthcare Growth and Income Fund Limited Partnership
                      (Exact Name of Registrant as Specified in its Charter)


   Delaware                                                         52-1549486
(State or Other Jurisdiction of                                (I.R.S. Employer
Incorporation or Organization)                           Identification Number)



  225 East Redwood Street, Baltimore, Maryland                          21202
(Address of Principal Executive Offices)                             (Zip Code)

        Registrant's Telephone Number, Including Area Code:     (410) 727-4083

                                               N/A
                      (Former Name, Former Address, and Former Fiscal Year,
                                 if Changed Since Last Report.)

  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


<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP






                                      INDEX


                                                                    Page No.
Part I.  Financial Information


     Item 1.  Financial Statements

              Consolidated Balance Sheets                                1
              Consolidated Statements of Operations                      2
              Consolidated Statements of Partners' Capital               3
              Consolidated Statements of Cash Flows                      4
              Notes to Consolidated Financial Statements                5-6


     Item 2.  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations          7-9



Part II.   Other Information

     1. through Item 6.                                                 10

     Signatures                                                         11




<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                               September 30,   December 31,
                                                                   1997            1996
Assets
Current Assets
<S>                                                           <C>             <C>
 Cash and cash equivalents                                    $       2,156   $      3,962
 Accounts receivable, net                                             6,672          6,429
 Estimated third-party payor settlements                                214            105
 Prepaid expenses                                                       703            514
   Total current assets                                               9,745         11,010

Property and equipment, net of accumulated depreciation              35,095         35,680

Other assets
 Goodwill, net                                                        5,300          5,490
 Loan acquisition costs, net                                             26             64
 Other deferred charges                                                   3             11
                                                                      5,329          5,565

   Total assets                                               $      50,169   $     52,255

Liabilities and Partners' Capital
Current liabilities
 Current portion of long-term debt                            $      24,140   $        621
 Accrued compensation and related costs                               1,638          2,415
 Accounts payable and other accrued expenses                          2,219          2,147
 Estimated third  party payor settlements                             3,885          2,958
   Total current liabilities                                         31,882          8,141

Deferred management fee payable                                         801            770
Loan payable to the Development General Partner                       1,022            984
Line of credit borrowings                                               -            1,000
Long-term debt                                                          -           23,971
                                                                      1,823         26,725

Partners' capital
 General partners                                                      (153)          (143)
 Assignee limited partners; 1,540,040
  units issued and outstanding                                       16,617         17,532
   Total partners' capital                                           16,464         17,389

   Total liabilities and
    partners' capital                                         $      50,169   $     52,255

</TABLE>

See accompanying notes to financial statements

-1-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands except per unit amounts)

<TABLE>
<CAPTION>
                                                                   Three Months Ended              Nine Months Ended

                                                              September 30,   September 30,   September 30,   September 30,
                                                                  1997            1996            1997            1996


Revenues
<S>                                                          <C>             <C>             <C>             <C>
 Medicaid and Medicare patients                              $       9,863   $       9,391   $      28,523   $      26,936
 Private patients                                                    2,718           2,661           8,234           8,311
 Investment and other income                                            77              70             235             261
                                                                    12,658          12,122          36,992          35,508

Expenses
 Operating, including $1,626,  $1,476,
  $5,014 and $3,825 to related parties                               9,873           9,684          29,541          28,443
 Management and administration fees
  to related parties                                                   814             781           2,375           2,290
 General and administrative                                            159             278             510             511
 Depreciation and amortization                                         498             515           1,483           1,480
 Interest expenses                                                     505             554           1,529           1,597
                                                                    11,849          11,812          35,438          34,321

Net earnings                                                 $         809   $         310   $       1,554   $       1,187




Net earnings per unit of assignee
 limited partnership interest                                $        0.52   $        0.20   $        1.00   $        0.76

</TABLE>


See accompanying notes to financial statements

-2-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
      Consolidated  Statements of Partners' Capital
  For the Nine Months Ended September 30, 1997 and 1996
                       (Unaudited)
                   Dollars in thousands

<TABLE>
<CAPTION>
                                                                        Assignee
                                                             General    Limited
                                                             Partners   Partners    Total



<S>                                                         <C>        <C>        <C>
Balance at December 31, 1996                                $   (143)  $ 17,532   $ 17,389

Net earnings                                                      16      1,538      1,554

Distributions to partners                                        (25)    (2,454)    (2,479)

Balance at September 30, 1997                               $   (153)  $ 16,617   $ 16,464





Balance at December 31, 1995                                $   (127)  $ 19,100   $ 18,973

Net earnings                                                      12      1,175      1,187

Distributions to partners                                        (25)    (2,454)    (2,479)

Balance at September 30, 1996                               $   (140)  $ 17,821   $ 17,681
</TABLE>

      See accompanying notes to financial statements

                           -3-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMTIED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                 1997       1996

Cash flows from operating activities
<S>                                                           <C>        <C>
 Net earnings                                                 $  1,554   $  1,187
 Adjustments to reconcile net earnings to net
  cash provided by operating activities
   Depreciation and amortization                                 1,483      1,480
   Minority interest in net earnings of operating
    partnerships                                                    18         14
   Increase in loan payable to Development General Partner          38         39
   Increase in deferred management fee payable                      31         32
   Change in other assets and liabilities
    Accounts receivable                                           (261)      (698)
    Estimated third-party payor settlements                        818      2,568
    Prepaid expenses                                              (189)      (110)
    Accrued compensation and related costs                        (777)        (2)
    Accounts payable and other accrued expenses                     72       (461)

Net cash provided by operating activities                        2,787      4,049

Cash flows from investing activities-
 additions to property and equipment                              (662)      (296)


Cash flows from financing activities
 Line of credit borrowings                                         -        1,100
 Repayment of line of credit borrowings                         (1,000)      (200)
 Repayment of long-term debt                                      (452)      (412)
 Distributions to partners                                      (2,479)    (2,479)

Net cash used in financing activities                           (3,931)    (1,991)

Net increase (decrease) in cash and cash equivalents            (1,806)     1,762
Cash and cash equivalents
 Beginning of period                                             3,962      1,539

 End of period                                                $  2,156   $  3,301
</TABLE>

See accompanying notes to financial statements

-4-
<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                   Notes to Consolidated Financial Statements
                               September 30, 1997
                                   (Unaudited)


NOTE 1 - THE FUND AND BASIS OF PREPARATION

The Fund, through its seven operating partnerships, derives substantially all of
its  revenue  from  extended  healthcare  provided to nursing  center  residents
including room and board, nursing care, drugs and other medical services.

The accompanying  financial  statements of Meridian Healthcare Growth and Income
Fund Limited  Partnership (the "Fund") do not include all of the information and
note  disclosures   normally  included  in  financial   statements  prepared  in
accordance with generally accepted accounting principles.  The unaudited interim
consolidated  financial  statements  reflect all  adjustments  which are, in the
opinion of  management,  necessary  to a fair  statement  of the results for the
interim  periods  presented.  All such  adjustments  are of a  normal  recurring
nature.   Certain  amounts  included  in  the  1996  Consolidated  Statement  of
Operations  have been  reclassified  to  conform to the 1997  presentation.  The
unaudited interim financial information contained in the consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements contained in the 1996 Annual Report.


NOTE 2 - RELATED PARTY TRANSACTIONS

The Fund is  obligated  to pay the  Administrative  General  Partner  an  annual
administration fee of the greater of $75,000 per year or 1/2 of 1% of the Fund's
annual  revenues.  The nursing centers owned by the operating  partnerships  are
managed by Meridian  Healthcare,  Inc., an affiliate of the Development  General
Partner,  under the terms of ten year  management  agreements  which provide for
management  fees  equal to 6% of the annual  revenues  of each  nursing  center.
Certain of the operating  partnerships  also purchase drugs and medical supplies
and other services from  affiliates of the  Development  General  Partner.  Such
purchases  are in turn billed to patients or third party  payors at prices which
on average approximate the nursing center's cost.

     Transactions  with  these  related  parties  for  the  three  months  ended
September 30, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>

                                                                       1997                  1996

<S>                                                             <C>                     <C>
         Management and administration fees                     $ 814,000               $ 781,000
         Drug and medical supplies purchases                      461,000                 649,000
         Nursing and rehabilitation services                    1,165,000                 826,000
         Interest expense on borrowings                            23,000                  24,000
</TABLE>

Loans outstanding  under an arrangement with the Development  General Partner to
fund operating  deficits  generated by the Mooresville,  Salisbury and Woodlands
nursing  centers were  $1,022,000 at September 30, 1997 and $984,000 at December
31, 1996.


NOTE 3 - DEBT

At December  31, 1996,  the  Randallstown  facility  failed to meet the required
ratio of cash flow to debt service.  Effective March 14, 1997, the lender agreed
under a Limited  Forbearance  Agreement to refrain and forbear  temporarily from
exercising  and enforcing any of its remedies for a period of time ending on and
including May 15, 1997. The agreement provides that should Randallstown not meet
all its covenants for the quarter ended March 31, 1997, the lender shall require
that  certain  partnerships  and/or the Fund  become  either  joint and  several
co-obligors  or  guarantors of  Randallstown's  obligation,  note and loan.  The
Randallstown  facility  did not meet  the  required  ratio of cash  flow to debt
service at March 31,  1997.  On July 2, 1997  under the terms of the  agreement,
Caton  Manor  Meridian   Limited   Partnership,   Frederick   Meridian   Limited
Partnership, and Hamilton Meridian


                                                      -5-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                   Notes to Consolidated Financial Statements
                               September 30, 1997
                                   (Unaudited)

NOTE 3 - DEBT  (continued)

Limited Partnership jointly and severally guaranteed  Randallstown's  obligation
and  secured  such  guaranty  with an  indemnity  deed of  trust  lien on  their
respective facilities and properties.

Effective June 30, 1997, an amendment to the Limited  Forbearance  Agreement was
signed  which  requires  Caton Manor  Meridian  Limited  Partnership,  Frederick
Meridian  Limited   Partnership,   Hamilton  Meridian  Limited  Partnership  and
Randallstown  Meridian  Limited  Partnership to maintain a combined Debt Service
Coverage  Ratio of 1.7 to 1.0. At September  30, 1997 the Fund was in compliance
with this debt covenants.


NOTE 4 - NET EARNINGS PER UNIT OF ASSIGNEE LIMITED PARTNERSHIP INTEREST

Net earnings per unit of assignee limited  partnership  interest is disclosed on
the Consolidated Statements of Operations and is based upon 1,540,040 units.



                                                      -6-

<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations



Liquidity and Capital Resources

         The Fund has  sufficient  liquid  assets  and  other  available  credit
resources to satisfy its operating  expenditures and anticipated routine capital
improvements at each of the seven nursing home facilities.

         As previously  discussed,  the  Randallstown  facility did not meet its
required  ratio of cash flow to debt  service  and on July 2, 1997  executed  an
amendment to the Limited  Forbearance  Agreement  effective June 30, 1997.  This
agreement  requires that Caton Manor  Meridian  Limited  Partnership,  Frederick
Meridian Limited  Partnership and Hamilton Meridian Limited  Partnership jointly
and severally guarantee Randallstown's  obligation and secure such guaranty with
an indemnity  deed of trust lien on their  respective  facilities and properties
and maintain a Debt Service  Coverage Ratio of 1.7 to 1.0. At September 30, 1997
the Fund was in compliance with its debt covenants.

         The Fund's  long-term debt is scheduled to mature February 28, 1998. As
a result  of this  maturity  date  being  less than one year from the end of the
current  reporting  period,  the Fund has  classified  the balance of this debt,
$24,140,000, as a current liability on its September 30, 1997 balance sheet. The
Fund is currently considering several financial options for the repayment of the
loan balances.

         On July 29, 1996, the Fund modified its revolving credit facility ("The
Facility") by  increasing  the maximum  amount to  $4,000,000  and extending the
maturity date until  February 28, 1998.  The Facility is designated  for working
capital  needs and  issuance of letters of credit.  The  Facility  is  primarily
secured by the accounts  receivable of the Fund. Any outstanding cash borrowings
under the Facility  bear  interest at LIBOR plus 1.75%.  At September  30, 1997,
there were no outstanding  borrowings under this Facility. The Fund is currently
considering options to replace this credit facility.

         On November 13, 1997, the Fund made a cash  distribution of $826,410 to
its assignee limited  partners,  which was funded from nursing center operations
generated  during  the third  quarter of 1997  after  payment  of  approximately
$81,000 of upper tier expenses.  In addition to funding the current distribution
and third quarter upper tier  expenses,  third quarter  income was sufficient to
reimburse  reserves  $176,247,  which had been utilized to fund a portion of the
first half 1997 distributions. Through the third quarter of 1997, nursing center
operations  generated  sufficient income to fund  approximately 81% of the total
distributions after payment of upper tier expenses of $226,000.

         While  future  distributions  will remain  dependent  on the  operating
performance of the properties, Fund management expects distributions will remain
at current levels.  Fourth quarter  operating results are expected to be in line
with the improved performance reflected in the third quarter and as a result, we
expect next quarter's income to fully fund the distribution to partners.


Results of Operations

Three Months Ended  September 30, 1997 vs. Three Months Ended September 30, 1996

         The Fund's patient revenues increased by approximately $529,000 (or 4%)
for the three months ended September 30, 1997 as compared to the same period for
1996.  This  increase  was  primarily  the result of effective  rate  increases.
Effective  July 1,  1997,  the four Fund  facilities  in the  State of  Maryland
received  rate  increases  of 5%-6%  compared  to  Medicaid  rate  increases  of
approximately  2.5% on July 1, 1996.  Medicaid  census in those four  facilities
increased  slightly in the three months ended  September 30, 1997 as compared to
the same period in 1996 (43 days).  The acuity level of those residents has also
increased.  The average private rate increased by approximately $9.71 per day in
the third quarter of 1997 as compared to the same period of 1996  accounting for
approximately $212,000 of the effective rate increase.  Private census was 1,174
days  lower in the third  quarter  of 1997  versus  the third  quarter  of 1996;
however, there was a shift in census towards facilities with overall higher


                                                      -7-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations



Results of Operations (continued)

private room rates. The remainder of the effective rate increase occurred in the
Medicare area. Although Medicare census decreased to 9.7% of total census in the
three  months ended  September  30, 1997 as compared to 10.2% of total census in
the comparable period in the prior year, the acuity level of those residents has
increased.  These  favorable  variances  were  offset in part by a  decrease  of
approximately $205,000 in prior year third party cost report settlements in 1997
as compared to 1996 as well as a decrease  in  Medicare  ancillaries  due to the
decrease in Medicare census.

         Operating  expenses  for the three  months  ended  September  30,  1997
increased  by  approximately  $189,000 (or 2%) as compared to the same period in
the prior year; however,  operating expenses as a percentage of revenue declined
to 78% in 1997 as compared to 80% in 1996. This decrease was largely a result of
improved cost control and in response to the census decline.  Salaries and wages
increased by  approximately  $151,000 (or 2.8%) due to normal wage  increases as
well  as the use of  special  weekend  incentive  programs  at the  Randallstown
facility in an effort to decrease agency usage.  Agency usage was  approximately
$17,000  higher  in the  third  quarter  of  1997  versus  1996;  however,  this
represented  a decrease from prior  quarters.  The remainder of the variance was
due to expected cost increases as well as increased  benefits in response to the
increased salaries.

         General and administrative  expenses decreased  approximately  $119,000
due primarily to a decrease in  professional  and  consulting  fees in the third
quarter of 1997 versus the comparable  period in 1996.  Additionally,  the third
quarter of 1996 includes a  reclassification  of expenses which resulted in that
quarters expenses being higher than normal by approximately $70,000.

         Interest  expense in the third quarter of 1997 versus 1996 decreased by
$49,000 as a result of the pay down of the line of credit  borrowings  in April,
1997.


 Nine Months Ended September 30, 1997 vs. Nine Months Ended September 30, 1996

         Patient revenues for the Fund's seven operating  partnerships increased
$1,510,000  (or 4%) for the nine months ended  September 30, 1997 as compared to
the same period in 1996. The primary reason for the revenue growth was effective
rate increases,  including $1,170,000 relating to Medicaid residents.  Effective
July 1, 1997, the four Maryland  facilities  received Medicaid rate increases of
5-6% as compared to  approximately  2.5% on July 1, 1996.  Also  contributing to
this Medicaid  increase was a shift to higher acuity  Medicaid  residents at the
facilities.  The remainder of the rate increase occurred in Medicare where there
has also been a shift to a higher acuity resident. Additionally, ancillary usage
increased in 1997 versus the  comparable  period in 1996.  Although total census
decreased by 5,281 days,  Medicare  census was 473 days higher in the first nine
months of 1997  versus  the same  period  in 1996.  Partially  offsetting  these
favorable variances was a decrease of approximately $467,000 in prior year third
party cost report settlements.

         Operating  expenses  for the  nine  months  ended  September  30,  1997
increased approximately  $1,098,000 (or 4%) as compared to the nine months ended
September  30,  1996.  As a  percentage  of total  revenue,  operating  expenses
remained   consistent   at  80%  of  revenue.   Salaries  and  wages   increased
approximately  $537,000 (or 3%) in the first three  quarters of 1997 compared to
the same  time  period in 1996 due to normal  rate  increases.  As a result of a
shortage in  certified  nursing  assistants  in the State of  Maryland,  nursing
agency usage increased approximately $121,000 in 1997 versus 1996. Total nursing
costs, as a result, are $1.76 per day higher in 1997 as compared to 1996.
         Another  factor  contributing  to the  operating  expense  increase was
higher ancillary  utilization in the first nine months of 1997 versus 1996. This
was  partially a result of the increased  Medicare  census in 1997 as well as an
increase in the utilization of ancillaries by Medicaid residents. As compared to
1996, a greater  percentage of  ancillaries  are being  utilized by the Medicaid
population and are not reimbursed under the Medicaid programs.  On a per patient
day basis, Medicaid ancillary utilization is $2.30 higher in 1997 than in 1996.

                                                      -8-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations


Results of Operations (continued)

         Interest expense for the nine months ended September 30, 1997 decreased
by  approximately  $68,000  versus the same  expense in 1996.  This was due to a
decreased use of the line of credit  borrowings.  All line of credit  borrowings
were paid off in full in April of 1997.




                                                      -9-
<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



                           PART II. OTHER INFORMATION




Item 1.     Legal Proceedings

                  Inapplicable

Item 2.     Changes in Securities

                  Inapplicable

Item 3.     Defaults upon Senior Securities

                  Inapplicable

Item 4.     Submission of Matters to a Vote of Security Holders

                  Inapplicable

Item 5.     Other Information

                  Inapplicable

Item 6.     Exhibits and Reports on Form 8-K

                  a)  Exhibits:    None

                  b)  Reports on Form 8-K:     None

                                                 -10-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP




                                   SIGNATURES




Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
                               LIMITED PARTNERSHIP




DATE:    11/11/97                 By:             /s/ John M.  Prugh
                                         John M. Prugh
                                         President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




DATE:    11/11/97                 By:           /s/ Timothy M.  Gisriel
                                         Timothy M. Gisriel
                                         Treasurer
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner





                                                     -11-

<PAGE>