<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, 1996

{   }  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, 1996     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          7-8



Part II.   Other Information

     1. through Item 6.                                                  9

     Signatures                                                         10






<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
              Consolidated Balance Sheets
                      (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>

                                                        September 30,   December 31,
                                                            1996            1995
Assets
Current Assets
<S>                                                    <C>             <C>
    Cash and cash equivalents                          $       3,301   $      1,539
    Accounts receivable, net                                   6,851          6,167
    Estimated third-party payor settlements                      469            337
    Prepaid expenses                                             681            571
        Total current assets                                  11,302          8,614

Property and equipment, net of accumulated depreciation       35,671         36,625

Other assets
    Goodwill, net                                              5,546          5,743
    Loan acquisition costs, net                                   78            100
    Preopening costs, net                                         14             25
                                                               5,638          5,868

        Total assets                                   $      52,611   $     51,107

Liabilities and Partners' Capital
Current liabilities
    Current portion of long-term debt                  $         606   $        553
    Line of credit                                             1,619            719
    Accrued compensation and related costs                     1,097          1,099
    Accounts payable and other accrued expenses                2,434          2,895
    Estimated third  party payor settlements                   3,312            612
        Total current liabilities                              9,068          5,878

Deferred management fee payable                                  760            728
Loan payable to the Development General Partner                  971            932
Long-term debt                                                24,131         24,596
                                                              25,862         26,256

Partners' capital
    General partners                                            (140)          (127)
    Assignee limited partners; 1,540,040
    units issued and outstanding                              17,821         19,100
        Total partners' capital                               17,681         18,973

        Total liabilities and
          partners' capital                            $      52,611   $     51,107


</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,
                                               1996           1995            1996            1995


Revenues
<S>                                       <C>            <C>             <C>             <C>
   Medicaid and Medicare patients         $       9,391  $       8,889   $      26,936   $      24,936
   Private patients                               2,652          2,853           8,250           8,435
   Investment and other income                       79            132             322             377
                                                 12,122         11,874          35,508          33,748

Expenses
   Operating, including $1,476,  $1,113,
      $3,825 and $3,334 to related parties        9,684          9,330          28,443          27,125
   Management and administration fees
      to related parties                            781            714           2,290           2,130
   General and administrative                       278            133             511             380
   Depreciation and amortization                    515            475           1,480           1,431
   Interest expenses                                554            549           1,597           1,648
                                                 11,812         11,201          34,321          32,714

Net earnings                              $         310  $         673   $       1,187   $       1,034




Net earnings per unit of assignee
  limited partnership interest            $        0.20  $        0.43   $        0.76   $        0.66

</TABLE>

See accompanying notes to financial statements

                   -2-
<PAGE>
MERIDIAN   HEALTHCARE  GROWTH  AND  INCOME  FUND  LIMITED  PARTNE   Consolidated
Statements of Partners' Capital For the Nine Months Ended September 30, 1996 and
1995
         (Unaudited)
    Dollars in thousands

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



<S>                          <C>      <C>      <C>
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





Balance at December 31, 1994 $   (113)$ 20,501 $ 20,388

Net earnings                       10    1,024    1,034

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

Balance at September 30, 1995$   (128)$ 19,071 $ 18,943

</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>

                                                                   1996                    1995

Cash flows from operating activities
<S>                                                        <C>                     <C>
 Net earnings                                              $            1,187      $            1,034
 Adjustments to reconcile net earnings to net
  cash provided by operating activities
   Depreciation and amortization                                        1,480                   1,431
   Minority interest in net earnings of operating
    partnerships                                                           14                       9
   Increase in loan payable to Development General Partner                 39                      38
   Increase in deferred management fee payable                             32                      29
   Change in other assets and liabilities
    Accounts receivable                                                  (698)                   (564)
    Estimated third-party payor settlements                             2,568                     816
    Prepaid expenses                                                     (110)                    (75)
    Accrued compensation and related costs                                 (2)                   (443)
    Accounts payable and other accrued expenses                          (461)                    (25)

Net cash provided by operating activities                               4,049                   2,250

Cash flows from investing activities-
 additions to property and equipment                                     (296)                   (292)


Cash flows from financing activities
 Increase in loan acquisition costs                                         --                    (38)
 Proceeds from issuance of long-term debt                                   --                  6,250
 Repayment of line of credit borrowings                                  (200)                      --
 Repayment of long-term debt                                             (412)                 (6,338)
 Proceeds from credit borrowings                                        1,100                     725
 Distributions to partners                                             (2,479)                 (2,479)

Net cash used in financing activities                                  (1,991)                 (1,880)

Net increase in cash and cash equivalents                               1,762                      78
Cash and cash equivalents
 Beginning of period                                                    1,539                   1,932

 End of period                                             $            3,301      $            2,010


</TABLE>


See accompanying notes to financial statements

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

                                    Notes to Consolidated Financial Statements
                                                September 30, 1996
                                   (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  1995  Consolidated  Statement  of
Operations  have been  reclassified  to  conform to the 1996  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 1995 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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

                                                                       1996                  1995

<S>                                                             <C>                     <C>
         Management and administration fees                     $ 781,000               $ 714,000
         Drug and medical supplies purchases                      649,000                 417,000
         Nursing and rehabilitation services                      826,000                 696,000
         Interest expense on borrowings                            24,000                  23,000
</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 $971,000 at September 30, 1996 and $932,000 at December 31,
1995.


NOTE 3 - DEBT

On July 29, 1996 the Fund modified the revolving  credit  facility (" 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 secured  primarily  by the
accounts  receivable of the Fund.  Any  outstanding  cash  borrowings  under the
Facility  bear  interest  at LIBOR  plus  1.75%.  At  September  30,  1996,  the
outstanding borrowings under this Facility totaled $1,619,000.




                                                      -5-


<PAGE>

                MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                                    Notes to Consolidated Financial Statements
                                                September 30, 1996
                                   (Unaudited)

NOTE 3- DEBT (continued)

At September 30, 1996, the Randallstown facility did not meet its required ratio
of cash flow to debt  service as a result of  measures  taken in response to the
unfavorable  State survey that they received.  As of November 13, 1996, the bank
has not issued a formal waiver to the Fund. The debt has not been  classified as
current in the  accompanying  balance  sheet as  Management  believes that it is
likely that the bank will issue the waiver and not call the debt.


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.

NOTE 5 - RECLASSIFICATIONS

Certain  1995  amounts  have been  reclassified  to conform  with  current  year
presentation.

                                                      -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.

         Between 1988 and 1989 the  Development  General Partner loaned the Fund
$597,000 to support operating deficits  generated by the Mooresville,  Salisbury
and Woodlands nursing centers during each center's first two years of operation.
Loans outstanding under this  arrangement,  including  interest at 9% per annum,
were $971,000 at September 30, 1996.  The Fund is obligated to repay these loans
when certain specified financial criteria are met, the most significant of which
is the payment of a preferred return to the assignee limited partners as defined
in the Fund's partnership agreement.

         At  September  30,  1996,  the  Randallstown  facility did not meet its
required  ratio of cash flow to debt  service as a result of  measures  taken in
response to the unfavorable State survey that they received.  As of November 13,
1996, the bank has not issued a formal waiver to the Fund. The debt has not been
classified as current in the accompanying  balance sheet as Management  believes
that it is likely that the bank will issue the waiver and not call the debt.

         On July 29, 1996 the Fund modified the 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, 1996 the
outstanding borrowings under this Facilty totaled $1,619,000.

         The  State  of  North  Carolina  has  delayed  the  effective  date  of
elimination  in its  Medicaid  methodology  of the  current  reimbursement  rate
component  for equity until July 1, 1997.  Fund  management  had  projected  the
effective  date of this  elimination  to be July 1,  1996.  As a result  of this
action,  Medicaid  reimbursements  from North Carolina during the second half of
1996 are expected to be approximately $182,000 over budget. Future action by the
North Carolina  Medicaid Agency could reduce and or eliminate the  reimbursement
component for equity and therefore reduce Medicaid reimbursement for the Fund by
up to $360,000 annually.

         On November 13, 1996,  the Fund will make a cash  distribution
of $826,410 of which approximately $653,000, or 79%, will be funded from nursing
center  operations  generated  during the third quarter of 1996 after payment of
approximately $64,000 of upper tier expenses.

         Future distributions will remain dependent on the operating performance
of the properties.  The General  Partners will review the 1997 operating  budget
along with updated  estimates for exception  revenue and third party settlements
in  mid-December to determine the level of  distributions  anticipated for 1997.
The  major  challenge  to the  Fund  in the  foreseeable  future  is to  control
operating  expenses  while  maximizing  revenues  through  strategic  admissions
policies.




                                                      -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

Three Months Ended September 30, 1996 vs. Three Months Ended September 30, 1995

         The Fund's patient  revenues  increased by  approximately  $301,000 (or
3%)for the three months ended  September 30, 1996 as compared to the same period
for 1995. Medicare census as a percentage of the total census increased to 10.2%
in the third quarter of 1996 as compared to 8.6% for the same period in 1995. As
a  result,  therapy  revenue  increased  $298,000.   Favorable  settlements  and
adjustments to reflect estimated third party payor  settlements  accounted for a
$213,000 increase in revenue in 1996 versus 1995. These favorable variances were
partially  offset by a decrease in the overall  census of the Fund's  facilities
which led to an unfavorable revenue variance of $46,000. Occupancy levels during
the third  quarter of 1996  decreased  to 94.2% as compared to 95.3%  during the
third quarter of 1995. The decrease in private revenue was a result of declining
private  pay census as well as a decrease  in overall  private  pay room  rates.
Finally,  within the Fund's  seven  nursing  homes,  there was a shift in census
toward homes with overall lower average room rates.

         Third quarter 1996  operating  expenses  increased  $354,000 (or 4%) as
compared  to  the  same  period  in  1995.   Salaries  and  benefits   increased
approximately  $273,000 (or 5%).  This was a result of normal wage  increases as
well as increased staffing to support the higher Medicare census which typically
requires additional nursing hours per patient day when compared to other patient
types.  Operating expenses also rose due to increased staffing and related costs
at the Randallstown  facility  resulting from unfavorable  State survey results.
Subsequent  to the end of the  quarter,  a  follow-up  survey  was  done and the
facility  received  approval for all  corrective  actions.  The remainder of the
increase in operating  expenses  resulted  from  increased  therapy  utilization
during the quarter.

         Third quarter general and administrative expenses increased $145,000 in
1996 versus the same period in 1995.  Approximately one-half of this increase is
a result of  consulting  fees paid for  assistance  in filing  third  party cost
reports.  The remainder of the increase is due to a reclassification  of certain
overhead costs in the third quarter of 1996.

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

         Patient revenues for the Fund's seven operating  partnerships increased
$1,815,000  (or 5%) for the nine months ended  September 30, 1996 as compared to
the same period in 1995. Approximately $310,000 of the increase was attributable
to room rate increases  which  resulted in an effective  increase of 1% from the
corresponding prior year period.  This increase would have been higher,  however
the quality mix of  residents  by home has shifted to homes with  overall  lower
average room rates. Also contributing to the increase in patient revenues was an
increase in  ancillary  revenue of $666,000 for the first nine months of 1996 as
compared to 1995.  This was due to increased  Medicare census in the nine months
ended  September  30, 1996 as  compared  to the same period in 1995,  as well as
increased utilization of therapies. The remainder of the increase in revenue was
attributable to prior year third party cost report settlements of $839,000.

         Operating  expenses  for the  nine  months  ended  September  30,  1996
increased  $1,318,000  (or 5%)  versus  the same  period in 1995.  Salaries  and
benefits  increased  $1,019,000  (or 6%) as a result of normal wage increases as
well as increased staffing at the Randallstown facility due to a State survey in
the third  quarter of 1996 and to support the increased  Medicare  census during
the first nine months of 1996.  The  remainder  of the  increase  resulted  from
increased therapy utilization.

         General and administrative expenses for the nine months ended September
30,  1996  increased  $131,000  (or 34%) as compared to the same period in 1995.
Approximately  $77,000 of the increase is  attributable  to consulting fees paid
for assistance in filing third party cost reports. The remainder of the increase
is due to an increase in other professional and consulting costs.

                                         -8-

<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








                                                        -9-

<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:    11/8/96                 By:             /s/ John M.  Prugh
                                         John M. Prugh
                                         President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




DATE:    11/8/96                 By:           /s/ Timothy M.  Gisriel
                                         Timothy M. Gisriel
                                         Treasurer
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




                                                       -10-