Harborside Healthcare Corp · 424A · On 5/28/96

Filed On 5/28/96   ·   SEC File 333-03096   ·   Accession Number 950130-96-1998

Prospectus   ·   Rule 424(a)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424A        Preliminary Prospectus                               128    821K 

Document Table of Contents

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 24, 1996 

PROSPECTUS                                                                      
3,600,000 SHARES

[LOGO]

COMMON STOCK

----------- 

All of the shares of Common Stock, par value $.01 per share (the "Common    
Stock"), offered hereby are being sold by Harborside Healthcare Corporation     
(the "Company"). Prior to this Offering (the "Offering"), there has been no     
public market for the Common Stock. It is currently estimated that the initial  
public offering price per share will be between $11.50 and $13.50. See          
"Underwriting" for a discussion of the factors that will be considered in       
determining the initial public offering price. It is anticipated that           
approximately 500,000 shares of Common Stock will be offered outside the United 
States to non-United States citizens or residents. At the request of the        
Company, up to 180,000 shares of Common Stock offered hereby have been reserved 
for sale to certain individuals, including directors and employees of the       
Company and members of their families, at the initial public offering price set 
forth above. The Common Stock has been approved for listing, subject to         
official notice of issuance, on the New York Stock Exchange under the symbol    
"HBR."                                                                          

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS  
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED 
HEREBY.                                                                         

----------- 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS  
A CRIMINAL OFFENSE.                                                             

                                                                · Download Table
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                                                  UNDERWRITING                  
                                  PRICE TO        DISCOUNTS AND      PROCEEDS TO
                                   PUBLIC        COMMISSIONS(1)      COMPANY(2) 
--------------------------------------------------------------------------------
                                                                                
Per Share...................        $                 $                 $       
--------------------------------------------------------------------------------
Total(3)....................        $                 $                 $       
--------------------------------------------------------------------------------
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(1)  The Company has agreed to indemnify the Underwriters against certain       
 liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."                                          
(2)  Before deducting estimated expenses of $850,000 payable by the Company.    
(3)  The Company has granted the Underwriters a 30-day option to purchase up to 
an additional 540,000 shares of Common Stock on the same terms and    
    conditions as set forth above, solely to cover over-allotments, if any. If
the option is exercised in full, the "Price to Public," "Underwriting 
Discounts and Commissions" and "Proceeds to Company" will be $   , $  
and $   , respectively. See "Underwriting."                           

----------- 

The shares of Common Stock are offered by the Underwriters when, as and if  
delivered to and accepted by the Underwriters, and subject to various prior     
conditions, including the right to withdraw, cancel or modify the Offering and  
to reject any order in whole or in part. It is expected that delivery of share  
certificates will be made in New York, New York, on or about    , 1996.         

NATWEST SECURITIES LIMITED                             DEAN WITTER REYNOLDS INC.

THE DATE OF THIS PROSPECTUS IS    , 1996

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FOR UNITED KINGDOM PURCHASERS: The shares of Common Stock offered hereby may
not be offered or sold in the United Kingdom other than to persons whose        
ordinary activities involve them in acquiring, holding, managing or disposing   
of investments, whether as principal or agent (except in circumstances that do  
not constitute an offer to the public within the meaning of the Public Offers   
of Securities Regulations 1995 or the Financial Services Act 1986) and this     
Prospectus may only be issued or passed on to any person in the United Kingdom  
if that person is of a kind described in Article 11(3) of the Financial         
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or a      
person to whom this Prospectus may otherwise lawfully be passed on.             

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT  
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK   
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN  
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN    
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY   
BE DISCONTINUED AT ANY TIME.                                                    

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PROSPECTUS SUMMARY

 The following summary should be read in conjunction with, and is qualified in
its entirety by reference to, the more detailed information and financial       
statements, including the notes thereto, appearing elsewhere in this            
Prospectus. Prospective investors should carefully consider the information set 
forth under the heading "Risk Factors." Unless otherwise indicated, the         
information in this Prospectus assumes (i) the consummation of the transactions 
relating to the formation of the Company described herein under the heading     
"The Reorganization" (such transactions are hereinafter referred to as the      
"Reorganization") and (ii) that the Underwriters' over-allotment option is not  
exercised. References in this Prospectus to the "Company" or "Harborside        
Healthcare" refer to Harborside Healthcare Corporation, its combined affiliates 
and partnerships and their predecessors, or any of them, depending on the       
context.                                                                        

THE COMPANY 

 Harborside Healthcare provides high quality long-term care, subacute care and
other specialty medical services in four principal regions: the Southeast       
(Florida), the Midwest (Ohio and Indiana), New England (New Hampshire) and the  
Mid-Atlantic (New Jersey and Maryland). Within these regions, the Company       
operates 26 licensed long-term care facilities (9 owned and 17 leased) with a   
total of approximately 3,000 licensed beds. After giving effect to the pending  
acquisition of four facilities in Ohio (the "Ohio Facilities"), the Company     
will operate 30 long-term care facilities (13 owned and 17 leased) with a total 
of 3,700 licensed beds. The Company provides traditional skilled nursing care,  
a wide range of subacute care programs (such as orthopedic, cerebrovascular     
accident ("CVA")/stroke, cardiac, pulmonary and wound care), as well as         
distinct programs for the provision of care to Alzheimer's and hospice          
patients. In addition, the Company provides certain rehabilitation therapy and  
behavioral health services both at Company-operated and non-affiliated          
facilities. The Company seeks to position itself as the long-term care provider 
of choice to managed care and other private referral sources in its target      
markets by achieving a strong regional presence and by providing a full range   
of high quality, cost effective nursing and specialty medical services.         

Since commencing operations in 1988, the Company has experienced significant
growth through strategic acquisitions in states it believes possess favorable   
demographic and regulatory environments, as well as through the expansion of    
subacute care and other specialty medical services provided at its long-term    
care facilities. Since 1993 and after giving effect to the recent and pending   
transactions, the Company increased its overall patient capacity by             
approximately 1,550 licensed beds, or 72.2%. During the same period, the        
Company also improved its overall quality mix (defined as net patient service   
revenues derived from Medicare, commercial insurance and other private payors)  
from 61.1% to 65.4% of net patient service revenues for the years ended         
December 31, 1993 and 1995, respectively, primarily as a result of the          
Company's rapid expansion of its subacute care and other specialty medical      
services. For the three months ended March 31, 1996, during which the Company   
began leasing six additional long-term care facilities in New Hampshire with    
approximately 540 beds (the "New Hampshire Facilities"), the Company's quality  
mix was 60.1% (31.8% private and other and 28.3% Medicare) and its average      
occupancy rate was 91.3%. The Company believes that its quality mix and its     
average occupancy rate have consistently been among the highest in the long-    
term care industry.                                                             

The Company intends to continue to grow by (i) selectively acquiring        
additional long-term care facilities in its existing and in new geographic      
regions, (ii) expanding the range of subacute care provided, including the      
addition of distinct COMPASS (COMprehensive Patient Active Subacute Systems)    
subacute care units, (iii) expanding its existing rehabilitation therapy and    
behavioral healthcare businesses, (iv) developing and acquiring new ancillary   
service operations, such as institutional pharmacy, home healthcare and         
infusion therapy and (v) expanding its Alzheimer's and hospice care programs.   
In keeping with its growth strategy, starting in January 1996, the Company      
began leasing the New Hampshire Facilities. Subsequently, the Company also      
entered into an agreement to acquire the four Ohio Facilities with              
approximately 700 licensed beds pursuant to a capital lease transaction (the    
"Ohio Transaction"), thereby further strengthening its existing Midwest         
regional presence.                                                              

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Collectively, the New Hampshire and Ohio transactions represented           
approximately $54.3 million in combined total net revenues for the year ended   
December 31, 1995. Since 1994, the Company has also successfully implemented    
subacute care programs at 24 of its long-term care facilities, added            
approximately 170 distinct COMPASS beds, expanded the number of distinct        
Alzheimer's and hospice care beds to 132 and expanded its rehabilitation        
therapy business to include 35 contracts with non-affiliated long-term care     
facilities. The Company believes that its strategy of concentrating its         
operations in selected geographic markets and complementing its long-term care  
platform with a wide range of specialty medical and other ancillary services    
will enable it to benefit from economies of scale and improve its ability to    
penetrate regional managed care markets. Although the Company is continuously   
discussing with third parties the possible acquisition of additional long-term  
care facilities, the Company does not at this time have any firm commitments to 
make any material acquisitions of long-term care facilities other than the Ohio 
Transaction, nor has it identified any material, specific ancillary business    
acquisitions.                                                                   

The Company believes that it is favorably positioned to benefit from trends 
impacting the healthcare industry, including favorable demographic shifts,      
advances in medical technology and continuing public and private pressures to   
contain growing healthcare costs. At the same time, government restrictions and 
high construction and start-up costs are expected to continue to constrain the  
supply of long-term care and subacute facilities. The Company further believes  
that an increasingly complex operating environment is motivating smaller, less  
efficient long-term care facility operators to combine with or sell to          
established operators. Harborside Healthcare expects that such recent trends    
toward industry consolidation will continue and will provide it with future     
acquisition opportunities.                                                      

THE OFFERING

                                                                · Download Table
                                                                              
Common Stock offered.............. 3,600,000 shares                           
Common Stock to be outstanding                                                
 after the Offering(1)............ 8,000,000 shares                           
Use of Proceeds................... The Company will use the net proceeds from 
                                   the Offering as follows: (i) approximately 
                                   $26.7 million to repay mortgage            
                                   indebtedness, including a related          
                                   prepayment penalty (the "Debt Repayment"); 
                                   (ii) up to $4.4 million to partially fund  
                                   an option to purchase the Ohio Facilities  
                                   at the end of the capital lease term; (iii)
                                   approximately $960,000 for payments to     
                                   certain of the Company's key employees     
                                   under existing plans and arrangements; and 
                                   (iv) the remainder for general corporate   
                                   purposes, including working capital and    
                                   acquisitions. See "Use of Proceeds," and   
                                   "Management--Employment Agreements and     
                                   Change of Control Arrangements."           
New York Stock Exchange Symbol.... "HBR"                                      

--------                                                                        
(1) Excludes 800,000 shares of Common Stock reserved for issuance pursuant to   
  the Company's stock and stock option plans, under which, upon consummation
of the Offering, options to purchase 420,000 shares at an exercise price
 equal to the initial public offering price will be granted and options to
purchase 80,000 shares at an exercise price of $8.15 per share will be  
granted in substitution for previously granted options to purchase      
interests in one of the Company's predecessors. See "Management--Stock  
Option Plans" and "Description of Capital Stock."                       

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SUMMARY COMBINED FINANCIAL AND OPERATING DATA 
(IN THOUSANDS, EXCEPT SHARE, PER SHARE AND OTHER DATA)

                                                        · Enlarge/Download Table

                                  YEAR ENDED DECEMBER 31,                            THREE MONTHS ENDED MARCH 31,           
                   --------------------------------------------------------- -----------------------------------------------
                                                1995 PRO FORMA AS ADJUSTED                      1996 PRO FORMA AS ADJUSTED  
                                               -----------------------------                   -----------------------------
                                                BEFORE OHIO   INCLUDING OHIO                    BEFORE OHIO   INCLUDING OHIO
                    1993     1994      1995    TRANSACTION(2) TRANSACTION(3)  1995     1996    TRANSACTION(4) TRANSACTION(5)
                   -------  -------  --------  -------------- -------------- -------  -------  -------------- --------------
                                                                                                                            
STATEMENT OF                                                                                                                
 OPERATIONS                                                                                                                 
 DATA(1):                                                                                                                   
Total net                                                                                                                   
revenues(6)......  $75,101  $86,376  $109,425    $ 131,381      $ 163,698    $23,777  $34,931    $  34,931      $  43,203   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Expenses:                                                                                                                   
Facility                                                                                                                    
operating........   57,412   68,951    89,378      106,584        131,244     19,734   28,120       28,120         34,463   
General and                                                                                                                 
administrative...    3,092    3,859     5,076        5,958          6,638      1,141    2,235        2,235          2,405   
Service charges                                                                                                             
paid to                                                                                                                     
affiliate........      746      759       700          700            700        177      185          185            185   
Depreciation and                                                                                                            
amortization.....    4,304    4,311     4,385        2,155          3,350      1,043      539          539            838   
Facility rent....      525    1,037     1,907        9,882          9,882        392    2,545        2,545          2,545   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
 Total expenses..   66,079   78,917   101,446      125,279        151,814     22,487   33,624       33,624         40,436   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Income from                                                                                                                 
operations.......    9,022    7,459     7,979        6,102         11,884      1,290    1,307        1,307          2,767   
Interest expense,                                                                                                           
net..............   (4,740)  (4,609)   (5,107)      (1,343)        (5,692)    (1,264)    (975)        (295)        (1,382)  
Loss on                                                                                                                     
investment in                                                                                                               
limited                                                                                                                     
partnership(7)...      --      (448)     (114)        (114)          (114)       (81)    (127)        (127)          (127)  
Other, net.......   (2,297)  (2,028)   (1,524)         --             --        (185)     --           --             --    
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Net income                                                                                                                  
(loss)...........    1,985      374     1,234        4,645          6,078       (240)     205          885          1,258   
Pro forma data:                                                                                                             
Pro forma income                                                                                                            
taxes(8).........      774      146       481        1,812          2,371        (94)      80          345            491   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Pro forma net                                                                                                               
income                                                                                                                      
(loss)(8)........  $ 1,211  $   228  $    753    $   2,833      $   3,707    $  (146) $   125    $     540      $     767   
                   =======  =======  ========    =========      =========    =======  =======    =========      =========   
Pro forma net                                                                                                               
income per                                                                                                                  
share(8).........                                $    0.35      $    0.46                        $    0.07      $    0.10   
Pro forma                                                                                                                   
weighted average                                                                                                            
shares                                                                                                                      
outstanding(9)...                                8,052,160      8,052,160                        8,052,160      8,052,160   
OTHER DATA(1):                                                                                                              
Facilities (as of                                                                                                           
end of period):                                                                                                             
Owned(10)(11)....       15       16         9            9             13          9        9            9             13   
Leased(11).......        2        3        11           17             17         10       17           17             17   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Total............       17       19        20           26             30         19       26           26             30   
Licensed beds (as                                                                                                           
of end of                                                                                                                   
period):                                                                                                                    
Owned(10)(11)....    1,860    1,976     1,028        1,028          1,720      1,022    1,028        1,028          1,720   
Leased(11).......      289      389     1,443        1,980          1,980      1,343    1,980        1,980          1,980   
                   -------  -------  --------    ---------      ---------    -------  -------    ---------      ---------   
Total............    2,149    2,365     2,471        3,008          3,700      2,365    3,008        3,008          3,700   
Average occupancy                                                                                                           
rate(12).........     92.5%    91.5%     91.5%        91.9%          92.2%      90.9%    91.3%        91.3%          91.8%  
Sources of net                                                                                                              
patient service                                                                                                             
revenues(13):                                                                                                               
Private and                                                                                                                 
other(14)........     39.9%    37.1%     32.3%        33.0%          32.9%      34.2%    31.8%        31.8%          31.8%  
Medicare.........     21.2%    24.9%     33.1%        27.4%          27.0%      30.6%    28.3%        28.3%          27.3%  
Medicaid.........     38.9%    38.0%     34.6%        39.6%          40.1%      35.2%    39.9%        39.9%          40.9%  

                                                                · Download Table

                                                     AS OF MARCH 31,            
                                         ---------------------------------------
                                                   1996 PRO FORMA AS ADJUSTED   
                                                 -------------------------------
                                                   BEFORE OHIO   INCLUDING OHIO 
                                          1996   TRANSACTION(15) TRANSACTION(16)
                                         ------- --------------- ---------------
                                                                                
BALANCE SHEET DATA(1):                                                          
Cash and cash equivalents............... $10,000     $23,340         $17,840    
Working capital.........................  12,395      26,516          17,414    
Total assets............................  63,378      76,646         134,185    
Total debt..............................  43,422      18,422          75,961    
Stockholders' equity....................   5,001      43,269          43,269    

------                                                                          
(1) Harborside Healthcare has been created in anticipation of the Offering in 
 order to combine under its control the operations of the long-term care
  facilities and ancillary businesses that are currently under the control
of The Berkshire Companies Limited Partnership ("Berkshire") and its  
affiliates. See "The Reorganization." The Company's financial and     
operating data above combine the historical results of these business 
entities.                                                             

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(2) Gives effect to the consummation of (i) the lease of the New Hampshire    
Facilities by the Company on January 1, 1996 (the "New Hampshire      
Transaction"); (ii) the sale by Krupp Yield Plus Limited Partnership  
("KYP") of seven long-term care facilities (the "Seven Facilities") to
  Meditrust, a real estate investment trust ("Meditrust"), on December 31,
    1995 and the subsequent distribution of $33,493,000 payable to the limited
partners of KYP (the "KYP Unitholders") as of December 31, 1995 in    
   connection with the liquidation of that partnership (the "Distribution");
(iii) the lease of the Seven Facilities by the Company on December 31,
    1995 (the "1995 REIT Lease"); and (iv) the Offering and the application of
  the net proceeds therefrom (assuming an initial public offering price of
$12.50 per share), as if such transactions had occurred on January 1, 
1995.                                                                 

(3) Gives effect to the transactions described in Note (2) above and the      
  pending Ohio Transaction as if such transactions had occurred on January
   1, 1995. The Ohio Transaction will be accounted for as a capital lease as
 a result of the bargain purchase option granted at the end of the lease
    term. This accounting treatment will result in an increase in depreciation
and amortization expense of $1,195,000 and an increase in interest    
expense, net, of $4,349,000. The Company expects to complete the Ohio 
  Transaction in the third quarter of 1996, subject to the satisfaction of
    certain customary conditions, including the satisfactory completion of the
Company's due diligence review and receipt of regulatory and other    
approvals.                                                            

(4) Gives effect to the consummation of the Offering and the application of   
  the net proceeds therefrom (assuming an initial public offering price of
$12.50 per share), as if the Offering had occurred on January 1, 1996.

(5) Gives effect to (i) the consummation of the Offering and the application  
  of the net proceeds therefrom (assuming an initial public offering price
of $12.50 per share), and (ii) the pending Ohio Transaction, as if the
 transactions had occurred on January 1, 1996. The Ohio Transaction will
result in an increase in depreciation and amortization expense for the
period of $299,000 and an increase in interest expense, net, for the  
period of $1,087,000.                                                 

(6) Total net revenues include net patient service revenues from the Company's
    facilities and revenues from ancillary services provided at non-affiliated
   long-term care facilities. Total net revenues exclude net patient service
    revenues from the Larkin Chase Nursing and Restorative Center (the "Larkin
Chase Center"), but include management fees and rehabilitation therapy
    service revenues from such facility. See "Business--Properties" and Note F
   to the Company's audited combined financial statements included elsewhere
in this Prospectus.                                                   

(7) Represents the Company's allocation of operating results for the Larkin   
  Chase Center which the Company accounts for using the equity method. See
"Business--Properties" and Note F to the Company's audited combined   
financial statements included elsewhere in this Prospectus.           

(8) Prior to the Reorganization, the Company's predecessors operated under    
 common control but were not subject to Federal or state income taxation
and, accordingly, no provision for income taxes has been made in the  
Company's audited combined financial statements. Following the        
 Reorganization, these predecessors will be subject to Federal and state
income taxes. Pro forma net income (loss) and pro forma net income per
share reflect the combined income tax expense that the Company's      
 predecessors would have incurred had they been subject to such taxation
during each of the periods indicated.                                 

(9) Pro forma weighted average shares outstanding include 52,160 dilutive     
 common equivalent shares (stock options issued within one year prior to
the Offering calculated using the treasury stock method and an assumed
initial public offering price of $12.50 per share) as if they were    
outstanding for all periods presented.                                

(10) Includes the Larkin Chase Center commencing in 1994.                       

(11) On December 31, 1995, the Seven Facilities were reclassified as "leased"   
    following the sale and concurrent 1995 REIT Lease. See Note (2) above. The
   Ohio Facilities are classified as "owned" reflecting the treatment of the
Ohio Transaction as a capital lease.                                  

(12) "Average occupancy rate" is computed by dividing the number of occupied    
  licensed beds by the total number of available licensed beds during each
of the periods indicated.                                             

(13) Net patient service revenues exclude all management fees and all           
rehabilitation therapy service revenues and the net patient service   
revenues of the Larkin Chase Center. See "Business--Properties."      

(14) Consists primarily of revenues derived from private pay individuals,       
managed care organizations, HMOs, hospice programs and commercial     
insurers.                                                             

(15) Gives effect to the consummation of the transactions described in Note (4) 
  above and a bonus payment in the form of Common Stock valued at $225,000
    to Damian Dell'Anno, the Company's Executive Vice President of Operations,
   under an existing plan which will be incurred as a result of the Offering
  (the "Bonus Payment"), as if such transactions had occurred on March 31,
1996.                                                                 

(16) Gives effect to the transactions described in Note (15) above and the Ohio 
 Transaction as if such transactions had occurred on March 31, 1996. The
 Ohio Transaction will be accounted for as a capital lease. See Note (3)
   above. This accounting treatment will result in an increase in total debt
of $57,539,000.                                                       

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RISK FACTORS  

An investment in the shares of Common Stock offered hereby involves various 
risks. Prior to investing in the Common Stock being offered hereby,             
prospective investors should carefully consider the risk factors set forth      
below, together with the other information set forth in this Prospectus.        

RISK OF ADVERSE EFFECT OF HEALTHCARE REFORM                                     

The Company is subject to extensive governmental healthcare regulation. In  
addition, there are numerous legislative and executive initiatives at the       
Federal and state levels for comprehensive reforms affecting the payment for    
and availability of healthcare services. It is not clear at this time what      
proposals, if any, will be adopted or, if adopted, what effect such proposals   
would have on the Company's business. Aspects of certain of these proposals,    
such as reductions in funding or payment rates of the Medicare and Medicaid     
programs, potential changes in reimbursement regulations for rehabilitation     
therapy services, interim measures to contain healthcare costs such as a        
short-term freeze on prices charged by healthcare providers or changes in the   
administration of Medicaid at the state level, could materially adversely       
affect the Company. There can be no assurance that currently proposed or        
future healthcare legislation or other changes in the administration or         
interpretation of governmental healthcare programs will not have a material     
adverse effect on the Company. In particular, changes to the Medicare           
reimbursement program that have recently been proposed could materially         
adversely affect the Company's revenues derived from ancillary services.        
Concern about the potential effects of proposed and unanticipated future        
reform measures has contributed to the volatility of securities prices of       
companies in healthcare and related industries and may similarly affect the     
price of the Common Stock. See "Business--Sources of Revenues" and "--          
Governmental Regulation."                                                       

REIMBURSEMENT BY THIRD-PARTY PAYORS                                             

The Company received approximately 32.9%, 27.0% and 40.1% of its net patient
revenues from private and other, Medicare and Medicaid patients, respectively,  
for the year ended December 31, 1995, on a pro forma basis after giving effect  
to the New Hampshire Transaction and the Ohio Transaction (31.8%, 27.3% and     
40.9%, respectively, for the three months ended March 31, 1996, on a pro forma  
basis after giving effect to the Ohio Transaction). The Company typically       
receives higher payment rates for services to private pay and Medicare          
patients than for equivalent services provided to patients eligible for         
Medicaid. Any decline in the number of private or Medicare patients or          
increases in the number of Medicaid patients could materially adversely affect  
the Company.                                                                    

Both governmental and other third-party payors, such as commercial insurers,
managed care organizations, HMOs and PPOs, have instituted cost containment     
measures designed to limit payments made to long-term care providers. These     
measures include the adoption of initial and continuing recipient eligibility   
criteria, the adoption of coverage criteria and the establishment of payment    
ceilings. Furthermore, governmental reimbursement programs are subject to       
statutory and regulatory changes, retroactive rate adjustments, administrative  
rulings and government funding restrictions. There can be no assurance that     
payments under state or Federal governmental programs will remain at levels     
comparable to present levels or will be sufficient to cover the costs           
allocable to patients eligible for reimbursement pursuant to such programs. In  
addition, there can be no assurance that the Company's facilities or the        
services provided by the Company will continue to meet the requirements for     
participation in such programs or that the states in which the Company          
operates will continue to meet their Medicaid reimbursement obligations on a    
timely basis, if at all. Any of the foregoing could materially adversely        
affect the Company.                                                             

The Company is subject to periodic audits by the Medicare and Medicaid      
programs, and the paying agencies for these programs have various rights and    
remedies against the Company if they assert that the Company has overcharged    
the programs or failed to comply with program requirements. Such paying         
agencies could seek to require the Company to repay any overcharges or amounts  
billed in violation of program requirements, or could make deductions from      
future amounts due to the Company. Such agencies could also impose fines,       
criminal penalties or program exclusions. Any such action could materially      
adversely affect the Company. See "Business--Sources of Revenues" and "--       
Government Regulation."                                                         

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ACQUISITIONS AND DEVELOPMENTS; DIFFICULTIES OF MANAGING RAPID EXPANSION         

The Company has pursued an aggressive facility acquisition program and      
expects that a significant portion of any future growth will result from the    
acquisition of additional long-term care facilities. The Company's success      
will depend in large part on its ability to identify suitable acquisition       
opportunities and its ability to pursue and finance such opportunities, obtain  
governmental licenses and approvals, consummate such acquisitions, implement    
operating enhancements and effectively assimilate newly acquired facilities     
into its operations. The Company may also seek to acquire ancillary service     
businesses. There can be no assurance that the Company will be successful in    
making such acquisitions or that such facilities or businesses will be          
profitable following their acquisition. In addition, growth through             
acquisition entails certain risks because the acquired facilities or            
businesses could be subject to unanticipated business uncertainties or legal    
liabilities.                                                                    

The Company recently entered into an agreement to acquire the four Ohio     
Facilities pursuant to a capital lease. The Ohio Transaction is anticipated to  
close in the third quarter of 1996 and is subject to the satisfaction of        
customary closing conditions, including the receipt of regulatory and other     
approvals. However, there can be no assurance that such conditions will be met  
or that the Ohio Transaction will be successfully completed during the third    
quarter of 1996, if at all, or if completed, that the Ohio Facilities will be   
successfully integrated into the Company's operations. The consummation of the  
Offering is not conditioned on the closing of the Ohio Transaction.             

The Company also intends to grow through the expansion of existing          
facilities and the development of new facilities. Facility expansion and        
development projects are subject to a number of contingencies that are common   
to construction projects but over which the Company may have little control     
and which may adversely affect project cost and completion time. These may      
include shortages of supplies and materials, the inability of contractors and   
subcontractors to perform under their contracts and changes in building,        
zoning and other applicable laws and regulations or the interpretation of such  
laws and regulations. The Company may also experience start-up costs and        
delays during the period between the completion of a newly developed or         
expanded facility and the full utilization of the facility's capacity, all of   
which could adversely affect the Company's operating results.                   

The Company's rapid growth has placed a significant burden on the Company's 
management and operating personnel. The Company's ability to manage its growth  
effectively and assimilate the operations of acquired facilities or             
businesses, or newly expanded or developed facilities, will require it to       
continue to attract, train, motivate, manage and retain key employees. If the   
Company is unable to manage its growth effectively, it could be materially      
adversely affected. See "Use of Proceeds," "Business--Growth Strategy," "--The  
Ohio Transaction," and "--Selected Expansion Projects."                         

GEOGRAPHIC CONCENTRATION                                                        

The Company's operations are located in Florida, Ohio, Indiana, New         
Hampshire, New Jersey and Maryland. A substantial portion of the Company's net  
revenues are derived from its operations in Florida, Ohio and New Hampshire.    
After giving effect to the New Hampshire Transaction, the Company derived       
41.2%, 20.9% and 17.3%, respectively, of its net revenues from these three      
states, for the year ended December 31, 1995 (32.9%, 36.9% and 13.8%,           
respectively, after giving effect to the New Hampshire Transaction and the      
Ohio Transaction). Downturns in local and regional economies could have a       
material adverse effect on the Company. Any adverse changes in the regulatory   
environment or to the reimbursement rates paid in the states in which the       
Company operates, particularly in Florida, Ohio and New Hampshire, could also   
have a material adverse effect on the Company. The state of New Hampshire       
recently adopted legislation which froze Medicaid reimbursement rates and       
called for a redesign of its Medicaid program which has had, and may continue   
to have, an adverse effect on reimbursements paid under that state's Medicaid   
program. For the year ended December 31, 1995, 63.6% of the net revenues from   
the New Hampshire Facilities were derived from the New Hampshire Medicaid       
program. See "Business--Sources of Revenues."                                   

SIGNIFICANT DEBT AND LEASE OBLIGATIONS; ACCUMULATED DEFICIT                     

After giving effect to the Offering, the Debt Repayment and the Ohio        
Transaction, which will be accounted for as a capital lease, the Company's      
total combined indebtedness (including total short-term and long-term debt)     

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as of March 31, 1996 would have been approximately $75.9 million, accounting    
for approximately 63.7% of its total capitalization. After giving effect to     
the Debt Repayment and the Ohio Transaction, the Company's total annual debt    
service obligations in 1995 would have been approximately $7.2 million. All     
nine of the facilities owned by the Company are currently subject to            
mortgages, seven of which are subject to mortgages in favor of Meditrust for a  
single loan. A default under this loan could therefore result in a loss to the  
Company of all of its facilities mortgaged to Meditrust.                        

The Company is also the lessee under 17 long-term operating leases for long-
term care facilities with aggregate minimum annual base rent payments of $9.1   
million in 1996 and which generally provide for annual rent increases and       
payment by the Company of taxes, insurance and other obligations. Fourteen of   
the Company's facilities are leased from Meditrust. Because these leases        
contain cross-default and cross-collateralization provisions, a default by the  
Company under one of these leases could adversely affect all 14 of the          
facilities leased from Meditrust and result in a loss to the Company of such    
facilities.                                                                     

The degree to which the Company will be leveraged and subject to significant
lease obligations could have important consequences to the Company, including   
limiting the Company's ability to obtain additional financing in the future     
for working capital, capital expenditures, facility acquisitions, expansions    
or developments or the refinancing of existing debt. In addition, a             
substantial portion of the Company's cash flows from operations may be          
dedicated to the payment of principal and interest on its indebtedness and      
rent expense, thereby reducing the funds available to the Company for its       
operations and to support its growth. Certain of the Company's current, and     
possibly future, debt agreements and leases contain cross-collateral and        
cross-default provisions and financial and other restrictive covenants,         
including restrictions on the incurrence of additional indebtedness, the        
creation of liens, the payment of dividends and the sale of assets. In          
addition, certain of the Company's leases do not contain non-disturbance        
provisions which could result in the loss of such facilities if the lessor      
defaults on its mortgage. There can be no assurance that the Company's          
operating results will be sufficient to support the payment of the Company's    
indebtedness and rent expense. See "Management's Discussion and Analysis of     
Financial Condition and Results of Operations--Liquidity and Capital            
Resources," "Business--Growth Strategy" and "--Properties."                     

As of December 31, 1995, and as of March 31, 1996, the Company had an       
accumulated deficit of $6.2 million and $6.0 million, respectively, and a       
stockholders' equity of $4.1 million and $5.0 million, respectively. See the    
historical and pro forma combined financial statements and notes thereto        
appearing elsewhere in this Prospectus.                                         

GOVERNMENTAL REGULATION                                                         

The Federal government and all the states in which the Company operates     
regulate various aspects of the Company's business. In addition to the          
regulation of Medicare and Medicaid reimbursement rates, 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 that regulate, among other matters, the number of licensed beds, the       
provision of services, the distribution of pharmaceuticals, equipment,          
staffing (including professional licensing), operating policies and             
procedures, fire prevention measures, environmental matters and compliance      
with building and safety codes. The failure to maintain or renew any required   
regulatory approvals or licenses could materially adversely affect the          
Company's ability to provide its services and receive reimbursement of its      
expenses. There can be no assurance that Federal, state or local governments    
will not impose additional restrictions on the Company's activities which       
could materially adversely affect the Company.                                  

Long-term care facilities are subject to periodic inspection by governmental
authorities to assure compliance with the standards established for continued   
licensing under state law and for certification under the Medicare or Medicaid  
programs, including a review of billing practices and policies. Failure to      
comply with these standards could result in the denial of reimbursement, the    
imposition of fines, temporary suspension of admission of new patients,         
suspension or decertification from the Medicare or Medicaid programs,           
restrictions on the ability to                                                  

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acquire new facilities or expand existing facilities and, in extreme cases,     
the revocation of a facility's license or closure of a facility. There can be   
no assurance that the facilities currently owned or leased by the Company will  
continue to meet the requirements for participation in the Medicare or          
Medicaid programs nor can there be any assurance that the facilities acquired   
or developed by the Company in the future will initially meet or continue to    
meet these requirements.                                                        

Many states, including each state in which the Company currently operates,  
control the supply of licensed long-term care beds through certificate of need  
("CON") programs. Presently, state approval is required for the construction    
of new long-term care facilities, the addition of licensed beds and certain     
capital expenditures at such facilities. To the extent that a CON or other      
similar approval is required for the acquisition or construction of new         
facilities or the expansion of the number of licensed beds, services or         
existing facilities, the Company could be adversely affected by the failure or  
inability to obtain such approval, changes in the standards applicable for      
such approval and possible delays and expenses associated with obtaining such   
approval. In addition, in most states the reduction of the number of licensed   
beds or the closure of a facility requires the approval of the appropriate      
state regulatory agency and, if the Company were to seek to reduce the number   
of licensed beds at, or to close, a facility, the Company could be adversely    
affected by a failure to obtain or a delay in obtaining such approval. Ohio     
has imposed a moratorium until June 30, 1997 on the issuance of CONs for the    
construction of new long-term care facilities and the addition of beds to       
existing facilities. Until recently, New Hampshire permitted long-term care     
facilities to add up to 10 licensed beds without obtaining a CON (referred to   
as "leeway beds") every two years as a matter of right. Recent legislation in   
New Hampshire has eliminated the right to leeway beds on existing CONs. These   
actions will restrict the Company's ability to expand its facilities in Ohio    
and New Hampshire.                                                              

The Company is also subject to Federal and state laws that govern financial 
and other arrangements between healthcare providers. Federal laws, as well as   
the laws 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 and services. 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 in a        
position to refer patients and personal service agreements have, under certain  
circumstances, been alleged to violate these provisions. A violation of the     
Federal anti-kickback law could result in the loss of eligibility to            
participate in Medicare or Medicaid, or in civil or criminal penalties for      
individuals or entities. Violation of state anti-kickback laws could lead to    
loss of licensure, significant fines and other penalties for individuals or     
entities. See "Business--Sources of Revenues" and "--Governmental Regulation."  

ENVIRONMENTAL AND OCCUPATIONAL HEALTH AND SAFETY MATTERS                        

The Company is 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 healthcare providers such as the  
Company are: air and water quality control requirements, occupational health    
and safety 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 remediating any hazardous         
substances that have come to be located on the property, or such substances     
that may have migrated off of, or been emitted, discharged, leaked, escaped or  
transported from, the property. The Company's operations may involve 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 harm         
individuals, property 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. The     
cost of any required remediation or removal of hazardous or toxic substances    
could be substantial and the liability of an owner or operator for any          
property is generally not limited under applicable laws and could exceed the    
property's value.                                                               

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Although the Company is not aware of any material liability under any           
environmental or occupational health and safety laws, there can be no           
assurance that the Company will not encounter such liabilities in the future,   
which could have a material adverse effect on the Company. See "Business--      
Governmental Regulation."                                                       

COMPETITION                                                                     

The long-term care industry is highly competitive. The Company competes with
other providers of long-term care on the basis of the scope and quality of      
services offered, the rate of positive medical outcomes, cost-effectiveness     
and the reputation and appearance of its long-term care facilities. The         
Company also competes in recruiting qualified healthcare personnel, in          
acquiring and developing additional facilities and in obtaining CONs. The       
Company's current and potential competitors include national, regional and      
local long-term care providers, some of whom have substantially greater         
financial and other resources and may be more established in their communities  
than the Company. The Company also faces competition from assisted living       
facility operators as well as providers of home healthcare. In addition,        
certain competitors are operated by not-for-profit organizations and similar    
businesses which can finance capital expenditures and acquisitions on a tax-    
exempt basis or receive charitable contributions unavailable to the Company.    

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 CON before a new      
long-term care facility can be constructed or additional licensed beds can be   
added to existing facilities. CON legislation is in place in all states in      
which the Company operates or expects to operate. The Company believes that     
these regulations reduce the possibility of overbuilding and promote higher     
utilization of existing facilities. However, a relaxation of CON 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. The New Jersey legislature is currently considering legislation that   
would permit acute care hospitals to offer subacute care services under         
existing CONs issued to those providers. Ohio has imposed a moratorium on the   
conversion of acute care hospital beds into long-term care beds. See            
"Business--Governmental Regulation."                                            

STAFFING AND LABOR COSTS                                                        

Staffing and labor costs represent the Company's largest expense. Labor     
costs accounted for 59.9%, 56.4% and 52.0% of the Company's total facility      
operating expenses in 1993, 1994 and 1995, respectively. The Company competes   
with other healthcare providers in attracting and retaining qualified or        
skilled personnel. The long-term care industry has, at times, experienced       
shortages of qualified personnel. A shortage of nurses or other trained         
personnel or general economic inflationary pressures may require the Company    
to enhance its wage and benefits package in order to compete with other         
employers. There can be no assurance that the Company's labor costs will not    
increase or, if they do, that they can be matched by corresponding increases    
in private-payor revenues or governmental reimbursement. Failure by the         
Company to attract and retain qualified employees, to control its labor costs   
or to match increases in its labor expenses with corresponding increases in     
revenues could have a material adverse effect on the Company. Approximately     
180 employees at two of the Company's facilities are covered by collective      
bargaining agreements. Although the Company believes that it maintains good     
working relationships with its employees and the unions that represent certain  
of its employees, it cannot predict the impact of continued or increased union  
representation or organizational activities on its future operations. See       
"Business--Employees."                                                          

LIABILITY AND INSURANCE                                                         

The Company's business entails an inherent risk of liability. In recent     
years, participants in the long-term care industry have been subject to         
lawsuits alleging malpractice or related legal theories, many of which involve  
large claims and significant legal costs. The Company expects that from time    
to time it will be subject to such suits as a result of the nature of its       
business. The Company currently maintains insurance policies in amounts and     
with coverage and deductibles as it deems appropriate, based on the nature and  
risks of its business, historical                                               

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experience and industry standards. There can be no assurance, however, that     
claims in excess of the Company's insurance coverage or claims not covered by   
insurance will not arise. A successful claim against the Company not covered    
by, or in excess of, its insurance coverage could have a material adverse       
effect on the Company. Claims against the Company, regardless of their merit    
or eventual outcome, may also have a material adverse effect on the Company's   
business and reputation, may lead to increased insurance premiums and may       
require the Company's management to devote time and attention to matters        
unrelated to the Company's business. The Company is self-insured (subject to    
contributions by covered employees) with respect to most of the healthcare      
benefits and workers' compensation benefits available to its employees. The     
Company believes that it has adequate resources to cover any self-insured       
claims and the Company maintains excess liability coverage to protect it        
against unusual claims in these areas. However, there can be no assurance that  
the Company will continue to have such resources available to it or that        
substantial claims will not be made against the Company. See "Business--        
Insurance."                                                                     

CONCENTRATION OF OWNERSHIP                                                      

After giving effect to the Offering, Douglas Krupp, George Krupp and        
Laurence Gerber (collectively, the "Principal Stockholders") will have          
combined beneficial ownership of 50.9% (47.7% if the Underwriters' over-        
allotment option is exercised in full) of the outstanding Common Stock. These   
individuals, together with the Company's other Directors and Executive          
Officers, will have combined beneficial ownership of 55.0% (51.5% if the        
underwriters' over-allotment option is exercised in full) of the outstanding    
Common Stock after giving effect to the Offering. Consequently, the Principal   
Stockholders will be able to control the business, policies and affairs of the  
Company, including the election of directors and major corporate transactions.  
The concentration of beneficial ownership of the Company may have the effect    
of delaying, deterring or preventing a change in control of the Company, may    
discourage bids for the Common Stock at a premium over the market price of the  
Common Stock or may otherwise adversely affect the market price of the Common   
Stock. See "Stock Ownership of Directors, Executive Officers and Principal      
Holders."                                                                       

CERTAIN ANTI-TAKEOVER PROVISIONS                                                

Certain provisions of the Certificate of Incorporation and By-laws of the   
Company, as well as Delaware corporate law, contain provisions that may be      
deemed to have an anti-takeover effect and may delay, defer or prevent a        
tender offer or takeover attempt that a stockholder of the Company might        
consider in its best interest, including an attempt that might result in the    
receipt of a premium over the then current market price for the shares held by  
stockholders. Certain of these provisions allow the Company to issue, without   
stockholder approval, preferred stock having rights senior to those of the      
Common Stock. Other provisions impose various procedural and other              
requirements that could make it more difficult for stockholders to effect       
certain corporate actions. In addition, the Company's Board of Directors is     
divided into three classes, each of which serves for a staggered three-year     
term, which may make it more difficult for a third party to gain control of     
the Board of Directors. In addition, the Company is subject to Section 203 of   
the Delaware General Corporation Law which under certain circumstances can      
make it more difficult for a third party to gain control of the Company         
without approval of the Board of Directors. See "Description of Capital         
Stock--Certain Provisions of the Company's Certificate of Incorporation and     
By-laws," "--Classification of Directors" and "--Section 203 of the Delaware    
Law."                                                                           

SHARES ELIGIBLE FOR FUTURE SALE                                                 

Sales of substantial amounts of Common Stock in the public market after the 
Offering under Rule 144 ("Rule 144") of the Securities Act of 1933, as amended  
(the "Securities Act") or otherwise or the perception that such sales could     
occur may adversely affect prevailing market prices of the Common Stock. The    
Company and all persons who were stockholders of the Company prior to the       
Offering have agreed, for a period of 180 days after the date of this           
Prospectus, not to sell, offer to sell, contract to sell, grant any option to   
purchase or otherwise dispose of any shares of Common Stock or any securities   
which are convertible into, or exchangeable or exercisable for, shares of       
Common Stock, without the prior written consent of NatWest Securities Limited,  
except for grants by the Company of options to purchase shares of Common Stock  
described in this Prospectus, the exercise of such options and the issuance of  
shares in connection with the Reorganization. See "The Reorganization" and      
"Shares Eligible for Future Sale."                                              

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IMMEDIATE AND SUBSTANTIAL DILUTION                                              

Purchasers of Common Stock in the Offering will experience immediate and    
substantial dilution of $7.51 per share in pro forma net tangible book value    
per share of Common Stock from the public offering price. See "Dilution."       

ABSENCE OF PRIOR PUBLIC MARKET                                                  

Prior to the Offering, there has been no public market for the Common Stock 
and there can be no assurance that an active trading market will develop or be  
sustained following the Offering. There can be no assurance that market prices  
for the Common Stock after the Offering will equal or exceed the initial        
public offering price per share set forth on the cover page of this             
Prospectus. The initial public offering price per share will be determined by   
negotiation between the Company and the Underwriters based upon several         
factors and may not be indicative of the market price for the Common Stock      
following the Offering. The market price of the Common Stock could be subject   
to significant fluctuations in response to various factors and events,          
including the liquidity of the market for shares of Common Stock, changes in    
the Company's historical and anticipated operating results, new statutes or     
regulations or changes in interpretations of existing statutes and regulations  
affecting the healthcare industry in general and the long-term care industry    
in particular. In addition, the stock market in recent years has experienced    
broad price and volume fluctuations that often have been unrelated or           
disproportionate to the operating performance of individual companies. These    
fluctuations, as well as general economic and market conditions, may adversely  
affect the market price of the Common Stock. See "Underwriting."                

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THE COMPANY 

Harborside Healthcare provides high quality long-term care, subacute care   
and other specialty medical services in four principal regions: the Southeast   
(Florida), the Midwest (Ohio and Indiana), New England (New Hampshire) and the  
Mid-Atlantic (New Jersey and Maryland). Within these regions, the Company       
operates 26 licensed long-term care facilities (9 owned and 17 leased) with a   
total of approximately 3,000 licensed beds. After giving effect to the pending  
Ohio Transaction, the Company will operate 30 facilities (13 owned and 17       
leased) with a total of 3,700 licensed beds. The Company provides traditional   
skilled nursing care, a wide range of subacute care programs (such as           
orthopedic, CVA/stroke, cardiac, pulmonary and wound care), as well as          
distinct programs for the provision of care to Alzheimer's and hospice          
patients. In addition, the Company provides certain rehabilitation therapy and  
behavioral health services both at Company-operated and non-affiliated          
facilities. The Company seeks to position itself as the long-term care          
provider of choice to managed care and other private referral sources in its    
target markets by achieving a strong regional presence and by providing a full  
range of high quality, cost effective nursing and specialty medical services.   

Harborside Healthcare was organized as a Delaware corporation in March 1996.
The predecessors of the Company have operated long-term care facilities since   
1988. The Company's principal executive offices are located at 470 Atlantic     
Avenue, Boston, Massachusetts 02210. Its telephone number is (617) 556-1515.    

THE REORGANIZATION  

The Company's operations have historically been conducted by various        
corporations and limited partnerships controlled by Berkshire, certain of its   
direct and indirect subsidiaries and affiliates, trusts for the benefit of the  
families of George and Douglas Krupp, and Messrs. Guillard, Dell'Anno and       
Gerber (collectively, the "Contributors"). The Company has entered into a       
reorganization agreement (the "Reorganization Agreement") with the              
Contributors, pursuant to which the Contributors will contribute their equity   
interests in such entities to the Company in exchange for an aggregate of       
4,400,000 shares of Common Stock immediately prior to completion of the         
Offering (the "Reorganization"). Except as described herein under the caption   
"Certain Transactions," the equity interests transferred to the Company by the  
Contributors in connection with the Reorganization constitute all of the        
equity interests relating to the business of the Company that were previously   
owned directly or indirectly by the Contributors. Following the                 
Reorganization, the Company will operate as a holding company and conduct all   
of its business through its wholly owned subsidiary corporations and limited    
partnerships. The representations and warranties made by the Contributors in    
the Reorganization Agreement are limited to their ownership of the equity       
interests being conveyed, their personal tax liabilities and their              
qualifications as accredited investors. In addition, upon consummation of the   
Reorganization, the Company will indemnify the Contributors against all         
obligations and liabilities of the Company's predecessors arising after such    
consummation. In connection with the Reorganization Agreement, the Company has  
agreed that if any of the Contributors pledge the shares of Common Stock        
received in connection with the Reorganization to a financial institution, the  
Company will enter into a registration rights agreement which provides the      
pledgee with a demand registration right, subject to certain limitations and    
at the Company's expense, in the event that it forecloses on the pledged        
shares.                                                                         

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USE OF PROCEEDS 

The net proceeds to the Company from the Offering, assuming an initial      
public offering price of $12.50 per share (the midpoint of the range set forth  
on the cover page of this Prospectus) and after deducting the estimated         
Offering expenses, including underwriting discounts and commissions, are        
estimated to be $41,000,000 ($47,277,500 if the Underwriters' over-allotment    
option is exercised in full). See "Underwriting." The Company will use the net  
proceeds of the Offering as follows: (i) approximately $26.7 million to repay   
mortgage indebtedness, including a related prepayment penalty of approximately  
$1.7 million, (ii) up to $4.4 million to partially fund an option to purchase   
the Ohio Facilities at the end of the capital lease term, (iii) approximately   
$960,000 for payments to certain of the Company's key employees under existing  
plans and arrangements and (iv) the remainder for general corporate purposes,   
including working capital and acquisitions. See "Management--Employment         
Agreements and Change of Control Arrangements." Although the Company is         
continuously discussing with third parties the possible acquisition of          
additional long-term care facilities, the Company does not at this time have    
any firm commitments to make any material acquisitions of long-term care        
facilities other than the Ohio Transaction, nor has it identified any           
material, specific ancillary business acquisitions. Pending their use, the net  
proceeds from the Offering will be invested principally in short-term,          
investment grade, interest-bearing securities.                                  

The repayment of indebtedness will reduce the principal amount outstanding  
under a mortgage loan in favor of Meditrust, of which $41.7 million aggregate   
principal amount was outstanding as of April 30, 1996. The loan matures on      
October 1, 2004 and bears interest at an annual rate of 10.65% plus additional  
interest equal to 0.3% of the difference between the annual operating revenues  
of the mortgaged facilities and actual revenues during the twelve-month base    
period commencing on October 1, 1995. Such additional interest begins to        
accrue on October 1, 1996