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 March 31, 2005
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 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)
300 East Lombard Street, Suite 1200 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
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes No X
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
INDEX
Page No.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS 2
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Earnings 4
Condensed Consolidated Statement of Partners' Capital 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 15
Item 4. Controls and Procedures15
Part II. Other Information
Item 1. through Item 6. 15-17
Signatures 18
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Cautionary Statement Regarding Forward Looking Statements
Statements made in this report, and in our other public filings, which are not
historical facts contain "forward-looking" statements (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and uncertainties
and are subject to change at any time. These forward-looking statements may
include, but are not limited to:
o certain statements in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," such as our ability to
meet our liquidity needs, scheduled debt and interest payments and
expected future capital expenditure requirements and the expected
effects of government regulation on reimbursement for services
provided and discussion of the proposed sale; and
o certain statements in the Notes to Condensed Consolidated Financial
Statements (Unaudited).
The forward-looking statements involve known and unknown risks, uncertainties
and other factors that are, in some cases, beyond our control. You are
cautioned that these statements are not guarantees of future performance and
that actual results and trends in the future may differ materially.
Factors that could cause actual results to differ materially include, but are
not limited to the following:
o changes in the reimbursement rates or methods of payment from Medicare
and Medicaid, or the implementation of other measures to reduce the
reimbursement for our services;
o the expiration of enactments providing for additional governmental funding;
o efforts of third party payors to control costs;
o the impact of federal and state regulations;
o changes in payor mix and payment methodologies;
o further consolidation of managed care organizations and other third party
payors;
o competition in our business;
o an increase in insurance costs and potential liability for losses not
covered by, or in excess of, our insurance;
o competition for qualified staff in the healthcare industry;
o our ability to control operating costs, and generate sufficient cash flow to
meet operational and financial requirements; and
o an economic downturn or changes in the laws affecting our business in those
markets in which we operate.
These risks are described in more detail in our Report on Form 10-K for the
fiscal year ended December 31, 2004.
In addition to these factors and any risks and uncertainties specifically
identified in the text surrounding forward-looking statements, any statements in
this report or the reports and other documents filed by us with the SEC that
warn of risks or uncertainties associated with future results, events or
circumstances also identify factors that could cause actual results to differ
materially from those expressed in or implied by the forward-looking statements.
All subsequent written and oral forward-looking statements attributable to us
or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section. We do not
undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this report or to reflect the occurrence of unanticipated events, except as may
be required under applicable securities law.
-2-
Part I. Financial Information
Item 1. Finanacial Statements
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31,
2005 December 31,
(Unaudited) 2004
--------------- ---------------
Assets
Current Assets
Cash and cash equivalents $ 1,669 $ 1,647
Accounts receivable, net 7,110 6,947
Estimated third-party payor settlements 112 268
Prepaid expenses and other current assets 980 827
--------------- ---------------
Total current assets 9,871 9,689
--------------- ---------------
Property and equipment, net of accumulated depreciation 30,057 30,359
--------------- ---------------
Other assets
Goodwill, net 4,237 4,237
Loan acquisition costs, net 156 189
--------------- ---------------
4,393 4,426
--------------- ---------------
Total assets $ 44,321 $ 44,474
=============== ===============
Liabilities and Partners' Capital
Current liabilities
Current portion of long-term debt $ 778 $ 765
Line of credit - 227
Accrued compensation and related costs 2 50
Accounts payable and other accrued expenses 2,461 2,002
Estimated third party payor settlements 1,741 1,643
--------------- ---------------
Total current liabilities 4,982 4,687
--------------- ---------------
Deferred management fee payable 1,115 1,105
Loan payable to the Development General Partner 1,380 1,367
Long-term debt 20,532 20,779
--------------- ---------------
23,027 23,251
--------------- ---------------
Partners' capital
General partners (152) (150)
Assignee limited partners; 1,540,040
units issued and outstanding 16,464 16,686
--------------- ---------------
Total partners' capital 16,312 16,536
--------------- ---------------
Total liabilities and
partners' capital $ 44,321 $ 44,474
=============== ===============
See accompanying notes to condensed consolidated financial statements.
-3-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands except per unit amounts)
Three Months Ended
---------------------------------
March 31, March 31,
2005 2004
--------------- ---------------
Revenues
Medicaid and Medicare patients $ 14,286 $ 14,315
Private patients 2,662 2,397
Investment and other income 25 29
--------------- ---------------
16,973 16,741
--------------- ---------------
Expenses
Operating, including $1,275, and
$1,152 to related parties 14,297 13,534
Management and administration fees
to related parties 908 916
General and administrative 533 319
Depreciation and amortization 545 541
Interest expense 331 399
--------------- ---------------
16,614 15,709
--------------- ---------------
Net earnings $ 359 $ 1,032
=============== ===============
Net earnings per unit of assignee
limited partnership interest
(computed based on 1,540,040
units) $ 0.23 $ 0.66
=============== ===============
See accompanying notes to condensed consolidated financial statements
-4-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Condensed Consolidated Statements of Partners' Capital
For the Three Months Ended March 31, 2005
(Unaudited)
(Dollars in thousands)
Assignee
General Limited
Partners Partners Total
--------------- --------------- ---------------
Balance at December 31, 2004 $ (150) $ 16,686 $ 16,536
Net earnings 4 355 359
Distributions to partners (6) (577) (583)
--------------- --------------- ---------------
Balance at March 31, 2005 $ (152) $ 16,464 $ 16,312
=============== =============== ===============
See accompanying notes to condensed consolidated financial statements
-5-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMTIED PARTNERSHIP
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Unaudited)
(Dollars in thousands)
2005 2004
--------------- ---------------
Cash flows from operating activities
Net earnings $ 359 $ 1,032
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 545 541
Minority interest in net earnings of operating partnerships 7 10
Increase in loan payable to Development General Partner 13 12
Increase in deferred management fee payable 10 11
Change in other assets and liabilities
Accounts receivable (170) 229
Estimated third-party payor settlements 254 (1,197)
Prepaid expenses and other current assets (153) (135)
Accrued compensation and related costs (48) 63
Accounts payable and other accrued expenses 459 (381)
--------------- ---------------
Net cash provided by operating activities 1,276 185
--------------- ---------------
Cash flows from investing activities -
additions to property and equipment (210) (12)
--------------- ---------------
Cash flows from financing activities
Repayment of long-term debt (234) (167)
Repayment of line of credit (227) -
Distributions to partners (583) (583)
--------------- ---------------
Net cash used in financing activities (1,044) (750)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 22 (577)
Cash and cash equivalents
Beginning of period 1,647 1,141
--------------- ---------------
End of period $ 1,669 $ 564
=============== ===============
See accompanying notes to condensed consolidated financial statements.
-6-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 1 - THE FUND AND BASIS OF PREPARATION
Meridian Healthcare Growth and Income Fund Limited Partnership (the Fund)
was organized under the laws of the State of Delaware and will continue to
operate through December 31, 2037, unless terminated sooner under the provisions
of the Partnership Agreement. The Fund's Administrative General Partner is
Brown Healthcare, Inc. and the Fund's Development General Partner is Meridian
Healthcare Investments, Inc. Brown Healthcare Holding Co., Inc. is the Fund's
Assignor Limited Partner. Meridian Healthcare Investments, Inc. is a
subsidiary of Genesis HealthCare Corporation (Genesis).
The Fund owns 98.99% limited partnership interests in each of the seven
operating partnerships. Brown Healthcare Inc. and Meridian Healthcare
Investments Inc. are the general partners of the seven underlying partnerships.
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 unaudited condensed consolidated financial statements of the
Fund do not include all of the information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America. The unaudited
condensed 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.
The accompanying unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Fund's Report on Form 10-K for the fiscal year ended
December 31, 2004.
The Fund has made a number of estimates relating to the reporting of assets and
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities to prepare these unaudited condensed consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America. Actual results could differ from those estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
The Fund is obligated to pay Brown-Healthcare, Inc. (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 Meridian
Healthcare Investments, Inc. (Development General Partner), under the terms of
existing management agreements which provide for management fees equal to 5% of
the annual revenues of each nursing center.
Transactions with these related parties for the three months ended March 31,
2005 and 2004 are as follows:
2005 2004
---- ----
Management and administration fees $ 908,000 $ 916,000
Nursing and rehabilitation services 1,275,000 1,152,000
Interest expense on borrowings 23,000 23,000
-7-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 2 - RELATED PARTY TRANSACTIONS (Continued)
The Development General Partner loaned the Fund $597,000, as required by the
Cash Flow Deficit Guaranty Agreement, to support the operating deficits
generated by the Mooresville, Salisbury and Woodlands nursing centers during
each center's first two years of operations subsequent to the Fund's acquisition
of partnership interests. Loans outstanding under the arrangement, including
accumulated interest from inception of the loan at 9% per annum, were $1,380,000
at March 31, 2005 and $1,367,000 at December 31, 2004. 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.
NOTE 3 - DEBT
On June 12, 2000, the Fund and a commercial bank refinanced mortgage loans
totaling $24,000,000 with a term of five years and an interest rate of 9.75%.
Effective February 1, 2003, the Fund amended the related mortgage loan
agreement. The amendment provides for a term of five years at an interest rate
of 6.5%. Monthly payments of $180,242 are based on a 20-year amortization
schedule with a mandatory prepayment option at the Bank's discretion during the
period between November 1, 2007 through May 1, 2008.
The Fund established a $4,000,000 revolving credit facility with the same
commercial bank. The balance outstanding as of December 31, 2004 was $227,000
which was repaid in the first quarter 2005. Borrowings under the credit facility
bear interest at a floating rate, which equals the announced commercial prime
rate. The bank can renew the credit facility each year for a one-year extension.
The mortgage notes payable are secured by deeds of trust on the related property
and all assets of the Fund. Under the terms of these loan agreements, the
operating partnerships are obligated to conform with specific financial criteria
and are subject to certain other covenants. The partnership is in compliance
with its covenants as of March 31, 2005.
NOTE 4 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
The Fund receives revenues from Medicare, Medicaid, private insurance, self-pay
residents, and other third party payors. The Medicaid and Medicare programs are
highly regulated. The failure of the Fund to comply with applicable
reimbursement regulations could adversely affect its business. The Fund monitors
its receivables from third party payor programs and reports such revenues at the
net realizable value expected to be received.
The sources and amounts of the Fund's revenues are determined by a number of
factors, including licensed bed capacity and occupancy rates of its eldercare
centers, the mix of patients and the rates of reimbursement among payors.
Changes in the acuity of the patients as well as payor mix among Medicare,
Medicaid and private pay can significantly affect the Fund's profitability.
The proposed Federal Budget that was released in February 2005 contains
provisions to cut Medicare funding for skilled nursing facilities by more than
$1.5 billion beginning October 1, 2005 by issuing regulations implementing
refinements to the current resource utilization group classification payment
system. The Fund refers to the anticipated refinement to the resource
utilization group classification system as "RUGs refinement." Although the Fund
is unable to predict with certainty the extent of the impact of RUGs refinement
on its financial condition and operating results, it believes it could result in
a significant reduction in Fund's Medicare revenue and profitability.
-8-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 4 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES (Continued)
It is not possible to fully quantify the effect of potential legislative or
regulatory changes, the administration of such legislation or any other
governmental initiatives on the Fund's business. Accordingly, there can be no
assurance that the impact of these changes or any future healthcare legislation
will not further adversely affect the Fund's business. There can be no assurance
that payments under governmental and private third party payor programs will be
timely, will remain at levels comparable to present levels or will, in the
future, be sufficient to cover the costs allocable to patients eligible for
reimbursement pursuant to such programs. The Fund's financial condition and
results of operations may be affected by the reimbursement process, which in the
healthcare industry is complex and can involve lengthy delays between the time
that revenue is recognized and the time that reimbursement amounts are settled.
NOTE 5 - POTENTIAL SALE
On February 11, 2005, the Fund entered into an Asset Purchase Agreement for the
sale of the seven nursing facilities and on February 22, 2005 the Purchaser
escrowed its required $1,000,000 good faith deposit under this Agreement. The
purchase price per the Agreement is $50,000,000 plus net working capital as
defined.
Under the terms of the Agreement and assuming the consent of the holders of a
majority of the Fund's units, the General Partners expect the sale to close by
the end of the second quarter of 2005 and project the sale will result in
distributable proceeds of approximately $20 per original $25 investment unit.
-9-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Fund was organized under the laws of the State of Delaware on December
8, 1987. The Fund will continue until December 31, 2037, unless sooner
terminated under the provisions of the Partnership Agreement. The Fund was
formed to acquire 98.99% of the limited partnership interests in seven limited
partnerships, each of which owns and operates a single nursing center (the
"Facilities").
The Fund's objectives are to (i) preserve Investors' capital; (ii) obtain
capital appreciation through increases in the value of the Facilities; and (iii)
provide quarterly cash distributions to Investors from income generated by the
Facilities' operating income, the income taxation of a portion of which is
anticipated to be deferred. The Facilities include four nursing centers located
in Maryland; two nursing centers located in North Carolina and one nursing
center in New Jersey. Each operating partnership owns the real and personal
property of its nursing center facility.
The Fund's sole business is its investment in partnerships which own and
operate nursing centers that are healthcare facilities licensed by individual
states to provide long-term healthcare within guidelines established by the
appropriate state health agencies and as directed by each patient's physician.
The major challenge to the Fund in the foreseeable future is to control
operating expenses, to maintain a quality mix of patients and to increase the
overall census at each of the facilities.
The aging of the population and increased life expectancies are the primary
driving forces behind the growth of the Fund's businesses. The Fund's management
believes that positive demographic trends imply that there will be a growing
demand for the services offered by healthcare providers that deliver the most
efficient, responsive, cost effective and high quality eldercare services.
Management of the Fund is continually engaged in various efforts to improve
profitability by focusing on key operational initiatives, including: improving
the quality of the Fund's payor mix, increasing the Fund's rate of occupancy,
improving nursing staff scheduling and retention, reducing reliance on overtime
compensation and temporary nursing agency services, and capitalizing on best
demonstrated practices in various areas of cost control. As a result, the Fund's
management believes the Fund will be well positioned to take advantage of the
favorable demographic and growth trends in its industry.
Government funded programs, principally Medicaid and Medicare, provide
approximately 84% of the Fund's revenue. Over the past five years, changes in
funding from these government sources has had a significant impact on the Fund's
cash flows and profitability. Through trade and other organizations, the Fund's
manager actively participates in partnership with other healthcare providers to
pursue strategies to minimize any potentially adverse impact of government
funding proposals. The Fund's management believes the continuation of government
funding at levels sufficient to profitably operate the Fund's business is its
greatest financial risk.
Labor costs, including salaries, wages and benefits, account for a
significant portion of the Fund's total operating expenses. The Fund competes
with other healthcare providers and with non-healthcare providers for both
professional and non-professional employees. In recent years, the Fund and the
long-term care industry have experienced shortages in qualified professional
clinical staff. While the Fund has been able to retain the services of an
adequate number of qualified personnel to staff its facilities and sites of
services, it has used expensive temporary nursing agency services to supplement
staffing. If a shortage of nurses or other health care workers occurred in the
geographic areas in which the Fund operates, it could adversely affect its
ability to attract and retain qualified personnel and could further increase its
operating costs, without a corresponding increase in the level of government
funded reimbursement.
-10-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain Transactions and Events
On February 11, 2005 the Fund entered into an Asset Purchase Agreement for
the sale of the seven nursing facilities and on February 22, 2005 the Purchaser
escrowed its required $1,000,000 good faith deposit under this Agreement. The
purchase price per the Agreement is $50,000,000. Under the terms of the
Agreement and assuming the consent of the holders of a majority of the Fund's
units, the General Partners expect the sale to close by the end of the second
quarter of 2005 and project the sale will result in distributable proceeds of
approximately $20 per original $25 investment unit.
Liquidity and Capital Resources
Reference to the Fund's unaudited condensed consolidated balance sheets and
unaudited condensed consolidated statements of cash flows will facilitate
understanding of the discussion that follows.
The Fund's working capital (excluding the current portion of long-term
debt) decreased $100,000 to $5,667,000 at March 31, 2005 as compared to
$5,767,000 at December 31, 2004. 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.
Cash flow from operating activities was $1,276,000 for the three-month
period ended March 31, 2005 as compared to $185,000 for the same period of 2004.
This increase in cash flow was due primarily to receipts from third-party payors
during the first quarter of 2005 coupled with increased accounts payable and
accrued expenses.
The Fund believes that the short-term liquidity needs will be met through
expected cash flow from operations and available working capital from the
existing revolving credit facility.
Cash used in investing activities for the three-month period ended March
31, 2005 was $210,000 and included improvements to the Fund's seven operating
facilities. Similar improvements made during the first three months of 2004 were
$12,000.
Cash used in financing activities for the three-month period ended March
31, 2005 included the repayment of the line of credit of 227,000, the repayment
of long term debt of $234,000 and distributions to partners totaling $583,000.
The Fund closed its mortgage loan refinancing with a bank for loans
totaling $24,000,000 on June 12, 2000. Effective February 1, 2003, the Fund
amended the existing mortgage. The amendment provides for a term of five years
at an interest rate of 6.5% from the effective date. Monthly payments of
$180,242 are based on a 20-year amortization schedule with a mandatory
prepayment option at the Bank's discretion during the period between November 1,
2007 through May 1, 2008.
The Fund also has a $4,000,000 line of credit with the same lender under
terms similar to the mortgage loan terms described above, except that the line
of credit facility requires annual reaffirmation. The outstanding balance of
$227,000 was repaid during the first quarter of 2005.
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 centers' first two years of operation.
Loans outstanding under this arrangement, including interest at 9% per annum,
were $1,380,000 at March 31, 2005 and $1,367,000 at December 31, 2004.
On May 16, 2005, the Fund will make its first quarter 2005 distribution to
partners of $583,000, representing a 6% return. This distribution will be funded
by net cash flow provided by operating activities during the first quarter of
2005. The Fund continues to evaluate the potential impact of Medicare
reimbursement reform and further capital improvement needs at the facilities. As
such, future distributions will be influenced by these considerations.
-11-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Revenue Sources
The Fund receives revenues from Medicare, Medicaid, private insurance,
self-pay residents, and other third party payors. The sources and amounts of the
Fund's revenues are determined by a number of factors, including licensed bed
capacity and occupancy rates of its eldercare centers, the mix of patients and
the rates of reimbursement among payors. Changes in the acuity of the patients
as well as payor mix among Medicare, Medicaid and private pay can significantly
affect the Fund's profitability.
On July 30, 2004, the Centers for Medicare and Medicaid Services (CMS)
published notice of the fiscal year 2005 prospective payment system rates
effective October 1, 2004 and which are in effect through September 30, 2005.
The fiscal year 2005 rules provide for a 2.8% market basket increase.
The proposed Federal Budget that was released in February 2005 contains
provisions to cut Medicare funding for skilled nursing facilities by more than
$1.5 billion beginning October 1, 2005 by issuing regulations implementing
refinements to the current resource utilization group classification payment
system. The Fund refers to the anticipated refinement to the resource
utilization group classification system as "RUGs refinement." Although the Fund
is unable to predict with certainty the extent of the impact of RUGs refinement
on its financial condition and operating results, it believes it could result in
a significant reduction in Fund's Medicare revenue and profitability.
The states in which we operate are currently preparing their budgets for
the coming year that begins July 1, 2005. State budget pressures in recent years
have translated into reductions in state spending in certain jurisdictions.
Given that Medicaid outlays are a significant component of state budgets, the
Fund expects continuing cost containment pressures on Medicaid outlays for
skilled nursing facilities in the states in which it operates. In each of the
major states where the Fund provides services, its manager is working with trade
groups, consultants and government officials to responsibly address the
particular funding issues.
Among the alternative Medicaid funding approaches that states have
explored and in many cases implemented are nursing home provider assessments as
tools for leveraging increase Medicaid matching funds. Such initiatives are
authorized under the law. Provider assessment plans generate additional federal
matching funds to the states for Medicaid reimbursement purposes, and
implementation of a provider assessment plan requires approval by CMS in order
to qualify for federal matching funds. These plans usually take the form of a
bed tax or a quality assessment fee, which is imposed uniformly across classes
of providers within the state. In turn, the state utilizes the additional
federal matching funds generated by the tax to pay increased reimbursement rates
to the providers, which often include a repayment of a portion of the provider
tax based on the provider's percentage of Medicaid patients. Nursing home
provider assessments were primarily implemented in North Carolina. In February
2005, the New Jersey provider assessment, which is retroactive to July 1, 2004
and will expire on June 20, 2006, was enacted. This assessment was recognized
during the quarter ended March 31, 2005. Recognition of the New Jersey provider
assessment resulted in increased revenue and net income of $435,000 and $116,000
respectively.
It is not possible to fully quantify the effect of potential legislative or
regulatory changes, the administration of such legislation or any other
governmental initiatives on the Fund's business. Accordingly, there can be no
assurance that the impact of these changes or any future healthcare legislation
will not further adversely affect the Fund's business. There can be no assurance
that payments under governmental and private third party payor programs will be
timely, will remain at levels comparable to present levels or will, in the
future, be sufficient to cover the costs allocable to patients eligible for
reimbursement pursuant to such programs. The Fund's financial condition and
results of operations may be affected by the reimbursement process, which in the
healthcare industry is complex and can involve lengthy delays between the time
that revenue is recognized and the time that reimbursement amounts are settled.
-12-
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 March 31, 2005 versus Three Months Ended March 31, 2004
Net earnings for the Fund were $359,000 for the three months ended March
31, 2005 as compared to $1,032,000 for the same period in fiscal year 2004. The
decrease in earnings is primarily due to an increase in operating and management
and administration expenses, which were partially offset by an increase in
Private patients revenue.
Overall revenues of $16,973,000 increased $232,000 or 1.4% for the three
months ended March 31, 2005 compared to the same period in fiscal year 2004. The
increase in revenue is primarily due to an increase in Private patients
revenues, which was partially offset by a decrease in Medicaid and Medicare
patients revenue of $29,000. Medicaid patients revenue decreased $65,000 in the
first quarter of 2005 as compared to the first quarter of 2004 due to the
recording of $337,000 Medicaid revenue retroactive to October 2003 through
December 2003 in the first quarter of 2004 for the two North Carolina centers.
Without this additional revenue, Medicaid revenue would have increased by
$272,000 or 2.8% in the first quarter of 2005 as compared to the same period in
the prior year. This rate increase is driven by the four Maryland centers, which
received their annual Medicaid rate adjustment in July 2004, and a rate increase
retroactive to July 2004 for the Woodlands Center in New Jersey. These rate
increases are partially offset by a reduction in the Medicaid census. The
average daily Medicaid census decreased by 47 residents or 7% for the three
months ended March 31, 2005 as compared to the same period in the prior year.
Medicare revenue increased $36,000 or .8% due to a rate increase of 6.8%, and an
increase in Medicare Part B revenues of $114,000, which was partially offset by
a reduction in the Medicare census. The average daily Medicare census decreased
by 10 residents or 7.1%. Private patients revenue increased $265,000 to
$2,662,000 for the first quarter of 2005 compared to the first quarter of fiscal
year 2004. Private revenue increased $184,000 for the three months ended March
31, 2005 compared to the same period in the prior year. This increase is
primarily due to increases in the private and assisted living private census.
The average daily Private census increased by 10 residents or 13.3% for the
three months ended March 31, 2005 compared to the same period in fiscal year
2004. The average daily Assisted Living Private census increased by 11 residents
or 42.2% for the three months ended March 31, 2005 compared to the same period
in fiscal year 2004. Insurance revenue increased $81,000 for the three months
ended March 31, 2005 compared to the same period in the prior year. This
increase is primarily due to a rate increase of approximately 3.6%.
First quarter 2005 expenses of $16,614,000 increased $905,000 or 5.8% from
$15,709,000 for the three months ended March 31, 2004.
Operating expenses increased $763,000 or 5.6% in the first quarter of
2005 as compared to the same period in fiscal year 2004. This increase is
primarily due to the increased costs of nursing services, bad debt expense,
state bed tax assessments, and ancillary costs. Nursing costs increased $87,000
for the three months ended March 31, 2005 as compared to the same period in
fiscal year 2004. This increase is primarily due to increases in salaries and
benefits, which is partially offset by a decrease in the cost of temporary nurse
staffing. Nursing salaries and benefits increased $144,000, while temporary
nurse staffing expense decreased $122,000 for the three months ended March 31,
2005 compared to the same period in fiscal year 2004. Nursing purchased services
increased $65,000 in the first quarter of 2005 compared to the first quarter of
2004. Bad debt expense increased $66,000 or 61.3% for the three months ended
March 31, 2005 as compared to the same period in fiscal year 2004 due to
additional write-off of uncollectible accounts. An assessment levied by the
state of New Jersey to patient days retroactive to July 2004 in the amount of
$319,000 was recognized in the first quarter of 2005. Ancillary costs increased
$171,000 or 9% for the three months ended March 31, 2005 as compared to the same
period in fiscal year 2004 due to higher Medicare Part B ancillary usage. The
remaining increase in operating costs is due to general inflationary cost
increases.
General and administrative expenses of $533,000 increased $214,000 or
approximately 67% for the first quarter March 31, 2005 compared to the same
period in fiscal year 2004. This increase is primarily due to legal fees of
$182,000 associated with the expected sale of the seven facilities.
-13-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Critical Accounting Policies
We consider an accounting policy to be critical if it is important to our
financial condition and results, and requires significant judgment and estimates
on the part of management in its application. Our critical accounting estimates
and the related assumptions are evaluated periodically as conditions warrant,
and changes to such estimates are recorded as new information or changed
conditions require revision. Application of the critical accounting policies
requires management's significant judgments, often as the result of the need to
make estimates of matters that are inherently uncertain. If actual results were
to differ materially from the estimates made, the reported results could be
materially affected. We believe that the following represents our critical
accounting policies, which are described in our most recent Report on Form 10-K:
o Allowance for Doubtful Accounts
o Revenue Recognition
During the current quarter, we did not make any material changes to our
estimates or methods by which estimates are derived with regard to our critical
accounting policies.
-14-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Fund does not have exposure to changing interest rates since it has no
fluctuation outstanding debt at March 31, 2005.
Item 4. Controls and Procedures
The Fund's management, with the participation of the Chief Executive
Officers and Chief Financial Officers of Brown Healthcare, Inc., the
Administrative General Partner, and Meridian Healthcare Investments, Inc., the
Development General Partner, evaluated the effectiveness of the Fund's
disclosure controls and procedures as of March 31, 2005. The term "disclosure
controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, Means controls and other procedures of a company that are designed
to ensure that information required to be disclosed by the company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company's management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure. The Fund's management recognizes
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Based on the evaluation of the Fund's
disclosure controls and procedures as of March 31, 2005, the Chief Executive
Officers and Chief Financial Officers of the Fund's general partners concluded
that, as of such date, the Fund's disclosure controls and procedures were
effective at the reasonable assurance level. No change in the Fund's internal
control over financial reporting occurred during the fiscal quarter ended March
31, 2005 that has materially affected, or is reasonably likely to materially
affect, the Fund's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities and Use of Proceeds
Inapplicable
Item 3. Defaults upon Senior Securities
Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
-15-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 5. Other Information
Report of Entry into a Material Definitive Agreement
The following information is provided pursuant to Item 1.01 of Form 8-K.
In connection with the contemplated sale to FC Properties VI, LLC ("FC") of
the Fund's seven skilled nursing facilities, Plainfield Meridian Limited
Partnership, Caton Manor Meridian Limited Partnership, Frederick Meridian
Limited Partnership, Hamilton Meridian Limited Partnership, Randallstown
Meridian Limited Partnership, Mooresville Meridian Limited Partnership and
Spencer Meridian Limited Partnership (collectively, the "Operating
Partnership"), the Fund and Genesis Eldercare Network Services, Inc. (the
"Manager"), entered into a letter agreement dated February 9, 2005 pursuant to
which Manager agreed to waive and release any and all rights of first offer,
rights of first refusal, rights of purchase and other option rights of any kind
it might have with respect to the facilities, all in connection with and
contingent upon the execution of a definitive purchase agreement between the
Operating Partnerships and FC.
On February 11, 2005 the Operating Partnerships entered into a definitive
purchase agreement for the facilities with FC (the "FC Purchase Agreement"). If
Investors do not approve the sale of the facilities pursuant to the FC Purchase
Agreement, or the closing under the FC Purchase Agreement otherwise does not
occur, the Operating Partnerships must provide written notice of the termination
or expiration of the FC Purchase Agreement to Manager's parent, Genesis
HealthCare Corporation ("Genesis"). During a period of 30 days following any
such written notice, Genesis may agree to purchase the facilities pursuant to a
contract that is identical in all material respects to the FC Purchase
Agreement. If the Operating Partnerships and Genesis do not enter into a binding
contract for the sale of the facilities before the expiration of such 30-day
period, the Operating Partnerships will have a period of 120 days from the end
of the 30-day period in which to enter into a replacement contract for the
purchase and sale of the facilities. If the Operating Partnerships are
successful at executing a replacement contract with such 120-day period, then
Manager's waiver of its right of first offer will apply with respect to such
replacement contract. If the Operating Partnerships do not enter into a
replacement contract, or any such replacement contract is terminated or expires
without closing, Manager's waiver will be deemed null and void and it will
continue to have a right of first offer with respect to the facilities. Any sale
of the facilities to Genesis or pursuant to a replacement contract would require
the consent of the holders of a majority of Fund's the issued and outstanding
units, which would be solicited before any such sale could be consummated.
-16-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 6. Exhibits
a) Exhibits
Exhibit 10.1 Letter Agreement dated February 9, 2005 by and
among Plainfield Meridian Limited Partnership, Caton Manor
Meridian Limited Partnership, Frederick Meridian Limited
Partnership, Hamilton Meridian Limited Partnership, Randallstown
Meridian Limited Partnership, Mooresville Meridian Limited
Partnership and Spencer Meridian Limited Partnership, the Fund
and Genesis Eldercare Network Services, Inc.
Exhibit 10.2 Asset Purchase Agreement, dated February 11, 2005,
by and between FC Properties VI, LLC and Plainfield Meridian
Limited Partnership, Caton Manor Meridian Limited Partnership,
Frederick Meridian Limited Partnership, Hamilton Meridian
Limited Partnership, Randallstown Meridian Limited Partnership,
Mooresville Meridian Limited Partnership and Spencer Meridian
Limited Partnership (incorporated by reference to Exhibit 2 to
the Fund's Current Report on Form 8-K filed February 16, 2005)
Exhibit 31.1 Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.3 Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.4 Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
b) Reports on Form 8-K:
Form 8-K dated February 11, 2005 describes the execution of the
Asset Purchase Agreement that reflects the sale of all or
substantially all of the real and non-real property assets of
the seven nursing centers in which the Fund owns a 98.99%
limited partner interest.
-17-
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: 5/13/05 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Healthcare, Inc.
Administrative General Partner
DATE: 5/13/05 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown-Healthcare, Inc.
Administrative General Partner
-18-
Exhibit 31.1
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, George V. Hager Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Meridian Healthcare
Growth and Income Fund Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: 5/12/05 By: /s/ George V. Hager, Jr.
George V. Hager, Jr.
Chief Executive Officer
Meridian Healthcare Investments, Inc.
Development General Partner
Exhibit 31.2
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James V. McKeon, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Meridian Healthcare
Growth and Income Fund Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: 5/12/05 By: /s/ James V. McKeon, III
James V. McKeon, III
Chief Financial Officer
Meridian Healthcare Investments, Inc.
Development General Partner
Exhibit 31.3
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John M. Prugh, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Meridian Healthcare
Growth and Income Fund Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: 5/13/05 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Brown-Healthcare, Inc.
Administrative General Partner
Exhibit 31.4
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Timothy M. Gisriel, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Meridian Healthcare
Growth and Income Fund Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: 5/13/05 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Brown-Healthcare, Inc.
Administrative General Partner
Exhibit 32.1
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Quarterly Report on Form 10-Q for the period
ending March 31, 2005 with the Securities and Exchange Commission on the date
hereof (the "Report"), We certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Fund.
Date: 5/12/05 By: /s/ George V. Hager, Jr.
George V. Hager, Jr.
Chief Executive Officer
Meridian Healthcare Investments, Inc.
Development General Partner
Date: 5/12/05 By: /s/ James V. McKeon, III
James V. McKeon, III
Chief Financial Officer
Meridian Healthcare Investments, Inc.
Development General Partner
Exhibit 32.2
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Quarterly Report on Form 10-Q for the period
ending March 31, 2005 with the Securities and Exchange Commission on the date
hereof (the "Report"), We certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Fund.
Date: 5/13/05 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Brown-Healthcare, Inc.
Administrative General Partner
Date: 5/13/05 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Brown-Healthcare, Inc.
Administrative General Partner