Beverly Enterprises Provides Update on Sales Process.

FORT SMITH, Ark. -- Beverly Enterprises, Inc. (BEI) (NYSE:BEV) provided an update on the on-going sale of the company. William R. Floyd, Chairman and Chief Executive Officer, made the following remarks to BEI employees:

"The Board of Directors met Monday of this week to review the bids in what has been a very robust initial round. We identified several groups of potential investors to participate in the second round.

"The process we're going through is fairly typical of any sales process of this type -- an initial round to determine preliminary interest -- followed by a second round with a smaller group of the more serious parties. I expect that the interest in the second round will continue to be robust -- especially in light of the very favorable Medicare funding proposal announced last week by CMS.

"I cannot provide any specific information about prices or financing arrangements -- and we won't be able to provide much in the way of continuing progress reports until we sign a final agreement with one of these investor groups. What I can tell you, however, is that some of the finalists have indicated that they would continue Beverly as an operating company in its present form, but others may not do so.

"Members of the executive management team have met with several of the finalists. And I think there is a possibility that one or more of these groups will approach us about the management team partnering with them. However, as of this point, this has not yet taken place. If management becomes allied with one of the groups, I want to emphasize that the group the management team elects to partner with will be treated on the same basis as any of the other finalists -- in terms of the Board's decision-making process.

"Towards the end of this month and into June, there will be a series of management presentations and other meetings with the various investor groups. And, as part of the more detailed due-diligence reviews they'll be undertaking during the second round, representatives of these investor groups will be visiting several of our nursing homes and service company operations. We'll certainly provide information about these visits to the people and locations that will be part of this review process -- as they are scheduled.

"In terms of the overall timetable, the Board will then ask for final bids and financing arrangements -- and then will select the purchaser. Once an agreement is signed, it will take a couple months at least to negotiate all the details before the transaction can actually close.

"Now, I'm going to ask your help with something during the remainder of this process. The second round will be ripe with opportunities for rumors -- and I can almost guarantee you that most of those rumors will be wrong. If you hear a rumor, let it end with you. Don't pass rumors along to the next person -- and needlessly cause worry and anxiety. When there's solid news to share with you, you'll hear it from me.

"So, all this is a somewhat lengthy process. And, if any of you were hoping for all the uncertainty to be over by Memorial Day, I'm afraid you're out of luck. This uncertainty is natural -- and I'm very sensitive to it. I'm also very appreciative of the fact that you haven't let this uncertainty get in the way of your performance.

"I'm also very sensitive to the anxiety that each of you feels, to some degree or another, about what might happen to your specific job after the sale is complete. We obviously can't make any guarantees about specific jobs -- and it will be up to the new owner to determine how the company will be structured and how it will be staffed.

"What may be useful, however, is to look at what has happened with the more than 150 facilities and other business units we've divested over the past two and one-half years. In most of these divestitures, the new owner has retained the vast majority of the associates. It simply makes good sense. The new owner wanted to buy a successful, on-going business -- and who knew that business better than the people who were already running it?

"Now, I don't want to mislead you. I've always tried to shoot straight with you. Under probably any scenario, there will be some positions eliminated. We want to make sure there will be some level of protection for any associate whose job might be eliminated. So, we've taken steps to ensure that our existing severance policies remain in effect for one year after a change in control of the company.

"If you should lose your job through no fault of your own in the year following a change in control, you would receive a severance payment as specified by our current policies. These policies are generally based on position and length of service.

"In addition, if you want more information on the severance policy that applies to your specific situation, contact the Associate Service Center. Now, I hope the Center is not going to be flooded with calls as soon as this meeting ends.

"Keep in mind a couple of things:

--"First, the sales process will be a somewhat lengthy one. And then, I expect there will be a transition period once the new owner takes over. Whatever changes might be made will have to involve some degree of preparation -- if they are to produce positive results over time.

--"Second -- and more important -- let's all remember that the best way to protect your job -- and the jobs of your co-workers -- is to continue doing great work. Continue the kind of performance that helped us turn this company around. That has helped us achieve one strong quarter after another. And that has helped us develop a plan for even more profitable growth in the years ahead. Great performance is really the best form of job security that any of us have."

The statements in this document relating to matters that are not historical facts are forward-looking statements based on management's beliefs and assumptions using currently available information and expectations as of the date hereof. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, including the risks and uncertainties detailed from time to time in BEI's filings with the Securities and Exchange Commission. In addition, BEI's results of operations, financial condition and cash flows may be adversely impacted by the ongoing sales process. The sales process may impact BEI's ability to attract and retain customers, management and employees and will result in the incurrence of significant advisory fees, legal costs and other expenses. Although BEI believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. BEI assumes no duty to publicly update or revise such statements, whether as a result of new information, future events or otherwise.

Beverly Enterprises, Inc. and its operating subsidiaries are leading providers of healthcare services to the elderly in the United States. At March 31, 2005, it operated 346 skilled nursing facilities, as well as 18 assisted living centers, and 56 hospice/home care centers. Through Aegis Therapies, the company offers rehabilitative services on a contract basis to nursing facilities operated by other care providers.