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HILLHAVEN ANNOUNCES 1992 THIRD-QUARTER RESULTS

 HILLHAVEN ANNOUNCES 1992 THIRD-QUARTER RESULTS
 TACOMA, Wash., March 26 /PRNewswire/ -- The Hillhaven Corp.


(AMEX: HIL) today announced results for its third quarter ended Feb. 29.
 The company reported that its fiscal third-quarter net income increased to $3,084,000 from $147,000 in the prior year quarter. Earnings per share were 2 cents, compared to $0.001 a year ago.
 As a result of the $90 million restructuring charge that the company recorded in the second quarter, for the first nine months of fiscal 1992, Hillhaven reported a net loss of $84,031,000, or 82 cents per share, as compared to net income of $487,000, or one-half cent profit per share in the prior year. This charge reflected the estimated loss from the planned disposition of 82 of Hillhaven's 358 nursing centers.
 Reported revenues and expenses between the current and prior periods have been significantly impacted by the restructuring. In the prior periods, revenues and expenses included operating results from all nursing centers. However, effective Dec. 1, 1991, operating results from nursing centers held for sale are excluded from revenues and expenses and are charged against the restructuring reserve. Also during the quarter, the company recorded additional depreciation on leases capitalized as a result of the terms of the restructuring.
 Net operating revenues decreased 9 percent for the quarter to $281,021,000, from $308,702,000 in the prior year quarter. Nursing center revenue declined 12.9 percent to $240,541,000 from $276,101,000 in the same quarter last year, while pharmacy revenues climbed 24.5 percent to $40,101,000 from $32,217,000 in the prior year quarter.
 For the nine-month period, net operating revenues rose 4 percent to $938,656,000 from $902,393,000 in the prior year. Nursing center revenue increased 2 percent to $824,579,000 from $808,807,000, while pharmacy revenues grew 21.3 percent to $112,433,000, compared to $92,681,000 in the nine-month period in the prior year.
 The restructuring plan, announced Dec. 5, 1991, also included the modification of lease arrangements with National Medical Enterprises Inc. (NYSE: NME). These lease terms had limited Hillhaven's earnings since its spin-off from NME in 1990.
 "We have completed our first quarter since our restructuring was announced and are pleased to be reporting improved earnings," said Bruce Busby, Hillhaven's chief executive officer. Busby continued, "We estimate completing our restructuring objectives will take as long as two years; we are satisfied with our progress to date."
 For the continuing group of nursing centers, average occupancy was maintained at 92.9 percent for the current and prior year quarter. Hillhaven's emphasis on providing rehabilitation therapies within its nursing centers resulted in a 31.4-percent increase in rehabilitation revenue to $26,081,000 from $19,844,000 in the third quarter of the prior year.
 The Hillhaven Corp. is a leading provider of quality long-term health care. The company operates and manages 358 nursing centers located in 37 states, 25 retirement housing communities located in 15 states, as well as two continuing care retirement communities. Its Medisave Pharmacies subsidiary operates 122 retail and institutional pharmacies in 24 states.
 THE HILLHAVEN CORP. - QUARTERLY FINANCIAL UPDATE
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited, dollars in thousands, except per-share amounts)
 Three Months Nine Months
 Ended: Feb. 29, Feb. 28, Feb. 29, Feb. 28,
 1992 1991 1992 1991
 Net operating revenues $281,021 $308,702 $938,656 $902,393
 Expenses:
 Operating and administrative 243,180 270,351 818,278 786,686
 Interest 14,669 8,999 34,629 26,595
 Depreciation and amortization 11,389 7,500 30,332 21,768
 Rent 9,469 23,272 53,474 73,174
 Guarantee fees 2,148 1,754 6,195 5,261
 Restructuring charge -- -- 90,000 --
 Total expenses 280,855 311,876 1,032,908 913,484
 Income (loss) from operations 166 (3,174) (94,252) (11,091)
 Interest income 3,044 3,808 9,368 12,746
 Income (loss) before taxes 3,210 634 (84,884) 1,655
 Income tax expense (benefit) 126 487 (853) 1,168
 Net income (loss) $ 3,084 $ 147 $(84,031) $ 487
 Earnings (loss) per share $ 0.02 $ 0.001 $ (0.82) $ 0.005
 Three Months Nine Months
 Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28,
 Shares used in 1992 1991 1992 1991
 per-share
 calculation 104,023,348 102,779,959 103,992,441 102,765,536
 NOTE: Financial data for the period after Dec. 1, 1991, exclude amounts related to the operations of nursing centers held for sale under the company's restructuring plan.
 THE HILLHAVEN CORP. - QUARTERLY FINANCIAL UPDATE
 SELECTED FINANCIAL DATA AND OPERATING STATISTICS
 (Dollars in thousands)
 Three Months Nine Months
 Ended: Feb. 29, Feb. 28, Feb. 29, Feb. 28,
 1992(A) 1991 1992(A) 1991
 Net operating revenues:
 Nursing centers $240,541 $276,101 $824,579 $808,807
 Pharmacies 40,101 32,217 112,433 92,681
 Gain on sale of assets 379 384 1,644 905
 Total $281,021 $308,702 $938,656 $902,393
 Operating income before
 property-related expenses
 and the restructuring charge(B):
 Nursing centers $ 31,437 $ 33,725 $102,169 $102,360
 Pharmacies 6,025 4,242 16,565 12,442
 Gain on sale of assets 379 384 1,644 905
 Total $ 37,841 $ 38,351 $120,378 $115,707
 Nursing centers owned or
 operated at end of period 259 344 259 344
 Number of licensed beds 31,936 42,512 31,936 42,512
 Nursing centers managed on
 behalf of others 17 19 17 19
 Pharmacy outlets at end of
 period 122 113 122 113
 Continuing care retirement
 communities at end of period 2 2 2 2
 Retirement housing communities
 (a discontinued operation) at
 end of period 25 25 25 25
 NOTE (A): Financial data and operating statistics for the period after Dec. 1, 1991, exclude amounts related to the operations of 82 nursing centers (10,484 beds) held for sale under the company's restructuring plan.
 NOTE (B): Property-related expenses include depreciation and amortization, interest, rent and guarantee fees.
 -0- 3/26/92
 /CONTACT: Tim Carroll of The Hillhaven Corp., 206-572-4901/
 (HIL) CO: The Hillhaven Corp. ST: Washington IN: HEA SU: ERN


SC-JH -- SE002 -- 1843 03/26/92 09:31 EST
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