SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|_| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
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|X| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Meridian Healthcare Growth and Income Fund Limited Partnership
(Name of Registrant as Specified In Charter)
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Filed by Meridian Healthcare Growth and Income Fund
Limited Partnership
Pursuant to Rule 14a-12
Commission File No. 0-17956
TO OUR INVESTORS
May 31, 2005
Dear Investor:
This report for Meridian Healthcare Growth and Income Fund Limited
Partnership contains financial results for the quarter ended March 31, 2005, as
well as a review of operations of the Fund during the period.
CASH DISTRIBUTION
On May 19, 2005, the Fund made its first quarter 2005 distribution to
partners of $583,000, representing a 6% return. This distribution was funded by
net cash flow provided by operating activities during the first quarter of 2005.
Each investor received (or had deposited in his account) his or her share of
this cash flow in the amount of $0.37 per $25.00 Unit, which represents a 6.0%
annualized return. 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.
OPERATIONS
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 patient 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.
Maintaining Medicaid and Medicare census continues to be a struggle. 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. In addition,
the average daily Medicare census decreased by 10 residents or 7.1% during the
first quarter of 2005 versus 2004. Management continues to focus their attention
on improving these trends. 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.
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.
LIQUIDITY AND CAPITAL RESOURCES
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.
SALE AND OUTLOOK
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
mid-2005 and project the sale will result in distributable proceeds of
approximately $21 per original $25 investment unit.
In the near future we will be sending out very important dated proxy
materials regarding the proposed transaction. Regardless of the number of units
you own, your vote is very important and we need your support. Investors are
urged to read the proxy statement and other related documents when they become
available because they will contain important time sensitive information related
to the transaction.
Sincerely,
BROWN-HEALTHCARE, INC.
Administrative General Partner
/s/ John M. Prugh
John M. Prugh
President
Where You Can Find Additional Information About the Proposed Sale of the Fund's
Skilled Nursing Facilities and Subsequent Liquidation
Meridian Healthcare Growth and Income Fund Limited Partnership (the "Fund") has
filed a preliminary proxy statement concerning the proposed sale of its skilled
nursing facilities to FC Properties IV, LLC and subsequent liquidation with the
Securities and Exchange Commission ("SEC"). The information contained in the
preliminary proxy statement is not complete and may be changed. Investors are
advised to read the definitive proxy statement related to the proposed
transaction when it becomes available and any other relevant documents filed
with the SEC because they will contain important information related to the
transaction. The definitive proxy statement will be mailed to investors of the
Fund seeking their approval of the sale of the Fund's skilled nursing
facilities, the plan of dissolution, and any other matters presented therein in
connection with the proposed transactions. Investors may obtain a free copy of
the documents filed by the Fund with the SEC at the SEC's website at
http://www.sec.gov. In addition, you may obtain any of the documents filed with
the SEC free of charge by requesting them in writing from the Fund, 300 East
Lombard Street, Suite 1200, Baltimore, Maryland 21202, Attention: Robert
Huether, Asset Manager or Yolanda Harris; Investor Services Coordinator,
Telephone Number: (410) 727-4083; Facsimile Number: (410) 625-2694.
Information Concerning Participation in the Fund's Proxy Solicitation
The Fund along with its General Partners and their respective executive officers
and directors may be deemed to be participants in the solicitation of proxies
from the investors of the Fund with respect to the proposed transaction.
Information regarding the Fund, its General Partners and their respective
executive officers and directors is included in the Fund's Form 10-K filed with
the SEC for the year ended December 31, 2004. This document is available free of
charge at the SEC's website at http://www.sec.gov. Investors may also obtain a
copy of this document free of charge by requesting it in writing from the Fund,
300 East Lombard Street, Suite 1200, Baltimore, Maryland 21202, Attention:
Robert Huether, Asset Manager or Yolanda Harris; Investor Services Coordinator,
Telephone Number: (410) 727-4083; Facsimile Number: (410) 625-2694. Investors
may obtain additional information about the interests of the General Partners
and their respective executive officers and directors in the proposed
transaction by reviewing the definitive proxy statement related to the
transaction when it becomes available.
Forward-Looking Statements
This letter contains forward-looking statements, including statements related to
the potential sale of the Fund's skilled nursing facilities and subsequent
dissolution. These statements are based on the General Partners' current
expectations and information currently available to them and are believed to be
reasonable and are made in good faith. However, the forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected in the statements. Factors that may make the
actual results differ from anticipated results include, but are not limited to,
those factors set forth in the Fund's Form 10-K, Form 10-Q and its other filings
with the SEC; the possibility that the proposed sale of the Fund's skilled
nursing facilities and subsequent dissolution may not ultimately occur for any
number of
reasons, such as our not obtaining investor approval of the sale or related
matters, or the failure to occur of one or more of the conditions to the
parties' obligations under the Asset Purchase Agreement; that the amount of the
net sales proceeds from the sale of the Fund's skilled nursing facilities
ultimately available for distribution to investors is not assured; that the
demand for or regulation of the type of skilled nursing services provided by the
Fund's facilities may change in a way that adversely affects the value of the
facilities, and, that other factors that affect the skilled nursing facility
business generally including, but not limited to, economic, political,
governmental and technological factors, all of which are difficult to predict
and some of which are beyond the Fund's control. For these reasons, you should
not rely on these forward-looking statements when making investment decisions.
The Fund does not undertake any obligation to update publicly any forward-
looking statement, either as a result of new information, future events or
otherwise.