Fountain View Reports First Quarter Results.

Business Editors

BURBANK, Calif.--(BUSINESS WIRE)--May 21, 2001

Fountain View, Inc. (the "Company"), a leading operator of 50 long-term care facilities in California, Texas and Arizona, today announced results for the first quarter ended March 31, 2001. During the first

Net revenues for the first quarter of 2001 were $76,863,000 and EBITDA was $7,910,000, or 10.3% of net revenues. For the first quarter of 2000, net revenues were $71,567,000 and EBITDA was $10,995,000, or 15.4% of net revenues. The information contained in this paragraph is presented prior to the impact of the charge discussed below.

In the first quarter of 2000, the Company recorded a pre-tax charge of $1,698,000 relating to the decertification of one of its SNFs. As previously reported, the Company regained Medicare and Medicaid certification for this facility beginning December 1, 2000 and has received reimbursement for services provided since that date. As was also previously reported, the decertification of this facility was reversed by an administrative law judge and the Health Care Financing Administration has appealed this decision.

While the earnings of the Company for the first quarter of 2001 were in line with management's expectations, they were significantly lower than last year due primarily to increases in wage rates, and workers compensation and professional liability costs. Medicare rate increases enacted April 1, 2001 should benefit the remainder of the year. However, the Company continues to be concerned about census, tight labor markets and the overall industry environment surrounding professional liability insurance.

For the quarter ended March 31, 2001, the Company was not in compliance with certain financial covenants and reporting requirements under its Term Loan and Revolving Credit Facility. These defaults are in addition to the previously reported technical defaults noted in the Company's December 31, 2000 financial statements. To date, the Company has been unable to obtain a waiver of these defaults from its lenders under this credit facility but intends to continue its discussions with such lenders to resolve this matter. As a result of these defaults, the Company's lenders have the right to accelerate payment of the amounts due under this credit facility.

As previously reported, the Company elected to defer, for thirty days, the interest payment due April 16, 2001 on its Senior Subordinated Notes. During the deferral period, the Company was negotiating with its lenders to restructure its Term Loan and Revolving Credit Facility, with the intention of having sufficient funds available to make the interest payment on the Senior Subordinated Notes by May 15, 2001. However, the Company was unable to restructure its Term Loan and Revolving Credit Facility and the interest payment was not made on May 15, 2001, as required. As a result, the holders of the Company's Senior Subordinated Notes have the right to accelerate payment of these notes, while the payment default continues. The Company intends to begin discussions with holders of its Senior Subordinated Notes and other interested parties in order to resolve this matter.

This press release may make certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding the future earnings and revenues and plans of the Company. Any such forward-looking statements are subject to various risks and uncertainties that might cause actual results to vary materially. Such risks are described in the Company's annual filing on Form 10-K on file with the Securities and Exchange Commission.

                          Fountain View, Inc.
                     Summarized Financial Results
                        (Dollars in Thousands)

                                          Three Months Ended
                                               March 31,
                                         2001            2000

Net revenues                       $    76,863      $    71,567

EBITDAR                                  9,764           12,761

EBITDA                             $     7,910      $    10,995

Occupancy Percentage

    Nursing Centers                      84.3%            84.4%
    Assisted Living Centers              66.2%            68.6%

Total                                    82.5%            82.7%


NOTE: The amounts presented are before a pre-tax charge of $1,698
recorded in the first quarter of 2000.