ADVOCAT ANNOUNCES FIRST QUARTER RESULTS

FRANKLIN, Tenn. (May 15, 2000) - Advocat Inc. (Nasdaq OTC:AVCA) today announced its results for the first quarter ended March 31, 2000. The Company reported earnings of $85,000 in the first quarter of 2000 compared with a loss of $983,000 for the same period in 1999. The net earnings per share for the quarter ended March 31, 2000, were $0.02 compared with a net loss per share of $0.18 for the quarter ended March 31, 1999. The results for the first quarter of 1999 include a $277,000 ($0.05 per share) charge net of tax for cumulative effect of change in accounting principle.

 Revenues for the first quarter ended March 31, 2000, were $47.3 million compared with revenues of $46.7 million in 1999. Revenue declined 3.1% to $35.4 million in U.S. nursing homes compared with $36.5 million in the first quarter of 1999 and was primarily due to a 3.4% decline in occupancy from the prior year. Revenues for U.S. assisted living facilities rose 21.3 % to $8.0 million and Canadian operations were up 8.4% to $3.9 million compared with the first quarter of 1999.

 Operating expenses decreased to $36.4 million in the first quarter compared with $37.7 million in 1999. The company continued to focus on cost reductions in response to Medicare reimbursement changes. 

 The Company also announced that it has negotiated extensions on two loans with outstanding balances of $25.7 million at March 31, 2000. The loans include a working capital line of credit and a bridge loan with a combined balance outstanding of $14.6 million and an acquisition line of credit with an outstanding balance of $11.6 million at March 31, 2000. The Company received extensions to June 30, 2000 for the amounts under the working capital line of credit and bridge loan that had a maturity date of February 28, 2000 and the acquisition line of credit that had a maturity date of December 1, 1999. The Company is negotiating a restructuring of the working capital line of credit and bridge loan, and negotiating replacement long-term financing on the acquisition line of credit.

 At March 31, 2000, the Company had negative working capital of $55.6 million primarily as result of the classification of a majority of the Company’s debt as current liabilities. The classification of a majority of the Company’s debt as current maturities is due to the Company’s non-compliance with debt covenants in various debt agreements, including net worth, cash flow and debt-to-equity ratio requirements. Cross-default or material adverse change provisions contained in the agreements allow the holders of substantially all of the Company=s debt to demand immediate repayment. As of this date, the Company had not obtained waivers of the non-compliance. The Company cannot assure that internally generated cash flows from earnings and existing cash balanced will be sufficient to fund existing debt obligations on future capital and working capital requirements through fiscal year 2000. The Company is currently discussing potential restructuring, modification and refinancing alternatives with its lenders and primary lessor. Any demands for repayment by lenders or the inability to obtain waivers or refinance the related debt would have a material adverse impact on the financial position, results of operations and cash flows of the Company. If the Company is unable to generate sufficient cash flow from its operations or successfully negotiate debt or lease amendments, it will explore a variety of other options, including, but not limited to, equity financing from outside investors, asset dispositions or relief under the United States bankruptcy code.

 Forward-looking statements made in this release involve a number of risks and uncertainties, including but not limited to, factors affecting the long-term care industry in general, governmental reimbursement, government regulation, health care reforms, the impact of future licensing surveys, changing economic and market conditions and other risk factors detailed in the Company’s Securities and Exchange Commission filings.

 Advocat Inc. operates 120 facilities including 55 assisted living facilities with 5,412 units and 65 skilled nursing facilities containing 7,307 licensed beds as of March 31, 2000. The Company operates facilities in 12 states, primarily in the Southeast, and three provinces in Canada.