ADVOCAT ANNOUNCES FIRST QUARTER RESULTS

 FRANKLIN, Tenn. (May 15, 2001) - Advocat Inc. (Nasdaq OTC:AVCA) today announced its results for the first quarter ended March 31, 2001.  The Company reported a net loss of $1.5 million, or $0.27 per share, in the first quarter of 2001 compared with net income of $85,000, or $0.02 per diluted share, in the first quarter of 2000. 

“Advocat continued to make progress in the first quarter and reported a 5% increase in revenues,” stated Charles W. Birkett, M.D., chairman and chief executive officer of Advocat Inc.  “Although our revenue growth continues to be restrained by regulatory limits, we received a rate increase in Arkansas effective January 12, 2001, and are working on programs to increase our occupancy in our facilities.  We also remain focused on controlling expense levels to improve our profitability.”

Revenues for the first quarter ended March 31, 2001, were $49.7 million compared with revenues of $47.3 million in 2000.  Revenue increased 6.5% to $38.3 million in U.S. nursing homes compared with $36.0 million in the first quarter of 2000 and was primarily due to increased Medicare utilization and PPS rate increases at certain facilities and increased Medicaid rates in Arkansas compared with the prior year.  Resident revenues were essentially even with the prior year at $10.4 million and management fees rose to $911,000, up from $901,000 in the first quarter of 2000.

Operating expenses increased to $51.1 million in the first quarter compared with $47.2 million in 2000.  The Company experienced a significant increase in professional liability costs and utilities in the latest quarter.

“We continue to face uncertainties regarding industry regulation andskyrocketing professional liability insurance costs,” continued Dr. Birkett. “Professional liability costs rose 74% in the first quarter to $2,494,000 compared with $1,431,000 in the first quarter of 2000.  The Company also remains in non-compliance with certain financial covenants.  We remain in active discussions with our lenders regarding potential waivers, amendments and refinancing alternatives and are hopeful that we can reach terms that will not jeopardize the future of Advocat.”

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 56 assisted living facilities with 5,245 units and 64 skilled nursing facilities containing 7,230 licensed beds as of March 31, 2001.  The Company operates facilities in 12 states, primarily in the Southeast, and four provinces in Canada.

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