Coram Healthcare Focus Remains on Quality Patient Care Within Growing Home Healthcare Markets Despite Legal Battles

Business Wire, August 23, 1999

DENVER--(BW HealthWire)--Aug. 23, 1999--

Coram Healthcare, Inc. (NYSE:CRH) said today that it remains focused on growing its core businesses despite recent legal actions relating to the termination of the Aetna Master Agreement.

On June 30, Coram announced that it had terminated a Master Agreement with Aetna U.S. Healthcare to manage home health services for Aetna in eight northeastern and mid-atlantic states. Simultaneously with the termination, Coram filed a $50 million lawsuit charging Aetna with fraud, misrepresentation, breach of contract, and rescission related to the Master Agreement.

On August 19, 1999, a small group of providers led by Apria Healthcare Group, a competitor, initiated an involuntary bankruptcy proceeding against Coram's Resource Network subsidiary ("CRN"). The filing is limited to the subsidiary and relates to the terminated Aetna Master Agreement.

Coram President and Chief Executive Officer Richard M. Smith said, "We are resolute that these legal actions will not be allowed to slow the business momentum of the overall Company.

"We have sound business lines that are growing and which promise to keep Coram Healthcare as a leader in the home healthcare industry," said Mr. Smith. "We have no intention of losing this momentum. Our people remain focused on high quality patient care and on the strength of relationships with payors and other referral sources.

"It was unfortunate that Apria Healthcare, a competitor of ours and a competitor of other providers in the CRN network, chose this counter-productive filing when we were in communication with them to address their claims," added Mr. Smith. "It is unfortunate that the involuntary filing will likely delay the orderly process we had established for all of the providers."

Mr. Smith said that he is confident that all of the legal issues related to the terminated Aetna Master Agreement will ultimately be fairly adjudicated in the courts. A court date for the Aetna suit has been set for April 2000. In the meantime, he said, Coram will continue with an aggressive business plan that includes the following:

-- Redesigning the company's 88 branches with an eye toward better utilization of technology;

-- Expanding marketing activities for the Company's new Clinical Trials and Medical Informatics subsidiary;

-- Creating an E-Commerce presence for the Coram Prescription Services subsidiary; and

-- Continuing expansion of the infusion therapy business.

"In short, our business plan focuses on each of our core business areas," said Mr. Smith. "Each area is supported by a growing industry with great potential for Coram in view of its reputation for quality and significant operational resources."

Denver-based Coram is a leading provider of high quality home infusion therapy operating from 90 locations in 44 states and Ontario, Canada. Through its Resource Network division, the Company manages networks of home healthcare providers on behalf of managed care plans and other payors. Coram's Prescription Services Division provides pharmacy benefit management services as well as specialty mail order prescription drugs for chronically ill patients. The Clinical Research and Medical Informatics Division provides home care and product development services to pharmaceutical, biotechnology, and medical device companies sponsoring clinical trials.

For more information, visit Coram's web site at www.coramhealthcare.com.

Note: Except for historical information, all other statements provided in this press release are "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company's actual results may vary materially from the forward-looking statements made above due to important factors such as the Company's history of operating losses and uncertainties associated with future operating results; significant outstanding indebtedness; equity conversion rights held by existing debt holders; limited liquidity; reimbursement-related risks; shifts in the mix of parties that pay for the Company's services; dependence upon relationships with third parties; uncertain future liabilities under capitation arrangements; concentration of large payors; the intensely competitive industry; the timing of or ability to complete acquisitions; government regulation of the home health care industry; certain legal proceedings; dependence on key personnel; recruitment and retention of trained personnel; potential volatility of stock price; New York Stock Exchange listing status; and unanticipated impacts from the Year 2000 issue. These and other risk factors that could affect Coram's financial results are further described in the Company's Form 10-K Annual Report, as amended, Form 10-Q Quarterly Reports, and Form 8-K Current Reports on file with the Securities and Exchange Commission.