Advanced Health Corporation Reports Record Second Quarter Results And Announces Senior Management Promotions.

TARRYTOWN, N.Y.--(BUSINESS WIRE)--August 7, 1997

- Earnings per share $0.14 vs. loss of ($0.15) in 2Q96;

- Net Revenues up 232% to $13.0 million

- Net Income reaches $1.2 million versus year ago loss;

- Provider headcount reaches 226; growth of 53 in current quarter

- Positive developments continue to build the Advanced Health

Med-E-Systems clinical information services subsidiary;

- Effective Sept.15 Alan Masarek promoted to President & COO,

Steve Hochberg, Vice Chairman

Advanced Health Corporation (Nasdaq:ADVH) today announced record revenues and earnings for the second quarter ended June 30, 1997.

Total net revenues for the second quarter increased 232% to $13.0 million as compared to net revenues of $3.9 million in the second quarter 1996. Net income increased to $1.2 million, or $0.14 per share, from a loss of $655,000, or ($0.15) per share, reported in the same period of 1996.

"We are extremely pleased with the tremendous growth Advanced Health experienced during the quarter which reflects the successful implementation of our strategy," said Advanced Health's Chairman and CEO Jon Edelson, MD, "We continue to build upon new physician practice and network management contracts and further penetrate the untapped East Coast health care marketplace. This growth reflects increased recognition of Advanced Health's strategy to partner with physician practices rather than purchase them.

"During the quarter we were able to enhance our Advanced Health Med-E-Systems clinical information services subsidiary through strategic investments and product developments. One investment made involved Caresoft, Inc., a disease management software company in Northern California, whose applications enable patients to collaborate with their doctors in improving their own health care outcomes via the Internet and telephone. Product development announcements include the installation of Med-E-Practice Intake,(TM) a new electronic tool that aids physicians in monitoring and evaluating patients' risks and health status through surveys and on-line systems."

Commenting on the quarter, Alan Masarek, Chief Operating Officer and Chief Financial Officer, said, "The increase we experienced in revenue and earnings can be attributed to our continued growth in practice management affiliations and software sales in our Advanced Health Med-E-Systems clinical information services subsidiary. In the second quarter alone, our provider count increased by 53 and our number of practices increased 50%, from 8 to 12."

"We also signed significant contracts with HIP Health Plan of New Jersey and Oxford Health Plans, providing significant lives for two of our networks. Additionally, we signed a network agreement with Assured Care Network Management, a multispecialty network of 486 physicians located in Chattanooga, TN, bringing the total number of networks under management to 13 as of June 30, 1997. We are proud of our results to date, and were confident of our ability to sustain this momentum going forward."

Senior Management Promotions

Effective September 15th, Alan Masarek will be promoted to President of Advanced Health. He will retain his position of Chief Operating Officer. This promotion will allow Mr. Masarek to take an even more integral role in the company's future evolution and growth. A search is currently underway to find a new Chief Financial Officer.

Also effective September 15th, co-founder and current President Steven Hochberg will be promoted to Vice Chairman. In his role as Vice Chairman, Mr. Hochberg will focus full-time on corporate business development and corporate transaction opportunities.

"These promotions are in recognition of the excellent work done by Alan and Steve in their efforts to grow and expand the company," said Edelson.

Advanced Health Corporation is a leading physician practice management company that vertically integrates practice and network management services with clinical information systems. Unlike other physician practice management companies, Advanced Health partners with - instead of purchases - physician group practices, thereby maintaining physicians' independence and providing the optimal incentives to achieve practice success. ADVH provides physician practice and network management and consulting services through its Advanced Health Management subsidiary and currently serves over 1,800 physicians. ADVH provides clinical information systems through its Advanced Health Med-E-Systems' subsidiary; these systems provide physicians with patient-specific clinical and health plan information at the point of care to improve the quality and reduce the costs of health care.

Statements in this press release concerning the Company's business outlook or future economic performances, anticipated profitability, revenues, expenses or other financial items, and product or service line growth, together with other statements that are not historical facts, are "forward looking statements" as that term is defined under the Federal Securities Laws. Any forward-looking statements are estimates, reflecting the best judgment of the party making such statements based upon currently available information and involve a number risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Risks, uncertainties and factors which could affect the accuracy of such forward looking statements are identified in the public filings made by the Company with the Securities and Exchange Commission, and forward looking statements contained in this press release or in other public statements of the Company should be considered in light of those factors. There can be no assurance that factors will not affect the accuracy of such forward looking statements.

Editor's Notes: This release is available on the Internet at http://www.advhealth.com and at http://www.noonanrusso.com.

                     ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share amounts)
                                   (unaudited)

                                   For the Three Months Ended
                                        June 30,     June 30,
                                         1997       1996 (1)

REVENUE                                $13,021       $3,925
COST OF REVENUES                         9,908        2,569
                                     ------------  -------------
    Gross profit                         3,113        1,356
OPERATING EXPENSES                       2,103        1,977
                                     ------------   -------------
    Operating income/(loss)              1,010         (621)
OTHER INCOME/(EXPENSE)                     141          (34)
                                     -------------  ------------
    Net Income(Loss) Before Taxes       $1,151        ($655)
PROVISION FOR TAXES                          0            0
                                     ==============  ===========
     Net Income (Loss)                  $1,151        ($655)
                                     ==============  ===========
PER SHARE INFORMATION
Net income (loss) per share              $0.14       ($0.15)
Weighted average common
 shares and equivalents outstanding      8,338        4,491

                                       For the Six Months Ended
                                        June 30,     June 30,
                                          1997       1996(1)

REVENUE                                 $23,028       $7,617
COST OF REVENUES                         17,309        5,580
                                      ------------  ------------
      Gross profit                        5,719        2,037
OPERATING EXPENSES                        4,185        3,840
                                      ------------  ------------
      Operating income/(loss)             1,534       (1,803)
OTHER INCOME/(EXPENSE)                      343          (53)
                                       ------------ ------------
      Net Income(Loss) Before Taxes      $1,877      ($1,856)
PROVISION FOR TAXES                          66            0
                                        ============ ============
      Net Income (Loss)                  $1,811      ($1,856)
                                        ============ ============
PER SHARE INFORMATION
Net income (loss) per share               $0.22       ($0.41)
Weighted average common
 shares and equivalents outstanding       8,190        4,487

1) Reclassification has been made to conform to 1997 presentation
-0-

                     ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET DATA
                                  (In thousands)
                                   (unaudited)

                                          December 31,   June 30,
                                             1996          1997
ASSETS
 Cash, cash equivalents and
  investment in marketable securities      $19,476       $12,176
 Accounts receivable                         8,637         7,870
 Other current assets                        1,806         4,533
                                        -------------   -------------
     Total current assets                   29,919        24,579
     PPE, intangibles, other assets          5,481        12,420
                                        =============    =============
         Total assets                      $35,400       $36,999
                                        =============    =============
LIABILITIES AND SHAREHOLDERS' EQUITY
 Total liabilities                          $3,516        $3,034
 Total shareholders' equity                 31,884        33,965
                                        =============    =============
     Total liablilties and
       shareholders' equity                $35,400       $36,999
                                       =============    =============

CONTACT: Advanced Health Corporation

Ophelia Bumgardner, 914/524-4720

e-mail: [e-mail]

or

Noonan/Russo Communications, Inc.

212/696-4455

Jennifer Angell, (investors), ext. 240

Michele Helm, (media), ext. 225

e-mail: [e-mail]