CHOICE DRUG ANNOUNCES FIRST QUARTER RESULTS; Company Reports Progress on Restructuring Plan and Signs New Correctional Contracts.

BALTIMORE--(BUSINESS WIRE)--July 17, 1995--Choice Drug Systems, Inc. (Nasdaq National Market: DOSE (common stock) DOSEW (warrants)) today announced unaudited results for the first quarter ended May 31, 1995. (See Attached Table.)

Sales for the first quarter were $10,709,000 compared to $11,223,000 in the previous year's first quarter. The Company also reported a net loss for the quarter of $417,500, or $.05 per share, compared to a net loss of $152,900, or $.03 per share, in the same period last year, primarily attributable to reduced sales in the Company's medical/surgical supply division, and increases in the cost of goods and certain operating expenses. Management noted that its medical/surgical supply business was sold in May 1995 as part of its newly implemented restructuring plan. The increase in operating expenses was attributable to costs associated with the final payment of amounts owed under a prior non-compete agreement; expenses related to the services of outside accounts receivable consultants; and the implementation of a standard bad-debt expense accrual.

Morris Perlis, Vice Chairman of Choice Drug, stated, "We are pleased to report significant progress in implementing our 90-day corporate restructuring plan, initiated after completing the acquisition of PremierPharmacy in late May. We are constructing a solid foundation upon which to grow the Company and achieve future profitable operations. In this regard, and reflecting our focus on the Company's core competencies of providing institutional pharmacy services to the long-term care and correctional markets, we have sold or closed unprofitable, non-core business segments. These segments accounted for approximately $1 million in combined annual operating losses."

As noted, during the first quarter Choice Drug sold its medical/surgical supply division to a national distributor of such supplies to the long term care industry. The medical/surgical supply business of PremierPharmacy was sold to a privately-held company in the same industry. While these divisions combined accounted for approximately $6.5 million in annual revenues, they were also responsible for large annual losses. Additionally, in June the Company's Chesapeake software division, which generated annual revenues of nearly $1.2 million in 1995, was sold to a privately-held company specializing in healthcare software. The Company's long-term care operation in St. Louis, which reported a loss on revenues of $600,000 last fiscal year, was also closed in June. The closing of the Company's mail order division, My Choice Plan, which generated $1 million in revenues last fiscal year, is expected to be completed later this month.

Mr. Perlis continued, "We have also achieved reductions in both corporate and operations payroll through the consolidation of the Company's Teaneck, New Jersey; Inwood, New York; and Dallas, Texas corporate offices into our Baltimore headquarters. Additionally, we have begun integrating the pharmacy and financial management information systems of Choice Drug and Premier to single operating platforms. These reductions, combined with additional cost saving measures, are expected to result in significant annual savings. The initial impact of these measures on the Company's operating results will begin in the second and third quarters of the current fiscal year.

"The strengthening of core business segments continued during the first quarter, with the signing of more new correctional contracts than in any other quarter in the Company's history. In total, these agreements encompass 27 correctional facilities, representing nearly 18,000 inmates nationwide. Largest among them is our agreement to provide institutional pharmacy services to 10 correctional facilities in the State of Delaware, which house 4,582 inmates. The Company commenced these services in June. This month, we begin providing institutional pharmacy services to two correctional facilities run by the State of Texas, comprised of approximately 5,800 inmates. Revenues generated from these agreements will be realized beginning in the current second quarter."

Mr. Perlis added that the Company has also signed an agreement to provide institutional pharmacy services for the first privatized correctional facility to be built in the State of Florida. Two additional correctional contracts, to service 4 state-run facilities in Ohio and 3 state-controlled facilities in Illinois, respectively, are expected to commence services in August.

"With these newest agreements," commented Mr. Perlis, "Choice currently serves approximately 95,000 inmates in 21 states, strengthening our position as the leading national provider of institutional pharmacy services to the correctional market. We will continue to expand our presence in this area by increasing our sales and customer service efforts and utilizing our personnel to teach clinical intervention as a means to reduce drug utilization.

"In May we announced an agreement with Excelsior Health Management, the joint purchasing arm for 14 geriatric care facilities located throughout the New York metropolitan area and Westchester County, to provide institutional pharmacy services to its 4,000 patient beds. We are pleased to report that Choice Drug is currently providing services to 1,435 patient beds and we expect to phase-in the remainder of these beds over the next four to six months. Services to Excelsior commenced on June 1st and the accompanying revenues will impact future quarter results. Finally, we have entered into a prime vendor relationship with McKesson Corp., the Company's largest drug supplier. This new relationship ensures more favorable purchasing terms for Choice Drug, and should reduce the Company's overall cost of goods and produce significant savings."

Choice Drug Systems, Inc. is a leading provider of extended care institutional pharmacy services to nursing homes, correctional facilities and HMOs. Choice Drug services accounts throughout the United States. Counsel Corporation (Nasdaq NMS: CXSN), based in Toronto, Canada, owns a 27% interest in Choice Drug Systems. -0-

              CHOICE DRUG SYSTEMS, INC. AND SUBSIDIARIES
             UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
              THREE MONTHS ENDED MAY 31, 1995 AND 1994

                                        Three Months Ended
                                              May 31,
                                        1995       1994(1)

Net sales                           $10,709,003   $11,223,028
Cost of sales                         6,907,797     6,934,103
  Gross profit                        3,801,206     4,288,925

Operating expenses:
 Selling and administrative expenses  4,077,999     3,920,128
 Depreciation                           151,819       139,963
 Amortization of intangibles             85,107        92,828
 Costs in connection with claims
  and litigation                              0        72,954
  Total operating expenses            4,314,925     4,225,873
  Operating (loss) income from
   continuing operations
    before extraordinary item          (513,719)       63,052

Non-operating expense (income):
 Interest expense, net                  215,839       228,629
 Other income                           (28,675)      (42,637)
   Total non-operating expense         (187,164)      185,992

Loss from continuing operations before
 income taxes, discontinued operations
  and extraordinary item               (700,883)     (122,940)

Income tax (benefit)                          0        (6,939)
   Loss from continuing operations
    before extraordinary item          (700,883)     (116,001)

Discontinued operations:
Loss from operations of discontinued
 business segments                            0       (36,874)
Net loss before extraordinary item $   (700,883)  $  (152,875)
Extraordinary item - discount on
repayment of vendor debt                283,364             0
Net loss                           $   (417,519)  $  (152,875)

Net loss per common share:
 Continuing operations             $      (0.08)  $     (0.02)
 Discontinued operations                   0.00         (0.01)
 Extraordinary item                        0.03          0.00
   Net loss                        $      (0.05)  $     (0.03)

Weighted average number of
 shares outstanding                    8,300,267    6,086,810

(1) 1994 results have been restated to reflect the effect of discontinued operations.

CONTACT: Choice Drug Systems, Inc.

Morris Perlis, Vice Chairman

[phone]

or

Counsel Corporation

Ivan Shaffer, Sr. VP, Corporate Communications

[phone]

or

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.

Devin Sullivan

[phone]

Robert Goldstein

[phone]