Capstone completes the purchase of the institutional pharmacy division of Integrated Health Services; Company doubles revenues to $214 million.

BALTIMORE, Md.--(HealthWire)--JULY 31, 1996--CAPSTONE PHARMACY SERVICES, INC. (Nasdaq NM Symbol: DOSE (common stock), DOSEW (warrants)) ("Capstone"), a leading provider of extended care pharmacy services to nursing homes, correctional facilities and HMOs today announced the completion of the purchase of Symphony Pharmacy Services, the wholly owned long term care pharmacy division of Integrated Health Services Inc. (NYSE: IHS).

Under the terms of the agreement, Capstone paid $150 million for substantially all the assets and business of Symphony Pharmacy. The purchase price to IHS was comprised of $125 million in cash and $25 million in Capstone shares. To initially fund the cash portion of the purchase price Capstone used bridge financing from commercial lenders and $25 million in proceeds from the sale of stock to its largest shareholder Counsel Corporation (NASDAQ: CXSNF/TSE: CXS) .

"We are excited to have completed Capstone's largest acquisition to date in such a timely manner," stated Allan Silber Chairman of Capstone Pharmacy Services, Inc. "The acquisition of Symphony doubles our annualized revenues, doubles our patient base, increases the number of pharmacies we maintain from nine to thirty- five and extends our reach to six new states. Capstone will now be providing services in 13 states."

"The strategic acquisition of Symphony Pharmacy substantially strengthens Capstone's position in the healthcare marketplace. With the addition of Symphony, Capstone is better able to address and fulfill the needs of managed care organizations. We realize that HMOs look for institutional pharmacies that have the ability to provide high quality, low cost pharmacy services over large areas. We are confident that this purchase keeps us ahead of the curve. While Capstone's Correctional Division already operates nationally, this acquisition also brings us closer to becoming a nation-wide provider of prescription medicine to long term care institutions," added Mr. Silber.

"We are very pleased to be working together with the excellent management team and employees of Symphony", stated Dirk Allison, President and CEO of Capstone. "We see great opportunity in the near term as we move to integrate the two companies."

Capstone has annualized revenues of approximately $105 million. It provides services to long term care facilities with 44,000 patient beds. It is also the largest provider of pharmaceutical services to prisons in the U.S. correctional system, serving some 110 prisons with 115,000 inmates. Symphony Pharmacy has annualized revenues of approximately $109 million based on the first quarter of 1996. It serves approximately 40,000 residents in over 380 long term care facilities in eight states. With this acquisition, Capstone becomes the second largest non-captive institutional pharmacy services provider in the country.

CONTACT: Dirk Allison

President

Capstone Pharmacy Services

410/646-6856

or

Ivan Shaffer

Senior Vice President

Counsel Corporation

416/866-3187

or

Jonathan Fassberg

LIPPERT/HEILSHORN & ASSOC., INC.

212/838-3777