CareGuide Announces First Quarter 2007 Financial Results.

Company Receives Agreement from Lender to Extend Debt Facility to January 1, 2009

CORAL SPRINGS, Fla. -- CareGuide, Inc. (OTCBB: CGDE), a total population health management company, announced today its first quarter financial results.

For the quarter ended March 31, 2007, the Company reported a net loss of $2.7 million on revenues of $8.2 million compared with net income of $480 thousand on revenues of $15.7 million for the same quarter of the prior year. The revenue decline was primarily the result of the Company's exit from its capitated risk contracts, which was completed by January 31, 2007. The capitated risk revenue for the quarters ended March 31, 2007 and 2006, was $3.1 million and $8.7 million, respectively.

Included in revenues for the quarter ended March 31, 2006, was $2.5 million of post-acute related administrative services only fee revenue, or ASO revenue, from a former capitated risk contract that was in transition to its final termination date of May 1, 2006, $1.2 million of ASO bonus revenue related to a performance-based contract that was in connection with a former capitated risk contract, as well as $475 thousand of ASO revenue from a division of the Company that was closed as of December 31, 2006. After excluding these items that were included in ASO revenue for the three months ended March 31, 2006, but not for the three months ended March 31, 2007, ASO revenue increased by $2.3 million to $5.1 million for the quarter ended March 31, 2007, from $2.8 million for the quarter ended March 31, 2006. A significant portion of this increase was due to the $1.2 million of ASO revenue for the quarter ended March 31, 2007, from customers the Company acquired through its merger with Haelan Corporation, which was completed in December 2006. Finally, CareGuide realized an EBITDA loss of $1.6 million compared with positive EBITDA of $1.3 million for the quarter ended March 31, 2006.

"The first two quarters of 2007 will reflect costs associated with the significant restructuring initiatives that CareGuide has recently undertaken," stated Chris Paterson, chief executive officer. "In addition to severance costs related to reductions in our headcount in recent months, we are seeing the short-term effect of the termination of our risk-based contracts and the conversion of the business model to one in which we do not bear any risk for provider claims. This positive step has resulted in a significant decrease in our revenues, but it has also reduced our expenses, since we are no longer responsible for the payment of claims. Every one of our contracts today is ASO, and we believe that investors can now compare our revenue and business model to those of disease management companies rather than insurance companies."

Mr. Paterson added, "By the fourth quarter of 2007, we expect to be generating positive cash flow from operations, and we expect to have positive net income for the fourth quarter of 2007. Based on our current contracts, we believe that our gross margin could be over 40% by that point, reflecting the better income opportunity with ASO contracts, as well as the actions we have taken to streamline operations and eliminate costs that were related to the provision of risk-based services." The Company previously disclosed that anticipated cost savings from its organizational restructuring efforts are expected to be approximately $4.0 million on an annualized basis. The Company expects to realize restructuring charges of approximately $500 thousand during 2007 related to these restructuring initiatives, which are anticipated to be complete by the end of the third quarter of 2007.

CareGuide also announced today that Comerica Bank, the lender on the Company's current $8.0 million line of credit facility, has agreed to extend the maturity date on the credit facility from October 1, 2007 to January 1, 2009, subject to the negotiation and execution of definitive documentation and the receipt of necessary consents. The Company is also in discussions with Comerica regarding a potential expansion of the credit facility.

Julie Meek, DNS, who was named chief operating officer of CareGuide last month, is leading key restructuring efforts, as well as the integration of the Company's legacy products with those acquired through the merger with Haelan. According to Meek, "We have product solutions that we believe go so much further than traditional disease management approaches. We seek to identify and engage many more people in need, and consequently we are seeing our solutions bend the medical inflation trend of the entire health plan population rather than for just a subset of people with illnesses. We think we have something special here, and now we have to go out and tell people about it."

The Company recently announced the results of a case study of 10 customers who are using its One Care Street[TM] solution. The study reported year-over-year medical cost decreases averaging 5.1% for the 10 customers as compared with medical cost increases of 6% to 8% commonly experienced by employers.

Presented below is a reconciliation of (loss) income from continuing operations, which we believe to be the most comparable GAAP measure, to EBITDA (loss) income from continuing operations:

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The Company's management will host a conference call and webcast to discuss the earnings release at 11:00 a.m. Eastern time on Wednesday, May 16, 2007. To participate in the call, participants should dial 1-212-896-6121 approximately ten minutes prior to the start time of the call. A telephonic replay of the call may be accessed by dialing 1-800-633-8284 and entering access code 21339411. The replay will be available from 1:00 p.m. Eastern time on Wednesday, May 16, 2007, through 6:00 p.m. on Thursday, May 17, 2007. The conference call will also be available for 30 days through the Company's website at www.careguide.com and at www.earnings.com.

Headquartered in Coral Springs, Florida, CareGuide delivers health optimizing solutions that represent the next generation of disease management. CareGuide distinguishes itself by combining high human touch with technology to identify, engage, and help individuals in need - the Company's focus is to find more, miss fewer, and help better. Because of its unique One Care Street[TM] approach, CareGuide can identify an unprecedented two thirds of the next group of near term high utilizers of medical services, providing the opportunity to impact the medical trend of the entire population in a health plan or employer group. Visit www.careguide.com for more information.

This release contains information about management's view of the Company's future expectations, financial results, plans and prospects, the realization of expected cost savings as a result of restructuring initiatives, enhancement of the Company's gross margins, improvement of operating cash flow, prospects for growth of the Company's ASO business and improvement of its operating results in future periods, prospects for extending and expanding the Company's line of credit facility and the availability of capital, and the impact of the Company's product offerings on customer healthcare costs, that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the Company's financial condition, its ability to realize expense savings and to operate more effectively following its restructuring efforts, its ability to extend and expand its line of credit facility (including the ability to obtain all necessary consents and guarantees of large stockholders), its ability to integrate and sell the Company's legacy product offerings with the product offerings acquired through the Haelan merger, its ability to successfully transition to an ASO-based revenue model, its ability to compete with disease management companies and others in the healthcare industry, the competitive environment generally in the healthcare industry and the growth of the healthcare market, as well as other factors that are discussed in the Company's Transition Report on Form 10-KSB for the nine months ended December 31, 2006, filed with the SEC on April 17, 2007, the Company's Form 10-Q for the three months ended March 31, 2007, filed with the SEC on May 15, 2007, as well as other documents the Company files with the SEC.

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