Community Care Services Announces Fiscal 1998 Results.

MT. VERNON, NY--(BUSINESS WIRE)--July 20, 1998--Community Care Services, Inc. (Nasdaq Small Cap Issues: CCSE) ("Community Care") today announced financial results for the fiscal year ended March 31, 1998 (see attached table).

Net revenues for the fiscal year ended March 31, 1998 increased 95.8% to $19,104,000 from $9,753,000 last year, due primarily to the acquisition of Metropolitan Respirator Service, Inc. ("MRS") in May 1997. This acquisition transformed Community Care into the largest provider of respiratory services and equipment, rehabilitation products, durable medical equipment and disposable medical supplies in the New York metropolitan area. Gross profit for the 1998 fiscal year increased to 59.8% from 55.9% last year. This increase in gross profit is primarily attributable to the change in the mix of net revenues and the MRS acquisition, which enhanced the Company's ability to obtain products at more competitive prices due to its increased market share and related ability to negotiate with its major vendors for better pricing and extended credit terms.

As previously announced, Community Care has implemented a program designed to enhance future profitability, productivity and efficiency through the consolidation of Community Care and MRS into Community Care's facility in Mount Vernon. This consolidation, which was completed fiscal 1998, is intended to reduce certain redundancies in operations and billing in order to obtain a better overall utilization of its operating personnel, reduce overhead and enhance administrative and operating efficiencies. As a result of the re-evaluation of certain assets, during fiscal 1998 Community Care incurred a one-time, non-recurring charge totaling approximately $4,225,000. This charge related to a provision for impairment of long lived assets resulting from the reduction in Medicare reimbursement for oxygen therapy services which has led the Company to reduce its carrying amount of goodwill. This write down, as well as $301,000 in legal and professional expenses and a $979,000 charge to earnings to write down certain accounts receivable to their estimated realizable value, contributed to the overall net loss for the 1998 fiscal year of $5,551,000, or $.84 per share (basic & diluted), versus net income of $330,000, or $.06 per share (basic & diluted), last year.

Exclusive of the aforementioned charges and legal expenses, Community Care would have reported a net loss of $26,000, or $0.00 per share (basic & fully diluted), for the 1998 fiscal year.

This press release contains forward-looking statements which involve numerous risks and uncertainties. Actual results could differ materially from those anticipated in such forward looking statements as a result of certain factors, including those set forth in the Company's filings with the Securities and Exchange Commission.

Community Care Services, Inc. is a leading provider of a wide variety of home healthcare products and services in the New York Metropolitan area. A JCAHO accredited provider with commendation, the Company services the home healthcare market by coordinating with various health care workers and payor case managers to determine the home health needs of patients.

          COMMUNITY CARE SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                 For The
                                                Year Ended
                                                 March 31,
                                            1998          1997

Net Revenues                             $19,104,000 $9,753,000

Costs and Expenses:
  Cost of net revenues:
    Product and supply costs               6,810,000  3,962,000
    Rental equipment depreciation            874,000    339,000
    Cost of net revenues                   7,684,000  4,301,000

Selling, general and administrative
 expenses                                 10,070,000  4,303,000

Provision for doubtful accounts            1,853,000    361,000

Amortization of intangible assets            312,000    129,000
Provision for impairment of long
 lived assets                              4,225,000       --

Total Costs and Expenses                  24,144,000  9,094,000

Operating (Loss) Income                   (5,040,000)   659,000

Interest Income                               23,000    103,000

Interest Expense                            (493,000)  (154,000)

(Loss)Income before provision for
  income taxes                            (5,510,000)   608,000

Provision for income taxes                    41,000    278,000

NET (LOSS) INCOME                        $(5,551,000)  $330,000

Per share data:
   Net (loss) income per common share:
  Basic and Diluted                          $ (0.84)   $  0.06

Weighted average number of
   common shares outstanding:
  Basic and Diluted                         6,595,913 5,405,822


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