Continental Home Healthcare Reports First Quarter Results.

Business Editors/Health & Medical Writers

GLENDALE, Calif.--(BUSINESS WIRE)--May 31, 2002

Continental Home Healthcare Ltd. (TSX: CHT) today announced results for the first quarter of fiscal 2002. All funds are in U.S. dollars unless otherwise stated.

First Quarter Highlights: (three months ended March 31, 2002 compared with three months ended March 31, 2001)

-- Revenues up 6%
                              Q1 2002             Q1 2001
                              -------             -------
Revenue                       $5,150,337          $4,861,641
EBITDA                        $458,093            $636,084
Net Income (loss)             $(15,246)           $173,601
EPS - basic                   $0.00               $ 0.01
    - diluted                 $0.00               $ 0.01

Robert Thornton, President and C.E.O., said "The first quarter results show a modest increase in revenue year-over-year and a decrease in net income. In order to return the Company to our historical, and greater, levels of profitability, management has undertaken a number of steps including the introduction of a cost reduction plan, during the first quarter and the period subsequent."

The most significant aspect of the cost reduction plan will be the closing of the Canadian division. Continental had its beginnings in Canada, and, for a number of years, Canadian operations contributed significantly to top line growth. However, the current healthcare environment in Canada has resulted in the division becoming increasing unprofitable. As a result, maintenance of the Canadian division requires a disproportionate allocation of assets, which ultimately led to the decision to close it. The Canadian division will cease to operate on June 30 and an orderly wind down will begin shortly. To reflect the exclusive U.S operational focus, management decided, effective January 1, 2002, to commence reporting in U.S. dollars.

In order to create further efficiencies through consolidation, Continental will complete the integration of its two Las Vegas locations into a new facility at the end of June. This will result in operational economies of scale and the ability to offer a comprehensive product selection to the Las Vegas market at one convenient location. The Company has also initiated plans to consolidate its billing operations for the two California locations during the second quarter. Further cost efficiencies, including a reduction in headcount, will be realized as result of theses consolidations.

Mr. Thornton stated "These changes will greatly benefit Continental in the months and years ahead. Not only will the Company enjoy the benefits of reduced expense levels, but the new operational configuration allows for a more streamlined and focused approach to our collection processes. Improvements in this area will augment external capital sources, enabling the Company to continue its strategy of growth, both organically and through acquisition."

Subsequent to the end of the quarter Continental closed a $4 million subordinated debenture financing with the Bank of Montreal Capital Corporation (BMOCC). As a part of the transaction, the Company will issue 4 million warrants to BMOCC, each entitling the holder to purchase a common share of the Company at a price of $1.00 per share. The proceeds will be used for the Company's acquisition program and to augment working capital, which will include increasing the Company's current inventory levels to support the expectation of strong organic growth in future periods.

Going forward, the persistent focus on operating costs will better position Continental to take advantage of the incredible growth opportunities the home healthcare industry has to offer. The outlook for the remainder of the year is for successful organic growth by aggressively seeking new and valuable contracts, and for significant sales and earnings in the second half of the year.

Continental Home Healthcare Ltd. acquires, consolidates and manages healthcare equipment retailers that provide equipment such as hospital beds, custom power and manual wheelchairs, scooters, respiratory products and services, bathroom safety products, ambulatory aids, and aids for daily living sold to individuals and healthcare institutions. Branches are located in Glendale and Indian Wells, California; and Las Vegas, Nevada.

The Company's shares trade on the Toronto Stock Exchange under the symbol "CHT". Current Company updates can be found at the web site: www.continentalhomehealth.com

For Further Information Please Contact:

Ellen Leesti or
[phone]

Cathy Hume
[phone]
Investor Relations Counsel
Hume, Kieran Inc.

Robert Thornton, President & C.E.O.
[phone]
Continental Home Healthcare Ltd.

Toll free Continental investor information
1-800-286-4566

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