Continental Home Healthcare Reports Second Quarter Results.

Business Editors

GLENDALE, Calif.--(BUSINESS WIRE)--Aug. 29, 2002

Co-awarded L.A. County preferred provider contract

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

Second Quarter Results: (three months ended June 30, 2002 compared
----------------------   with three months ended June 30, 2001)

                                             Q2-2002          Q2-2001
---------------------------------------------------------------------
Revenue                                   $4,993,453       $5,324,312
EBITDA(a)                                    $78,139         $808,550
Income (Loss) from continuing
 operations                                $(398,911)        $222,786
Loss from discontinued operations          $(545,887)        $(46,710)
Net Income (Loss)                          $(944,798)        $176,076
EPS - basic                                   $(0.07)           $0.02
    - diluted                                 $(0.07)           $0.02

Year-to-Date Results: (six months ended June 30, 2002 compared with
--------------------   six months ended June 30, 2001)

                                                2002             2001
---------------------------------------------------------------------
Revenue                                   $9,900,143       $9,791,032
EBITDA(a)                                   $606,683       $1,492,974
Income (Loss) from continuing
 operations                                $(335,005)        $453,365
Loss from discontinued operations          $(625,039)       $(103,688)
Net Income (Loss)                          $(960,044)        $349,677
EPS - basic                                   $(0.07)           $0.03
    - diluted                                 $(0.07)           $0.03
----

    (a) Earnings before interest, taxes, depreciation, amortization

Robert Thornton, President and C.E.O., said, "the results for the second quarter were disappointing. The net loss for the quarter is partially attributable to one-time costs associated with the closure of the Canadian operations and the consolidation of the two Las Vegas outlets. Also a factor in the net loss was the cash flow constraints during the first two months of the quarter which resulted in lower inventory levels and therefore lower than typical rental and sales revenues being realized for the period. However, as a result of the CA$4 million subordinated debenture financing, which was closed on May 23, 2002, regular product shipping resumed and the bulk of the revenues which would have otherwise been realized during the second quarter will be recorded in the third quarter."

Progress continues to be made as a result of the cost reduction plans previously developed. The consolidation of the Company's two Las Vegas locations was completed this quarter and the resulting cost efficiencies will be realized in the third quarter and beyond. The Company also completed the consolidation of its billing operations for the two California locations during the second quarter. In addition, cost reductions associated with the closure of the Canadian facility should become evident in the third quarter.

"We continue to see evidence that the cost reduction initiatives will provide operational economies of scale. As a result of these changes and our continued emphasis on a more streamlined and focused approach to our collection processes, a further reduction in normal administrative expenses and accounts receivable is anticipated," added Mr. Thornton.

Subsequent to the end of the second quarter, Continental commenced the three-year, co-awarded, preferred provider contract with the County of Los Angeles to provide home medical equipment to patients at five County administrated hospitals. "The initial reception from the five County administrated hospitals has been very positive and we anticipate that this contract will provide significant future revenue and earnings growth as it matures" said Mr. Thornton.

The outlook for the remainder of the year is for moderate organic growth and the continued refinement of the Company's systems and processes to more fully exploit the opportunities for greater economies of scale.

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

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