Coram Healthcare Announces Strategic Repositioning.

Business Editors

DENVER--(BUSINESS WIRE)--Dec. 21, 1999

Coram Healthcare (NYSE: CRH) Chairman, President and Chief Executive Officer Daniel D. Crowley today announced a strategic repositioning of Coram's business.

"Coram Healthcare has always delivered high quality home infusion therapy," Mr. Crowley said. "Now we're going back to focus more exclusively on what we do best, the basics of home infusion. To get this jump started, we have named three National Product Champions who will lead our efforts in nutrition, hemophilia and transplant-related infusion therapies. The vice presidents leading these areas are, respectively, Michael Saracco, Eric Hill and Linda McBride.

"Successful companies get what they focus their energy on," Mr. Crowley said. "To try to re-create shareholder value, we're going to have a top down, total corporate focus to try to grow these key therapies and change the mix of Coram's infusion business.

"The second prong of our repositioning is to move quickly to reduce the internal operating costs of Coram," Mr. Crowley said. "After an initial review, it was immediately clear that costs were too high and we had to take action. To lower our costs, we have identified approximately $15 million in annual savings that we will be implementing over the next 12 months through elimination of positions, consolidation of corporate departments, termination of all non-essential consulting agreements and cancellation of various non-essential expenditures. We also expect to reduce operating expenses through implementation of a nationwide home-health lab agreement and through implementation of a primary case management model to improve efficiency and maintain quality in our nursing visits program.

"This market will be dominated by low cost, efficient providers of high quality services. We believe we can compete more effectively and have a positive margin by reducing our costs," Mr. Crowley said. "To move this process forward, we believe that the repositioning is critical."

It is also anticipated that, subject to review by the Company's outside auditors, charges of approximately $25 million to $30 million will be taken in the fourth quarter to reflect the many changes being made at Coram. This will include amounts for the liquidation of R-Net, severance costs and various balance sheet adjustments. Mr. Crowley also announced a strong addition to the turnaround management team. Effective immediately, Allen J. Marabito has joined Coram as Executive Vice President with responsibility for legal, corporate compliance, human resources, contracting, and purchasing.

"These key areas need a senior level focus and the leadership of a veteran manager," Crowley said. "I've worked with Allen for more than 15 years and I believe he will get the job done. He is extremely effective and has the integrity, resourcefulness, strategic focus, and the ability to analyze and resolve complex issues."

In his last corporate assignment, Mr. Marabito was Senior Vice President, Secretary and General Counsel of Foundation Health Corporation from 1991 to 1997. During his tenure, the company was extremely dynamic, completing a turnaround and growing rapidly, ultimately attaining Fortune 200 status.

"We believe we're on the path to an effective turnaround," said Mr. Crowley. "We are moving quickly to identify challenges, focus on key therapies, cut costs and install strong mangement. There remain, however, significant challenges facing the company and uncertainties that could materially affect our success."

Denver-based Coram Healthcare, through its subsidiaries, is a national leader in providing quality home infusion therapy. Company subsidiaries also provide support for clinical trials, medical product development and medical informatics, and specialty pharmacy benefit management and mail order services.

Note: Except for historical information, all other statements in this press release are "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company's actual results may vary materially from these forward-looking statements due to important risk factors including the Company's history of operating losses and uncertainties associated with future operating results; significant outstanding indebtedness; equity conversion rights held by existing debt holders; limited liquidity; reimbursement-related risks; shifts in the mix of parties that pay for the Company's services; dependence upon relationships with third parties; uncertain future liabilities under capitation arrangements; timing of or ability to complete acquisitions; government regulation of the home health care industry and the Company's ability in the future to comply; certain legal proceedings, including tax disputes; dependence on key personnel; potential volatility of the stock price; New York Stock Exchange listing status; the ability to execute a repositioning of the Company; and unanticipated impacts from the Year 2000 issue. Certain risk factors are described in greater detail in the Company's form 10-K Annual Report, as amended, Form 10-Q Quarterly Reports, and Form 8-K Current Reports on file with the Securities and Exchange Commission.