Counsel Corporation's U.S. Institutional Pharmacy Operation Acquires Symphony Pharmacy Services Inc.

TORONTO--(BUSINESS WIRE)--June 24, 1996--Counsel Corporation(NASDAQ: CXSNF TSE: CXS )

Capstone Pharmacy Services Inc. Doubles Revenues to US$214 Million

Allan Silber, Chairman & CEO of Counsel Corporation and Chairman of Capstone Pharmacy Services Inc. (NASDAQ: DOSE(common stock) DOSEW (warrants)), a leading provider of extended care pharmacy services to nursing homes, correctional facilities and HMOs, announced today that Capstone had signed a definitive agreement to purchase the business of Symphony Pharmacy Services Inc., the wholly owned long term care pharmacy division of Integrated Health Services Inc. (NYSE:IHS).

The purchase price will be US$150 million, US$125 million in cash and US$25 million in Capstone shares. To initially fund the cash portion of the purchase price Capstone will use bridge financing from commercial lenders and US$25 million in proceeds from the sale of stock to Counsel Corporation, its largest shareholder. As soon as practicable after closing of the transaction, Capstone intends to offer common stock or debt securities for sale to repay the bridge financing indebtedness, and also to provide additional funds for working capital and future potential acquisitions. Any debt securities issued by Capstone which have not been registered under the Securities Act of 1933 may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. Any sale of securities to the public will only be made by means of a prospectus in compliance with applicable law. This press release does not constitute an offer to sell or the solicitation of an offer to sell any securities.

Capstone has annualized revenues of approximately US$105 million. It provides services to long term care facilities with 44,000 patient beds. It is also the largest provider of pharmaceutical services to prisons in the U.S. correctional system, serving some 110 prisons with 120,000 inmates. Symphony Pharmacy has annualized revenues of approximately US$109 million based on the first quarter of 1996. It serves approximately 40,000 residents in over 380 long term care facilities in eight states. Capstone will become the second largest non-captive institutional pharmacy services provider in the country. "The sale of our pharmacy division grew out of a continuing process we go through at IHS: reviewing our operations to determine whether it makes more sense to own or buy certain services supporting our post-acute health care networks," said Dr. Robert N. Elkins, IHS chairman and chief executive officer. "In the case of pharmacy services, critical mass is important to significantly lowering costs while maintaining quality care. With IHS facilities accounting for only 20 percent of Symphony Pharmacy=s client base, we view pharmacy as a service that can be outsourced to a provider such as Capstone, whose critical mass will allow for economies of scale."

"By selling the pharmacy under these terms at this time, it will allow IHS to strengthen its post-acute network in other areas," said Dr. Elkins. "Proceeds from the sale will be used to reduce debt and fund acquisitions in home health and other ancillary services. We are pleased to be realizing this value for our shareholders as well as freeing up capital to invest in our long term growth strategy - the development of post-acute networks."

Allan Silber said, "This is the largest acquisition in Capstone's history. It is additive to Capstone's customer base. It doubles its annualized revenues, doubles its patient base, increases the number of pharmacies it operates from nine to thirty-five and extends its reach to six new states. Capstone will now be providing services in 13 states.

"Also, strategically, this acquisition is pivotal for Capstone. Managed care organizations will soon begin to play a key role in the long term care arena. To serve HMOs, institutional pharmacies must have the ability to provide high quality, low cost pharmacy services over large areas. The purchase of Symphony will help keep Capstone ahead of the curve of this new trend. While Capstone's Correctional Division already operates nationally, this acquisition also brings it closer to becoming a nation-wide provider of prescription medicine to long term care institutions."

As a result of the pendency of this transaction, Capstone is today announcing that the expiration date of its redeemable warrants originally issued in its initial public offering has been further extended by the Board of Directors from June 30, 1996 to July 31, 1996 to allow information concerning the proposed transaction to be included in a Registration Statement on Form S-3 that Capstone has filed with the Securities and Exchange Commission in connection with such warrants. Other terms of the warrants remain unchanged.

Counsel Corporation has been active in the U.S. health care sector since 1983. It is presently engaged in three health care segments, Home Health Care, Institutional Pharmacy and Specialty Pharmacy services.

Its 27 percent-owned American HomePatient Inc. (NASDAQ:AHOM) is the third largest diversified home health care company in the U.S. Its primary lines of business include respiratory therapy, infusion therapy and the sale and lease of medical equipment and supplies which are provided through 259 locations in 28 states.

Counsel's 25 percent-owned Capstone Pharmacy Services, Inc. is a leading supplier of extended care pharmacy services to nursing homes, correctional facilities and HMOs.

Counsel's 65 percent-owned Stadtlanders Pharmacy Services, Inc., which it recently agreed to acquire, manages the pharmaceutical needs of patients with high-risk, high-cost chronic medical conditions. It focuses in specific disease states such as organ transplant, HIV/AIDS, oncology and infertility. Utilizing next day express delivery services, it distributes prescription drugs to patients across the United States. Stadtlanders' services include managing insurance reimbursement benefits for patients and providing educational materials on specific disease states.

CONTACT: Counsel Corporation

Morris Perlis, 416/866-3193

or

Counsel Corporation

Ivan Shaffer, 416/866-3187