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                                    FORM 10-Q
                             -----------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

         (Mark One)
         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the period ended June 30, 2001

                                       OR

         [  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____________ to ______________


                         Commission File Number: 0-22162

                                CARECENTRIC, INC.
             (Exact name of registrant as specified in its charter)


                  Delaware                                 22-3209241
                  (State or other jurisdiction of          (I.R.S. Employer
                  incorporation or organization)           Identification No.)

                  2625 Cumberland Parkway, Suite 310       30339
                  Atlanta, Georgia                         (zip code)
                  (Address of principal
                  executive offices)

                  (Registrant's telephone number,
                   including area code)                    (678) 264-4400


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                      Yes  X                No ___

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

                                                    Outstanding at
       Class                                        7/31/2001
       -----                                        ---------
       Common Stock, $.001 par value                4,381,350 shares


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<PAGE>


                                CARECENTRIC, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX


PART I.        FINANCIAL INFORMATION
               ---------------------

Item 1.        Consolidated Financial Statements

               Consolidated  Balance  Sheets - June  30,  2001  (unaudited)  and
               December 31, 2000 (audited).

               Consolidated  Statements  of Operations - Three Months Ended June
               30, 2001 (unaudited) and 2000 (unaudited).

               Consolidated  Statements  of  Shareholders'  Equity - Six  Months
               Ended June 30, 2001 (unaudited).

               Consolidated  Statements  of Cash  Flows - Three  Months  and Six
               Months Ended June 30, 2001 (unaudited) and 2000 (unaudited).

               Notes  to  Consolidated  Financial  Statements  - June  30,  2001
               (unaudited).

Item 2.        Management's  Discussion and Analysis of Financial  Condition and
               Results of Operations

Item 3.        Quantitative and Qualitative Disclosures About Market Risk


PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings

Item 2.        Changes in Securities

Item 3.        Defaults Upon Senior Securities

Item 4.        Submission of Matters to a Vote of Security Holders

Item 5.        Other Information

Item 6.        Exhibits and Reports on Form 8-K


                                       2
<PAGE>





PART I - FINANCIAL INFORMATION


Item 1.  Consolidated Financial Statements

The accompanying  unaudited consolidated financial statements have been prepared
by CareCentric,  Inc. ("CareCentric" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission.  Accordingly, they do not
include all of the  information  and  footnotes  required by generally  accepted
accounting principles for complete financial  statements.  In the opinion of the
Company, all adjustments (consisting only of normal recurring entries) necessary
for the fair  presentation  of the Company's  results of  operations,  financial
position and cash flows for the periods presented have been included.

                                       3
<PAGE>


<TABLE>
<CAPTION>
<S>                                                                          <C>                   <C>

                                                    CARECENTRIC, INC.
                                               CONSOLIDATED BALANCE SHEETS

                                                                                  June 30,            December 31,
                                                                              -----------------    -------------------
                                                                                    2001                  2000
                                                                              -----------------    -------------------
                                                                                (unaudited)            (audited)
                              ASSETS

 Current assets:
        Cash and cash equivalents                                                   $   45,000          $     362,000
        Accounts receivable, net of allowance for
          doubtful accounts of $525,000 and $237,000
          respectively                                                               8,075,000              8,484,000
        Prepaid expenses, inventory and other
          current assets                                                               943,000                701,000
                                                                              -----------------    -------------------
          Total current assets                                                       9,063,000              9,547,000

Purchased software, furniture and equipment, net                                     1,819,000              1,957,000
Intangible assets, net                                                              21,571,000             23,405,000
Other assets                                                                           350,000                211,000
                                                                              -----------------    -------------------
          Total assets                                                           $  32,803,000         $   35,120,000
                                                                              =================    ===================

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
        Line of credit                                                           $   5,996,000          $   5,996,000
        Note payable                                                                   647,000                600,000
        Accounts payable                                                             2,713,000              1,156,000
        Accrued compensation expense                                                   817,000                616,000
        Accrued liabilities                                                          7,435,000              7,447,000
        Customer deposits                                                            2,206,000              2,496,000
        Unearned revenues                                                            3,609,000              5,001,000
                                                                              -----------------    -------------------
          Total current liabilities                                                 23,423,000             23,312,000

Accrued liabilities, less current portion                                               36,000                128,000

Notes payable long-term                                                              3,575,000                600,000
                                                                              -----------------    -------------------
Total liabilities                                                                   27,034,000             24,040,000

Shareholders' equity:
       Preferred stock; 10,000,000 shares authorized
           Series B Preferred, $.001 par value; 5,600,000 issued
             and outstanding                                                             6,000                  6,000
           Series C Preferred, $.001 par value;  850,000 issued
             and outstanding                                                             1,000                  1,000
         Series D Preferred, $.001 par value; 398,000 issued and
             outstanding                                                                     -                      -
         Common stock, $.001 par value; 20,000,000 shares authorized,
             4,381,350 shares issued and outstanding at June 30, 2001, and
             3,849,816 shares issued and outstanding at December 31, 2000;               4,000                  4,000
        Additional paid-in capital                                                  21,070,000             21,070,000
        Stock warrants                                                               1,000,000              1,000,000
        Accumulated deficit                                                       (16,312,000)           (11,001,000)
                                                                              -----------------    -------------------
          Total shareholders' equity                                                 5,769,000             11,080,000
                                                                              -----------------    -------------------

          Total liabilities and shareholders' equity                             $  32,803,000         $   35,120,000
                                                                              =================    ===================

</TABLE>


See notes to consolidated financial statements.

The above  financial  statements  reflect the fact that for accounting  purposes
MCS, Inc. is deemed to have  acquired  CareCentric,  Inc. on March 7, 2000,  the
date of the merger, as more fully explained in Notes 1 and 2 to the Consolidated
Financial Statements.


                                       4
<PAGE>
                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                       <C>               <C>                   <C>

                                               Three Months Ended June 30,                Six Months Ended June 30,
                                           ----------------------------------      ----------------------------------
                                                 2001               2000                  2001                2000
                                           -------------     ----------------      ----------------    --------------
Net revenues:                              $ 6,549,000       $   6,257,000        $   13,393,000      $   10,258,000

Costs and expenses:
     Cost of revenues                        3,135,000           3,954,000             6,403,000           6,501,000
     Selling, general and administrative     2,711,000           2,807,000             5,536,000           4,259,000
     Research and development                1,609,000           1,780,000             3,376,000           2,491,000
     Depreciation and amortization           1,084,000           1,183,000             2,169,000           1,610,000
     Restructuring charge                      675,000                  -                675,000                   -
                                          -------------      ----------------      ----------------   ---------------
          Total costs and expenses           9,214,000           9,724,000            18,159,000          14,861,000
                                          -------------      ----------------      ----------------   ---------------
    Loss from operations                    (2,665,000)         (3,467,000)           (4,766,000)         (4,603,000)

Other (expense) income:
     Interest expense                         (383,000)           (189,000)             (739,000)           (266,000)
     Interest and other income                  68,000              28,000               194,000              34,000
                                          --------------     ----------------      ----------------   ----------------
Net loss before taxes                        (2,980,000)         (3,628,000)          (5,311,000)         (4,835,000)
                                          --------------     ---------------      ----------------   -----------------

     Income tax benefit                              -                   -                     -             157,000
                                          --------------     ---------------      ----------------   -----------------
Net loss                                  $  (2,980,000)     $   (3,628,000)       $  (5,311,000)       $ (4,678,000)
                                          ==============     ===============      ================   =================

Net loss per share - basic and diluted    $       (0.67)     $        (0.94)       $       (1.27)       $      (1.57)
                                          ===============    ================      ================   ================

Weighted average common shares -
   basic and diluted                          4,418,000           3,850,000            4,178,000           2,983,000
                                          ===============    ================      ================   ================

</TABLE>

See notes to consolidated financial statements.

The above  financial  statements  reflect the fact that for accounting  purposes
MCS, Inc. is deemed to have acquired Simione Central Holdings,  Inc. on March 7,
2000,  the date of the merger,  as more fully  explained in Notes 1 and 2 to the
Consolidated Financial Statements. The weighted average shares computations have
been recast to give effect to the shares of  CareCentric  common stock issued to
MCS  stockholders  in connection  with the MCS merger for both periods shown, as
more fully described in Note 1 to the Consolidated Financial Statements.


                                       5
<PAGE>

<TABLE>
<CAPTION>

<S>                  <C>      <C>           <C>        <C>            <C>          <C>           <C>

                                                     CARECENTRIC, INC.
                                      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                          For the six months ended June 30, 2001

                                                                                                                  Total
                                Common                  Preferred      Paid-in                   Accumulated   Shareholders'
                      Shares     Stock       Shares       Stock        Capital      Warrants       Deficit        Equity
                    ----------- ----------- ----------- -----------  ------------- ------------  ------------- ---------------

Balance at
December 31, 2000    3,850,000    $  4,000   6,848,000   $    7,000   $ 21,070,000   $ 1,000,000  $(11,001,000)   $ 11,080,000

Issuance of
$.001 par value
common stock (1)       593,000           -           -            -              -             -             -               -

Cancellation of
$.001 par value
common stock (1)      (62,000)           -           -            -              -             -              -              -

Net loss                     -           -           -           -              -            -      (5,311,000)    (5,311,000)
                     ------------ ----------- ----------- -----------  ------------- ------------  ------------- -------------
Balance at
June 30, 2001        4,381,000    $ 4,000    6,848,000   $   7,000    $ 21,070,000  $ 1,000,000   $(16,312,000)  $ 5,769,000
                     ============ ========== ===========  ===========  ============= ============  ============= =============
</TABLE>



(1)  See Note 8 to the consolidated financial statements.





See notes to consolidated financial statements.

The above  financial  statements  reflect the fact that for accounting  purposes
MCS, Inc. is deemed to have  acquired  CareCentric,  Inc. on March 7, 2000,  the
date of the merger, as more fully explained in Notes 1 and 2 to the Consolidated
Financial Statements.


                                       6
<PAGE>





                                                 CARECENTRIC, INC.

                                        CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
    <S>                                                <C>           <C>              <C>           <C>

                                                    Three Months ended June 30,       Six Months ended June 30,
                                                    ------------------------------    ---------------------------
                                                        2001          2000                2001           2000
                                                    ---------------- -------------    ------------   ------------
    Cash flows from operating activities:
    Net loss                                            $(2,980,000)  $(3,628,000)    $(5,311,000)   $(4,678,000)
    Adjustments to reconcile net loss
    to net cash used in operating activities:
       Provision for doubtful accounts                       84,000       281,000         153,000        352,000
       Amortization and depreciation                      1,084,000     1,184,000       2,178,000      1,610,000

    Changes in assets and liabilities, net of
    acquisitions:
       Accounts receivable                                1,423,000       494,000         376,000       (870,000)
       Prepaid expenses and other current assets            166,000       197,000        (242,000)        15,000
       Other assets                                        (146,000)     (137,000)       (139,000)      (136,000)
       Accounts payable                                    (125,000)   (1,044,000)      1,557,000       (873,000)
       Accrued compensation expense                        (196,000)     (308,000)        201,000        (82,000)
       Accrued liabilities                                  467,000       147,000         (12,000)      (683,000)
       Customer deposits                                   (194,000)      714,000        (290,000)       819,000
       Unearned revenues                                   (828,000)      598,000      (1,392,000)     1,612,000
                                                       ------------  ------------    ------------   ------------
            Net cash used in operating activities        (1,245,000)   (1,502,000)     (2,921,000)    (2,914,000)
                                                       ------------  ------------    ------------   ------------

    Cash flows from investing activities:
    Purchase of software, furniture and equipment          (256,000)     (110,000)       (375,000)      (271,000)
                                                        ------------  ------------    ------------   ------------
            Net cash used in investing activities          (256,000)     (110,000)       (375,000)      (271,000)
                                                        ------------  ------------    ------------   ------------

    Cash flows from financing activities:
    Cash received in connection with MCS merger                   -             -               -      3,547,000
    Proceeds from issuance of preferred stock                     -     1,000,000               -      1,000,000
    Proceeds from issuance of notes payable               1,292,000       583,000       2,979,000        590,000
                                                        ------------  ------------    ------------   ------------
            Net cash provided by financing activities     1,292,000     1,583,000       2,979,000      5,137,000
                                                        ------------  ------------    ------------   ------------
            Net increase/(decrease) in cash
                and cash equivalents                       (209,000)      (29,000)       (337,000)     1,952,000

    Cash and cash equivalents, beginning of period          254,000     2,028,000         362,000         47,000
                                                        ------------  ------------    ------------   ------------

    Cash and cash equivalents, end of period             $   45,000    $1,999,000       $  45,000     $1,999,000
                                                        ============  ============    ============   ============
</TABLE>



See notes to consolidated financial statements.

The above  financial  statements  reflect the fact that for accounting  purposes
MCS, Inc. is deemed to have  acquired  CareCentric,  Inc. on March 7, 2000,  the
date of the merger, as more fully explained in Notes 1 and 2 to the Consolidated
Financial Statements.



                                       7
<PAGE>




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


MCS as Deemed Acquirer of CareCentric, Inc.

On March 7, 2000, CareCentric, Inc. (formerly known as Simione Central Holdings,
Inc.)  ("CareCentric"  or the  "Company")  and MCS,  Inc.  ("MCS")  merged  in a
transaction  accounted  for as a reverse  acquisition  for  financial  reporting
purposes.  In connection  with the  acquisition,  CareCentric  issued  1,489,853
shares of its common stock in exchange for all the  outstanding  common stock of
MCS,  and  thereby,   the  former   shareholders  of  MCS  acquired  control  of
CareCentric. As a result, for financial reporting purposes MCS is considered the
acquiring company;  hence, the historical financial statements of MCS became the
historical  financial  statements  of  CareCentric  and  include  the results of
operations of CareCentric only from the effective acquisition date.

The weighted  average  common  shares for the six months ended June 30, 2000 are
recast in the accompanying  Consolidated Statements of Operations to give effect
to the 1,489,853 shares of CareCentric  common stock that were issued to the MCS
shareholders in connection with the  CareCentric/MCS  merger on March 7, 2000 as
though such shares had been  outstanding  for the entire period.  For the period
from  January 1, 2000  through  March 6, 2000,  therefore,  1,489,853  shares of
issued and  outstanding  CareCentric  common stock are deemed to be owned by the
MCS  shareholders.  For the period from March 7, 2000 through December 31, 2000,
there were 3,849,816 total shares of issued and outstanding Company common stock
(after giving effect to the CareCentric/MCS merger). The weighted average shares
for the year  ended  December  31,  2000 are also  recast to give  effect to the
1,489,853  shares  of  CareCentric  common  stock  that  were  issued to the MCS
shareholders  pursuant to the  CareCentric/MCS  merger as though such shares had
been outstanding for the entire period.

Basis of Presentation

The consolidated  financial  statements have been prepared by the Company (which
as used herein refers to CareCentric, after giving effect to the merger with MCS
and, as the context requires, MCS, prior to the CareCentric/MCS merger), include
the  results  of  operations  of  the  parent   company  and  its  wholly  owned
subsidiaries and are unaudited (except for the December 31, 2000 balance sheet).
In the opinion of management, all adjustments, which consist of normal recurring
adjustments,  considered  necessary for a fair  presentation have been included.
All  inter-company  balances  and  transactions  have been  eliminated.  Interim
results are not  necessarily  indicative of the results that may be expected for
the year ending December 31, 2001.

Certain  financial  information and footnote  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  These financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
as of December 31, 2000  appearing in the Company's  Report on Form 10-K for the
year ended December 31, 2000.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification  of recorded  asset  amounts and amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable  to  continue  to  operate  in the  normal  course of  business.  See the
Liquidity section of Management Discussion and Analysis on page 14.

Certain  prior  period  amounts  have been  reclassified  to conform to the 2001
financial statement presentation.

Description of Business

The Company is a leading provider of information  technology systems and related
services and  consulting  services  designed to help home health care  providers
more effectively operate their businesses in today's environment.  The Company's
focus is to help home health care  providers  streamline  their  operations  and
better serve their patients.  The Company offers several comprehensive  software
solutions. Each of these solutions provides a basic set of software applications
and  specialized  modules  that can be added based upon  customer  needs.  These
software  solutions  are  designed to enable  customers  to generate and utilize


                                       8
<PAGE>

comprehensive  financial,  operational and clinical information.  In addition to
its software solutions and related software support services, the Company's home
health care consulting services assist providers in addressing the challenges of
reducing costs, maintaining quality,  streamlining operations and re-engineering
organizational  structures,  as well as assisting with regulatory compliance and
merger and acquisition due diligence.

Cash Equivalents

All highly  liquid  investments  purchased  with an  original  maturity of three
months or less are considered to be cash equivalents.

Intangible Assets and Long-lived Assets

Statement of Financial  Accounting  Standards ("SFAS") No. 121,  "Accounting for
the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of"
requires  impairment  losses  to  be  recorded  on  long-lived  assets  used  in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  asset's
carrying amount.

The  intangible  assets  arising from the  CareCentric/MCS  merger are amortized
using the  straight-line  method over the estimated  useful lives of the related
assets as more fully disclosed in Note 4. The Company reviews its long-lived and
intangible  assets for impairment  whenever  events or changes in  circumstances
indicate that the carrying  amount may not be  recoverable.  The  measurement of
possible  impairment is based upon determining  whether  projected  undiscounted
future cash flow from the use of the asset is less than the  carrying  amount of
the asset.

Income Taxes

The Company  accounts  for income taxes using the  asset/liability  method which
requires  recognition  of deferred tax  liabilities  and assets for the expected
future tax consequences of temporary differences between the financial statement
carrying amount and the tax bases of assets and liabilities.

Net (Loss) Earnings Per Share

The Company  has  adopted  SFAS No.  128,  "Earnings  Per  Share."  SFAS No. 128
replaced the  calculation  of primary and fully diluted  earnings per share with
basic and diluted earnings per share.  Unlike primary earnings per share,  basic
earnings  per share  exclude  any  dilutive  effects of  options,  warrants  and
convertible  securities.  Diluted earnings per share for the quarters ended June
30, 2000 and 2001 exclude the effects of options, warrants and conversion rights
as they would be antidilutive,  and as a result,  basic and diluted earnings are
the same for the quarters  ended June 30, 2000 and 2001.  Per share  amounts for
all periods have been presented in conformity with SFAS No. 128 requirements.

Stock Based Compensation

Stock options are accounted for under  Accounting  Principles  Board Opinion No.
25,  "Accounting for Stock Issued to Employees," and the provisions of Statement
of  Financial   Accounting  Standards  No.  123,  "Accounting  for  Stock  Based
Compensation" (SFAS No. 123 and related interpretations).

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Cash and cash  equivalents:  The carrying  amounts reported in the balance sheet
for cash and cash equivalents approximate their fair value.

Notes payable:  The carrying amounts of the Company's notes payable approximates
their fair value.




                                       9
<PAGE>

Recently Adopted Accounting Standards

In  1998,  the  Financial   Accounting  Standards  Board  issued  SFAS  No.  133
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
became  effective for the  Company's  fiscal  quarter  ended June 30, 2001.  The
Company's  management  does not believe  that the  adoption of SFAS No. 133 will
have a  material  impact on the  Company's  financial  position  or  results  of
operations.

On December 3, 1999, the SEC released Staff  Accounting  Bulletin 101, (SAB 101)
"Revenue  Recognition in Financial  Statements".  This bulletin established more
clearly defined revenue recognition criteria than previously existing accounting
pronouncements.  On June 26, 2000, the SEC released SAB 101B,  which delayed the
required  implementation  of SAB 101 until no later than the  fourth  quarter of
fiscal years ending December 31, 2000. The Company  believes that the effects of
this bulletin were not material to its financial position, results of operations
or cash flow.

In July 2001,  the  Financial  Accounting  Standards  Board  issued SFAS No. 141
"Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets",
which,  for all intents and  purposes  for the  Company,  will become  effective
December 31, 2001. Goodwill generated in purchase  transactions will be recorded
as a non-wasting  asset  subject to an  impairment  test at least once per year.
Amortization  of  goodwill  currently  on the  Company's  books will cease as of
January 1, 2002. The Company is currently evaluating the effect that adoption of
FAS 142 will have on its  financial  position and results of operations in 2002.
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations - Impact of New Accounting Standards" below.

NOTE 2 - CARECENTRIC/MCS MERGER

On March 7, 2000, MCS completed the merger with CareCentric.  CareCentric issued
1,489,853  shares of common stock to MCS stockholders in exchange for all of the
outstanding  shares of MCS common stock. This number of shares has been adjusted
to reflect a one-for-five  reverse stock split that was completed by CareCentric
immediately  prior to the merger.  In connection with the closing of the merger,
Mestek  invested $6.0 million in  CareCentric in exchange for 5.6 million shares
of Series B preferred stock and warrants to purchase  400,000 shares (on a split
adjusted  basis) of  CareCentric  common  stock  and  converted  a  pre-existing
$850,000  note  receivable  into  850,000  shares of Series C  preferred  stock.
Additional  information on the merger is included in the Company's  Registration
Statement on Form S-4 (Registration No. 333-96529).

As required by generally accepted  accounting  principles (GAAP), the effects of
the merger on the Company's  assets and liabilities  have been excluded from the
operating section of the cash flow statement for reporting purposes.

Pro-forma unaudited results assuming the merger took place as of January 1, 2000
are as follows:

<TABLE>
<CAPTION>
              <S>                                               <C>                   <C>

                                                                    For Six Months Ended June 30,
                                                              ------------------------------------------
                                                                     2001                   2000
                                                              -------------------- ---------------------
              Net revenues                                       $  13,393,000         $  13,626,000
              Net (loss)                                         $  (5,311,000)        $  (6,439,000)
              Net (loss) per share - basic and diluted           $       (1.27)        $       (1.64)
</TABLE>


NOTE 3 - RESTRUCTURING AND OTHER CHARGES

In April 2001,  CareCentric  approved a plan to close one remote  support office
and to downsize the workforce at its remaining facilities.  As a result of these
actions the  Company  recorded a total  charge of $675,000 in the quarter  ended
June 30, 2001.

The  restructuring  charge  includes  $598,000 of employee  severance  costs and
$77,000 in other exit costs  (principally lease termination costs and functional
relocation  expenses).  The plan entails the  elimination  of 33 positions,  the
layoff of six additional employees and the closing of one non-essential training
and support facility. The Company expects to pay $585,000 in cash related to the
restructuring  plan.  During the quarter  ended June 30,  2001 the Company  paid
$294,000 in employee costs and $18,000 in other exit costs. As of July 31, 2001,
39 employees had been separated under the plan.

                                       10
<PAGE>

NOTE 4 - PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

Purchased software, furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
<S>                                            <C>                   <C>                  <C>
                                                                                           Depreciation
                                                   June 30,            December 31,         Estimated
                                                     2001                  2000            Useful lives
                                               -----------------     ------------------   ---------------
Software                                          $  1,677,000           $  1,635,000        3 years
Furniture and fixtures                               1,577,000              1,551,000       10 years
Computer equipment                                   4,552,000              4,415,000        5 years
                                               -----------------     ------------------
                                                     7,806,000              7,601,000
Accumulated depreciation                           (5,987,000)             (5,644,000)
                                               -----------------     ------------------
Net purchased software, furniture and
  equipment                                       $  1,819,000           $  1,957,000
                                               =================     ==================
</TABLE>



NOTE 5 - INTANGIBLE ASSETS

Intangible assets at June 30, 2001 consisted of the following:
<TABLE>
<CAPTION>
      <S>                        <C>                 <C>                   <C>                <C>
                                                         Accumulated          Net Book         Amortization
                                       Cost             Amortization            Value             Period
                                 -----------------   --------------------  ----------------   ----------------

      Developed technology            $10,650,000         $  (1,775,000)      $  8,875,000           8 years
      Assembled workforce               2,300,000              (613,000)         1,687,000           5 years
      Customer base                     1,700,000              (252,000)         1,448,000           9 years
      Goodwill                         11,851,000            (2,290,000)         9,561,000           7 years
                                   ---------------    -------------------  ----------------
                                      $26,501,000         $  (4,930,000)      $ 21,571,000
                                   ===============    ===================  ================
</TABLE>
See also Note 1, "Summary of Significant Accounting Policies - Recently Adopted
Accounting Standards".

NOTE 6 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
<S>                                                 <C>                <C>

                                                    June 30, 2001      December 31, 2000
                                                    -------------      -----------------
Short Term:
Line of Credit                                         $ 5,996,000       $  5,996,000
Note Payable - Mestek                                  $   647,000       $    600,000

Long Term:
Convertible Note Payable - Barrett C. O'Donnell        $   600,000       $    600,000
Convertible Note Payable - J.E Reed                    $ 2,975,000       $          -
                                                       -----------     --------------
Total Long-term Notes Payable                          $ 3,575,000       $    600,000
                                                       ===========     ==============
</TABLE>


Line of Credit:

On July 12, 2001, the Company renewed a $6.0 million Loan and Security Agreement
facility (the Wainwright  Facility) with  Wainwright  Bank and Trust Company,  a
commercial  bank,  under which the Company granted a first priority  position on
substantially  all of its  assets  as  security.  The  Wainwright  Facility  was
initially used to pay off the line of credit with Silicon  Valley Bank,  certain
short-term loans from Mestek,  Inc., and a loan from David O. Ellis, and then to
fund the Company's  operations.  Borrowings under the Wainwright Facility accrue
interest,  at the bank's  prime  rate per annum,  require  monthly  payments  of
interest  and  mature on July 12,  2002.  The  Company's  obligations  under the


                                       11
<PAGE>

Wainwright  Facility  are  guaranteed  by Mestek in  consideration  of which the
Company  has  issued a  warrant  to  Mestek to  purchase  104,712  shares of the
Company's common stock.

Convertible Note Payable - Barrett C. O'Donnell:

On November  11, 1999,  Simione  Central  Holdings,  Inc.  ("Simione")  borrowed
$500,000  from  Barrett  C.  O'Donnell  on an  unsecured  basis and  executed  a
promissory  note in  connection  therewith.  Mr.  O'Donnell is a director of the
Company.  When the  CareCentric/MCS  merger was completed on March 7, 2000,  the
Company succeeded to this obligation. The note payable to Mr. O'Donnell included
interest at 9% per annum,  was scheduled to mature on May 11, 2002, and required
quarterly  payments of accrued  interest.  On August 8, 2000,  the $500,000 note
payable to Mr.  O'Donnell,  together  with  $100,000  of  deferred  salary,  was
cancelled  in  exchange  for a  $600,000  subordinated  note,  convertible  into
CareCentric  common stock at a strike price of $2.51 per share, with interest at
9% per annum and a five-year maturity.

Note Payable - Mestek:

The Company is obligated  under an unsecured  promissory  note in the  principal
amount of $600,000 payable to Mestek Inc. which bears interest at prime plus one
percent with interest  payable  semiannually and which matures on July 30, 2002.
This note covers funds  advanced by Mestek to  CareCentric  to cover payroll and
accounts  payable  obligations  incurred by the Company during the period of its
transition of senior  lenders from Silicon  Valley Bank to  Wainwright  Bank and
Trust Company.

J.E. Reed Facility:

On June 22, 2000, the Company  entered into a new financing  facility (the J. E.
Reed  Facility)  provided  by John E.  Reed,  Chairman  of  CareCentric  and the
Chairman and Chief  Executive  Officer of Mestek,  Inc. The J. E. Reed  Facility
consists of a $6.0 million  subordinated  revolving line of credit,  convertible
into  common  stock of the  Company at a strike  price of $2.51 per share,  with
interest at 9% per annum and payable quarterly, and a five-year maturity. The J.
E.  Reed  Facility  can be drawn  down by the  Company  as  needed  in  $500,000
increments  and is  secured by a second  position  on  substantially  all of the
Company's assets.  Borrowings totaling $2.975 million were outstanding under the
J. E. Reed Facility as of July 31, 2001. The unused capacity under the J.E. Reed
line as of July 31, 2001 was $3.025 million.

The Company is obligated under a number of capital lease obligations originally
entered into by CareCentric related to computer equipment formerly used in
CareCentric's business.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company is engaged in various legal and  regulatory  proceedings  arising in
the normal course of business which management believes will not have a material
adverse effect on its financial position or results of operations.

NOTE 8 - SHAREHOLDERS' EQUITY

Subsequent to December 31, 2000, changes in the Company's  Shareholders'  Equity
(all on a split-adjusted basis) are as follows:

Common Shares - 20,000,000 shares authorized,  $.001 par value, 4,381,330 shares
issued and outstanding.  Of such shares,  1,489,853 were issued on March 7, 2000
to the former MCS common  shareholders,  606,904 were issued on March 7, 2000 to
the  holders of  CareCentric  Series A  Preferred  Stock (the  former  preferred
shareholders and noteholders of CareCentric Solutions,  Inc.), which shares were
converted  into  CareCentric  common shares in connection  with the merger,  and
531,534 were issued on March 19, 2001 to the former  preferred  shareholders and
noteholders of CareCentric Solutions, Inc. as described below.

Pursuant  to the terms of the July 12, 1999 Merger  Agreement  by which  Simione
acquired the stock of CareCentric  Solutions,  Inc., the Company was required to
issue up to an additional 606,904 shares of common stock to the former preferred
shareholders  and  noteholders of CareCentric  Solutions if the average  closing
price of the Company's stock for the period October 1, 2000 through December 31,
2000 did not equal $15.00 per share.  Since the Company's  average closing stock


                                       12
<PAGE>

price for the fourth  quarter of 2000 was less than  $15.00 per share,  on March
20, 2001,  the Company  issued  593,688 shares of its common stock to the former
preferred  shareholders  and noteholders of CareCentric  Solutions.  The Company
asserted  that it was not  required  to issue  13,216  additional  shares of its
common  stock as well as 150,740  shares of common stock that were being held by
it in escrow under the terms of the CareCentric Solutions Merger Agreement based
upon  various  indemnification  and expense  overages  claims it believed it had
against the former CareCentric Solutions preferred shareholders and noteholders.
On May 16, 2001,  the Company  finalized a  settlement  of these claims with the
representative  of the former  CareCentric  Solutions  parties pursuant to which
88,586 shares of common stock were released from escrow and  distributed  to the
former  CareCentric  Solutions  preferred  shareholders  and  noteholders,   the
remaining  62,154 escrow shares were cancelled,  no additional  shares of common
stock will be  issued,  and the  parties  executed  a  comprehensive  settlement
agreement.

Stock  Options - The  Company has granted  options to purchase an  aggregate  of
571,659 shares (on a split adjusted  basis) of common stock as of July 31, 2001,
of which 2,500  options  with an exercise  price of $3.00 per share were granted
during the three month period ended June 30, 2001. Of the options granted,  none
were  exercised  prior to July 31, 2001 and 41,705 have been  cancelled.  Of the
remaining  557,454  options,  256,254 are vested and  exercisable as of July 31,
2001. The exercise prices range from $2.51 to $73.55 per share,  both on a split
adjusted basis.

NOTE 9 - SEGMENT RESULTS

The Company has two reportable  segments:  Software Systems and Consulting.  The
Company's  Software Systems segment sells  comprehensive  and flexible  software
solutions and services to enable home health care providers to more  effectively
operate their  businesses and compete in  prospective  payment (PPS) and managed
care environments.  The Consulting segment assists home health care providers in
addressing the challenges of reducing costs,  maintaining quality,  streamlining
operations and re-engineering  organizational  structures,  as well as assisting
with  regulatory  compliance  and  assisting  with  merger and  acquisition  due
diligence.

The Company  evaluates  performance  and allocates  resources based on profit or
loss from operations, not including gains and losses on the Company's investment
portfolio.  The accounting  policies of the reportable  segments are the same as
those used for the Consolidated  Financial Statements.  The revenues,  operating
profits  (losses) and assets of the Company  include the  operations of MCS only
from January 1, 2000 through  March 7, 2000 and  CareCentric  from March 7, 2000
forward. Accordingly, because CareCentric's 2000 results from operations are not
fully included,  comparability between the 2000 and 2001 figures is compromised.
See Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  for  a  discussion  of  revenue  and  results  of  operations  on  a
"comparable" basis. The revenues,  operating losses and assets of the Company by
business segment are as follows:

<TABLE>
<CAPTION>
<S>                               <C>                   <C>                 <C>                    <C>

                                    Three months ended June 30,                Six months ended June 30,
                                -------------------------------------    --------------------------------------
                                     2001                 2000                 2001                 2000
                                ----------------    -----------------    -----------------    -----------------
Revenues
      Software systems             $  5,324,000         $  5,233,000         $ 10,979,000         $  8,768,000
      Consulting services             1,225,000            1,024,000            2,414,000            1,490,000
                                ----------------    -----------------    -----------------    -----------------
              Total                $  6,549,000         $  6,257,000         $ 13,393,000         $ 10,258,000
                                ================    =================    =================    =================

Cost of Sales
      Software systems             $  2,054,000         $  2,927,000         $  4,542,000         $  5,049,000
      Consulting services             1,081,000            1,027,000            1,861,000            1,452,000
                                ----------------    -----------------    -----------------    -----------------
              Total                $  3,135,000         $  3,954,000         $  6,403,000         $  6,501,000
                                ================    =================    =================    =================

Research & development
      Software systems             $  1,609,000         $  1,780,000         $  3,376,000         $  2,491,000
                                ================    =================    =================    =================

Depreciation and amortization
      Software systems            $     947,000         $  1,040,000         $  1,894,000         $  1,430,000
      Consulting services               137,000              143,000              275,000              180,000
                                ----------------    -----------------    -----------------    -----------------
              Total               $   1,084,000         $  1,183,000         $  2,169,000         $  1,610,000
                                ================    =================    =================    =================



                                       13
<PAGE>

Net income (loss) from continuing operations

      Software systems            $  (2,735,000)       $  (3,285,000)        $ (5,054,000)        $ (4,532,000)
      Consulting services              (245,000)            (343,000)            (257,000)            (303,000)
                                -----------------    -----------------    -----------------    -----------------
              Total               $  (2,980,000)       $  (3,628,000)        $ (5,311,000)        $ (4,835,000)


                                       Three months ended June 30,                Six months ended June 30,
                                 ------------------------------------    --------------------------------------
                                        2001                 2000                 2001                 2000
                                 ---------------    -----------------    -----------------    -----------------
Interest expense
      Software systems                  377,000              189,000              726,000              266,000
      Consulting services                 6,000                    -               13,000                    -
                                 ---------------    -----------------    -----------------    -----------------
                    Total         $     383,000        $     189,000          $   739,000          $   266,000
                                 ===============    =================    =================    =================

Income taxes
      Software systems                        -                    -                    -          $  (157,000)
                                ================    =================    =================    =================

Expenditures for long-lived assets
      Software systems              $   256,000        $     271,000          $   375,000          $   432,000
                                ================    =================    =================    =================
</TABLE>


                                    June 30,           December 31,
                                      2001                 2000
                                ----------------    -----------------
Assets
      Software systems              $ 28,309,000         $ 30,648,000
      Consulting services              4,494,000         $  4,472,000
                                -----------------    -----------------
              Total                 $ 32,803,000         $ 35,120,000
                                =================    =================


Certain  categories  of  expenses  are  omitted.   See  Consolidated   Financial
Statements above.

The Net  Income  (loss)  from  continuing  operations  reported  above  has been
affected by non-cash depreciation and amortization charges as reported above.

NOTE 10 - LICENSE AGREEMENTS

The  Company  licenses   certain  software   products  from  third  parties  for
incorporation  in, or other use  with,  its  products  and is  obligated  to pay
license fees in connection  with such  products.  The Company  sublicenses  such
products  to  its  customers   and  collects   fees  in  connection   with  such
sublicensees.

NOTE 11 - SUBSEQUENT EVENTS

The  Company  and  the  management  of  its  wholly-owned  subsidiary,   Simione
Consulting,  Inc.,  recently  have been  evaluating  the  operations  of Simione
Consulting and its ability to maximize its business and methods of realizing its
synergies  with the  Company.  On July 31,  2001,  William  J.  Simione,  Jr., a
Director and  Executive  Vice  President of the Company and President of Simione
Consulting and Robert J. Simione,  Senior Vice President of Simione  Consulting,
each  delivered  written  notice to the Company of their  election to  terminate
their employment with Simione Consulting effective as of September 30, 2001. The
Company has entered into and anticipates  completing  negotiations regarding the
separation of Messrs.  William and Robert Simione from the Company prior to that
date  and the  orderly  and  mutually  beneficial  transition  of the  Company's
consulting  business.  These  negotiations are very preliminary and the ultimate
financial effect on the Company  resulting from these  negotiations is currently
uncertain;  however, the Company expects that Messrs. William and Robert Simione
will form a new stand-alone company employing the current consulting  employees.
While  the  Company  believes  that  in the  short  term it  will  lose  revenue
associated  with the  consulting  business,  the Company  believes  that it will
benefit in the longer term from greater  management  focus on the Company's core
software  businesses  and  from an arms  length  relationship  with  independent
consultants.  The Company is pleased  that Mr.  William  Simione Jr.  intends to
remain on the Company's Board of Directors.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Certain  statements  set  forth  in  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Act of 1934,  as amended,  and are
subject to the safe harbor created by such  sections.  When used in this report,
the words "believe", "anticipate", "estimate", "expect", and similar expressions
are  intended to  identify  forward-looking  statements.  The  Company's  future
financial performance could differ significantly from that set forth herein, and
from the  expectations  of  management.  Important  factors that could cause the
Company's financial  performance to differ materially from past results and from
those expressed in any forward looking statements  include,  without limitation,
the  inability  to close the  transactions  required  to obtain  the  additional
capital resources described herein,  variability in quarterly operating results,
customer concentration,  product acceptance, long sales cycles, long and varying
delivery  cycles,  the  Company's  dependence  on  business  partners,  emerging
technological  standards ,the effects of changes in regulations affecting health
care providers,  uncertainties  regarding the  restructuring  described  herein,
risks  associated  with  acquisitions  and  the  risk  factors  detailed  in the
Company's  Registration  Statement on Form S-4 (File No.  333-96529)  and in the
Company's  periodic  reports filed with the Securities and Exchange  Commission.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements, which speak only as of their dates. This Management's Discussion and
Analysis of  Financial  Condition  and Results of  Operations  should be read in
conjunction with the Company's  consolidated  financial statements and the notes
thereto.


                                       14
<PAGE>

Liquidity and Capital Resources

The Company  secured $13.0 million in new debt and equity capital during 2000 as
follows:
<TABLE>
<CAPTION>
    <S>                                    <C>                <C>                        <C>

                  Source                       Funding                 Form                   Date Closed
    ------------------------------------  ------------------  ------------------------   ----------------------

    John E. Reed                            $     1,000,000   Series D Preferred Stock          June 22, 2000
    John E. Reed                                  6.000,000   Line of Credit                    June 22, 2000
    Wainwright Bank and Trust Company             6,000,000   Line of Credit                    July 12, 2000
                                            ------------------
                                            $    13,000,000
                                            ==================
</TABLE>

Details on the line of credit  transactions  referenced  above are  described in
greater detail in Note 6 to the accompanying Financial Statements.

The  Wainwright  Bank and Trust Company Line of Credit was initially used to pay
off the Silicon Valley Bank Line of Credit, certain short term loans from Mestek
Inc.,  and the note  payable to David O. Ellis,  and then to fund the  Company's
operations.  As of July 31, 2001, the unused capacity under the John E. Reed and
Wainwright  Bank and  Trust  Company  lines of  credit  are  $3,025,000  and $0,
respectively.

Notwithstanding  the Company's continued  commitment to marketing,  research and
development,  its net borrowings  from all sources,  representing  in effect the
Company's cash  utilization  rate, were  significantly  reduced during the three
months ended June 30, 2001, to $1.275 million, as compared with $1.7 million for
the three  months  ended  March 31, 2001 and $2.7  million for the three  months
ended December 31, 2000. The Company had no borrowings  during the month of July
and, based upon internally generated cash forecasts, expects to borrow less than
$500,000  though the quarter ending  September 30, 2001. As of July 31, 2001 the
Company had $3.025 million in available  capacity  remaining  under the J E Reed
line.  As  disclosed  in the  financial  statements,  the  Company has a working
capital deficit of $14.4 million at June 30, 2001.

In furtherance of its plan to achieve a breakeven cash  utilization  rate in the
near term, the Company  implemented a restructuring  plan in April 2001, as more
fully described  herein, in addition to the various other ongoing cost reduction
initiatives  undertaken  subsequent  to the  MCS/CareCentric  merger on March 7,
2000.  The Company  believes in light of these cost  reduction  efforts that its
funding  sources,  as described  above,  will be  sufficient to meet its working
capital needs in 2001. The Company remains dependent,  however,  on its majority
shareholder, J. E. Reed, for its working capital financing needs.

As part of the restructuring  plan, the Company recorded a restructuring  charge
of $675,000 to cover the cost of employee severance and related benefits for the
elimination of 33 positions,  the layoff of 6 employees,  and the closing of one
non-essential  training  and  support  facility.  The total  annual  payroll and
associated benefits for the affected employees is approximately $3.8 million and
the  total  annual  operating  cost for the  closed  facility  is  approximately
$55,000.

The Company's operating earnings for the three months ended June 30, 2001, after
adding  back  non-cash  charges  (amortization  and  depreciation),  spending on
research and development, and the restructuring charge was $703,000, computed as
follows:

          (Loss) Income from operations                 $     (2,665,000)
          Amortization and depreciation                        1,084,000
          Research and development                             1,609,000
          Restructuring charge                                   675,000
                                                       -------------------
                                                         $       703,000
                                                       ===================



                                       15
<PAGE>


Background

CareCentric,   Inc.   (formerly  known  as  Simione  Central   Holdings,   Inc.)
("CareCentric" or the "Company") is a leading provider of information technology
systems and related software support services and consulting  services  designed
to help home health care providers more effectively  operate their businesses in
today's  environment.  The Company's focus is to help home health care providers
streamline their operations and better serve their patients.  CareCentric offers
several  comprehensive  software  solutions.  Each of these solutions provides a
basic set of software  applications and specialized modules,  which can be added
based on  customer  needs.  These  software  solutions  are  designed  to enable
customers  to generate  and utilize  comprehensive  financial,  operational  and
clinical information.

In addition to its software solutions and related software support services, the
Company's home health care consulting  services  assist  providers in addressing
the challenges of reducing costs,  maintaining quality,  streamlining operations
and  re-engineering   organizational  structures,  as  well  as  assisting  with
regulatory compliance and merger and acquisition due diligence.

The Company sells its software  pursuant to  non-exclusive  license  agreements,
which provide for the payment of a one-time  license fee. In accordance with SOP
97-2,  these  revenues  are  recognized  when  products  are  delivered  and the
collectibility  of fees is probable,  provided that no  significant  obligations
remain under the contract.  The Company generally  requires payment of a deposit
upon the  signing of a customer  order as well as  certain  additional  payments
prior to delivery. As a result, the Company's balance sheet reflects significant
customer deposits.

Third party  software and computer  hardware  revenues are  recognized  when the
related  products  are  shipped.   Software  support  agreements  are  generally
renewable  for one-year  periods,  and revenue  derived from such  agreements is
recognized  ratably  over  the  period  of  the  agreements.   The  Company  has
historically  maintained high renewal rates with respect to its software support
agreements.  The  Company  charges for  software  implementation,  training  and
technical  consulting  services as well as management  consulting services on an
hourly or daily basis.  The price of such services varies depending on the level
and expertise of the related professionals. These revenues are recognized as the
related services are performed.

The Company  believes  that  continued  enhancement  of its software  systems is
critical to its future success,  and anticipates that investment in existing and
new  products  will  continue  as  needed  to  support  the  Company's   product
strategies.  Costs  incurred  to  establish  the  technological  feasibility  of
computer software products are expensed as incurred.  The Company's policy is to
capitalize  costs  incurred  between  the  point of  establishing  technological
feasibility and general release only when such costs are material. For the three
months ended June 30, 2001 and 2000, the Company did not capitalize any computer
software development costs.

Backlog

The Company had backlog associated with its software operations of approximately
$3.1 million,  $3.7 million,  and $4.1 million on June 30, 2001, March 31, 2001,
and  December  31,  2000,  respectively.  Backlog  consists of the  unrecognized
portion of contractually  committed software license fees,  hardware,  estimated
installation  fees and  professional  services.  The length of time  required to
complete an  implementation  depends on many factors  outside the control of the
Company,  including the state of the customer's existing information systems and
the customer's ability to commit the personnel and other resources  necessary to
complete the implementation  process.  As a result, the Company may be unable to
predict  accurately  the amount of revenue it will  recognize  in any period and
therefore can make no assurances  that the amounts in backlog will be recognized
in the next twelve months.

Results of Operations for Three Months ended June 30, 2001

Net  Revenues.  Total net  revenues  for the three  months  ended June 30,  2001
increased by $0.3  million,  or 4.6%,  to $6.5 million in 2001 from $6.2 million
for the three  months  ended  June 30,  2000.  Revenues  from  software  systems
increased  $.3 million,  or 11.7%,  to $2.3 million in 2001 from $2.0 million in
2000. Revenues from software maintenance  decreased by $0.2 million, or 6.6%, to


                                       16
<PAGE>

$3.0 million in 2001 from $3.2 million in 2000. Revenue from consulting services
increased by $0.2 million,  or 19.6%,  to $1.2 million in 2001 from $1.0 million
in 2000.

Cost of Revenues.  Total cost of revenues decreased  approximately $0.8 million,
or 20.7%,  to $3.1  million for the three  months  ended June 30, 2001 from $3.9
million for the three  months  ended June 30,  2000.  As a  percentage  of total
revenues,  cost of revenues  decreased to 47.9% in 2001 from 63.2% in 2000.  The
$0.8 million decrease  resulted  primarily from  efficiencies  achieved from the
combination  of support  operations,  elimination  of excess  capacity  and cost
management after the merger. The improvement in gross margin percentage resulted
from efficiencies  achieved from the combination of support operations and other
cost  management  activities,  as well as an increase in software  sales,  which
carry a higher gross margin, as compared to total sales.

Selling,  General  and  Administrative  Expenses.  Total  selling,  general  and
administrative  expenses  decreased  $0.1  million to $2.7 million for the three
months ended June 30, 2001 from $2.8 million for the three months ended June 30,
2000.  This  decrease is  principally  attributable  to  synergies  derived from
centralization  of  administrative  functions and  elimination of  non-essential
facilities and excess capacity,  and the reduction in force (described in Note 3
to the financial statements) totaling $0.4 million,  which were partially offset
by  one-time  expenditures  surrounding  the change in  corporate  identity  and
increased advertising and marketing costs totaling $0.3 million. As a percentage
of total net revenues,  selling,  general and administrative expenses were 41.4%
for the three  months  ended  June 30,  2001  compared  with 44.9% for the three
months ended June 30, 2000.

Research and Development  Expenses.  Research and development expenses decreased
$0.2 million,  or 9.6%, to $1.6 million for the three months ended June 30, 2001
from $1.8 million for the three months ended June 30, 2000.  As a percentage  of
total net revenues, these expenses decreased to 24.6% for the three months ended
June 30, 2001 from 28.4% for the three months  ended June 30, 2000.  This dollar
decrease was attributable primarily to the reduction in force (described in Note
3 to the financial statements).

Amortization and Depreciation.  Amortization and depreciation  decreased by $0.1
million,  or 8.4%, to $1.1 million for the three months ended June 30, 2001 from
$1.2 million for the three months ended June 30, 2000.  This  decrease  resulted
from the normal disposition of fully depreciated assets.

Restructuring and Other Charges. In April 2001,  CareCentric  approved a plan to
close one remote  support  office and to downsize the workforce at its remaining
facilities.  As a result of these actions the Company recorded a total charge of
$675,000.

The  restructuring  charge  includes  $598,000 of employee  severance  costs and
$77,000 in other exit costs  (principally lease termination costs and functional
relocation  expenses).  The plan entails the elimination of 33 positions (10% of
salaried  employees),  the layoff of six additional employees and the closing of
one non-essential training and support facility in Houston,  Texas. Employees at
impacted  locations  have been  informed of the  restructuring  initiatives  and
benefits available to them under applicable benefit plans or related contractual
provisions have been  communicated.  Affected  employees will leave  CareCentric
using a mixture of voluntary and  involuntary  separation  programs and layoffs.
The Company expects to pay $585,000 in cash related to the  restructuring  plan.
During the quarter  ended June 30, 2001,  the Company paid  $294,000 in employee
costs and $18,000 in other exit costs.  As of July 31, 2001,  39  employees  had
been  separated  under the plan.  The Company  expects to fully realize  savings
related  to these  headcount  reductions  during  the  second  half of 2001 with
estimated ongoing annual net savings of $3.2 million.  The Company expects these
savings will be realized as reductions in cost of sales and selling, general and
administrative expense, and research and development expense.

Other  Income  (Expense).  Interest  expense for the three months ended June 30,
2001  relates  primarily  to  borrowings  under  the  Company's  lines of credit
agreement  and capital  lease  obligations  and has  increased by  approximately
$194,000 from the interest  expense  incurred during the three months ended June
30, 2001 as a result of increased borrowing subsequent to June 30, 2000.

Income Taxes. The Company has not incurred or paid taxes since its inception.


                                       17
<PAGE>
Results of Operations for the Six Months Ended June 30, 2001

Results of  operations  for the six  months  ended June 30,  2000  included  the
operations of the former MCS for six months and the  operations  of  CareCentric
(formerly  Simione  Central  Holdings,  Inc.) for only the period  subsequent to
March 7, 2000.  As a result,  a comparison  of the 2001 and 2000  Statements  of
Operations is not  meaningful  to an  understanding  of the  Company's  relative
performance.  Therefore, for purposes of comparability, the following discussion
reflects the assumption that the operations of CareCentric and MCS were combined
on a pro-forma  basis for the six months ended June 30, 2000, as  illustrated in
Table 1 below.

Net  Revenues.  Total  net  revenues  for the six  months  ended  June 30,  2001
decreased by $0.2 million,  or 2.4%, to $13.4 million in 2001 from $13.6 million
in 2000.  Revenues from software systems increased by $0.3 million,  or 6.2%, to
$4.9  million  in 2001  from  $4.6  million  in  2000.  Revenues  from  software
maintenance  decreased by $0.1  million,  or 3.5%,  to $6.1 million in 2001 from
$6.2  million  in 2000.  Revenue  from  consulting  services  decreased  by $0.4
million, or 14.2%, to $2.4 million in 2001 from $2.8 million in 2000.

Cost of Revenues.  Total cost of revenues decreased  approximately $2.3 million,
or 26.7%,  to $6.4  million  for the six months  ended  June 30,  2001 from $8.7
million  for the six  months  ended  June 30,  2000.  As a  percentage  of total
revenues,  cost of revenues  decreased to 47.8% in 2001 from 64.1% in 2000.  The
$2.3 million decrease resulted from  efficiencies  achieved from the combination
of support operations,  elimination of excess capacity and cost management after
the CareCentric/MCS  merger. The improvement in gross margin percentage resulted
from efficiencies  achieved from the combination of support operations and other
cost  management  activities,  as well as a reduction in hardware  revenues as a
percentage of total revenues.

Selling,  General  and  Administrative  Expenses.  Total  selling,  general  and
administrative  expenses  decreased  $0.2  million to $5.5  million  for the six
months  ended June 30, 2001 from $5.7  million for the six months ended June 30,
2000.  This  decrease is  principally  attributable  to  synergies  derived from
centralization  of  administrative  functions and  elimination of  non-essential
facilities  and excess  capacity  totaling  $0.6 million,  which were  partially
offset by one-time  expenditures  surrounding  the change in corporate  name and
increased advertising and marketing costs totaling $0.4 million. As a percentage
of total net revenues,  selling,  general and administrative expenses were 41.0%
for the six months  ended June 30, 2001  compared  with 42.4% for the six months
ended June 30, 2000.

Research and Development  Expenses.  Research and development expenses increased
$0.1  million,  or 3.3%,  to $3.4 million for the six months ended June 30, 2001
from $3.3  million for the six months ended June 30,  2000.  As a percentage  of
total net revenues,  these expenses  increased to 25.4% for the six months ended
June 30, 2001 from 24.06% for the six months  ended June 30,  2000.  This dollar
increase was attributable to additional  development costs for all products, but
especially for The Smart Clipboard(R), PharmMed Rx(TM) and HMExpress(TM).

Amortization and Depreciation.  Amortization and depreciation  decreased by $0.1
million,  or 4.3%,  to $2.2  million for the six months ended June 30, 2001 from
$2.3 million for the six months ended June 30, 2000. This decrease resulted from
the normal disposition of fully depreciated assets.

Other Income (Expense).  Interest expense for the six months ended June 30, 2001
relates primarily to borrowings under the Company's line of credit agreement and
capital lease  obligations and has increased by approximately  $0.4 million from
the  interest  expense  incurred  during the six months ended June 30, 2001 as a
result of increased borrowing subsequent to June 30, 2000.


Impact of New Accounting Standards

In 1998, the Financial and Accounting Standards Board issued SFAS No. 133 ("SFAS
No. 133"),  "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 is effective for the Company's fiscal year ending December 31, 2001. The
Company's  management  does not believe  that the  adoption of SFAS No. 133 will
have a material impact on the Company's position or results of operations.

In July 2001,  the  Financial  Accounting  Standards  Board  issued SFAS No. 141
"Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets",
which,  for all intents and  purposes  for the  Company,  will become  effective
December 31, 2001. Goodwill generated in purchase  transactions will be recorded
as a non-wasting  asset  subject to an  impairment  test at least once per year.
Amortization of goodwill currently on the Company's


                                       18
<PAGE>

books will cease as of January 1, 2002. The Company is currently  evaluating the
effect that adoption of FAS 142 will have on its financial  position and results
of operations in 2002.

<TABLE>
<CAPTION>
         <S>                                                   <C>                      <C>
                               Table 1. CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS
                                                     (unaudited)

                                                                         Six Months Ended June 30,
                                                                -------------------------------------------
                                                                       2001                     2000
                                                                -------------------      -------------------
          Net revenues:                                             $   13,393,000           $   13,626,000
          Costs and expenses:
              Cost of revenues                                           6,403,000                8,732,000
              Selling, general and administrative                        5,536,000                5,770,000
              Research and development                                   3,376,000                3,269,000
              Depreciation and amortization                              2,169,000                2,267,000
              Restructuring and other charges                              675,000                        -
                                                                -------------------      -------------------
                 Total costs and expenses                               18,159,000               20,038,000
                                                                -------------------      -------------------
              Loss from operations                                      (4,766,000)              (6,412,000)
          Other (expense) income:
              Interest expense                                            (739,000)                (178,000)
              Interest and other income                                    194,000                   (3,000)
                                                                -------------------      -------------------
          Net loss before taxes                                         (5,311,000)              (6,593,000)
                                                                -------------------      -------------------
              Income tax benefit                                                 -                 (154,000)
                                                                -------------------      -------------------
          Net  loss                                                 $  (5,311,000)          $    (6,439,000)
                                                                ===================      ===================

          Net loss per share - basic and diluted                    $       (1.27)          $        (1.64)
                                                                ===================      ===================
          Weighted average common shares -
              basic and diluted                                          4,178,000                3,926,000
                                                                ===================      ===================
</TABLE>


Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

As of June 30, 2001,  the  Company's  obligations  include  variable  rate notes
payable  and a line of credit  bank note with  aggregate  principal  balances of
approximately  $10.2  million,  which mature at various dates through 2005.  The
Company  is  exposed  to the  market  risk of  significant  increases  in future
interest rates.  Each incremental  point change in the prime interest rate would
correspondingly   increase  or  decrease  the  Company's   interest  expense  by
approximately $66,000 per year.

At June 30, 2001,  the Company had accounts  receivable  of  approximately  $8.1
million (net of an allowance for doubtful accounts of $525,000).  The Company is
subject  to a  concentration  of  credit  risk  because  most  of  the  accounts
receivable are due from companies in the home health industry.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Neither  CareCentric  nor any of its  subsidiaries  is  currently a party to any
legal proceedings which management believes would be material to the business or
financial condition of the Company on a consolidated basis.

Item 2.  Change in Securities.

In May 2001, the Company  released from escrow 88,586 shares of its common stock
to the former preferred  shareholders and noteholders of CareCentric  Solutions,
Inc.  previously  issued  pursuant  to the  terms of the July  12,  1999  Merger
Agreement.  In  issuing  shares  without  registration,  the  Company  takes the
position that this transaction  does not constitute an "offer",  "offer to sell"
or "sale" under Section 5 of the  Securities Act of 1933, and also relies on the


                                       19
<PAGE>

exemption  from  registration  provided in Section 4(2) of the Securities Act of
1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits:

     The following  Exhibits are filed as part of this Quarterly  Report on Form
     10-Q:

10.1 Settlement  Agreement  and Mutual  Release  dated as of May 16, 2001 by and
     between the  registrant  and the former  shareholders  and  noteholders  of
     CareCentric  Solutions,  Inc.  by and through  Daniel J.  Mitchell as their
     representative and agent.

____________________________

*Filed herewith.

     (b)  Reports on Form 8-K:

     The  Company  has not filed any  reports on Form 8-K during the quarter for
     which this report is filed.



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                      CARECENTRIC, INC.


Dated: August 10, 2001                By:/s/ Stephen M.Shea
                                         --------------------------------------
                                           STEPHEN M. SHEA
                                           Senior Vice President - Finance and
                                           Chief Financial Officer
                                           (Principal Financial Officer)






                                       20
<PAGE>



EXHIBIT INDEX

Exhibit No.    Description
-----------    -----------

10.1           Settlement  Agreement and Mutual Release dated as of May 16, 2001
               by and between the  registrant  and the former  shareholders  and
               noteholders of CareCentric Solutions,  Inc. by and through Daniel
               J. Mitchell as their representative and agent.




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