================================================================================
                                    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 September 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                                    10/31/2001
        -----                                    ----------
        Common Stock, $.001 par value            4,371,350 shares

================================================================================


<PAGE>


                                CARECENTRIC, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX


         PART I.           FINANCIAL INFORMATION

         Item 1.           Consolidated Financial Statements

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

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

                           Consolidated Statements of Shareholders' Equity -
                           Nine Months Ended September 30, 2001 (unaudited) and
                           2000 (unaudited).

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

                           Notes to Consolidated Financial Statements -
                           September 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>

                                CARECENTRIC, INC.
                           CONSOLIDATED BALANCE SHEETS
<S>                                                                           <C>                  <C>
                                                                               September 30,          December 31,
                                                                              -----------------    -------------------
                                                                                    2001                  2000
                                                                              -----------------    -------------------
                                                                                (unaudited)            (audited)
                       ASSETS

 Current assets:
        Cash and cash equivalents                                               $       31,000       $        362,000
        Accounts receivable, net of allowance for
          doubtful accounts of $378,000 and $551,000
          respectively                                                               5,741,000              8,484,000
        Prepaid expenses, inventory and other current
          assets                                                                     1,602,000                701,000
                                                                              -----------------    -------------------
          Total current assets                                                       7,374,000              9,547,000

Purchased software, furniture and equipment, net                                     1,697,000              1,957,000
Intangible assets, net                                                              18,030,000             23,405,000
Other assets                                                                           468,000                211,000
                                                                              -----------------    -------------------
          Total assets                                                          $   27,569,000       $     35,120,000
                                                                              =================    ===================


          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
        Note payable                                                                   647,000                600,000
        Line of Credit                                                               5,013,000              5,996,000
        Current portion capital lease obligation                                        10,000                      -
        Accounts payable                                                             1,847,000              1,156,000
        Accrued compensation expense                                                   931,000                616,000
        Accrued liabilities                                                          6,339,000              7,447,000
        Customer deposits                                                            1,760,000              2,496,000
        Unearned revenues                                                            4,142,000              5,001,000
                                                                              -----------------    -------------------
          Total current liabilities                                                 20,689,000             17,316,000

Accrued liabilities, less current portion                                            1,910,000                128,000
Notes payable long-term                                                              4,100,000                600,000
                                                                              -----------------    -------------------
Total liabilities                                                                   26,699,000             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,
          4,371,350 shares issued and outstanding at September 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                                                        (21,211,000)           (11,001,000)
                                                                              -----------------    -------------------
          Total shareholders' equity                                                   870,000             11,080,000
                                                                              -----------------    -------------------
          Total liabilities and shareholders' equity                            $   27,569,000       $     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>
<TABLE>
<CAPTION>
                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<S>                                     <C>                 <C>                   <C>                <C>
                                         Three Months Ended September 30,          Nine Months Ended September 30,
                                       ------------------------------------      ------------------------------------
                                            2001                2000                  2001                2000
                                       ----------------    ----------------      ----------------   -----------------
Net revenues:                           $    4,769,000      $    7,177,000        $   15,748,000     $    15,933,000
Costs and expenses:
     Cost of revenues                        1,646,000           2,621,000             6,188,000           7,670,000
     Selling, general and
       administrative                        2,550,000           3,253,000             7,551,000           7,457,000
     Research and development                1,413,000           1,897,000             4,789,000           4,388,000
     Depreciation and amortization           1,011,000           1,027,000             2,905,000           2,457,000
     Restructuring charge                            -                   -               675,000                   -
                                       ----------------    ----------------      ----------------   -----------------
          Total costs and expenses           6,620,000           8,798,000            22,108,000          21,972,000
                                       ----------------    ----------------      ----------------   -----------------
    Loss from operations                    (1,851,000)         (1,621,000)           (6,360,000)         (6,039,000)

Other (expense) income:
     Interest expense                         (219,000)           (265,000)             (958,000)           (531,000)
     Interest and other income                  29,000              68,000               223,000             220,000
                                       ----------------    ----------------      ----------------   -----------------
Net loss before taxes                   $   (2,041,000)     $   (1,818,000)       $   (7,095,000)    $    (6,350,000)
                                       ----------------    ----------------      ----------------   -----------------

     Income tax benefit                              -              (6,000)                    -             151,000
                                       ----------------    ----------------      ----------------   -----------------
Net loss from continuing operations         (2,041,000)         (1,824,000)           (7,095,000)         (6,199,000)

Discontinued operation:
     Loss on disposal of
        discontinued operations             (2,632,000)                  -            (2,632,000)                  -
     Loss from discontinued
        operations                            (226,000)            (21,000)             (483,000)           (324,000)
                                       ----------------    ----------------      ----------------   -----------------
    Net loss from operations of
       discontinued segment                 (2,858,000)            (21,000)           (3,115,000)           (324,000)
                                       ----------------    ----------------      ----------------   -----------------
Net loss                                $   (4,899,000)     $   (1,845,000)       $  (10,210,000)    $    (6,523,000)
                                       ================    ================      ================   =================

Loss per share - basic and diluted
    From continuing operations          $        (0.47)     $        (0.47)       $        (1.67)    $         (1.89)
    From discontinued operations        $        (0.65)     $        (0.01)       $        (0.73)    $         (0.10)
                                       ----------------    ----------------      ----------------   -----------------

Net loss per share                      $        (1.12)     $        (0.48)       $        (2.40)    $         (1.99)
                                       ================    ================      ================   =================

Weighted average common shares -
   basic and diluted                         4,371,000           3,850,000             4,243,000           3,273,000
                                       ================    ================      ================   =================
</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.



                                       5
<PAGE>
<TABLE>
<CAPTION>

                                CARECENTRIC, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                  For the nine months ended September 30, 2001


<S>                 <C>         <C>         <C>         <C>         <C>            <C>          <C>            <C>
                                                                                                                   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)       (72,000)          -           -           -              -            -              -              -

Net loss                     -           -           -           -              -            -    (10,210,000)   (10,210,000)
                   ------------ ----------- ----------- -----------  ------------- ------------ -------------- --------------

Balance at
September 30, 2001   4,371,000   $   4,000   6,848,000   $   7,000   $ 21,070,000   $1,000,000   $(21,211,000)  $    870,910
                   ============ =========== =========== ===========  ============= ============ ============== ==============
</TABLE>


(1)      See Note 9 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>

<TABLE>
<CAPTION>
                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW

<S>                                                 <C>           <C>             <C>             <C>
                                                        Three Months ended             Nine Months ended
                                                          September 30,                  September 30,
                                                    --------------------------    -----------------------------
                                                        2001         2000             2001           2000
                                                    ------------- ------------    -------------   -------------

Cash flows from operating activities:
Net loss                                            $ (4,899,000) $(1,845,000)    $(10,210,000)   $(6,523,000)

Adjustments to reconcile net loss
to net cash used in operating activities:
   Provision for doubtful accounts                       133,000            -          252,000        376,000
   Amortization and depreciation                       1,094,000    1,171,000        3,277,000      2,780,000
   Loss on disposal of assets                          2,632,000            -        2,632,000              -

Changes in assets and liabilities, net of
acquisitions:
   Accounts receivable                                   565,000      (11,000)       1,026,000       (905,000)
   Prepaid expenses and other current assets            (117,000)     200,000         (359,000)       215,000
   Other assets                                         (660,000)      20,000         (799,000)      (117,000)
   Accounts payable                                     (866,000)    (308,000)         691,000     (1,182,000)
   Accrued compensation expense                          114,000     (110,000)         315,000       (192,000)
   Accrued liabilities                                   803,000     (544,000)         699,000     (1,225,000)
   Customer deposits                                    (446,000)      36,000         (736,000)       856,000
   Unearned revenues                                     533,000     (796,000)        (859,000)       817,000
                                                    ------------- ------------    -------------   -------------
        Net cash used in operating activities         (1,114,000)  (2,187,000)      (4,071,000)    (5,100,000)
                                                    ------------- ------------    -------------   -------------

Cash flows from investing activities:
Assets and liabilities disposed of                     1,715,000            -        1,715,000
Purchase of software, furniture and equipment           (122,000)    (136,000)        (467,000)      (408,000)
                                                    ------------- ------------    -------------   -------------
        Net cash used in investing activities          1,593,000     (136,000)       1,248,000       (408,000)
                                                    ------------- ------------    -------------   -------------

Cash flows from financing activities:
Cash received in connection with MCS merger                                 -                -      3,547,000
Proceeds from issuance of preferred stock                                   -                -      1,000,000
Proceeds from issuance / (repayments) of notes
payable                                                 (493,000)   1,985,000        2,492,000      2,575,000
                                                    ------------- ------------    -------------   -------------
        Net cash provided by financing activities       (493,000)   1,985,000        2,492,000      7,122,000
                                                    ------------- ------------    -------------   -------------
        Net increase/(decrease) in cash and cash
        equivalents                                      (14,000)    (338,000)        (331,000)     1,614,000

Cash and cash equivalents, beginning of period            45,000    1,999,000          362,000         47,000
                                                    ------------- ------------    -------------   -------------

Cash and cash equivalents, end of period            $     31,000  $ 1,661,000     $     31,000    $ 1,661,000
                                                    ============= ============    =============   =============
</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
                               SEPTEMBER 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 nine months ended September 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  condensed  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. 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.

Description of Business

The Company is a leading provider of information  technology systems and related
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   comprehensive
financial, operational and clinical information.

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.  Continuing  losses and changes in the home health  information
technology  market, as well as future  requirements under SFAS 142, have added a
level of complexity  for the Company in its review for  impairment of intangible
assets.  As  a  result,   the  Company  concludes  that  a  realistic   internal
determination  of  impaired  assets  cannot be fairly  determined  at this time.
Accordingly,  the Company,  in the fourth quarter of 2001, plans to consider any
additional  resources to assist it in determining what, if any, impairments have
occurred.  Should this process result in an impairment  adjustment,  the Company
will fully comply with the requirements of SFAS 121.

                                       8
<PAGE>

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 6. 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
September  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  September  30, 2000 and
2001. Per share amounts for all periods have been  presented in conformity  with
SFAS No. 128 requirements.

Reclassification

Reclassifications   are  made   periodically  to  previously   issued  financial
statements to conform with the current year presentation.

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).

Comprehensive Income

For the periods ended September 30, 2001 and 2000,  respectively,  there were no
components of other comprehensive income.

Recently Adopted Accounting Standards

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standards (SFAS) 141,  Business  Combinations and SFAS
142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all business
combinations  completed  after June 30, 2001.  SFAS 142 is effective  for fiscal
years beginning  after December 15, 2001;  however,  certain  provisions of this
Statement apply to goodwill and other intangible assets acquired between July 1,
2001 and the effective  date of SFAS 142. Major  provisions of these  Statements
and their  effective  dates for the  Company are as  follows:  (i) all  business
combinations  initiated  after  June 30,  2001 must use the  purchase  method of
accounting and the pooling of interest method of accounting is prohibited except
for transactions  initiated before July 1, 2001; (ii) intangible assets acquired
in a business  combination  must be recorded  separately  from  goodwill if they
arise from  contractual or other legal rights or are separable from the acquired
entity  and can be sold,  transferred,  licensed,  rented or  exchanged,  either
individually  or as  part of a  related  contract,  asset  or  liability;  (iii)
goodwill and  intangible  assets with  indefinite  lives acquired after June 30,
2001 will not be  amortized  and  effective  January  1,  2002,  all  previously
recognized  goodwill and intangible  assets with indefinite lives will no longer
be subject to  amortization;  (iv)  effective  January  1,  2002,  goodwill  and
intangible  assets with indefinite lives will be tested for impairment  annually
and whenever  there is an impairment  indicator,  and (v) all acquired  goodwill
must be assigned to  reporting  units for  purposes  of  impairment  testing and
segment reporting.  The Company is currently evaluating the impact that SFAS 141
and 142 will have on its financial reporting requirements.

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


                                       9
<PAGE>

of Series B preferred stock and warrants to purchase  400,000 shares (on a split
adjusted  basis) of  CareCentric  common 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  and  the  disposal  of the
discontinued  segment more fully described in Note 3 took place as of January 1,
2000 are as follows:

<TABLE>
<CAPTION>
<S>                                                           <C>                   <C>
                                                                 For Nine Months Ended September 30,
                                                              ------------------------------------------
                                                                     2001                   2000
                                                              -------------------- ---------------------
              Net revenues                                       $    15,748,000     $  18,100,000
              Net (loss)                                         $    (7,095,000)    $  (8,800,000)
              Net (loss) per share - basic and diluted           $         (1.67)    $       (2.24)
</TABLE>


NOTE 3 - DISCONTINUED OPERATIONS

On September 28, 2001, CareCentric  discontinued its Consulting business segment
by closing  the sale of certain  of the assets of its  wholly-owned  subsidiary,
Simione Consulting, Inc., to Simione Consultants,  L.L.C. ("Simione"),  which is
owned and  controlled by William  Simione,  Jr., a director of the Company.  The
total sales price was approximately  $2.0 million plus the assumption of certain
liabilities  by Simione.  The  Company's  net pre-tax  loss on the  disposal was
approximately  $2.6 million.  The Company has accounted for the transaction as a
loss on disposal of discontinued operations in accordance with APB 30.


NOTE 4 - 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 September 30, 2001 the Company paid
$175,000  in employee  costs and $7,000 in other exit  costs.  As of October 31,
2001,  $469,000 in employee costs and $25,000 in other exit costs have been paid
under the plan and 39 employees have been separated.


NOTE 5 - PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

Purchased software, furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>                <C>
                                                        September 30,        December 31,       Estimated
                                                            2001                 2000          Useful lives
                                                       ----------------    -----------------  ---------------
Software                                                 $  1,725,000         $  1,635,000         3 years
Furniture and fixtures                                      1,409,000            1,551,000        10 years
Computer equipment                                          4,512,000            4,415,000         5 years
                                                       ----------------    -----------------
                                                            7,646,000            7,601,000
Accumulated depreciation                                   (5,949,000)          (5,644,000)
                                                       ----------------    -----------------
Net purchased software, furniture and equipment           $ 1,697,000          $ 1,957,000
                                                       ================    =================
</TABLE>



                                       10
<PAGE>

NOTE 6 - INTANGIBLE ASSETS

Intangible assets at September 30, 2001 consisted of the following:
<TABLE>
<CAPTION>
<S>                         <C>                 <C>                   <C>                  <C>               <C>
                                                    Assets              Accumulated          Net Book          Amortization
                            Original Cost           Disposed (1)        Amortization           Value              Period
                            ---------------     -----------------     ----------------     --------------    -----------------
Developed technology         $  10,650,000       $            0        $  (2,108,000)       $  8,542,000         8 Years
Assembled workforce              2,300,000             (422,000)            (595,000)          1,283,000         5 years
Customer base                    1,700,000             (510,000)            (209,000)            981,000         9 Years
Goodwill                        11,851,000           (2,484,000)          (2,143,000)          7,224,000         7 Years
                            ---------------     -----------------     ----------------     --------------
                             $  26,501,000       $   (3,416,000)       $  (5,055,000)       $ 18,030,000
                            ===============     =================     ================     ==============
</TABLE>

(1)  See Note 3 to the Financial Statements.


NOTE 7 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>
<S>                                         <C>                      <C>
                                            September 30, 2001       December 31, 2000
                                            ------------------       -----------------
Short Term:
----------
Note Payable - Mestek                        $         647,000        $        600,000
Line of Credit                               $       5,013,000        $      5,996,000
                                            ------------------       -----------------
                                             $       5,660,000        $      6,596,000
                                            ==================       =================
Long Term:
---------
Convertible Note Payable - B. C. O'Donnell   $         600,000        $        600,000
Convertible Note Payable - J.E Reed          $       3,500,000        $              -
                                            ------------------       -----------------
                                             $       4,100,000        $        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
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.  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 $647,000 payable to Mestek Inc. which bears interest at prime plus one
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
plus the accrued interest thereon for the twelve months ended June 30, 2001.



                                       11
<PAGE>

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 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  $3.5  million  were  outstanding  under the J. E. Reed  Facility as of
October 31, 2001. The unused capacity under the J.E. Reed line as of October 31,
2001 was $2.5  million.  As of September  30, 2001,  interest  expense  totaling
approximately $146,000 had been recorded but not paid on the borrowing under the
J.E. Reed line of credit,  which  constitutes a default  thereunder.  Lender has
executed a waiver of default for such non-payment of interest.

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 8 - 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 9 - SHAREHOLDERS' EQUITY

Common  Shares - Pursuant to the terms of the July 12, 1999 Merger  Agreement by
which the Company 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 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.

On June 28, 2001, the Company  settled a dispute with Star Sterling  Corporation
("Star") in  connection  with the March 26, 1999 asset  acquisition  of Tropical
Software Services wherein the Company asserted certain claims against Star under
the terms of the original agreement.  Under the terms of the settlement,  10,000
shares of the Company's common stock originally  issued to Star were returned to
the Company and have been cancelled.

Stock  Options - The  Company has granted  options to purchase an  aggregate  of
550,797 shares (on a split  adjusted  basis) of common stock as of September 30,
2001. Of the options  granted,  none were exercised  prior to September 30, 2001
and 22,803 have been cancelled.  Of the remaining  527,994 options,  254,244 are
vested and  exercisable as of September 30, 2001. The exercise prices range from
$2.51 to $73.55 per share, both on a split adjusted basis.


NOTE 10 - SUBSEQUENT EVENTS

On November 1, 2001,  the Company  appointed  John R. Festa as its President and
Chief Executive  Officer,  and Mr. Festa assumed full-time  responsibilities  in
such roles on November 12, 2001. Bruce Dewey, the Company's former President and
Chief Executive  Officer,  recently accepted  appointment as President and Chief
Operating  Officer of  Mestek,  Inc.  Mr.  Dewey is  continuing  to serve on the
Company's  Board of Directors as Vice Chairman with a focus on strategy  related
to product development and business  alliances.  Mr. Festa's initial salary will
be $200,000  annually,  and he will be entitled to an annual  bonus based on the
Company's achievement of certain financial,  cash flow and performance milestone
goals that are currently being negotiated between Mr. Festa and the Compensation
Committee of the Company's Board of Directors.

                                       12
<PAGE>

In connection with Mr. Festa's appointment, the Company has granted to Mr. Festa
210,000 shares of the Company's  Series E Preferred  Stock.  The Series E shares
include the following terms:

o    Half of the shares vest over a three (3) year period and the other half are
     forfeitable  pro  rata  over a  three  (3)  year  period  if the  Company's
     financial,  cash flow and performance milestone goals referred to above are
     not achieved;

o    All of the shares will be vested and not subject to forfeiture  immediately
     upon a change of control of the Company;

o    The shares are convertible into the Company's Common Stock on a one-for-one
     basis once the vesting and  forfeiture  conditions  as to those shares have
     lapsed;

o    The shares  shall  accrue  non-cumulative  dividends  at the coupon rate of
     3-1/2% per year;

o    Upon a change of control of the Company,  the Series E Preferred Stock will
     have an equal  priority with the Company's  Series B, Series C and Series D
     Preferred Stock; and

o    Upon a liquidation or winding up of the Company, the Series E Preferred
     Stock will be junior in priority to the Series B, Series C and Series D
     Preferred Stock.

Mr. Festa, as holder of the Series E Preferred  Stock,  will also have the right
to receive  additional  Series E shares  through  January  31,  2003 (other than
pursuant to a change of control transaction) so as to enable him to maintain his
percentage  ownership of the Company's  outstanding capital stock if the Company
raises up to an  additional  $6 million in equity  capital.  For all such equity
offerings of the Company that result in aggregate  consideration in excess of $6
million,  Mr. Festa will have the right to purchase  securities in such offering
on the same terms and conditions  thereof so as to maintain a minimum  ownership
percentage of three percent (3%) of the Company's outstanding capital stock on a
fully diluted basis.

In  connection  with his  employment  by the Company,  Mr. Festa was granted the
right to a sale of business success fee based on the net proceeds to be received
by the Company or its  shareholders  for the completion of a sale of the Company
during the term Mr. Festa serves as the Company's  President and Chief Executive
Officer  and for nine (9)  months  thereafter.  Mr.  Festa is also  entitled  to
severance  payments  equal to 12 months of annual  base salary in the event that
Mr. Festa's  employment is terminated  without cause or within 18 months after a
change of control transaction (defined as the ownership interests in the Company
collectively  owned by Mestek,  Inc. and John E. Reed  falling  below 25% of the
aggregate  ownership  of the  Company's  outstanding  capital  stock  on a fully
diluted basis).



                                       13
<PAGE>

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.

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 these three transactions are described in greater detail in Note 7 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 September 30, 2001, the unused capacity under the John E. Reed
and  Wainwright  Bank and Trust Company lines are $2.5 million and $1.0 million,
respectively.

The  Company's  net  borrowings  from all  sources,  representing  in effect the
Company's cash  utilization  rate, were  significantly  reduced during the three
months ended  September 30, 2001,  to $0.5  million,  as compared with the three
months ended December 31, 2000, March 31, 2001, and June 30, 2001,  during which
the  Company   borrowed  $2.7  million,   $1.7  million,   and  $1.28   million,
respectively.  The Company repaid  approximately $1.0 million to Wainwright Bank
with the  proceeds  from the asset  sale  discussed  in Note 3 to the  financial
statements  and,  based on  internally  generated  cash  forecasts,  the Company
expects to borrow no more than $0.5 million  through the quarter ending December
31, 2001.  As disclosed in the financial  statements,  the Company has a working
capital deficit of $13.9 million at September 30, 2001.

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 its ongoing 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.

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


                                       14
<PAGE>

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.

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  September 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
$3.2  million and $4.1  million on  September  30, 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 September 30, 2001

Net Revenues.  Total net revenues for the three months ended  September 30, 2001
decreased by $2.4 million,  or 33.4%,  to $4.8 million in 2001 from $7.2 million
in 2000. This decrease is attributable principally to reduced revenue across all
products and services as a result of reduced  bookings of software and equipment
sales  in the  final  quarter  of  2000  and  the  first  half  of  2001  due to
uncertainties  in the marketplace over the effect of the  implementation  of the
Prospective Payment System of reimbursement by Medicare.

Cost of  Revenues.  Cost of revenues as a percentage  of total  revenues for the
three  months  ended  September  30, 2001  decreased to 34.5% from 36.5% for the
three  months  ended  September  30,  2000.  The  improvement  in  gross  margin
percentage  resulted from efficiencies  achieved from the combination of support
operations and other cost management activities.

Selling,  General  and  Administrative  Expenses.  Total  selling,  general  and
administrative  expenses  decreased  $0.7  million to $2.6 million for the three
months  ended  September  30, 2001 from $3.3  million for the three months ended
September  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 4 to the financial statements.

Research and Development  Expenses.  Research and development expenses decreased
$0.5 million, or 25.5%, to $1.4 million for the three months ended September 30,
2001 from $1.9  million for the three  months ended  September  30,  2000.  This


                                       15
<PAGE>

dollar decrease was  attributable  primarily to the reduction in force described
in Note 4 to the  financial  statements.  As a percentage of total net revenues,
these expenses  increased to 29.6% for the three months ended September 30, 2001
from 26.4% for the three months ended September 30, 2000.

Other Income  (Expense).  Interest  expense for the three months ended September
30, 2001 relates  primarily to  borrowings  under the  Company's  line of credit
agreement  and capital  lease  obligations  and has  decreased by  approximately
$46,000  from the  interest  expense  incurred  during  the three  months  ended
September  30,  2000 as a result  of the  decrease  in the prime  interest  rate
subsequent to September 30, 2000.

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

Results of Operations for the Nine Months Ended September 30, 2001

Results of operation  for the nine months ended  September 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  nine  months  ended  September  30,  2000,  as
illustrated in Table 1 below.


             Table 1. CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                   <C>                      <C>
                                                            Nine Months Ended September 30,
                                                      -------------------------------------------
                                                             2001                     2000
                                                      -------------------      -------------------
Net revenues:                                             $   15,748,000           $   18,100,000
Costs and expenses:
    Cost of revenues                                           6,188,000                9,343,000
    Selling, general and administrative                        7,551,000                9,032,000
    Research and development                                   4,789,000                5,166,000
    Depreciation and amortization                              2,905,000                3,033,000
    Restructuring and other charges                              675,000                        -
                                                      -------------------      -------------------
         Total costs and expenses                             22,108,000               26,574,000
                                                      -------------------      -------------------
    Loss from operations                                      (6,360,000)              (8,474,000)
Other (expense) income:
    Interest expense                                            (958,000)                (494,000)
    Interest and other income                                    223,000                   14,000
                                                      -------------------      -------------------
Net loss before taxes                                         (7,095,000)              (8,954,000)
                                                      -------------------      -------------------
    Income tax benefit                                                 -                 (154,000)
                                                      -------------------      -------------------
Net  loss                                                 $   (7,095,000)          $   (8,800,000)
                                                      ===================      ===================
Net loss per share - basic and diluted                    $        (1.67)          $        (2.24)
                                                      ===================      ===================
Weighted average common shares -
    basic and diluted                                          4,243,000                3,926,000
                                                      ===================      ===================
</TABLE>


Net  Revenues.  Total net revenues for the nine months ended  September 30, 2001
decreased by $2.4 million, or 13.0%, to $15.7 million in 2001 from $18.1 million
in 2000. These reduced revenues are attributable  principally to reduce bookings
of software and equipment  sales in the final quarter of 2000 and the first half
of  2001  due to  uncertainties  in  the  marketplace  over  the  effect  of the
implementation of the Prospective Payment System of reimbursement by Medicare.

Cost of Revenues.  Cost of revenues as a percentage of total revenues  decreased
to 39.3% for the nine months  ended  September  30, 2001 from 51.7% for the nine
months ended  September 30, 2000.  The  improvement  in gross margin  percentage


                                       16
<PAGE>

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  $1.5  million to $7.6  million for the nine
months  ended  September  30, 2001 from $9.1  million for the nine months  ended
September  30, 2000.  This  decrease is  principally  attributable  to synergies
derived from  centralization  of  administrative  functions and  elimination  of
non-essential  facilities  and excess  capacity.  As a  percentage  of total net
revenues,  selling,  general and administrative expenses were 47.9% for the nine
months ended  September  30, 2001  compared with 49.9% for the nine months ended
September 30, 2000.

Research and Development  Expenses.  Research and development expenses decreased
$0.4 million,  or 7.7%, to $4.8 million for the nine months ended  September 30,
2001 from $5.2  million for the nine  months  ended  September  30,  2000.  As a
percentage of total net revenues, these expenses increased to 30.4% for the nine
months ended  September 30, 2001 from 28.5% for the nine months ended  September
30, 2000.

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  September  30,  2001 the  Company  paid  $294,000 in
employee  costs and $18,000 in other exit  costs.  As of October  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 $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 nine months ended September 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 nine  months  ended
September  30, 2000 as a result of increased  borrowing  subsequent to September
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
adoption  of SFAS  No.  133 did not  have a  material  impact  on the  Company's
financial position or results of operations.

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standards (SFAS) 141,  Business  Combinations and SFAS
142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all business
combinations  completed  after June 30, 2001.  SFAS 142 is effective  for fiscal
years beginning  after December 15, 2001;  however,  certain  provisions of this
Statement apply to goodwill and other intangible assets acquired between July 1,
2001 and the effective  date of SFAS 142. Major  provisions of these  Statements
and their  effective  dates for the  Company are as  follows:  (i) all  business
combinations  initiated  after  June 30,  2001 must use the  purchase  method of
accounting and the pooling of interest method of accounting is prohibited except
for transactions  initiated before July 1, 2001; (ii) intangible assets acquired
in a business  combination  must be recorded  separately  from  goodwill if they
arise from  contractual or other legal rights or are separable from the acquired
entity  and can be sold,  transferred,  licensed,  rented or  exchanged,  either
individually  or as  part of a  related  contract,  asset  or  liability;  (iii)
goodwill and  intangible  assets with  indefinite  lives acquired after June 30,
2001 will not be  amortized  and  effective  January  1,  2002,  all  previously
recognized  goodwill and intangible  assets with indefinite lives will no longer


                                       17
<PAGE>

be subject to  amortization;  (iv)  effective  January  1,  2002,  goodwill  and
intangible  assets with indefinite lives will be tested for impairment  annually
and whenever  there is an impairment  indicator;  and (v) all acquired  goodwill
must be assigned to  reporting  units for  purposes  of  impairment  testing and
segment reporting.  The Company is currently evaluating the impact that SFAS 141
and 142 will have on its financial reporting requirements.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

As of September 30, 2001, the Company's  obligations include variable rate notes
payable  and a line of credit  bank note with  aggregate  principal  balances of
approximately  $9.7 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 $56,000 per year.

At September 30, 2001, the Company had accounts receivable of approximately $5.7
million net of an allowance  for doubtful  accounts of $378,000.  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 would be material to the business or financial condition
of the Company on a consolidated basis.

Item 2.  Change in Securities.

None

Item 3.  Defaults Upon Senior Securities.

None

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

On July 31, 2001, the Annual Meeting of Stockholders  of  CareCentric,  Inc. was
held.  Stockholders present in person or by proxy holding 5,290,639 votes, based
upon ownership of CareCentric common stock and preferred stock, were represented
at the meeting.

Seven  Directors  of the Company were duly elected to hold office until the next
Annual Meeting of Stockholders or until  successors have been duly elected.  The
elected Directors and the affirmative votes were as follows:

                                                       Votes Against or
Name                          Affirmative Votes             Withheld
----                          -----------------        ----------------
John E. Reed                       5,286,785                     3,854
R. Bruce Dewey                     5,290,620                        19
Barrett C. O'Donnell               5,286,462                     4,177
Winston R. Hindle, Jr.             5,290,620                        19
Dr. David O. Ellis                 5,286,787                     3,852
William Simione, Jr.               5,290,488                       151
Edward K. Wissing                  5,290,620                        19

The number of shares of CareCentric common stock reserved for issuance under the
1997 Omnibus Equity-based Incentive Stock Option Plan was increased from 450,000
shares to 900,000 shares. The affirmative votes for this matter were as follows:

                                       18
<PAGE>

    Affirmative Votes           Votes Against       Votes Abstained
    -----------------           -------------       ---------------
           5,092,030                 111,126                87,483

Grant  Thornton  LLP was  appointed as the  Company's  auditors for December 31,
2001. The affirmative votes for this matter were as follows:

    Affirmative Votes           Votes Against       Votes Abstained
    -----------------           -------------       ---------------
           5,277,881                   1,542                11,216


Item 5.  Other Information.

None.

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

(a) Exhibits:

Exhibit No.    Description
-----------    -----------
2.1+           Purchase and Sale  Agreement  dated  September  28, 2001,  by and
               between the  Registrant,  Simione  Central  Consulting,  Inc. and
               Simione Consultants,  L.L.C. (incorporated herein by reference to
               Exhibit 2.1 filed with  Registrant's  Current  Report on Form 8-K
               filed October 12, 2001.)
-----------------------------

+ In accordance with Item 601(b)(2) of the Registration  S-K, the schedules have
been  omitted.  There is a list of schedules at the end of the Exhibit,  briefly
describing  them.  The  Registrant  will  furnish  supplementally  a copy of any
omitted schedule to the Commission upon request.

(b) Reports on Form 8-K:

None.




                                       19
<PAGE>

                                   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: November 14, 2001             By:/s/ Dennis A. Brauckman
                                        ----------------------------------------
                                        DENNIS A. BRAUCKMAN
                                        Vice President - Finance and
                                        Chief Financial Officer
                                        (Principal Financial Officer)






<PAGE>


                                 EXHIBIT INDEX

Exhibit No.    Description
-----------    -----------
2.1+           Purchase and Sale  Agreement  dated  September  28, 2001,  by and
               between the  Registrant,  Simione  Central  Consulting,  Inc. and
               Simione Consultants,  L.L.C. (incorporated herein by reference to
               Exhibit 2.1 filed with  Registrant's  Current  Report on Form 8-K
               filed October 12, 2001.)
-----------------------------

+ In accordance with Item 601(b)(2) of the Registration  S-K, the schedules have
been  omitted.  There is a list of schedules at the end of the Exhibit,  briefly
describing  them.  The  Registrant  will  furnish  supplementally  a copy of any
omitted schedule to the Commission upon request.


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