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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                -----------------

                                    FORM 10-Q

                                -----------------

(Mark One)

  |X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

For the quarterly period ended June 30, 2004

                                       OR

  |_| Transition report pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934

Commission File Number:  000-50371

                         Curative Health Services, Inc.
             (Exact name of registrant as specified in its charter)

               MINNESOTA                                    51-0467366
   (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                      Identification Number)

                                150 Motor Parkway
                            Hauppauge, New York 11788
                                 (631) 232-7000

            (Address and phone number of principal executive offices)

                      -------------------------------------

      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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act): Yes |X| No |_|

      As of July 30, 2004, there were 12,919,294 shares of the Registrant's
Common Stock, $.01 par value, outstanding.

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

<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
Part I     Financial Information                                                          Page No.
---------------------------------------------------------------------------------------------------
<S>                                                                                       <C>
Item 1     Financial Statements:

           Condensed Consolidated Statements of Operations                                   3
                 Three and Six Months ended June 30, 2004 and 2003

           Condensed Consolidated Balance Sheets                                             4
                 June 30, 2004 and December 31, 2003

           Condensed Consolidated Statements of Cash Flows                                   5
                 Six Months ended June 30, 2004 and 2003

           Notes to Condensed Consolidated Financial Statements                              6

Item 2     Management's Discussion and Analysis of Financial Condition                       16
                 and Results of Operations

Item 3     Quantitative and Qualitative Disclosures About Market Risk                        24

Item 4     Controls and Procedures                                                           24

Part II    Other Information                                                              Page No.
---------------------------------------------------------------------------------------------------

Item 1     Legal Proceedings                                                                 25

Item 2     Changes in Securities and Use of Proceeds                                         25

Item 4     Submission of Matters to a Vote of Security Holders                               26

Item 6     Exhibits and Reports on Form 8-K                                                  27

           Signatures                                                                        30
</TABLE>


                                       2
<PAGE>

Part I Financial Information

Item 1. Financial Statements

                 Curative Health Services, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Three Months Ended           Six Months Ended
                                                    June 30                     June 30
                                                2004        2003            2004         2003
                                              --------    --------       ---------    ---------
<S>                                           <C>         <C>            <C>          <C>
Revenues:
   Products                                   $ 57,698    $ 37,373       $ 116,784    $  87,823
   Services                                      6,742       7,316          13,214       14,886
                                              --------    --------       ---------    ---------
        Total revenues                          64,440      44,689         129,998      102,709

Costs and operating expenses:
   Cost of product sales                        46,586      25,168          93,411       62,555
   Cost of services                              2,972       3,382           5,899        6,860
   Selling, general and administrative          16,176       9,776          26,193       20,834
                                              --------    --------       ---------    ---------
     Total costs and operating expenses         65,734      38,326         125,503       90,249
                                              --------    --------       ---------    ---------

(Loss) income from operations                   (1,294)      6,363           4,495       12,460

Other income                                       101           2             108            4

Interest expense                                (3,993)       (525)         (4,609)      (1,012)
                                              --------    --------       ---------    ---------

(Loss) income before income taxes               (5,186)      5,840              (6)      11,452

Income tax (benefit) provision                  (2,054)      2,307              (8)       4,524
                                              --------    --------       ---------    ---------

Net (loss) income                             $ (3,132)   $  3,533       $       2    $   6,928
                                              ========    ========       =========    =========

Net (loss) income per common share, basic     $   (.24)   $    .29       $     .00    $     .57
                                              ========    ========       =========    =========

Net (loss) income per common share, diluted   $   (.24)   $    .26(i)    $     .00    $     .51(i)
                                              ========    ========       =========    =========

Weighted average common shares, basic           13,092      12,378          13,087       12,299
                                              ========    ========       =========    =========

Weighted average common shares, diluted         13,092      13,797          13,827       13,864
                                              ========    ========       =========    =========
</TABLE>

(i)   Calculated under the "as if converted" method. See Note 3.

                             See accompanying notes


                                       3
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              June 30, 2004    December 31, 2003
                                                              -------------    -----------------
<S>                                                             <C>                 <C>
ASSETS
Current assets:
Cash and cash equivalents                                       $   1,181           $   1,072
Accounts receivable, net                                           76,027              55,217
Inventories                                                        10,484              11,237
Prepaids and other current assets                                   4,955               4,270
Deferred tax assets                                                 3,680               2,984
                                                                ---------           ---------
   Total current assets                                            96,327              74,780

Property and equipment, net                                        11,106               7,890
Intangibles subject to amortization, net                           21,874               1,463
Intangibles not subject to amortization (trade names)               1,615                 682
Goodwill                                                          255,054             147,895
Other assets                                                       14,206               1,228
                                                                ---------           ---------
   Total assets                                                 $ 400,182           $ 233,938
                                                                =========           =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                $  19,655           $  28,892
Accrued expenses                                                   22,411              11,502
Deferred taxes                                                      1,007               1,007
Current portion of long-term liabilities                            3,871               7,911
Other current liabilities                                             336                  --
                                                                ---------           ---------
   Total current liabilities                                       47,280              49,312

Long-term liabilities                                             200,320              39,599
Deferred taxes                                                      1,752               1,307
Other long-term liabilities                                         5,779                  --
                                                                ---------           ---------
   Total long-term liabilities                                    207,851              40,906

Stockholders' equity:
Common stock                                                          128                 127
Additional paid in capital                                        116,410             115,082
Retained earnings                                                  30,120              30,118
Notes receivable - stockholders                                    (1,607)             (1,607)
                                                                ---------           ---------
   Total stockholders' equity                                     145,051             143,720
                                                                ---------           ---------

   Total liabilities and stockholders' equity                   $ 400,182           $ 233,938
                                                                =========           =========
</TABLE>

                             See accompanying notes


                                       4
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                 June 30
                                                                            2004           2003
                                                                         ---------       --------
<S>                                                                      <C>             <C>
OPERATING ACTIVITIES:
Net income                                                               $       2       $  6,928
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization                                             2,334          1,184
   Provision for doubtful accounts                                             476          1,849
   Amortization of deferred financing fees                                     438             --
   Changes in operating assets and liabilities, net of effects from
   Specialty Infusion acquisitions:
     Accounts receivable                                                     7,258         (4,101)
     Inventories                                                             3,913          3,182
     Prepaids and other                                                        174            (87)
     Accounts payable and accrued expenses                                 (13,463)        (4,944)
                                                                         ---------       --------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                    1,132          4,011

INVESTING ACTIVITIES:
Proceeds from Investment in Accordant Health Services, Inc.                  2,327             --
Specialty Infusion acquisitions, net of cash acquired                     (152,765)       (22,868)
Purchases of property and equipment                                         (1,161)        (2,841)
                                                                         ---------       --------

NET CASH USED IN INVESTING ACTIVITIES                                     (151,599)       (25,709)

FINANCING ACTIVITIES:
Net proceeds from long-term borrowings                                     173,685             --
Shares repurchased and retired                                                  --         (1,524)
Proceeds from exercise of stock options                                        162          2,432
Proceeds from repayment of notes receivable - stockholders                      --            780
Borrowing from credit facilities, net of repayment                             743         31,733
Repayments of long-term liabilities                                        (24,014)       (13,368)
                                                                         ---------       --------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                  150,576         20,053
                                                                         ---------       --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           109         (1,645)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             1,072          2,643
                                                                         ---------       --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $   1,181       $    998
                                                                         =========       ========

SUPPLEMENTAL INFORMATION
Interest paid                                                            $   1,012       $  1,015
                                                                         =========       ========
Income taxes paid                                                        $     977       $  3,994
                                                                         =========       ========
</TABLE>

                             See accompanying notes


                                       5
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The condensed consolidated financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments and a non-recurring
revenue adjustment of approximately $1 million (reduction to revenue) - see
Note 10) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the interim
periods. The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements for the year ended
December 31, 2003 and notes thereto contained in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission. The results of
operations for the three and six months ended June 30, 2004 are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2004.

In this quarterly report on Form 10-Q, "Curative" or the "Company" refers
collectively to Curative Health Services, Inc. and its consolidated
subsidiaries, including Critical Care Systems, Inc. ("CCS"). With the
acquisition of CCS (see Note 4), the Company is repositioning its Specialty
Pharmacy Services business unit to focus on the specialty infusion market which
is a hybrid of the specialty pharmacy and traditional home infusion industries.
In connection with this repositioning, the Company has changed the name of its
Specialty Pharmacy Services business unit to Specialty Infusion business unit
and the name of its Specialty Healthcare Services business unit to Wound Care
Management business unit. For ease of reference, the names of these business
units have been standardized throughout this quarterly report on Form 10-Q
regardless of whether the discussion pertains to periods prior to or after the
name changes.

Stock Based Compensation Plans

The Company grants options for a fixed number of shares to employees and
directors with an exercise price equal to the fair value of the shares at the
date of grant. The Company accounts for stock option grants under the
recognition and measurement principles of Accounting Principles Board ("APB")
No. 25, "Accounting for Stock Issued to Employees," and related Interpretations
because the Company believes the alternate fair value accounting provided for
under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," requires the use of option valuation models that
were not developed for use in valuing employee stock options. Under APB No. 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recorded.

The following table illustrates the effect on net (loss) income and earnings per
share as if the Company had applied the fair value recognition provisions of
SFAS No. 123 to stock-based compensation for the three and six months ended June
30, 2004 and 2003 (in thousands, except per share data):


                                       6
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation (continued)

<TABLE>
<CAPTION>
                                                                   Three Months Ended                Six Months Ended
                                                                         June 30                          June 30
                                                                    2004           2003             2004           2003
                                                                  --------       --------         --------       --------
<S>                                                               <C>            <C>              <C>            <C>
Net (loss) income                                                 $ (3,132)      $  3,533         $      2       $  6,928
Deduct:  Total stock-based employee compensation expense
    determined under fair value based method for all awards,
    net of related tax effects                                       1,274          1,193            2,249          2,325
                                                                  --------       --------         --------       --------
Pro forma net (loss) income                                       $ (4,406)      $  2,340         $ (2,247)      $  4,603
                                                                  ========       ========         ========       ========

(Loss) earnings per share:
    Basic - as reported                                           $   (.24)      $    .29         $    .00       $    .57
    Basic - pro forma                                                 (.34)           .19             (.17)           .37

    Diluted - as reported                                         $   (.24)      $    .26(i)      $    .00       $    .51(i)
    Diluted - pro forma                                               (.34)           .17(i)          (.19)           .34(i)
</TABLE>

(i)   Calculated under the "as if converted" method. See Note 3.

Note 2. Reclassifications

Certain prior year amounts in the condensed consolidated financial statements
and accompanying notes have been reclassified to conform to the current year
classifications.

Note 3. Net (Loss) Income per Common Share

Net (loss) income per common share, basic, is computed by dividing the net
(loss) income by the weighted average number of common shares outstanding. Net
(loss) income per common share, diluted, is computed by dividing adjusted net
(loss) income (see below) by the weighted average number of shares outstanding
plus dilutive common share equivalents. The following table sets forth the
computation of weighted average shares, basic and diluted, used in determining
basic and diluted earnings per share (in thousands):

<TABLE>
<CAPTION>
                                                                   Three Months Ended               Six Months Ended
                                                                         June 30                         June 30
                                                                    2004           2003             2004           2003
                                                                  --------       --------         --------       --------
<S>                                                                 <C>            <C>              <C>            <C>
Weighted average shares, basic                                      13,092         12,378           13,087         12,299
Effect of dilutive stock options and convertible notes                  --          1,419              740          1,565
                                                                  --------       --------         --------       --------
Weighted average shares, diluted                                    13,092         13,797           13,827         13,864
                                                                  ========       ========         ========       ========
</TABLE>


                                       7
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Net (Loss) Income per Common Share (continued)

Adjusted net (loss) income and net (loss) income per common share, diluted, for
the three and six months ended June 30, 2004 and 2003 were computed as follows
(in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                    Three Months Ended              Six Months Ended
                                                                          June 30                        June 30

                                                                    2004           2003             2004           2003
                                                                  --------       --------         --------       --------
<S>                                                               <C>            <C>              <C>            <C>
Net (loss) income, as reported                                    $ (3,132)      $  3,533         $      2       $  6,928
Add back interest related to convertible notes, net of tax              31             65               63            131
                                                                  --------       --------         --------       --------
Adjusted net (loss) income                                        $ (3,101)      $  3,598         $     65       $  7,059
                                                                  ========       ========         ========       ========

Net (loss) income per common share, diluted                       $   (.24)(1)   $    .26         $    .00       $    .51
                                                                  ========       ========         ========       ========

Weighted average shares, diluted                                    13,092         13,797           13,827         13,864
                                                                  ========       ========         ========       ========
</TABLE>

In accordance with SFAS No. 128, "Earnings Per Share," net (loss) income per
common share, diluted, for the three and six months ended June 30, 2004 and 2003
was calculated under the "as if converted" method, which requires adding shares
related to convertible notes that have no contingencies to the denominator for
diluted earnings per share and adding to net (loss) income, the numerator, tax
effected interest expense relating to those convertible notes.

(i)   Basic shares of 13,092 were used to calculate net loss per common share as
      using the effects of stock options and convertible notes would have an
      anti-dilutive effect on earnings per share.

Note 4. Specialty Infusion Acquisitions

On February 3, 2003, the Company acquired MedCare, Inc. ("MedCare"), a specialty
pharmacy with locations in Alabama, Mississippi and West Virginia. The purchase
price for MedCare was $6.3 million. A final purchase price allocation based on
fair market value of acquired assets and liabilities has been completed.

On April 23, 2003, the Company acquired the assets and specialty pharmacy
business of All Care Medical, Inc. ("All Care"), a Louisiana-based Synagis(R)
pharmacy. The purchase price of All Care was $2.1 million. A final purchase
price allocation based on fair market value of acquired assets and liabilities
has been completed.

On June 10, 2003, the Company acquired certain assets of Prescription City, Inc.
("Prescription City"), a Spring Valley, New York, specialty pharmacy business
specializing in the provision of chemotherapy and cancer drugs. The purchase
price for Prescription City was $17.5 million. Fair market valuations have not
yet been finalized and, as such, the allocation of the purchase price is
preliminary, pending a final valuation.


                                       8
<PAGE>
                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Specialty Infusion Acquisitions (continued)

As previously disclosed, a search warrant issued by a U.S. Magistrate Judge,
Southern District of New York, relating to a criminal investigation was executed
on November 4, 2003 at the Company's Prescription City pharmacy in Spring
Valley, New York. The Government has informed the Company that it is not a
target of the investigation. The Company was served with the search warrant on
Tuesday, November 4, 2003 while it was conducting its own compliance review at
the Spring Valley pharmacy. The Company has cooperated fully with the U.S.
Attorney's Office in its investigation. Based on information known as of
November 5, 2003, the Company terminated Paul Frank, the former principal
shareholder of Prescription City. The Company also hired outside counsel in
connection with this investigation. Certain assets of Prescription City were
purchased by the Company in June 2003. The purchase was structured as an asset
purchase with the Company being provided indemnifications, representations and
warranties by the seller. The Company has filed a complaint in the Southern
District of New York against Paul Frank and Prescription City, seeking
rescission, compensatory and punitive damages and other relief. Such litigation
is pending, and the outcome is uncertain at this time.

On April 23, 2004, the Company acquired CCS, a leading national provider of
specialty infusion pharmaceuticals and related comprehensive clinical services,
for a total consideration of approximately $152.8 million in cash, including a
working capital payment of approximately $2.8 million. CCS focuses on
delivering four principal therapies: hemophilia clotting factor, intravenous
immunoglobulin ("IVIG"), Total Parenteral Nutrition and anti-infective
therapies. The Company financed the acquisition of CCS with a portion of the
proceeds from the Company's offering of $185 million aggregate principal amount
of 10.75% senior notes due 2011, offered to eligible purchasers pursuant to
Rule 144A and Regulation S under the Securities Act of 1933, and additional
borrowings under the Company's refinanced credit facility with GE Healthcare
Financial Services, a unit of GE Commercial Finance, as agent and lender. Both
the offering of senior notes and the refinancing of the Company's existing
credit facility were completed on April 23, 2004, concurrent with the closing
of the acquisition of CCS.

The Company acquired approximately $38.7 million of CCS's assets, including
$28.6 million in accounts receivable, $3.2 million in inventory and $3.3 million
in fixed assets. The Company also assumed approximately $13.9 million of CCS's
liabilities, including $1.4 million recorded in accrued expenses related to
severance costs associated with the terminations of 10 CCS employees. As of June
30, 2004, the Company paid nearly all of such costs, leaving a remaining accrued
liability balance of approximately $0.05 million. The excess of the acquisition
cost over the fair value of identifiable tangible net assets acquired was
approximately $125.2 million, consisting of approximately $20.5 million in payor
contracts and $0.2 million in covenants not to compete, which are being
amortized over 17 years and 4 years, respectively, from the date of acquisition,
and trade name and goodwill of approximately $0.9 million and $107 million,
respectively, which are not being amortized for book purposes per SFAS No. 142,
"Goodwill and Other Intangible Assets." Fair market valuations have not yet been
finalized and, as such, the allocation of the purchase price is preliminary,
pending completion of a final valuation.

The acquisitions described above (collectively the "specialty infusion
acquisitions") were consummated for purposes of expanding the Company's
Specialty Infusion business and were accounted for using the purchase method of
accounting. The accounts of the specialty infusion acquisitions and related
goodwill and intangibles are included in the accompanying condensed consolidated
balance sheets. The operating results of the specialty infusion acquisitions are
included in the accompanying condensed consolidated statements of operations
from the dates of acquisition.


                                       9
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Specialty Infusion Acquisitions (continued)

Unaudited pro forma amounts for the three and six months ended June 30, 2004 and
2003, assuming the specialty infusion acquisitions had occurred on January 1,
2003 are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                            Three Months Ended                Six Months Ended
                                                  June 30                          June 30
                                            2004          2003              2004              2003
                                          --------       -------         ---------          --------
<S>                                       <C>            <C>             <C>                <C>
Revenues                                  $ 71,830       $71,583         $ 163,548          $159,463
Net (loss) income                         $ (3,650)      $ 2,712         $  (2,859)         $  5,373
Net (loss) income per share, diluted      $   (.21)      $   .20(i)      $    (.28)(i)      $    .39(i)
</TABLE>

(i)   Calculated under the "as if converted" method. See Note 3.

The pro forma amounts for the three and six months ended June 30, 2004 and 2003
give effect to: (i) the Company's offering of $185 million aggregate principal
amount of 10.75% senior notes due 2011; (ii) the refinancing of the Company's
revolving credit facility and (iii) specialty infusion acquisitions as if these
transactions occurred on January 1, 2003. The above pro forma amounts include
adjustments related to the CCS acquisition, including, but not limited to, the
amortization of identifiable intangibles related to a preliminary purchase price
allocation, additional compensation expense and retention incentives, and pro
forma tax adjustments.

The pro forma operating results shown above are not necessarily indicative of
operations in the periods following acquisitions.

Note 5. Segment Information

The Company adheres to the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company has two
reportable segments: Specialty Infusion and Wound Care Management. In its
Specialty Infusion business unit, the Company purchases various
biopharmaceutical products from suppliers and then contracts with insurance
companies and other payors, as well as retail pharmacies, to provide
direct-to-patient distribution of, and other support services, including
education, reimbursement and the provision or coordination of injection or
infusion services related to, these biopharmaceutical products, including
Synagis(R) for the prevention of respiratory syncytial virus. Revenues from
Synagis(R) sales for the three and six months ended June 30, 2004 were
approximately $1.6 million and $24.6 million, respectively. As respiratory
syncytial virus occurs primarily during the winter months, the major portion of
the Company's Synagis(R) sales may be higher during the first and fourth
quarters of the calendar year which may result in significant fluctuations in
the Company's quarterly operating results.


                                       10
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5. Segment Information (continued)

In its Wound Care Management business unit, the Company contracts with hospitals
to manage outpatient Wound Care Center(R) programs.

The Company evaluates segment performance based on (loss) income from
operations. For the three months ended June 30, 2004, management estimated that
corporate general and administrative expenses allocated to the reportable
segments were 63% for Specialty Infusion and 37% for Wound Care Management. For
the six months ended June 30, 2004, management estimated that corporate general
and administrative expenses allocated to the reportable segments were 61% for
Specialty Infusion and 39% for Wound Care Management. Intercompany transactions
were eliminated to arrive at consolidated totals.

The following tables present the results of operations and total assets of the
reportable segments of the Company at and for the three and six months ended
June 30, 2004 and 2003 (in thousands):

<TABLE>
<CAPTION>
                                                At and for the three months ended June 30, 2004
                                           ----------------------------------------------------------
                                             Specialty              Wound Care
                                              Infusion              Management             Total
                                           ---------------      -------------------     -------------
<S>                                          <C>                      <C>                <C>
      Revenues                               $  57,698               $  6,742            $  64,440
      (Loss) income from operations          $  (2,289)              $    995            $  (1,294)
      Total assets                           $ 368,733               $ 31,449            $ 400,182

<CAPTION>


                                                At and for the three months ended June 30, 2003
                                           ----------------------------------------------------------
                                             Specialty              Wound Care
                                              Infusion              Management             Total
                                           ---------------      -------------------     -------------
<S>                                          <C>                     <C>                 <C>
      Revenues                               $  37,373               $  7,316            $  44,689
      Income from operations                 $   5,549               $    814            $   6,363
      Total assets                           $ 204,437               $  8,526            $ 212,963

<CAPTION>

                                                 At and for the six months ended June 30, 2004
                                           ----------------------------------------------------------
                                             Specialty              Wound Care
                                              Infusion              Management             Total
                                           ---------------      -------------------     -------------
<S>                                          <C>                     <C>                 <C>
      Revenues                               $ 116,784               $ 13,214            $ 129,998
      Income from operations                 $   3,075               $  1,420            $   4,495
      Total assets                           $ 368,733               $ 31,449            $ 400,182

<CAPTION>

                                                 At and for the six months ended June 30, 2003
                                           ----------------------------------------------------------
                                             Specialty              Wound Care
                                              Infusion              Management             Total
                                           ---------------      -------------------     -------------
<S>                                          <C>                     <C>                 <C>
      Revenues                               $  87,823               $ 14,886            $ 102,709
      Income from operations                 $  10,646               $  1,814            $  12,460
      Total assets                           $ 204,437               $  8,526            $ 212,963
</TABLE>


                                       11
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6. Employee and Facility Termination Costs

In 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities," which
nullified Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring)." SFAS No. 146 establishes
fair value as the objective for initial measurement of liabilities related to
exit or disposal activities and requires that such liabilities be recognized
when incurred.

In the first quarter of 2003, the Company consolidated its pharmacy operations
in California which resulted in the termination of a total of 25 employees and
the vacating of a leased facility. The Company recorded a charge of $1.6 million
in the same period related to this activity.

The following provides a reconciliation of the related accrued costs associated
with the pharmacy consolidation at and for the three and six months ended June
30 (in thousands):

<TABLE>
<CAPTION>
                                                      At and for the three months ended June, 30, 2004
                                          -------------------------------------------------------------------------
                                            Beginning      Costs Charged         Costs Paid or          Ending
                                             Balance         To Expense        Otherwise Settled       Balance
                                             -------         ----------        -----------------       -------
<S>                                             <C>             <C>                  <C>                  <C>
      Employee termination costs                $ 39            $ --                 $ --                 $ 39
      Facility termination costs                 371              --                   60                  311
                                                ----            ----                 ----                 ----
                                                $410            $ --                 $ 60                 $350
                                                ====            ====                 ====                 ====

<CAPTION>

                                                       At and for the six months ended June, 30, 2004
                                          -------------------------------------------------------------------------
                                            Beginning      Costs Charged         Costs Paid or          Ending
                                             Balance         to Expense        Otherwise Settled       Balance
                                             -------         ----------        -----------------       -------
<S>                                             <C>             <C>                  <C>                  <C>
      Employee termination costs                $ 39            $ --                 $ --                 $ 39
      Facility termination costs                 431              --                  120                  311
                                                ----            ----                 ----                 ----
                                                $470            $ --                 $120                 $350
                                                ====            ====                 ====                 ====
</TABLE>

In 2004, the Company expects to pay out approximately $0.3 million of these
accrued costs and the remainder in subsequent years.

Note 7. Changes in Capital Structure

During the first six months of 2004, the Company had the following significant
changes in capital structure:

Notes Converted into Common Stock. In January 2004, certain selling shareholders
of Infinity Infusion Care, Ltd. ("Infinity") exercised their rights under
convertible notes and converted approximately $1.2 million of such notes into
72,715 shares of the Company's common stock.


                                       12
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Derivative Instruments, Hedging Activities and Debt

The Company has adopted SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," and SFAS No. 149,
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
These statements require that all derivative instruments be recorded on the
consolidated balance sheets at their respective fair values as either assets or
liabilities.

In conjunction with the acquisition of CCS on April 23, 2004, the Company
offered to eligible purchasers $185 million aggregate principal amount of 10.75%
senior subordinated notes due May 1, 2011 (the "Notes") which bear interest at
10.75%, payable semi-annually. In addition, the Company entered into a $90
million notional amount interest rate swap agreement. This agreement is used by
the Company to effectively modify its exposure to interest rate risk by
converting its fixed-rate debt to a floating rate liability. Under the
agreement, the Company receives, on the portion of the senior subordinated notes
hedged, 10.75% fixed rate amounts in exchange for floating interest rate (the
6-month LIBOR rate plus a premium) payments over the life of the agreement
without an exchange of the underlying principal amount. The swap matures on May
2, 2011.

The swap is a fair value hedge. As a result, changes in fair value of the hedge
are recognized in each period in earnings. Additionally, the portion of the debt
that has been hedged has been marked to fair value (discount of $3.7 million),
with a recognition of the change in fair value during the period in earnings.
The Company is exposed to the risk of interest rate changes and credit risk in
the event of nonperformance by the counterparties. However, the Company believes
the risk of nonperformance is low.

As of June 30, 2004, the Company recognized a net gain of approximately $0.1
million (net of tax) related to the recording of the hedged debt and the swap at
fair value (recorded in other income). The fair value of the swap agreement as
of June 30, 2004 was approximately $3.7 million and is recorded in other
long-term liabilities.

Also in conjunction with the acquisition of CCS on April 23, 2004, the Company
completed the refinancing of its existing credit facility with GE Healthcare
Financial Services, a unit of GE Commercial Finance, as agent and lender to a
$40 million senior secured revolving credit facility to support permitted
acquisitions, and future working capital and general corporate needs. At that
time, the Company paid off its existing revolver and term loan in the amounts of
$13.6 million and $24 million, respectively. The amended and restated revolving
credit facility is an asset backed facility, with availability based upon the
Company's balance of eligible accounts receivable and inventory, offset by
approximately $7.5 million held against that availability as a reserve for the
Company's hedge agreement. A commitment fee of approximately $0.9 million was
paid upon closing of the amended and restated agreement, the cost of which will
be amortized over the remaining term of the loan. As of June 30, 2004, the
Company had approximately $26 million of availability under its revolving credit
facility. The facility also contains certain financial covenants which are
measured quarterly during the term of the facility which expires in July, 2008.
As of June 30, 2004, the Company was in compliance with those covenants.


                                       13
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Note Guarantees

On April 23, 2004, the Company issued the Notes under an Indenture (the
"Indenture"), dated April 23, 2004, among the Company, its subsidiaries and
Wells Fargo Bank, National Association. The Notes are jointly and severally
guaranteed by all of the Company's existing and future restricted subsidiaries
("Restricted Subsidiaries"), as defined in the Indenture, on a full and
unconditional basis, and no separate consideration will be received for the
issuance of these guarantees. However, under certain circumstances, the Company
may be permitted to designate any of its Restricted Subsidiaries as
"Unrestricted Subsidiaries."

The Company has no assets or operations independent of its Restricted
Subsidiaries. Furthermore, as of April 23, 2004, there were no significant
restrictions on the ability of any Restricted Subsidiary to transfer to the
Company, without consent of a third party, any of such Restricted Subsidiary's
assets, whether in the form of loans, advances or cash dividends.

Note 10. Medi-Cal Reimbursement Reduction

Approximately 16% and 17% of the Company's total revenues for the three and six
months ended June 30, 2004, respectively, were derived from the California state
funded health programs. The California state legislature in 2003 passed
legislation that modifies the reimbursement methodology for blood-clotting
factors under various California state funded health programs. Under the new
reimbursement methodology, blood-clotting factor products will be reimbursed
based upon Average Selling Price ("ASP"), as provided by the manufacturers, plus
20%.

In addition, payments for California's Medicaid program ("Medi-Cal") and certain
other state-funded health programs were to be reduced by 5% for services
provided on and after January 1, 2004. On December 23, 2003, the United States
District Court for the Eastern District of California issued an injunction
enjoining that scheduled 5% Medi-Cal reimbursement rate cut. The California
Department of Health Services ("DHS") has filed an appeal of such decision with
the federal Ninth Circuit Court of Appeals, which should be heard by the Court
later this year. The length of the injunction and the ultimate outcome of this
litigation are uncertain at this time. The court order enjoining the 5% Medi-Cal
rate reduction did not apply to other state funded programs for hemophilia
patients, and California recently implemented the 5% reduction for these other
programs. However, the 5% reduction as applied to the other state funded
programs was repealed on or about July 31, 2004 for services provided on and
after July 1, 2004.

In May 2004, DHS issued a provider bulletin notifying providers that the ASP
plus 20% methodology would be implemented for services provided on and after
June 1, 2004, but did not specify actual reimbursement rates. On or about July
9, 2004, DHS published a notice in the California Regulatory Notice Register
advising that persons wanting to find out the latest rates could obtain the
information from Electronic Data Systems. Based on information the Company has
received regarding such rates, the Company believes that such revised
rates could result in substantially greater cuts than the guidance previously
provided by DHS representatives had indicated, amounting to approximately a
30-40% cut from current rates. In light of these cuts, the Company has
considered restructuring, reducing or withdrawing services currently
provided to Medi-Cal beneficiaries, and has taken certain cost-reduction
measures, including eliminating certain customer sales and services management
and field positions.


                                       14
<PAGE>

                 Curative Health Services, Inc. and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Medi-Cal Reimbursement Reduction (continued)

On May 27, 2004, a lawsuit was filed on behalf of two individual Medi-Cal
recipients with hemophilia in the United States District Court for the Eastern
District of California against the State of California relating to the
implementation of the new ASP reimbursement methodology, alleging, among other
things, that a severe reduction in reimbursement rates would threaten the
ability of Medi-Cal recipients with hemophilia to have adequate access to blood
clotting factor. The Court denied an application for a temporary restraining
order in the case on the grounds that, because DHS had not revealed the new
rates, there was insufficient evidence that a withdrawal of blood clotting
factor providers from the Medi-Cal program was imminent. This case is still
pending. In addition, on June 10, 2004, the Company filed a lawsuit in the
Superior Court for the County of Sacramento relating to the failure of DHS to
disclose payment rates and the detailed methodology utilized to determine the
rates, and its failure to comply with certain applicable federal procedural
requirements relating to the reimbursement rates. DHS has removed the
case to the United States District Court for the Eastern District of California,
and a hearing has been held to remand the case back to the state court. The
ultimate outcomes of these litigations are uncertain at this time.


                                       15
<PAGE>

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

Overview

Curative Health Services, Inc., through its two business units, Specialty
Infusion and Wound Care Management, seeks to deliver high-quality care and
clinical results that result in high patient satisfaction for patients
experiencing serious or chronic medical conditions.

Curative's Specialty Infusion business unit provides biopharmaceutical and
compounded pharmaceutical products to patients with chronic and critical disease
states and related clinical services to assist these patients with their
intensive disease management needs. The Company purchases various
biopharmaceutical and other pharmaceutical products from suppliers and then
contracts with insurance companies and other payors, as well as retail
pharmacies, to provide direct-to-patient distribution of these products. In
addition to distribution, the Company also provides other support services,
including education, reimbursement and provision or coordination of injection or
infusion services, related to these biopharmaceutical and other pharmaceutical
products. The products distributed and the injection or infusion therapies
offered by the Company are used by patients with chronic or severe conditions
such as hemophilia, immune system disorders, chronic or severe infections,
gastrointestinal illnesses that prohibit oral digestion and other severe
conditions requiring nutritional support, respiratory syncytial virus, cancer,
rheumatoid arthritis, hepatitis C, multiple sclerosis or growth hormone
deficiency. Examples of biopharmaceutical products used by the Company's
patients include hemophilia clotting factor, intravenous immune globulins (or
"IVIG"), MedImmune, Inc.'s Synagis(R) and Centocor, Inc.'s Remicade(R). Examples
of other pharmaceutical products used by the Company's patients include
compounded pharmaceuticals such as total parenteral nutrition products and
anti-infectives. As of June 30, 2004, the Company had 423 payor contracts and 20
retail pharmacy contracts and provided services or products in at least 40
states. The Specialty Infusion business unit provides services directly to
patients and caregivers and delivers its products via overnight mail or courier
and through its retail pharmacies.

The following provides approximate percentages of Specialty Infusion patient
revenues for the six months ended June 30, 2004 and for the year ended December
31, 2003:

                                         June 30,       December 31,
                                           2004             2003
                                        ----------     --------------

                 Private Payors            49.3%            42.5%
                 Medicaid                  44.3%            51.0%
                 Medicare                   6.4%             6.5%

Curative's Wound Care Management business unit is a leading disease management
company specializing in chronic wound care management. The Wound Care Management
business unit manages, on behalf of hospital clients, a nationwide network of
Wound Care Center(R) programs that offer a comprehensive range of services for
treatment of chronic wounds. The Company's Wound Management Program consists of
diagnostic and therapeutic treatment procedures that are designed to meet each
patient's specific wound care needs on a cost-effective basis. The Company's
treatment procedures are designed to achieve positive results for wound healing
based on significant experience in the field. The Company maintains a
proprietary database of patient results that it has collected since 1988
containing over 460,000 patient cases. The Company's treatment procedures, which
are based on extensive patient data, have allowed the Company to achieve an
overall rate of healing of approximately 85% for patients completing therapy. As
of June 30, 2004, the Wound Care Center(R) network consisted of 91 outpatient
clinics located on or near campuses of acute care hospitals in 30 states.


                                       16
<PAGE>

Recent Developments

California Medi-Cal Reimbursement Reduction

Approximately 16% and 17% of the Company's total revenues for the three and six
months ended June 30, 2004, respectively, were derived from the California state
funded health programs. The California state legislature in 2003 passed
legislation that modifies the reimbursement methodology for blood-clotting
factors under various California state funded health programs. Under the new
reimbursement methodology, blood-clotting factor products will be reimbursed
based upon ASP, as provided by the manufacturers, plus 20%.

In addition, payments for Medi-Cal and certain other state-funded health
programs were to be reduced by 5% for services provided on and after January 1,
2004. On December 23, 2003, the United States District Court for the Eastern
District of California issued an injunction enjoining that scheduled 5% Medi-Cal
reimbursement rate cut. DHS has filed an appeal of such decision with the
federal Ninth Circuit Court of Appeals, which should be heard by the Court later
this year. The length of the injunction and the ultimate outcome of this
litigation are uncertain at this time. The court order enjoining the 5% Medi-Cal
rate reduction did not apply to other state funded programs for hemophilia
patients, and California recently implemented the 5% reduction for these other
programs. However, the 5% reduction as applied to the other state funded
programs was repealed on or about July 31, 2004 for services provided on and
after July 1, 2004.

In May 2004, DHS issued a provider bulletin notifying providers that the ASP
plus 20% methodology would be implemented for services provided on and after
June 1, 2004, but did not specify actual reimbursement rates. On or about July
9, 2004, DHS published a notice in the California Regulatory Notice Register
advising that persons wanting to find out the latest rates could obtain the
information from Electronic Data Systems. Based on information the Company has
received regarding such rates, the Company believes that such revised
rates could result in substantially greater cuts than the guidance previously
provided by DHS representatives had indicated, amounting to
approximately a 30-40% cut from current rates. In light of these cuts, the
Company has considered restructuring, reducing or withdrawing services currently
provided to Medi-Cal beneficiaries, and has taken certain cost-reduction
measures, including eliminating certain customer sales and services management
and field positions.

On May 27, 2004, a lawsuit was filed on behalf of two individual Medi-Cal
recipients with hemophilia in the United States District Court for the Eastern
District of California against the State of California relating to the
implementation of the new ASP reimbursement methodology, alleging, among other
things, that a severe reduction in reimbursement rates would threaten the
ability of Medi-Cal recipients with hemophilia to have adequate access to blood
clotting factor. The Court denied an application for a temporary restraining
order in the case on the grounds that, because DHS had not revealed the new
rates, there was insufficient evidence that a withdrawal of blood clotting
factor providers from the Medi-Cal program was imminent. This case is still
pending. In addition, on June 10, 2004, the Company filed a lawsuit in the
Superior Court for the County of Sacramento relating to the failure of DHS to
disclose payment rates and the detailed methodology utilized to determine the
rates, and its failure to comply with certain applicable federal procedural
requirements relating to the reimbursement rates. DHS has removed the
case to the United States District Court for the Eastern District of California,
and a hearing has been held to remand the case back to the state court. The
ultimate outcomes of these litigations are uncertain at this time.


                                       17
<PAGE>

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's condensed consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these condensed consolidated
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the condensed consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. On an ongoing basis, management evaluates its estimates
and judgments, including those related to revenue recognition, bad debts,
inventories, income taxes, intangibles and derivatives. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies, among others,
affect its more significant judgments and estimates used in the preparation of
its condensed consolidated financial statements:

Revenue recognition. Specialty Infusion revenues are recognized, net of any
contractual allowances, when the product is shipped to a patient, retail
pharmacy or a physician's office, or when the service is provided. Wound Care
Management revenues are recognized after the management services are rendered
and are billed monthly in arrears.

Trade receivables. Considerable judgment is required in assessing the ultimate
realization of receivables, including the current financial condition of the
customer, age of the receivable and the relationship with the customer. The
Company estimates its allowances for doubtful accounts using these factors. If
the financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required. In circumstances where the Company is aware of a
specific customer's inability to meet its financial obligations (e.g.,
bankruptcy filings), a specific reserve for bad debts is recorded against
amounts due to reduce the receivable to the amount the Company reasonably
believes will be collected. For all other customers, the Company has reserves
for bad debt based upon the total accounts receivable balance.

Inventories. Inventories are carried at the lower of cost or market on a first
in, first out basis. Inventories consist of high cost biopharmaceutical and
pharmaceutical products that, in many cases, require refrigeration or other
special handling. As a result, inventories are subject to spoilage or shrinkage.
On a quarterly basis, the Company performs a physical inventory and determines
whether any shrinkage or spoilage adjustments are needed. Although the Company
believes its inventories balance at June 30, 2004 is reasonably accurate, there
can be no assurances that spoilage or shrinkage adjustments will not be needed
in the future. The recording of any such reserve may have a negative impact on
the Company's operating results.

Deferred taxes. The Company had approximately $3.7 million in deferred tax
assets at June 30, 2004 and approximately $2.8 million in deferred tax
liabilities. The Company does not have a valuation allowance against its assets
as it believes it is more likely than not that the tax assets will be realized.
The Company has considered future income expectations and prudent tax strategies
in assessing the need for a valuation allowance. In the event the Company
determines in the future that it needs to record a valuation allowance, an
adjustment to deferred tax assets would be charged against income in the period
of determination.


                                       18
<PAGE>

Goodwill and intangibles. Goodwill represents the excess of purchase price over
the fair value of net assets acquired. Intangibles consist of the separately
identifiable intangibles, such as pharmacy and customer relationships and
covenants not to compete. The Company accounts for goodwill and intangible
assets in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets,"
which requires goodwill and intangible assets with indefinite lives no longer be
amortized but rather be reviewed annually, or more frequently if impairment
indicators arise, for impairment. Separable intangible assets that are not
deemed to have an indefinite life are amortized over their useful lives. In
assessing the recoverability of the Company's goodwill and intangibles, the
Company must make assumptions regarding estimated future cash flows and other
factors to determine the fair value of the respective assets. If these estimates
or assumptions change in the future, the Company may need to record an
impairment charge for these assets. An impairment charge would reduce operating
income in the period it was determined that the charge was needed.

Derivative Instruments and Hedging Activities. The Company has an interest-rate
swap to hedge a portion of its fixed-rate senior notes. The Company accounts for
its hedging instrument under the provisions of SFAS No. 133, as amended by SFAS
Nos. 138 and 149, which require that all derivative financial instruments be
recorded on the consolidated balance sheets at fair value as either assets or
liabilities. Adjustments in fair value are recognized in earnings in the period
of the change. The Company is exposed to the risk of interest rate changes and
credit risk in the event of nonperformance by the counterparties. However, the
Company believes the risk of nonperformance is low.

Key Performance Indicators

The following provides a summary of some of the key performance indicators that
may be used to assess the Company's results of operations. These comparisons are
not necessarily indicative of future results (dollars in thousands).

<TABLE>
<CAPTION>
                                                           For the six months ended June 30
                                                   -------------------------------------------------
                                                     2004           2003         $ Change   % Change
                                                   -------------------------------------------------
<S>                                                <C>            <C>            <C>            <C>
      Specialty Infusion revenues                  $116,784       $ 87,823       $ 28,961       33%
      Wound Care Management revenues                 13,214         14,886         (1,672)     (11%)
                                                   --------       --------       --------
      Total revenues                               $129,998       $102,709       $ 27,289       27%

      Specialty Infusion revenues to total               90%            86%
      Wound Care Management revenues to total            10%            14%
                                                   --------       --------
      Total                                             100%           100%

      Specialty Infusion gross margin              $ 23,373       $ 25,268       $ (1,895)      (7%)
      Wound Care Management gross margin              7,315          8,026           (711)      (9%)
                                                   --------       --------       --------
      Total gross margin                           $ 30,688       $ 33,294       $ (2,606)      (8%)

      Specialty Infusion gross margin %                  20%            29%
      Wound Care Management gross margin %               55%            54%
      Total gross margin %                               24%            32%

      Specialty Infusion - SG&A                    $ 14,277       $  9,886       $  4,391       44%
      Wound Care Management - SG&A                    2,046          2,337           (291)     (12%)
      Corporate - SG&A                                9,870          8,611          1,259       15%
                                                   --------       --------       --------
      Total SG&A                                   $ 26,193       $ 20,834       $  5,359       26%

      Operating margin                             $  4,495       $ 12,460       $ (7,965)     (64%)
      Operating margin %                                  3%            12%
</TABLE>


                                       19
<PAGE>

Results of Operations

Revenues. The Company's revenues for the second quarter of 2004 increased $19.8
million, or 44%, to $64.4 million compared to $44.7 million for the second
quarter of the prior fiscal year. For the first six months of 2004, revenues
increased $27.3 million, or 27%, to $130 million from $102.7 million for the
same period in 2003. The increases in revenues for the three and six months of
2004 compared to the same periods in 2003 were the result of the 2004
acquisition of CCS and the specialty infusion acquisitions the Company completed
in 2003, offset by a reduction in hemophilia revenue related to the reduced
reimbursement from California state programs and a slight reduction in service
revenues in the Wound Care Management business unit.

Product revenues, attributed entirely to the Specialty Infusion business unit,
increased $20.3 million, or 54%, to $57.7 million in the second quarter of 2004
from $37.4 million in the second quarter of 2003. For the first six months of
2004, product revenues increased $29 million, or 33%, to $116.8 million compared
to $87.8 million for the same period in 2003. The increases in product revenues
for the three and six months of 2004 compared to the same periods in 2003 were
primarily attributable to the 2004 acquisition of CCS and the specialty infusion
acquisitions the Company completed in 2003, offset by a reduction in hemophilia
revenue related to the reduced reimbursement from California state programs.
Product revenues for the three and six months ended June 30, 2004 and 2003
included the following:

<TABLE>
<CAPTION>
                                                    Three Months Ended June 30
                                        ------------------------------------------------
                                                 2004                     2003
                                        -----------------------   ----------------------
                                                       % of                     % of
                                                     Specialty                Specialty
                                            In        Infusion       In        Infusion
                                         millions     Revenues    millions     Revenues
                                        ------------------------------------------------
<S>                                        <C>          <C>         <C>          <C>
Hemophilia                                 $29.7         51%        $28.7         77%
IVIG, infusables and injectables(1)          7.4         13%          4.7         12%
Antibiotics                                  7.2         13%           --         --
Synagis(R)                                   1.6          3%          1.5          4%
Oncology                                     1.8          3%          0.8          2%
TPN                                          3.1          5%           --         --
Other(2)                                     6.9         12%          1.7          5%
                                           -----        ---         -----        ---
Total Specialty Infusion revenues          $57.7        100%        $37.4        100%
                                           =====        ===         =====        ===
</TABLE>

<TABLE>
<CAPTION>
                                                    Six Months Ended June 30
                                        ------------------------------------------------
                                                 2004                     2003
                                        -----------------------   ----------------------
                                                       % of                     % of
                                                     Specialty                Specialty
                                            In        Infusion       In        Infusion
                                         millions     Revenues    millions     Revenues
                                        ------------------------------------------------
<S>                                        <C>          <C>         <C>          <C>
Hemophilia                                 $ 57.4        49%        $57.2         65%
IVIG, infusables and injectables(1)          12.3        10%          8.7         10%
Antibiotics                                   7.2         6%           --         --
Synagis(R)                                   24.6        21%         18.3         21%
Oncology                                      3.4         3%          0.8          1%
TPN                                           3.1         3%           --         --
Other(2)                                      8.8         8%          2.8          3%
                                           ------       ---         -----        ---
Total Specialty Infusion revenues          $116.8       100%        $87.8        100%
                                           ======       ===         =====        ===
</TABLE>


                                       20
<PAGE>

(1)   Includes IVIG, Remicade(R) and growth hormone products

(2)   Other includes, but is not limited to, products such as oral medications,
      Avonex(R), Rebetron(R), Betaseron(R)and Rebif(R)

As respiratory syncytial virus occurs primarily during the winter months, the
major portion of the Company's Synagis(R) sales will be recorded in the first
and fourth quarters of the calendar year which may result in significant
fluctuations in the Company's quarterly operating results.

Service revenues, attributed entirely to the Wound Care Management business
unit, decreased $0.6 million, or 8%, to $6.7 million in the second quarter of
2004 from $7.3 million in the second quarter of 2003. For the first six months
of 2004, service revenues decreased $1.7 million, or 11%, to $13.2 million
compared to $14.9 million for the same period in 2003. The decreases in service
revenues for the three and six months ended June 30, 2004 were primarily
attributable to contract renegotiations resulting in lower average revenues per
program and the conversion over the last 12 months of 4 under arrangement
programs to management service programs where revenues are lower. For the second
quarter of 2004, the Company signed 3 new Wound Care Management contracts and 3
contracts were terminated. For the first six months of 2004, the Company signed
9 new contracts and 3 contracts were terminated. The continued termination,
non-renewal or renegotiations of a material number of management contracts or
the inability to sign new contracts could result in a continued decline in the
Company's Wound Care Management business unit revenue.

Cost of Product Sales. Cost of product sales, attributed entirely to the
Specialty Infusion business unit, increased $21.4 million, or 85% to $46.6
million in the second quarter 2004 from $25.2 million in the second quarter of
2003. For the first six months of 2004, cost of product sales increased $30.9
million, or 49%, to $93.4 million compared to $62.6 million for the same period
in 2003. The increases in cost of product sales for the three and six months
ended June 30, 2004 were primarily attributable to the 2004 acquisition of CCS
and the specialty infusion acquisitions the Company completed in 2003. As a
percentage of product revenues, cost of product sales for the second quarter of
2004 was 81% compared to 67% for the same period in 2003 and 80% for the first
six months of 2004 compared to 71% for the same period in 2003. The increased
percentage for the second quarter and the first six months of 2004 was primarily
attributable to the acquisition of CCS that has reduced the percentage of
revenues derived from hemophilia products, which have a lower product cost
percentage of revenue, as well as the reduction in hemophilia revenue related to
the reduced reimbursement from California state programs.

Cost of Services. Cost of services, attributed entirely to the Wound Care
Management business unit, decreased $0.4 million, or 12%, to $3 million in the
second quarter of 2004 from $3.4 million in the second quarter of 2003. For the
first six months of 2004, cost of services decreased $1 million, or 14%, to $5.9
million compared to $6.9 million in the second quarter of 2003. The decreases in
cost of services for the three and six months ended June 30, 2004 were primarily
attributed to the conversion over the last 12 months of 4 under arrangement
programs to management service programs where expenses are lower. As a
percentage of service revenues, cost of services for the second quarter of 2004
was 44% compared to 46% for the same period in 2003 and 45% for the first six
months of 2004 compared to 46% for the same period in 2003.

Selling, General and Administrative. Selling, general and administrative
expenses increased $6.4 million, or 65%, to $16.2 million for the second quarter
of 2004 from $9.8 million for the same period in 2003. For the second quarter of
2004, selling, general and administrative expenses consisted of $5.5 million
related to the Specialty Infusion business, $1 million related to the Wound Care
Management business, $4.8 million related to corporate services and $4.9 million
in charges related to litigation costs of Prescription City and integration
costs of the CCS acquisition. The increase of $6.4 million was due to the 2004
acquisition of CCS, acquisitions completed in 2003, growth in corporate
departments to support


                                       21
<PAGE>

these acquisitions and $4.9 million in charges in the second quarter of 2004
compared to $0.8 million in charges for the same period of 2003. The charges
incurred in the second quarter of 2003 were related to the Company's early
termination of its previous credit line and costs of the Company's consolidation
of its pharmacy operations. As a percentage of revenues, selling, general and
administrative expenses were 25% in the second quarter of 2004 compared to 22%
for same period in 2003.

For the first six months of 2004, selling, general and administrative expenses
increased $5.4 million, or 26%, to $26.2 million from $20.8 million for the same
period in 2003 and consisted of $9.2 million related to the Specialty Infusion
business, $2 million related to the Wound Care Management business, $9.9 million
related to corporate services and $5 million in charges related to litigation
costs of Prescription City and integration costs of the CCS acquisition. The
increase of $5.4 million was due to the 2004 acquisition of CCS, acquisitions
completed in 2003, growth in corporate departments to support these acquisitions
and $5 million in charges in the second quarter of 2004 compared to $3.5 million
in charges for the same period of 2003. The charges incurred in the first six
months of 2003 were related to the Company's early termination of its previous
credit line, costs of the Company's consolidation of its pharmacy operations and
severances related to executive departures. As a percentage of revenues,
selling, general and administrative expenses were 20% for the first six months
of 2004 and 2003.

Net (Loss) Income. Net loss was $3.1 million, or ($.24) per diluted share, in
the second quarter of 2004 compared to net income of $3.5 million, or $.26 per
diluted share, in the second quarter of 2003. For the first six months of 2004,
net income was $2 thousand, or $0 per diluted share, compared to net income of
$6.9 million, or $.51 per diluted share, for the same period in 2003. The
decrease for the second quarter and first six months was primarily attributed to
the increase in charges incurred in 2004 and the reduction in hemophilia revenue
related to the reduced reimbursement from California state programs.

Liquidity and Capital Resources

Working capital was $49 million at June 30, 2004 compared to $25.5 million at
December 31, 2003. Total cash and cash equivalents at June 30, 2004 was $1.2
million. The ratio of current assets to current liabilities was 2 to 1 at June
30, 2004 and 1.5 to 1 at December 31, 2003.

Cash flows provided by operating activities for the six months ended June 30,
2004 totaled $1.1 million, primarily attributable to $2.3 million in
depreciation and amortization and decreases of $7.3 million in accounts
receivable, $3.9 million in inventories and $13.5 million in accounts payable
and accrued expenses.

Cash flows used in investing activities totaled $151.6 million attributable to
proceeds of approximately $2.3 million from Accordant Health Services, offset by
$152.8 million cash used in the CCS acquisition and $1.1 million used in fixed
asset purchases.

Cash flows provided by financing activities totaled $150.6 million attributable
to $173.7 million proceeds from long-term borrowings, $0.2 million in proceeds
from the exercise of stock options and $0.7 million in borrowing from the
Company's credit facility, offset by $24 million used in repayments of debt
obligations.

During the first six months of 2004, the Company experienced a net increase in
accounts receivable of $20.8 million attributable to the acquisition of CCS and
an increase in accounts receivable days outstanding. Days sales outstanding were
97 days at June 30, 2004, as compared to 78 days at December 31, 2003. At June
30, 2004, days sales outstanding for the Specialty Infusion business unit was
100 days and for the Wound Care Management business unit, days sales outstanding
was 64 days. The increase in days sales outstanding was attributable to the
inclusion of CCS, which historically has experienced higher days sales
outstanding, as well as a continued slowdown from California state payers.


                                       22
<PAGE>

As of June 30, 2004, the Company's current portion of long-term liabilities of
$3.9 million included $2 million representing the current portion of the
Department of Justice ("DOJ") obligation, $0.9 million representing the current
portion of a convertible note payable used in connection with the purchase of
Apex Therapeutic Care, Inc. ("Apex") in February 2002 and $1 million
representing the note payable used in connection with the purchase of certain
assets of Prescription City in June 2003. At June 30, 2004, the Company's
long-term liabilities of $200.3 million included $181.2 million in senior notes
payable, net of a discount to fair value of $3.7 million, $13.4 million in
borrowed funds from the Company's commercial lender, $1 million related to the
DOJ obligation, a $1.7 million promissory note representing the long-term
portion of the convertible note used in the purchase of Apex and $3 million in a
convertible note payable related to the purchase of Home Care of New York, Inc.
in October 2002.

The Company's current portion of long-term liabilities and long-term liabilities
increased $156.7 million to $204.2 million at June 30, 2004 compared to $47.5
million at December 31, 2003. The 330% increase is due to the $181.2 million in
bonds payable, offset by the conversion of $1.2 million related to the Infinity
note in the first quarter of 2004 and a lower balance on the revolving credit
facility.

The Company's longer term cash requirements include working capital for the
expansion of its Specialty Infusion business and for acquisitions. Other cash
requirements are anticipated for capital expenditures in the normal course of
business, including the acquisition of software, computers and equipment related
to the Company's management information systems. As of June 30, 2004, the
Company had a $3 million obligation, payable over approximately two years, to
the DOJ related to the settlement of its litigation previously disclosed, as
well as senior notes bank debt and convertible and promissory notes totaling
$201.2 million payable over various periods through 2011. In April 2004, the
Company completed the acquisition of CCS for total consideration of
approximately $150 million in cash. The purchase price was paid with the
proceeds from an offering of $185 million aggregate principal amount of 10.75%
senior notes due 2011 offered to eligible purchasers pursuant to Rule 144A and
Regulation S under the Securities Act of 1933. Concurrent with the transaction
closing, the Company also completed the refinancing of its existing credit
facility with GE Healthcare Financial Services, a unit of GE Commercial Finance,
as agent and lender to a $40 million senior secured revolving credit facility to
support permitted acquisitions, and future working capital and general corporate
needs. As of June 30, 2004, the Company had approximately $26 million of
availability under its revolving credit facility. The Company expects that,
based on its current business plan, its expected operating cash flow and
existing credit facilities will be sufficient to meet working capital needs and
a minimal number of acquisitions. Any acquisitions of substantial size will
require the Company to either increase its credit facilities, issue equity or
offer some combination of both debt and equity.

Cautionary Statement

This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These statements include statements regarding
intent, belief or current expectations of the Company and its management. These
forward-looking statements are not guarantees of future performance and involve
a number of risks and uncertainties that may cause the Company's actual results
to differ materially from the results discussed in these statements. Factors
that might cause such differences include, but are not limited to, those
described under the heading, "Critical Accounting Policies and Estimates"
herein, or those described in Exhibit 99.1 to this Form 10-Q and other factors
described in the Company's future filings with the SEC.


                                       23
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company currently does not have market risk sensitive instruments entered
into for trading purposes and does not have operations subject to risks of
material foreign currency fluctuations. The Company places its investments in
instruments that meet high credit quality standards, as specified in the
Company's investment policy guidelines, and does not expect any material loss
with respect to its investment portfolio. The Company does not enter into
derivative instruments other than for fair value hedging purposes and does not
speculate using derivative instruments.

In the second quarter of 2004, the Company entered into a $90 million notional
amount interest-rate swap to hedge a portion of its fixed-rate debt and
effectively modify its exposure to interest rate risk. This swap agreement is
used by the Company to effectively modify its exposure to interest rate risk by
converting its fixed-rate debt to a floating rate liability. Under the swap
agreement, the Company receives, on the portion of the senior subordinated notes
hedged, 10.75% fixed rate amounts in exchange for floating interest rate (the
6-month LIBOR rate plus a premium) payments over the life of the agreement
without an exchange of the underlying principal amount. The swap matures on May
2, 2011. As the swap is a fair value hedge, changes in fair value of the hedge
are recognized in each period in earnings. Additionally, the portion of the debt
that has been hedged has been marked to fair value (discount of $3.7 million),
with a recognition of the change in fair value during the period in earnings.
The Company is exposed to credit risk in the event of nonperformance by the
counterparties. However, the Company believes the risk of nonperformance is low.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's management,
including its Chief Executive Officer and Chief Financial Officer, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this
report, the Company's disclosure controls and procedures were effective in
timely alerting them to the material information relating to the Company (or its
consolidated subsidiaries) required to be included in the reports the Company
files or submits under the Exchange Act.

Changes in Internal Controls

During the fiscal quarter ended June 30, 2004, there has been no change in the
Company's internal control over financial reporting (as defined in Rule 13
a-15(f) under the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.


                                       24
<PAGE>

Curative Health Services, Inc. and Subsidiaries

Part II Other Information

Item 1. Legal Proceedings

In the normal course of its business, the Company may be involved in lawsuits,
claims, audits and investigations, including any arising out of services or
products provided by or to the Company's operations, personal injury claims and
employment disputes, the outcome of which, in the opinion of management, will
not have a material adverse effect on the Company's financial position or
results of operations.

Prescription City Litigation

As previously disclosed, a search warrant issued by a U.S. Magistrate Judge,
Southern District of New York, relating to a criminal investigation was executed
on November 4, 2003 at the Company's Prescription City pharmacy in Spring
Valley, New York. The Government has informed the Company that it is not a
target of the investigation. The Company was served with the search warrant on
Tuesday, November 4, 2003 while it was conducting its own compliance review at
the Spring Valley pharmacy. The Company has cooperated fully with the U.S.
Attorney's Office in its investigation. Based on information known as of
November 5, 2003, the Company terminated Paul Frank, the former principal
shareholder of Prescription City. The Company also hired outside counsel in
connection with this investigation. Certain assets of Prescription City were
purchased by the Company in June 2003. The purchase was structured as an asset
purchase with the Company being provided indemnifications, representations and
warranties by the seller. The Company has filed a complaint in the Southern
District of New York against Paul Frank and Prescription City, seeking
rescission, compensatory and punitive damages and other relief. Such litigation
is pending, and the outcome is uncertain at this time.

California DHS Litigation

Also as previously disclosed, on June 10, 2004, the Company filed a lawsuit in
the Superior Court for the County of Sacramento relating to the failure of DHS
to disclose payment rates and the detailed methodology utilized to determine the
rates, and its failure to comply with certain applicable federal procedural
requirements relating to the reimbursement rates. DHS has removed the
case to the United States District Court for the Eastern District of California
and a hearing has been held to remand the case back to the state court.
The ultimate outcome of this litigation is uncertain at this time.

Item 2. Changes in Securities and Use of Proceeds

(b)   On April 23, 2004, in connection with its acquisition of CCS, the Company
      offered to eligible purchasers, pursuant to Rule 144A and Regulation S
      under the Securities Act of 1933, $185 million aggregate principal amount
      of 10.75% senior notes due 2011. The Company issued the notes under an
      Indenture, dated April 23, 2004, among the Company, its subsidiaries and
      Wells Fargo Bank, National Association, terms of which include certain
      covenants for the Company. These covenants limit the Company's ability to
      pay dividends or other cash distributions to the holders of its common
      stock and the Company's ability to redeem its common stock under certain
      circumstances, including when the Company is in default under the
      Indenture, when the aggregate of these restricted payments exceeds a
      certain level and when certain financial ratios of the Company reach a
      specified level.


                                       25
<PAGE>

Item 2. Changes in Securities and Use of Proceeds (continued)

(e)
                   Issuer Purchases of Equity Securities(i)
                               Second Quarter 2004

<TABLE>
<CAPTION>
                                                                                    (d) Maximum
                                                                                    Number (or
                                                           (c) Total Number         Approximate
                                                               of Shares          Dollar Value) of
                                                           Purchased as Part       Shares that May
                       (a) Total Number                       of Publicly         Yet Be Purchased
                          of Shares     (b) Average Price   Announced Plans        Under the Plans
 Period(ii)               Purchased       Paid per Share      or Programs            or Programs
----------------------------------------------------------------------------------------------------
<S>                         <C>               <C>               <C>                  <C>
Month #1 (April
1 to April 30)                  --                --                --                       --
Month #2 (May 1
to May 31)                  79,190            $11.85            79,190(ii)           $1,062,000(ii)
Month #3 (June 1
to June 30)                     --                --                --                       --
                            ------            ------            ------               ----------
Total                       79,190            $11.85            79,190               $1,062,000
                            ======            ======            ======               ==========
</TABLE>

(i)  The Company adopted a Stock Repurchase Plan on February 17, 1999 (which
     was subsequently amended on March 5, 1999, March 31, 2000 and August 23,
     2000 with respect to amounts authorized to be repurchased), and terminated
     this Stock Repurchase Plan on June 2, 2004. Prior to the termination, the
     Company had ceased making repurchases under this plan since March 29, 2001.

(ii) Pursuant to the Employment Agreement (the "Agreement") between Paul F.
     McConnell and the Company, dated April 23, 2004, which agreement is part
     of the negotiated transaction of our acquisition of CCS and which is filed
     with our Current Report on Form 8-K on May 4, 2004, Mr. McConnell agreed
     to purchase on the open market with his own personal funds, subject to
     availability, applicable laws and the Company's trading policies, shares
     of the Common Stock of the Company having a total purchase price of $2
     million.  The Agreement specifies that Mr. McConnell shall purchase these
     shares within 30 days of April 23, 2004, provided that, such 30-day period
     will be suspended for any portion where applicable laws and the Company's
     trading policies prohibit such purchase.

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

The Company held its 2004 annual meeting of stockholders on June 2, 2004.
Proxies for the meeting were solicited pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended, and there was no solicitation in opposition to
management's nominees as listed in the proxy statement. There were present at
the Annual Meeting in person or by proxy the holders of 11,736,604 votes. At the
meeting, the stockholders elected all nine members of the Company's Board of
Directors to serve for a term of one year.

Elected members of the Board of Directors: (Shares voted affirmative in
parenthesis)

                                     Affirmative          Withheld/Against
                                     -----------          ----------------
      Paul S. Auerbach, MD          (11,425,666)               310,938
      Daniel E. Berce               (11,283,891)               452,713
      Peter M. DeComo               (11,553,419)               183,185
      Lawrence P. English           (11,391,059)               345,545
      Joseph L. Feshbach            (11,521,740)               214,864
      Timothy I. Maudlin             (9,355,108)             2,381,496
      Paul F. McConnell             (11,529,944)               206,660
      Gerard Moufflet               (11,523,454)               213,150
      John C. Prior                 (11,532,455)               204,149


                                       26
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holder (continued)

The stockholders also approved the ratification of the appointment of Ernst &
Young LLP as the Company's independent registered public accounting firm. Number
of votes for were 11,298,753, against 424,295 and 13,556 abstained.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

    Exhibit 2.1   Stock Purchase Agreement relating to Critical Care Systems,
                  Inc. by and among Curative Health Services, Inc. Critical Care
                  Systems, Inc. and each of the persons listed therein, dated
                  February 24, 2004**

    Exhibit 2.2   Letter Agreement supplementing the Stock Purchase Agreement,
                  dated April 23, 2004, by and between Curative Health Services,
                  Inc. and Christopher J. York, as Seller's Representative**

    Exhibit 3.1   Amended and Restated Articles of Incorporation of Curative
                  Health Services, Inc.*

    Exhibit 3.2   By-Laws of Curative Health Services, Inc.*

    Exhibit 4.1   Indenture, dated April 23, 2004, by and among Curative Health
                  Services, Inc., certain of its subsidiaries as Guarantor and
                  Wells Fargo Bank, N.A., as Trustee**

    Exhibit 4.2   Registration Rights Agreement, dated April 23, 2004, by and
                  among Curative Health Services, Inc., certain of its
                  subsidiaries as Guarantors and UBS Securities LLC**

    Exhibit 4.3   Specimen of 144A Notes**

    Exhibit 4.4   Specimen of Regulation S Notes**

    Exhibit 4.5   Specimen of Guarantees**

    Exhibit 10.1  Separation from Employment Agreement, dated April 27, 2004,
                  between William C. Tella and the Company

    Exhibit 10.2  Amendment No. 1 to Curative Health Services, Inc. 2000 Stock
                  Incentive Plan

    Exhibit 10.3  Amendment No 3 to Curative Health Services, Inc. Non-Employee
                  Director Stock Option Plan

    Exhibit 10.4  Swap Transaction Agreement, dated May 3, 2004, between
                  National City Bank and the Company

    Exhibit 10.5  First Amendment to Amended and Restated Credit Agreement and
                  Collateral Documents, made and entered into as of May 3, 2004,
                  among General Electric Capital Corporation and the Company


                                       27

<PAGE>


Item 6. Exhibits and Reports on Form 8-K (continued)


    Exhibit 10.6  Second Amendment to Amended and Restated Credit Agreement,
                  made and entered into as of June 30, 2004, among General
                  Electric Capital Corporation and the Company

    Exhibit 31.1  Certification of Chief Executive Officer pursuant to Rule
                  13a-14(a) (Section 302 Certification), as adopted pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

    Exhibit 31.2  Certification of Chief Financial Officer pursuant to Rule
                  13a-14(a) (Section 302 Certification), as adopted pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

    Exhibit 32.1  Certification of Chief Executive Officer pursuant to 18
                  U.S.C. ss.1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

    Exhibit 32.2  Certification of Chief Financial Officer pursuant to 18
                  U.S.C. ss.1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

    Exhibit 99.1  Cautionary Statements

   *  Incorporated by reference to the similarly numbered exhibit to the
      Company's Current Report on Form 8-K filed on August 19, 2003

   ** Incorporated by reference to the similarly numbered exhibit to the
      Company's Current Report on Form 8-K filed on April 30, 2004

   The Company has excluded from the exhibits filed with this report instruments
   defining the rights of holders of long-term debt of the Company where the
   total amount of the securities authorized under such instruments does not
   exceed 10 % of its total assets. The Company hereby agrees to furnish a copy
   of any of these instruments to the SEC upon request.





                                       28
<PAGE>

Item 6. Exhibits and Reports on Form 8-K (continued)

(b)   Form 8-K

      Form 8-K filed April 6, 2004, reporting under Item 5 a press release
      announcing the Company's plans to offer approximately $185 million of
      senior unsecured notes due 2011 in a private placement (Rule 144A
      offering), exempt from the registration requirements of the Securities Act
      of 1933, as amended.

      Form 8-K filed April 20, 2004, reporting under Item 5 a press release
      announcing certain terms of Mr. Paul F. McConnell's anticipated employment
      with the Company and his appointment as director nominee in the Company's
      2004 annual meeting, subject to and upon the closing of the acquisition of
      Critical Care Systems, Inc.

      Form 8-K filed April 30, 2004, reporting under Item 2 the Company's
      acquisition of all of the outstanding capital stock of Critical Care
      Systems, Inc. and under Item 5 a press release announcing the Company's
      completion of the CCS acquisition, the private placement issuance under
      Rule 144A and Regulation S of the Securities Act of 1933, as amended, of
      $185 million aggregate principal amount of its 10.75% senior notes due
      2011 and the refinancing of its existing credit facility with GE
      Healthcare Financial Services.

      Form 8-K filed May 4, 2004, furnishing under Item 12 a press release
      announcing the Company's results of operations and financial condition for
      the completed fiscal quarter ended March 31, 2004.

      Form 8-K filed May 4, 2004, reporting under Item 5 and filing exhibits
      under Item 7 on the Company's completion of the CCS acquisition, the
      private placement issuance under Rule 144A and Regulation S of the
      Securities Act of 1933, as amended, of $185 million aggregate principal
      amount its 10.75% senior notes due 2011, the refinancing of its existing
      credit facility with GE Healthcare Financial Services and, pursuant to the
      closing of these transactions, Mr. Paul F. McConnell's employment
      agreement, noncompetition agreement and restricted stock unit award
      agreement with the Company.

      Form 8-K filed May 28, 2004, reporting under Item 5 a press release
      regarding a lawsuit filed in California seeking to preliminarily and
      permanently enjoin the implementation of a new methodology for calculating
      Medi-Cal reimbursement payments.


                                       29
<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.

Date: August 9, 2004

                               Curative Health Services, Inc.
                               (Registrant)


                               /s/  Joseph Feshbach
                               --------------------
                                   Joseph Feshbach
                                   Chief Executive Officer and Chairman
                                   (Principal Executive Officer)


                               /s/  Thomas Axmacher
                               --------------------
                                   Thomas Axmacher
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)