<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

  /X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999.

  / /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER: 0-19815

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

                             CAREMATRIX CORPORATION

             (Exact name of Registrant as specified in its charter)

                  DELAWARE                             04-3069586
  ----------------------------------------  ---------------------------------
      (State of other jurisdiction of        (I.R.S. Employer Identification
       incorporation or organization)                     No.)

       197 FIRST AVENUE, NEEDHAM, MA                      02494
  ----------------------------------------  ---------------------------------
  (Address of principal executive offices)             (Zip Code)

                                 (781) 433-1000

              (Registrant's telephone number, including area code)

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

    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/

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

<TABLE>
<S>                                            <C>
                    CLASS                             OUTSTANDING AT AUGUST 10, 1999
---------------------------------------------  ---------------------------------------------
        Common Stock, $.05 par value                         18,032,697 shares
</TABLE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                             CAREMATRIX CORPORATION

                               TABLE OF CONTENTS

                         PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                PAGE
                                                                                                ----
<S>           <C>                                                                               <C>

FINANCIAL STATEMENTS

Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998.........................    3

Consolidated Statements of Earnings for the three and six months ended June 30, 1999 and June
30, 1998......................................................................................    4

Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and June 30,
1998..........................................................................................    5

Notes to Consolidated Financial Statements....................................................    6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.........................................................................   10

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................   15

                                     PART II--OTHER INFORMATION

ITEM 1:       LEGAL PROCEEDINGS...............................................................   16

ITEM 2:       CHANGES IN SECURITIES...........................................................   16

ITEM 3:       DEFAULTS UPON SENIOR SECURITIES.................................................   16

ITEM 4:       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................   16

ITEM 5:       OTHER INFORMATION...............................................................   16

ITEM 6:       EXHIBITS AND REPORTS ON FORM 8-K................................................   17
</TABLE>

                                       2
<PAGE>
                             CAREMATRIX CORPORATION

                          CONSOLIDATED BALANCE SHEETS

                   AS OF JUNE 30, 1999 AND DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                JUNE 30, 1999   DECEMBER 31, 1998
                                                                                --------------  -----------------
<S>                                                                             <C>             <C>
                                                                                 (UNAUDITED)
                                                     ASSETS
Current assets:
  Cash and cash equivalents...................................................  $   28,695,793   $    28,217,373
  Restricted cash.............................................................       5,315,824        22,305,371
  Receivables:
    Accounts receivable, net..................................................      33,180,636        25,334,127
    Accounts receivable-related party.........................................      31,517,086        21,662,515
  Prepaid expenses and other current assets...................................       7,147,488         4,875,075
                                                                                --------------  -----------------
      Total current assets....................................................     105,856,827       102,394,461
Lease acquisition costs, net..................................................      19,358,569        15,792,315
Property and equipment, net...................................................     162,798,086       147,938,997
Other long-term assets, net...................................................      62,898,208        41,023,981
Goodwill, net.................................................................      40,192,376        42,496,693
                                                                                --------------  -----------------
      Total assets............................................................  $  391,104,066   $   349,646,447
                                                                                --------------  -----------------
                                                                                --------------  -----------------

                                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt...........................................  $      989,032   $       848,600
  Accounts payable............................................................       8,693,275         9,315,591
  Accrued compensation and benefits...........................................       2,975,855         2,262,161
  Accrued liabilities.........................................................      11,153,723        14,800,794
  Other current liabilities...................................................       1,210,844         1,246,007
                                                                                --------------  -----------------
    Total current liabilities.................................................      25,022,729        28,473,153
Mortgages and notes payable...................................................      77,141,585        43,029,548
Borrowings under line of credit...............................................      22,863,687        20,863,687
Convertible subordinated notes................................................     115,000,000       115,000,000
Other long-term liabilities...................................................       7,135,496         7,859,818

Commitments and contingencies
Shareholders' equity..........................................................     143,940,569       134,420,241
                                                                                --------------  -----------------
      Total liabilities and shareholders' equity..............................  $  391,104,066   $   349,646,447
                                                                                --------------  -----------------
                                                                                --------------  -----------------
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       3
<PAGE>
                             CAREMATRIX CORPORATION

                CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

       FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED             SIX MONTHS ENDED
                                                     ----------------------------  -----------------------------
<S>                                                  <C>            <C>            <C>             <C>
                                                     JUNE 30, 1999  JUNE 30, 1998  JUNE 30, 1999   JUNE 30, 1998
                                                     -------------  -------------  --------------  -------------
Revenues:
  Resident operations..............................  $  40,015,624  $  24,987,107  $   78,416,036  $  46,149,087
  Resident operations--related party...............      5,798,257      3,255,423      11,679,957      5,841,809
  Development fee income...........................         97,244        714,091         583,748      1,688,293
  Development fee income--related party............      7,668,338      5,210,025      13,617,556     10,133,160
                                                     -------------  -------------  --------------  -------------
    Total revenue..................................     53,579,463     34,166,646     104,297,297     63,812,349
                                                     -------------  -------------  --------------  -------------
Expenses:
  Facility operating expenses......................     29,020,943     17,542,988      55,347,773     33,009,898
  Facility lease expense...........................        213,348        595,124         373,446      1,177,698
  Facility lease expense--related party............      4,709,007      3,430,910       9,791,853      6,548,203
  General and administrative.......................      5,114,130      5,087,304      10,288,915      9,551,440
  Depreciation and amortization....................      2,517,139        865,386       4,689,284      1,600,844
                                                     -------------  -------------  --------------  -------------
    Total expenses.................................     41,574,567     27,521,712      80,491,271     51,888,083
                                                     -------------  -------------  --------------  -------------
Earnings from operations...........................     12,004,896      6,644,934      23,806,026     11,924,266
Other income (expense):
  Interest income--related party...................        949,819        376,999       1,649,639        718,473
  Interest and other income........................      1,148,390      1,785,405       1,911,193      3,772,873
  Interest expense.................................     (3,672,270)    (1,828,582)     (7,187,814)    (3,666,710)
                                                     -------------  -------------  --------------  -------------
    Total other income (expense)...................     (1,574,061)       333,822      (3,626,982)       824,636
                                                     -------------  -------------  --------------  -------------
Earnings before income taxes and preferred
  dividends........................................     10,430,835      6,978,756      20,179,044     12,748,902
Income taxes.......................................      4,120,179      2,826,396       7,970,722      5,226,777
                                                     -------------  -------------  --------------  -------------
Earnings before preferred dividends................      6,310,656      4,152,360      12,208,322      7,522,125
Preferred dividends................................          1,775          1,825           3,600          6,400
                                                     -------------  -------------  --------------  -------------
Net earnings.......................................  $   6,308,881  $   4,150,535  $   12,204,722  $   7,515,725
                                                     -------------  -------------  --------------  -------------
                                                     -------------  -------------  --------------  -------------
Basic shares outstanding...........................     17,938,288     17,665,463      17,975,224     17,521,463
                                                     -------------  -------------  --------------  -------------
                                                     -------------  -------------  --------------  -------------
Basic earnings per share...........................  $        0.35  $        0.23  $         0.68  $        0.43
                                                     -------------  -------------  --------------  -------------
                                                     -------------  -------------  --------------  -------------
Diluted shares outstanding.........................     21,980,216     18,106,195      22,182,101     18,095,732
                                                     -------------  -------------  --------------  -------------
                                                     -------------  -------------  --------------  -------------
Diluted earnings per share.........................  $        0.34  $        0.23  $         0.66  $        0.42
                                                     -------------  -------------  --------------  -------------
                                                     -------------  -------------  --------------  -------------
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       4
<PAGE>
                             CAREMATRIX CORPORATION

               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

            FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998

<TABLE>
<CAPTION>
                                                                                          SIX MONTHS ENDED
                                                                                   ------------------------------
<S>                                                                                <C>             <C>
                                                                                   JUNE 30, 1999   JUNE 30, 1998
                                                                                   --------------  --------------
Cash flows from operating activities:
  Net earnings...................................................................  $   12,204,722  $    7,515,725
  Noncash items included in net earnings:
    Depreciation of fixed assets.................................................       2,479,201         651,821
    Amortization of intangible assets............................................       1,735,726         707,917
    Amortization of lease acquisition costs......................................         474,357         241,106
  Increase in accounts receivable................................................     (17,612,647)     (7,091,316)
  Changes in current assets......................................................      (1,403,799)     (1,578,635)
  Increase (decrease) in current liabilities.....................................      (3,976,068)      6,076,248
  Other noncash items............................................................              --          56,700
                                                                                   --------------  --------------
    Net cash provided (used) by operating activities.............................      (6,098,508)      6,579,566
                                                                                   --------------  --------------
Cash flows from investing activities:
  Additions to property and equipment............................................      (3,184,007)     (1,768,636)
  Purchase of SeniorCare Group, Ltd. Facility....................................      (5,780,000)             --
  Additions to lease deposits and other long-term assets.........................     (12,048,783)     (5,470,385)
  Increase in prepaid rent.......................................................      (8,300,000)             --
  Change in restricted cash......................................................      16,989,547     (17,193,233)
  Lease acquisition costs........................................................      (4,040,611)     (7,810,051)
                                                                                   --------------  --------------
    Net cash used by investing activities........................................     (16,363,854)    (32,242,305)
                                                                                   --------------  --------------
Cash flows from financing activities:
  Exercise of stock options and warrants.........................................         199,651       4,243,988
  Repurchase of common shares....................................................      (2,884,045)             --
  Borrowings under the line of credit............................................       2,000,000              --
  Net proceeds from mortgage refinancing.........................................      25,474,266              --
  Repayment of debt, net.........................................................      (1,849,090)       (310,680)
  Other, net.....................................................................              --          60,454
                                                                                   --------------  --------------
    Net cash provided by financing activities....................................      22,940,782       3,993,762
                                                                                   --------------  --------------
Increase (decrease) in cash and cash equivalents.................................         478,420     (21,668,977)
Cash and cash equivalents, beginning of period...................................      28,217,373     152,619,435
                                                                                   --------------  --------------
Cash and cash equivalents, end of period.........................................  $   28,695,793  $  130,950,458
                                                                                   --------------  --------------
                                                                                   --------------  --------------
Other noncash items:
  Conversion of convertible debentures into equity...............................                  $    2,000,000
                                                                                                   --------------
                                                                                                   --------------
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       5
<PAGE>
                             CAREMATRIX CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

    CareMatrix Corporation (the "Company") develops, manages, owns, and operates
assisted living facilities and various other health care facilities.

    The accompanying interim unaudited financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such regulations. The
financial statements reflect all adjustments and disclosures which are, in the
opinion of management, necessary for a fair presentation of the financial
position and results of operations for the periods presented. All such
adjustments are of a normal recurring nature. The interim financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, for additional disclosures. The results of
operations for the interim periods presented are not necessarily indicative of
the results that may be achieved for the full year. Certain reclassifications
have been made on the prior year's financial statements to conform to the
current year's presentations.

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.

2. RESTRICTED CASH

    CASH COLLATERAL.  Under the terms of an agreement to fix interest rates on
future leases with Chancellor Senior Housing Group, Inc. and certain affiliated
companies, the Company is required to maintain specified levels of cash
collateral with a financial institution. Interest on the funds held accrues to
the benefit of the Company. At June 30, 1999, the amount held as collateral was
approximately $2.5 million as one agreement was terminated during the second
quarter. At December 31, 1998, the amount held as collateral was approximately
$19.1 million.

3. RELATED PARTY TRANSACTIONS

    As used herein, "Chancellor" or "Chancellor Entity" refers to Chancellor
Senior Housing Group, Inc., Abraham D. Gosman (Chief Executive Officer and
Chairman of the Board of the Company) or companies in which Mr. Gosman and
certain current and former members of the Company's senior management exercise
significant control.

    The Company has entered into management and marketing agreements with
Chancellor Entities which provide for fees to be earned by the Company during
the fill-up and upon the initial move-in of residents into new facilities up to
the maximum occupancy of a facility and for fees based upon the revenues of a
facility. For the six months ended June 30, 1999, the Company recognized revenue
of $11.7 million for marketing and management services provided to various
Chancellor Entities under the terms of these agreements compared to revenue of
$12.8 million for the year ended December 31, 1998.

    During the quarter ended June 30, 1999, the Company paid a Chancellor Entity
$4.2 million to purchase, at estimated fair market value, an interest in a
limited partnership. The investment is being accounted for under the equity
method, accordingly, the Company has recorded its share of the income earned on
the investment in other income. The Chancellor Entity has guaranteed the value
of the investment at $4.2 million.

                                       6
<PAGE>
                             CAREMATRIX CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. RELATED PARTY TRANSACTIONS (CONTINUED)
    During 1999, the Company paid certain Chancellor Entities $4.0 million for
the right to receive the Chancellor Entity's share of cash flow for two
facilities which are owned 50% by a Chancellor Entity and 50% by third parties.
The rights are being amortized over the term of the related agreement. In
addition, the Company paid various Chancellor Entities $8.3 million related to
lease rights and deposits for five facilities. These lease rights are being
amortized over the terms of the related leases.

    During the quarter ended March 31, 1999, the Company paid a Chancellor
Entity $2.0 million for development and management rights related to a senior
community in New Jersey. The development rights are being amortized as the
related fees are earned.

    During 1999, the Company purchased, at cost, three parcels of land from
certain Chancellor Entities for approximately $4.5 million.

4. PURCHASE OF SENIORCARE GROUP, LTD. FACILITY

    The Company completed the acquisition of the tenth SeniorCare Group, Ltd.
("SeniorCare") facility in January 1999 (see Note 3 of Notes to Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998). In connection with the acquisition of this facility,
the Company recorded the related fixed assets and debt at their estimated fair
market values of $18.5 million and $8.1 million, respectively.

5. DEBT REFINANCING

    During the quarter ended June 30, 1999, the Company refinanced certain
mortgage debt assumed in the SeniorCare acquisition. The new loans have an
aggregate principal amount of $38.0 million and bear interest at 7.53%. The
loans mature June 2009 and payments of principal and interest begin July 1999.
The proceeds from the loan were used primarily for working capital. In
connection with the refinancing, the Company reduced goodwill by approximately
$1.5 million, which represents the net excess of the fair value of the debt
retired over its historical cost basis.

    During the quarter ended March 31, 1999, the Company refinanced certain
mortgage debt assumed in the SeniorCare acquisition. The new mortgage has a
principal amount of $16.7 million, bears interest at 30 day LIBOR plus 3% and
matures January 31, 2002. Interest payments are due monthly beginning in March
1999. The proceeds from the loan were used primarily to complete the acquisition
of SeniorCare and to repay the existing mortgage.

                                       7
<PAGE>
                             CAREMATRIX CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. EARNINGS PER SHARE

    Earnings per share has been computed in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per share."

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED JUNE 30, 1999
                                                                             ---------------------------------------
BASIC EARNINGS PER SHARE                                                       EARNINGS       SHARES      PER SHARE
---------------------------------------------------------------------------  ------------  ------------  -----------
<S>                                                                          <C>           <C>           <C>
Earnings available to common shareholders..................................  $  6,308,881    17,938,288   $    0.35
  Effect of dilutive securities:
    Stock options and warrants.............................................            --        52,982          --
    6.25% Convertible Debentures...........................................     1,164,571     3,982,684          --
    Conversion of preferred stock..........................................         1,775         6,262          --
                                                                             ------------  ------------       -----
Diluted earnings per share.................................................  $  7,475,227    21,980,216   $    0.34
                                                                             ------------  ------------       -----
                                                                             ------------  ------------       -----
</TABLE>

<TABLE>
<CAPTION>
                                                                                SIX MONTHS ENDED JUNE 30, 1999
                                                                           ----------------------------------------
BASIC EARNINGS PER SHARE                                                     EARNINGS        SHARES      PER SHARE
-------------------------------------------------------------------------  -------------  ------------  -----------
<S>                                                                        <C>            <C>           <C>
Earnings available to common shareholders................................  $  12,204,722    17,975,224   $    0.68
  Effect of dilutive securities:
    Stock options and warrants...........................................             --       217,931          --
    6.25% Convertible Debentures.........................................      2,329,142     3,982,684          --
    Conversion of preferred stock........................................          3,548         6,262          --
                                                                           -------------  ------------       -----
Diluted earnings per share...............................................  $  14,537,412    22,182,101   $    0.66
                                                                           -------------  ------------       -----
                                                                           -------------  ------------       -----
</TABLE>

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED JUNE 30, 1998
                                                                             ---------------------------------------
BASIC EARNINGS PER SHARE                                                       EARNINGS       SHARES      PER SHARE
---------------------------------------------------------------------------  ------------  ------------  -----------
<S>                                                                          <C>           <C>           <C>
Earnings available to common shareholders..................................  $  4,150,535    17,665,463   $    0.23
  Effect of dilutive securities:
    Stock options and warrants.............................................            --       440,732          --
                                                                             ------------  ------------       -----
Diluted earnings per share.................................................  $  4,150,535    18,106,195   $    0.23
                                                                             ------------  ------------       -----
                                                                             ------------  ------------       -----
</TABLE>

<TABLE>
<CAPTION>
                                                                                 SIX MONTHS ENDED JUNE 30, 1998
                                                                             ---------------------------------------
BASIC EARNINGS PER SHARE                                                       EARNINGS       SHARES      PER SHARE
---------------------------------------------------------------------------  ------------  ------------  -----------
<S>                                                                          <C>           <C>           <C>
Earnings available to common shareholders..................................  $  7,515,725    17,521,463   $    0.43
  Effect of dilutive securities:
    Stock options and warrants.............................................            --       538,714          --
    8.5% Convertible Debentures                                                        --        35,555          --
                                                                             ------------  ------------       -----
Diluted earnings per share.................................................  $  7,515,725    18,095,732   $    0.42
                                                                             ------------  ------------       -----
                                                                             ------------  ------------       -----
</TABLE>

7. COMMON STOCK

    In February 1999, the Company announced that its Board of Directors has
authorized a share repurchase program. The Company was authorized to purchase up
to one million shares of its outstanding common stock from time to time in open
market transactions. As of June 30, 1999, the Company had

                                       8
<PAGE>
                             CAREMATRIX CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMON STOCK (CONTINUED)
repurchased 181,400 shares at an average price of $15.84. Pending resolution of
the Company's review of strategic alternatives (see Note 8), the Company has
suspended purchases under the program.

    In April 1999, the Company was approved to be listed on the Nasdaq Stock
Market. The Company's common stock began trading under the symbol "CMDC" on
April 23, 1999.

8. SUBSEQUENT EVENTS

    On July 22, 1999, the Company announced that the Board of Directors had
instructed management to explore various strategic alternatives to maximize
shareholder value. A member of the Company's Board of Directors has been engaged
by the Company as a consultant to help identify strategic alternatives.

    On August 10, 1999, the Company's Board of Directors authorized the
retention of the investment banking firms DeutscheBancAlex.Brown and PaineWebber
Incorporated, to assist in further identifying strategic alternatives. Also, a
special committee of the Board of Directors has been formed with the authority
to engage financial advisors to assist it in considering for the benefit of the
Company and its shareholders any proposal which may arise.

                                       9
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

    The Company is a provider of assisted living services to the elderly. At
June 30, 1999, the Company operated 61 facilities in 18 states with
approximately 7,400 units. Of the facilities, 32 are owned/leased, and 29 are
managed. The Company provides assistance with the activities of daily living and
other personalized support services in a residential setting for elderly
residents who cannot live independently but who do not need the level of medical
care provided in a skilled nursing facility. The Company also provides
additional specialized care and services to residents with certain low acuity
medical needs and residents with Alzheimer's disease or other forms of dementia.
By offering this full range of services, the Company is able to accommodate the
changing needs of residents as they age within a facility and develop further
physical or cognitive frailties.

    The Company derives its revenues from three primary sources: (i) resident
fees for the delivery of independent and assisted living and other long-term
care services; (ii) management services income for management of and marketing
for facilities; and (iii) fee income from the development and construction of
facilities. Resident fees typically are paid monthly by residents, their
families or other responsible parties. Resident fees and management fees are
recognized as revenues when services are provided. Development fee revenue is
recognized on the percentage of completion basis using the achievement of
specific milestones in the development process.

    The Company has made forward-looking statements in this Report (and in
documents that are incorporated by reference) that are subject to risks and
uncertainties. Forward-looking statements include information concerning
possible or future results of operations of the Company. Also, when the Company
uses words such as "believes," expects," "anticipates" or similar expressions,
it is often, but not always, making forward-looking statements. Stockholders
should note that many factors could affect our future financial results and
could cause such results to differ materially from those expressed in our
forward-looking statements. Those factors include, but are not limited to, the
following:

    - risks related to the Company's operating history and available financing;

    - risks related to the Company's anticipated growth and acquisition
      strategy;

    - risks inherent in the construction and development industry;

    - uncertainty about the changing regulatory environment;

    - risks related to the Year 2000 problem;

    - risks related to competition;

    - risks related to the Company's ability to attract and retain key
      personnel; and

    - risks related to the ability of the Chancellor Entities' (the entities
      that own a majority of the facilities the Company develops and operates)
      ability to continue to obtain adequate financing to fund the facilities
      during start-up and any equity needed, including cash for operating
      losses, and to meet bank covenants. Any inability to do so, or any default
      by Chancellor under its debt obligations, could have a material adverse
      effect on the Company's financial position, results of operations, and
      cash flows (see Notes 1 and 3 and Note 13 of the Notes to Consolidated
      Financial Statements in the Company's Annual Report on Form 10K for the
      year ended December 31, 1998). As used herein "Chancellor" or "Chancellor
      Entities" refer to Chancellor Senior Housing Group, Inc., Abraham D.
      Gosman (Chief Executive Officer and Chairman of the Board of the Company)
      or companies in

                                       10
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

OVERVIEW (CONTINUED)
     which Mr. Gosman and certain current and former members of the Company's
      senior management exercise significant control.

    All references to "Notes" contained herein refer to Notes to Consolidated
Financial Statements in this Form 10-Q, unless otherwise specified.

  THE QUARTER ENDED JUNE 30, 1999 COMPARED TO THE QUARTER ENDED JUNE 30, 1998

    REVENUES. Resident operations revenue increased by $17.6 million for the
second quarter of 1999 compared to the same period in 1998. The increase is
comprised principally of revenue from facilities leased or owned for less than
one year, including $7.8 million from seven facilities acquired in the
SeniorCare Group, Ltd. ("SeniorCare") acquisition (see Note 3 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998), and from fees related to management
contracts and other services as a result of the increase in the number of
facilities under construction and in operation. Included in resident operations
revenue in the second quarter of 1999 is $2.5 million earned from marketing and
management services provided to facilities under construction per the terms of
existing development agreements compared to $1.9 million in the second quarter
of 1998.

    As described in Note 3, during 1999 the Company amended existing management
contracts with certain Chancellor Entities to increase its base management fees.
The impact of this change increased revenue during the quarter by $460,000.

    The Company's comparable nursing home revenue declined $2.1 million during
the second quarter of 1999 primarily due to the impact of the implementation of
the Medicare prospective payment system ("PPS"). Under the terms of the
Company's existing leases, it has been indemnified by the various Chancellor
Entity lessors for this change on governmental regulations. Included in facility
operating expenses is a credit of $1.6 million, which represents the
reimbursement for lost revenue due to PPS, to reflect the impact of these
indemnification agreements.

    Development fee income was $7.8 million in the second quarter of 1999 versus
$5.9 million in the same period in 1998. As a percentage of operating revenue,
development fee income decreased to 14.5% in 1999 from 17.3% in 1998. The
Company expects that this trend will continue for the remainder of the year.

    FACILITY EXPENSES. Facility operating expenses were $29.0 million in the
second quarter of 1999 compared to $17.5 million in the same period of 1998, an
increase of $11.5 million. The increase is primarily due to operating expenses
from facilities leased or owned less than one year.

    Facility lease expense was $4.9 million in the second quarter of 1999
compared to $4.0 million in the same period in 1998. The increase of $0.9
million is primarily due to facilities leased less than one year.

    GENERAL AND ADMINISTRATIVE. General and administrative expenses were $5.1
million for both the second quarter of 1999 and 1998. As a percentage of
operating revenue, general and administrative expenses in the second quarter of
1999 declined to 9.5% from 14.9% in the second quarter of 1998.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the second
quarter of 1999 increased $1.7 million compared to the same period in 1998. The
increase is due primarily to $1.0 million of depreciation from facilities open
less than one year and $0.6 million from the amortization of other intangible
assets.

                                       11
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

  THE QUARTER ENDED JUNE 30, 1999 COMPARED TO THE QUARTER ENDED JUNE 30, 1998
                                  (CONTINUED)
    INTEREST AND OTHER INCOME AND INTEREST EXPENSE. Interest and other income
for the second quarter of 1999 was $2.1 million compared to $2.2 million for the
same period in 1998. Included in other income in the second quarter of 1999 is
$0.8 million which reflects the increase in the fair market value of the
Company's investment in a limited partnership (see Note 3). The decrease in
interest income is due to lower average cash balances during 1999 compared to
1998. Interest expense for the second quarter of 1999 increased to $3.7 million
from $1.8 million for the same period in 1998. The increase is primarily due to
interest expense of $1.2 million related to SeniorCare debt assumed or
refinanced and $0.5 million from borrowings under the line of credit.

    INCOME TAXES. The Company's effective tax rate during the second quarter of
1999 was 39.5% compared to 40.5% in 1998. The decrease in the effective tax rate
is due to the expected reduction in the effective state tax rate to 4.5% for
1999 from 6.0% for 1998.

  THE SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
                                      1998

    REVENUES. Resident operations revenue increased by $38.1 million for the six
months ended June 30, 1999, compared to the same period in 1998. The increase is
comprised principally of revenue from facilities leased or owned for less than
one year, including $15.3 million from seven facilities acquired in the
SeniorCare acquisition, and from fees related to management contracts and other
services as a result of the increase in the number of facilities under
construction and in operation. Included in resident operations revenue in the
six months ended June 30, 1999, is $7.0 million earned from marketing and
management services provided to facilities under construction per the terms of
existing development agreements compared to $3.6 million in the comparable
period in 1998.

    As described in Note 3, during 1999 the Company amended existing management
contracts with certain Chancellor Entities to increase its base management fees.
The impact of this change increased revenue during the six months ended June 30,
1999, by $740,000.

    The Company's comparable nursing home revenue declined $3.0 million during
the six months ended June 30, 1999, primarily due to the impact of the
implementation of PPS. Under the terms of the Company's existing leases, it has
been indemnified by the various Chancellor Entity lessors for this change on
governmental regulations. Included in facility operating expenses is a credit of
$2.8 million, which represents the reimbursement for lost revenue due to PPS, to
reflect the impact of these indemnification agreements.

    Development fee income was $14.2 million during the six months ended June
30, 1999 versus $11.8 million in the same period in 1998. As a percentage of
operating revenue, development fee income decreased to 13.6% in 1999 from 18.5%
in 1998. The Company expects that this trend will continue for the remainder of
the year.

    FACILITY EXPENSES. Facility operating expenses for the first six months of
1999 increased by $22.3 million compared to the same period in 1998. The
increase is due primarily to operating expenses from facilities leased or owned
less than one year.

    Facility lease expense was $10.2 million in the first six months of 1999
compared to $7.7 million in the same period in 1998. The increase of $2.5
million is primarily due to facilities leased less than one year.

    GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
first six months of 1999 increased to $10.3 million from $9.6 million in the
same period of 1998. As a percentage of

                                       12
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

  THE SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
                                1998 (CONTINUED)
operating revenue, general and administrative expenses in the first six months
of 1999 declined to 9.9% from 15.0% in the first six months of 1998. The
increase in expense is primarily due to an increase in salary and benefits
expenses relating to the hiring of additional corporate and regional staff in
anticipation of the Company's growth plans.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the first
six months of 1999 increased $3.1 million compared to the same period in 1998.
The increase is due primarily to $1.9 million of depreciation from facilities
open less than one year and $1.0 million from the amortization of other
intangible assets.

    INTEREST AND OTHER INCOME AND INTEREST EXPENSE. Interest and other income
for the first six months of 1999 was $3.6 million compared to $4.5 million for
the same period in 1998. Included in other income in the first six months of
1999 is $1.0 million from the Company's investments in two limited partnerships.
The decrease in interest income is due to lower average cash balances during
1999 compared to 1998. Interest expense for the first six months of 1999
increased to $7.2 million from $3.7 million for the same period in 1998. The
increase is primarily due to $2.3 million related to SeniorCare debt assumed or
refinanced and $1.0 million from borrowings under the line of credit.

LIQUIDITY AND CAPITAL RESOURCES

    Cash, cash equivalents and restricted cash at June 30, 1999 were $28.7
million compared to $28.2 million at December 31, 1998, an increase of $0.5
million.

    Cash used by operations was $6.1 million in the first six months of 1999.
This is comprised of $16.9 million of net earnings before depreciation and
amortization offset by a $17.6 million increase in accounts receivable,
primarily from new facilities in development and operations, and a $5.4 million
increase in other working capital items.

    Cash used in investing activities was $16.4 million in the first six months
of 1999 compared to a use of $32.2 million for the same period in 1998. The use
of cash was due to $5.8 million to complete the SeniorCare acquisition (see Note
4), $12.3 million used for prepaid rent and cash flow rights for seven
facilities (see Note 3), $3.2 million in additions to property and equipment,
$2.0 million used to purchase the development and management rights to a senior
community, $4.5 million used for the purchase of three parcels of land (see Note
3), and $2.4 million used for purchase deposits on four parcels of land. The
Company received $16.6 million from the return of cash held in a cash collateral
account (see Note 2).

    Cash flows provided by financing activities were $22.9 million in the first
six months of 1999 compared to $4.0 million for the same period in 1998. The
increase is due primarily to the net proceeds from various mortgage refinancings
(see Note 5) partially offset by $2.9 million used to repurchase the Company's
common shares on the open market (see Note 7) and $1.8 million of debt
repayments, which includes $0.8 million related to assets held for sale (see
Note 5 of Notes to Consolidated Financial Statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998).

    The Company will require resources in the future to fund the planned
acquisition and development of additional assisted living, independent and
supportive independent and extended care facilities as well as its working
capital requirements and common stock repurchases. The Company expects to
partially fund these resource requirements with its cash on hand, borrowings
under its $35.0 million line of credit (of which $12.1 million was unused at
June 30, 1999) as well as related party or third-party financing of facilities
to be developed. Furthermore, the Company intends to seek bank borrowings and
other debt or

                                       13
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
equity financings to provide additional sources of capital in the future. The
Company is in the process of refinancing some of the debt assumed in the
SeniorCare acquisition and hopes to raise approximately $8.0 million through
this refinancing.

    Although Chancellor continues to seek additional sources of capital to
finance its development pipeline, there can be no assurance that it will be
successful in doing so. If Chancellor cannot obtain adequate capital or reduces
the number and/or size of the projects in its development pipeline, then the
Company's development fee revenue will decline. Currently, the Company expects
that its development fee revenue will decline in the third and fourth quarters
of 1999. If this were to occur, the Company is prepared to reduce its general
and administrative costs as appropriate, although there can be no assurance that
any such reduction in expenses would offset potential lost revenue.

YEAR 2000

    The Year 2000 problem concerns the inability of information systems to
recognize properly and process date-sensitive information beyond December 31,
1999. In July 1998, the Company initiated a formal program to identify and
resolve Year 2000 issues. The scope of the program includes the investigation of
all Company functions and services, including embedded systems in what are not
traditionally considered information technology systems.

    The Company has identified its resident billing and general ledger as
internal systems that present a high level of risk from a Year 2000 perspective.
The Company has also identified several key external systems that could pose a
significant risk to the Company: those of various governmental agencies,
particularly Medicare and Medicaid, its payroll provider, and its investment
management companies and other financial intermediaries. The Company has also
acquired several facilities and/or utilizes third-party management companies to
provide financial information. These acquired systems must also be brought into
the Company's program.

    The Company has completed the planning and awareness and systems inventory
phases of the program. The assessment phase is scheduled to be completed in the
third quarter of fiscal 1999, with the correction phase being completed by the
third quarter of the same year. In April 1999, the Company completed the upgrade
of its general ledger system so that it is now Year 2000 compliant. The Company
is beginning the process of assessing the risk of supplier readiness, and in
selected cases will review the preparedness of individual suppliers for the Year
2000 problem.

    The Company currently estimates the cost of the Year 2000 program will
approximate $200,000, with a range of plus or minus twenty-five percent. The
Company's corporate personnel who directly oversee functions at the facility
level will also assist in the Year 2000 program as part of their regular duties.
This is expected to help reduce Year 2000 costs. All costs, except those
incurred for long-lived assets, are expensed as incurred. These costs include
the costs of outside consultants, systems replacements, and other minor
equipment requirements. The costs incurred to date are not material.

    Ultimately, the potential impact of the Year 2000 issue will depend not only
on the corrective measures the Company undertakes, but also on the way in which
the Year 2000 issue is addressed by governmental agencies, businesses and other
entities whose financial condition or operational capability is important to the
Company. Communications with significant third parties will be initiated to
determine the extent of risk created by those third parties' failure to
remediate their own Year 2000 issues; however, it is not possible, at present,
to determine the financial effect if their remediation efforts are not completed
in a

                                       14
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

YEAR 2000 (CONTINUED)
timely manner. While the Company expects to resolve all Year 2000 risks without
a material adverse impact on its results of operations and financial position,
there can be no assurance as to the ultimate success of the program.
Uncertainties exist as to the Company's ability to detect all Year 2000 problems
as well as its ability to achieve successful and timely resolution of all Year
2000 issues. A "reasonably likely worst case" scenario of Year 2000 risks for
the Company could include the inability to receive reimbursement from Medicare
and Medicaid, and problems involving the inability of the Company's financial
intermediaries to accurately reflect the Company's cash position. The
consequences of these issues may include lost revenue and lower cash receipts.
The Company is unable to quantify the potential effect of these items on its
results of operations, liquidity, and financial position should some or a
combination of these events occur.

    In addition, because the Company's day-to-day operations are heavily
dependent on its ability to communicate information throughout its network of
facilities, the Company would be particularly susceptible to any possible
effects that the Year 2000 issue has on local and national communications
systems, including without limitation, telephone and data lines, because of the
difficulty in implementing viable contingency plans. Any interruption or
malfunction of such systems could have a material adverse effect on the Company.

    As the correction phase of the program is completed in 1999, the Company
expects to have developed contingency plans, which would augment existing
contingency plans, for the then current risks.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company is subject to market risk from exposure to changes in interest
rates based on its financing, investing and cash management activities. The
Company does not expect changes in interest rates to have a material effect on
income or cash flows for the year ended December 31, 1999, although there can be
no assurances that interest rates will not significantly change.

                                       15
<PAGE>
                           PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    The Company is a party to litigation in the ordinary course of business. The
Company does not believe that any such litigation will have a material adverse
effect on its business, financial position or results of operations.

ITEM 2.  CHANGES IN SECURITIES

    None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    ANNUAL MEETING OF THE STOCKHOLDERS OF THE COMPANY ON JUNE 21, 1999

    On June 21,1999, the Company held its annual meeting of shareholders (the
"Annual Meeting") at which it submitted to a vote of its shareholders the
following matters:

    ELECTION OF DIRECTORS

    The following nominees were elected directors of the Company at the Annual
Meeting to serve until the 2000 annual meeting of shareholders and thereafter
until their successors are duly elected and qualified. The following table sets
forth a summary with respect to the results of the shareholder vote.

<TABLE>
<CAPTION>
NOMINEE                                                           FOR         AGAINST    WITHHELD
------------------------------------------------------------  ------------  -----------  ---------
<S>                                                           <C>           <C>          <C>
Abraham D. Gosman...........................................    17,322,237          --     160,932
Andrew D. Gosman............................................    17,322,103          --     161,066
Michael M. Gosman...........................................    17,322,003          --     161,166
Donald J. Amaral............................................    17,323,615          --     159,554
H. Loy Anderson, Jr.........................................    17,320,215          --     159,954
Rev. Bedros Baharian........................................    17,320,857          --     162,312
Robert Cataldo..............................................    17,321,637          --     162,532
Stephen E. Ronai............................................    17,323,515          --     159,654
</TABLE>

        AMENDMENT OF THE 1996 EQUITY INCENTIVE PLAN

        The shareholders were asked to approve and adopt the amendment of the
    Company's 1996 Equity Incentive Plan (the "1996 Plan") in order to increase
    the number of shares available for issuance under the 1996 Plan to
    2,900,000.

        The number of votes in favor of the amendment of the 1996 Plan was
    12,132,703, the number of votes against was 3,201,926, the number of
    abstentions was 8,523.

ITEM 5.  OTHER INFORMATION

    None.

                                       16
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a) The following exhibits are filed as part of this report:

        3.01 Corrected Third Restated Certificate of Incorporation of CareMatrix
             Corporation(2)

        3.02 By-laws of CareMatrix Corporation, as amended through December 9,
             1996(1)

       10.00 Management Agreement dated March 5, 1999 between CareMatrix of
             Massachusetts ("CMM") and Chancellor of Mt. Prospect, LLC(*)

       10.01 Management Agreement dated June 29, 1999 between CMM and Chancellor
             of Middletown, LLC(*)

       10.02 Amended and restated management agreement dated January 19, 1999
             between CMM and Chancellor of Plantation, Inc.(*)

       10.03 Amended and restated management agreement dated April 1, 1999
             between CMM and Chancellor of Deerfield Beach, Inc. (*)

       10.04 Amended and restated management agreement dated April 1, 1999
             between CMM and Chancellor of Naples, Inc. (*)

       10.05 Amended and restated management agreement dated April 1, 1999
             between CMM and Chancellor of Bonita Springs, Inc. (*)

       10.06 Amended and restated management agreement dated April 1, 1999
             between CMM and Chancellor of Stuart, Inc.

       27  Financial Data Schedule(*)

    (b) Reports on Form 8-K

    None.

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

(*) Filed herewith.

(1) Filed as an Exhibit to the Company's Annual Report on Form 10-K for the year
    ended December 31, 1996.

(2) Filed as an Exhibit to the Company's Annual Report on Form 10-K for the year
    ended December 31, 1997.

                                       17
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities and Exchange Act of 1934, as amended, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

<TABLE>
<S>                             <C>  <C>
                                CAREMATRIX CORPORATION

                                By:  /s/ ABRAHAM D. GOSMAN
                                     -----------------------------------------
                                     Abraham D. Gosman
                                     Chief Executive Officer

                                By:  /s/ MICHAEL J. ZACCARO
                                     -----------------------------------------
                                     Michael J. Zaccaro
                                     Chief Accounting Officer
</TABLE>

Dated: August 16, 1999

                                       18