SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

FORM 10-K

(MARK ONE)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

     For the fiscal year ended December 31, 1999
OR

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

     FOR THE TRANSITION PERIOD FROM ___________ TO _______________

                         COMMISSION FILE NUMBER 0-22162

                         SIMIONE CENTRAL HOLDINGS, INC.
             (Exact name of Registrant as specified in its charter)

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

                 6600 POWERS FERRY ROAD, ATLANTA, GEORGIA 30339
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (770) 644-6700

                    Securities registered pursuant to Section
12(b) of the Act:

                                                    NAME OF EACH EXCHANGE
         TITLE OF EACH CLASS                        ON WHICH REGISTERED
         -------------------                        ---------------------

               NONE                                         NONE

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.001 PAR VALUE
                                (Title of class)

     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 if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ x ]

     Aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant on March 27, 2000; $6,377,917.


<PAGE>
    There were 3,853,305 shares of Common Stock outstanding at March 27, 2000.

     Documents  incorporated  by  reference  in this Form 10-K:  Portions of the
definitive  proxy statement  relating to the 2000 Annual Meeting of Stockholders
in Part III, Items 10 (as related to Directors), 11, 12 and 13.

                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

     Simione Central  Holdings,  Inc.  ("Simione" or the "Company") is a leading
provider of systems and services  designed to help home health care providers to
more  effectively  operate  their  businesses  and  compete  in a  managed  care
environment.  Simione offers several flexible software solutions.  Each of these
solutions provide a basic set of software applications,  and several specialized
modules which can be added based on customer  demand.  These software  solutions
are  designed  to  enable  customers  to  generate  and  utilize   comprehensive
financial,  operational  and clinical  information.  In addition to its software
solutions and related  software  support  services,  Simione's  home health care
consulting services assist providers in addressing the challenges of:

     -    reducing costs;
     -    maintaining quality;
     -    streamlining operations;
     -    re-engineering organizational structures; and
     -    analyzing and performing due diligence in mergers and acquisitions.

     During 1999, Simione had over 1,500 customers nationwide, including:

     -    hospital-based companies;
     -    free-standing home health care providers;
     -    alternate-site care organizations;
     -    home medical equipment providers;
     -    integrated delivery systems; and
     -    government-managed organizations.

     Simione  formerly  provided  comprehensive  agency  support  services which
included  administrative,  billing and collection,  training,  reimbursement and
financial management services,  among others.  Simione discontinued this line of
business in December 1999.

     For  information   regarding   management's   plan  to  improve   Simione's
performance,   see  Note  1,  to  Simione's  Notes  to  Consolidated   Financial
Statements.

     Unless the  context  otherwise  requires,  references  to  Simione  include
Simione Central Holdings,  Inc. and its subsidiaries.  Our executive offices are
located at 6600 Powers  Ferry Road,  Atlanta,  Georgia  30339 and the  telephone
number is 770-644-6700.

RECENT DEVELOPMENTS

     Effective March 26, 1999, Simione purchased substantially all the assets of
Tropical Software  Services,  a Windows based home medical equipment  management
system.  The  acquisition  was  accounted  for using  the  purchase  method  for
financial reporting purposes. The purchase price of approximately $1,963,000 has
been  allocated  to  the  assets  acquired  and  liabilities  assumed  including
$1,951,000 of purchased technology. Purchased technology is being amortized over
an estimated three year useful life.


<PAGE>
     On July 12, 1999, Simione entered into an agreement to acquire  CareCentric
Solutions,  Inc.  pursuant  to a  merger  of  CareCentric  into a  wholly  owned
subsidiary of Simione.  The CareCentric merger was completed on August 12, 1999,
for  consideration,  part in cash and part in Series A Preferred Stock,  worth a
total of  $9,312,460.  Under the merger  agreement,  CareCentric  merged  into a
wholly owned  subsidiary  of Simione,  and Simione  issued  3,034,521  shares of
Series A Preferred Stock to the former preferred stockholders and noteholders of
CareCentric,  and paid $3.00 per share in cash to the former common stockholders
of CareCentric,  or approximately  $200,000 cash in the aggregate.  The Series A
Preferred  Stock was converted  into Simione common stock only upon the approval
of the conversion by a majority of the Simione stockholders.

     CareCentric  was a leading  provider of  point-of-care  systems in the home
health  care   information   systems'   marketplace.   Simione   believes   that
CareCentric's  system,  The  Smart  ClipBoard(TM),   is  the  home  health  care
industry's leading, Windows, pen-compatible,  point-of-care clinical information
system.

     In February 2000,  NASDAQ informed Simione that the merger with MCS, Inc. a
wholly  owned  subsidiary  of Mestek,  Inc.  was a change of control  that would
require Simione to apply for a new listing on the NASDAQ market. The new listing
requirements included a bid price which was higher than the then quoted price on
the NASDAQ market. If the Company could not meet that requirement, among others,
for a new listing, the Company's stock would become delisted.  In response,  the
Company has filed an appeal with  NASDAQ,  for which a decision  from NASDAQ has
not yet been received,  and with shareholder approval,  completed a one for five
reverse stock split to effect a higher bid price. The Company  continues to work
with NASDAQ to meet the requirements to be listed on the NASDAQ SmallCap Market,
including  waiver of  certain  voting  rights  granted to Mestek on the Series B
Preferred Stock to comply with NASDAQ's  Voting Rights Policy.  The Company will
promptly  report any final  ruling from  NASDAQ on the listing of the  Company's
stock.

     On March 7, 2000,  Simione  completed  the merger  with MCS,  Inc.  Simione
issued  approximately  1.5 million shares of common stock to MCS stockholders in
exchange for all of the outstanding  shares of MCS common stock.  This number of
shares has been adjusted to reflect a one-for-five  reverse stock split that was
completed immediately prior to the merger. In connection with the closing of the
merger, Mestek invested $6 million in Simione in exchange for 5.6 million shares
of Series B preferred  stock and warrants to purchase  shares of Simione  common
stock.   Additional   information   on  the  merger  is  included  in  Simione's
Registration  Statement on Form S-4  (Registration  No.  333-96529) and a Mestek
loan was exchanged for 0.85 million shares of Series C Preferred Stock.

     On March 7, 2000,  Simione effected a one-for-five  reverse stock split for
its common stock.  The reverse stock split was  effective  for  stockholders  of
record as of March 7, 2000.  Trading on NASDAQ reflected the reverse stock split
beginning  March 8,  2000.  For 20 trading  days  beginning  March 8, 2000,  the
Simione  common  stock traded under the symbol  "SCHID".  On April 5, 2000,  the
Simione common stock again traded under the symbol "SCHI".

     Also on March 7, 2000, Simione stockholders  approved the conversion of the
Series A Preferred  Stock into common stock.  These shares of Series A Preferred
Stock were  converted  into 606,904  shares of Common Stock,  on a  post-reverse
split basis, on March 7, 2000  immediately  prior to the consummation of the MCS
merger.  Subject to certain  post-closing  adjustments  and  claims,  the former
CareCentric  preferred  stockholders  and  noteholders  will receive  additional
shares of Simione common stock (up to a maximum of 606,904 additional shares) if
the average  closing  market  price of Simione  common  stock  during the fourth
quarter of 2000 is less than $15.00 per share.
<PAGE>

     Effective April 14, 2000, George M. Hare has resigned his position as Chief
Financial  Officer of Simione.  Effective  April 15, 2000,  Stephen Shea,  Chief
Financial  Officer of Mestek,  will also hold the  position  of Chief  Financial
Officer of Simione.

INDUSTRY OVERVIEW

     Home  health  care is an  important  part  of the  health  care  industry's
continuum of care services.  The  increasing  importance of home health care has
principally  been a result of significant  economic  pressures within the health
care industry.  In recent years,  U.S. health care  expenditures  have increased
rapidly. In response to these escalating expenditures,  payors, such as Medicare
and managed care organizations,  have applied increasing pressure on physicians,
hospitals  and other  providers to contain  costs.  This pressure has led to the
growth of lower cost  alternate-site  care,  such as home  health  care,  and to
reduced hospital  admissions and lengths of stay. In addition,  home health care
has grown  rapidly as a result of  advances  in medical  technology,  which have
facilitated  the delivery of services in alternate  sites,  demographic  trends,
such as an aging  population,  and preferences  among patients to receive health
care in their homes.

     Home health care consists of many elements, including:

     -    skilled nursing;
     -    durable medical and rehabilitation equipment;
     -    intravenous and infusion therapy; and
     -    hospice.

     Historically, this industry has been highly fragmented and characterized by
small, local providers offering a limited range of services.  With the advent of
managed care and integrated  delivery  systems,  home health care providers have
had to expand their geographic scope and range of product and service offerings.
In  addition,  the overall  growth in the home health care  industry has allowed
providers to grow and realize increased operating  efficiencies.  As a result of
these  developments  and legislation and regulatory  pressures,  the home health
care industry has been in a period of rapid consolidation.

     Medicare  traditionally  reimbursed a majority of home health care services
at reasonable and customary  amounts that could not exceed the costs of services
provided,  resulting in a direct relationship  between the number of home health
care visits and reimbursement. However, the Balanced Budget Act of 1997, enacted
on August 5, 1997,  contained provisions that significantly change the manner in
which home health  agencies and home care  services  will be  reimbursed  in the
future by Medicare.  The  legislation  created the interim  payment system which
lowered the cost per visit limitations and created restrictions on the amount of
cost  reimbursement per Medicare  beneficiary.  In late January 1998, the Health
Care Financing  Administration  ("HCFA"),  the federal  agency that  administers
Medicare  reimbursement  for the home health care  industry,  published a notice
revising the schedule of limits on home health  agency costs for cost  reporting
periods  beginning on or after October 1, 1997, which reduced the cost per visit
limitations.  At the same time, HCFA issued a rule setting forth surety bond and
capitalization requirements for home health agencies.

     As  mandated  by the  Balanced  Budget  Act,  HCFA has also  announced  the
implementation,  effective  October 1, 2000,  of a prospective  payment  system,
which would limit  reimbursement to a fixed amount for all services rendered per
episode  of care based upon home  health  care  resources  groups  indicated  by
clinical assessments. The interim payment system has had a significant impact on
the  home  health  industry,  resulting  in  numerous  closings  of home  health
agencies,  consolidation of agencies and decisions by home health agencies to no
longer  participate  in the Medicare  program or serve  Medicare  beneficiaries.
Further,  once  fully-implemented,  the  prospective  payment  system could also
potentially  impact the home health industry in the same manner.  In addition to
the impact of the interim payment system and the prospective payment system, the
growth in the number of Medicare members enrolling in managed care plans,  which
have also begun to take  measures  to  contain  costs,  will have a  significant
impact on how  providers may operate  profitably.  The  uncertainty  in the home
health care industry  concerning these changing  regulations  adversely impacted
Simione's  business in 1998 as many  providers  dissolved or delayed  purchasing
decisions.  Simione cannot predict how new regulations  will impact its business
in the future.

     As  a  result  of  consolidation  and  measures  to  address  ongoing  cost
pressures,  home  health  care  providers  will  increasingly  require  enhanced
management expertise, specialized industry knowledge and standardized financial,
operational and clinical information in order to compete.  Simione believes that
many existing home health care information systems are inadequate to address the
changing  needs of home health care  providers.  Generally,  these  systems were
designed to generate  patient billing  information and cost reports for Medicare
reimbursement  and,  as  a  result,  may  be  unable  to  provide  the  detailed
information  required for meaningful business analyses and data collection under
the new system.

THE SIMIONE CENTRAL SOLUTIONS

     Simione  offers a  comprehensive  set of  solutions to address the changing
needs of home health care providers  through  information  systems  training and
support and consulting services.

     Simione's  systems  and  services  are  designed to enable home health care
providers  to generate  and utilize  comprehensive  financial,  operational  and
clinical information and address organizational issues in order to make informed
decisions,  more  effectively  operate their businesses and compete in a managed
care and/or  prospective  payment  system  environment.  These  solutions can be
packaged and customized to serve the individual needs of customers.


<PAGE>
MARKET POSITION

Simione's  objective  is to  enhance  its  position  as a  leading  provider  of
solutions to the home health care industry.  The principal elements of Simione's
business and product  strategies are described below.  During 1999,  significant
progress in the execution of many of the strategies was made. Specifically,  the
acquisition of the Smart Clipboard and Outcomes Planner  products  combined with
the merger with MCS, signed in May 1999 and completed in March 2000 has provided
a realization of many of the resources and products needed to enhance  Simione's
market position. Accordingly, the products and services that have become part of
Simione's  offerings to the industry with the completion of the MCS merger, have
been included in the Core Software Solutions,  Specialized Product Solutions and
Service Solutions sections below.

BUSINESS STRATEGIES

CREATE  GROWTH  THROUGH   TECHNOLOGY  AND  CO-MARKETING   PARTNERSHIP.   Because
information   technology  tools  are  becoming  more  platform  independent  and
adaptable to the "Plug and Play"  environment,  we will not develop  specialized
programs and tool sets already  developed well by vendors.  We intend to partner
with such vendors by interface,  integration or  incorporation of their products
into our comprehensive IT solution.

LEVERAGE EXISTING CUSTOMER BASE. Simione currently (before the MCS merger) has a
base of over 1,500  customers  nationwide.  Simione  believes that a significant
opportunity  exists to cross-sell  its existing  systems and services as well as
introduce new systems and enhancements.

GENERATE  RECURRING  REVENUE.  Simione  generates  recurring  revenue  through a
combination of annually renewable maintenance  agreements and multi-year service
contracts.  Simione attempts to maximize recurring revenue opportunities through
a  combination  of  periodic  system  enhancements  and  comprehensive  customer
service.

CAPITALIZE  ON CHANGING  INDUSTRY  DYNAMICS.  As the home  health care  industry
consolidates,  Simione  believes it is well  positioned  to increase  its market
share by leveraging  its existing  relationships  with large  providers  such as
Tenet,  Walgreen and Mercy.  Simione also believes its  comprehensive  solutions
will become increasingly important to home health care providers as they address
the  challenges  presented  by health  care  reform and as  integrated  delivery
systems become more prevalent.

EXPAND  THROUGH  ACQUISITIONS  AND STRATEGIC  ALLIANCES.  Through very selective
strategic  acquisitions  Simione  intends to  continue  to expand its system and
service  offerings,  expand its customer  base and  increase  its market  share.
Simione also intends to selectively  establish strategic alliances to expand its
system and service offerings and grow its distribution capabilities.

CONSOLIDATE  DUPLICATIVE  PRODUCTS AND SERVICES.  Simione believes that improved
efficiency and lower cost of operations will be realized  through  consolidation
of  similar   products  and  services  within  the  same  market  space.   These
consolidations   will  present   customers  with  more  effective   control  and
flexibility of their product and service strategies.

INTEGRATION OF CORE PRODUCTS.  Based on market demand, Simione's products are in
the process of becoming  architecturally  integrated to create  multi-faceted IT
solutions that provide customer control over rules-based processing and seamless
data entry and data accessibility.

ALTERNATIVE  DELIVERY SYSTEMS.  Simione is developing product solutions that can
be web enabled with the ability to operate in both  distributed  and Application
Service Provider (ASP) environments.


<PAGE>

FOCUS ON PROCESS IMPROVEMENT. Simione is enhancing selected features of existing
products and developing new products to help its customers  improve workflow and
operational process. Such activities will help customers manage and reduce costs
while  maintaining  quality  clinical  outcomes,  which  are  believed  to  be a
necessity for business survival under the prospective payment system.


INFORMATION SYSTEMS

Simione  offers  comprehensive  and flexible  software  solutions to address the
information  processing  needs  defined  by a number of unique  homecare  market
segments including home medical equipment suppliers, infusion therapy providers,
home  health  agencies,   hospice  service  providers  and  integrated  delivery
networks. Each of Simione's software products offers a suite of core application
modules that address the financial,  clinical and  operational  requirements  of
home healthcare providers. These applications are designed to:

     -    Improve efficiencies of customer processes and operations
     -    Operate in a Number of Technology Environments
     -    Provide Scalability and Growth Options
     -    Provide Open Data Access
     -    Produce Management Reporting and Decision Support Tools
     -    Facilitate Regulatory Compliance
     -    In addition to its core software products, Simione offers several
          specialized modules and applications.


CORE SOFTWARE SOLUTIONS
Simione's core software solutions are as follows:

STAT2
------
A complete, flexible and fully integrated home health agency management system.
The STAT2 core set of software applications includes:

         -   Client Intake                     -   Billing/Accounts Receivable
         -   Treatment Plans                   -   General Ledger
         -   Employee Tracking                 -   Accounts Payable
         -   Scheduling                        -   Payroll
         -   Electronic Transmission/Remittance

This core set can be  enhanced  with  specialized  features  including  hospice,
telephony  and cost  reporting.  The STAT2 system  allows a customer to exchange
clinical and financial  information  with external systems in either a real-time
or batch mode through  interface  engine  technology or  customized  interfaces.
STAT2 is  designed to  increase  staff  productivity  by fully  integrating  the
system's   clinical,   financial  and  operational   applications   and  thereby
eliminating  redundant  data entry.  STAT2 has the ability to  customize  system
features as well as the ability to expand with the customers' business.

DME 6.3
-------
PC-based  software  application  for home medical  equipment and medical supply
businesses. The DME 6.3 core set of software applications includes:

         -   Order Entry                      -   Billing
         -   Inventory Management             -   Accounts Receivable
         -   General Ledger                   -   Purchase Orders

DME 6.3 features add-on modules such as retail sales and bar coding. The DME 6.3
software  provides  easy  to use  data  import/export  capabilities.  DME 6.4 is
currently in customer testing.

MESTAMED
--------
MestaMed is a fully integrated billing, accounting and inventory control system
for providers of home health services including:

         -   Home Medical Equipment & Supplies
         -   Home Health Care
         -   Infusion Therapy
         -   Rehabilitation Equipment
         -   Hospice Services.

MestaMed  customers are home health care providers who use MestaMed to track the
delivery of home  medical  equipment  and  services to patients  and to meet the
complex requirements  necessary to obtain  reimbursement from  Medicare/Medicaid
and other third-party payers. Simione believes MestaMed is the only system which
integrates  information for  operational  and financial  management for multiple
line of business homecare providers.

MestaMed is comprised of the following core modules:
         - Patient Intake               - HME Order Processing
         - Rental Equipment Management  - Billing & Electronic Claims Processing
         - Accounts Receivable          - Inventory Control and Asset Management
         - Management Reporting         - Service Transaction Processing
         - HHA Scheduling               - Clinical and Supporting Documentation
         - IV Prescription Processing

A  number  of  additional  add-on  features  and  supplemental  modules  can  be
optionally  purchased to satisfy the IT  requirements  of a particular  homecare
provider.  MestaMed is designed to easily and cost effectively meet the needs of
large  providers  who have high  transaction  volumes,  large  numbers of users,
multiple branches and remote processing requirements. MestaMed is available on a
variety of hardware  platforms and  operating  environments  including  OpenVMS,
UNIX, Windows NT, AIX and various Intel, Alpha and RS 6000 computer systems.

HMExpress
---------
HMExpress is a Windows-based,  cost-effective  and proven suite of applications
designed for small to  mid-sized  home medical  equipment  providers.  HMExpress
automates  order  processing,  CMN  management,  billing,  accounts  receivable,
inventory  and  rental  management  - the  core  operational  areas  of any  HME
business.  A subset of the more functionally robust MestaMed product,  HMExpress
packages years of research and development into an affordable out-of-the-box HME
solution.

HMExpress  features HME patient intake and order  processing,  equipment pickups
and exchanges,  rental equipment  management,  recurring rental billing,  capped
rental  processing,  DMERC  CMN  printing  and  tracking,  1500  Bill  Printing,
Private-Pay Statements, DMERC Electronic Claims Submission,  Billing System, A/R
system, Perpetual Inventory, Management Reporting and Multi-Brach Processing.

In addition to the core  components of HMExpress,  several  add-on  products are
available  including a  user-friendly  Report  Writer,  DMERC ERN processing and
Electronic   Medicaid   Claims   Processing.   HMExpress   comes  complete  with
Computer-Based  Training  courses,  comprehensive  user  documentation  and free
regional training sessions.  HMExpress customers are also afforded high quality,
real-time customer support coverage and services.

SMART CLIPBOARD
---------------
The Smart  ClipBoard is a clinical  information  system that enables home health
agencies  to  compete   effectively   in  the  changing   health  care  delivery
environment.  Originally  designed  in  1993,  it  was  the  first  home  health
point-of-care  information system developed around pen-based computer technology
and home health  clinical  processes.  The Smart  ClipBoard  provides a clinical
solution  designed to assist home care  providers  in  co-managing  the cost and
quality of the care they deliver by helping them  understand  their clinical and
administrative  processes.  The Smart  ClipBoard  software suite was released in
1996.

By using The Smart ClipBoard, an agency can use and modify its existing clinical
assessment  criteria and care plans.  As a result,  structured  clinical data is
presented and captured in a user-friendly manner at the point-of-care.  Finally,
a suite of data analysis reports and ad-hoc queries help to facilitate  clinical
process  understanding  and  improvement.  The Smart  ClipBoard's  point-of-care
features  assist  clinicians  in  capturing  structured  documentation  of,  and
variance from,  planned patient care processes.  Other features allow clinicians
to have access to patient  caseload data and  libraries of medical  information.
Through a relationship  with Outcome Concept Systems,  the system provides OASIS
and ORYX  data  entry,  validation,  submittal  and  reporting  capabilities  as
required under federal regulations and JHACO industry standards.

The Smart  Clipboard  System will also feature a web-based order tracking system
to be introduced later in 2000. The Orders Tracking System will allow physicians
to process plans of treatment  (485's) and  supplemental  orders using  Internet
technologies.  Using a secure web-site,  agencies and physicians can quickly and
efficiently automate the work flow process surrounding the review,  modification
and acceptance of agency-generated  orders. The Orders Tracking System will also
incorporate  an Orders  Management  component to allow  agencies to  efficiently
track and respond to  outstanding  orders.  Automated  escalation  routines send
e-mail and FAX reminders to physician  offices to expedite the orders completion
process.

The Orders Tracking System will provide an innovative e-business solution to the
provider  community that will allow the electronic  processing of orders and the
reduction  of  costs  associated  with  the  paperwork  bottlenecks  surrounding
traditional orders management.

The Smart ClipBoard includes several  administrative and clinical  components to
help improve workflow processes throughout an agency:

- Patient Administration
- Scheduling
- Orders Management
- Outcomes Management & Reporting

In 2000 Simione  intends to interface  Smart ClipBoard to the billing modules of
STAT2 and MestaMed and develop further operational  management  enhancements for
the system.


SPECIALIZED PRODUCT SOLUTIONS

Simione offers the following specialized software solutions:

OASIS/ORYX  BENCHMARKING
-----------------------
Simione will form strong  strategic  alliances in 2000 with leading  performance
measurement  systems  companies to allow home  healthcare  companies to collect,
manage,   report  and  analyze   clinical   data.   The  Health  Care  Financing
Administration  has mandated the  collection  of a  standardized  set of patient
assessment  data  (OASIS).  Several  accreditation  organizations  such as JCAHO
(ORYX) require the  collection  and  submission of key assessment  indicators as
well.  Comprehensive  collection and  benchmarking  software  allows agencies to
transmit required clinical data to state agencies,  to provide flexible in-house
reporting features, to receive periodic comparative statistics from other member
agencies  and to  access  clinical  data  in an  open  architecture  for  ad-hoc
reporting.

DECISION SUPPORT / DATA WAREHOUSING
-----------------------------------
During 2000,  Simione will begin the design and  development  of data  warehouse
features  that will allow  agencies to easily  access data to perform  'what-if'
analysis  utilizing the latest On-Line  Analytical  Processing  (OLAP) compliant
tools.  Using these tools,  agencies can merge and combine data across  multiple
databases to produce a number of decision  support  scenarios that can be easily
modified to accommodate new criteria and market  conditions.  Automated routines
to move  consolidated  financial and clinical  data to a common data  repository
from a number of Simione software product  databases will constantly  update the
historical  databases  used to analyze data.  Pre-defined  data cubes,  reports,
graphs,  charts and decision support  software will provide  additional value to
agency IT groups.

CLINCAL CONTENT OPTIONS

SMART CARE
----------
The Smart Care suite of patient  careplans  and  assessments  allow  agencies to
implement paper and electronic  clinical data  collection  processes by defining
treatment  plans for a variety of medical  diagnosis-based  conditions,  hospice
services and infusion therapies. Over 30 plans of care and supported assessments
facilitate immediate implementation of a structured clinical process.

OUTCOMES PLANNER SYSTEM
-----------------------
The Outcomes Planner System (OPS) is currently available to Simione customers as
a   paper-based   documentation   solution   designed   to   give   agencies   a
teaching-oriented  set of care planning  options.  The Outcomes  Planner  System
consists of standard  pre-defined  clinical  content  including  assessments and
visit-driven  careplans.  The  Outcomes  Planner  System  predefines  methods of
delivering standardized but individualized patient care by specifying care goals
and visit milestones that result in more successful clinical outcomes with lower
costs.  Simione will introduce the electronic  content version of the OPS system
later this year.

Simione  Central  will  continue  to utilize a  significant  number of  clinical
healthcare  professionals to develop  content-based  solutions to supplement its
software products.

COMPUTER-BASED TRAINING (CBT) COURSEWARE
----------------------------------------
Simione's  CBT division has  produced a number of  interactive  CBT courses that
cover a variety of homecare industry and product-specific topics. CBT courseware
features leading industry experts and allows Simione to deliver quality training
and  educational  courseware at a fraction of the cost of  traditional  training
options.  CBT offerings give Simione a leading  advantage in delivering  quality
education and training to its customers to supplement its software  products and
consulting activities.  CBT courseware can also be delivered and administered in
a web-based environment.

Over 20 titles have been developed with another 18-20 planned for 2000.

REGULATORY ENHANCEMENTS
-----------------------
Simione will expend  professional  resources  to address the  healthcare-related
regulatory issues facing providers this year:

PROSPECTIVE PAY SYSTEM (PPS)
----------------------------
As a result  of the  Balanced  Budget  Act of 1997 and the  OCESSA  Act of 1999,
implementation of a Prospective Pay System is mandated for home health agencies.
Simione will provide a host of educational  and  consulting  services as well as
clinical and software modifications  necessary to meet PPS compliance.  Products
will be created to supply healthcare agencies with tools and processes to assist
agencies in succeeded in this new cost-oriented environment.

HIPAA
-----
The  Health  Insurance  Portability  and  Accountability  Act  will  necessitate
security and electronic  transmission-related  enhancements to current  software
products. As specific implementation  guidelines are published,  Simione Central
will respond by allocating the resources needed to gain compliance.


SERVICE SOLUTIONS

SOFTWARE SUPPORT SERVICES
-------------------------
Simione  believes that providing  comprehensive  software  support  services to
customers is critical to its success in the home health care industry.  With the
completion  of the merger with MCS in March 2000,  Simione  employs in excess of
120 professionals dedicated to this effort who provide the following services:

     -    Implementation:  Implementation  services  include  an  assessment  of
          existing  customer  business  processes,   project  planning,   system
          training,   business  process   re-engineering   and  data  conversion
          assistance.

     -    Training:  Training  services  are  offered on a  continuing  basis to
          existing  customers  either  at the  customer's  site or at a  Simione
          location.

     -    Software Support:  Simione offers on-call  telephone  software support
          seven  days a week and  provides  maintenance  releases  on a periodic
          basis.  Releases of software enhancements are generally made available
          to  customers   annually.   These  enhancements   include  unspecified
          improvements  and  regulatory  data  updates.  This  support  does not
          include major  functional or computer  platform  changes that would be
          offered to customers as new product  sale  opportunities.

     -    Technical  Consulting:  Simione provides  software  customization  and
          integration,  technical audits of the customer's  information systems,
          integration   and  network   planning  and   strategic   and  tactical
          information systems planning.

Support services represent a source of recurring revenue,  as these services are
provided through annual renewable  maintenance contracts which provide access to
customer support,  updates to respond to changes in reimbursement and regulatory
policies,  and product enhancements.  The software in installations which do not
have  maintenance  agreements  rapidly  becomes  obsolete.  Other  services  are
generally  charged on a time and  materials  usage  basis.  Simione's  technical
personnel also provide on-site and on-call hardware support.

CONSULTING SERVICES
-------------------
Simione's home health care consulting  services assist  providers in addressing
the  challenges of a managed care and/or PPS  environment,  such as reducing the
cost of  delivering  care  while  maintaining  or  improving  quality  of  care,
streamlining   operational   structures   and   re-engineering    organizational
structures.  Simione's  consulting  operations,  which were  acquired in January
1996,  have been  providing  consulting  advice to the home health care industry
since 1963. The consulting  staff is comprised of approximately 35 professionals
with home health  care  industry  specific  experience.  Consulting  engagements
generally focus on:
<PAGE>
    - Strategic Planning   - Marketing Studies      - Acquisition Due Diligence
    - Operational Reviews  - Business Valuations    - Quality Assurance Reviews
    - Reimbursement        - Organizational Reviews - Operational Re-engineering
    - Consultation         - Management             - Medical Records
    - Medicare Compliance  - Cost Report Preparation

Simione  provides  consulting  services  on a time and  materials  usage  basis.
Simione believes that its consulting services group effectively  complements its
software and services,  provides a valuable  outlook on the changing home health
care  industry and is a source of  innovative  ideas for  Simione's  information
systems enhancements. Furthermore, consulting services are designed to build new
customer  relationships  and provide  opportunities  for the sale of  additional
information systems and services.

CUSTOMERS

     During 1999, Simione had over 1,500 customers nationwide, including:

     -    hospital-based companies;
     -    home health care providers;
     -    alternate-site care organizations;
     -    home medical equipment providers;
     -    integrated delivery systems; and
     -    government-managed organizations.

     Columbia/HCA  accounted  for 35% of  Simione's  revenues in 1998 and 11% of
Simione's revenues in 1999. See "Simione Management's Discussion and Analysis of
Financial  Condition  and Results of Operations -- Overview" for a discussion of
Simione's relationship with Columbia/HCA. No other customer accounted for 10% or
more of Simione's  consolidated net revenues during the year ending December 31,
1999.

SALES AND MARKETING

     Simione  markets its systems and  services  through a direct sales force in
four national  territories  located  throughout the United States.  Simione also
employs  a  marketing  and  sales  support  staff to  assist  its  sales  force.
Recognizing  the  importance of  maintaining  good  communication  and obtaining
valuable input from its customers, Simione sponsors customer advisory groups and
national  user group  meetings.  Regional  user group  meetings are also held to
discuss  customer  comments,  suggestions,  industry-trends  and related  system
issues.

BACKLOG

     Simione had backlog of $1.6 million on December  31, 1999,  $4.1 million on
December 31, 1998,  and $7.1 million on December 31, 1997.  Backlog  consists of
the  unrecognized  portion of  contractually  committed  software  license fees,
hardware,  estimated  installation fees and professional services. The length of
time required to complete an implementation  depends on many factors outside the
control of Simione,  including the state of the customer's existing  information
systems and the customer's  ability to commit the personnel and other  resources
necessary to complete the implementation  process.  As a result,  Simione may be
unable to predict  accurately  the amount of  revenue it will  recognize  in any
period and,  therefore,  can make no assurances that the amounts in backlog will
be recognized in the next twelve months.

TECHNOLOGY

     The Smart  ClipBoard  system operates in all Windows  environments  and its
point-of-care features operate on tablets,  laptops and other scaleable devices.
It  features a flexible  relational  database  capable of  accurate  replication
necessary to support distributed and remote information systems.

     The STAT2 system operates on multiple operating systems, including Windows,
and is designed for use on microcomputers, network PCs, and IBM and DEC computer
hardware.  The STAT2 system allows a customer to exchange clinical and financial
information  with  external  systems  in either an  immediate  connection  or by
accumulating data to transmit later in batches or batch mode.

     The Dezine Durable Medical  Equipment 6.3 system operates on the MS-DOS and
Windows  operating  systems and is designed for use on microcomputers or network
PCs.

     The  integrated  MestaMed  system  operates on multiple  operating  systems
including Open VMS, Windows NT, UNIX, AIX, and other primary platforms.  An ODBC
gateway  has  been  developed  to allow  efficient  queries  of its  proprietary
database.

     Simione's systems are dependent upon many third-party software and hardware
products and related services. There can be no assurance that financial or other
difficulties  experienced by such  third-party  vendors will not have an adverse
effect on  Simione's  abilities  to provide its systems or that  Simione will be
able  to  replace  such  third-party   products  and  services  if  they  become
unavailable.

     The  third-party  software  is composed  of varying  types and  contractual
arrangements.  The nature and scope of the third-party  software is described in
the table below. The software  licensed from third parties falls into one of the
four categories  listed below. All of Simione's  products use these  third-party
software products to some varying degree. Generally, the third-party software is
licensed  under  agreements  that have a  one-year  term.  Fees  charged  by the
third-party software vendors are passed on to Simione's customers in the license
fees or maintenance fees charged by Simione.  The software is either embedded in
Simione's  software  prior  to sale or  accessed  by  Simione's  software  as an
external data file.

<TABLE>
<CAPTION>
                                             TERMS OF LICENSE
                                             ----------------

                          MONTHLY                          PER USER OR       EMBEDDED
                        MAINTENANCE      ONE TIME FEE       PER SEAT         SOFTWARE      DATA FILE
                        -----------      ------------       --------         --------      ---------
<S>                          <C>              <C>               <C>             <C>           <C>

Operating System             X                 X                X               X
Medical Content              X                 X                X                              X
Report Writer                X                 X                X               X
Data Base Manager            X                 X                X               X

</TABLE>

RESEARCH AND DEVELOPMENT

     Simione  maintains a staff of  approximately  40  programmers,  systems and
application analysts,  quality assurance analysts and documentation  specialists
(a total of 75 including MCS after the merger) who monitor  developments  in the
computer  software  and health  care  industries  and who  continuously  work to
enhance  Simione's  systems.  Simione's  research and development  expenses were
approximately $4.0, $6.7 and $6.7 million for the years ended December 31, 1999,
1998 and 1997, respectively.

     Simione is enhancing  selected features of existing products and developing
new products to help its customers  improve  workflow and  operational  process.
Such  activities will help customers  manage and reduce costs while  maintaining
quality  clinical  outcomes,  which are believed to be a necessity  for business
survival under the prospective  payment system.  Simione has additional research
and  development  activities  underway  to make  certain  product  functionality
web-enabled.  Additionally,  Simione  plans  to  develop  or  enhance  interface
capabilities  between the Smart  ClipBoard  product  acquired in the CareCentric
acquisition and its other core home health agency products.

     Simione  recognizes the need to respond to the rapid  technological  change
that is occurring in the  software and health care  industries.  There can be no
assurance,  however,  that Simione will be able to develop  products on a timely
basis or that its future products will fully address the needs of its current or
prospective customers.

COMPETITION

     Competition  in the market for home  health  care  information  systems and
services  is intense  and is expected to  increase.  Simione  believes  that the
primary factors affecting competition are:

         -   system performance and reliability
         -   customer support
         -   service
         -   system flexibility and ease of use
         -   potential for providing enhancements
         -   reputation
         -   financial stability.

     Simione  believes  it is a strong  competitor  in  system  performance  and
reliability,  customer support and potential for enhancements.  Simione provides
customer  support through a toll-free  call-in number which Simione believes has
been  effective  in  satisfying  customer  needs.  Simione  believes  it  has  a
competitive  advantage  in the service  area  because it offers a more  complete
health care  industry  consulting  service  that  supplements  and  supports its
systems-related  services,  and strengthens customer  relationships.  Pricing in
this  industry  is very  competitive,  with  no  particular  company,  including
Simione,  having a clear  advantage.  Simione  believes  that it has a very good
reputation  among the home health care providers who are familiar with Simione's
products,  but Simione's name  recognition  within the market at large is not as
well  established  as  many  of the  competitors.  Simione  is at a  competitive
disadvantage on the financial stability factor because its financial position is
not as strong as that of its major competitors.


     Simione's   competitors   include  other  providers  of  home  health  care
information  systems and  services,  management  companies  and home health care
consulting firms. Furthermore, other major health care information companies not
presently  offering home health care information  systems,  or major information
system  companies not currently in the health care  industry,  could develop the
technology and enter Simione's  markets.  Simione  believes its most significant
competitors are:

         -   Delta Health Systems (owned by Shared Medical Systems Corp.);
         -   McKesson HBOC;
         -   Patient Care Technologies, Inc. (partially owned by Meditech);
         -   Home Care Information Systems, Inc. (owned by Misys PLC); and
         -   3M Datacron (owned by 3M).

     Increased  competition  could  result in price  reductions,  reduced  gross
margins and loss of market share, any of which could materially adversely affect
Simione's business,  financial condition and results of operations. In addition,
many of Simione's  competitors  and  potential  competitors  have  significantly
greater financial, technical, product development, marketing and other resources
and  market  recognition  than  Simione.  Many  of  Simione's  competitors  also
currently have, or may develop or acquire,  substantial installed customer bases
in the home  health  care  industry.  As a result  of these  factors,  Simione's
competitors may be able to respond more quickly to new or emerging  technologies
and changes in  customer  requirements  or to devote  greater  resources  to the
development,  promotion  and sale of their  systems and services  than  Simione.
There can be no  assurance  that  Simione  will be able to compete  successfully
against current and future  competitors or that  competitive  pressures faced by
Simione will not materially  adversely affect its business,  financial condition
and results of operations.

PROPRIETARY RIGHTS AND PRODUCT PROTECTION

     Simione owns the  copyrights  on its STAT2  system and The Smart  ClipBoard
product acquired in the CareCentric  merger.  Simione depends upon a combination
of trade secret, copyright and trademark laws, license agreements, nondisclosure
and other contractual provisions,  confidentiality policies and various security
measures to protect its proprietary  rights.  There can be no assurance that the
legal  protections  afforded to Simione or the precautions taken by Simione will
be adequate to prevent  misappropriation of Simione's  technology.  In addition,
these  protections  do  not  prevent  independent   third-party  development  of
functionally  equivalent or superior  technologies,  systems or services, or the
obtaining of a patent with respect to Simione's technology by third parties. Any
infringement or misappropriation of Simione's  proprietary software could have a
material  adverse effect on Simione.  As the number of home health care software
information  systems  increases  and the  functions  of  these  systems  further
overlap,  health care  information  systems may  increasingly  become subject to
infringement claims. Although there has been no litigation with respect to these
claims, there can be no assurance that Simione will not be subject to litigation
in the future or additional infringement claims.

     Simione  believes that its current  systems and products do not infringe on
the patent or trademark rights of any third parties.  There has,  however,  been
substantial  litigation and uncertainty  regarding  copyright,  patent and other
intellectual property rights involving computer software companies and there can
be no assurance that Simione will prevail in any infringement litigation brought
against  it.  One party has  initiated  an  infringement  inquiry  with  Simione
involving its TEMS software.  Simione believes that this inquiry will not have a
material adverse effect on its financial position or results of operations since
the  settlement and licensing  terms  currently  offered by the inquiring  party
would  be  immaterial  to  Simione's  financial   performance.   Any  claims  or
litigation,  with or  without  merit,  could be  costly  and  could  result in a
diversion of management's  attention which could have a material  adverse effect
on Simione's business,  financial  condition and results of operations.  Adverse
determinations in such claims or litigation may require Simione to cease selling
certain systems or products,  obtain a license and/or pay damages,  any of which
could also have a  material  adverse  effect on  Simione's  business,  financial
condition and results of operations.

GOVERNMENT REGULATION AND HEALTH CARE REFORM

     The health care  industry is subject to changing  political,  economic  and
regulatory  influences that may affect the procurement  practices and operations
of home health care  organizations.  During the past several  years,  the United
States  health care  industry  has been  subject to an increase in  governmental
regulation of, among other things,  reimbursement rates and certain proposals to
reform various aspects of the United States health care system have periodically
been considered by Congress. Future proposals may result in increased government
involvement in home health care and otherwise  change the operating  environment
for  Simione's  customers.  Home  health care  organizations  may react to these
proposals  and the  uncertainty  surrounding  such  proposals by  curtailing  or
deferring investments in Simione's systems and services.  Simione cannot predict
what  impact,  if  any,  such  factors  might  have on its  business,  financial
condition and results of operations.

     The  Office of  Inspector  General  of the  Department  of Health and Human
Services has  identified in its Work Plan for Fiscal Year 1999 several  projects
within  the home  health  industry  which  will be the  focus  of the  Inspector
General's  scrutiny in fiscal year 1999.  Each year the  Inspector  General sets
forth in its Work  Plan for that year the areas  that will be  scrutinized.  For
example,  the 1999 Work Plan sets forth that the Inspector General will focus on
audits of home  health  base  year  costs,  location  of  service  requirements,
assessment of the impact of the interim  payment system on  beneficiary  access,
physicians  case  management  billings,  utilization  patterns  of  home  health
agencies, and claims for home health aides. Additionally,  the Inspector General
has  focused  in recent  years on how  third-party  billing  companies,  such as
Simione, provide billing and collection services to its customers. The Inspector
General has also stressed the  importance of compliance  programs for aspects of
the health care industry.  Although currently implementation of such programs is
voluntary,  such compliance programs may become a requirement in the future as a
condition of being  reimbursed under any federal or state programs or by private
health plan payors. The Inspector General released in December 1998 a compliance
program intended as guidance to third-party  medical billing companies and their
agents and subcontractors in developing internal controls promoting adherence to
applicable law and the program requirements of federal, state and private health
plan payors.  Any changes  resulting from the Inspector  General's review of the
home health  industry and how home health services are billed could increase the
costs and time necessary for Simione to provide its  administrative  services to
its  customers  and  could  affect  Simione  in  other  respects  not  currently
foreseeable.

     The  confidentiality  of patient records and the circumstances  under which
such records may be released for inclusion in databases  maintained on Simione's
systems are subject to substantial  regulation by state  governments and federal
legislation  governing  specialized  medical  information and records.  Although
compliance with these laws and regulations is principally the  responsibility of
the  hospital,  physician  or other home  health  care  provider  with access to
Simione's  information systems,  regulations  governing patient  confidentiality
rights are evolving rapidly. For example,  the Health Insurance  Portability and
Accountability  Act of 1996 includes  provisions  directing the Secretary of the
Department  of Health  and  Human  Services  to adopt  standards  governing  the
electronic  transmission  of data in  connection  with a number of  transactions
involving  health  information,  including  submission of health  claims.  These
standards are to cover security  measures and safeguards  with respect to health
information,  as well as standardization of data,  assignment of identifiers and
authentication of electronic signatures.

     In January  1999,  HCFA  published  an interim  final rule and a final rule
requiring home health agencies to report  electronically  data obtained from the
Outcome and Assessment Information Set ("OASIS") as a condition of participation
by such agencies in the Medicare program.  OASIS requires information  regarding
patients to be submitted  electronically to HCFA, and the January 1999 rules set
forth   requirements  for  maintaining  the  privacy  of  patient   identifiable
information  generated by OASIS.  Further,  these rules  require the home health
agency or its agent to maintain the confidentiality of all patient  identifiable
information  contained  in the  clinical  record and neither  can  release  such
patient identifiable OASIS information to the public. Any agent acting on behalf
of an agency in connection with the  transmission of OASIS data must be doing so
pursuant  to a  written  agreement  with  the  home  health  agency.  Additional
legislation  governing the dissemination of medical record  information has been
proposed  at both the state and  federal  level.  This  legislation  may require
holders of such information to implement  additional security measures which may
be difficult to implement and costly to Simione.  There can be no assurance that
changes to state or federal laws and  regulations  will not materially  restrict
the ability of home health care  providers  to submit  information  from patient
records to Simione's systems or impose  requirements which are incompatible with
Simione's current systems.

     In late  October  1999,  HCFA  released its  proposed  regulations  for the
prospective  payment system for  reimbursement  of home health  providers  under
Medicare.  These  proposed  rules are subject to comment and are  expected to be
finalized by July 2000 and  effective  October  2000.  The  proposed  rules will
reimburse  home  health  providers  fixed  amounts  for 60 day  episodes of care
determined by home health resource group case-mix  classifications  on the basis
of an initial OASIS assessment adjusted for regional labor cost differences. The
proposed  rules  state  that the  reimbursement  will be 50% at the start of the
episode and 50% after the final report for the episode with all  adjustments has
been  transmitted.  Adjustments  will be allowed  for low  utilization,  partial
episodes,  significant  changes in  condition,  delivery  of  therapy  and other
excessive costs situations. Additional submittals required will include a notice
of admission,  identification  of the appropriate  case mix group and a one-line
universal bill submission.

     These changes to the Medicare payment system will require extensive changes
to the manner in which home health care providers do business  because they will
be  required to reduce or manage the costs of care per episode so the costs will
not exceed the allowed  reimbursement,  while maintaining the quality of medical
outcomes required by the patient, the payor or other governmental regulatory and
self-regulating  organizations.  Such changes will require  extensive changes to
Simione's software products.  Plans are underway to understand and address these
changes. There is no assurance that:

     -    these changes can be made correctly or in a timely enough manner given
          the resources of Simione;

     -    HFCA will not change or delay these requirements;

     -    other suppliers of home health care software who are competitors  will
          not supply better versions of such products; or

     -    Simione's  customers  will have the  resources  and skills to make the
          changes to their operational processes needed to remain in business or
          to acquire,  install and use the  information  technology we intend to
          sell to address this major regulatory change.

     In the Omnibus Consolidated and Emergency Supplemental Appropriation Act of
1999,  the portions of the Balanced  Budget Act of 1997 that were  applicable to
the  reimbursement of home health care providers under Medicare were amended to:

     -    defer the 15% additional funding cut until October 2000;

     -    provide  for  three  year   extended   payments   of  prior   Medicare
          over-reimbursements with the first year interest-free;

     -    eliminate  the bundling of home medical  equipment  billings with home
          health agency billings; and

     -    provide other minor relief.

     These  changes will  increase the cash flow of our  customers and potential
customers for the next 12 months, but do not provide the permanent relief sought
by the industry. The non-bundling change eliminates an opportunity for MCS which
has a software  program that would  facilitate  such  bundling of billing.  This
legislation will not require significant changes to our software programs.

     The United States Food and Drug  Administration is responsible for assuring
the safety and effectiveness of medical devices under the Federal Food, Drug and
Cosmetic Act.  Computer products are subject to regulation when they are used or
are intended to be used in the diagnosis of disease or other  conditions,  or in
the cure,  mitigation,  treatment or prevention  of disease,  or are intended to
affect the structure or function of the body. Although Simione believes that its
systems are not subject to FDA regulation, the FDA could determine in the future
that  predictive  applications  of Simione's  systems  could make them  clinical
decision tools subject to FDA regulation.  Compliance with FDA regulations could
be burdensome,  time consuming and expensive.  Simione also could become subject
to future  legislation and regulations  concerning the manufacture and marketing
of medical devices and health care information systems. These could increase the
costs and time necessary to market new systems and could affect Simione in other
respects  not  presently  foreseeable.  Simione  cannot  predict  the  effect of
possible future legislation and regulation.

EMPLOYEES

     As of December 31, 1999,  Simione employed  approximately  200 individuals.
Simione  believes that its future success depends in large part upon recruiting,
motivating and retaining  highly skilled and qualified  employees in all aspects
of Simione's  business.  None of Simione's  employees is  represented by a labor
union. Simione believes that its employee relations are good.

PROPERTIES

     Simione's  principal  executive  offices are  located at 6600 Powers  Ferry
Road,  Atlanta,  Georgia  30339.  The  principal  executive  offices  consist of
approximately  56,924 square feet. Simione uses 20,681 square feet of this space
and subleases the remainder to a third-party. The lease on this space expires on
December 31, 2002.

     Simione also leases office space in the following locations:

LOCATION                                 SQUARE FOOTAGE  LEASE EXPIRATION
--------                                 --------------  ----------------
Pompano Beach, Florida..............         20,291      December 31, 2000
Duluth, Georgia.....................          8,370      March 31, 2001
Hamden, Connecticut.................          6,500      December 31, 2002
East Brunswick, New Jersey..........          8,540      September 30, 2000
Sugar Land, Texas...................          7,900      September 30, 2000
Westborough, Massachusetts..........          3,020      August 30, 2001
Huntington Beach, California........            976      May 31, 2000
San Diego, California...............          1,800      February 28, 2000
Irving, Texas.......................          1,645      March 31, 2003
Jacksonville, Florida...............          1,019      January 31, 2000
Pittsburgh (Monroeville), Pennsylvania       24,308      September 30, 2005
Pleasanton, California..............          2,463      March 31, 2003

     The landlord of the Connecticut  office is a company  controlled by Barrett
O'Donnell,  Chairman of Simione,  and Reid Horovitz,  former General Counsel and
Secretary of Simione.

     Simione believes that its present facilities are adequate to meet Simione's
current and foreseeable needs.


ITEM 3.  LEGAL PROCEEDINGS

     Neither  Simione nor any of its  subsidiaries  is  currently a party to any
legal proceedings which would be material to the business or financial condition
of Simione on a consolidated  basis.  Simione was,  however,  served on July 17,
1997 with an  administrative  subpoena issued by the United States Department of
Health and Human Services,  Office of Inspector General. In connection with that
subpoena,  the  Department  of  Justice  had  advised  Simione  that  aspects of
Simione's past  relationship  with  affiliates of  Columbia/HCA  were within the
scope of an  ongoing  grand  jury  investigation.  Simione's  relationship  with
Columbia/HCA  arose  based on the sale in  October  of 1996 to  Columbia/HCA  of
Central Health Holding Company, Inc, the former parent company of Central Health
Management Services, Inc., a predecessor company of Simione. At the time of such
sale, Simione entered into a number of contracts to provide  information systems
and outsourcing  services to Columbia/HCA.  In late 1999, the Justice Department
confirmed to Simione that neither Simione, nor any of its officers, directors or
employees, were a target in the investigation and that the Department of Justice
had removed the Company from its inquiry.

     Simione was one of several  defendants named in a  "whistleblower"  lawsuit
related  to  alleged  Medicare  fraud  filed  under the False  Claims Act in the
Northern District of Georgia (U.S. ex rel.  McLendon v. Columbia/HCA  Healthcare
Corp., et al., No.  97-VC-0890 (N.D.  Ga.)). The lawsuit involves alleged claims
that Simione allegedly  participated in a conspiracy with Columbia/HCA and other
third parties to bill inflated and  fraudulent  claims to Medicare.  Simione has
learned  that the  Justice  Department  has  elected  not to join in the  claims
asserted  against  Simione by Donald  McLendon,  who is a former  employee of an
unrelated  service  provider to  Columbia/HCA.  Although the Justice  Department
joined the suit with regard to other  defendants,  it  specifically  declined to
intervene with regard to Simione.  Simione has had indications that Mr. McLendon
may still pursue "whistleblower"  claims against Simione directly.  Simione does
not believe that any of these claims, if asserted against Simione, will have any
material effect on Simione's  overall  business or financial  condition.  In the
event these claims are asserted,  Simione  intends to vigorously  defend against
them.

     The Company remains liable for certain  settlement costs payable to IBM for
the early  cancellation of the Company's service agreement with IBM for services
provided to Columbia/HCA.  Those costs amount to approximately  $2.5 million and
are part of claims for  reimbursement  under a still active  legal  dispute with
Columbia/HCA.  In the event the legal  dispute  is not  settled  in favor of the
Company,  the Company may be liable for all or part of this amount plus any late
payment charges if appropriate.




<PAGE>



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

        None.

EXECUTIVE MANAGEMENT OF THE REGISTRANT

Barrett C. O'Donnell...........46     Chairman of the Board
R. Bruce Dewey.................48     Chief Executive Officer, President and
                                            Director
William J. Simione, Jr.........57     Executive Vice President and Director,
                                            President of Simione Consulting
Jack Arthur....................61     Senior Vice President of Product
                                            Management and Quality Assurance
George M. Hare.................44     Senior Vice President and Chief Financial
                                            Officer (until April 14, 2000)
Kathryn B. McClellan...........45     Senior Vice President of Product Services
Charles N. Mead, M.D. .........52     Chief Science and Technology Officer
Michael Quinn .................46           Senior Vice President of Corporate
                                            Resources and Customer Support
Robert J. Simione..............49     Senior Vice President of Consulting
William A. Thomasmeyer.........45     Senior Vice President of Sales and
                                             Marketing

     Effective  April 15,  2000,  the  Company's  Chief  Financial  Officer  and
Treasurer  will be Mr.  Stephen  Shea.  Mr.  Shea is and will  remain  the Chief
Financial Officer of Mestek, Inc., a NYSE company. Mestek was the parent company
of MCS, Inc. before it merged into Simione on March 7, 2000.

     R. Bruce Dewey has served as Senior Vice  President and General  Counsel of
Mestek  since  1994 and  Secretary  of Mestek  since  1992.  Mr.  Dewey was Vice
President -- Administration  prior to 1994. Prior to joining Mestek in 1990, Mr.
Dewey was an attorney in private  practice in Seattle,  Washington most recently
with  Cairncross,  Ragen & Hempelmann from 1987 to 1990.  Prior to the merger of
Mestek,  Inc.  and Reed  National  Corp.,  Mr.  Dewey had been  Assistant to the
President  of  Reed  from  1979  to  1983  and  had  been  affiliated  with  the
Cooper-Weymouth, Peterson division of Reed from 1975 to 1979. In accordance with
the terms of the merger  agreement,  Mr. Dewey was appointed the Chief Executive
Officer of Simione as of  September 9, 1999.  Mr. Dewey will remain  Senior Vice
President and Secretary of Mestek and will spend  approximately  75% of his time
on Simione. Mr. Dewey was a director of MCS from June 1992 to August 1999.

     Barrett C.  O'Donnell  has served as Chairman of the Board of Simione since
June 15, 1998, and served as Chief Executive Officer and President from June 15,
1998 to September 9, 1999.  Mr.  O'Donnell  has been a director of Simione since
October  1996.  From October 1992 until October 1996,  Mr.  O'Donnell  served as
Chairman of the Board of InfoMed  Holdings,  Inc., a Delaware  corporation  that
merged with  Simione  Central  Holding,  Inc.,  a Georgia  corporation,  to form
Simione  effective October 8, 1996. Mr. O'Donnell also served as Chief Executive
Officer of InfoMed from November 1994 to October 1996. From 1978 to present, Mr.
O'Donnell has been Chairman of the Board,  President and Chief Executive Officer
of O'Donnell  Davis,  Inc.,  which is in the consulting and investment  advisory
services business.

     William J. Simione,  Jr. is a certified public accountant who has served as
Vice Chairman of the Board and Executive Vice President of Simione since October
1996.  From January 1996 until October 1996, Mr. Simione served as the President
of Simione  Central,  Inc., a wholly owned  subsidiary of Simione.  From January
1975 until December  1995,  Mr. Simione was Managing  Partner of the Home Health
Care Consulting  Division of Simione & Simione,  CPAs. Since September 1995, Mr.
Simione has also served as a director and an audit committee member of Personnel
Group of America,  Inc., a leading provider of information  technology  services
and commercial staffing solutions. Mr. Simione has 32 years of experience in the
home health care industry.

     Jack Arthur  served as Senior Vice  President  of Product  Development  and
Product  Management  of Simione from January 1999 to the date of the merger with
MCS,  when he became  Senior Vice  President of Product  Management  and Quality
Assurance. From July of 1998 until December of 1998, Mr. Arthur was a manager of
product development with Eclipsys,  Inc., an information systems provider.  From
October  of 1995  until June of 1998,  Mr.  Arthur  was the owner of  Healthcare
Consulting,  Inc., a health care information  systems consulting  company.  From
June of 1985 until October of 1995, Mr. Arthur held various product  development
management positions with SMS, Inc., an information systems provider.

     George Hare has served as the Senior  Vice  President  and Chief  Financial
Officer of Simione  since May 1999.  Since  March of 1999,  Mr.  Hare has been a
Partner with Tatum CFO Partners,  LLP.  From February of 1988 to 1999,  Mr. Hare
worked for ADT Security Services and its subsidiaries in various capacities. Mr.
Hare is a Certified Public Accountant. Mr. Hare has resigned effective April 14,
2000.

     Kathryn B. McClellan  served as Senior Vice President of Customer  Services
and Support of Simione  from  November  1998 to the date of the merger with MCS,
when she became  Senior Vice  President of Product  Services.  From June of 1996
until November of 1998,  Ms.  McClellan  held various  operational  and customer
services  positions  with  Simione.  From April of 1991 until June of 1996,  Ms.
McClellan was an administrator and director of Memorial Medical Center.

     Charles N. Mead, M.D. has served as Chief Science and Technology Officer of
Simione  since  August 1999.  From June 1993 to August  1999,  Dr. Mead was Vice
Chairman, Chief Scientist and a director of CareCentric,  which he co-founded in
1993. Dr. Mead has a long-standing  involvement in biomedical  computing and the
application of computers to medicine.

     Michael  Quinn served as Senior Vice  President of  Operations of MCS since
1985 and became an officer of Simione  after the merger with MCS, when he became
Senior Vice  President of Corporate  Resources  and Customer  Support.  He was a
director of MCS since 1992 until the merger with Simione. From 1977 to 1985, Mr.
Quinn worked in various  programming and sales capacities for MCS and its parent
company supervising sales, product development and product support.

     Robert J.  Simione has served as Senior Vice  President  of  Consulting  of
Simione since October of 1996. From January of 1976 until September of 1996, Mr.
Simione was a principal of Simione & Simione.

     William A. Thomasmeyer  became Senior Vice President of Sales and Marketing
of Simione  after the merger with MCS. Mr.  Thomasmeyer  served as President and
Chief  Executive  Officer of MCS from January 1999.  From 1996 until December of
1998, Mr.  Thomasmeyer was President of Mestek  Technology,  a Mestek subsidiary
founded to pursue the  acquisition  of  software  companies  in market  segments
complementary to MCS. From 1989 through 1996, Mr.  Thomasmeyer was President and
C.E.O. of Virtual  Microsystems,  Inc. and Logicraft  Information  Systems,  two
software companies based in the CD-ROM networking market.

     Stephen M. Shea will become Chief  Financial  Officer of Simione  effective
April 15, 2000.  Mr. Shea was Senior Vice  President - Finance of MCS, Inc. from
1994 until its merger into Simione on March 7, 2000.  Mr. Shea has been employed
in  various  financial  roles by  Mestek,  Inc.  since  1985 and served as Chief
Financial  Officer of Mestek since 1990,  and as Senior Vice President - Finance
since 1994.


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The table below sets forth the high and low sales prices of Simione  common
stock as reported on The NASDAQ Stock  Market's  National  Market System for the
calendar periods indicated.

     The  common  stock of  Simione  has  traded on The  NASDAQ  Stock  Market's
National  Market  System  under the symbol SCHI since June 30, 1997 and prior to
June 30, 1997 was traded on the OTC Bulletin Board under the same symbol. During
March 2000,  the common stock was traded  temporarily  under the symbol SCHID on
NASDAQ to reflect  the  1-for-5  reverse  stock  split.  As of February 1, 2000,
Simione common stock was held by approximately 2,256 holders of record. For this
purpose, stockholders whose shares are held by brokers on behalf of stockholders
are not separately counted.

     The table below shows the  reported  quarterly  high and low bid prices for
Simione common stock on the OTC Bulletin Board for the period January 1, 1997 to
June 29,  1997,  and the  reported  quarterly  high and low sales  price for the
Simione  common stock on the NASDAQ Stock Market for the periods  after June 30,
1997.  The  information  set  forth  below  does not  include  retail  mark-ups,
mark-downs  or  commissions.   In  addition,   over-the-counter  prices  reflect
inter-dealer prices, and may not necessarily represent actual transactions.  The
sales  prices  after the  second  quarter of 1997  reflect  the value of Simione
common stock  following a 1-for-2 reverse stock split which occurred on June 30,
1997.  The sales prices have been  adjusted to reflect the effect of the 1-for-5
reverse stock split which occurred on March 7, 2000.

<TABLE>
<CAPTION>

                             1999                          1998                        1997
                             ----                          ----                        ----
                     HIGH            LOW           HIGH            LOW          HIGH          LOW
                     ----            ---           ----            ---          ----          ---
<S>                 <C>              <C>          <C>            <C>          <C>            <C>

First Quarter        $17.50          $6.25        $60.625         $32.50       $38.75        $21.25
Second Quarter        21.25          6.875          81.25          31.25        33.75         25.00
Third Quarter         15.00           6.25          41.25          4.375        73.75         47.50
Fourth Quarter        9.375           5.00          16.25           5.00       70.625         35.00
</TABLE>

     Simione has never  declared or paid cash dividends on Simione common stock.
Simione currently  intends to retain future earnings,  if any, for future growth
and does not anticipate paying any cash dividends in the foreseeable future.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The following table sets forth selected consolidated  financial data of the
Company. The selected consolidated financial data in the table as of and for the
years ended December 31, 1999,  1998,  1997,  1996 and 1995 are derived from the
audited   consolidated   financial  statements  of  the  Company.  The  selected
consolidated  financial  data as of and for the year  ended  December  31,  1996
includes the operating  results of Simione & Simione acquired  effective January
1, 1996 and InfoMed Holdings,  Inc. ("IMHI") for the period October 8, 1996 (the
effective  date of the IMHI  Acquisition)  to December  31,  1996.  The selected
consolidated  financial  data as of and for the year  ended  December  31,  1997
includes the operating results of Dezine Healthcare  Solutions,  Inc. ("Dezine")
for the period  December 1, 1997 (the effective date of the Dezine  Acquisition)
to December  31,  1997.  As of and for the year ended  December  31,  1995,  the
Company was a  subsidiary  of CHHC.  See Notes 1 and 8 to Notes to  Consolidated
Financial Statements for a description of the Company's history. The data should
be read in  conjunction  with "Item 7.  Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" and the  Consolidated  Financial
Statements and Notes thereto of the Company included herein.



<PAGE>
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                                  -----------------------
                                               1999          1998          1997        1996 (2)      1995 (2)
                                            ------------  ------------  ------------ -------------  ------------
                                                           (in thousands, except per share data)
   <S>                                        <C>           <C>            <C>          <C>           <C>
   Net revenues:
      Software and services                    $ 14,693      $ 27,523      $ 27,356      $ 15,308      $  5,387
      Agency support                              1,541         6,936        14,680         7,324         7,835
      Consulting services                         7,299         6,437         4,909         3,363             -
      Columbia settlement fee                     2,250           750             -             -             -
                                            ------------  ------------  ------------ -------------  ------------
        Total net revenues                       25,783        41,646        46,945        25,995        13,222

   Cost and expenses:
      Cost of revenues                           16,447        26,091        22,715        14,698         8,154
      Selling, general and administrative        13,346        13,822        12,508         7,037         3,095
      Research and development                    3,968         6,741         6,670         5,677         2,929
      Amortization and depreciation               3,546         2,392         1,714           785             -
      Purchased in-process research and
      development                                     -             -         8,127        12,574             -
      Severance and other restructuring
      charges                                   (1,140)         5,011             -         1,215             -
                                            ------------  ------------  ------------ -------------  ------------
        Total cost and expenses                 36,167        54,057        51,734        41,986        14,178
                                            ------------  ------------  ------------ -------------  ------------
   Loss from operations                        (10,384)      (12,411)       (4,789)      (15,991)         (956)

   Other income (expenses)
      Interest expense                            (242)         (183)         (215)         (115)             -
      Interest and other income                    204           424           490           207             -
                                            ------------  ------------  ------------ -------------  ------------
        Net loss                             $ (10,422)     $(12,170)     $ (4,514)    $ (15,899)     $   (956)
                                            ============  ============  ============ =============  ============
        Net loss per share - basic and        $  (5.95)     $  (7.10)     $  (3.15)     $ (18.55)     $  (1.60)
        dilutive (1), (3)
                                            ============  ============  ============ =============  ============
   Weighted average common shares - basic
   and diluted (1), (3), (4)                      1,750         1,711         1,433           858           599
                                            ============  ============  ============ =============  ============
</TABLE>

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                        ------------
                                               1999          1998          1997        1996 (2)      1995 (2)
                                            ------------  ------------  ------------ -------------  ------------
                                                                         (in thousands)
<S>                                         <C>           <C>          <C>           <C>            <C>
   Balance Sheet Data
      Cash and cash equivalents                 $   620      $ 10,527       $ 8,267      $  3,385       $   323
      Working capital (deficit)                 (10,204)        1,302         9,019        (1,203)          189
      Total assets                               26,242        27,857        28,919        18,776         1,828
      Long-term obligations                       2,621         2,671             -         2,986             -
      Shareholders' equity (deficit)              6,841         7,725        19,489         4,680           650

</TABLE>


(1)  The number of shares  used to compute the net loss per share  reflects  the
     2,994,856 shares issued in the reorganization of the Company on January 17,
     1996. See Notes 1 and 11 of the Notes to Consolidated  Financial Statements
     of the Company.

(2   Certain  amounts in the 1996 and 1995  Statement  of  Operations  have been
     reclassified to conform with the 1998 presentation.

(3)  All amounts have been restated in accordance with SFAS 128.

(4)  Share information has been restated to effect the 1 for 5 reverse split.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS

     The following is a discussion of the consolidated  financial  condition and
results of operation of the Company for the three years ended  December 31, 1999
and certain factors that will affect the Company's financial condition. In these
discussions,  most  percentages  and  dollar  amounts  have been  rounded to aid
presentation;  as a result, all such figures are  approximations.  References to
such approximations have generally been omitted.

OVERVIEW

     The  Company is a leading  provider  of  integrated  systems  and  services
designed to enable home health care providers to more effectively  operate their
businesses and compete in a managed care environment. The Company offers several
comprehensive  and flexible  software  solutions,  each of which  provide a core
platform of software  applications and which  incorporate  selected  specialized
modules  based on customer  demand.  These  software  solutions  are designed to
enable customers to generate and utilize  comprehensive  financial,  operational
and  clinical  information.  In addition to its software  solutions  and related
software support  services,  the Company's home health care consulting  services
assist  providers in addressing  the challenges of reducing  costs,  maintaining
quality,  streamlining operations and re-engineering  organizational structures.
The Company also provides  comprehensive  agency support  services which include
administrative,  billing and collection,  training,  reimbursement and financial
management services, among others.

     The Company enters into multi-year  contracts (generally 3 to 5 years) with
its customers in connection  with its provision of agency support  services.  In
general,  these  contracts  provide for the payment of monthly fees based on the
number of billed home care visits made by the customer.  Revenues  derived under
these contracts are recognized  monthly as the related services are rendered and
typically range from several hundred thousand dollars to several million dollars
per year. As a result,  the loss of any of these contracts could have a material
adverse  impact on the Company's  business,  financial  condition and results of
operations.

     The Company sells its software pursuant to non-exclusive license agreements
which provide for the payment of a one-time  license fee. In accordance with the
American Institute of Certified Public  Accountants  Statement of Position 97-2,
"Revenue Recognition", these revenues are recognized when products are delivered
and the  collectibility  of  fees  is  probable,  provided  that no  significant
obligations  remain  under  the  contract.  Revenues  derived  from  the sale of
software  products  requiring  significant  modification  or  customization  are
recognized  based upon the  percentage  of completion  method.  The price of the
Company's  software varies  depending on the number of software modules licensed
and the number of users  accessing  the  system and can range from ten  thousand
dollars to a few million dollars.  The Company  generally  requires payment of a
deposit  upon the  signing  of a customer  order as well as  certain  additional
payments prior to delivery.  As a result,  the Company's  balance sheet reflects
significant customer deposits.

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

     The Company defines recurring revenues as revenues derived under multi-year
contracts in addition to annual software support agreements. These revenues were
approximately  $9.0 million,  or 35% of total net  revenues,  for the year ended
December 31, 1999,  $6.3  million,  or 14% of total net  revenues,  for the year
ended December 31, 1998, and $28.2  million,  or 60% of total net revenues,  for
the year ended  December  31,  1997.  The  Company  anticipates  that  recurring
revenues  may  represent  a greater  portion  of its total net  revenues  in the
foreseeable future.

     For the years ended December 31, 1999,  1998, and 1997, the Company derived
11%, 35% and 48% ,  respectively,  of its total net revenues from contracts with
affiliates of Columbia/HCA.

     The contracts with  Columbia/HCA  were terminated on December 1, 1998 and a
settlement  of $7.0  million  was  agreed  to by  both  parties  for  the  early
termination of certain of the contracts and for specific wind down of activities
to be performed by the Company  through  March 31, 1999.  Largely as a result of
the termination of the Columbia/HCA  contracts,  Simione  ultimately  decided to
discontinue its Agency Support line of business.  This business was discontinued
in October 1999.


<PAGE>



     The Company  believes that  continued  development  and  enhancement of its
software  systems is critical to its future success,  and  anticipates  that the
total  amount of research and  development  expense  will  increase,  but should
decrease  as a  percentage  of total  net  revenues  as the  Company  grows  its
revenues. Costs incurred to establish the technological  feasibility of computer
software  products  are  expensed  as  incurred.  The  Company's  policy  is  to
capitalize  costs  incurred  between  the  point of  establishing  technological
feasibility and general release only when such costs are material.  During 1998,
the Company  wrote-off  approximately  $2.0 million of  capitalized  software to
reflect the  abandonment of certain  development  projects.  For the years ended
December 31, 1999, 1998 and 1997, the Company capitalized  computer software and
development cost in the amount of $732,000, $0, and $616,000, respectively.

RESULTS OF OPERATIONS

     The following table sets forth, for the years indicated, certain items from
the consolidated statements of operations expressed as a percentage of total net
revenues.  The  Company's  historical  operating  results  are  not  necessarily
indicative of the results for any future period.

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                                        -----------------------
                                                                1999            1998           1997
                                                                ----            ----           ----
<S>                                                           <C>               <C>            <C>
Percentage of Net Revenues:
Net revenues:
    Software and services                                      57.0 %           66.1%           58.3%
    Agency support                                              6.0             16.7            31.3
    Consulting services                                        28.3             15.4            10.4
      Columbia settlement fee                                   8.7              1.8
                                                       -------------------------------------------------
         Total net revenues                                   100.0            100.0           100.0
  Costs and expenses:
    Costs of revenues                                          63.8             62.7            48.4
    Selling, general and administrative                        51.8             33.2            26.6
    Research and development                                   15.4             16.2            14.2
    Amortization and depreciation                              13.7              5.7             3.6
    Purchased in-process research and development                -                -             17.3
    Severance and other restructuring charges                  (4.4)            12.0            --
                                                       -------------------------------------------------
         Total costs and expenses                             140.3            129.8           110.1
                                                       -------------------------------------------------
Loss from operations                                          (40.3)           (29.8)          (10.1)
Other income (expense):
    Interest expense                                           (0.9)            (0.4)           (0.5)
    Interest and other income                                   0.8              1.0             1.0
                                                       -------------------------------------------------
         Net loss                                             (40.4)%          (29.2%           (9.6%
                                                       =================================================
</TABLE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998

     Net Revenues.  Total net revenues  decreased  $15.9 million,  or 38.1%,  to
$25.8  million in 1999 from $41.6  million in 1998.  This  decrease in total net
revenues  includes,  a $0.9  million  increase in  consulting  revenues,  a $3.9
million  decrease  in agency  support  attributable  to the  termination  of the
Columbia/HCA  contracts,  and a $12.8 million decrease in new software sales and
related services.

     Net revenues  from  Software and Services  include  revenues  from software
licenses,   service   fees,   computer   hardware   sales,   software   support,
implementation,  training and  technical  consulting  services.  These  revenues
decreased  $12.8 million,  or 46.6%, to $14.7 million in 1999 from $27.5 million
in 1998. The total decrease  represents a $10.5 million decrease in new software
sales and related  services,  and a $2.3 million  decrease  attributable  to the
declining revenue associated with the Columbia/HCA contracts.

     Net revenues from Agency Support decreased $5.4 million,  or 78.3%, to $1.5
million in 1999 from $6.9 million in 1998. This decrease was attributable to the
declining  number  of  visits  and  ultimate  termination  of  the  Columbia/HCA
contracts.

     Net revenues from Consulting  Services increased $0.9 million, or 13.4%, to
$7.3 million in 1999 from $6.4 million in 1998 and was  attributable to revenues
from new customers.

     Net revenues from the Columbia  settlement fee represent  amounts earned as
part of the settlement with Columbia/HCA.

     Cost of Revenues.  Cost of revenues  decreased $9.7 million,  or 37.2%,  to
$16.4  million in 1999 from $26.1  million in 1998. As a percentage of total net
revenues,  cost of revenues  increased to 63.7% in 1999 from 57.8% in 1998.  The
7.7  million  dollar  decrease  resulted  from the  decrease in revenue for both
software and services and agency support.  The increase as a percentage of total
net  revenues  is  principally  due to impact of lower  Software  Sales  causing
product support and installation costs to represent a higher percentage of total
cost of revenues.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  decreased  $0.5 million,  or 3.6%, to $13.3 million in 1999 from $13.8
million in 1998.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were  50.9% in 1999 and  33.2%  in 1998.  This  dollar
decrease was  attributable  to  approximately  $1.5 million in costs  related to
additional  bad debt  expense the  business  acquired in the Dezine  acquisition
offset by approximately $1.0 million in restructuring charges.

     Research and Development.  Research and development expenses decreased $2.8
million,  or 41.1%,  to $2.9  million in 1999 from $6.7  million  in 1998.  As a
percentage of total net revenues, research and development expenses decreased to
15.4% in 1999 from 16.2% in 1998.

     Amortization and Depreciation.  Amortization and depreciation  increased by
$1.1 million to $3.5 million in 1999 from $2.4  million in 1998.  This  increase
includes  approximately  $989,000 of amortization  expenses attributable certain
acquisitions.

     Excess  Capacity  and  Charges.  The  Company  reduced  the reserve by $1.1
million for the subleasing of part of the corporate office  building.  A portion
was  maintained  in the  reserve  for  any  contingent  liabilities  related  to
obligations  for the  sublease.  The Company  reduced the reserve by $517,000 of
excess  capacity  relating to the closure of several  branch offices and reduced
the severance reserve by $799,000.

     Other Income  (Expense).  Interest  expense relates to the borrowings under
the Company's line of credit  agreements and capital lease  obligations  and has
increased  by  approximately   $58,000.   Interest  and  other  income  consists
principally  of  interest  income  related  to the  Company's  short  term  cash
investments and has decreased by approximately $220,000.

     Income  Taxes.  The Company has not incurred or paid any income taxes since
its inception.  At December 31, 1999, the Company had net operating loss ("NOL")
carryforwards  for federal and state income tax purposes of $15.3 million.  Such
losses expire beginning in 2010, if not utilized. The Tax Reform Act of 1986, as
amended,  contains  provisions  that limit the NOL and tax credit  carryforwards
available  to be used in any given year when  certain  events  occur,  including
additional  sales of equity  securities  and other  changes in  ownership.  As a
result,  certain of the NOL carryforwards may be limited as to their utilization
in any year.  The  Company  has  concluded  that it is more likely than not that
these NOL  carryforwards  will not be realized  based on a weighing of available
evidence at December 31,  1999,  and as a result a 100%  deferred tax  valuation
allowance has been recorded against these assets.


COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997

     Net Revenues. Total net revenues decreased $5.3 million, or 11.3%, to $41.6
million in 1998 from $46.9 million in 1997.  This decrease in total net revenues
includes a $6.2 million  increase  attributable to the business  acquired in the
Dezine  acquisition  which was  completed  in December of 1997,  a $1.5  million
increase in consulting  revenues,  a $9.7 million  decrease  attributable to the
declining  number  of  visits  and  ultimate  termination  of  the  Columbia/HCA
contracts,  and a $3.5  million  decrease  in new  software  sales  and  related
services.

     Net revenues  from  Software and Services  include  revenues  from software
licenses,   service   fees,   computer   hardware   sales,   software   support,
implementation,  training and  technical  consulting  services.  These  revenues
decreased  $167,000,  or 0.4%,  to $27.5  million in 1998 from $27.4  million in
1997.  This  decrease  includes  a $6.2  million  increase  attributable  to the
business  acquired in the Dezine  acquisition which was offset by a $3.5 million
decrease in new software sales and related services, and a $2.7 million decrease
attributable  to  the  declining   revenue   associated  with  the  Columbia/HCA
contracts.

     Net revenues from Agency Support decreased $7.0 million,  or 47.6%, to $7.7
million in 1998 from $14.7 million in 1997.  This decrease was  attributable  to
the  declining  number of visits and ultimate  termination  of the  Columbia/HCA
contracts.

     Net revenues from Consulting  Services increased $1.5 million, or 31.0%, to
$6.4 million in 1998 from $4.9 million in 1997 and was  attributable to revenues
from new customers.

     Cost of Revenues.  Cost of revenues  increased  $1.4  million,  or 6.2%, to
$26.1  million in 1998 from $22.7  million in 1997. As a percentage of total net
revenues,  cost of revenues  increased to 62.3% in 1998 from 48.4% in 1997. This
dollar  increase  includes  $2.5 million in costs  attributable  to the business
acquired  in  the  Dezine  acquisition  offset  by  a  $1.4  decrease  in  costs
attributable  to  the  terminated  Columbia/HCA  contracts.  The  increase  as a
percentage  of total net  revenues  is  principally  due to the  decrease in new
software sales and related services.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  increased $1.3 million,  or 10.4%, to $13.8 million in 1998 from $12.5
million in 1997.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were  33.2% in 1998 and  26.6%  in 1997.  This  dollar
increase was attributable to approximately  $2.1 million in costs related to the
business acquired in the Dezine acquisition offset by approximately $1.0 million
in restructuring charges.

     Research  and  Development.  Research  and  development  expenses  remained
constant  at $6.7  million  in 1998 and  1997.  As a  percentage  of  total  net
revenues,  research  and  development  expenses  increased to 16.2% in 1998 from
14.2% in 1997.  This  percentage  increase  reflects  the  decrease in total net
revenues compared to a relatively constant level of dollar expenditures.

     Amortization and Depreciation.  Amortization and depreciation  increased by
$700,000  to $2.4  million  in 1998 from $1.7  million  in 1997.  This  increase
includes  approximately  $300,000 of amortization  expenses  attributable to the
Dezine acquisition and approximately  $400,000  associated with the depreciation
and amortization of purchased  software,  furniture,  and equipment  acquired in
1998.

     Purchased  In-Process  Research and  Development.  In  connection  with the
Dezine  acquisition  in 1997,  the purchase  price of $9.4 million was allocated
based on relative  fair value of the assets  acquired and  liabilities  assumed.
Pursuant to a study conducted by an independent third-party valuation firm, $8.1
million  related to the  Dezine  acquisition  purchase  price was  allocated  to
purchased  in-process research and development and, in accordance with generally
accepted accounting  principles,  was charged to operations as it was not deemed
to have reached technological feasibility and had no alternative future use.

     Severance  and  Other  Restructuring   Charges.   The  Company  recorded  a
restructuring charge totaling $7.5 million as a result of the change in the home
care  business  environment  resulting  from  IPS,  and the  termination  of the
Columbia/HCA  contracts,  coupled with the decision to eliminate  certain legacy
development  projects  including  the AS400  effort.  Total  charges  were $11.5
million and included a $2.0 million  write-off  of  capitalized  software , $2.1
million  in  severance  from a  reduction  in force,  $3.7  million  in costs to
terminate contracts with third-party  vendors, and $3.7 million in costs related
to excess capacity and other charges.  These charges were offset by $4.0 million
of the  $7.5  million  settlement  fee  resulting  from the  termination  of the
Columbia/HCA contracts.

     Other Income  (Expense).  Interest  expense relates to the borrowings under
the Company's line of credit  agreements and capital lease  obligations  and has
remained constant at approximately $200,000.  Interest and other income consists
principally  of  interest  income  related  to the  Company's  short  term  cash
investments and has remained constant at approximately $450,000.

     Income  Taxes.  The Company has not incurred or paid any income taxes since
its inception.  At December 31, 1998, the Company had net operating loss ("NOL")
carryforwards  for federal and state income tax purposes of $10.6 million,  such
losses expire in years 2010 through 2013, if not utilized.  The Company also has
research and development and alternative  minimum tax credits ("tax credits") of
approximately $90,000 available to reduce future income tax liabilities. The Tax
Reform Act of 1986, as amended,  contains  provisions that limit the NOL and tax
credit carryforwards  available to be used in any given year when certain events
occur,  including  additional  sales of equity  securities  and other changes in
ownership.  As a result,  certain of the NOL and tax credit carryforwards may be
limited as to their  utilization  in any year. The Company has concluded that it
is more likely than not that these NOL and tax credit  carryforwards will not be
realized based on a weighing of available  evidence at December 31, 1998, and as
a result a 100% deferred tax valuation allowance has been recorded against these
assets.

SELECTED QUARTERLY FINANCIAL RESULTS

     The  Company's  quarterly  operating  results  have  been and  will  likely
continue to be subject to significant  fluctuations.  The Company  believes that
the timing of strategic  acquisitions  may cause  fluctuations  in its operating
results.  Revenues  can be  expected  to vary  significantly  as a result of the
acceleration or delay of system  implementations due to customer requirements or
other factors beyond the Company's control,  fluctuations in demand for existing
systems and services and the Company's ability to manage successfully any future
growth.  The sales cycles  related to its systems  offerings and agency  support
contracts  can be long and  difficult to predict,  resulting in  variability  of
revenues.  In  addition,  the  implementation  period  related to the  Company's
information   systems   can  range   from   three   months  to  one  year.   The
unpredictability of revenues could in any quarter result in a shortfall relative
to quarterly expectations.  Many other factors may contribute to fluctuations in
the  Company's  operating  results.   Accordingly,  the  Company  believes  that
period-to-period  comparisons  of  results  of  operations  are not  necessarily
meaningful   and  should  not  be  relied  upon  as  any  indication  of  future
performance.

     The following  table sets forth certain  unaudited  consolidated  quarterly
financial  data for each of the eight quarters for the period ended December 31,
1999.  This  information  is  unaudited,  but, in the  opinion of the  Company's
management,  includes  all  adjustments,  consisting  only of  normal  recurring
adjustments,  necessary for fair  presentation  of the information in accordance
with generally accepted accounting  principles  generally accepted in the United
States.  These quarter results of operations are not  necessarily  indicative of
future operating results.



<PAGE>




<TABLE>
<CAPTION>

                                          FISCAL YEAR 1999                              FISCAL YEAR 1998
                     ---------------------------------------------------- -----------------------------------------------
                       MAR. 31,     JUNE 30,    SEPT. 30,    DEC. 31,     MAR. 31,    JUNE 30,   SEPT. 30,   DEC. 31,
                         1999         1999        1999         1999         1998       1998       1998        1998
                     ------------ ------------ ------------ ------------- ----------- --------- ----------- -------------
                                                                         (in thousands, except per share data)
Net revenues:
<S>                      <C>         <C>         <C>         <C>         <C>         <C>        <C>         <C>
   Software and services 4,496       3,562       3,273       9,165       9,951       1,960
   Agency support          667         544         190         140       2,808       1,859       1,219       1,050
   Consulting services   1,497       1,920       1,879       2,003       1,447       1,764       1,814       1,412
   Columbia
     settlement fee      2,250                                                                                 750
                      --------    --------    --------    --------    --------    --------    --------    --------
     Total net revenues  8,910       6,026       5,342       5,505      13,420      13,574       9,480       5,172

Costs and expenses:
   Cost of revenues      4,474       4,266       4,015       3,692       6,325       6,658       6,103       7,005
   Selling, general and  2,368       2,204       4,321       4,453       4,129       3,803       3,179       2,711
   administrative
   Research and          1,038         843         827       1,260       1,816       1,588       1,936       1,401
   development
   Amortization and        623         777       1,011       1,135         558         601         618         615
   depreciation
   Purchased              --          --          --          --          --          --          --
   in-process
   research and
   development
   Severance and other    --        (1,140)       --          --          --         9,578      (4,567)
   restructuring charges
                         --------    --------    --------    --------    --------    --------    --------    --------
   Total costs
   and expenses          8,503       8,090       9,034      10,540      12,828      12,650      21,414       7,165

   Loss from
   operations              407      (2,064)     (3,692)     (5,035)        592         924     (11,934)     (1,993)

Other income (expense):
   Interest expense        (69)         (2)        (46)       (125)        (16)         (9)        (50)       (108)
   Interest and
   other income             80          82          23          19         111          96          97         120
                      --------    --------    --------    --------    --------    --------    --------    --------
Net income (loss)     $    418    $ (1,984)   $ (5,141)     (1,984)        687       1,011     (11,887)     (1,981)
                      ========    ========    ========    ========    ========    ========    ========    ========
Net income (loss)
per share             $   0.25    $  (1.15)   $ (2.10)    $  (0.59)   $   0.35    $   0.55    $  (6.95)   $  (1.15)
                      ========    ========    ========    ========    ========    ========    ========    ========

Weighted average
common shares - basic    1,731       1,756       1,757       1,757       1,844       1,915       1,714       1,719
basic                 ========    ========    ========    ========    ========    ========    ========    ========

Net income (loss)        0.25     $  (1.15)   $ (2.10)    $  (0.59)   $   0.35    $   0.55    $  (6.95)   $  (1.15)
                      ========    ========    ========    ========    ========    ========    ========    ========

Weighted average
common shares -         1,756        1,756       1,757       1,757       1,844       1,915       1,714       1,719
diluted               ========    ========    ========    ========    ========    ========    ========    ========

</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 1999, the Company had negative  working capital of $10.2
million and cash and cash  equivalents  of $0.6 million.  The Company's  current
liabilities  as of December 31, 1999 include  customer  deposits of $1.0 million
and unearned revenues of $2.1 million.

     Net cash used in  operating  activities  for the years ended  December  31,
1999,  1998,  and  1997 was  $6.4  million,  $1.1  million,  and  $1.4  million,
respectively.  The changes were  principally  due to cash used to fund operating
losses and payment of restructuring reserve costs accrued for as of December 31,
1999.

     Net cash used in  investing  activities  for the years ended  December  31,
1999,  1998,  and  1997  was $2.4  million,  $1.0  million  and  $10.3  million,
respectively. The Company made capital expenditures totaling approximately $0.3,
$0.6 million and $1.2 million  during 1999,  1998,  and 1997,  respectively.  In
March 1999, the Company completed the Tropical  acquisition for a purchase price
of $2.0 million,  of which, $1.8 million was cash and the remainder consisted of
100,000  shares of the  Company's  common  stock.  In August  1999,  the Company
completed the purchase of the Outcomes  Planner product for  approximately  $0.2
million and the  acquisition of CareCentric  Solutions Inc. for a total purchase
price of  approximately  $12.0  million,  of which $0.2  million was cash,  $2.7
million was assumed liabilities and $9.3 million was Preferred Series A Stock of
the Company.  In December of 1997, the Company completed the Dezine  acquisition
for a purchase price of $9.4 million.

     Net cash  (used)  provided  by  financing  activities  for the years  ended
December 31, 1999,  1998,  and 1997 was ($1.1)  million,  $4.3 million and $16.6
million,  respectively. In 1999, the net use of cash resulted from the repayment
of a $5.0 million line of credit outstanding at December 31, 1998,  repayment of
a $1.5 million bank loan assumed with the CareCentric  acquisition,  offset $5.4
million of loan  proceeds.  The $5.4 million of 1999 loan proceeds  consisted of
$3.0 million  received from Mestek in conjunction with the merger with MCS, $1.6
million of loans  received  from Mestek and two  shareholders  and $0.8  million
received from advances on the Company's $5.0 million  commercial line of credit.
In July of 1997, the Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission and sold 2,000,000 shares of its Common Stock
for  $10.00  per share and  received  approximately  $17.7  million  in net cash
proceeds from this offering for general corporate  purposes and working capital,
including potential strategic acquisitions.

     In January of 1996, the Company established line of credit agreements which
provided for  aggregate  borrowing of $2.5 million which had been fully drawn as
of December 31, 1996.  During 1997, the Company repaid these lines of credit and
terminated them.

     In June of 1997,  the  Company  established  a  revolving  credit  facility
pursuant to which the maximum principal amount at any time outstanding could not
exceed  the  lesser of $5  million  or the  "Borrowing  Base"(as  defined in the
revolving credit facility agreement).  During 1998, the Company repaid this line
of credit and terminated it.


1998 CAPITAL RESOURCES

     In May of 1998, the Company entered into a new Loan and Security  Agreement
with a bank. Pursuant to the Agreement, the bank agreed to make available to the
Company a revolving  credit facility,  the maximum  principal amount of which at
any time must be equal to the lesser of $25 million or the "margin  requirement"
then in effect.  Interest  will accrue at a variable rate per annum equal to the
prime  rate for prime  borrowings  or the LIBOR  Rate plus  1.5%-3.0%  per annum
(depending on the leverage ratio measured  quarterly) for the LIBOR  borrowings.
Under the terms of the  agreement,  the  Company  granted to the bank a security
interest  in  all  accounts,  inventory,  equipment,  and  general  intangibles.
Additionally,   the  Company's   subsidiaries   also  guaranteed  the  Company's
obligations  to  the  bank  under  the  Agreement.   The  $5.0  million  balance
outstanding  at  December  31,  1998  under  this  agreement  was repaid and the
agreement was cancelled in March 1999.

1999 CAPITAL RESOURCES

     In March 1999, Simione completed the Tropical  acquisition for $1.8 million
in cash and 100,000  shares of common  stock at the then fair value of $1.63 per
share. Also in March 1999, Simione repaid a $5 million line of credit obligation
to a bank.

     In May 1999, Simione entered into a definitive agreement to merge with MCS,
Inc.,  a wholly  owned  subsidiary  of Mestek.  For every  share of  outstanding
Simione common stock,  Simione agreed to issue  approximately 0.85 shares of its
common  stock  to  Mestek  in  the  exchange.  MCS  was a  leading  provider  of
information  systems  and  services  to  the  home  health  care  industry  with
approximately $14.9 million in revenues and $1.4 million in net income in 1998.

     In August 1999, Simione acquired CareCentric Solutions,  Inc. pursuant to a
merger for approximately 3.0 million shares,  (before giving effect to Simione's
one for five split) of Simione's  Series A Preferred  Stock. The preferred stock
was valued at $3.00 per share,  pre-split,  at  closing.  Under the terms of the
merger, Simione may have to issue up to an additional  approximately 3.0 million
shares,  pre-split,  of common  stock if  Simione's  common  stock does not meet
certain price targets during the fourth quarter of 2000. In conjunction with the
CareCentric  merger  Simione  assumed  a loan  from a bank  with an  outstanding
balance of $1.5 million. The $1.5 million bank loan was retired through use of a
new loan extended by Mestek in September 1999.

     In  September  1999,  Simione  obtained a $5.0 million  commercial  line of
credit with a national bank.  Simione's  trade  accounts  receivable are used as
collateral  for the line and must be  maintained  at certain  levels of aging to
support  availability  of  advancement  under the  line.  This line of credit is
secured  by a lien  on  substantially  all  of the  assets  of  Simione.  Actual
availability  under the terms of the line was about $1.7 million at December 31,
1999.

     Also in September  1999, in connection  with an amendment of the MCS merger
agreement,  Simione  received  $3.0 million of loan  proceeds  from Mestek,  the
parent company of MCS. The Mestek loan accrued  interest at the BankBoston prime
rate plus 2%. The loan  proceeds  were used to retire $1.5 million of term loans
assumed with the  acquisition of CareCentric and to fund operating  needs.  When
the MCS merger was completed,  Mestek's note  evidencing this loan was converted
into Series B Preferred Stock and a warrant to purchase Simione common stock.

     In  November  1999  Simione  received  $1.6  million of loans  from  Mestek
($850,000) and two stockholders of Simione ($750,000),  Barrett C. O'Donnell and
David Ellis,  to fund  operating  needs and  continue  the  execution of product
strategies  in the fourth  quarter of 1999.  The  $850,000  loan from Mestek was
converted  into newly issued series C Preferred  stock of Simione at the closing
of the MCS merger.  The loans from  O'Donnell  and Ellis have various  terms and
maturities.


CURRENT FINANCING AND EFFECTS OF MERGER.

     In February  2000,  Simione  received an  additional  $1.0  million of loan
proceeds from Mestek.  The loan proceeds were used to fund  Simione's  operating
needs until  completion  of the merger with MCS,  and carried the same terms and
security as the $3.0 million loan  received  from Mestek in September  1999.  On
March 7,  2000,  the  merger  with MCS was  completed.  When the MCS  merger was
completed,  Mestek's notes  evidencing the additional  $1.0 million loan and the
$3.0 million loan were  combined  with an  additional  $2.0 million in cash from
Mestek for a total  investment of $6.0 million.  This $6.0 million was converted
into Series B Preferred Stock and a warrant to purchase Simione common stock.

     The completion of the MCS merger resulted in the following events affecting
the liquidity of Simione:

         -  the  consolidation of the accounts  receivable of MCS into
                      Simione's  accounts  receivable,  providing an  additional
                      $1.5  million of  borrowing  capacity on the $5.0  million
                      bank line of credit  established  by Simione in  September
                      1999;
         -  Receipt by Simione of an  additional  $1.1 million in cash
                      from  Mestek.  The  $1.1  million  was  comprised  of $2.0
                      million from Mestek for purchase of the Series B Preferred
                      Stock and  Warrant  reduced  by $0.2  million  of  accrued
                      interest on Mestek's  $4.0 million in loans to Simione and
                      $0.7 million of inter-company debt owed by MCS to Mestek)

     Operating  losses  during 1999 were  heavier than  originally  forecast and
Simione has incurred  significant  problems  collecting its accounts  receivable
because  of  the  depressed  operating  condition  of its  customers  due to the
negative  effects  of the  current  government  limits  over home  medical  cost
reimbursement  and the costs to date of developing,  implementing and supporting
the CareCentric  product which have been higher than  anticipated.  In addition,
sales revenue has been lower than planned in the core DME 6.3 and STAT2 products
while new sales of the CareCentric  and Tropical  products have not developed as
quickly as projected. The merger with MCS adds additional products and resources
to Simione,  but the success of the business will depend upon increases in sales
of new software  systems and installation  performance  including an emphasis on
the CareCentric acquired business.  Simione is currently finalizing its business
plans  for the post MCS  merger  period.  The  proposed  changes  in  government
reimbursement  regulations  (the PPS  regulations  scheduled  to take  effect in
October  2000),  combined  with the  competitive  nature  of  Simione's  product
development  and  marketing  initiatives  following  the  merger,  increase  the
importance  of  timely  execution  or  acceleration  of  those  plans.  To fully
implement those plans, Simione has determined it requires additional financing.

     On April 12, 2000,  the Company  received a letter from Mr. John Reed,  the
Chairman of the Board of Mestek Inc. and the controlling interest shareholder of
both Mestek and Simione, which outlines his intentions in developing and funding
a new capital  plan for  Simione.  The capital  plan commits $7.0 million in the
form  of a $5.0  million  convertible  note  and  $2.0  million  of  convertible
preferred  stock.  The specific terms of the  convertible  note and  convertible
preferred  stock  are still  under  final  negotiation  and are  subject  to all
required  corporate  approvals.  In  addition,  the  Company  continues  to seek
alternative  commercial debt financing with the objective of obtaining increased
amounts of available capital and better lending terms.

     The  Company  believes  that a  successful  completion  and  closing of the
capital  plan in  combination  with the  funds  available  from its  cash,  cash
equivalents  and cash to be generated from future  operations will be sufficient
to meet the  Company's  operating  requirements,  assuming no  material  adverse
change in the operation of the Company's business,  for at least the next twelve
months.


IMPACT OF NEW ACCOUNTING STANDARDS

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


YEAR 2000 ISSUES

Introduction.  Year 2000 issues arise  because many  computer  software and
hardware  systems use only two digits to represent the year. As a result,  these
systems may not process dates beyond 1999, which may cause errors in information
or system failures.  Therefore, some computer software and hardware will need to
be modified prior to the Year 2000 in order to remain functional.

Conditions  After  January  2000.  The Company  has not  incurred  any  material
difficulties  or expenses  with the year 2000 issues  since  January 1, 2000 and
does not expect any in the future.


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     Effective  February 8, 1999, the Company decided to appoint Arthur Andersen
LLP as the Company's independent  accountants for the fiscal year ended December
31, 1998 and dismissed Ernst & Young LLP. The decision to change accountants was
approved by the Audit  Committee of the Board of Directors of the Company acting
pursuant to authority delegated by the Board of Directors of the Company.

     Ernst  &  Young  LLP's  reports  on the  Company's  consolidated  financial
statements  during the last year ended  December  31, 1997  contained no adverse
opinion or a  disclaimer  of  opinion,  and its  opinion  was not  qualified  or
modified as to uncertainty, audit scope or accounting principles.

     During the last two fiscal years and in the  subsequent  interim  period to
February 8, 1999,  there were no  disagreements  between the Company and Ernst &
Young LLP on any  matters  of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure,  which disagreements,  if
not resolved to the  satisfaction  of Ernst & Young LLP, would have caused it to
make a reference to the subject matter of the  disagreements  in connection with
its reports.

     None  of  the  "reportable   events"  described  in  Item  304(a)(1)(v)  of
Regulation  S-K occurred with respect to the Company  during the last two fiscal
years or in the subsequent interim period to February 8, 1999.

     During the last two fiscal years and subsequent  interim period to February
8, 1999,  the Company did not consult with Arthur  Andersen LLP regarding any of
the matters or events set forth in Item  (304)(a)(2)(i)  and (ii) of  Regulation
S??.


<PAGE>
                                   PART III

     With the exception of information relating to the executive officers of the
Company which is provided in Part I hereof, all information required by Part III
(Items  10,  11,  12 and  13) is  incorporated  by  reference  to the  Company's
definitive proxy statement relating to the 2000 Annual Meeting of Stockholders.

                                     PART IV

ITEM 14.  EXHIBITS,  FINANCIAL  STATEMENTS,  FINANCIAL  STATEMENT  SCHEDULES AND
          REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this Report:

          1.   Financial Statements.

          2.   Financial Statement Schedule.

               Schedule II--Valuation and Qualifying Accounts

     CERTAIN  FINANCIAL  STATEMENT  SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE
NOT APPLICABLE.

          3.   Exhibits Incorporated by Reference or Filed with this Report.

     The following exhibits are filed as part of this Report.  Where such filing
is made by incorporation by reference to a previously filed statement or report,
such statement or report is identified in parentheses.

EXHIBIT
NUMBER                                                 DESCRIPTION
------                                                 -----------

2.1(1,3)--     Agreement  and Plan of Merger dated as of July 12, 1999 among
               the Company,  Simione  Acquisition  Corporation  and  CareCentric
               Solutions, Inc.

2.2(1,2)--     Second  Amended  and  Restated  Agreement  and Plan of Merger and
               Investment  Agreement  dated as of October  25, 1999 by and among
               MCS, Inc.,  Mestek,  Inc., the Company,  John E. Reed, Stewart B.
               Reed and E. Herbert Burk.

3.1  --        Certificate of Incorporation  of the Company  (Incorporated by
               reference to Exhibit 3.1 of the Company's  Registration Statement
               on Form S-4  (Registration  Number  33-57150)  as filed  with the
               Securities and Exchange Commission).

3.2  --        Amendment  to the  Certificate  of  Incorporation  of the Company
               (Incorporated  by  reference  to  Exhibit  3.2 of  the  Company's
               Registration Statement on Form S-4 (Registration Number 33-57150)
               as filed with the Securities and Exchange Commission).

3.3  --        Certificate of Amendment of the Certificate of  Incorporation  of
               Simione  Central  Holdings,  Inc.,  filed June 30,  1997 with the
               Secretary  of State of the  State of  Delaware  (Incorporated  by
               reference to Exhibit 3.3 of the Company's  Current Report on Form
               8-K dated July 9, 1997 as filed with the  Securities and Exchange
               Commission).

3.4  --        Amended  and  Restated  Bylaws of the  Company  (Incorporated  by
               reference to Exhibit 3.3 of the Company's  Registration Statement
               on Form S-1  (Registration  Number  333-25551)  as filed with the
               Securities and Exchange Commission).

3.5  --        Certificate of Ownership Merging Simione Central  Holdings,  Inc.
               into InfoMed  Holdings,  Inc.  (Incorporated  by reference to the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December  31,  1996 as filed  with the  Securities  and  Exchange
               Commission).

3.6* --        Certificate of Designation of Series B Preferred Stock

3.7* --        Certificate of Designation of Series C Preferred Stock

4.1  --        Specimen  Stock  Certificate  of  the  Company  (Incorporated  by
               reference to Exhibit 4.1 of the Company's  Registration Statement
               on Form S-1  (Registration  Number  333-25551)  as filed with the
               Securities and Exchange Commission).

4.2  --        See Exhibits  3.1,  3.2,  3.3, 3.4 and 3.5 for  provisions of the
               Company's  Certificate of Incorporation  and Bylaws governing the
               rights of holders of securities of the Company.

4.3  --        Registration  Rights Agreement dated October 7, 1996 by and among
               InfoMed  Holdings,  Inc.,  those  stockholders of Simione Central
               Holding, Inc. appearing as signatories to the Registration Rights
               Agreement,  and those  stockholders  of  InfoMed  Holdings,  Inc.
               appearing as signatories  to the  Registration  Rights  Agreement
               (Incorporated  by  reference  to  Exhibit  10.1 of the  Company's
               Current  Report on Form 8-K dated  October  8, 1996 as filed with
               the Securities and Exchange Commission).

9.1  --        Form  of  Simione  Central  Holding,   Inc.  Shareholders  Voting
               Agreement and Irrevocable  Proxy dated March 5, 1996 by and among
               Howard B. Krone,  William J.  Simione,  Jr., Gary  Rasmussen,  G.
               Blake Bremer,  Katherine L. Wetherbee,  A. Curtis Eade,  James A.
               Tramonte,  John Isett, Cindy Lumpkin,  Douglas E. Caddell, Robert
               J. Simione,  Kenneth L. Wall, Allen K. Seibert,  III, Jerry Sevy,
               Larry  Clark,  Lori  N.  Siegel,  Gary  M.  Bremer,   Richard  A.
               Parlontieri, and James R. Henderson (Incorporated by reference to
               the  Company's  Annual  Report on Form 10-K for the  fiscal  year
               ended December 31, 1996 as filed with the Securities and Exchange
               Commission).

9.2  --        Agreement  dated  as of  October  7,  1996 by and  among  InfoMed
               Holdings, Inc., EGL Holdings, Inc., Mercury Asset Management plc,
               O'Donnell  Davis,  Inc.,  Barrett  O'Donnell  and  certain  other
               holders  of the Class A  Convertible  Preferred  Stock of InfoMed
               Holdings,  Inc. (Incorporated by reference to Exhibit 10.2 of the
               Company's  Current  Report on Form 8-K dated  October  8, 1996 as
               filed with the Securities and Exchange Commission).

10.1 --        Amended and  Restated  Agreement  and Plan of Merger  dated as of
               September 5, 1996 by and among InfoMed  Holdings,  Inc.,  Simione
               Central  Holding,  Inc.  and  InfoSub,   Inc.   (Incorporated  by
               reference to Exhibit 2.1 of the Company's  Current Report on Form
               8-K dated  September  5, 1996 as filed  with the  Securities  and
               Exchange Commission).

10.2 --        InfoMed Holdings, Inc. Amended and Restated Share Warrant for the
               Purchase of Common Stock of InfoMed Holdings,  Inc. dated October
               5, 1996  between  InfoMed  Holdings,  Inc.  and each of O'Donnell
               Davis,  Inc.,  Rowan  Nominees Ltd.,  David O. Ellis,  Richard V.
               Lawry, Salvatore A. Massaro,  Murali Anantharaman,  Kathleen E.J.
               Ellis,  Jeremy Ellis, Karen Ellis, Gemma Ellis, Thomas M. Rogers,
               Jr., and Arnold Schumacher  (Incorporated by reference to Exhibit
               4.1 of the Company's  Current Report on Form 8-K dated October 8,
               1996 as filed with the Securities and Exchange Commission).

10.3  --       Warrant to  Purchase  100,000  shares of Class A Common  Stock of
               Simione  Central  Holding,  Inc.,  dated April 12,  1996  between
               Simione  Central  Holding,  Inc. and Home Health  First,  a Texas
               not-for-profit  corporation  (Incorporated  by  reference  to the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December  31,  1996 as filed  with the  Securities  and  Exchange
               Commission).

10.4  --       Common Stock Warrant of InfoMed  Holdings,  Inc. dated October 8,
               1996 between Jefferies & Company, Inc. and InfoMed Holdings, Inc.
               (Incorporated by reference to the Company's Annual Report on Form
               10-K for the fiscal  year ended  December  31, 1996 as filed with
               the Securities and Exchange Commission).

10.5+ --       Form of Simione Central Holding, Inc. 1996 Incentive Stock Option
               Agreement  dated September 4, 1996 by and between Simione Central
               Holding, Inc. and each of James R. Henderson, William J. Simione,
               Jr., Robert Simione,  Katherine Wetherbee,  Sheldon Berman, Betty
               Gordon,  William J. Simione, III, J. Blake Bremer, Craig Luigart,
               Kenneth  L.  Wald,  Marty  Cavaiani,  Lori  Ferrero,  Douglas  E.
               Caddell,   Andy  Anello  and  A.  Curtis  Eade  (Incorporated  by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended  December 31, 1996 as filed with the Securities
               and Exchange Commission).

10.6+ --       1994 Incentive Stock Option and  Non-Qualified  Stock Option Plan
               (Incorporated by reference to the Company's Annual Report on Form
               10-K for the fiscal  year  ended June 30,  1994 as filed with the
               Securities and Exchange Commission).

10.7+  --      Simione Central Holdings,  Inc. Profit Sharing Plan dated October
               31, 1996, as amended  (Incorporated by reference to the Company's
               Annual Report on Form 10-K for the fiscal year ended December 31,
               1996 as filed with the Securities and Exchange Commission).

10.8+  --      Simione Central  Holdings,  Inc.  Section 125 Plan effective date
               January  1,  1997  sponsored  by  the  Company  (Incorporated  by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended  December 31, 1996 as filed with the Securities
               and Exchange Commission).

10.9   --      Headquarters  at Gateway Lake Lease  Agreement  dated  January 1,
               1996 by and  between  Gateway  LLC  and  InfoMed  Holdings,  Inc.
               (Incorporated by reference to the Company's Annual Report on Form
               10-K for the fiscal  year  ended June 30,  1996 as filed with the
               Securities and Exchange Commission).

10.10  --      Sublease  dated  November 22, 1996 between  Environmental  Design
               International,  Ltd. and Simione Central,  Inc.  (Incorporated by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended  December 31, 1996 as filed with the Securities
               and Exchange Commission.

10.11  --      Lease  Amendment  dated August 7, 1992 by and between  Sugar Land
               Plaza   Building   Corporation   and  Medical   Solutions,   Inc.
               (Incorporated by reference to the Company's Annual Report on Form
               10-K for the fiscal  year ended  December  31, 1997 as filed with
               the Securities and Exchange Commission).

10.12  --      Lease dated August 13, 1992 between Unum Life  Insurance  Company
               of America and Dezine Associates, Inc. (Incorporated by reference
               to the  Company's  Annual Report on Form 10-K for the fiscal year
               ended December 31, 1997 as filed with the Securities and Exchange
               Commission).

10.13  --      Indenture  of Lease  dated  January  1, 1998 by and  between  S&S
               Realty and Simione  Central  Consulting,  Inc.  (Incorporated  by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended  December 31, 1997 as filed with the Securities
               and Exchange Commission).

10.14  --      Lease dated  December  18, 1996 by and  between  Resurgens  Plaza
               South Associates, L.P. and Simione Central, Inc. (Incorporated by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended  December 31, 1997 as filed with the Securities
               and Exchange Commission).

10.15+ --      Severance  Agreement  dated July 22, 1998 between Simione Central
               Holdings, Inc. and Gary M. Bremer.  (Incorporated by reference to
               the  Company's  Annual  Report on Form 10-K for the  fiscal  year
               ended December 31, 1997 as filed with the Securities and Exchange
               Commission).

10.16+ --      Executive  Employment  Agreement  dated  January 1, 1996  between
               Simione Central,  Inc. and William J. Simione,  Jr. (Incorporated
               by reference to the Company's  Annual Report on Form 10-K for the
               fiscal year ended  December 31, 1996 as filed with the Securities
               and Exchange Commission).

10.17  --      Agreement dated October 4, 1996 by and between InfoMed  Holdings,
               Inc. and EGL  Holdings,  Inc.  (Incorporated  by reference to the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December  31,  1996 as filed  with the  Securities  and  Exchange
               Commission).

10.18  --      Information  Systems  Management  Agreement dated January 4, 1996
               between  Integrated  Systems  Solutions  Corporation  and Central
               Health Management  Services,  Inc.  (Incorporated by reference to
               the  Company's  Annual  Report on Form 10-K for the  fiscal  year
               ended December 31, 1996 as filed with the Securities and Exchange
               Commission).

10.19  --      Master Software  License  Agreement  Number 96-2283 dated October
               31, 1996 by and between  Software 2000,  Inc. and Simione Central
               Holding, Inc.  (Incorporated by reference to the Company's Annual
               Report on Form 10-K for the fiscal year ended  December  31, 1996
               as filed with the Securities and Exchange Commission).

10.20  --      Guaranty  Agreement  dated  October 31, 1996 by Simione  Central,
               Inc. in favor of HCA,  Inc.  (Incorporated  by  reference  to the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December  31,  1996 as filed  with the  Securities  and  Exchange
               Commission).

10.21  --      Lease Agreement dated March 18, 1996 between National Leasing,
               Inc. and Simione Central, Inc.  (Incorporated by reference to the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December  31,  1996 as filed  with the  Securities  and  Exchange
               Commission).

10.22  --      Amendment 2 to  Agreement  for  Information  Technology  Services
               between  SC  Holding,   Inc.  and  Integrated  Systems  Solutions
               Corporation  dated July 31, 1997  (Incorporated  by  reference to
               Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q dated
               August  13,  1997 as  filed  with  the  Securities  and  Exchange
               Commission).

10.23   --     Loan and Security  Agreement by and between  National  Bank of
               Canada and Simione Central  Holdings,  Inc.,  dated as of June 6,
               1997 (Incorporated by reference to Exhibit 10.34 of the Company's
               Current  Report on Form 8-K dated June 21, 1997 as filed with the
               Securities and Exchange Commission).

10.24  --      Loan and Security  Agreement by and between Wachovia Bank, NA and
               the Company dated as of May 11, 1998.

10.25  --      Remarketing  Agreement  dated  April  17,  1998  between  Simione
               Central National, Inc. and Eclipsys Corporation.

10.26  --      Stock  Purchase  Agreement  dated April 17, 1998 between  Simione
               Central  Holdings,   Inc.,   Eclipsys   Corporation  and  certain
               stockholders of the Company.

10.27(3)   -   Form of  Shareholder  Voting  Agreement by and among the Company,
               Daniel J.  Mitchell  as agent  for  shareholders  of  CareCentric
               Solutions,  Inc. and each of Barrett C.  O'Donnell  and O'Donnell
               Davis, Inc.

10.28(3) --    Shareholder   Voting   Agreement   by  and  among  the   Company,
               CareCentric Agent, and Mestek, Inc.

16.1  --       Letter  re  change  in  Certifying  Accountant  (Incorporated  by
               reference to Exhibit 4.1 of the Company's  Current Report on Form
               8-K dated  February  8,  1999 as filed  with the  Securities  and
               Exchange Commission).

21.1* --       Subsidiaries of the Company

23.1* --       Consent of Arthur Andersen LLP.

23.2* --       Consent of Ernst & Young LLP.

27.1* --       Financial Data Schedule (for SEC use only).
-------------------------

*  Filed herewith

+    Identifies each exhibit that is a "management contract of compensatory plan
     or arrangement" required to be filed as an exhibit to this Annual Report on
     Form 10-K pursuant to Item 14 of Form 10-k

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

(2)  Incorporated herein by reference to Exhibit 2.1 to the Form 10 of MCS, Inc.
     (File No.  000-27829)  filed on  October  26,  1999.

(3)  Incorporated  by reference to the  Registrant's  Current Report on Form 8-K
     dated as of August 12, 1999.

(b)  Reports on Form 8-K.

The  Company filed no Reports on Form 8-K during the fourth quarter of 1999.




<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.


                                                 SIMIONE CENTRAL HOLDINGS, INC.

Date:  April 13, 2000                            /s/ R. BRUCE DEWEY
                                                 -------------------------------
                                                 By:  R. Bruce Dewey
                                                      President and Chief
                                                      Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

     SIGNATURE                           TITLE                       DATE
     ---------                           -----                       ----

/s/ R. Bruce Dewey            President, Chief Executive           April 13,2000
----------------------        Officer and Director
R. Bruce Dewey                (principal executive
                              officer)

/s/ GEORGE M. HARE            Chief Financial Officer and         April 13, 2000
----------------------        Treasurer (principal financial
George M. Hare                and accouting officer)


----------------------        Chairman of the Board of           April ___, 2000
Barrett C. O'Donnell          Directors


/s/ WILLIAM J. SIMIONE, JR.
----------------------        Executive Vice President            April 13, 2000
William J. Simione, Jr.       Director


----------------------        Director                           April ___, 2000
David O. Ellis


/s/ JAMES A. GILBERT
----------------------        Director                            April 13, 2000
James A. Gilbert


/s/ WINSTON R. HINDLE, JR.
----------------------        Director                            April 13, 2000
Winston R. Hindle, Jr.


/s/ DAVID W. HUNTER
----------------------        Director                            April 13, 2000
David W. Hunter


/s/ DANIEL J. MITCHELL
----------------------        Director                            April 13, 2000
Daniel J. Mitchell


/s/ JOHN E. REED
----------------------        Director                            April 13, 2000
John E. Reed


/s/ STEWART B. REED
----------------------        Director                            April 13, 2000
Stewart B. Reed


/s/ JESSE I. TREU
----------------------        Director                            April 13, 2000
Jesse I. Treu


/s/ EDWARD K. WISSING
----------------------        Director                            April 13, 2000
Edward K. Wissing





<PAGE>

<TABLE>
<CAPTION>

                         SIMIONE CENTRAL HOLDINGS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                           <C>
Report of Independent Public Accountants -Arthur Andersen LLP and Ernst & Young LLP...........................35,36
Consolidated Financial Statements
Consolidated Balance Sheets--December 31, 1999 and 1998..........................................................37
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997.................................................................................38
Consolidated Statements of Shareholders' Equity (Deficit) for the
years ended December 31, 1999, 1998 and 1997.....................................................................39
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.................................................................................40
Notes to Consolidated Financial Statements.......................................................................41

</TABLE>

<PAGE>



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To  Simione Central Holdings, Inc.:

We have audited the accompanying  consolidated balance sheets of SIMIONE CENTRAL
HOLDINGS, INC. (a Delaware corporation) and subsidiaries as of December 31, 1999
and 1998 and the related  consolidated  statements of operations,  shareholders'
equity (deficit),  and cash flows for the two years then ended.  These financial
statements  and the  schedule  referred to below are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Simione Central Holdings,  Inc.
and  subsidiaries  as of  December  31,  1999 and 1998 and the  results of their
operations and their cash flows for the two years then ended in conformity  with
accounting principles generally accepted in the United States.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The schedule  listed  Item14(a)(2)  is
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures applied in the audits of
the basic  financial  statements  and, in our  opinion,  fairly  states,  in all
material  respects,  the  financial  data  required  to be set forth  therein in
relation to the basic financial statements taken as a whole.

                                             /s/ Arthur Andersen LLP

Atlanta, Georgia
March 10, 2000
(except with respect to the matter
discussed in Note 16, as which the
date is April 13, 2000)



<PAGE>


REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Shareholders
of Simione Central Holdings, Inc.:

         We have audited the accompanying consolidated statements of operations,
shareholders'  equity and cash flows of Simione Central  Holdings,  Inc. for the
year ended December 31, 1997. Our audit also includes the information related to
the year ended  December 31, 1998 included in the financial  statement  schedule
listed in the Index at Item 14(a).  These financial  statements and schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audit.

         We conducted our audit in accordance with auditing standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated results of operations
and cash flows of Simione Central Holdings, Inc. for the year ended December 31,
1997, in conformity with accounting  principles generally accepted in the United
States.  Also, in our opinion,  the related financial statement  schedule,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents  fairly in all material  respects the  information  related to the year
ended December 31, 1997 set forth therein.


                                                /s/ ERNST & YOUNG LLP


Atlanta, Georgia
February 23, 1998



<PAGE>


<TABLE>
<CAPTION>
                                      SIMIONE CENTRAL HOLDINGS, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                                                                DECEMBER 31,
                                                                    ------------------------------------
                                                                         1999                1998
                                                                    ----------------    ----------------
                                      ASSETS
<S>                                                                   <C>                <C>

 Current assets:
       Cash and cash equivalents                                       $    620,000       $  10,527,000
       Accounts receivable, net of allowance
         for doubtful accounts of $3,582,000
         and $1,674,000 in 1999 and 1998 respectively                     5,252,000           7,680,000
       Prepaid expenses and other current assets                            704,000             556,000
                                                                    ----------------    ----------------
         Total current assets                                             6,576,000          18,763,000

Purchased software, furniture and equipment, net
                                                                          1,339,000           1,852,000
Intangible assets, net
                                                                         17,442,000           7,138,000
Other assets
                                                                            885,000             104,000
                                                                    ----------------    ----------------
         Total assets                                                 $  26,242,000       $  27,857,000
                                                                    ================    ================


                       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
       Line of credit                                                  $    767,000       $   5,000,000
       Accounts payable                                                   3,000,000           1,626,000
       Accrued compensation expense                                         358,000             578,000
       Accrued liabilities                                                6,523,000           7,241,000
       Customer deposits                                                    999,000           1,145,000
       Unearned revenues                                                  2,133,000           1,871,000
       Notes payable                                                      3,000,000                   -
                                                                     ----------------    ----------------
         Total current liabilities                                       16,780,000          17,461,000

Accrued liabilities, less current portion                                 1,021,000           2,671,000

Notes payable long-term                                                   1,600,000                   -

Commitments and contingencies

Shareholders' equity:
       Preferred stock, $.001 par value; 10,000,000
       shares authorized;
         3,035,000  issued and outstanding                                    3,000                   -
       Common stock, $.001 par value; 20,000,000 shares
       authorized;
         8,783,000 and  8,598,000 shares issued and
         outstanding, respectively                                            9,000               9,000
       Additional paid-in capital                                        51,628,000          42,093,000
       Accumulated deficit                                              (44,799,000)        (34,377,000)
                                                                    ----------------    ----------------
         Total shareholders' equity                                       6,841,000           7,725,000
                                                                    ----------------    ----------------
         Total liabilities and shareholders' equity                   $  26,242,000       $  27,857,000
                                                                    ================    ================
</TABLE>


                            See notes to consolidated financial statements



<PAGE>

<TABLE>
<CAPTION>
                                             SIMIONE CENTRAL HOLDINGS, INC.
                                          CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           YEARS ENDED DECEMBER 31,
                                              --------------------------------------------------------------
                                                   1999                    1998                  1997


                                              ----------------      -------------------    -----------------
<S>                                             <C>                      <C>                  <C>
Net revenues:
    Software and services                        $ 14,693,000             $ 27,523,000         $ 27,356,000
    Agency support                                  1,541,000                6,936,000           14,680,000
    Consulting services                             7,299,000                6,437,000            4,909,000
    Columbia settlement fee                         2,250,000                  750,000                    -
                                              ----------------      -------------------    -----------------
        Total net revenues                         25,783,000               41,646,000           46,945,000

Costs and expenses:
    Cost of revenues                               16,447,000               26,091,000           22,715,000
    Selling, general and administrative            13,346,000               13,822,000           12,508,000
    Research and development                        3,968,000                6,741,000            6,670,000
    Amortization and depreciation                   3,546,000                2,392,000            1,714,000
    Purchased in-process research and
    development                                             -                        -            8,127,000
    Severance and other restructuring charges      (1,140,000)               5,011,000                    -
                                              ----------------      -------------------    -----------------
         Total costs and expenses                  36,167,000               54,057,000           51,734,000
                                              ----------------      -------------------    -----------------
    Loss from operations                          (10,384,000)              (12,411,000)         (4,789,000)

Other income (expense):
    Interest expense                                 (242,000)                (183,000)            (215,000)
    Interest and other income                         204,000                  424,000              490,000
                                              ================      ===================    =================
Net loss                                        $(10,422,000)            $(12,170,000)        $ (4,514,000)
                                              ================      ===================    =================

Net loss per share basic and diluted           $     (5.95)             $     (7.11)         $     (3.15)
                                              =================      ===================    =================

Weighted average common shares - basic
and diluted                                         1,750,000                1,711,000            1,433,000
                                              =================      ===================    =================
</TABLE>

                                See notes to consolidated financial statements




<PAGE>


<TABLE>
<CAPTION>
                                                 SIMIONE CENTRAL HOLDINGS, INC.
                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

                                      FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, 1997


                                                                          ADDITIONAL      STOCK                       TOTAL
                                        COMMON                 PREFERRED   PAID-IN     SUBSCRIPTION   ACCUMULATED   SHAREHOLDERS'
                               SHARES     STOCK     SHARES      STOCK      CAPITAL      RECEIVABLE     DEFICIT        EQUITY
                               --------  --------  ----------  --------  -------------   ---------  -------------   -----------
<S>                           <C>        <C>           <C>         <C>  <C>             <C>        <C>              <C>
Balance at December 31, 1996  5,952,000  $6,000          -         -    $23,216,000     $(850,000) $(17,692,000)    $4,680,000

Issuance of  $.001 par value
common stock from exercise of
stock options and warrants      555,000   1,000          -         -        548,000           -              -        549,000

Issuance of $.001 par value
common stock for purchase
Benchmark Consulting, Inc.       16,000       0          -         -        200,000           -              -        200,000

Issuance of $.001 par value
common stock, net of offering
cost                           2,000,000   2,000         -         -     17,722,000           -              -     17,724,000

Payment of stock
subscription                         -         -         -         -              -     850,000              -        850,000

Net loss                             -         -         -         -              -           -    (4,514,000)     (4,514,000)
                               --------  --------  ----------  --------  -------------   ---------  ------------- ------------
Balance at December 31, 1997   8,523,000   9,000           -         -    41,686,000           -   (22,206,000)   $19,489,000
                               ========= ========  ==========  ========  =============   =========  ============= ============

Issuance of  $.001 par value
common stock from exercise
of stock options                 33,000        0           -         -       111,000           -              -      111,000

Issuance of $.001 par value
common stock for purchase
Benchmark Consulting, Inc.       42,000        0           -         -        296,000           -              -      296,000

Net loss
                                     -          -           -         -            -           -    (12,171,000)  (12,171,000)
                              ----------  --------  ----------  --------  -------------   ---------  ------------- ------------
Balance at December 31, 1998  8,598,000    9,000           -         -     42,093,000           -   (34,377,000)    7,724,000
                              ==========  ========  ==========  ========  =============   =========  ============= =============


Issuance of  $.001 par value
common stock from exercise
of stock options                 85,000         0           - .       -        63,000           -              -       63,000

Issuance of $.001 par value
common stock related to
acquisitions                    100,000       100           -         -       162,000           -              -      162,000

Issuance of $.001 par value
preferred stock related to           -         -     3,035,000     3,000     9,310,000           -              -   9,313,000
acquisitions

Net loss                             -         -           -         -              -           -   (10,422,000)    (10,422,000)
                               --------  --------  ----------  --------  -------------   ---------  -------------   -----------
Balance at
December 31, 1999            $8,783,000    $9,000   3,035,000    $3,000  $  51,628,000  $      -    $(44,799,000)    $ 6,841,000
                            ============ =========  ==========  ========  =============   ========= =============   ===========
</TABLE>

        See notes to consolidated financial statements




<PAGE>


<TABLE>
<CAPTION>
                         SIMIONE CENTRAL HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW


                                                                                 YEARS ENDED DECEMBER 31,
                                                               ------------------------------------------------------------
                                                                     1999                  1998                1997
                                                               ------------------   -------------------  ------------------
     <S>                                                      <C>                   <C>                  <C>
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                      $ (10,422,000)        $ (12,170,000)      $  (4,514,000)

    ADJUSTMENTS TO RECONCILE NET LOSS
    TO NET CASH USED IN OPERATING ACTIVITIES:
       Purchased in-process research and development                           -                     -           8,127,000
       Provision for doubtful accounts                                 2,721,000               791,000           1,330,000
       Amortization and depreciation                                   3,546,000             2,392,000           1,714,000
       Write-off of capitalized software                                 259,000             2,006,000                   -
       Write-off of excess furniture & fixtures                                -                64,000                   -
       Loss on sale of assets                                                  -                     -              26,000

    CHANGES IN ASSETS AND LIABILITIES, NET OF
    ACQUISITIONS:
       Accounts receivable                                               258,000               591,000         (3,920,000)
       Prepaid expenses and other current assets                         (73,000)              582,000            (29,000)
       Other assets                                                     (792,000)           (1,479,000)           (577,000)
       Accounts payable                                                1,046,000              (249,000)         (1,599,000)
       Accrued compensation expense                                     (230,000)               18,000           (106,000)
       Accrued liabilities                                            (2,668,000)            3,700,000           (526,000)
       Customer deposits                                                (145,000)             (317,000)           (219,000)
       Unearned revenues                                                 100,000               343,000         (1,150,000)
       Long-term liabilities                                                   -             2,671,000                   -
                                                               ------------------   -------------------  ------------------
            Net cash used in operating activities                     (6,400,000)           (1,057,000)         (1,443,000)
                                                               ------------------   -------------------  ------------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of acquired companies, net of cash acquired              (2,131,000)             (476,000)         (9,808,000)
    Purchase of software, furniture and equipment                       (277,000)             (495,000)           (916,000)
    (Increase) decrease in restricted cash                                     -                     -           1,000,000
    (Increase) decrease in other intangible assets                             -                     -           (585,000)
                                                               ------------------   -------------------  ------------------
    Net cash used in investing activities                             (2,408,000)             (971,000)        (10,309,000)
                                                               ------------------   -------------------  ------------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from repayment of stock subscription                              -                     -             850,000
    Proceeds from (payment on) notes payable                          (1,133,000)             4,226,000         (1,726,000)
    Issuance of common stock, net of cash expenses
    preferred stock                                                            -                     -          17,724,000
    Payments on capital lease obligations                                (29,000)              (48,000)           (733,000)
    Payments of related-party notes                                            -               (1,000)            (30,000)
    Proceeds from exercise of stock options and warrants                  63,000               111,000             549,000
                                                               ------------------   -------------------  ------------------
          Net cash provided by (used in) financing
          activities                                                  (1,099,000)             4,288,000          16,634,000
                                                               ------------------   -------------------  ------------------
          Net change in cash and cash equivalents                     (9,907,000)             2,260,000           4,882,000

    Cash and cash equivalents, beginning of  year                     10,527,000              8,267,000           3,385,000
                                                               ------------------   -------------------  ------------------
    Cash and cash equivalents, end of  year                         $    620,000         $  10,527,000       $   8,267,000
                                                               ==================   ===================  ==================

</TABLE>

       See notes to consolidated financial statements



<PAGE>

                         SIMIONE CENTRAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

     Background:  Incorporated in September 1991 as a wholly owned subsidiary of
Central  Health  Holding  Company,  Inc.  ("CHHC"),  Central  Health  Management
Services,  Inc. ("CHMS") provided information and management support services to
home health care providers. Central Health Services, Inc. ("CHS"), also a wholly
owned subsidiary of CHHC, provided similar services to home health care agencies
owned by CHHC. On January 1, 1997, CHHC transferred at book value the assets and
employees  related  to CHS's  information  services  and  certain  clinical  and
financial  support  services to CHMS.  On January  17,  1997,  CHHC  completed a
pro-rata   distribution  of  the  outstanding   common  stock  of  CHMS  to  its
shareholders.

     On October 8, 1997,  InfoMed  Holdings,  Inc. ("IMHI") and CHMS merged in a
transaction  accounted  for as a reverse  acquisition  for  financial  reporting
purposes.  In connection with the merger,  IMHI issued  3,958,356  shares of its
common  stock in exchange  for all the  outstanding  common  stock of CHMS,  and
thereby,  the former shareholders of CHMS acquired control of IMHI. As a result,
CHMS is considered  the  acquiring  company;  hence,  the  historical  financial
statements  of CHMS  became  the  historical  financial  statements  of IMHI and
include the results of operations  of IMHI only from the  effective  acquisition
date. On December 19, 1997, IMHI changed its name to Simione  Central  Holdings,
Inc. (the "Company").

     Overview:  The  Company is a leading  provider  of  integrated  systems and
services  designed  to enable home health  care  providers  to more  effectively
operate their businesses and compete in a managed care environment.  The Company
offers several  comprehensive  and flexible  software  solutions,  each of which
provide a core platform of software  applications and which incorporate selected
specialized  modules  based on customer  demand.  These  software  solutions are
designed to enable  customers to generate and utilize  comprehensive  financial,
operational and clinical information.  In addition to its software solutions and
related  software  support  services,  the Company's home health care consulting
services  assist  providers in  addressing  the  challenges  of reducing  costs,
maintaining quality,  streamlining operations and re engineering  organizational
structures.  The Company also provides  comprehensive  agency  support  services
which include administrative,  billing and collection,  training,  reimbursement
and financial management services, among others.

MANAGEMENT'S PLAN

     The Company has incurred  significant losses in each fiscal year since 1994
and declining  revenues in 1999. The Company has been  challenged by the changes
in the health care industry.  During fiscal year 1999,  the Company  experienced
operating  losses of  $10,384,000.  The fiscal  1999 loss is  attributable  to a
number of factors:

      -   Cancellation  of the  customer  contract  with  Columbia/HCA  that had
          generated  11%, 35%, and 48% of the Company's  total  revenues for the
          years 1999, 1998 and 1997, respectively

      -   Elimination  of certain  legacy  development  projects

      -   Changes  to  the  government's  reimbursement  methodology  from  cost
          reimbursement to set prospective payments which affected the Company's
          customers Decreased revenues generated from Software and Services

In response to these losses, the Company has taken the following steps:

      -   significant change in senior management

      -   reduce  fixed  and  variable  expenditures,   including  restructuring
          charges

      -   improve  operating  efficiencies  o improve  customer  service  levels
          needed to maintain recurring revenue

      -   focus product  development  efforts to capitalize on changing industry
          dynamics

      -   expand through  acquisitions and strategic  alliances  negotiate a new
          capital funding agreement a national bank and selected investors


<PAGE>



     Some steps  taken to improve  the  Company's  performance  will not provide
immediate results;  however,  management believes that the steps taken in fiscal
1999 and 1998 will yield long-term  benefits,  creating an organization  that is
well-suited  to take  advantage  of market  opportunities.  Management  plans to
continue to aggressively market the Company's  services,  monitor costs and fund
development  to ensure  that the  Company's  products  continue  to  incorporate
state-of-the-art technologies and provide customers with value-added solutions.

BASIS OF PRESENTATION

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

MANAGEMENT ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  as well as the  reported  amounts  of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

REVENUE RECOGNITION

     In 1998,  the Company  adopted the American  Institute of Certified  Public
Accountants  ("AICPA")  Statement of Position  ("SOP") 97-2,  "Software  Revenue
Recognition,"  which  supersedes  SOP 91-1  and is  effective  for  transactions
entered  into for fiscal years  beginning  after  December 31, 1997.  While some
principles  remain the same,  there are several key differences  between the two
pronouncements,  including accounting for multiple element  arrangements.  Under
SOP 97-2, the Company  recognizes  software  license  revenue when the following
criteria are met: (1) a signed and executed  contract is obtained;  (2) shipment
has  occurred;  the license fee is fixed and  determinable;  (4)  collection  is
probable;  and  (5)  remaining  obligations  under  the  license  agreement  are
insignificant.  The Company sells and invoices software licenses and maintenance
fees as separate  contract  elements.  Prices net of  discounts  are  separately
identified  at the time of sale for each  element.  The Company has  established
vendor specific objective evidence related to the value of maintenance fees. The
Company uses the residual  value method to allocate  between  licenses and first
year maintenance. The adoption of SOP 97-2 did not have a material impact on the
Company's financial statements.

     Revenues are derived from the licensing and sub licensing of software,  the
sale of computer  hardware,  professional  and  technical  consulting  services,
implementation and training services, software maintenance and support services,
outsourcing  services,  as  well  as  home  health  care  management  consulting
services.  Outsourcing services are provided under contractual arrangements with
terms typically ranging from three to five years.

     To the extent  that  software  and  services  revenues  result  from shared
resource information management, software support, implementation,  training and
technical  consulting  services,  such  revenues are  recognized  monthly as the
related services are rendered or, for software support  revenues,  over the term
of the related  agreement.  To the extent that  software and  services  revenues
result from  software  licenses,  computer  hardware  and  third-party  software
revenues,  such revenues are recognized when the related  products are delivered
and  collectibility  of fees is  determined  to be  probable,  provided  that no
significant  obligation  remains under the contract.  Limited amounts of revenue
derived from the sale of software licenses requiring significant modification or
customization are recorded based upon percentage of completion using labor hours
or contract  milestones.  The Company  had one such  contract in 1997.  Software
support or maintenance,  allow customers to receive unspecified enhancements and
regulatory  data updates in addition to telephone  support.  Agency  support and
consulting  services revenues are recognized monthly as the related services are
performed.

CONCENTRATIONS AND MAJOR CUSTOMERS

     The  Company  sells its systems and  services to various  companies  in the
health care industry.  The Company  performs  ongoing credit  evaluations of its
customers'  financial condition and, generally,  requires no collateral from its
customers.  Current  operations  are  charged  with an  allowance  for  doubtful
accounts based upon  experience and any unusual  circumstances  which affect the
collectibility of receivables.  Amounts deemed uncollectible are charged against
this allowance.

     Through  October  1997,  the Company  derived a portion of its revenue from
services  provided  to its former  parent  company,  see Note 14. See Note 2 for
discussion of the Company's major customer.

     The Company is dependent upon certain third-party software  arrangements as
well as  certain  contractual  arrangements  for  provision  of  certain  of its
services, see Note 16.

     The  Company  had  software  revenue  representing  7% and 5% of total  net
revenue  for  the  years  ended   December  31,  1998  and  December  31,  1999,
respectively.  The Company had  hardware  revenue  representing  5% of total net
revenue for the years ended December 31, 1998 and December 31, 1999.

CASH EQUIVALENTS

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

PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

     Purchased software, furniture and equipment is stated at cost. Depreciation
is calculated for financial  reporting  purposes using the straight-line  method
over the estimated useful lives (ranging from one to ten years) of the assets or
lease term, whichever is shorter.

SOFTWARE DEVELOPMENT COSTS

     Costs  incurred to  establish  the  technological  feasibility  of computer
software  products  are  research  and  development  expense  and are charged to
expense as incurred. The Company capitalizes costs incurred between the point of
establishing  technological  feasibility and general release when such costs are
material. The Company capitalized $0.7 million of software development costs for
the year ended  December 31, 1999 and $1.4 million in 1998 prior to the decision
to abandon the development project.  During 1999 and 1998, the Company wrote off
approximately $0.3 million and $2 million, respectively, of capitalized software
to reflect the abandonment of certain development projects (see Note 2).

INTANGIBLE ASSETS AND LONG-LIVED ASSETS

     In 1997, the Company adopted  Statement of Financial  Accounting  Standards
("SFAS") No. 121,  "Accounting  for the Impairment of Long-Lived  Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires impairment losses to
be  recorded  on  long-lived  assets  used  in  operations  when  indicators  of
impairment are present and the undiscounted cash flows estimated to be generated
by those  assets are less than the asset's  carrying  amount.  SFAS No. 121 also
addresses the accounting for long-lived  assets that are expected to be disposed
of.  The  adoption  of SFAS No.  121 did not  have an  impact  on the  Company's
financial statements.

     Intangible  assets,  arising  principally  from the accounting for acquired
businesses,  are  amortized  using the  straight-line  method over the estimated
useful lives of the related  assets which range from 4 to 11 years.  The Company
reviews its long-lived and intangible  assets for impairment  whenever events or
changes  in  circumstances   indicate  that  the  carrying  amount  may  not  be
recoverable.  The measurement of possible  impairment is based upon  determining
whether  projected  undiscounted  future  cash flow from the use of the asset is
less than the carrying  amount of the asset.  During the fourth quarter of 1999,
the  remaining  carrying  value of $0.3 million of  intangible  assets  acquired
during 1996 was charged to operations.

INCOME TAXES

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


<PAGE>



NET LOSS PER SHARE

     In 1997, the Company  adopted SFAS No. 128,  "Earnings Per Share." SFAS No.
128 replaced the  calculation  of primary and fully  diluted  earnings per share
with basic and diluted  earnings per share.  Unlike primary  earnings per share,
basic earnings per share excludes any dilutive effects of options,  warrants and
convertible  securities.  Diluted  earnings  per share are very  similar  to the
previously  reported fully diluted earnings per share. Per share amounts for all
periods have been presented in conformity with SFAS No. 128 requirements.

     Net loss per share is computed on the basis of the weighted  average number
of common shares  outstanding during the period. The 2,994,856 shares of Class A
common  stock  issued in the  reorganization  of the Company on January 17, 1997
(see Note 12) have been treated as outstanding since January 1, 1996. Due to the
net loss incurred by the Company in each year,  basic and diluted loss per share
do not differ.  Common stock equivalents relate to shares  potentially  issuable
under outstanding options and warrant agreements and are included in the diluted
loss per share calculation if dilutive.

     The  following  table sets forth the  computation  of basic and diluted net
loss per share:

<TABLE>
<CAPTION>

                                         1999             1998           1997
                                         ----             ----           ----
<S>                                  <C>              <C>             <C>

  Numerator:
       Net loss                      $ (10,422,000)   $ (12,170,000)   $(4,514,000)

  Denominator:
       Denominator for basic and
       diluted earnings per share --
       weighted-average shares      $   1,750,000         1,711,000       1,433,000

  Net loss per share -
        basic and diluted           $       (5.95)    $       (7.11)    $     (3.15)
</TABLE>

STOCK BASED COMPENSATION

     Stock options are accounted for under  Accounting  Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
The Company has  included in these  consolidated  financial  statements  the pro
forma equivalent  disclosure  information  required by SFAS No. 123, "Accounting
for Stock-Based Compensation," see Note 12.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

RECENTLY ADOPTED ACCOUNTING STANDARDS

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

RECLASSIFICATIONS

     Certain  prior  years'  amounts  have been  reclassified  to conform to the
current year financial statement presentation.


<PAGE>



2.   SEVERANCE AND OTHER RESTRUCTURING CHARGES

     As a result of the change in focus of the Company's business from providing
services to affiliates of CHHC, the Company incurred severance and certain other
restructuring  costs totaling  $1,215,000 in the fourth  quarter of 1996.  These
costs primarily  relate to severance of seven terminated key employees and costs
to buy out a lease of equipment no longer useful to the Company.  As of December
31, 1997,  payments of $855,000 had been made against the accrued  severance and
other restructuring charges.

     As a result of the change in the home care business  environment  resulting
from the  interim  payment  system  ("IPS")  which  lowered  the cost per  visit
limitations  and created  restrictions on the amount of cost  reimbursement  per
Medicare  beneficiary,  the  termination of the  Columbia/HCA  contracts  (which
accounted  for 11%,  35% and 48% of the  Company's  total  revenue for the years
ended  December  31,  1999,  1998 and 1997,  respectively)  and the  decision to
eliminate certain legacy  development  projects  including the AS400 effort, the
Company incurred severance and certain other  restructuring costs totaling $11.5
million in 1998.

TERMINATED CONTRACTS

     Simione  had a  contractual  relationship  with IBM to provide  services to
Simione's largest customer,  Columbia/HCA.  When Columbia/HCA  elected to cancel
contractual agreements with Simione,  Simione in turn canceled related contracts
with  IBM  to  provide  services  to  Columbia/HCA  through  Simione.  Simione's
management executed an exit plan, in accordance with EITF 94-3, that resulted in
the  incurrence of  incremental  termination  costs that had no future  economic
benefit. As a specific part of the termination of the contract with IBM, Simione
contractually  had to pay a termination  fee $800,000 as well as wind down costs
$810,000 in  addition  to minimum  quarterly  payment  requirements  $2,600,000.
Simione  estimated  this cost during the third  quarter of 1998,  but based upon
actual visits during the fourth quarter of 1998, Simione was not required to pay
as large a penalty as  originally  estimated.  Simione  recorded  this change in
estimate of $150,000 as a reduction to the  "severance  and other  restructuring
charge" line item on the income statement during the fourth quarter of 1998.

EXCESS CAPACITY

     The following is a detailed  discussion of the specific components included
within excess  capacity that was original set up in 1998. The following table is
a detailed summary:

     Office Space -- approximately $2,775,000

     This amount  relates to abandoned  office space at the Company's  corporate
headquarters  in Atlanta from which the Company will not benefit.  During fiscal
year 1998, Simione  unsuccessfully  searched to sublease this space.  Management
estimated that the Company would be unsuccessful given the following factors: 1)
the layout of the abandoned  office space,  2) partial use of the building would
be difficult to renovate to a mixed-company building, 3) the current real-estate
market, and 4) a smaller portion of the space had to be rented separately due to
a contractual sublease agreement Simione previously entered. Simione recorded an
accrual for the full amount of these  leases from the time of vacancy  until the
end of the contractual lease term.

     Furniture and Fixtures -- approximately $715,000

     This  amount  relates  to certain  furniture  and  fixtures  located in the
abandoned  office  space at the  Company's  corporate  headquarters  in Atlanta.
Simione will not benefit from them in the future.  Management estimated that the
Company  would be  unsuccessful  in  realizing  the book value of these  assets.
Additionally,  the  Company  would  have  to pay  certain  cancellation  fees on
operating leases.  Management stopped  depreciating these assets and updated the
estimates of salvage value.

     Of the  original  additions  recorded as part of the  restructuring  charge
during the third and fourth  quarters of 1998,  $200,000 was reduced  during the
fourth  quarter  because the amounts were not  supportable  under EITF 94-3. The
support  could not be provided for these  assets as well as the eventual  resale
value of these fixtures upon sublease or sale.

     Legal Fees and Other -- approximately $265,000

     This amount primarily relates to expected fees associated with legal issues
as a result of the cancellation of the above  agreements.  As these amounts were
only expected and no invoices  existed,  the costs were not allowable under EITF
94-3.  The  company  recognized  this fact and  reduced  the accrual by $200,000
during the fourth quarter of 1998. SEVERANCE

     Simione  planned  to  terminate  160  employees  across  all  groups of the
organization  including  senior  executives,  administrative  personnel,  shared
service personnel,  information  systems developers,  and consultants.  Of these
employees,  156 were terminated as of December 31, 1999.  Three of the remaining
employees were not terminated and accepted other positions with the company. The
severance  restructuring  reserve  was  reduced by $23,605 for the cost of their
previously  planned  severance.  The  remaining  employee is  employed  with the
Company until certain  critical  work effort is  completed.  We anticipate  this
employee will remain employed until the critical work is completed at which time
severance and a bonus will be paid. In accordance with EITF 94-3 no amounts were
accrued for the special bonus for this individual.

     The  remaining  balance  of $0.5  million  in the  severance  accrual as of
December 31, 1999 represents  amount due to the single employee  described above
and  the  previous  CEO's  severance  package  under  a  multiple-year   service
agreement. The remaining accrual will be paid in 2000.

COLUMBIA/HCA TERMINATION

     In December of 1998, Columbia/HCA terminated its contracts with the Company
and paid a settlement fee of $7.0 million. Of this settlement fee, $0.75 million
was for  services  provided in December  1998,  $2.3  million for services to be
provided in 1999 and $4.0 million reduced the restructuring  charges incurred in
1998.  The  allocation  of the  settlement  between  services and  restructuring
charges is based upon  allocating  revenue over the periods in which  additional
services were performed.  The agreement required Simione to assist  Columbia/HCA
with the  completion  of certain  services  through the end of March 1999.  This
required the  maintaining  of the Company's  service  support system and certain
staffing  levels.  Simione  calculated  a margin  percentage  using an estimated
allocation  of  staffing  costs for the two prior  years.  This  margin was then
applied to reflect the  reduction of certain  staffing  positions.  To match the
revenue to the expenses at the same ratio, Simione recognized $750,000 per month
for January, February, and March 1999.

PRODUCT RELATED

     The  product  related  charge  relates  solely  to the  abandonment  of the
conversion of the Company's  legacy product to the AS400  platform.  The product
was called Synergy.  The full amount of $2.1 million represents the write-off of
amounts  originally  capitalized  by the company  under SFAS No 86.  These costs
represented  amounts  capitalized   subsequent  to  the  point  of  establishing
technological  feasibility  and prior to  general  release of the  product.  The
Company's decision to abandon this effort and the related charge was recorded in
accordance  with SFAS No. 86.  SFAS No. 86  requires  an  impairment  loss to be
recorded when impairment indicators are present and the unamortized  capitalized
costs of a computer  software  product exceed the net  realizable  value of that
asset.  The net realizable value is the estimated future gross revenue from that
product  reduced by the estimated  future costs of  completing  and disposing of
that  product.  The  Company  had no  sales  of this  product,  as it was  never
generally available to the public.

     The  following  tables  present  a roll  forward  of the one  time  charges
incurred by the Company in 1998 and 1999. Of these charges,  $2.0 million of the
product related  component and $0.4 million of the excess capacity  component do
not have a cash impact to the Company.
<PAGE>

<TABLE>
<CAPTION>

                                       BALANCE                                                             BALANCE
                                    DECEMBER 31,                                                        DECEMBER 31,
                                        1997            ADDITIONS      REDUCTIONS          USAGE            1998
                                   ----------------   --------------  --------------   --------------  ----------------
    <S>                            <C>                <C>             <C>              <C>             <C>

    Terminated contracts                                 $3,715,000     $ (150,000)     $(1,315,000)   $  2,250,000
    Excess capacity                              -        3,755,000       (400,000)        (402,000)      2,953,000
    Severance                                    -        2,091,000               -        (758,000)      1,333,000
    Columbia/HCA termination fee                 -       (4,000,000)              -        4,000,000              -
                                                      ==============  ==============   ==============
    Total Restructuring cost           $         -       $5,561,000     $ (550,000)      $ 1,525,000  $   6,536,000
                                                      ==============  ==============   ==============

    Accrued liability less
    current portion                              -                                                       (3,865,000)

                                   ----------------                                                    ----------------
    Accrued liability long-term        $         -                                                    $   2,671,000
                                   ================                                                    ================

</TABLE>

     The reduction of $1.1 million of excess capacity charges for the year ended
December 31, 1999,  results from the subleasing of excess space in the Company's
headquarters  office in Atlanta.  The following table presents a roll forward of
the one time  charges  incurred  by the  Company.  The  majority  of the current
portion of remaining  restructuring  costs are comprised of the IBM  termination
costs,  which are payable upon demand.  The $0.9  million  long-term  portion of
remaining  restructuring  costs are  composed  primarily  of excess  office  and
equipment leases having terms ending after December 2000.

<TABLE>
<CAPTION>
                                      BALANCE                                                              BALANCE
                                    DECEMBER 31,                                                        DECEMBER 31,
                                        1998            ADDITIONS      REDUCTIONS          USAGE            1999
                                  -----------------   --------------  --------------   --------------  ----------------
<S>                                <C>                 <C>            <C>              <C>             <C>
Terminated contracts                 $   2,250,000         $      -    $          -      $  (41,000)     $   2,209,000
Excess capacity                          2,953,000                -     (1,140,000)        (476,000)         1,337,000
Severance                                1,333,000                -               -        (799,000)           534,000
                                  -----------------   --------------  --------------   --------------  ----------------
Total Restructuring Cost             $   6,536,000         $      -    $(1,140,000)     $(1,316,000)     $   4,080,000
                                                      ==============  ==============   ==============

Accrued liability less current
  portion                               (3,865,000)                                                         (3,186,000)
                                  ----------------                                                     ----------------
Accrued liability long-term          $   2,671,000                                                        $    894,000
                                  =================                                                    ================
</TABLE>


3.  PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

         Purchased software, furniture and equipment consisted of the following:

                                             DECEMBER 31,
                                 -----------------------------------
                                 ----------------    ---------------
                                      1999                1998
                                 ----------------    ---------------

    Equipment                   $   2,984,000       $   2,043,000
    Purchased software              1,221,000           1,114,000
    Furniture                         576,000             510,000
    Leasehold improvements            179,000             166,000
                                  ----------------    ---------------
                                    4,960,000           3,833,000
    Accumulated depreciation       (3,621,000)         (1,981,000)
                                  ================    ===============
                                $   1,339,000       $   1,852,000
                                  ================    ===============


4.   INTANGIBLE ASSETS

     Intangible assets consisted of the following:
<TABLE>
<CAPTION>

                                                  DECEMBER 31,                   AMORTIZATION
                                       ------------------------------------
                                             1999               1998                PERIOD
                                       -----------------   ----------------  ---------------------
    <S>                                 <C>                 <C>              <C>

    Developed technology                $   14,065,000      $   2,881,000                4-5 years
    Goodwill                                 5,768,000          4,239,000               7-10 years
    Trade name                               1,142,000          1,142,000                 11 years
    Other                                    1,658,000          1,695,000               6-10 years

                                      -----------------   ----------------
                                            22,633,000          9,957,000
    Accumulated amortization                (5,191,000)        (2,819,000)
                                     ==================    ================
                                        $   17,442,000       $  7,138,000
                                     ==================    ================
</TABLE>

5.   NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

     On June 6, 1997,  the Company  entered into a Loan and  Security  Agreement
with a bank. Pursuant to the Agreement, the bank agreed to make available to the
Company a revolving  credit facility,  the maximum  principal amount of which at
any time must be equal to the lessor of $5 million or the "borrowing  base" then
in effect. Interest accrues at a variable rate per annum equal to the prime rate
plus 0.25% (8.75% as of December 31,  1997).  Under the terms of the  Agreement,
the Company granted to the bank a security interest in all accounts receivables,
inventory,  equipment, and general intangibles.  Additionally,  borrowings under
this  agreement were secured by the  outstanding  capital stock of the Company's
subsidiaries. The Company's subsidiaries guaranteed the Company's obligations to
the bank under the Agreement.  As of December 31, 1997, $774,000 was outstanding
and  $4,226,000  was  available  under this  agreement.  The agreement was fully
repaid and cancelled during 1998.

     On May 11, 1998, the Company entered into a new Loan and Security Agreement
with a bank. Pursuant to the Agreement, the bank agreed to make available to the
Company a revolving  credit facility,  the maximum  principal amount of which at
any time had to equal the lesser of $25 million or the "margin requirement" then
in effect. Interest accrued at a variable rate per annum equal to the prime rate
for prime  borrowings  (7.75% as of  December  31,  1999) or the LIBOR rate plus
1.5%-3.0% per annum (depending on the leverage ratio measured quarterly) for the
LIBOR  borrowings  (6.38%  as of  December  31,  1999).  Under  the terms of the
agreement,  the Company granted to the bank a security interest in all accounts,
inventory,  equipment,  and general  intangibles.  Additionally,  the  Company's
subsidiaries  also  guaranteed  the Company's  obligations to the bank under the
Agreement.  As  of  December  31,  1998  there  was  a  balance  of  $5  million
outstanding.  The  Company  repaid  all  obligations  under  the  agreement  and
terminated this credit facility in 1999 .

     The Company has entered  into lease  agreements  with a related  party (see
Note  14)  for  certain  office  and  computer   equipment  and  furniture  with
approximate  aggregate  cost  and net  book  value  of  $690,000  and  $624,000,
respectively,  at December 31, 1997.  In December  1997,  the Company  opted for
early  termination  of these leases and purchased the equipment  from the lessor
for $579,000. Additionally, the Company has other equipment under capital leases
with third-party lessors with approximate aggregate cost of $148,000 and $29,000
and net book  value of  $88,000  and  $7,000,  at  December  31,  1999 and 1998,
respectively. Amortization of capital leased assets is included in the Company's
depreciation expense and amounted to approximately$18,000,  $45,000 and $283,000
for 1999, 1998 and 1997, respectively.

     In September 1999, the Company  obtained a $5.0 million  commercial line of
credit.  The line of credit became operational in October 1999. The terms of the
line require certain aging of accounts  receivable and certain operating results
for future periods in order to maintain the  availability of the line for future
use. Interest is accrued at prime plus 2.0% or 10.5% as of December 31, 1999.

     In November 1999, the Company  received a commitment of $1.6 million of new
loans from certain shareholders of the Company and Mestek, the parent company of
MCS  ($750,000  from  shareholders  and $850,000  from  Mestek).  The loans were
obtained to provide  additional  funding for the Company's  operations  and have
maturity terms ranging from a minimum of 9 months to a maximum of 36 months. The
shareholder  loans of $750,000  are not secured and include an interest  rate of
9.0%. The $850,000 Mestek loan had an 11.0% interest rate and was secured by the
assets  of the  Company.  The loan  carried  an option  to  convert  to Series C
Preferred Stock of the Company on or after the completion of the MCS merger (See
Note 16).

6.   OPERATING LEASES

     The  Company  leases  its  office  facilities  and  certain  furniture  and
equipment  under  various  operating  lease  agreements,  some of which are with
related  parties (see Note 14).  These leases  require the Company to pay taxes,
insurance and maintenance expenses, and provides for renewal options at the then
fair market  rental value of the  property.  Amounts  expensed  under  operating
leases were approximately $2,562,000,  $3,048,000, and $2,847,000, for the years
ended December 31, 1999, 1998, and 1997, respectively.

     Aggregate  annual rental payments for operating  leases with  noncancelable
lease terms in excess of one year are as follows:

                   Years Ending December 31,

                   2000                            $2,216,000
                   2001                             1,626,000
                   2002                               181,000
                   2003 Thereafter                      8,000
                                                    ---------
                   Total                           $4,031,000

7.   COMMITMENTS AND CONTINGENCIES

     On  November  1,  1996,  Simione  Central,  Inc.  ("SCI"),  a wholly  owned
subsidiary  of the  Company,  entered  into a series of  five-year  contracts to
provide shared resource  information  management and agency support  services to
several affiliates of Columbia/HCA Health Care Corporation ("Columbia/HCA").  As
part of the negotiation of these contracts with SCI,  Columbia/HCA required that
this   subsidiary,   formerly   a   subsidiary   of  CHHC,   guarantee   certain
indemnification  obligations  of  the  former  shareholders  of  CHHC,  as  such
indemnification   obligations   relate  to  the   administration  and  potential
liabilities to the Central Health Holding Company, Inc. Employee Stock Ownership
Plan  (  the  "Plan")  or  its  participants.   Columbia/HCA  became  indirectly
responsible  for these Plan  obligations  as a result of its  acquisition of the
CHHC stock. As a result of the fact that all former CHHC  shareholders  are also
shareholders  of the  Company  by virtue of the  January  1997  spin-off  of the
Company, SCI agreed to undertake this contingent obligation.  Under the terms of
this guaranty agreement (the "Guaranty"),  SCI agreed to guarantee  Columbia/HCA
against losses arising from the following:  (i) liabilities relating to the Plan
for losses resulting from a fiduciary  breach,  prohibited  transaction or other
violation of law relating to the Plan and (ii) liabilities  relating to the Plan
which are not paid by the former  stockholders  of CHHC other than the Plan, but
only to the extent such losses are not recovered by  Columbia/HCA  through other
indemnity  provisions of its  agreement  with the former  shareholders  of CHHC.
These indemnity  provisions include any potential recovery from CHHC's insurance
policies as well as recoveries from escrow accounts  established for the benefit
of  Columbia/HCA  by  CHHC's  former  shareholders.  This  subsidiary's  maximum
liability  under the Guaranty is $17,500,000  for claims arising before November
1, 1998 and $15,000,000 for claims arising before November 1, 2000.  There is no
liability for any claims arising after November 1, 2000. Further,  the aggregate
maximum  liability under the Guaranty is $20,000,000.  Pursuant to the Guaranty,
the subsidiary agreed that on each date that a guaranteed obligation is required
to be paid to  Columbia/HCA,  the  subsidiary  shall  grant  to  Columbia/HCA  a
security  interest equal to the amount of the  guaranteed  obligation in all the
subsidiary's  accounts receivable.  This subsidiary also granted to Columbia/HCA
the  right to offset  any  liability  arising  under the  Guaranty  against  any
obligation of Columbia/HCA or its affiliates to the subsidiary.  At December 31,
1999,  no claims  had been made  under the  Guaranty  and the  Company  does not
currently   anticipate   incurring  any  loss   associated  with  the  Guaranty.
Columbia/HCA  sold the home care agencies under contract with the Company during
1998 and opted for an early termination of the contracts, due to expire in 2001,
with the Company. See Note 2 for settlement details.

     The Company is engaged in various legal and regulatory  proceedings arising
in the normal  course of  business  which  management  believes  will not have a
material adverse effect on its financial position or results of operations.  The
Company was, however,  served on July 17, 1997 with an  administrative  subpoena
issued by the United States  Department of Health and Human Services,  Office of
Inspector General.  In connection with that subpoena,  the Department of Justice
("DOJ") had  advised the Company  that  certain  aspects of the  Company's  past
relationship with affiliates of Columbia/HCA were within the scope of an ongoing
grand jury  investigation and confirmed to the Company that neither the Company,
nor  any  of  its  officers,  directors  or  employees,  was  a  target  in  the
investigation. Prior to December 31, 1999, the Company was notified that the DOJ
had removed the Company from its inquiry.

     The Company remains liable for certain  settlement costs payable to IBM for
the early  cancellation of the Company's service agreement with IBM for services
provided to Columbia/HCA.  Those costs amount to approximately  $2.5 million and
are part of claims for  reimbursement  under a still active  legal  dispute with
Columbia/HCA.  In the event the legal  dispute  is not  settled  in favor of the
Company,  the Company may be liable for all or part of this amount plus any late
payment charges if appropriate.



8.   ACQUISITIONS

     Effective  January 1, 1996, the Company purchased certain assets of Simione
& Simione,  CPA's -- Consulting Division (a division of Simione & Simione, CPAs,
a Partnership)  ("Simione & Simione") for $2,000,000 in cash.  Simione & Simione
provided a wide range of home health care consulting services.  This acquisition
was  accounted  for using the purchase  method.  The entire  purchase  price was
allocated to goodwill and is being amortized over ten years.

     On October 8, 1996,  IMHI merged with CHMS.  IMHI provided a  comprehensive
package of software  applications for home health care providers  marketed under
the name STAT 2. In connection with the acquisition, each issued and outstanding
share of CHMS common stock was  converted  into and  exchanged  for the right to
receive  .22021  shares of IMHI  common  stock as of the  effective  date.  As a
result, IMHI issued 3,958,356 shares of common stock to CHMS's stockholders.  In
addition,  each of the outstanding shares of IMHI Class A Convertible  Preferred
Stock was  converted  into and exchanged for shares of IMHI common stock and all
outstanding  options  and  warrants  to  purchase  CHMS  common  stock as of the
effective date were  converted into the right to purchase  shares of IMHI common
stock,  provided that the number of shares to be so purchased and the respective
exercise prices thereof have been adjusted by the exchange ratio. The merger was
accounted for as a reverse  acquisition under the purchase method of accounting.
As a result,  for  accounting  purposes CHMS was  considered as having  acquired
IMHI.  The  historical  financial  statements  of  CHMS  became  the  historical
financial  statements  of IMHI and  include the  results of  operations  of both
companies  from the effective  date.  All share amounts have been  retroactively
restated  giving  effect to the .22021  exchange  ratio of CHMS  shares for IMHI
shares.  CHMS had been on a December 31 fiscal  year end,  and,  therefore,  the
fiscal year-end of IMHI was changed to December 31. Effective December 19, 1996,
IMHI changed its name to Simione Central Holdings, Inc. (the "Company").

     The purchase price of approximately  $16,797,000 consisted of the estimated
value assigned to the outstanding shares,  options and warrants of IMHI totaling
$13,516,000,  plus $760,000 of acquisition costs and net liabilities  assumed of
$2,521,000.  The $13,516,237 estimated value of outstanding IMHI shares, options
and warrants consists of $9,746,348  assigned to the value of outstanding shares
and $3,769,889 assigned to the value of outstanding options and warrants assumed
in the transaction.  The value of the shares, options and warrants was estimated
based on an independent appraisal of the value of the Company's shares as of the
date the merger agreement was executed.

     The purchase  price was allocated  based on the relative fair values of the
assets  acquired  and  liabilities  assumed.  Approximately  $12,574,000  of the
purchase price was allocated to purchased  in-process  research and development.
This  in-process   research  and  development  had  not  reached   technological
feasibility  and had no alternative  future use, and  therefore,  was charged to
operations as of the acquisition  date. In addition,  $4,223,000 of the purchase
price was  allocated  to  certain  identifiable  intangible  assets and is being
amortized over the related assets estimated useful life, as follows:

     IMHI -- VALUE ASSIGNED TO ASSETS BALANCE SHEET CATEGORY ACQUIRED

Purchased Technology...........    4 Years     $2,100,000
Trade Names....................   11 Years      1,100,000
Customer List..................    9 Years        400,000
Assembled Workforce............    6 Years        600,000
                                               -----------
                                               $4,200,000
                                               ===========

     The valuations were determined by the Company using the income approach.  A
description of the acquired in-process  technology and the estimates of the fair
value of in-process R&D made by the Company for the business combination are set
forth below.

     A summary of the four major projects included in In-process R&D are:

     - Stat 2 --  Open/GUI:  complete  redesign  of the Stat 2 V3.6 to a Windows
based GUI (Graphical  User  Interface)  architecture  including a new scheduling
module for home care visits and creation of  interfacing  links for the STATScan
and Tel Time projects

     - Stat 2 Medical  Records --  Open/GUI:  migration  of the Medical  Records
product to a Windows based GUI architecture and allow for pen-based  technology.
HL/7 messaging & data management in an integrated  environment with the STATScan
project.


     - STATScan:  a new product  feature  allowing  conversion of  Windows-based
imaging  of paper  forms into  digitized  data files  thereby  providing  direct
customer management of information without redundant data entry and reduced data
errors at the point of entry.

     - Tel Time:  a new  interactive  voice  response  telephone  based  product
allowing  efficient  documentation  of time of service and  mileage  information
needed for home medical visit cost reimbursement.

     Estimated net cash inflows from the acquired in-process  technology related
to IMHI were  projected to commence in the year 1997,  peak in 1998 and steadily
decline  through 2003.  The  in-process  technology was expected to be completed
during  fiscal  years  1997  and  1998.  As of the date of  acquisition,  it was
estimated that  approximately  $1 million had been expended to develop these R&D
projects.  The  estimated  cost to complete the projects  was  approximately  $2
million.

     The fair value assigned to purchased  in-process  technology was determined
by  estimating  the  contribution  of the  purchased  in-process  technology  to
developing  commercially viable products and estimating the resulting cash flows
from the expected product sales of such products. In arriving at the cash flows,
a contributory  asset charge was applied for the use of working  capital,  fixed
assets,  developed  technology and other  intangibles.  The resulting cash flows
were  discounted  to their  present value using a rate of 23%. The discount rate
was based on an analysis of IMHI's weighted average cost of capital, and venture
capital rates given the risk of the value added  assets.  There were no material
anticipated  changes  from  historical  pricing,  margins  and  expense  trends.
Acquired  developed  technology of approximately $2.1 million was capitalized at
the  acquisition  date and is being  amortized over 3-5 years on a straight-line
basis.

     After  InfoMed  and  Simione  merged,  STAT  2/GUI  and the STAT 2  Medical
Records/GUI  projects were  determined to be similar in customer target with the
Synergy project which was under  development at Simione.  The competing  product
development  projects  were  consolidated  and full  effort  was  focused on the
Synergy  project.  Since the Synergy project was the major project  abandoned in
the third quarter 1998 restructuring, the expected benefits of the IMHI projects
have not been  realized.  The non-GUI  versions of the STAT 2 and STAT 2 Medical
Records products are being integrated with CareCentric's SmartClipboard product.
Due to the  financial  difficulties  currently  occurring  in  the  home  health
industry,  revenue  forecasts for the combined products are less aggressive than
the original  forecasts made in 1996.  Due to the importance of the  development
projects for STAT,  the delay in market entry caused by the  abandonment  of the
Synergy project in the 1998 restructuring of Simione has significantly  added to
Simione's current financial difficulties.

     The Tel Time and STATScan projects were completed.  However,  both of these
projects were significantly less important to revenue generation than the STAT 2
and STAT 2 Medical Records projects.  Since Tel Time is used in conjunction with
nurse's visits,  the reduction in nurse's visits has further  depressed  revenue
generation  from original  expectations.  Due to changes in scanning  technology
since  1996,  the Company has decided to partner  with  scanning  suppliers  and
create interfacing software to utilize the STATScan product.

     Effective  December 1, 1997, the Company  purchased  substantially  all the
assets of Dezine  Healthcare  Solutions,  Inc.  ("Dezine").  Dezine  provided  a
comprehensive  package  of  software  applications  for home  medical  equipment
providers.  This  acquisition was accounted for using the purchase  method.  The
purchase price of approximately  $9,379,000  (including  $200,000 of acquisition
costs and net  liabilities  assumed of $71,000)  was paid in cash and  allocated
based on the  relative  fair  values  of the  assets  acquired  and  liabilities
assumed.  Approximately  $8,127,000  of the  purchase  price  was  allocated  to
purchased  in-process  research and  development.  This in-process  research and
development  had not reached  technological  feasibility  and had no alternative
future use, and therefore, was charged to operations as of the acquisition date.

     In-process research and development for Dezine included two projects at the
time of Simione's  purchase of Dezine.  In the  valuation  report on  intangible
assets,  prepared by independent  appraisers,  both projects were  identified as
critical to Dezine's long-term competitiveness. The independent valuation method
used was a forecast of future revenues and expenses applied in a discounted cash
flow model. The forecast assumptions,  technology life cycles and discount rates
used were developed through conversations with management and review of industry
research and industry analyst reports.

     -  Enterprise  7.0:  Complete  redesign of the import and export  interface
features  of  Dezine's  DOS based  utilities  program  to  provide  standardized
database  structure,  enhanced  security,  interaction  with pop-up date fields,
standardized function/editing keys and HL7 compatible file structure.

     - Gen2000: Windows-based program with a suite of market driven segments for
home  medical  equipment   management  reporting  and  enterprise  solution  for
interaction  with  an  integrated  health  care  provider  having  home  medical
equipment services.

     The  Enterprise  7.0  project  was an  internal  test  phase at the time of
Simione's acquisition,  but Dezine management estimated to have 7 more man-years
of work to be  completed  before  market  testing  could  begin.  The data  base
management  implications of Enterprise 7.0 required  interaction with nearly all
features  included in the existing medical  equipment  software products sold by
Dezine. This development complexity was further complicated by the fact that the
DOS based utilities  being converted in the project were no longer  commercially
supported  by the  authors of the  utilities.  The need for  internally  audited
accuracy in data  acquisition  and transfer by the post  Enterprise  7.0 product
also added a need for significant testing to assure marketability.

     The  Gen2000  project  was  a  complete  rewrite  and  enhancement  of  the
functionality of Dezine's existing  products.  It was estimated that at the time
of the acquisition,  Dezine had spent 4 man-years developing the project and had
two man-years of feature-design work remaining.  At the time of the acquisition,
it was estimated  that 10 man-years of work were needed to complete a marketable
product.  The software design  requirements  of Gen2000  required SQL and Delphi
skills which were just being learned by the developers employed by Dezine.

     Enterprise 7.0 and Gen2000 had expected completion dates of the end of 1998
and 1999,  respectively.  Neither  project had completed any market test work at
the time of acquisition.

     At the same time as changes in the cost reimbursement rules for home health
care became understood in 1998, the capital available for long-term  development
projects  within  Simione and its  subsidiaries  was  reduced.  None of Dezine's
pre-acquisition  programs  were  ever  completed.  Additionally,  Simione's  own
product development efforts were using all available programming personnel.

     In  addition,  $1,323,000  of the purchase  price was  allocated to certain
identifiable  intangible  assets and will be amortized  over the related  assets
estimated useful life, as follows:

       DEZINE -- VALUE ASSIGNED TO ASSETS BALANCE SHEET CATEGORY ACQUIRED



Purchased Technology............... 5 Years     900,000
Customer List..................... 10 Years     400,000
                                              -----------
                                              1,300,000
                                              ===========

     The Company's  consolidated  statement of  operations  for the period ended
December  31,  1997  includes  the  operating  results  of Dezine for the period
December 1, 1997 (the effective date of the Dezine  acquisition) to December 31,
1997.

     Pro forma information  (unaudited)  giving effect to the acquisitions as if
they took place on January 1 1997, is as follows:

                             YEAR ENDED DECEMBER 31, 1997
                          -------------------------------

Net revenues..................................     $  53,397,919
Net income (loss).............................     $   3,657,552
Net income (loss) per share -- basic..........     $        0.51
Net income (loss) per share -- diluted........     $        0.44

     This pro forma information does not purport to be indicative of the results
that actually  would have  occurred if the  acquisitions  had been  effective on
January 1, 1997 and 1996 or which may be obtained in the future.

     Effective  March 26,  1999,  the Company  purchased  substantially  all the
assets of Tropical Software Services ("Tropical"),  a Windows based Home Medical
Equipment (HME) Management  System.  The acquisition was accounted for using the
purchase  method  for  financial  reporting  purposes.  The  purchase  price was
comprised of $1.8 million in cash and $0.2 million in Simione  stock  (valued at
the average  trading value for a reasonable  period of time before and after the
announcement of the purchase).  The purchase price of  approximately  $1,963,000
has been  allocated to the assets  acquired and  liabilities  assumed  including
$1,951,000 of purchased technology. Purchased technology is being amortized over
an estimated three year useful life.

     Effective  August 12, 1999 the Company acquired 100% of the common stock of
CareCentric  Solutions,  a provider of point-of-care  systems in the home health
care information  systems  marketplace,  for approximately 3.0 million shares of
newly issued  Series A Preferred  Stock of the Company.  Non-cash  consideration
consisted  of  3,034,521  shares of Simione  Series A Preferred  Stock valued at
$2.58. The guaranteed value of $3.00 per common share of Simione stock after the
fourth quarter of 2000 has been discounted to the purchase date  (considering an
incremental  borrowing rate of 10%.) The discounted  value as of the acquisition
is $2.58 per share and  coincides  with the average fair market value of Simione
common  stock as  traded  just  prior to the  announcement  of the  acquisition.
Simione's stock value has not exceeded this floor subsequent to the announcement
of the  merger.  If Simione  common  stock does not meet the  guaranteed  value,
Simione will issue up to an additional 3,034,521 shares of common stock to these
stockholders.  No additional intangible assets will be recorded in the future as
the  purchase  price  remains the  guaranteed  value per share.  The only future
financial statement impact could be a reclassification  between common stock and
additional paid-in-capital for the additional shares issued.

                                        CARE-
                                       CENTRIC
                                       MERGER
                                      ----------

PURCHASE PRICE:
Simione Series A Preferred Stock.     3,034,521
Guaranteed value per share.......   $      2.58
                                     ----------
Total value of stock.............   $ 7,813,892
Cash.............................       218,000
Net liabilities assumed..........     1,060,513
                                    ===========
  Total purchase price             $  9,092,405
                                    ===========

Guaranteed value per share at December 31, 2000........ $   3.00
Guaranteed value per share at acquisition date......... $   2.58


     All warrants for CareCentric  stock were canceled as a result of the merger
with Simione.

     Only options held by employees  who remained  with Simione after the merger
were converted from CareCentric  options to Simione  options.  The conversion of
the options was made such that no vesting or  expiration  terms changed from the
terms included in the origin CareCentric  options.  The numbers and strike price
of the options were converted  using the same stock ratio and valuation used for
the common stock holders of CareCentric at the date of the merger.  As a result,
600,000  CareCentric  employee options at a strike price of $0.50 converted into
20,400 Simione  options at a strike price of $14.71.  Accordingly,  all exercise
prices of CareCentric  options are significantly  above Simione's current market
stock price.

     The merger was accounted for as a purchase in  accordance  with  accounting
Principles Board Opinion No. 16, "Business  Combinations."  Intangible assets of
approximately $9.8 million acquired have been allocated to specific identifiable
elements and related  useful lives  determined  based upon an  assessment  by an
independent  third-party valuation services company. The identifiable intangible
assets are comprised of developed technology and goodwill,  which have estimated
useful lives of 7 years.  The table below is a summary of the estimated  amounts
allocated to the long-lived assets acquired:

    CARECENTRIC -- VALUE ASSIGNED TO ASSETS BALANCE SHEET CATEGORY ACQUIRED

Developed technology..............   7 Years   $9,100,000
Goodwill..........................   7 Years      700,000
                                              ----------------
                                               $9,800,000
                                              ================

     Pro forma information  (unaudited)  giving effect to the acquisitions as if
they took place on January 1, of each year, is as follows:

                                     YEARS ENDED DECEMBER 31,
                              -----------------------------------------------
                              1999                     1998
                              ------------------------ ----------------------
    Net revenues              $   27,155,000        $   42,707,000
    Net income (loss)         $   (13,726,000)      $   (19,076,000)
    Net income (loss)
       per share - basic      $      (7.84)         $      (8.20)
    Net income (loss)
       per share - diluted    $      (7.84)         $      (8.20)


     This pro forma information does not purport to be indicative of the results
that actually  would have  occurred if the  acquisitions  had been  effective on
January 1, 1999 and 1998 or which may be obtained in the future.

9.   INCOME TAXES

     The Company has not incurred or paid any income taxes since its inception.

     Deferred  income  taxes  reflect  the net effect of  temporary  differences
between the financial  reporting  carrying amounts of assets and liabilities and
income tax carrying  amounts of assets and  liabilities.  The  components of the
Company's deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>

                                                               YEARS ENDED DECEMBER 31,
                                                          ------------------------------------
                                                                 1999               1998
                                                          -----------------  -----------------
<S>                                                       <C>                <C>

Deferred tax assets:
      Net operating loss                                   $     6,378,000    $     4,040,000
      Purchased intangible assets                                3,480,000          2,880,000
      Severance and other restructuring charges                    815,000          2,690,000
      Allowance for doubtful accounts                            1,360,000            630,000
      Deferred revenue                                             810,000            370,000
      Depreciation                                                 625,000                  -
      Other                                                        560,000                  -
                                                           ---------------    ---------------
Total deferred tax assets                                       14,028,000         10,610,000

Deferred tax liabilities:
      Purchased intangible assets                               (1,530,000)       (1,480,000)
      Depreciation                                                       -          (330,000)
                                                          -----------------  -----------------
Total deferred tax liabilities                                  (1,530,000)       (1,810,000)
                                                          -----------------  -----------------
Net deferred tax assets                                         12,498,000         8,800,000
Valuation allowance                                            (12,498,000)       (8,800,000)
                                                          -----------------  -----------------
                                                          $              -   $              -
                                                          =================  =================
</TABLE>

     The Company has  approximately  $10.4 million of net  operating  losses for
income tax  purposes  available to offset  future  taxable  income.  Such losses
expire  beginning  in 2010 and may be subject to certain  limitations  for prior
changes in ownership. A valuation allowance reducing the net deferred tax assets
to zero has been  recorded  based on  management's  assessment  that it is "more
likely than not" that this net asset is not realizable as of December 31, 1999.

     Actual income tax expense differs from the "expected"  amount  (computed by
applying the U.S.  Federal  corporate  income tax rate of 34% to the loss before
income taxes) as follows:

<TABLE>
<CAPTION>

                                                                   YEARS ENDED DECEMBER 31,
                                                         1999                1998                1997
                                                         ----                ----                ----
<S>                                               <C>                  <C>                <C>
Federal tax benefit computed at statutory rates   $   (3,588,000)      $    (4,140,000)   $   (1,530,000)
State income taxes, net of federal effect               (325,000)             (490,000)         (180,000)
Other, net                                               215,000                190,000         (650,000)
Change in valuation allowance                          3,698,000              4,440,000         2,360,000
                                                  ----------------     ----------------   ---------------
Income tax expense                                $           --       $             --    $           --
                                                  ================     ================   ===============
</TABLE>


10.  EMPLOYEE BENEFIT PLANS

     CHHC  sponsored the Central  Health Holding  Company,  Inc.  Employee Stock
Ownership Plan (the "Plan"), which covered substantially all full-time employees
of CHHC and its wholly owned  subsidiaries and was funded by cash  contributions
from CHHC and its wholly  owned  subsidiaries.  The major  asset of the Plan was
shares of CHHC common stock  acquired by the Plan.  In  connection  with the pro
rata  distribution  of the common stock of CHMS (see Note 1), the Plan  received
shares of the Company's  common stock. All of the Plan's assets are allocated to
each  eligible  employee's  account and are held in trust  until the  employee's
termination,  retirement, total disability or death. In connection with the sale
of CHHC to Columbia/HCA, the Plan was converted from an employee stock ownership
plan to the Simione Central  Holdings,  Inc. Profit Sharing Plan Trust,  and the
sponsorship of the Plan was transferred  from CHHC to the Company.  All expenses
are funded by the Plan.

     The  Company  has  adopted  401(k)  plans  that  cover   substantially  all
employees.  The Company contributes to the plans based upon the dollar amount of
each participant's  contribution.  The Company made contributions to these plans
of  approximately  $137,000,  $171,000  and  $94,000  in 1999,  1998  and  1997,
respectively.

11.  SHAREHOLDERS' EQUITY

     On July 1, 1997, a  Registration  Statement,  filed by the Company with the
Securities and Exchange Commission on Form S-1, became effective. In conjunction
with the  effectiveness  of the Registration  Statement,  the Company effected a
one-for-two  reverse stock split of the Company's  outstanding common stock. The
Company  sold  2,000,000  (post-reverse  split)  shares of its common  stock for
$10.00 per share and received  approximately  $17.7 million in net  proceeds.  A
shareholder  also sold  1,220,000  (post-reverse  split)  shares  for $10.00 per
share.  The Company did not receive any of the proceeds  from the sale of shares
by the selling shareholder.

     All share and per share amounts  included in these  consolidated  financial
statements have been restated to reflect the reverse stock split.

     As of December 31, 1998, the Company has reserved  567,800 shares of common
stock for future  issuance upon the exercise of warrants and options to purchase
common stock.

     In connection with the acquisition of CareCentric Solutions,  Inc., Simione
issued Series A Preferred Stock. The Series A Preferred Stock was converted into
Simione  common  stock  on  a  share-for-share   basis  after  approval  by  the
shareholders  immediately  prior to the  completion of the merger with MCS, Inc.
The post merger, converted shares represent 16% of the Company's common stock.

     In connection  with the MCS merger,  Mestek,  the former parent  company of
MCS, invested $6.0 million in Simione. That investment was converted into Series
B Preferred  Stock,  which carry votes  equivalent to 2,240,000 shares of common
stock.  The Series B  Preferred  Stock also has a 9% coupon rate and an attached
warrant to purchase 400,000 shares of common stock of the Company.  The Series B
Preferred Stock is not redeemable or convertible.

     In November 1999, Mestek loaned an additional  $850,000 to Simione.  At the
completion  of the  merger  with  MCS,  the note  was  converted  into  Series C
Preferred Stock of the Company. The Preferred Stock has a liquidation preference
of $1.00 per share, junior in priority to the Series B Preferred Stock, to right
to one  vote  per  share  on  all  matters  voted  on by  Simione  stockholders,
cumulative  dividends  at the rate of 11% of the  $1.00  per  share  liquidation
preference,  and the right to receive the same  consideration  as an outstanding
share of Simione common stock in the event of a change of control transaction.

STOCK OPTIONS

     The Company has  established  several stock option  plans,  under which the
Company is  authorized  to grant  options to  purchase an  aggregate  of 380,700
shares of common stock.  Options granted under these plans must have an exercise
price not less than the fair market  value at the date of grant.  In addition to
options of 115,843 granted under these plans,  the Company has granted  non-plan
options to certain  related  parties.  Such non plan  options  were granted with
exercise prices equal to fair market value on the date of grant.

     A summary of the Company's stock option activity for 1997, 1998 and 1999 is
as follows:

                                                         WEIGHTED
                                          NUMBER          AVERAGE
                                            OF           EXERCISE
                                          OPTIONS          PRICE
                                       --------------   ------------

    Outstanding at December 31, 1996        281,327        $  22.90
    Granted                                  67,860        $  54.40
    Exercised                               (35,853)       $   6.05
    Forfeited                                   (82)       $  11.00
                                       --------------
    Outstanding at December 31, 1997        313,253        $  31.80
                                       --------------
    Granted                                 148,400        $  29.55
    Exercised                                (6,486)       $  18.45
    Forfeited                               (78,241)       $  42.30
                                       --------------
    Outstanding at December 31, 1998        376,925        $  28.85
                                      --------------
    Granted                                 171,080        $  11.45
    Exercised                               (17,000)       $   3.70
    Forfeited                              (113,920)       $  23.07
                                       --------------
    Outstanding at December 31, 1999        417,086        $  24.10
                                       ==============


<TABLE>
<CAPTION>

                                     OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                          ------------------------------------------  -------------------------
                                            WEIGHTED
                                             AVERAGE       WEIGHTED                       WEIGHTED
         RANGE OF                           REMAINING       AVERAGE                       AVERAGE
         EXERCISE              NUMBER      CONTRACTUAL     EXERCISE         NUMBER        EXERCISE
          PRICES            OUTSTANDING   LIFE IN YEARS      PRICE        EXERCISABLE     PRICE
    --------------------   ------------- --------------  ------------    ------------     --------
<S>  <C>         <C>             <C>           <C>           <C>              <C>           <C>

     $    -       $7.36            1,469        0.5          $     3.70          1,469      $   3.70
     $ 7.36      $14.71          167,375        8.3          $     9.67        100,709      $  10.30
     $14.71      $22.07           67,172        5.6          $    16.07         67,172      $  16.07
     $22.07      $29.42           25,654        5.9          $    25.00         25,654      $  25.00
     $29.42      $36.78           74,366        7.7          $    32.70         45,233      $  32.07
     $36.78      $44.13            7,000        5.8          $    42.06          6,667      $  42.01
     $44.13      $51,49            8,167        7.8          $    45.00          2,834      $  45.00
     $51.49      $58.84           59,969        6.4          $    53.27         55,829      $  53.14
     $58.84      $66.20            1,000        7.4          $    60.00            667      $  60.00
     $60.20      $73.55            4,913        9.2          $    72.95          4,913      $  72.95
                            -------------- --------------  -------------  ------------    ----------
                                 417,086        7.3          $    24.10        311,147      $  25.67
                            ==============                                ============

</TABLE>
     For the purposes of pro forma disclosures,  the estimated fair value of the
stock  options  is  amortized  to expense  over the  options'  vesting  periods.
Risk-free  interest  rates of 5.24%;  no dividends;  a volatility  factor of the
expected  market  price  of  the  Company's  common  stock  of  1.2666;   and  a
weighted-average  expected life of the options of 6.45 years.  The Company's pro
forma net loss and net loss per share (basic and diluted)  are  $13,988,000  and
$7.99, respectively, for 1999 and $14,118,000 and $8.25, respectively, for 1998,
$5,269,000 and $3.70, respectively, for 1998.


STOCK PURCHASE WARRANTS

     At December  31,  1999,  the Company had  outstanding  warrants to purchase
shares of the Company's common stock as follows:


         COMMON          EXERCISE           EXPIRATION
         SHARES           PRICE                DATE
     ---------------  ---------------  ---------------------

             25,000     $   5.00       February 24, 2005
             10,336     $  31.10       October 8, 1999
              2,000     $  56.30       May 27, 2000
    ----------------
             37,336
     ===============

     All outstanding warrants are exercisable.

     During 1997, the Company issued,  and the holder  exercised,  a warrant for
the purchase of 2,202  shares of common stock at $15.80 per share.  During 1998,
warrants were exercised for 75,000 shares of common stock at $5.00 per share.

12.  SEGMENT RESULTS

     The Company has two reportable  segments:  product-related  and consulting.
The Company's  product-related segment sells comprehensive and flexible software
solutions and services to enable home health care providers to more  effectively
operate  their  businesses  and compete in the  managed  care  environment.  The
consulting  segment  assists  home  health  care  providers  in  addressing  the
challenges of reducing costs,  maintaining quality,  streamlining operations and
reengineering organizational structures.

     The Company evaluates  performance and allocates  resources based on profit
or loss from operations  before income taxes,  not including gains and losses on
the Company's  investment  portfolio.  The accounting policies of the reportable
segments are the same as those describe in the summary of significant accounting
policies (Note 1). The revenues,  operating  losses and assets of the Company by
business segment are as follows:


<PAGE>

<TABLE>
<CAPTION>
                                                    1999                     1998                    1997
                                         -----------------------  -----------------------  ----------------------
   <S>                                           <C>                       <C>                     <C>


    Revenues
      Product related                             $  18,412,000            $  35,209,000           $  42,036,000
      Consulting                                      7,371,000                6,437,000               4,909,000
                                         -----------------------  -----------------------  ---------------------
             Total                                $  25,783,000            $  41,646,000           $  46,945,000
                                         =======================  =======================  ======================
    Cost of sales
      Product related                             $  11,061,000            $  20,646,000           $  18,184,000
      Consulting                                      5,386,000                5,445,000               4,531,000
                                         -----------------------  -----------------------  ---------------------
             Total                                $  16,447,000            $  26,091,000           $  22,715,000
                                         =======================  =======================  ======================

    Research and development
      Product Related                             $   3,968,000            $   6,741,000           $   6,670,000
                                         =======================  =======================  ======================

    Depreciation and amortization
      Product related                             $     541,000            $   1,914,000           $   1,174,000
      Consulting                                      2,717,000                  394,000                 430,000
      Unallocated amount of
         Corporate overhead                             288,000                   84,000                 110,000
                                         -----------------------  -----------------------  ---------------------
             Total                                $   3,546,000            $   2,392,000           $   1,714,000
                                         =======================  =======================  ======================

    Purchased R&D
      Product related                             $           -            $           -           $   8,127,000
      Consulting                                              -                        -                       -
                                         -----------------------  -----------------------  ---------------------
             Total                                $           -            $          -            $   8,127,000
                                         =======================  =======================  ======================

    Restructuring expenses
      Product related                            $  (1,140,000)            $   5,011,000             $         -
      Consulting                                              -                        -                       -
      Unallocated amount of
         Corporate overhead                                   -                        -                       -
                                         -----------------------  -----------------------  ---------------------
             Total                               $  (1,140,000)            $   5,011,000             $         -
                                         =======================  =======================  ======================

    Net Loss
      Product related                            $  (8,631,000)          $   (8,537,000)           $   (460,000)
      Consulting                                     1,400,000                  484,000               (126,000)
      Unallocated amount of
         Corporate overhead                         (3,153,000)              (4,357,000)             (4,203,000)
         Interest income/expense-net                   (38,000)                  240,000                 275,000
                                         -----------------------  -----------------------  ---------------------
             Total                              $  (10,422,000)          $  (12,170,000)          $  (4,514,000)
                                         =======================  =======================  ======================

    Assets
      Product related                            $  20,912,000            $  11,894,000           $  17,188,000
      Consulting                                     4,726,000                4,713,000               3,874,000
      Unallocated amount of
         assets net of eliminations                    604,000               11,250,000               7,857,000
                                        -----------------------  -----------------------  ---------------------
             Total                               $  26,242,000            $  27,857,000           $  28,919,000
                                        =======================  =======================  ======================
</TABLE>


13.  TRANSACTIONS WITH FORMER PARENT COMPANY

     The Company derived  revenue from charges for the services  provided to the
home health care agencies owned by CHHC. The charges were recorded, for purposes
of these consolidated  financial  statements,  in an amount equal to the cost of
the services  being  provided  and  therefore  generated  no  operating  profit.
Revenues of $12,051,000  were recognized in 1997. In addition,  CHHC charged the
Company  a  management  fee for the  services  provided  related  to  legal  and
executive.  CHHC's charges  included direct costs  identified and allocations of
shared costs based on statistical and  operational  data such as square footage,
hours, and direct  operating costs. In the opinion of management,  the method of
allocation  is  reasonable.  A  management  fee in the  amount of  $432,000  was
incurred in 1997. These arrangements terminated effective October 31, 1997.

14.  RELATED-PARTY TRANSACTIONS

     Gateway LLC, a company owned in part by a prior Chief Executive Officer and
another  officer of the Company,  leases an office facility to the Company under
the terms of an  agreement,  which expires  December 31, 2001.  Rent expense and
related operating  expenses paid to Gateway LLC by the Company were $266,000 and
$356,000  in 1998 and  1997,  respectively.  Gateway  LLC  sold  the  lease to a
third-party in August of 1998.

     A  major  shareholder  and  executive  officer  along  with  certain  other
executive  officers of the Company are  shareholders of National  Leasing,  Inc.
("National").  During 1997, the Company entered into various  three-year capital
leases with National.  In December 1997, the Company opted for early termination
of all the outstanding  capital leases with National and purchased the equipment
under lease for approximately  $579,000.  Payments,  excluding the purchase,  to
National under these lease  agreements  totaled $260,000 and $70,000 in 1998 and
1997, respectively.


     A  shareholder  and  executive  officer  of the  Company is a partner in an
entity that leases an office  facility to the Company  under an operating  lease
that expires in December 2002. Rent expense and related operating  expenses paid
to this entity were  $136,000,  $130,000  and  $130,000 in 1999,  1998 and 1997,
respectively.  Future annual rental payments under this lease are  approximately
$136,000 per year for 1999 through 2002.

     The Company has  consulting  agreements  with two entities in which certain
directors of the Company have ownership interests.  Aggregate monthly consulting
fees paid to these two entities approximate $20,000 through July 1998 and $5,000
thereafter.   The  fees  totaled   $149,000  and  $205,000  in  1998  and  1997,
respectively.

     The Company has subleased  certain space to  Healthfield,  Inc. which has a
significant shareholder who was a former member of the board of directors of the
Company.

     Certain  relatives  of William  Simione  Jr. and  Robert  Simione  manage a
certified public accounting  business which performs services for the Company in
conjunction with services performed for customers of Simione.

     R. Bruce Dewey  remains a Senior Vice President of Mestek while performing
his duties as Chief  Executive  Officer,  President and director of the Company.

15.  LICENSE AGREEMENTS

     Certain  software  applications of the Company's NAHC IS software  solution
incorporates software licensed from a third party. Under this license agreement,
the Company is obligated to pay  royalties  based on the volume of  transactions
processed by the Company. Royalty rates per transaction vary based on the volume
of transactions processed and totaled $0, $77,000 and $255,000 in 1999, 1998 and
1997, respectively.

     Another license agreement obligated the Company to pay royalties based
on a percentage of net collected revenues from sales of certain covered systems.
Royalty expense under this agreement  totaled $0, $113,000 and $161,000 in 1999,
1998 and 1997, respectively.

     The Company  obtained data  processing and network  communication  services
under an agreement  with IBM Global  Services  ("IBM").  The agreement  with IBM
required the Company to pay fees based on the volume of transactions  processed.
This agreement was canceled during 1998 effective January 31, 1999.  Termination
and wind down costs are  included in the  restructuring  charges for 1999.  (see
Note 2)

16.  MERGER AND SUBSEQUENT EVENT

     On May 26, 1999, the Company  entered into a definitive  agreement to merge
with MCS, Inc. (MCS), a wholly owned subsidiary of Mestek,  Inc. For every share
of outstanding  Mestek common stock,  the Company agreed to issue  approximately
 .85  shares of its  common  stock to Mestek  in the  exchange.  MCS is a leading
provider of  information  systems and services to the home health care  industry
with  approximately  $16.6  million  (unaudited)  in  revenue  and $1.4  million
(unaudited)  in net income in 1998.  MCS markets its product  under the MestaMed
name. It has approximately 570 active customers.

     In September  1999, the board of directors of Mestek resolved to distribute
all of the capital stock of MCS to the Mestek stockholders, on a pro rata basis,
prior  to  the  merger  of  MCS  into  the  Company.  In  conjunction  with  the
distribution of the capital stock of MCS, Mestek resolved to invest $6.0 million
into the Company in the form of loan notes accruing  interest at prime plus 2.0%
per annum. The $6.0 million notes were convertible into Series B Preferred Stock
with attached  warrants and stock options as described below.  Also in September
1999,  Mestek  invested  $3.0  million into the Company in the form of a partial
advance on these loan notes.  In January  2000,  Mestek  advanced  another  $1.0
million in the form of a loan, thereby advancing an aggregate of $4.0 million on
the $6.0  million  commitment.  Under  the  terms  of the  notes,  Mestek  was a
subordinate creditor to the bank holding the commercial line of credit.

     In November  1999,  Mestek loaned  Simione an additional  $850,000  bearing
interest at 11% per annum and convertible at Mestek's option into 850,000 shares
of Series C Preferred Stock of Simione.

     At the special  shareholder's  meeting on March 7, 2000,  the  shareholders
approved the merger and the merger with MCS was completed on March 7, 2000.

     At the  completion  of the merger  with MCS,  the $4.0  million in notes to
Mestek were retired and that amount,  together with the remaining  $2.0 million,
for a total $6.0 million  investment by Mestek,  were converted into 5.6 million
shares of Series B  Preferred  Stock of Simione  that carry a coupon  rate of 9%
deferred until June 30, 2000. The Series B Preferred Stock carries 0.4 votes per
share for purposes of voting on issues requiring common shareholder approval. In
connection with the purchase of the Series B Preferred Stock,  Mestek received a
warrant to purchase  400,000 shares of common stock of the Company and an option
to  purchase  up to  387,113  shares of  Common  Stock of the  Company.  Accrued
interest on the $4.0 million of notes was paid at the closing of the merger from
the proceeds of the  remaining  $2.0  million paid by Mestek.  The effect of the
merger,  including  the voting  rights of the Series B Preferred  Stock,  was to
provide Mestek and its shareholders voting control of the Company.

     At the closing of the merger,  Mestek  exercised  the option to convert its
$850,000 loan to Simione into 850,000 shares of Series C Preferred Stock,  which
carry a coupon rate of 11% and .2 votes per shares.

     As shown in the financial  statements,  during the years ended December 31,
1998 and  1999,  the  Company  incurred  losses  of  $10.4  million  and  $12.2,
respectively,  and at December  31,  1999,  its current  liabilities  exceed its
current assets by $10.2 million. The negative operating results and negative net
working capital were mainly the result of:

-    Cancellation of the customer  contract with Columbia/HCA that had generated
     11%, 35%, and 48% of the Company's  total revenues for the years 1999, 1998
     and 1997 respectively.

-    Elimination of certain legacy development projects

-    Changes   to  the   government's   reimbursement   methodology   from  cost
     reimbursement  to set  prospective  payments  that  affected the  Company's
     customers.

-    Decreased revenues generated from Software and Services

     These  factors,  among  others,  indicate  that the  Company  is in need of
additional  capital funding to support its current working capital needs,  repay
certain deferred current  liabilities and execute its business plan. In response
to that capital  funding need, on April 12, 2000, the Company  received a letter
from Mr. John Reed, the Chairman of the Board of Mestek Inc. and the controlling
interest  shareholder  of both Mestek and Simione,  which outlines a new capital
plan.  The  capital  plan  commits  $7.0  million in the form of a $5.0  million
convertible  note and $2.0 million of convertible  preferred stock. The specific
terms of the convertible  note and  convertible  preferred stock are still under
final negotiation.  In addition,  the Company is pursuing alternative commercial
debt financing with the objective of obtaining  increased amounts of capital and
better  lending  terms than  currently  exist  under its  existing  bank line of
credit.


<PAGE>

<TABLE>
<CAPTION>
SIMIONE CENTRAL HOLDINGS, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS


                                                    ADDITIONS
                                                     CHARGED
                                     BALANCE AT        TO          ADDITIONS                        BALANCE AT
                                      BEGINNING     COST AND        DUE TO                            END OF
                                      OF PERIOD     EXPENSES      ACQUISITION    DEDUCTIONS (1)       PERIOD
                                     ------------  ------------  --------------  ----------------  -------------
    <S>                             <C>            <C>           <C>            <C>                 <C>

    Year ended December 31, 1999
    Allowance for Doubtful Accounts  $1,674,000     $2,721,000    $              $       814,000    $ 3,582,000
                                    ============  ============  ==============   ================  =============

    Year ended December 31, 1998
    Allowance for Doubtful Accounts  $1,915,000     $  791,000    $              $     1,032,000      1,674,000
                                     ============  ============  ==============  ================  =============

    Year ended December 31, 1997
    Allowance for Doubtful Accounts  $1,063,000     $1,330,000    $   254,000     $      732,000      1,915,000
                                     ============  ============  ==============  ================  =============
</TABLE>

    (1) Write-offs of uncollectible accounts