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, 2000

OR

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

     FOR THE TRANSITION PERIOD FROM ___________ TO _______________

                         COMMISSION FILE NUMBER 0-22162

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

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

           2625 CUMBERLAND PARKWAY, SUITE 310, ATLANTA, GEORGIA 30339
               (Address of principal executive offices) (Zip Code)
       Registrant's telephone number, including area code: (678) 264-4400

           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 30, 2001; $4,263,640.

     There were 4,443,484 shares of Common Stock outstanding at March 30, 2001.

     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.


<PAGE>
     Note: The discussions in this Form 10-K contain forward-looking  statements
that involve  risks and  uncertainties.  Statements  contained in this Form 10-K
that are not historical facts are forward-looking statements that are subject to
the safe harbor created by the Private Securities Litigation Reform Act of 1995.
A number of important  factors could cause future results of CareCentric and its
subsidiaries  to differ  materially and  significantly  from those  expressed or
implied in past  results and in any forward  looking  statements  made by, or on
behalf  of,  the  Company.  Factors  that  could  cause  or  contribute  to such
differences  include,  but are not limited to, those discussed in "Business" and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  as well as those  discussed  elsewhere  in this Form  10-K.  These
factors  include,  without  limitation,  those  listed in "Risk  Factors" in the
Company's Registration Statement on Form S-4 (File No. 333-96529).

PART I

ITEM 1.  BUSINESS

OVERVIEW

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

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

CareCentric has over 2,500 customers nationwide, including:

          -    hospital-based facilities;
          -    free-standing home health care providers;
          -    alternate-site care organizations;
          -    home  medical,   IV,   infusion  and   rehabilitation   equipment
               providers;
          -    integrated delivery networks (IDN); and
          -    government-managed organizations.

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

     Unless the context otherwise  requires,  references to CareCentric  include
CareCentric,  Inc. and its  subsidiaries.  Our executive  offices are located at
2625 Cumberland  Parkway,  Suite 310,  Atlanta,  Georgia 30339 and the telephone
number is 678-264-4400.

RECENT DEVELOPMENTS

     In December  2000,  CareCentric  changed its Nasdaq Small Cap Market symbol
from "SCHI" to "CURA".  On January 30, 2001,  the Company  changed its name from
Simione Central Holdings, Inc. to CareCentric, Inc. pursuant to a Certificate of
Ownership and Merger filed under  applicable  provisions of the Delaware General
Corporation Law. On the same date, the Company's two operating subsidiaries also
changed their names, with Simione Central Consulting,  Inc. changing its name to
Simione Consulting,  Inc. and Simione Central National, LLC changing its name to
CareCentric National, LLC pursuant to filings made with the Georgia Secretary of
State's office.

                                       2
<PAGE>

INDUSTRY OVERVIEW

     Home  health  care is an  important  part  of the  health  care  industry's
continuum of care services.

     Home  health care  consists  of various  lines of  services,  including:

          -    skilled nursing;
          -    private duty;
          -    physical, occupational and speech therapies;
          -    durable medical and rehabilitation equipment and supplies;
          -    intravenous and infusion therapy; and
          -    hospice.

     The  importance  of home health care  throughout  the 1980's and 1990's was
principally a result of payor choices and significant  economic pressures within
the  health  care  industry.  In those  years,  U.S.  health  care  expenditures
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. During the 1980s and
early 1990s, this pressure 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 grew rapidly as a result of advances in medical
technology,  which  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.  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
networks  (IDN) and changes in state  regulations,  home  health care  providers
sought to  expand  their  geographic  scope and  range of  product  and  service
offerings.  As a result of these  developments  and  legislation  and regulatory
pressures,  the home health care industry went into a period of rapid growth and
consolidation.

     This  trend  of  growth  and  consolidation   began  to  reverse  with  the
implementation  of the Interim  Payment  System (IPS) by the Health Care Finance
Administration (HCFA) the federal agency that administers Medicare reimbursement
for the home health care industry,  pursuant to the Balanced  Budget Act of 1997
enacted on August 5, 1997. 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 contained  provisions that significantly change the manner in
which home health  agencies and home care services were  reimbursed by Medicare.
The  legislation  created IPS which lowered the cost per visit  limitations  and
created   restrictions  on  the  amount  of  cost   reimbursement  per  Medicare
beneficiary. In late January 1998, HCFA 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.  IPS 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.
Consolidation  of the  industry  continued,  but at a  slower  pace,  as  first,
uncertainties  about the effect of IPS,  and second,  the  significantly  poorer
operating results  (especially for home health agencies that were part of an IDN
or hospital-based  system or had modified  operations to adapt to a managed-care
environment), slowed the pace of home health merger and acquisition activity.

     Also,  as  mandated  by  the  Balanced   Budget  Act,  HCFA  announced  the
implementation, effective October 1, 2000, of a prospective payment system (PPS)
which would limit  reimbursement to a fixed amount for all services rendered per
episode of care based upon home health care resource groups (HHRG)  indicated by
clinical assessments (OASIS). Once fully-implemented, PPS could also potentially
impact the home  health  industry  in the same manner as IPS. In addition to the
impact of IPS and PPS, the growth in the number of Medicare members enrolling in
managed care plans,  which have taken  measures to contain  costs,  has and will
have  a  significant  impact  on  how  providers  may  operate  profitably.  The
uncertainty  in  the  home  health  care  industry   concerning  these  changing
regulations,   and  HCFA's  continuing   "clarifications"  of  the  regulations,
adversely  impacted  CareCentric's  business  in  1998,  1999  and  2000 as many
providers  dissolved,  conserved  cash,  cut  back  on IT  spending  or  delayed
purchasing decisions. These negative factors increased during the fourth quarter
of 2000 as PPS took effect and home health  providers faced greater  uncertainty
and were further  distracted.  While HME and IV/infusion  service providers were
not significantly affected by IPS or PPS, other cost-cutting initiatives of HCFA
had a deleterious  effect on such providers'  interest in upgrading or acquiring
information technology products and services. CareCentric cannot predict how new
regulations  will  impact its  business  in the  future,  although  the costs of
addressing  hundreds of pages of regulations  with fixed  implementation  dates,
last minute  changes  and  post-effective  amendments  and  "clarifications"  in
comprehensive and integrated legacy and client/server  systems are extensive and
disruptive to product development, deployment and support operations.

                                       3
<PAGE>

     As a result of consolidation and measures to address ongoing cost pressures
and the  complexities  of PPS,  home health  care  providers  will  increasingly
require  enhanced  management  expertise,  specialized  industry  knowledge  and
standardized financial,  operational and clinical data, information, reports and
transactional forms in order to compete. CareCentric 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 financial and clinical data collection  under
the new system.  The Company believes  providers need reports and real-time data
on operational or financial matters and complete,  organized and timely clinical
records to  effectively  treat patients and to co-manage the cost and quality of
the clinical care necessary to achieve favorable patient outcomes.

     Thus PPS, in transferring  the cost risk to home health  providers  already
committed to quality clinical outcomes,  creates the opportunity for the Company
and its competitors to work with the providers to develop information technology
software applications that will be tools in facilitating best practices, process
improvement,  decision support,  activity-based  costing, and electronic records
and form transmission.

MARKET POSITION

     CareCentric's  objective  is to enhance  and grow its  position  as a major
provider of  comprehensive  and  integrated  information  technology  solutions,
focused  solely on the home  health care  industry.  The  principal  elements of
CareCentric's  business and product strategies are described below. During 2000,
significant  progress  in the  execution  of many of the  strategies  was  made.
Specifically,  the  absorption of The Smart  Clipboard(R)  and Outcomes  Planner
products  acquired in 1999 combined with the  acquisition of the MestaMed(R) and
HMExpress products through 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 CareCentric's market position.  Accordingly,  the products and
services that have become part of  CareCentric's  offerings to the industry with
the  completion  of the MCS  merger,  have been  included  in the  current  Core
Software  Solutions,  Specialized  Software Product Solutions,  Clinical Content
Options and Service Solutions sections below.

BUSINESS STRATEGIES

     Create Growth Through  Technology and  Co-Marketing  Partnerships.  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 well  developed by other  vendors.  We intend to
partner with such vendors by interface,  integration or  incorporation  of their
products into our comprehensive  information  technology solutions.  Examples of
this  include  agreements  to  provide  web-enablement  of  process  improvement
solutions, on-line collection,  validation, submittal and benchmark-reporting of
OASIS and ORYX  data and  medication  dictionaries  and drug  interactions.  The
Company continues to negotiate  alliances to utilize  e-commerce and e-signature
capabilities.

     Leverage  Existing  Customer  Base.  CareCentric  has a base of over  2,500
customers nationwide. CareCentric believes that a significant opportunity exists
to sell add-on products and services to existing customers and to cross-sell its
existing systems and services as well as introduce new systems and enhancements.

     Generate Recurring Revenue. CareCentric generates recurring revenue through
a  combination  of annually  renewable  maintenance  agreements  and  multi-year
service   contracts.   CareCentric   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,  CareCentric believes it is well positioned to increase its market
share by leveraging  its existing  relationships  with large  providers  such as
Tenet,  Walgreens  and American  Home  Patient.  CareCentric  also  believes its
comprehensive  and integrated  solutions will become  increasingly  important to
home health care  providers as they address the  challenges  presented by health
care reform and changing  demographics and as integrated delivery systems become
more prevalent.

     Consolidate  Duplicative  Products and Services.  CareCentric 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.  Some  examples  include:
PharmWorks  and the  MestaMed(R) IV module were  consolidated  and improved into


                                       4
<PAGE>

PharmMed Rx(TM), an application  which fully automates  processes unique to home
infusion pharmacy  providers  including  streamlined order processing,  enhanced
clinical  documentation,  improved workflow and increased reporting power. Also,
support of DME VI was  consolidated  into the  MestaMed(R)  "Real Time"  support
system in 2000.  In 2001, we intend to complete  development  of the "Real Time"
Smart  Clipboard(R)  support  operation  and convert  STAT2 support to the "Real
Time" model.

     Consolidate  Functional  Business  Needs.  Work  continues  throughout  the
Company to build on successful consolidation of business functions that occurred
in 2000,  including  human  resources,  finance and  accounting,  inside  sales,
territorial  sales,  marketing and promotion,  internal  management  information
systems,  classroom  training and product  management as well as the adoption of
best  practices  and methods in quality  assurance,  customer  support,  product
development process, product documentation and product deployment.

     Integration  of  Core  Products.  Based  on  market  demand,  CareCentric's
products  are in the process of becoming  architecturally  integrated  to create
multi-faceted  information  technology  solutions that provide  customer control
over rules-based  processing and seamless data entry and data accessibility.  In
2000, the STAT2 financial and billing  management system was integrated by means
of a data  gateway  to the Smart  Clipboard(R)  system.  Patient  master  files,
information  on admissions,  discharges  and transfers,  orders and PPS data are
transferred  across  the  data  interface  created  by the  Gateway.  A  similar
integration  between  MestaMed(R) and Smart Clipboard(R) will go to beta test in
the second  quarter of 2001. The Gateways allow users of the STAT2 system and of
the MestaMed(R)  HHA module (which is integrated  with HME,  PharmMed Rx(TM) and
rehab  modules)  to add Smart  Clipboard(R)  point-of-care  and other  intuitive
clinical tools to achieve comprehensive and efficient clinical practice.

     Alternative  Delivery Systems.  CareCentric is developing business modeling
and product  requirements for information  technology  solutions that can be web
enabled with the ability to operate in both distributed and Application  Service
Provider (ASP) environments.

     Focus on Process Improvement. CareCentric 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  through  process  improvement,  timely access to relevant data and
efficient  utilization of resources while maintaining quality clinical outcomes,
which are believed to be a necessity for business survival under PPS.

THE CARECENTRIC SOLUTIONS

     CareCentric  offers a comprehensive set of product and service solutions to
address the changing  needs of home health care  providers  through  information
technology   software  systems,   training  (including   e-Learning   products),
technical, deployment and consulting services and customer support.

     Carecentric'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
business  decisions,  more effectively operate their businesses and compete in a
managed care and/or PPS environment. These information technology solutions will
help home health care providers:

     -    reduce costs, improve cash flow and build financial strength

     -    co-manage cost and quality, establish outcomes-based clinical practice
          and empower clinicians to make better decisions at the point-of-care

     -    maximize return on technology investment through comprehensive product
          deployment services to optimally configure and run the application

     -    increase  understanding  of key  industry  issues and optimal  product
          usage with specialized training and e-Learning products

     -    get real  time  responses  to system  usage  issues  through  in-depth
          customer support and call tracking

     -    devise business  strategies and enhance processes with the help of our
          knowledgeable and experienced Simione consultants

PPS, in transferring the cost risk to home health providers already committed to
quality  clinical  outcomes,  creates an opportunity  for the Company to develop
software  applicaitons  and related  services that will be tools in facilitating
best practices, process improvement, decision support, actvity-based costing and
efficient,  electronic  transmission  of  medical  records  and  forms.  Current


                                       5
<PAGE>

information,  which is the life-blood of quality health care, must be organized,
available and affordable.  Investment in information technology is more critical
in home health care because the information  needs both to be shared and secured
and the users can be both distributed and  disconnected.  CareCentric is working
to  direct  its  information   technology   solutions  at  these  opportunities.
Information  technology  solutions  can be packaged and  customized to serve the
individual needs of customers.

INFORMATION SYSTEMS

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

     -    Promote  improvement  in the  efficiency  of  customer  processes  and
          operations

     -    Operate in a number of popular technology environments

     -    Provide scalability and growth options

     -    Facilitate open data access

     -    Produce management reporting and decision support tools

     -    Facilitate regulatory compliance

CORE SOFTWARE SOLUTIONS

     CareCentric's core software solutions are as follows:

Smart Clipboard(R)
------------------
     The Smart Clipboard(R) is a clinical  information system designed to enable
home health agencies to compete effectively in the changing health care delivery
environment.  Originally  conceived  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(R)  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(R) software suite was released in
1996 and has been  significantly  enhanced  since  then.  It is a  Windows-based
client/server   application  that  uses   replication   technology  to  maintain
synchronized  subsets of the master  database in each tablet  computer  for data
collection and validation at the point-of-care.  This facilitates  disconnected,
distributed  operations that  characterize the information and operational needs
of home health  operations  spread  over large areas or across a region.  It has
been the experience of home health agencies that install the Smart  Clipboard(R)
that use of its features by  well-trained  clinical staff  generally  delivers a
significant  return on investment  due to the  automation  of previously  manual
tasks and access to  electronically  linked  information  replacing  paper-based
systems.  The  Smart  Clipboard(R)   provides  home  care  and  hospice  nurses,
therapists,  and  other  clinicians  with a means to  capture  complete  patient
information  and assist in making  timely,  informed  clinical  decisions at the
point-of-care.  The Smart  Clipboard(R)  application was created to organize all
clinical  information in a structured,  interrelated  fashion that automatically
links   assessments  to  problems,   problems  to  outcomes,   and  outcomes  to
interventions and actions.

     By using The Smart Clipboard(R), a home health agency has a tool to 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,  there is also a suite of data analysis reports and
ad-hoc queries to facilitate clinical process understanding and improvement. The
Smart Clipboard(R)'s  point-of-care  features can assist clinicians in capturing
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
benchmark-reporting capabilities as required under federal regulations and JHACO
industry  standards.  The Company designed the Smart Clipboard(R) system to work
in  conjunction  with the STAT2 system through our  proprietary  data gateway to
give home health agencies seamless data exchange from clinical to operational to
financial  functions and back as indicated or required.  The data gateway to the
MestaMed(R) comprehensive,  integrated system will undergo a beta test beginning
in the second quarter of 2001.

                                       6
<PAGE>

STAT2
-----
     STAT2 is designed as 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 of applications and their  underlying  features and functions
can be enhanced with specialized features including hospice,  telephony (through
the TEMS system  described  in  Specialized  Product  Solutions  below) and cost
reporting. The STAT2 system allows a customer to exchange clinical and financial
information  with external systems such as demographics and patient master files
from  affiliates or referring  institutions  in either a real-time or batch mode
through HL-7  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. The STAT2 system can also
be used  with The  Smart  Clipboard(R)  point-of-care  system by means of a data
gateway interface.

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

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

     MestaMed(R) customers are home health care providers who use MestaMed(R) to
track the delivery of home medical  equipment and related  supplies and infusion
pharmacy,  skilled  nursing  and hospice  services  to patients  and to meet the
complex requirements  necessary to obtain reimbursement from Medicare,  Medicaid
and other  third-party  payers.  CareCentric  believes  MestaMed(R)  is the only
system  which  fully   integrates   information  on  operational  and  financial
management for multiple lines of service homecare providers.

     MestaMed(R)  is in  use  nationwide  by  hundreds  of  organizations,  from
independent providers to large, regional and national companies.  In practice it
has proven to be  well-suited to meet the needs of larger,  multi-location  home
care providers. MestaMed(R) is designed to be cost-effective and scalable and to
readily expand to meet future  information  processing  requirements and provide
management  flexibility.   Multi-service  providers  can  de-centralize  certain
operations,  such as intake,  by location or line of  business;  and  centralize
other functions, such as billing and collections,  across locations and business
lines.

     The complete  MestaMed(R)  system consists of a core management  module and
three separate,  yet  fully-integrated  operations modules that automate various
functions as well as create,  track, and manage documents unique to each line of
business.  MestaMed(R)  Management System includes a core set of routines common
to all lines of business.  On the front end,  these routines set up and maintain
all master file  information and perform  patient intake.  On the back end, core
routines  generate  bills,  manage claims and  collections,  product reports and
interface to third-party  applications.  The MestaMed(R) HHA module produces all
required clinical documentation, schedules visits, and tracks physicians orders.
The  MestaMed(R)  HME module  processes  medical  equipment  and supply  orders,
including  recurring  rentals  and  sales,  generates  certificates  of  medical
necessity  (CMNs)  and  prior  authorizations   (PARs),  and  tracks  serialized
inventory. The PharmMed Rx(TM) module, a home infusion pharmacy module, provides
the  functionality  to enter,  process,  and manage  prescriptions  and  related
orders.  In addition,  we expect that  MestaMed(R) will be able to work with The
Smart  Clipboard(R)  point-of-care  system through a data gateway after the beta
test in the second quarter of 2001.

     MestaMed(R) HHA is an office-based  application that runs from desktops and
readily  supports  one or more  locations.  It  works  in  conjunction  with the
MestaMed(R)  Management  System to deliver a complete solution for multi-service
home care  agencies.  For agencies  seeking a more robust,  point-of-care  based
clinical  system,  it will be integrated  with The Smart  Clipboard(R)  in 2001.
MestaMed(R) HHA offers the following functions:

     The  MestaMed(R)  HME  module  works in  conjunction  with the  MestaMed(R)
Management  System to deliver a  comprehensive  solution  for home  medical  and
rehabilitation  equipment and supplies  providers.  An office-based  application
that adapts to both centralized and/or decentralized operations, MestaMed(R) HME
supports multiple locations and offers order entry, recurring rentals and sales,
HME billing,  certificates of medical  necessity  (CMNs),  prior  authorizations
(PARs),  serialized  inventory,   scanner-based  point  of  delivery,   physical
inventory, asset maintenance, and rehabilitative equipment.

     A number of  additional  add-on  features and  supplemental  modules can be
optionally  purchased to satisfy the  information  technology  requirements of a
particular  home care  provider.  MestaMed(R)  is  designed  to easily  and cost
effectively meet the needs of large providers who have high transaction volumes,


                                       7
<PAGE>

large numbers of users,  multiple branches and remote  processing  requirements.
MestaMed(R)  is  available  on a variety of  hardware  platforms  and  operating
environments  including Open VMS, UNIX, Windows NT, AIX and various Intel, Alpha
and RS 6000 computer systems.  Computer-based  training courses on the efficient
operations of various  features and functions of the  MestaMed(R) HME Module are
available from our  e-Learning  group.  MestaMed(R)  customers are also afforded
real-time customer support coverage and services.

DME VI
------
     DME VI is a  PC-based  software  application  for  mid-size  to large  home
medical equipment and medical supply businesses. The DME VI core set of software
applications includes:

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

     DME VI features add-on modules such as retail sales and bar coding. The DME
VI  software  provides  easy  to use  data  import/export  capabilities.  DME VI
customers are also afforded  real-time  customer  support coverage and services.
Computer-based  training (CBT) courses on the efficient use of various  features
and functions of the DME VI software are available  from our  e-Learning  group.
More CBT titles will be added in 2001.

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(R)  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,  CMN printing and  tracking,  Medicare Form 1500 bill
printing,  private-pay  statements,  Durable Medical Equipment  Regional Carrier
(DMERC)  Electronic  Claims  Submission,  billing  system,  accounts  receivable
system, perpetual inventory, management reporting and multi-branch processing.

     In addition to the core  components of HMExpress,  several add-on  products
are available,  including a user-friendly Report Writer,  Electronic  Remittance
Notice  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
real-time  customer  support  coverage and  services.  HMExpress can grow with a
business or  customers  can upgrade to other  compatible  CareCentric  products.
Optional ODBC capability  addresses the data reporting and integration  needs of
customers.

SPECIALIZED SOFTWARE PRODUCT SOLUTIONS

     CareCentric offers the following specialized software solutions:

OASIS/ORYX Reporting and Benchmarking
-------------------------------------
     In  2000,  CareCentric  entered  into an  agreement  with  Outcome  Concept
Systems, Inc. (OCS),  establishing OCS as CareCentric's exclusive ORYX and OASIS
benchmarking  and  outcomes  solution   partner.   This  agreement  will  enable
CareCentric  to offer the  complete  suite of OCS  products  to all  CareCentric
customers  who use  outcome  measures  to define  patient  care  goals.  The OCS
products allow home healthcare companies to collect,  manage, report and analyze
clinical data. HCFA has mandated the collection of a standardized set of patient
assessment  data  (OASIS).  Several  accreditation  organizations  such as JCAHO
require the collection and  submission of key  assessment  indicators  (ORYX) as
well. The OCS-OASIS(TM)  program  incorporates JCAHO accepted measures and OASIS
requirements into one program for data input,  real-time,  desktop reporting and
graphing,  and online access to quarterly benchmarks.  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.  The OCS-OASIS(TM)
program has been incorporated into The Smart Clipboard(R)  system to allow OASIS
and ORYX data entry and validation at the point-of-care.

PharmMed Rx(TM)
---------------
     PharmMed Rx(TM) is CareCentric's  enhanced,  comprehensive,  Windows-based,
home care pharmacy  software.  PharmMed  Rx(TM),  when used with the MestaMed(R)
Management System, is designed to be a fully functional,  completely  integrated


                                       8
<PAGE>

pharmacy software system  specifically  enhanced to facilitate multiple types of
prescription processing and consolidated claims management. PharmMed Rx(TM) uses
an SQL database through the MestaMed(R) PDBC gateway.

     PharmMed Rx(TM) works in conjunction with the MestaMed(R) Management System
to fully automate many processes  unique to home infusion therapy  providers.  A
Windows-based  application that adapts to both centralized and/or  decentralized
operations,  PharmMed Rx(TM) supports multiple  locations and offers streamlined
order  processing,  enhanced  clinical  documentation,  improved  operations  to
facilitate  more efficient  workflow,  and improved  reporting to aid regulatory
compliance.

TEMS (Telephone Entry Management System)
----------------------------------------
     TEMS is a Windows-based  software  application that enables home care field
employees to record  baseline  timecard  and visit  information  using  standard
touch-tone or cellular telephones.  It was designed as a simple,  low-cost means
for capturing key information at the  point-of-care.  TEMS confirms staff visits
through caller identification.  Once collected, information may be automatically
exported into an agency's payroll and billing applications. The Company believes
that TEMS is well  suited for use by  paraprofessionals  or home  health  aides.
TEMS,  under a  patent  licensed  from  MCI/WorldCom(R),  uses  telephones  like
terminals to affordably  document baseline visit,  mileage,  payroll and billing
information in a manner that the Company believes is affordable.

     In 2001,  CareCentric hopes to develop  applications for TEMS for providers
of home medical equipment and infusion pharmacy services.

Decision Support / Data Warehousing
-----------------------------------
     During 2001,  CareCentric intends to continue the design and development of
data warehouse features that will allow agencies to access and gather data in an
orderly  manner to perform  "what-if"  analysis  utilizing  the  latest  On-Line
Analytical  Processing  (OLAP)  compliant  tools working  through open data base
compliant (ODBC) features and gateways  currently in MestaMed(R),  STAT2 and The
Smart  Clipboard(R).  Using these tools, we expect that agencies will be able to
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 CareCentric  software
product  databases  would  constantly  update the  historical  databases used to
analyze  data.  Pre-defined  data cubes,  reports,  graphs,  charts and decision
support  software would provide  additional value to agency  management  groups.
Each of the  comprehensive  applications - MestaMed(R),  Smart  Clipboard(R) and
STAT2 - offer ODBC features that facilitate the use of third-party report writer
applications.

e-Learning Products
-------------------
     CareCentric's  e-Learning  group  has  produced  a  number  of  interactive
computer-based  training (CBT) courses that cover a variety of homecare industry
and  product-specific  topics. CBT courseware  features leading industry experts
and allows CareCentric to deliver quality training and educational courseware at
a fraction  of the cost of  traditional  training  options.  CareCentric  offers
computer-based training using CD-ROM media, as well as web-based training (WBT),
affording  the ability to provide  timely  training  topics - at the  provider's
convenience - directly  related to job performance and compliance  requirements.
In 2001, the Company  intends to focus its development on CBT's that train users
of its software  products to reduce the cost of  installation  and  re-training.
CBT's to train and  educate  the users of DME VI will be  completed  in 2001 and
those for the training of users of The Smart  Clipboard(R) will be undertaken in
2001  with  completion  anticipated  in 2002.  CBT/WBT  courseware  provides  an
interactive,   self-paced,   individualized  learning  environment.   Multimedia
technology (text, images, sound, animation,  video) and workstations are used to
present courseware in an interactive manner. Instructions contain presentations,
demonstrations, and simulations complete with question and response capability.

Forms
-----
     Through an outside printing  contractor,  CareCentric offers a vast variety
of standard  Medicare,  Medicaid and other forms used by home medical  equipment
providers.

CLINICAL CONTENT OPTIONS

SmartCare
---------
     The  SmartCare  suite of patient  care plans and  assessments  allows  home
health agencies to implement paper-based and electronic clinical data collection
processes by defining  treatment plans for a variety of medical  diagnosis-based


                                       9
<PAGE>

conditions  common to skilled nursing,  hospice services and 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  CareCentric
customers as a paper-based  documentation  solution  designed to give agencies a
teaching-oriented set of clinical care pathway options.  CareCentric's  Outcomes
Planner  System  is  a  disease-specific,  clinical  care  path  and  care  plan
documentation   package  that  includes   discipline-specific   OASIS  and  ORYX
assessments for skilled nursing, hospice and therapy.  Compliant with both OASIS
and ORYX, OPS defines and measures  outcomes for each visit or patient encounter
and provides  documentation  along  critical  paths for  management  of over 100
medical conditions.  The electronic form of OPS which can be used with The Smart
Clipboard(R) has modules for skilled nursing. Modules for physical, occupational
and  speech  therapy,  social  work and  hospice  are in  development.  OPS is a
highly-effective  tool for use under PPS.  Home health  agencies  can use OPS to
assist  them in  meeting  the  continuing  challenge  of fewer  dollars,  sicker
patients  and  shorter  lengths of stay.  OPS  enables a home  health  agency to
sharpen its management focus while ensuring quality of patient care to:

     -    access over 200 disease-specific  clinical care pathways based on best
          standards of care

     -    document visits based on standardized, measurable clinical assessments

     -    investigate  care  behavior  that  affects  patient  outcomes  and PPS
          reimbursement

     -    provide payors/surveyors with documentation of quality care

     -    ensure compliance with the approved  Outcome-Based Quality Improvement
          Model (OBQI)

     CareCentric  plans  to  continue  introduction  of the  electronic  content
version  of the  various  modules  of the OPS  system  for use  with  The  Smart
Clipboard(R), CareCentric's advanced clinical management system, in 2001.

     CareCentric  will  continue to employ and utilize a  significant  number of
clinical  healthcare   professionals  and  advisors  to  develop   content-based
solutions to supplement its clinical content options and software products.

Regulatory Enhancements
-----------------------
     CareCentric will continue to expend  professional  resources to address the
healthcare-related  regulatory  issues  currently  facing  home  care  providers
including:

     Prospective Payment System (PPS). As a result of the Balanced Budget Act of
1997 and the OCESSA Act of 1999,  implementation of a prospective payment system
(PPS) was mandated for home health agencies.  CareCentric  provides  educational
and consulting services as well as clinical and software modifications necessary
for PPS  compliance.  CareCentric  offers  the  PPS  Calculator,  which  enables
healthcare  agencies to assess PPS compliance and includes the final  regulation
requirements  and the  ability  to produce  the  following  valuable  management
reports:

     -    The Summary  Report  summarizes all episodes,  including  prorated and
          outlier  episodes,  by profit and loss by type of  episode,  including
          gross and net reimbursement, average episode cost, average supply cost
          by episode, and visits by discipline for each type of episode.

     -    The Diagnosis Analysis Report shows profit and loss by the top 20 most
          profitable and least profitable diagnoses, their medical supply costs,
          and visits by discipline for the episode.

     -    Profit and Loss by  Utilization  and  Diagnosis  identifies  the top 5
          diagnoses with the highest utilization,  supply cost, profit and loss,
          and type of episode.

     -    Clinical,   Functional,   and  Service   Dimension  report  shows  the
          utilization by discipline and resulting profit or loss by dimension.

     -    The  Analysis by Therapy  Utilization  pinpoints  the number of visits
          which convert a patient's visits from a loss to a profit.

     -    The Summary  Analysis by HHRG will identify the most common HHRG's for
          an agency, total patients and visits for that HHRG,  profit/loss,  and
          total episode days.

     -    The Medical  Supply Cost Report will show the medical supply costs and
          associated number of patients, and profit and loss for each group.

                                       10
<PAGE>

     HIPAA.  The  Company  expects  that the Health  Insurance  Portability  and
Accountability  Act of 1996 will  necessitate  security,  privacy and electronic
transmission-related  enhancements  to current  software  products.  As specific
implementation  regulations,  guidelines  and  timetables  are  promulgated  and
finalized, CareCentric will respond by allocating the resources it believes will
be needed to gain  compliance  for its  product and  service  offerings  and its
operations.

See also the  section  below  entitled  Government  Regulation  and Health  Care
Reform.

SERVICE SOLUTIONS

Software Services
-----------------
     CareCentric  believes that  providing  comprehensive  software  services to
customers  is  critical  to  its  success  in the  home  health  care  industry.
CareCentric employs in excess of 150 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 and education services are offered on a continuing
          basis  to  existing  customers  either  at the  customer's  site or at
          CareCentric's    classroom   training    facilities   in   Pittsburgh,
          Pennsylvania, Houston, Texas and Norcross, Georgia.

     -    Software  Support:   CareCentric  offers  on-call  telephone  software
          support  seven  days a week and  provides  maintenance  releases  on a
          periodic basis to address non-conforming software,  certain regulatory
          updates  and  certain  product  feature  and  function   enhancements.
          Releases of software  enhancements  are  generally  made  available to
          customers   periodically.   These  enhancements   include  unspecified
          improvements  and  regulatory  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:  CareCentric provides software customization and
          integration,  technical audits of the customer's  information systems,
          integration   and  network   planning  and   strategic   and  tactical
          information systems planning.

     -    Custom Programming:  CareCentric  provides customized  programming for
          its STAT2 customers on a fixed fee and per hour basis.

     Software 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  certain   unspecified  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.   Travel  costs  are  billed   separately.
CareCentric's  technical  personnel also provide  on-site and on-call  technical
audit and server support.

Consulting Services
-------------------
     CareCentric's  home health care consulting  services,  Simione  Consulting,
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.  CareCentric's consulting operations,
which were acquired by Simione in January 1996,  have been providing  consulting
advice to the home health care  industry  since 1963.  The  consulting  staff is
comprised  of  approximately  30  professionals  with home health care  industry
specific experience. Consulting engagements generally focus on:

    - 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

     The Simione Consulting group of CareCentric provides consulting services on
a time and materials usage basis.  Travel costs and business expenses are billed
separately.  The Company 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
CareCentric'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.

                                       11
<PAGE>

     The  consulting  services  business is highly  dependent upon the skills of
individual professionals.  The Company has no assurance that these professionals
can be retained in sufficient numbers to assure continuation of these services.

CUSTOMERS

CareCentric has over 2,500 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.

SALES AND MARKETING

     CareCentric, led by a Senior Vice President of Sales and Marketing, markets
its information  technology systems and services through a direct sales force in
three national  territories  located  throughout the United States each led by a
Regional Vice President.  Territorial account executives numbered twelve (12) at
March 30,  2001.  An inside  sales force of eight (8) handles  non-system,  CBT,
forms and  supplies  sales.  A Vice  President of business  development  handles
national accounts.  CareCentric 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,  CareCentric
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

     CareCentric  had backlog of $4.1 million on December 31, 2000, $1.0 million
on December 31, 1999,  and $0.8 million on December 31, 1998. If the  historical
operations  of  Simione,   MCS  and  CareCentric   Solutions,   Inc.  (CSI)  are
arithmetically  combined for purposes of comparability,  CareCentric had backlog
of $4.1  million on December 31,  2000,  $1.6 million on December 31, 1999,  and
$4.1 million on December 31, 1998. 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
CareCentric,  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,  CareCentric 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(R) 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 DME VI system operates on MS-DOS and Windows  operating  systems and is
designed for use on microcomputers or network PCs.

     The integrated  MestaMed(R)  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.

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

                                       12
<PAGE>

     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  CareCentric's   products  use  these
third-party  software  products  to some  varying  degree.  Fees  charged by the
third-party  software  vendors are passed on to  CareCentric's  customers in the
license  fees,  annual fees or  maintenance  fees  charged by  CARECENTRIC.  The
software is either embedded in CareCentric's  software prior to sale or accessed
by CareCentric's software as an external data file.

<TABLE>
<CAPTION>
<S>                        <C>             <C>         <C>            <C>           <C>
                                                   TERMS OF LICENSE

                              MONTHLY      ONE TIME    PER USER OR    EMBEDDED      DATA
                            MAINTENANCE       FEE       PER SEAT      SOFTWARE      FILE
                            -----------       ---       --------      --------      ----

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

     CareCentric  maintains  a staff of  approximately  90 product  and  project
managers, programmers, data base engineers and analysts, systems and application
analysts,  quality assurance analysts and documentation  specialists who monitor
developments  in the  computer  software  and  health  care  industries  and who
continuously work to enhance and develop  CareCentric's  systems.  CareCentric's
research and  development  expenses  were  approximately  $6.2,  $1.1,  and $1.2
million for the years ended December 31, 2000, 1999, and 1998, respectively.  If
the historical operations of Simione, MCS and CareCentric Solutions,  Inc. (CSI)
are  arithmetically  combined  for  purposes  of  comparability,   research  and
development  expenses  increased  $1.1 million,  or 20%, to $6.4 million in 2000
from $5.3 million in 1999. As a percentage  of total net revenues,  research and
development expenses increased to 22.7% in 2000 from 12.9% in 1999.

     CareCentric  is  enhancing  selected  features  of  existing  products  and
developing new products to help its customers  improve  workflow and operational
and  clinical  process.  The Company  believes  that 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  (PPS).   CareCentric  has  multiple   additional  research  and
development activities underway.

     CareCentric  recognizes  the need to  respond  to the  rapid  technological
change that is occurring in the  software and health care  industries.  In 2001,
CareCentric  began  Project  UNIFY,  a  multi-disciplinary  approach  to product
development  based upon the Rational Unified  Process(R) and its associated tool
sets.  The  Company  has  undertaken  development  assessments  of  two  of  its
development  centers,   successfully  run  two  pilot  projects  using  the  new
development process (both slated for inclusion in the planned Release 3.1 of The
Smart   Clipboard(R))   and  begun  planning  a  new  approach  to  "change  and
configuration" management. There can be no assurance,  however, that CareCentric
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.  CareCentric  believes that the
primary factors affecting competition are:

     -    system performance and reliability
     -    ability to operate in a changing regulatory environment
     -    customer support
     -    service
     -    system flexibility and ease of use
     -    potential for providing feature  enhancements
     -    reputation o financial stability

                                       13
<PAGE>

     CareCentric  believes it is a strong  competitor in system  performance and
reliability in its legacy products,  ability to provide regulatory enhancements,
customer support and potential for enhancements.  CareCentric  provides customer
support through a real-time,  telephone-based  system which CareCentric believes
has been effective in satisfying customer needs.  CareCentric  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
CareCentric,  having a clear advantage.  CareCentric's reputation is tied mainly
to the performance of each of its products.  As comprehensive  systems, they are
known for broad  functionality,  but require  extensive  education and training.
Overall the Company  believes its workforce is gaining a reputation for clinical
knowledge.

     CareCentric's name recognition within the market is not as well established
as many of its  competitors.  Advertising  of the  name,  new  logo and tag line
-Achieve  Your  Potential--began  in early 2001 and is intended to increase  the
Company's name recognition and visibility in the market place. CareCentric is at
a  competitive  disadvantage  with  respect to financial  stability  because its
financial position is not as strong as that of its major competitors.

     CareCentric'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  CareCentric's  markets.  CareCentric  believes  its most
significant competitors are:

     -    Delta Health Systems (a division of Shared Medical Systems Corp. owned
          by Siemens);
     -    McKesson HBOC;
     -    Patient Care Technologies, Inc. (partially owned by Meditech);
     -    Home Care Information Systems, Inc. (owned by Misys PLC);
     -    3M
     -    Beyond Now Technologies
     -    Fastrack Healthcare System
     -    Computer Applications Unlimited

     Increased  competition  could  result in price  reductions,  reduced  gross
margins and loss of market share, any of which could materially adversely affect
CareCentric's  business,  financial  condition  and  results of  operations.  In
addition,  many of  CareCentric's  competitors  and potential  competitors  have
significantly greater financial,  technical, product development,  marketing and
other resources and market  recognition than CareCentric.  Many of CareCentric'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, CareCentric'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  CareCentric.  There can be no assurance that  CareCentric  will be able to
compete  successfully against current and future competitors or that competitive
pressures  faced  by  CareCentric  will  not  materially  adversely  affect  its
business, financial condition and results of operations.

PROPRIETARY RIGHTS AND PRODUCT PROTECTION

     CareCentric  owns the  copyrights on its STAT2 system,  the DME VI acquired
from  Dezine,  The Smart  Clipboard(R)  system  acquired in its 1999 merger with
CareCentric  Solutions,  Inc. (CSI) and the MestaMed(R)  and HMExpress  products
acquired in its 2000 merger with MCS,  Inc.  (MCS).  CareCentric  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 CareCentric or the precautions
taken  by  CareCentric   will  be  adequate  to  prevent   misappropriation   of
CareCentric'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
CareCentric's  technology by third parties. Any infringement or misappropriation
of CareCentric's core proprietary  software could have a material adverse effect
on CareCentric.  Although there has been no significant  litigation with respect
to these claims, 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.

                                       14
<PAGE>

     CareCentric  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 CareCentric will prevail in any infringement  litigation in
which  it  becomes   involved.   To  resolve  an   infringement   inquiry   from
MCI/Worldcom(R)  involving  CareCentric's  TEMS software,  CareCentric  signed a
settlement  and  licensing  agreement  in  2000  requiring  a call  counter  and
quarterly  royalty payments which will be immaterial to the Company'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  CareCentric's  business,  financial  condition and
results of operations.  Adverse  determinations in such claims or litigation may
require  CareCentric  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 CareCentric'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 CareCentric's  customers.  Home health care organizations may react to these
proposals  and the  uncertainty  surrounding  such  proposals by  curtailing  or
deferring investments in CareCentric's systems and services.  CareCentric 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 had  identified in its Work Plan for Fiscal Year 2000 several  projects
within the home health industry which were the focus of the Inspector  General's
scrutiny in fiscal year 2000. Each year the Inspector  General sets forth in its
Work Plan for that year the areas that will be  scrutinized.  For  example,  the
2000 Work Plan set forth that the  Inspector  General would focus on home health
compliance  programs,  physician  involvement  in  approving  home health  care,
screening of home health  beneficiaries,  payments based on location of service,
and reasonableness of current payments.  In addition to most of the items in the
2000 Work Plan,  the 2001 Work Plan sets forth that the  Inspector  General will
focus on the impact of the  prospective  payment  system  (PPS) on access to and
quality of care, home health  prospective  payment system controls,  assessments
used for case-mix adjustment,  and Medicare's debt management process. Screening
of home health  beneficiaries  and  reasonableness  of current  payments are not
included in the 2001 Work Plan. Additionally,  the Inspector General has focused
in recent  years on how  third-party  billing  companies,  such as  CareCentric,
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 CareCentric to provide its administrative  services
to its customers and could affect  CareCentric  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
CareCentric'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 CareCentric's information systems,  regulations governing patient
confidentiality  rights are evolving rapidly.  For example, the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) 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 intended 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. There are
a number of standards to be included in the  rulemaking  for the  provisions  of
HIPAA. Of the nine provisions,  a Notice of Proposed Rule has been published for
five of the  standards.  Of these  five  standards,  only two  have  final  rule
publication.  The Standards for Electronic Transactions and Code Sets Final Rule
was  published  in the August 17, 2000  Federal  Register and would be effective
October 16, 2000, setting an effective  compliance date of October 16, 2002. The


                                       15
<PAGE>

goal of this regulation is to simplify  electronic transfer of data by requiring
a single set of  standards be used  throughout  the health care  industry.  This
single set of  electronic  standards  will be required  for all health plans and
providers,  as well as  claims  clearinghouses,  whether  in the  government  or
private sector. This regulation includes eight electronic  transactions and four
code sets to be used in those transactions. These are:

     -    Health claims and equivalent encounter information
     -    Enrollment and disenrollment in a health plan
     -    Eligibility for a health plan
     -    Health care payment and remittance advice
     -    Health plan premium payments
     -    Health claim status
     -    Referral certification and authorization
     -    Coordination of benefits

     Many of these  transactions  are  integrated  into the  operations  of home
health  agencies  and the Company  expects  that they will impact  CareCentric's
coding and transaction processes.

     The Standards for Privacy of Individually  Identifiable  Health Information
Final Rule was issued on December 20, 2000. This regulation protects all patient
records, including paper, electronic,  and oral communications.  HHS has delayed
the effective  date of the privacy rules by two months,  setting a new effective
date as of April 14, 2001,  with a new compliance  date of April 14, 2003.  This
rule  will  require  significant  changes  in  CareCentric's   systems  and  its
operations regarding access to records, masking, and confidentiality.

     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  CareCentric.  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  CareCentric's  systems  or impose  requirements  which are
incompatible  with  CareCentric's  current systems.  During 2000, HCFA announced
that  OASIS  assessments  must be  completed  on all  adult  patients,  with the
exception of  maternity or personal  care/housekeeping  services.  However,  the
encoding and transmission requirement currently applies to Medicare and Medicaid
patients only. OASIS  requirements have been delayed for patients receiving only
personal care (non-skilled) services.

     On July 3, 2000,  HCFA  released the  Prospective  Payment  System for Home
Health  Agencies Final Rule for  reimbursement  of home health  providers  under
Medicare  which was  effective  on October 1,  2000.  Under this rule,  Medicare
reimburses  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
Rule specifies that  reimbursement will be 60% at the start of the first episode
and 40% after the final claim with all  adjustments  has been  transmitted.  For
subsequent episodes, the agency will be paid 50% at the start of the episode and
50%  upon  receipt  of the  final  clam.  Agencies  must  submit a  Request  for
Anticipated Payment (RAP) after the first billable visit, which will trigger the
initial  payment.  Adjustments  will be  allowed  for low  utilization,  partial
episodes,  significant  changes in condition,  delivery of therapy  services and
other  excessive  cost  situations.   Additional   submittals  required  include
identification of the appropriate case mix group, source of admission, and a one
line universal bill submission.

     These  changes to the  Medicare  payment  system  have  required  extensive
changes to the manner in which home health care  providers  do business  because
they are 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  have  required
extensive  changes to CareCentric's  software  products,  especially  STAT2, The
Smart Clipboard(R) and the MestaMed(R) HHA module.

                                       16
<PAGE>

     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 o provide other minor relief.

     These  changes were intended to increase the cash flow of our customers and
potential  customers  but do not  provide  the  permanent  relief  sought by the
industry.  The  non-bundling  change  eliminates  an  opportunity  to  sell  the
MestaMed(R)  product,  which has a software  program that would  facilitate such
bundling of billing.  This legislation will not require  significant  changes to
our software programs.

     The Medicare,  Medicaid,  and SCHIP Benefits Improvement and Protection Act
(BIPA) of 2000  established  positive  payment changes for home health agencies.
These changes were:

     -    Additional delay in application of 15% reduction on payment limits for
          home health services until October 1, 2002;
     -    Restoration of full market basket update for home health  services for
          fiscal year (FY) 2001;
     -    Temporary two-month periodic interim payment extension;
     -    Clarification  in the use of  telehealth  in  delivery  of home health
          services;
     -    General Accounting Office (GAO) study on costs to home health agencies
          of purchasing non-routine medical supplies;
     -    Clarification  of  criteria  for  branch  offices  and a GAO  study on
          supervision of home health care provided in rural areas;
     -    Clarification of the "Homebound" definition;
     -    Temporary  10%  increase for home health  services  furnished in rural
          areas;
     -    Revisions to Medicare appeals process; and
     -    A full market-basket update for home medical equipment for fiscal year
          2001.

     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 administered by the Food and Drug  Administration  (FDA).  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  CareCentric  believes  that its systems are not
subject to FDA regulation, the FDA could determine in the future that predictive
applications of  CareCentric's  systems could make them clinical  decision tools
subject to FDA regulation.  Compliance with FDA regulations could be burdensome,
time  consuming and expensive.  CareCentric  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  CareCentric  in other
respects not presently  foreseeable.  CareCentric  cannot  predict the effect of
possible future legislation and regulation.

EMPLOYEES

     As of December 31, 2000, CareCentric employed 298 individuals.  CareCentric
believes  that its  future  success  depends  in  large  part  upon  recruiting,
motivating and retaining  highly skilled and qualified  employees in all aspects
of CareCentric's  business.  None of CareCentric's employees is represented by a
labor union. CareCentric believes that its employee relations are good.

ITEM 2.  PROPERTIES

     CareCentric's  principal  executive  offices are located at 2625 Cumberland
Parkway,  Suite 310,  Atlanta,  Georgia 30339. The principal  executive  offices
consist of approximately  12,000 square feet. The lease on this space expires on
January 31, 2003.

     CareCentric  also leases  office space for its  operations in the following
locations:

LOCATION                              SQUARE FOOTAGE         LEASE EXPIRATION

Pompano Beach, Florida..............        20,291           December 31, 2001*
Duluth, Georgia.....................         8,370           March 31, 2001*
Westborough, Massachusetts..........         3,020           August 30, 2001
Stafford, Texas.....................         2,868           November 30, 2002


                                       17
<PAGE>

Hamden, Connecticut.................         6,500           December 31, 2002
Atlanta, Georgia....................        64,324           December 31, 2002*
Irving, Texas.......................         1,645           March 31, 2003*
Pleasanton, California..............         2,463           March 31, 2004*
East Brunswick, New Jersey..........         1,082           August 31, 2005
Pittsburgh (Monroeville), Pennsylvania      24,308           September 30, 2005
Norcross, Georgia...................        19,704           February 28, 2007

*See below

     In September 1999 CareCentric  entered into a  non-cancelable  agreement to
sublease  approximately  43,000  square feet of the former  principal  executive
office in Atlanta,  Georgia  through the remaining term of the lease. In January
2001,  CareCentric  entered  into a  non-cancelable  agreement  to sublease  the
remaining  space formerly  occupied by  CareCentric  as its principal  executive
offices  through the remaining term of the lease.  In February 2000  CareCentric
entered into a non-cancelable agreement to sublease all of the 1,645 square feet
of office space at its Irving,  Texas location through the remaining term of the
lease.  During 2000 CareCentric also entered into  non-cancelable  agreements to
sublease  approximately 6,800 square feet of the Pompano Beach,  Florida office.
All these subleases are coterminous with CareCentric's leases. The operations at
the Duluth,  Georgia office have been moved to Norcross,  Georgia and the Duluth
lease was terminated upon its expiration.  The Company is currently  negotiating
to return the Pleasanton, California office to the landlord.

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

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


ITEM 3.  LEGAL PROCEEDINGS

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

     Simione Central Holding,  Inc., a subsidiary of CareCentric now known as SC
Holding,  Inc.  ("SC  Holding")  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 SC Holding  allegedly  participated in a conspiracy
with Columbia/HCA and other third parties to bill inflated and fraudulent claims
to Medicare.  On July 21, 1999, the Justice Department issued notice that it had
elected  not to join  in the  claims  asserted  against  SC  Holding  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 SC
Holding.  In late 2000,  CareCentric was advised by Mr. McLendon's attorney that
notwithstanding the declination by the Justice Department,  Mr. McLendon intends
to pursue "whistleblower" claims against SC Holding directly. In the event these
claims are asserted,  CareCentric  and SC Holding  intend to  vigorously  defend
against them.

         The Company  reached a settlement on June 30, 2000 with IBM relative to
the early  cancellation of the Company's service agreement with IBM for services
provided to a former customer of CareCentric and related fees for services.  The
settlement  was fully  reserved for in connection  with the  accounting  for the
Simione/MCS  merger on March 7, 2000 and,  accordingly,  did not have a material
adverse impact upon the Company's financial condition or results of operations.


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

        None.


                                       18
<PAGE>


EXECUTIVE MANAGEMENT OF THE REGISTRANT

R. Bruce Dewey............       49      Chief Executive Officer, President and
                                         Director
William J. Simione, Jr....       58      Executive Vice President and  Director,
                                         President of Simione  Consulting
Jack Arthur...............       62      Senior Vice President of Product
                                         Management and Quality Assurance
Stephen M. Shea...........       45      Senior   Vice   President   and   Chief
                                         Financial Officer
Mark A. Kulik.............       42      Senior  Vice  President  of  Sales  and
                                         Marketing
Kathryn B. McClellan......       46      Senior Vice President of Corporate
                                         Relations
Charles N. Mead, M.D......       53      Chief Science and Technology Officer
Michael Quinn.............       47      Senior  Vice   President of  Operations
Robert J. Simione.........       50      Senior  Vice  President  of  Consulting


     R. Bruce Dewey was appointed the Chief  Executive  Officer of Simione as of
September  9,  1999 in  accordance  with  the  terms of the  MCS/Simione  merger
agreement  and remains in that  capacity  with  CareCentric.  Mr. Dewey  remains
Senior Vice President and Secretary of Mestek, Inc. and spends approximately 75%
of his time in his capacity as  CareCentric's  Chief Executive  Officer.  He 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  of
Mestek 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. Mr. Dewey was a director of MCS, Inc. from June
1992 to August 1999.

     William J. Simione,  Jr. is a certified public accountant who has served as
Vice Chairman of the Board and Executive  Vice President of Simione from October
1996 to the date of the  MCS/Simione  merger.  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 33 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 its merger with
MCS, Inc. when he became Senior Vice President of Product Management and Quality
Assurance.  From July 1998  until  December  1998,  Mr.  Arthur was a manager of
product development with Eclipsys,  Inc., an information systems provider.  From
October 1995 until June 1998, Mr. Arthur was the owner of Healthcare Consulting,
Inc., a health care information systems consulting company. From June 1985 until
October 1995, Mr. Arthur held various product development  management  positions
with SMS, Inc., an information systems provider.

     Stephen M. Shea has served as Chief Financial  Officer of CareCentric since
April 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 has served as Chief
Financial  Officer of Mestek  since 1990,  and as Senior Vice  President-Finance
since 1994.  Mestek was the parent  company of MCS,  Inc.  before it merged into
Simione on March 7, 2000.

     Mark A. Kulik  became  Senior  Vice  President  of Sales and  Marketing  of
CareCentric  in October  2000.  Mr.  Kulik has spent the majority of his 21-year
career in the healthcare industry including hospital supply  distribution,  home
health care, home medical equipment,  home infusion,  and healthcare information
management.  Prior to joining  CareCentric,  Mr. Kulik served as Executive  Vice
President for several health care management and information  service companies,
the most recent being Healthcare  Credentials  Management Services from December
1998 to February 2000 and Equifax Healthcare Information Services from July 1994
to December 1998.  Earlier in his career, he served as Area  Vice-President  for
Abbey/Foster Medical, Inc. from July 1986 to February 1991.

     Kathryn B. McClellan became Senior Vice President of Corporate Relations of
CareCentric  in May 2000.  She  previously  served as Senior Vice  President  of
Customer  Services and Support of Simione from  November 1998 to the date of the
merger with MCS, Inc. when she became Senior Vice President of Product Services.
From June 1996 until November 1998, Ms.  McClellan held various  operational and
customer services  positions with Simione.  From April 1991 until June 1996, Ms.
McClellan was an administrator and director of Memorial Medical Center.

                                       19
<PAGE>

     Charles N. Mead,  M.D.  served as Chief Science and  Technology  Officer of
Simione from August 1999 to the date of the MCS/Simione  merger.  From June 1993
to the date of its acquisition by the Company, Dr. Mead was Vice Chairman, Chief
Scientist and a director of CareCentric Solutions,  Inc., 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, Inc.
since 1985 and became an officer of  CareCentric  upon the merger with MCS, Inc.
when he became Senior Vice  President of Operations,  responsible  for corporate
resources and customer support.  He was a director of MCS, Inc. since 1992 until
the  merger  with  Simione.  From 1977 to 1985,  Mr.  Quinn  worked  in  various
programming  and  sales   capacities  for  MCS,  Inc.  and  its  parent  company
supervising sales, product development and product support.

     Robert J.  Simione has served as Senior Vice  President  of  Consulting  of
Simione from October 1996 to the date of the  MCS/Simione  merger.  From January
1976 until September 1996, Mr. Simione was a principal of Simione & Simione. Mr.
Simione has significant  experience in the financial and operational  management
of hospice  providers  and home health  operations  inside  integrated  delivery
networks.

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

     As more  fully  explained  in Notes 1 and 2 to the  Consolidated  Financial
Statements,  MCS, Inc. is considered to have acquired Simione Central  Holdings,
Inc. on March 7, 2000, and the historical  financial statements of the "Company"
as discussed  herein are therefore the historical  financial  statements of MCS,
Inc. only, except where specifically noted.

     Conversely,  the table  below sets  forth the high and low sales  prices of
CareCentric  common  stock  subsequent  to the merger and the high and low sales
prices of Simione prior to the merger as reported on The Nasdaq Stock Market for
the calendar periods indicated.

     The common stock of  CareCentric  has traded on The Nasdaq  Stock  Market's
Smallcap Market under the symbol CURA since December 26, 2000. From June 6, 2000
until December 26, 2000, the common stock traded on the Nasdaq  SmallCap  Market
under the symbol SCHI.  From June 30, 1997 until June 6, 2000,  the common stock
traded on the Nasdaq  National  Market under the symbol SCHI,  and prior to June
30, 1997 it traded on the OTC Bulletin Board under the symbol SCHI. 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 March 30, 2001,  CareCentric  common stock was held by  approximately
3,591 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
CareCentric  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  CareCentric  common stock on the Nasdaq National Market and Nasdaq Smallcap
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 CareCentric  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>
<S>                  <C>        <C>        <C>       <C>          <C>         <C>         <C>         <C>
                            2000                  1999                    1998                    1997
                     -------------------   --------------------   ---------------------   ----------------------
                      HIGH        LOW       HIGH        LOW         HIGH        LOW         HIGH         LOW
                     --------   --------   --------  ----------   ---------   ---------   ----------  ----------

First Quarter        11.250     3.250      17.500     6.250        60.625      32.500       38.370      21.250
Second Quarter        4.875     2.000      21.250     6.875        81.250      31.250       33.750      25.000
Third Quarter         3.500     1.500      15.000     6.250        41.250       4.375       73.750      47.500
Fourth Quarter        4.125     2.250       9.375     5.000        16.250       5.000       70.625      35.000

</TABLE>

     CareCentric has never declared or paid cash dividends on CareCentric common
stock.  CareCentric  currently  intends to retain future  earnings,  if any, for
future  growth  and  does  not  anticipate  paying  any  cash  dividends  in the
foreseeable  future.  CareCentric's line of credit includes  restrictions on the
payment of dividends.

                                       20
<PAGE>

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, 2000,  1999,  1998,  1997 and 1996 are derived from the
audited  consolidated  financial  statements  of  the  Company.  As  more  fully
explained  in Note 1 to the  Consolidated  Financial  Statements,  MCS,  Inc. is
considered to have acquired Simione Central Holdings, Inc. on March 7, 2000, and
the  historical  financial  statements of the "Company" as discussed  herein are
therefore the historical  financial  statements of MCS, Inc. only,  except where
specifically  otherwise  noted.  See Note 1 to Notes to  Consolidated  Financial
Statements for information about 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.

<TABLE>
<CAPTION>
<S>                                <C>              <C>            <C>           <C>             <C>
                                                               YEAR ENDED DECEMBER 31,
                                    ----------------------------------------------------------------------
                                         2000             1999           1998       1997            1996
                                    ---------------  -------------- --------------- --------  ------------
                                                        (in thousands, except per share data)

Net revenues:                      $  24,968         $  16,648      $ 14,901     $ 15,433        $ 14,636


Costs and expenses:
    Cost of revenues                  13,646            10,563         9,225        8,885           8,350
    Selling, general and
      administrative                  10,756             4,077         3,586        3,540           3,378
    Research and development           6,174             1,051           231            -               -
    Amortization and depreciation      3,960               230           194          119              94
                                    --------------  -------------- ------------- ----------   -------------
         Total costs and expenses     34,536            15,921        13,236       12,544          11,822
                                    --------------  -------------- ------------- ----------   -------------
    (Loss) income from operations     (9,568)              727         1,665        2,889           2,814

Other (expense) income:
    Interest expense                    (899)                -             -            -               -
    Interest and other income             68                45            47           74              52
                                    --------------  -------------- ------------- ----------   -------------
Net (loss)  income before taxes      (10,399)              772         1,712        2,963           2,866
                                    --------------  -------------- ------------- ----------   -------------
    Income tax benefit (expense)         154              (306)         (686)      (1,195)         (1,158)
                                    --------------- -------------- ------------- ----------   -------------
Net  (loss) income from continuing
  operations                         (10,245)              466         1,026        1,768           1,708
                                    --------------- -------------- ------------- ----------   -------------

Discontinued operations
    Income from operations of
    discontinued segment before
    taxes                                  -               251           671          401             249
    Applicable tax expense                 -               100           268          160             100
Net income from operations of
     discontinued segment                  -               151           403          241             149
                                    ---------------  -------------- ------------ ----------    ------------
Net  (loss) income                  $(10,245)          $   617       $ 1,429       $2,009          $1,857
                                    ===============  ============== ============ ==========    ============

Net (loss) income per share -
basic and diluted
    From continuing operations      $   (3.00)         $  0.31       $  0.69       $  1.19         $ 1.15
Weighted average common shares -
    basic and diluted                   3,418            1,490         1,490         1,490          1,490
                                    ===============  ============================== ===========   ==========
Net (loss) income per share -
basic and diluted
    From discontinued operations    $       -          $  0.10       $  0.27       $  0.16         $ 0.10
Weighted average common shares -
    basic and diluted                   3,418            1,490         1,490         1,490          1,490
                                    ===============  ============== =============== ===========   ==========
Net (loss) income per share -
basic and diluted
    From operations                 $   (3.00)         $  0.41       $  0.96       $  1.35          $1.25
Weighted average common shares -
    basic and diluted                   3,418            1,490         1,490         1,490          1,490
                                    ===============  ============== =============== ===========  ===========
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                     DECEMBER 31,
                                         2000            1999            1998           1997             1996
                                                                                                     (UNAUDITED)
                                  ---------------  -------------- --------------- --------------  ---------------
                                                                    (in thousands)
BALANCE SHEET DATA
    Cash and cash equivalents       $    362               47            60             40             34
    Working capital (deficit)        (13,765)          (1,542)       (1,745)        (2,110)        (1,754)
    Total assets                      35,120            6,696         5,279          4,895          4,489
    Long-term obligations                728                -             -              -              -
    Shareholders' equity (deficit)  $ 11,080           $  505          (981)        (1,640)        (1,312)
</TABLE>


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

     Certain  statements  set forth in  Management's  Discussion and Analysis of
Financial  Condition  and  Results  of  Operations  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private  Securities  Litigation  Reform Act of 1995,  and are subject to the
safe  harbor  created  by such  sections.  When used in this  report,  the words
"believe",  "anticipate",  "estimate",  "expect",  and similar  expressions  are
intended to identify  forward-looking  statements.  All  statements,  other than
statements of historical  facts,  included or  incorporated by reference in this
Form 10-K which address  activities,  events, or developments  which the Company
expects or  anticipates  will or may occur in the future,  including  statements
regarding the Company's competitive position,  the successful development of its
software  products,  the impact on the Company of actual or proposed  regulatory
changes, the Company's  expectations regarding the adequacy of current financing
arrangements,  product demand and market growth, and other statements  regarding
future  plans  and  strategies,   anticipated   events  or  trends  and  similar
expressions concerning matters that are not historical facts are forward-looking
statements.  These statements are based on certain assumptions and analyses made
by the  Company in light of its  experience  and its  perception  of  historical
trends,  current  conditions,  and expected future developments as well as other
factors it believes are appropriate in the  circumstances.  The Company's future
financial performance could differ significantly from that set forth herein, and
from the  expectations  of  management.  Important  factors that could cause the
Company's financial  performance to differ materially from past results and from
those expressed in any forward looking statements  include,  without limitation,
the inability to obtain additional capital  resources,  variability in quarterly
operating  results,  customer  concentration,  product  acceptance,  long  sales
cycles,  long and varying delivery cycles, the Company's  dependence on business
partners,  emerging  technological  standards,  changing  regulatory  standards,
inability  to retain or hire  experienced  and  knowledgeable  employees,  risks
associated with acquisitions,  increased regulation of the health care industry,
future  consolidation  of the  health  care  industry,  potential  liability  in
connection with the Department of Labor  investigation or IRS audit, the need to
develop new and  enhanced  products,  product  delays and  errors,  competition,
difficulty  protecting  intellectual  property  rights,  and  the  risk  factors
detailed  in  the  Company's  Registration  Statement  on  Form  S-4  (File  No.
333-96529) and in the Company's  periodic  reports filed with the Securities and
Exchange Commission.  Readers are cautioned not to place undue reliance on these
forward-looking   statements,   which  speak  only  as  of  their  dates.   This
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  should  be read  in  conjunction  with  the  Company's  consolidated
financial statements and the notes thereto. The Company assumes no obligation to
update publicly any such forward-looking statements,  whether as a result of new
information, future events, or otherwise.

     The following is a discussion of the consolidated  financial  condition and
results of operation of the Company for the three years ended  December 31, 2000
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.

     As more  fully  explained  in Notes 1 and 2 to the  Consolidated  Financial
Statements,  MCS, Inc. is considered to have acquired Simione Central  Holdings,
Inc. on March 7, 2000, and the historical  financial statements of the "Company"
as discussed  herein are therefore the historical  financial  statements of MCS,
Inc. only, except where specifically noted.

                                       22
<PAGE>

OVERVIEW

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

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

CareCentric has over 2,500 customers nationwide, including:

     -    hospital-based facilities;
     -    free-standing home health care providers;
     -    alternate-site care organizations;
     -    home medical IV, infusion and rehabilitation equipment providers;
     -    integrated delivery networks (IDN); and
     -    government-managed organizations.

     Through a subsidiary,  Simione Central  Holdings,  Inc.  formerly  provided
comprehensive agency support services which included administrative, billing and
collection,  training,  reimbursement and financial management  services,  among
others. This line of business was discontinued in December 1999.

     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 when products are delivered and  collectibility  of fees is probable,
provided that no significant obligations remain under the contract. 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 under
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 generally charges for software implementation,  training
and technical  consulting services as well as management  consulting services on
an hourly or daily  basis.  The Company is now  offering  "tiered  pricing"  for
implementation  of new  systems  whereby  the  customer  pays a fixed  fee for a
certain  level of  packaged  services  and daily  fees for  services  beyond the
package.  Consulting  services are sometimes  sold on a fixed,  per  engagement,
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 software
support   agreements,   whether   annual  or  otherwise.   These  revenues  were
approximately  $11.0 million,  or 44% of total net revenues,  for the year ended
December 31, 2000,  $3.5 million,  or 23.3% of total net revenues,  for the year
ended December 31, 1999, and $3.3 million,  or 21.2% of total net revenues,  for
the year ended December 31, 1998. Unless and until revenues generated from sales
of new systems increases, recurring revenues will represent a greater portion of
its total net revenues.

     The Company  believes that  continued  development  and  enhancement of its
software  systems are 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. For the years
ended December 31, 2000, 1999, and 1998, the Company had no capitalized computer
software and development costs.

                                       23
<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 2000 AND 1999

     Results of  operations  for the  twelve  months  ended  December  31,  2000
included  the  operations  of the former MCS for the full twelve  months and the
operations  of Simione  Central  Holdings,  Inc.  (Simione)  only for the period
subsequent to March 7, 2000.  Results of operations  for the twelve months ended
December 31, 1999 included only the operations of the former MCS.  Consequently,
a comparison of the 2000 and 1999  Statements of Operations is not meaningful to
an understanding of the Company's relative  performance in 2000. For purposes of
comparability,  therefore,  the  following  discussion  reflects  the pro  forma
assumption that the operations of Simione, MCS and CareCentric  Solutions,  Inc.
(CSI) were  arithmetically  combined for each of the twelve month  periods ended
December 31, 2000 and 1999.

     Net Revenues.  Revenues  (exclusive of Simione's  Outsourcing Segment which
was  discontinued  at the end of 1999) were $27.3  million for the twelve months
ended  December 31, 2000 and $40.0 million for the twelve months ended  December
31, 1999.  Revenues from software  systems  decreased $10.6 million,  or 53%, to
$9.5 million in 2000 from $20.1 million in 1999. Software  maintenance  revenues
were  unchanged in 2000 from 1999 at $12.5  million.  Revenues  from  consulting
services  decreased  $2.1  million,  or 28%,  to $5.3  million in 2000 from $7.4
million in 1999.

     These  significantly   reduced   "comparable   revenues"  are  attributable
principally  to reduced  bookings of software and  equipment  sales in the final
quarter of 1999 and early part of 2000, as well as relatively  weak software and
hardware sales in the last quarter of 2000.  The Company  believes these results
are traceable  generally to adverse economic  conditions  prevailing in the home
healthcare  marketplace and more  specifically to uncertainties  surrounding the
MCS/Simione  merger on March 7, 2000 and customer concerns related to "Year 2000
functionality".  Other  factors  include  discontinuance  of  product  lines and
consolidation of certain  operations and functions in connection with the merger
or to reduce costs.  Finally,  the results were affected by uncertainties in the
marketplace related to a new home health care provider reimbursement system, the
Prospective  Payment  System,  or PPS,  implemented by the Health Care Financing
Administration  (HCFA) in October of 2000.  The PPS payment system is based upon
pre-set per episode  fees,  in contrast to the former  Interim  Payment  System,
(IPS),  which it  replaced,  which was based  upon  Medicare's  historical  cost
reimbursement  practice.  As such, PPS represented a radical departure from past
practice  and  introduced  significant  uncertainty  in  the  home  health  care
industry.  While the Company expects this to be a short-lived  phenomenon as the
impact of PPS  becomes  clearer  and the  Company's  core  customer  base  gains
experience  in the PPS  environment,  in the short run,  information  technology
spending in the home health  industry  has been and  continues  to be  adversely
affected.

     Cost of Revenues.  Cost of revenues  decreased  $13.2  million,  or 48%, to
$14.4  million in 2000 from $27.6  million in 1999. As a percentage of total net
revenues,  cost of revenues  decreased to 52.8% in 2000 from 69.0% in 1999.  The
$13.2 million decrease  resulted  primarily from the  corresponding  decrease in
revenue  for both  software  and  services  and  consulting.  The  decrease as a
percentage  of total net revenues is  principally  due to the impact of a higher
ratio of higher margin sales to total sales.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  decreased  $6.8  million,  or 36%, to $12.2 million in 2000 from $19.0
million in 1999.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were  44.8% in 2000 and  47.5%  in 1999.  This  dollar
decrease was attributable to synergies  derived from the merger and cost savings
initiatives  implemented in 2000. Cost savings were primarily  realized  through
the centralization of administrative  functions and elimination of non-essential
facilities and excess capacity. These initiatives are continuing in 2001.

     Research and Development.  Research and development expenses increased $0.9
million,  or 14.8%,  to $7.0  million in 2000 from $6.1  million  in 1999.  As a
percentage of total net revenues, research and development expenses increased to
25.5% in 2000 from 15.0% in 1999.  This  dollar  increase  was  attributable  to
additional development costs for all continuing products, but especially for The
Smart Clipboard(R), PharmMed Rx(TM) and HMExpress.

     Amortization and Depreciation.  Amortization and depreciation  increased by
$1.1 million to $4.7 million in 2000 from $3.6  million in 1999.  This  increase
includes approximately $1.0 million of amortization expenses attributable to the
Simione/MCS  merger  on March 7,  2000.  See  Notes 3 and 4 to the  accompanying
Consolidated Financial Statements.

     Operating Loss. The Company's  operating loss from  continuing  operations,
reflecting  the  same  assumptions  as  above  for  purposes  of  comparability,
decreased  from  ($15,483,000)  for the twelve months ended December 31, 1999 to
($11,789,000) for the twelve months ended December 31, 2000. Management believes
this  reduced  operating  loss,  despite  significantly  reduced  revenues  on a
comparable  basis,  is primarily  the result of the  aforementioned  cost saving
initiatives implemented subsequent to the MCS/Simione merger on March 7, 2000.

                                       24
<PAGE>

     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  $657,000.   Interest  and  other  income  consists
principally  of  interest  income  related to customer  finance  charges and the
Company's  short  term  cash  investments  and has  decreased  by  approximately
$130,000.  The  Company  expects  further  increases  in 2001  due to  increased
borrowing.

     Income  Taxes.  The Company has not incurred or paid any income taxes since
its inception.  At December 31, 2000, CareCentric had net operating loss ("NOL")
carryforwards  for federal and state income tax purposes of $28.6 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, 2000,  and  accordingly,  a 100% deferred tax valuation
allowance has been recorded against these assets. See Note 7 to the accompanying
Consolidated Financial Statements.

     The income tax benefit of $154,000  reflected in the  financial  statements
for 2000 relates primarily to losses incurred by MCS between January 1, 2000 and
March 7, 2000 while it was a subsidiary of Mestek. The income tax benefit arises
due to the inclusion of MCS's  results for this period in Mestek's  consolidated
federal and state income tax filings for 2000.

COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998

     Results of  operations  for the twelve  months ended  December 31, 1999 and
1998  reflect  the  operations  of MCS only.  The  discussion  which  follows is
therefore  not  reflective  of the  Company  as  constituted  subsequent  to the
Simione/MCS  merger on March 7, 2000.  No attempt has been made for  purposes of
the following discussion to arithmetically  combine the 1999 and 1998 results of
operations of MCS, Simione, and CSI for purposes of comparability as the results
would  not be  meaningful  to an  understanding  of  the  Company  as  presently
constituted.

     Net Revenues. Total net revenues increased $1.7 million, or 11.7%, to $16.6
million  in 1999  from  $14.9  million  in 1998.  This  increase  was  traceable
principally to improved delivery of MestaMed(R) software system sales based upon
high bookings in the fourth quarter of 1998 and accelerated  shipment of systems
sold in the fourth quarter of 1999.

     Cost of Revenues.  As a percentage of total net revenues,  cost of revenues
increased  to 63.4% in 1999 from 61.9% in 1998 owing  principally  to  increased
spending on the Company's customer support infrastructure.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  increased  $0.5 million,  or 13.7%,  to $4.1 million in 1999 from $3.6
million in 1998.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were 24.5% in 1999 and 24.1% in 1998.  The increase in
cost was attributable  principally to a revised sales  compensation  program and
incremental spending on outside marketing consulting services.

     Research and Development.  Research and development expenses increased $0.8
million,  to $1.1 million in 1999 from $0.2 million in 1998.  As a percentage of
total net revenues,  research and development expenses increased to 6.3% in 1999
from 1.5% in 1998. The increased  spending  related to  development  work on (1)
Mentor,  an  interactive   multimedia   training  system,  (2)  open  data  base
connectivity  (ODBC) for the Company's  MestaMed(R)  product and (3) a graphical
user interface (GUI) for MestaMed(R).

     Amortization and  Depreciation.  Amortization and depreciation  expense was
relatively unchanged at $0.2 million in 1999 and 1998.

     Other Income (Expense) Other income consists principally of interest income
related  to the  customer  finance  charges  and the  Company's  short term cash
investments and has decreased by approximately $2,000.

     Income  Taxes.  The  Company's  federal  and state  income  tax  provisions
approximated 40% for both 1999 and 1998.

                                       25
<PAGE>

SELECTED QUARTERLY FINANCIAL RESULTS

     The  Company's  quarterly  operating  results  have  been and  will  likely
continue to be subject to significant fluctuations.  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 new  installations  the Company's  information
systems  can range from a few months to one year  while  add-ons  can occur more
quickly.  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 four quarters for the period ended  December 31,
2000 and includes the  operations  of the former MCS for the full twelve  months
and the  operations of Simone for the period  subsequent to March 7, 2000.  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
quarterly  results  of  operations  are not  necessarily  indicative  of  future
operating results.  Quarterly information for periods prior to 2000 is not shown
as this data relates to MCS only and is, therefore, not meaningful in comparison
to  the  2000  data.  A  Combinted  Total  column  is  included  reflecting  the
combination  of the results of  operations  of MCS and Simione for the full year
2000.
<TABLE>
<CAPTION>
<S>                                      <C>          <C>          <C>          <C>          <C>           <C>
                                                                     FISCAL YEAR 2000
                                                                  (dollars in thousands)
                                         -----------------------------------------------------------------------------
                                                                                                           COMBINED
                                          MAR 31      JUNE 30       SEP30        DEC 31        TOTAL         TOTAL
                                         ---------    --------     --------     ---------    ----------    -----------
Net revenues:                             $ 4,000     $ 6,257      $ 8,547       $ 6,164      $ 24,968        $27,277

Costs and expenses:
   Cost of revenues                         2,547       3,954        3,756         3,389        13,646         14,415
   Selling, general and administrative      1,453       2,807        3,262         3,234        10,756         12,214
   Research and development                   711       1,780        1,897         1,786         6,174          6,952
   Amortization and depreciation              426       1,183        1,171         1,180         3,960          4,700
                                         ---------    --------     --------     ---------    ----------    -----------
      Total costs and expense               5,137       9,724       10,086         9,589        34,536         38,281
                                         ---------    --------     --------     ---------    ----------    -----------

(Loss) income from operations             (1,137)     (3,467)      (1,539)       (3,425)       (9,568)        (11,004)

Other (expense) income:
   Other (expense) income                     (6)           -            -             -           (6)
   Interest expense                          (76)       (189)        (316)         (318)         (899)          (939)
   Interest and other income                   12          28           17            17            74              -
                                         ---------    --------     --------     ---------    ----------    -----------
Net (loss) income before income taxes     (1,207)     (3,628)      (1,838)       (3,726)      (10,399)       (11,943)
                                         ---------    --------     --------     ---------    ----------    -----------

   Income tax benefit (expense)               157           -          (7)             4           154            154
                                         ---------    --------     --------     ---------    ----------    -----------
Net (loss) income                         (1,050)     (3,628)      (1,845)       (3,722)      (10,245)       (11,789)
                                         ---------    --------     --------     ---------    ----------    -----------

Net (loss) income per share - basic
and diluted                               $(0.50)     $(0.94)      $(0.48)       $(0.97)       $(3.00)
Weighted average common shares - basic
and diluted                                 2,113       3,850        3,850         3,850         3,418
                                         =========    ========     ========     =========    ==========
</TABLE>

Note: Quarterly earnings per share figures do not arithmetically add to the full
year 2000 earnings per share due to interim  changes in weighted  average shares
outstanding  during 2000. The above numbers reflect the effect of a one for five
reverse stock split effected in connection with the MCS/Simione  merger on March
7, 2000.

                                       26
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     In May 1999, Simione entered into a definitive agreement to merge with MCS,
a wholly owned  subsidiary of Mestek,  as more fully  explained in Note 1 to the
Consolidated Financial Statements. 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. (CSI) 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. The total
purchase price was approximately $12 million,  of which $0.2 million was paid in
cash, $2.7 million was in the form of assumed liabilities,  and $9.3 million was
in the form of  Series A  Preferred  Stock of  Simione.  Under  the terms of the
merger,  Simione was  required to issue up to an  additional  approximately  3.0
million  shares,  pre-split,  of common stock if Simione's  common stock did not
meet certain  price  targets  during the fourth  quarter of 2000.  Because those
price targets were not satisfied, in March 2001, Simione (now CareCentric, Inc.)
issued  593,668  shares of its common stock to former  holders of CSI  preferred
stock and CSI noteholders.  In conjunction with the acquisition of CSI in August
1999,  Simione  assumed a loan from a bank with an  outstanding  balance of $1.5
million.  The $1.5 million bank loan was retired in  connection  with a new loan
extended  by  Mestek  to  Simione  in  September  1999,  described  in the  next
paragraph.

     In  September  1999,  in  connection  with an  amendment  of the MCS merger
agreement,  Simione  received  $3.0 million in 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 CSI and to fund operating  needs.  When the MCS
merger  was  completed,  Mestek's  note  evidencing  this loan and  other  loans
described  below were converted  into Series B Preferred  Stock and a warrant to
purchase CareCentric 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 loan from Mr.  O'Donnell along with $100,000 in deferred
salary were exchanged for a $600,000 subordinated note,  convertible into common
stock at $2.51 per share,  with  interest at 9% per annum and a maturity date of
August 8, 2005.  The loan from Dr.  Ellis was paid in full on July 12, 2000 from
the credit facility provided by Wainwright Bank and Trust Company. See Note 5 to
the accompanying Consolidated Financial Statements.

     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 and Mestek's  notes  evidencing
the $1.0  million and $3.0  million  loans,  together  with an  additional  $2.0
million in cash from Mestek were converted  into Series B Preferred  Stock and a
warrant to purchase  CareCentric common stock. The consolidation of the accounts
receivable  of MCS into the  then  outstanding  balance  of  Simione's  accounts
receivable provided an additional $1.5 million of borrowing capacity on the $5.0
million bank line of credit established by Simione in September 1999.

     Immediately after the Simione/MCS  merger on March 7, 2000, the Company had
cash and cash  equivalents of $3.5 million and short and long term debt from all
sources  of  $2.5  million,   for  a  positive  net   cash/(debt)   position  of
approximately $1.0 million.  In order to supplement its capital  resources,  the
Company,  subsequent to the merger,  undertook a search for  additional  capital
resources  which  resulted  in the  creation  of the  following  credit and debt
facilities and preferred equity securities:

<TABLE>
<CAPTION>
       <S>                                   <C>                 <C>                         <C>
                   SOURCE                      FUNDING                   FORM                 DATE CLOSED
       -------------------------------   --------------------    ---------------------- ------------------------

       John E. Reed                           $ 1,000,000        Series D Preferred Stock    June 22, 2000

       John E. Reed                             6,000,000        Line of Credit              June 22, 2000

       Wainwright Bank and Trust                6,000,000        Line of Credit              July 12, 2000
       Company
                                         --------------------

                                             $ 13,000,000
                                         ====================
</TABLE>

                                       27
<PAGE>

     These three  transactions  are described in greater detail in Notes 5 and 9
to the accompanying  Consolidated Financial Statements.  The Wainwright Bank and
Trust Company line of credit was used to pay off the Silicon Valley Bank line of
credit,  certain short term loans from Mestek,  and the note payable to David O.
Ellis.  The  Wainwright  Line of Credit  expires  July 11,  2001 and  payment is
guaranteed by Mestek.

     Subsequent  to  March  7,  2000,  the  Company's  consumption  of  cash  as
illustrated  by the total of its net debt  (borrowings  less cash) and preferred
equity position has evolved as follows:

                                       Net Debt
                               Preferred Equity Position      Net Change
                               -------------------------      ----------
    March 7, 2000                 ($ 5,851,000)
    March 31, 2000                ($ 8,052,000)               ($2,201,000)
    June 30, 2000                 ($ 9,663,000)               ($1,611,000)
    September 30, 2000            ($11,987,000)               ($2,324,000)
    December 31, 2000             ($14,684,000)               ($2,697,000)
    March 31, 2001                ($16,596,000)               ($1,912,000)

     During  2000  the  Company   incurred   operating  losses  and  experienced
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 Smart Clipboard(R)  product,  which
have been higher than anticipated.  In addition, sales revenue in 2000 was lower
than planned in the core MestaMed(R),  DME VI and STAT2 products while new sales
of The Smart  Clipboard(R)  and Tropical  products  (now  discontinued)  did not
develop as quickly  as  projected.  The merger  with  Simione  added  additional
products and resources and, importantly, added to the Company's critical mass of
installed sites but the Company's longer term success will depend upon increased
sales of new software systems and successful installation performance, including
in particular The Smart  Clipboard(R) and MestaMed(R).  In this connection,  the
Company recorded a significant increase in bookings of new systems in all of its
major product lines in March,  2001.  Notwithstanding  the financial  conditions
prevailing  in the  home  health  marketplace,  the  Company  continued  to fund
significant  product  development  initiatives  during 2000 and during the first
quarter of 2001.  Accordingly,  until revenues  increase  sufficiently  to cover
these  forward-looking  costs  and  operating  expenses,   the  Company  remains
dependent on its majority  shareholder  for its working capital  financing.  The
Company's majority  shareholder has stated his intention and ability to continue
to  advance  cash to the  Company  in  accordance  with the terms of his  credit
facility.

     As of  March  31,  2001,  the  Company  has  untapped  credit  capacity  of
approximately  $4.3  million  from the  aforementioned  facilities.  The Company
believes that its funding sources,  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,  until at least
December 31, 2001.

     As of December 31, 2000, the Company had negative  working capital of $13.8
million and cash and cash  equivalents  of $0.4 million.  The Company's  current
liabilities  as of December 31, 2000 include  customer  deposits of $2.5 million
and unearned revenues of $5.0 million.

     Net cash  provided by (used in)  operating  activities  for the years ended
December 31, 2000, 1999, and 1998 was ($7.2) million,  ($0.3) million,  and $1.3
million, respectively. Cash used in 2000 principally funded operating losses and
was also used to pay various liabilities  reflected on the Simione balance sheet
as of March 7, 2000.  The  pre-merger  Simione  liabilities  paid in this manner
include  severance pay, excess office space,  excess leased computer  equipment,
and legal fees.

     Cash flows from  financing  activities  include  (1) net line of credit and
other  borrowings  during 2000 (excluding  debt acquired in the merger),  (2) $1
million  of  capital  raised  via the  issuance  in June of 2000 of the Series D
Preferred  Stock,  and (3) cash  acquired  in the  merger  on  March 7,  2000 of
approximately $3.5 million.

     Inflation  has not had, and is not  expected to have, a material  impact on
the Company's  operations.  If inflation increases,  the Company will attempt to
increase its prices to offset  increased  expenses.  No assurance  can be given,
however,  that the Company  will be able to  adequately  increase  its prices in
response to inflation.

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 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.

     On December 3, 1999, the SEC released Staff  Accounting  Bulletin 101, (SAB
101) "Revenue  Recognition in Financial  Statements." This bulletin  established
more clearly  defined  revenue  recognition  criteria than  previously  existing
accounting  pronouncements.  On June 26, 2000, the SEC released SAB 101B,  which
delayed the  required  implementation  of SAB 101 until no later than the fourth


                                       28
<PAGE>

quarter of fiscal years ending December 31, 2000. The Company  believes that the
effects of this bulletin were not material to its financial position, results of
operations or cash flow.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     As of December 31, 2000, the Company's  obligations  include  variable rate
notes payable and a line of credit bank note with aggregate  principal  balances
of  approximately  $7.2 million which mature at various dates through 2005.  The
Company  is  exposed  to the  market  risk of  significant  increases  in future
interest rates. Each incremental point in the prime interest rate would increase
the Company's interest expense by approximately $66,000 per year.

     At December 31, 2000, the Company had accounts  receivable of approximately
$8.5 million  (net of an  allowance  for  doubtful  accounts of  $551,000).  The
Company  is  subject  to a  concentration  of credit  risk  because  most of the
accounts receivable are due from companies in the home health industry.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Financial  Statements  and  Supplementary  Data appear on pages 36 to 52 of
this Annual Report on Form 10-K.

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

     Effective June 9, 2000,  the Company  decided to appoint Grant Thornton LLP
as the Company's independent  accountants for the fiscal year ended December 31,
2000 and dismissed  Arthur Andersen LLP. The decision to change  accountants was
recommended by the Audit Committee and approved by the Board of Directors of the
Company. Grant Thorton had been the auditors for MCS prior to the merger.

     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 three fiscal
years or in the subsequent interim period to June 9, 2000.

     Except as described below,  during the last two fiscal years and subsequent
interim  period to June 9, 2000, the Company did not consult with Grant Thornton
LLP regarding any of the matters or events set forth in Item  (304)(a)(2)(i) and
(ii) of Regulation  S-K.  Grant  Thornton had been the auditor for MCS, Inc. for
several years for the period  preceding the merger.  After the completion of the
MCS merger, the historical  financial  statements of MCS, Inc. were deemed to be
the  financial  statements  of the  Company.  The Company  consulted  with Grant
Thornton regarding the financial  statements after the completion of the merger.
Simione  did not  consult  with  Grant  Thornton  regarding  accounting  matters
pertaining to the financial statements of the Company prior to the MCS merger.


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.

                                       29
<PAGE>

          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     --     Amended and Restated Certificate of Incorporation of the Company.

3.2*    --     Certificate of Ownership and Merger of Simione Central  Holdings,
               Inc. with and into CareCentric, Inc.

3.3     --     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).

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  and  3.2  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).

                                       30
<PAGE>

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+    --    CareCentric,  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+    --    CareCentric, 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).

                                       31
<PAGE>

10.15+   --    Severance Agreement dated July 22, 1998 between CareCentric, 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).

10.16.1* --    Addendum to  Executive  Employment Agreement  dated  December 20,
               2000  between  Simione  Central  Holdings,  Inc.  and William  J.
               Simione, Jr.

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   CareCentric,   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
               CareCentric,  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.

10.29    --    Warrant  to  Purchase  Common  Stock  dated  March 7, 2000 by and
               between the Company and Mestek,  Inc.  (Incorporated by reference
               to Exhibit 10.3  to  the Registrant's Report on Form 10-Q for the
               quarter ended March 31, 2000, (File No. 000-22162)).

                                       32
<PAGE>

10.30(4) --    Merger  Option  Agreement  by and between the Company and Mestek,
               Inc. dated March 7, 2000.

10.31(4) --    Series D Convertible  Preferred  Stock Purchase  Agreement  dated
               June 12, 2000 between the Company and John E. Reed.

10.32(4) --    Secured  Convertible Credit Facility and Security Agreement dated
               June 12, 2000 between the Company,  Simione Central National, LLC
               and Simione Central Consulting, Inc. and John E. Reed.

10.33(4) --    Warrant  dated  June 12,  2000 by and  between  the  Company  and
               Mestek, Inc.

10.34    --    Warrant  dated  July 12,  2000 by and  between  the  Company  and
               Mestek,  Inc.  (Incorporated  by reference to Exhibit 10.1 to the
               Registrant's  Quarterly Report on Form 10-Q for the quarter ended
               September 30, 2000).

10.35    --    Loan and Security  Agreement by and between the Company,  Simione
               Central  National,  LLC,  Simione  Central  Consulting,  Inc. and
               Wainwright   Bank  and  Trust   Company,   dated  July  10,  2000
               (Incorporated  by reference  to Exhibit 10.1 to the  Registrant's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2000 (File No. 000-22162)).

10.36*   --    Lease   Agreement  dated  January  16,  2001   between   Prentiss
               Properties   Acquisition  Partners,   L.P.  and  Simione  Central
               Holdings, Inc.

10.37*   --    Sublease  dated  June 17,  1999  between   Healthfield,  Inc. and
               Simione   Central   Holdings,   Inc.,   and   consented   to   by
               Environmental Design International, Inc.

10.38*   --    Sublease dated December 20,  2000  between  International  Paper,
               Inc. and Simione Central Holdings, Inc.

10.39*   --    Sublease  Lease  Agreement  dated January  15,  2000  between The
               Profit   Recovery  Group  International  USA,   Inc.  and Simione
               Central Holdings, 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).

16.2     --    Letter  re  change  in  Certifying  Accountant  (Incorporated  by
               reference to Exhibit 4.1 of the Company's  Current Report on Form
               8-K dated June 14, 2000 as filed with the Securities and Exchange
               Commission).

21.1*    --    Subsidiaries of the Company.

23.1*    --    Consent of Grant Thornton LLP.

___________________________________


*  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 (File No. 000-22162).

(4)  Incorporated  by reference to the Company's Form 10-Q for the quarter ended
June 30, 2000 (File No. 000-22162).

(b) Reports on Form 8-K.

On December 20, 2000,  the Company filed a Current  Report on Form 8-K reporting
the change of its Nasdaq symbol to "CURA".




                                       33
<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.


                                       CARECENTRIC, INC.


Date:  April 17, 2001                  /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.

<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>
SIGNATURE                                TITLE                                  DATE

/s/ R. BRUCE DEWEY                       President, Chief Executive Officer     April 17, 2001
--------------------------------         and Director (principal executive
R. Bruce Dewey                           officer)

/s/ STEPHEN M. SHEA                      Chief Financial Officer and            April 17, 2001
--------------------------------         Treasurer (principal financial and
Stephen M. Shea                          accounting officer)

/s/ WILLIAM J. SIMIONE, JR.              Executive Vice President and Director  April 17, 2001
--------------------------------
William J. Simione, Jr.

/s/ DAVID O. ELLIS                       Director                               April 17, 2001
--------------------------------
David O. Ellis

/s/ WINSTON R. HINDLE, JR.               Director                               April 17, 2001
--------------------------------
Winston R. Hindle, Jr.

/S/ BARRETT C. O'DONNELL                 Director                               April 17, 2001
--------------------------------
Barrett C. O'Donnell

/s/ JOHN E. REED                         Director                               April 17, 2001
--------------------------------
John E. Reed

/s/ EDWARD K. WISSING                    Director                               April 17, 2001
--------------------------------
Edward K. Wissing
</TABLE>





                                       34
<PAGE>



CARECENTRIC, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE

Report of Independent Public Accountants - Grant Thornton LLP.................36
Consolidated Balance Sheets...................................................37
Consolidated Statements of Operations.........................................38
Consolidated Statements of Shareholders' Equity (Deficit) for the years ended
     December 31, 2000, 1999, and 1998........................................39
Consolidated Statements of Cash Flow for the years ended
     December 31, 2000, 1999, and 1998........................................40
Notes to Consolidated Financial Statements....................................41



                                       35
<PAGE>



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and the Board of Directors of CareCentric, Inc.:

We have audited the  accompanying  consolidated  balance sheets of  CARECENTRIC,
INC. (a Delaware  corporation) and subsidiaries as of December 31, 2000 and 1999
and the related  consolidated  statements of  operations,  shareholders'  equity
(deficit),  and cash flows for each of the years in the three year period  ended
December 31, 2000. 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  CareCentric,   Inc.  and
subsidiaries  as of  December  31,  2000  and  1999  and the  results  of  their
operations  and their cash flows for each of the years in the three year  period
ended  December 31, 2000 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.  Schedule II included herein 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/ GRANT THORNTON LLP

GRANT THORNTON LLP
Boston, Massachusetts
April 2, 2001




                                       36
<PAGE>




                                CARECENTRIC, INC.
                           CONSOLIDATED BALANCE SHEETS
                                     ($000s)
<TABLE>
<CAPTION>
<S>                                                    <C>                   <C>
                                                                    DECEMBER 31,
                                                             2000                  1999
                                                        ------------------    -----------------
ASSETS

 Current assets:
     Cash and cash equivalents                          $    362,000         $     47,000
     Accounts  receivable,  net  of  allowance
        for doubtful accounts  of $551,000
        and $166,000 respectively                          8,484,000            4,329,000
     Prepaid expenses and other current assets               701,000              273,000
                                                        ----------------    -----------------
        Total current assets                               9,547,000            4,649,000

Purchased  software,  furniture and equipment, net         1,957,000              920,000
Intangible assets, net                                    23,405,000                    -
Other assets                                                 211,000            1,127,000
                                                       -----------------    -----------------
       Total assets                                    $  35,120,000        $   6,696,000
                                                       =================    =================

</TABLE>

                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S>                                                   <C>                     <C>
Current liabilities:
     Line of credit                                    $   5,996,000          $         -
     Notes Payable                                           600,000                    -
     Accounts payable                                      1,156,000            1,137,000
     Accrued compensation expense                            616,000              393,000
     Accrued liabilities                                   7,447,000            1,334,000
     Customer deposits                                     2,496,000              419,000
     Unearned revenues                                     5,001,000            2,908,000
                                                      ------------------    -----------------
       Total current liabilities                          23,312,000            6,191,000

Accrued liabilities, less current portion                    128,000                    -

Note payable long-term                                       600,000                    -
                                                      ------------------    -----------------
           Total Liabilities                              24,040,000            6,191,000

Shareholders' equity:
     Preferred Stock;  10,000,000   shares
          authorized
     Series B Preferred, $.001 par value;
          5,600,000  issued and outstanding                    6,000                    -

     Series C Preferred, $.001 par value;
          850,000  issued and outstanding                      1,000                    -

     Series D Preferred, $.001 par value;
          398,000  issued and outstanding                          -                    -

     Common stock, $.001 par value; 20,000,000
          shares authorized; 3,849,816 shares
          issued and outstanding at
          December 31, 2000
          1,489,853   shares  issued  and
          outstanding  at December 31, 1999                    4,000                1,000

     Additional paid-in capital                           21,070,000            1,260,000
     Stock warrants                                        1,000,000                    -
     Accumulated deficit                                 (11,001,000)            (756,000)
                                                    ------------------    -----------------
       Total shareholders' equity                         11,080,000              505,000
                                                    ------------------    -----------------

       Total   liabilities  and
       shareholders' equity                            $  35,120,000        $   6,696,000
                                                    ==================    =================

</TABLE>

See notes to consolidated financial statements.

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



                                       37
<PAGE>

                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S>                                                 <C>                  <C>                  <C>

                                                                     YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------------------------
                                                          2000                 1999                 1998
                                                    ------------------   ------------------   ------------------

        Total revenues, net                              $ 24,968,000         $ 16,648,000         $ 14,901,000

Costs and expenses:
    Cost of revenues                                       13,646,000           10,563,000            9,225,000
    Selling, general and administrative                    10,756,000            4,077,000            3,586,000
    Research and development                                6,174,000            1,051,000              231,000
    Amortization and depreciation                           3,960,000              230,000              194,000
                                                    ------------------   ------------------   ------------------
         Total costs and expenses                          34,536,000           15,921,000           13,236,000
                                                    ------------------   ------------------   ------------------

 (Loss) income from operations                            (9,568,000)              727,000            1,665,000

Other (expense) income:
    Interest expense                                         (899,000)                   -                    -
    Interest and other income                                  68,000               45,000               47,000
                                                    ------------------   ------------------   ------------------
    (Loss)  income from  continuing  operations
     before taxes                                         (10,399,000)             772,000            1,712,000
                                                    ------------------   ------------------   ------------------

    Income tax benefit (expense)                              154,000             (306,000)            (686,000)
                                                    ------------------   ------------------   ------------------
    (Loss) income from continuing operations             $(10,245,000)         $   466,000         $  1,026,000
                                                    ------------------   ------------------   ------------------

Discontinued operation:
    Income from operations of discontinued
         segment before taxes                                       -              251,000              671,000

    Applicable tax expense                                          -              100,000              268,000
                                                    ------------------   -------------------   -----------------
    Income from operations of discontinued
     segment                                                        -              151,000              403,000
                                                    ------------------   ------------------   ------------------
Net (loss) income                                       $(10,245,000)          $   617,000         $  1,429,000
                                                    ==================   ==================   ==================
Net (loss) income per share - basic and diluted:
    From continuing operations                          $      (3.00)          $      0.31         $       0.69
    From discontinued operations                        $          -           $      0.10         $       0.27
                                                    ------------------   -------------------   -----------------
    Net (loss) income                                   $      (3.00)          $      0.41         $       0.96
                                                    ==================   ==================   ==================
    Weighted    average    common    shares   -
    outstanding - basic and diluted                         3,418,000            1,490,000            1,490,000
                                                    ==================   ==================   ==================
</TABLE>

See notes to consolidated financial statements.

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



                                       38
<PAGE>


                                CARECENTRIC, INC.
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
<S>                       <C>         <C>             <C>                       <C>          <C>         <C>             <C>

                                                                                Additional                                 Total
                               Common Stock              Preferred Stock         Paid-in       Stock      Accumulated  Shareholders'
                            Shares        Stock        Shares        Stock       Capital      Warrants      Deficit        Equity
------------------------- ----------  -----------     ----------  ---------     ------------ ----------  ------------- -------------
Balance at
December 31, 1997             1,000    $   1,000                                $    230,000              $(1,871,000)  $(1,640,000)

Net Income                                                                                                  1,429,000     1,429,000

Dividends Paid to Mestek                                                                                     (770,000)     (770,000)
                          -----------  -----------   -----------  ------------  ------------  ----------  ------------   -----------
Balance at
December 31, 1998             1,000    $   1,000                                $    230,000              $(1,212,000)  $  (981,000)

Capital contribution
from Mestek                                                                        1,030,000                              1,030,000

Net Income                                                                                                    617,000       617,000

Dividends Paid to Mestek                                                                                     (161,000)     (161,000)
                          -----------  -----------   -----------  ------------   -----------  ----------- -------------  -----------
Balance at
December 31, 1999             1,000    $   1,000                                  $1,260,000              $  (756,000)     $505,000

MCS, Inc. shares
eliminated in merger         (1,000)      (1,000)                                                                            (1,000)

CareCentric, Inc.
shares post merger
$.001 par                 3,850,000        4,000                                  19,810,000  $1,000,000                 20,814,000

Issuance of $.001 par
value preferred stock
in connection with
merger                                                 6,848,000       $7,000                                                 7,000
Series B, 5,600,000 shares
Series C, 850,000 shares
Series D, 398,000 shares

Net loss                                                                                                  (10,245,000)  (10,245,000)
                          -----------  -----------   -----------  ------------   -----------  ----------  ------------  ------------
Balance at
December 31, 2000         3,850,000    $  4,000        6,848,000     $   7,000   $21,070,000   1,000,000 $(11,001,000)  $11,080,000
                          ===========  ===========   ===========  ============   ===========  ========== ============= =============

</TABLE>

See notes to consolidated financial statements.

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


                                       39
<PAGE>

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


                                                            ---------------    --------------    --------------
                                                                 2000               1999              1998
                                                            ---------------    --------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                           $ (10,245,000)      $   617,000       $  1,429,000

ADJUSTMENTS  TO  RECONCILE  NET (LOSS)
INCOME TO NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES:
   Provision for doubtful accounts                                385,000                 -            163,000
   Amortization and depreciation                                3,960,000           240,000            194,000

CHANGE IN ASSETS AND LIABILITIES,
NET OF ACQUISITIONS:  (SEE NOTE 2)
   Accounts receivable                                           (929,000)         (205,000)          (304,000)
   Prepaid expenses and other current assets                      159,000           115,000            129,000
   Other assets                                                 1,122,000          (983,000)                 -
   Accounts payable                                            (2,684,000)          281,000           (251,000)
   Accrued compensation                                           (88,000)         (395,000)           (87,000)
   Accrued liabilities                                           (730,000)          557,000             70,000
   Customer deposits                                              949,000          (270,000)            30,000
   Unearned revenues                                              726,000          (242,000)           (55,000)
                                                            ---------------    --------------    --------------
      Net cash (used in) provided by operating
        activities                                             (7,222,000)         (285,000)         1,318,000
                                                            ---------------    --------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of software, furniture and equipment                    (658,000)         (597,000)          (528,000)
                                                            ---------------    --------------    --------------
      Net cash used in investing activities                      (658,000)         (597,000)          (528,000)
                                                            ---------------    --------------    --------------

CASH FLOW FROM FINANCING ACTIVITIES:
Cash received in connection with MCS merger                     3,547,000                 -                  -
Capital contribution form former parent                                 -         1,030,000                  -
Payment on notes payable                                         (150,000)                -                  -
Proceeds from notes payable                                       600,000                 -                  -
Increase (decrease) in line of credit                           4,198,000                 -                  -
Dividends paid (to Mestek by MCS)                                       -          (161,000)          (770,000)
                                                            ---------------    --------------    --------------
      Net cash provided by financing activities                 8,195,000           869,000           (770,000)
                                                            ---------------    --------------    --------------
      Net change in cash and cash equivalents                     315,000           (13,000)            20,000

Cash and cash equivalents, beginning of period                     47,000            60,000             40,000
                                                            ---------------    --------------    --------------
Cash and cash equivalents, end of period                      $   362,000        $   47,000       $     60,000
                                                            ===============    ==============    ==============
</TABLE>


See notes to consolidated financial statements.

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

                                       40
<PAGE>



                                CARECENTRIC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MCS AS DEEMED ACQUIRER OF CARECENTRIC, INC.

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

     The weighted average common shares for the year ended December 31, 2000 are
recast in the accompanying  Consolidated Statements of Operations to give effect
to the 1,489,853 shares of CareCentric  common stock that were issued to the MCS
shareholders in connection with the  CareCentric/MCS  merger on March 7, 2000 as
though such shares had been  outstanding  for the entire period.  For the period
from  January 1, 2000  through  March 6, 2000,  therefore,  1,489,853  shares of
issued and  outstanding  CareCentric  common stock are deemed to be owned by the
MCS  shareholders.  For the period from March 7, 2000 through December 31, 2000,
there were 3,849,816 total shares of issued and outstanding Company common stock
(after giving effect to the CareCentric/MCS merger). The weighted average shares
for the year  ended  December  31,  1999 are also  recast to give  effect to the
1,489,853  shares  of  CareCentric  common  stock  that  were  issued to the MCS
shareholders  pursuant to the  CareCentric/MCS  merger as though such shares had
been outstanding for the entire period.

BASIS OF PRESENTATION

     The  consolidated  financial  statements  have been prepared by the Company
(which as used herein refers to  CareCentric,  after giving effect to the merger
with  MCS and,  as the  context  requires,  MCS,  prior  to the  CareCentric/MCS
merger),  include the results of operations of the parent company and its wholly
owned  subsidiaries.  All  inter-company  balances  and  transactions  have been
eliminated.

     These financial  statements do not include any adjustments  relating to the
recoverability and classification of recorded asset amounts or classification of
liabilities  that might be necessary should the Company be unable to continue to
operate  in the  normal  course  of  business.  See Note 13 to the  accompanying
Consolidated Financial Statements.

     Certain prior period amounts have been  reclassified to conform to the 2000
financial statement presentation.

DESCRIPTION OF BUSINESS

     The Company is a provider  of  information  technology  systems and related
services and consulting  services  designed to enable home health care providers
to more  effectively  operate their  businesses  and compete in the  prospective
payment system (PPS) and managed care  environments.  The Company's  focus is to
help home health care  providers  streamline  their  operations and better serve
their patients.  CareCentric offers several  comprehensive  software  solutions.
Each of these  software  solutions are designed to enable  customers to generate
and utilize comprehensive  financial,  operational and clinical information.  In
addition to its software  solutions and related software support  services,  the
Company's home health care consulting  services  assist  providers in addressing
the challenges of reducing costs,  maintaining quality,  streamlining operations
and  re-engineering   organizational  structures,  as  well  as  assisting  with
regulatory compliance and merger and acquisition due diligence.

                                       41
<PAGE>

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;  (3) the license fee is fixed and determinable;  (4) collection is
probable;  and  (5)  remaining  obligations  under  the  license  agreement  are
immaterial.  The Company sells and invoices  software  licenses and  maintenance
fees  as  separate  contract  elements,   except  with  respect  to  first  year
maintenance for the  MestaMed(R)  product which is sold in the form of a bundled
turnkey system. 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 MestaMed(R) software revenue 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, accessories and supplies,  professional and technical
consulting  services,  implementation and training products and services,  forms
and case plans, software maintenance and support services, outsourcing services,
as well as home health care management consulting services.

     To the extent that  software and  services  revenues  result from  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 revenues derived from the sale of software licenses requiring
significant modification or customization are recorded based upon the percentage
of completion method using labor hours or contract milestones.  Software support
or  maintenance  allows  customers  to  receive  unspecified   enhancements  and
regulatory data updates in addition to telephone  support.  Consulting  services
revenues are recognized monthly as the related services are performed.

     Revenues for post-contract customer support are recognized ratably over the
term of the support period,  which is typically one year. Post contract customer
support  fees  typically  cover  incremental  product  enhancements,  regulatory
updates  and  correction  of  software  errors.  Separate  fees are  charged for
significant product  enhancements,  new software modules,  additional users, and
migrations to different operating system platforms.

     Subsequent to system shipment, the Company frequently delivers a variety of
add-on  software  and  hardware  components.   Revenues  from  these  sales  are
recognized upon shipment.

     In addition to software  licenses,  software  maintenance and support,  and
related hardware, the Company also provides computer-based training, CD-ROMs and
a number of ancillary  services  including on site  implementation and training,
classroom training,  consulting and "premium" and after-hours support.  Revenues
from such  products  and services are  recognized  monthly as such  products are
delivered and such services are performed.

     Unbilled  receivables  typically represent revenues from ancillary services
performed  and earned in the  current  period but not  billed  until  subsequent
periods,  usually within one month.  Unearned revenues  represent amounts billed
and included in accounts  receivable for which revenue  recognition  has not yet
occurred.


                                       42
<PAGE>

PROPERTY AND EQUIPMENT

     Property and equipment are carried at cost.  Depreciation  and amortization
are computed using the  straight-line  method over the estimated useful lives of
the  assets.  When  assets are retired or  otherwise  disposed  of, the cost and
related accumulated depreciation are removed from the accounts and any resulting
gain or loss is reflected in income for the period.


SOFTWARE DEVELOPMENT EXPENSES

     SFAS No. 86 requires that software development costs incurred subsequent to
the  establishment of technological  feasibility for the product be capitalized.
The Company has no capitalized  development costs as of December 31, 2000 except
those developed technologies  capitalized in connection with the CareCentric/MCS
merger on March 7, 2000 as more fully described in Note 4.


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.


INTANGIBLE ASSETS AND LONG-LIVED ASSETS

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

     The intangible assets arising from the CareCentric/MCS merger are amortized
using the  straight-line  method over the estimated  useful lives of the related
assets  as more  fully  disclosed  in Notes 2 and 4.  The  Company  reviews  its
long-lived and intangible  assets for impairment  whenever  events or changes in
circumstances  indicate  that the carrying  amount may not be  recoverable.  The
measurement of possible  impairment is based upon determining  whether projected
undiscounted  future  cash  flow  from  the use of the  asset  is less  than the
carrying amount of the asset.


INCOME TAXES

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


NET (LOSS) EARNINGS PER SHARE

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

Numerator:
   Net (loss) income               $(10,245,000)       $  617,000    $1,429,000

Denominator:
   Denominator for basic and
   diluted earnings per share -
   weighted-average shares            3,418,000         1,489,853      1,489,853

Net (loss) income per share --
   basic and diluted               $      (3.00)      $      0.41      $    0.96


                                       43
<PAGE>

STOCK BASED COMPENSATION

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


FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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


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.

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


DISCONTINUED OPERATIONS

     The discontinued operations reported in the Company's results of operations
for the year ending December 31, 1999 relate to MCS's Profitworks  segment which
was  distributed  to MCS's former parent  company,  Mestek Inc., on September 1,
1999.


NOTE 2 - CARECENTRIC/MCS MERGER

     On March 7, 2000, MCS completed the merger with CareCentric, Inc. (formerly
known as Simione  Central  Holdings Inc.)  ("CareCentric").  CareCentric  issued
1,489,853  shares of common stock to MCS stockholders in exchange for all of the
outstanding  shares of MCS common stock. This number of shares has been adjusted
to reflect a one-for-five  reverse stock split that was completed by CareCentric
immediately  prior to the merger.  In connection with the closing of the merger,
Mestek  invested $6.0 million in  CareCentric in exchange for 5.6 million shares
of Series B preferred stock and warrants to purchase  400,000 shares (on a split
adjusted basis) of CareCentric common stock.

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

     Pro-forma unaudited results assuming the merger took place as of January 1,
1999, and further assuming that the acquisition of CareCentric  Solutions,  Inc.
by CareCentric on August 12, 1999 took place on January 1, 1999, are as follows:

                                     FOR YEAR ENDED DECEMBER 31,
                         -----------------------------------------------
                                2000                    1999
                         ----------------------- -----------------------

   Net revenues                         $ 27,277,000       $ 40,010,000
   Net (loss)                           $(11,943,000)      $(15,483,000)
   Net (loss) per share - basic         $      (3.10)             (4.02)
   Net (loss) per share - diluted       $      (3.10)             (4.02)


                                       44
<PAGE>

NOTE 3.  PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

         Purchased software, furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
   <S>                          <C>                  <C>                   <C>
                                                                            DEPRECIATION
                                  DECEMBER 31,             DECEMBER 31,       ESTIMATED
                                      2000                     1999         USEFUL LIVES
                                 ---------------      -----------------    ---------------

    Furniture and Fixtures       $    1,551,000       $     315,000         10 years
    Computer equipment                                                       5 years
                                      6,050,000           1,483,000
                                ----------------      -----------------
    Accumulated depreciation          7,601,000           1,798,000
                                     (5,644,000)           (878,000)
                                 ---------------      -----------------
                                 $    1,957,000       $     920,000
                                 ===============      =================
</TABLE>


NOTE 4.  INTANGIBLE ASSETS

         Intangible assets consisted of the following:

<TABLE>
<CAPTION>
    <S>                                <C>                 <C>                    <C>                 <C>
                                                               ACCUMULATED            NET BOOK            AMORTIZATION
                                             COST             AMORTIZATION              VALUE                PERIOD
                                       -----------------   --------------------   ------------------  ---------------------

    Developed technology                    $10,650,000         $  (1,109,000)         $  9,541,000         8 years
    Assembled workforce                                                                                     5 years
                                              2,300,000              (383,000)            1,917,000
    Customer base                                                                                           9 years
                                              1,700,000              (157,000)            1,543,000
    Goodwill                                                                                                7 years
                                             11,851,000            (1,447,000)           10,404,000
                                       -----------------   --------------------   ------------------
                                            $26,501,000         $  (3,096,000)         $ 23,405,000
                                       =================   ====================   ==================
</TABLE>


NOTE 5 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

                                     December 31, 2000    December 31, 1999
                                     -----------------    -----------------

SHORT TERM:
Line of Credit                       $   5,996,000
Note Payable - Mestek                      600,000       $          -
                                     ===============       ====================

LONG TERM:
Convertible Note Payable -
     Barrett C. O'Donnell            $      600,000        $          -
                                     ==============        =====================


Line of Credit:

     On July 12, 2000, the Company entered into a $6.0 million Loan and Security
Agreement  facility (the  Wainwright  Facility) with  Wainwright  Bank and Trust
Company,  a commercial  bank,  under which the Company  granted a first priority
position on substantially all of its assets as security. The Wainwright Facility
was used to pay off the line of credit with Silicon  Valley Bank,  certain short
term loans from Mestek,  Inc., and a loan from David O. Ellis.  Borrowings under
the Wainwright  Facility  accrue  interest,  at the bank's prime rate per annum,
require monthly  payments of interest and mature on July 12, 2001. The Company's
obligations   under  the  Wainwright   Facility  are  guaranteed  by  Mestek  in
consideration  of which the  Company  has issued a warrant to Mestek to purchase
104,712 shares of the Company's  common stock as more fully  explained in Note 9
to these Financial Statements.

                                       45
<PAGE>

Convertible Note Payable - Barrett C. O'Donnell:

     On November 11, 1999,  Simione borrowed  $500,000 from Barrett C. O'Donnell
and  $250,000  from David O. Ellis,  both on an  unsecured  basis,  and executed
promissory  notes in  connection  therewith.  Dr.  Ellis and Mr.  O'Donnell  are
directors of the Company. When the CareCentric/MCS merger was completed on March
7, 2000, the Company succeeded to both of these obligations. The note payable to
Dr. Ellis,  which accrued interest at 9% per annum, was paid in full on July 12,
2000 in  advance  of its  August  15,  2000  maturity.  The note  payable to Mr.
O'Donnell  included interest at 9% per annum, was scheduled to mature on May 11,
2002, and required  quarterly  payments of accrued interest.  On August 8, 2000,
the $500,000 note payable to Mr.  O'Donnell,  together with $100,000 of deferred
salary, was cancelled in exchange for a $600,000 subordinated note,  convertible
into  CareCentric  common  stock at a strike  price of  $2.51  per  share,  with
interest at 9% per annum and a five-year maturity.

Note Payable - Mestek:

     The Company is obligated under a one year unsecured  promissory note in the
principal  amount of  $600,000  payable to Mestek Inc.  which bears  interest at
prime with  interest  payable  semiannually  and which matures on July 30, 2001.
This note covers funds  advanced by Mestek to  CareCentric  to cover payroll and
accounts  payable  obligations  incurred by the Company during the period of its
transition of senior  lenders from Silicon  Valley Bank to  Wainwright  Bank and
Trust Company.

J.E. Reed Facility:

     On June 22, 2000, the Company entered into a new financing facility (the J.
E. Reed  Facility)  provided by John E. Reed,  Chairman of  CareCentric  and the
Chairman and Chief  Executive  Officer of Mestek,  Inc. The J. E. Reed  Facility
consists of a $6.0 million  subordinated  revolving line of credit,  convertible
into  common  stock of the  Company at a strike  price of $2.51 per share,  with
interest at 9% per annum and a five-year  maturity.  The J. E. Reed Facility can
be drawn down by the Company as needed in $500,000  increments and is secured by
a second position on substantially  all of the Company's  assets.  No borrowings
were outstanding under the J. E. Reed Facility as of December 31, 2000.

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


NOTE 6 - COMMITMENTS AND CONTINGENCIES

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

     The  Company  leases its office  facilities  and  certain  equipment  under
various operating lease agreements,  some of which are with related parties (see
Note 11).  These  leases  require  the  Company  to pay  taxes,  insurance,  and
maintenance  expenses  and provide  for renewal  options at the then fair market
rental value of the property.

     Aggregate annual rental payments for operating  leases with  non-cancelable
lease  terms in excess  of one year,  net of  non-cancelable  subleases,  are as
follows:

     Years ended December 31,

     2001            $1,526,000
     2002             1,309,000
     2003             1,118,000
     2004               879,000
     2005               719,000
     --------------------------
     Thereafter         553,000
                     ----------
     Total           $6,104,000


NOTE 7.  INCOME TAXES

     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:

                                       46
<PAGE>

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

                                                           YEARS ENDED DECEMBER 31,
                                                          2000                 1999
Deferred tax assets:
      Net operating loss                          $      10,900,000     $               -
      Severance and other restructuring charges             837,000                     -
      Allowance for doubtful accounts                       929,000                     -
      Deferred revenue                                    2,864,000                     -
      Depreciation                                          226,000                     -
      Other                                                 575,000                     -
                                                    -----------------     -----------------
Total deferred tax assets                                16,331,000                     -
Valuation allowance                                     (16,331,000)                    -
                                                    -----------------     -----------------
                                                  $                -    $               -
                                                    =================     =================
</TABLE>

     The Company has  approximately  $28.6 million of net  operating  losses for
income tax purposes,  including  approximately $22.0 million incurred by Simione
Central Holdings, Inc. prior to the merger on March 7, 2000, available to offset
future taxable income.  Such losses begin expiring in 2010. The Company's use of
the net operating  losses  incurred by Simione prior to the merger is subject to
limitations  in the Internal  Revenue Code relating to changes in  ownership.  A
valuation  allowance reducing the total 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, 2000.

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

                                                                     YEARS ENDED DECEMBER 31,
                                                         2000               1999                  1998
                                                         ----               ----                  ----

Federal tax benefit computed at statutory rates    $ (3,536,000)             $  262,000            $  582,000
State income taxes, net of federal effect              (615,000)                 44,000               104,000
Other, net                                              463,000                      -                      -
Change in valuation allowance                         3,534,000                      -                      -
                                                  ---------------      ----------------       ---------------

Income tax expense                                   $ (154,000)             $  306,000            $ 686,000
                                                  ===============      ================       ===============
</TABLE>


NOTE 8. - EMPLOYEE BENEFIT PLANS

     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  $189,000,  $76,000  and  $67,000  in  2000,  1999  and  1998,
respectively.  These  contributions  relate to the MCS 401(k)  Plan for 1999 and
1998 and to the Simione Central  Holdings,  Inc. 401(k) Plan, which survived the
merger, for 2000.


NOTE 9 - SHAREHOLDERS' EQUITY

     Subsequent to the  CareCentric/MCS  Merger on March 7, 2000,  the Company's
Shareholders'  Equity  (all on a  split  adjusted  basis)  is  comprised  of the
following:

     Common Shares - 20,000,000 shares  authorized,  $.001 par value,  3,849,816
shares issued and outstanding.  1,489,853 of such shares were issued on March 7,
2000 to the former MCS common  shareholders.  606,904 of such shares were issued
on March  7,  2000 to the  former  preferred  shareholders  and  noteholders  of
CareCentric  Solutions,  Inc.,  which  shares were  converted  into  CareCentric
(formerly  known as Simione  Central  Holdings Inc.) common shares in connection
with the merger.

     Pursuant  to the  terms of the  July 12,  1999  Merger  Agreement  by which
Simione  acquired  the stock of  CareCentric  Solutions,  Inc.,  the Company was
required  to issue up to an  additional  606,904  shares of common  stock to the
former preferred  shareholders  and noteholders of CareCentric  Solutions if the
average  closing  price of the  Company's  stock for the period  October 1, 2000
through  December  31, 2000 is not equal $15.00 per share.  Since the  Company's
average  closing stock price for the fourth quarter of 2000 was less than $15.00
per share,  on March 19, 2001,  the Company  issued 593,688 shares of its common
stock to the  former  preferred  shareholders  and  noteholders  of  CareCentric
Solutions.  The Company has  asserted  that it is not  required to issue  13,216
additional  shares of its common stock as well as 150,740 shares of common stock
currently  being  held  by it in  escrow  under  the  terms  of the  CareCentric
Solutions  Merger  Agreement  based upon  various  indemnification  and  expense
overages  claims it believes it has  against  the former  CareCentric  Solutions
preferred shareholders and noteholders.  The Company has negotiated a settlement
of these  claims with the  representative  of the former  CareCentric  Solutions
parties  pursuant to which 88,586  shares of common stock will be released  from
escrow  and   distributed  to  the  former   CareCentric   Solutions   preferred
stockholders  and  noteholders,  the  remaining  62,154  escrow  shares  will be
cancelled,  no additional shares of common stock will be issued, and the parties
will execute a comprehensive settlement agreement.

                                       47
<PAGE>

Preferred Stock-10,000,000 shares authorized

     Series B Preferred  Stock -$.001 par value,  5,600,000  shares issued.  The
shares of Series B Preferred  Stock are held by Mestek,  Inc.  (Mestek) and were
issued in  consideration  of $6,000,000  paid to  CareCentric,  Inc. on March 7,
2000, in the form of cash and debt  forgiveness.  The Series B Preferred shares,
as originally issued,  carried 2,240,000 common share votes (on a split adjusted
basis) and were entitled to a 9%  cumulative  dividend,  among other rights.  In
connection  with the Company's  application  for listing on the NASDAQ  SmallCap
Market,  the  Company  reached an  agreement  with Mestek on June 12, 2000 under
which Mestek agreed to allow the aforementioned  number of common share votes to
be reduced to  1,120,000  in  consideration  for the  issuance by the Company to
Mestek of a warrant to acquire up to 490,396 shares of CareCentric common stock,
as more fully described below.

     Series C Preferred  Stock - $.001 par value,  850,000  shares  issued.  The
shares of Series C Preferred Stock are held by Mestek,  Inc. and result from the
conversion of a pre-existing  $850,000  convertible note payable to Mestek, Inc.
The Series C  Preferred  shares  carry  170,000  common  share votes (on a split
adjusted  basis) and are  entitled to an 11%  cumulative  dividend,  among other
rights.

     Series D Preferred  Stock - $.001 par value,  398,406  shares  issued.  The
shares of Series D  Preferred  Stock are held by John E. Reed and were issued on
June 12, 2000 in  consideration of $1.0 million paid to the Company in cash. The
Series D Preferred  shares are entitled to other  rights.

     Common  Stock  Warrants - In  connection  with the issuance of the Series B
Preferred Stock described above,  Mestek,  Inc. received a warrant to acquire up
to 400,000  shares of the Company's  common stock at a per share  exercise price
equal to  $10.875.  In  connection  with the waiver by Mestek,  Inc.  of certain
voting  rights  previously  granted to it,  Mestek  received  on June 12, 2000 a
warrant to acquire up to 490,396 shares of the Company's common stock for a term
of 3 years at a per share  exercise  price equal to $3.21.  In  connection  with
Mestek's  guarantee of the Company's  obligations  under the line of credit from
Wainwright  Bank and Trust Company,  as more fully  explained in Note 5 to these
Financial  Statements,  Mestek received on July 12, 2000 a warrant to acquire up
to 104,712  shares of the Company's  common stock for a term of 3 years at a per
share exercise price equal to $2.51. The aforementioned number of shares and per
share prices are all on a split adjusted basis.

     Stock Options - The Company has granted options to purchase an aggregate of
673,252  shares (on a split  adjusted  basis) of common stock as of December 31,
2000. Of the options granted, none were exercised prior to December 31, 2000 and
101,593 have been  cancelled.  Of the  remaining  571,659  options,  415,426 are
vested and  exercisable as of December 31, 2000. The exercise  prices range from
$2.51 to $73.55 per share, both on a split adjusted basis.

     The following summarizes all stock options as of December 31, 2000: Options
totaling 24,000 shares were  outstanding  and vested under the now  discontinued
1996  Simione  (formerly  CHMS) Plan at exercise  prices  ranging from $15.80 to
$25.00.  Options totaling 1,000 shares were outstanding and vested under the now
discontinued  1997 SCHI NQ  (Directors)  Plan at an  exercise  price of  $43.13.
Non-plan  options  totaling  117,240 shares,  of which 87,907 were vested,  were
outstanding at exercise prices ranging from $2.51 to $52.50. The Simione Central
Holding, Inc. 1997 Omnibus Equity-Based Plan (the "Plan") is the only continuing
stock option plan of the Company.  The Plan offers both incentive  stock options
and non-qualified  stock options.  The Company is authorized to grant options of
up to 450,000  shares of common  stock.  Options  totaling  429,419  shares were
outstanding,  of which,  302,519 shares are vested,  at exercise  prices ranging
from $3.83 to $73.55.  Options totaling 274,800 shares were granted to employees
of the Company in 2000,  249,800 shares  pursuant to the Plan at exercise prices
ranging from $3.83 to $4.00 per share and 25,000 non-plan options at an exercise
price of $2.51 per share.

     On January 5, 2001,  non-qualified  options  totaling  25,000  shares  were
granted  under the Plan to the  non-employee  directors at an exercise  price of
$3.25 per share.

     In  connection  with the  Simione/MCS  merger on March 7, 2000,  Mestek was
granted a series of options to purchase a total of approximately  378,295 shares
of the Company's  common stock (on a split  adjusted  basis).  These options are
exercisable only to the extent that outstanding CareCentric options, warrants or
other  conversion  rights are exercised.  These options were designed to prevent
dilution of Mestek's  ownership  interest  in the Company  after the merger.  As
options, warrants and other common rights are cancelled,  Mestek's option rights
are correspondingly reduced. Due to the contingent nature of these options, they
have been excluded from the following tables. At April 2, 2001,  296,542 of such
options were available under the original terms of issuance.

                                       48
<PAGE>

     A summary of the Company's  stock option activity from December 31, 1999 is
as follows:

                                                                   WEIGHTED
                                                  NUMBER            AVERAGE
                                                    OF             EXERCISE
                                                 OPTIONS             PRICE
                                              ---------------   ----------------
    Outstanding at December 31, 1999                       -
                                              ---------------
    Options Acquired                                 398,452           $  24.10
    Granted                                          274,800           $   3.70
    Exercised                                                           $     -
    Forfeited
                                                   (101,593)           $  33.65
                                              ---------------
    Outstanding at December 31, 2000                                   $  12.45
                                                   571,659
                                              ===============

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

                                             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
-------------------------  ---------------- ----------------- --------------------- ------------- ------------
      $   -       $ 7.36           270,800        9.8               $     3.75           175,000      $  3.83
      $ 7.36      $14.71           165,238        5.7               $     9.62           125,016      $  9.97
      $14.71      $22.07            25,990        5.0               $    15.88            25,990      $ 15.88
      $22.07      $29.42            11,010        5.7               $    25.00            11,010      $ 25.00
      $29.42      $36.78            70,302        6.1               $    32.67            56,536      $ 32.43
      $36.78      $44.13             6,000        5.8               $    42.61             6,000      $ 42.61
      $44.13      $51.49             8,000        7.0               $    45.00             5,333      $ 45.00
      $51.49      $58.84             7,180        6.6               $    55.63             7,180      $ 55.63
      $58.84      $66.20             1,000        6.4               $    60.00             1,000      $ 60.00
      $66.20      $73.55             6,139        8.6               $    73.55             2,361      $ 73.55
                           ----------------                                         -------------
                                   571,659        7.1               $    12.45           415,426      $ 13.40
                           ================                                         =============
</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 5.34%;  no dividends;  a volatility  factor of the
expected  market  price  of  the  Company's  common  stock  of  1.40685;  and  a
weighted-average  expected life of the options of 7.10 years.  The Company's pro
forma net loss and net loss per share (basic and diluted)  are  $10,941,000  and
$3.20, respectively, for 2000.


Stock Purchase Warrants

     At December  31,  2000,  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
            104,712         $   2.51          July 12, 2003
            490,396         $   3.21          June 30, 2003
            400,000         $  10.88          March 7, 2003
     ---------------
          1,020,108
     ===============

     All outstanding warrants are exercisable.


NOTE 10 - SEGMENT RESULTS

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

                                       49
<PAGE>

     The Company evaluates  performance and allocates  resources based on profit
or loss  from  operations,  not  including  gains and  losses  on the  Company's
investment portfolio. The accounting policies of the reportable segments are the
same as those used for the  Consolidated  Financial  Statements.  The  revenues,
operating  (losses)  profits and assets of the Company include the operations of
CareCentric  from March 7, 2000 to December 31, 2000,  the operations of MCS for
the full twelve months ended  December 31, 2000,  and the operations of MCS only
for the twelve  months ended  December  31, 1999 and December 31, 1998,  as more
fully explained in Note 1. Accordingly,  because CareCentric's 1999 results from
operations are not included, comparability between the 1998 and 1999 figures and
the 2000 figures is not meaningful.  See Management's Discussion and Analysis of
Financial  Condition and Results of  Operations  for a discussion of revenue and
results of operations on a "comparable"  basis.  The revenues,  operating losses
and assets of the Company by business segment are as follows:
<TABLE>
<CAPTION>
<S>                             <C>                    <C>                    <C>

                                                           December 31,
                                -------------------------------------------------------------------
                                      2000                    1999                    1998
                                ------------------     --------------------   ---------------------
    Revenues
       Software Systems                20,988,000           $   16,648,000          $   14,901,000
       Consulting                       3,980,000
                                ------------------     --------------------   ---------------------
                 Total              $  24,968,000           $   16,648,000          $   14,901,000
                                ==================     ====================   =====================

    Cost of sales
       Software Systems             $  10,187,000           $   10,563,000          $    9,225,000
       Consulting                       3,459,000
                                ------------------     --------------------   ---------------------
                 Total                 13,646,000           $   10,563,000          $    9,225,000
                                ==================     ====================   =====================

    Research and development
       Software Systems             $   6,174,000            $   1,051,000           $     231,000
                                ==================     ====================   =====================

    Depreciation and
    amortization
       Software Systems             $   3,494,000            $     230,000           $     194,000
       Consulting                         466,000                        -
                                ------------------     --------------------   ---------------------
                 Total              $   3,960,000            $     230,000           $     194,000
                                ==================     ====================   =====================

    Net income (loss)
    from Continuing
    Operations
       Software Systems            $   (10,301,000)          $     466,000          $    1,026,000
       Consulting                            56,000
                                --------------------   --------------------   ---------------------
                 Total                 (10,245,000)          $     466,000          $    1,026,000
                                ====================   ====================   =====================

    Assets
       Software Systems            $     30,648,000          $   6,696,000          $    5,279,000
       Consulting                         4,472,000                      -                       -
                                --------------------   --------------------   ---------------------
                 Total                $  35,120,000          $   6,696,000          $    5,279,000
                                ====================   ====================   =====================

    Interest expense
       Software Systems                $    899,000             $        -              $        -
                                --------------------   --------------------   ---------------------
                 Total                 $    899,000             $        -              $        -
                                ====================   ====================   =====================

    Income taxes
       Software Systems               $   (154,000)           $    306,000           $     686,000
                                --------------------   --------------------   ---------------------
                 Total                $   (154,000)           $    306,000           $     686,000
                                ====================   ====================   =====================

    Expenditures for long-
      lived Assets
       Software Systems               $     658,000          $     597,000          $      528,000
                                --------------------   --------------------   ---------------------
                 Total                $     658,000          $     597,000          $      528,000
                                ====================   ====================   =====================
</TABLE>

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


                                       50
<PAGE>

NOTE 11 - RELATED PARTY TRANSACTIONS

     A  shareholder  and  director 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.  Annual rental  payments  under this lease are  approximately
$136,000 per year through 2002.

     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 CareCentric.

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

     Stephen M. Shea remains Senior Vice President and Chief  Financial  Officer
of Mestek,  Inc. while  performing his duties as Chief Financial  Officer of the
Company.

     As of December 31, 2000, the Company had one promissory note outstanding to
a director. The note is described in Note 5 to these Financial Statements.

     John  E.  Reed  is a  director  and a  significant,  but  not  controlling,
shareholder  of the  Wainwright  Bank and Trust  Company  which has provided the
Company with a $6.0 million line of credit, as more fully explained in Note 5 to
the Financial Statements.

     John E. Reed,  Chairman  of the Company and  Chairman  and Chief  Executive
Officer of Mestek,  Inc.,  has  provided the Company with a $6.0 million line of
credit  (unrelated to the Wainwright  Bank and Trust $6.0 million line of credit
described  above) as more fully described in Note 9 to the Financial  Statements
and has also purchased $1.0 million of the Company's Series D Preferred Stock on
June 12, 2000, as more fully described in Note 9 to these Financial  Statements.
An  independent  committee of the Company's  Board of  Directors,  consisting of
Barrett C. O'Donnell and David O. Ellis, negotiated the terms of Mr. Reed's debt
and equity investments in the Company.  The issuance of 398,406 shares of Series
D Preferred  Stock to Mr. Reed for his $1.0 million equity  investment was based
on a per share  price of $2.51,  which was the 5-day  average  closing  price of
CareCentric common stock as of the date of the final negotiation of the terms of
Mr.  Reed's  purchase.  The  conversion  price for Mr. Reed's $6.0 million loan,
which converts into CareCentric common stock as described in more detail in Note
5 to these Financial Statements, is also $2.51 per share.

     Warrants  were granted in June 2000 and July 2000 by the Company to Mestek,
Inc. in connection with its waiver of certain voting rights  previously  granted
to it and in connection  with its guarantee of the loan from Wainwright Bank and
Trust  Company to the Company.  The terms of the warrants (as  described in more
detail in Note 9 to these  Financial  Statements)  were based on negotiations by
independent committees of the Boards of Directors of the Company and Mestek.


NOTE 12 - LICENSE AGREEMENTS

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


NOTE 13- LIQUIDITY

     As disclosed in the financial  statements,  the Company's  operations  have
used significant  amounts of cash in 2000 and during the first quarter of fiscal
2001. The Company has a working  capital  deficit of $13,765,000 at December 31,
2000, and has borrowed since December 31, 2000 approximately $1,700,000 from its
majority  shareholder  through  March  31,  2001,  in order to meet its  working
capital needs.

     The merger with  Simione  added  additional  products  and  resources  and,
importantly,  added to the Company's  critical  mass of installed  sites but the
Company's  longer term success will depend upon increased  sales of new software
systems and  successful  installation  performance,  including in particular the
Company's Smart ClipBoard(R) and MestaMed(R) products.

                                       51
<PAGE>

     As of  March  31,  2001,  the  Company  has  untapped  credit  capacity  of
approximately $4.3 million from its majority  shareholder.  The Company believes
that its funding  sources,  in combination with the funds available from cash to
be generated  from future  operations,  will be sufficient to meet the Company's
operating  requirements through at least December 31, 2001, assuming no material
adverse change in the operation of the Company's  business.  Notwithstanding the
financial  conditions  prevailing  in the home health  marketplace,  the Company
continued to fund significant  product  development  initiatives during 2000 and
during  the  first  quarter  of  2001.  Accordingly,   until  revenues  increase
sufficiently to cover these  forward-looking  costs and operating expenses,  the
Company  remains  dependent on its majority  shareholder for its working capital
financing.  The  Company's  majority  shareholder  has stated his  intention and
ability to continue to advance cash to the Company in accordance  with the terms
of his credit facility.

 NOTE 14.  SUBSEQUENT EVENTS

     On January 31,  2001,  the Company  changed its name from  Simione  Central
Holdings,  Inc. to CareCentric,  Inc. pursuant to a Certificate of Ownership and
Merger filed under  applicable  provisions of the Delaware  General  Corporation
Law. On the same date,  the Company's two  operating  subsidiaries  also changed
their names, with Simione Central Consulting,  Inc. changing its name to Simione
Consulting,  Inc.  and  Simione  Central  National,  LLC  changing  its  name to
CareCentric National, LLC pursuant to filings made with the Georgia Secretary of
State's office.

     Pursuant to the terms of the July 12, 1999  Merger  Agreement  by which the
company  acquired  the stock of  CareCentric  Solutions,  Inc.,  the Company was
required  to issue up to an  additional  606,904  shares of common  stock to the
former preferred  shareholders  and noteholders of CareCentric  Solutions if the
average  closing  price of the  Company's  stock for the period  October 1, 2000
through  December  31, 2000 is not equal $15.00 per share.  Since the  Company's
average  closing stock price for the fourth quarter of 2000 was less than $15.00
per share,  on March 19, 2001,  the Company  issued 593,688 shares of its common
stock to the  former  preferred  shareholders  and  noteholders  of  CareCentric
Solutions.  The Company has  asserted  that it is not  required to issue  13,216
additional  shares of its common stock as well as 150,740 shares of common stock
currently  being  held  by it in  escrow  under  the  terms  of the  CareCentric
Solutions  Merger  Agreement  based upon  various  indemnification  and  expense
overages  claims it believes it has  against  the former  CareCentric  Solutions
preferred shareholders and noteholders.  The Company has negotiated a settlement
of these  claims with the  representative  of the former  CareCentric  Solutions
parties  pursuant to which 88,586  shares of common stock will be released  from
escrow  and   distributed  to  the  former   CareCentric   Solutions   preferred
shareholders  and  noteholders,  the  remaining  62,154  escrow  shares  will be
cancelled,  no additional shares of common stock will be issued, and the parties
will execute a comprehensive settlement agreement.




                                       52
<PAGE>



                                CARECENTRIC, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
<S>                                   <C>              <C>             <C>             <C>             <C>

                                                         Additions
                                                          Charges
                                       Balance at           to          Additional                      Balance at
                                        Beginning        Cost and         Due to        Deductions        End of
                                        of Period         Expense       Acquisition         (1)           Period
                                      --------------   --------------  --------------  --------------  --------------

   Year ended December 31, 2000
   Allowance for Doubtful Accounts        $ 166,000        $ 538,000       $       -        $153,000       $ 551,000
                                      ==============   ==============  ==============  ==============  ==============

   Year ended December 31, 1999
   Allowance for Doubtful Accounts        $ 166,000        $       -       $       -        $      -       $ 166,000
                                      ==============   ==============  ==============  ==============  ==============

   Year ended December 31, 1998
   Allowance for Doubtful Accounts        $   3,000        $ 163,000       $       -        $      -       $ 166,000
                                      ==============   ==============  ==============  ==============  ==============
</TABLE>


   (1)  Write-offs  of  uncollectible  accounts






                                       53

1311194