Needham, MA, October 29, 1998 – CareMatrix Corporation (AMEX: CMD), a fully integrated assisted living company, today announced record results for the third quarter and nine months ended September 30, 1998.

The Company reported net income of $4,937,234 or $0.27 per share on revenues of $39,604,947 for the third quarter ended September 30, 1998, compared to net income of $1,935,131 or $0.11 per share on revenues of $20,818, 581 for the same quarter of 1997.

For the nine months ended September 30, 1998, the Company reported that earnings tripled to $12,452,959 or $0.69 per share on revenues of $103,417,296, compared to net income of $3,978,095 or $0.23 per share on revenues of $48,840,578 for the same period in 1997.

Robert M. Kaufman, Chief Executive Officer of CareMatrix said, "We are pleased to report that we exceeded consensus estimates for both revenues and earnings for the eighth consecutive quarter. Operating margins for our stabilized assisted living facilities continue to remain strong, and at 39.2% have increased by nearly 2% since the beginning of the year. We expect this trend to continue as our stabilized portfolio continues to become more weighted to our newer, larger facilities. Occupancy levels at these facilities increased to 93.4% which we believe is virtually stabilized occupancy."

During the first three quarters of 1998 the Company added 18 facilities with a resident capacity of 2,700 and currently operates 44 facilities with a resident capacity of over 5,300. In addition 22 facilities with a resident capacity of over 2,400 are expected to open in the next two quarters. Additionally, the Company's development pipeline consists of 84 facilities representing over 10,000 units including 32 in construction representing over 3,450 units. All of the facilities in construction are expected to open in the next twelve months.

Mr. Kaufman added, "The past three months have been significant for us. We closed the SeniorCare Group, Ltd. acquisition that adds seven operating facilities and, when completely built out, will add a total of nine facilities on Long Island and one in New Jersey. This is a very important acquisition for us as it further solidifies our dominance in the metropolitan New York marketplace where we currently have 43 facilities consisting of a 6,000 resident capacity in operation or development. This is the deepest and most affluent marketplace in the country."

"Most importantly, the fill rates for our new facilities remain extremely strong. We converted three facilities to leases in the third quarter and the facilities we opened in the past year, mostly in the last three months, remain ahead of plan. This further validates both the depth of demand for the services we offer as well as our cluster market strategy. We continue to believe that the key to both short and long-term market success is depth in specific target markets to realize the synergies of marketing, name recognition, hiring and cost control."

"We are very excited about the future growth plans of the Company," Mr. Kaufman concluded, "Our plan includes first openings in metropolitan markets such as Philadelphia and San Francisco. We expect to add Chicago and New York City as well in the near future."

"In addition, we continue to believe that larger facilities that offer multiple entry points and a continuum of care to seniors will serve to extend stays and reduce turnover. Furthermore, our plan is to develop several campus sites a year, such as our Princeton, New Jersey site, that will include a combination of independent villas and/or townhouses, supportive independent living, assisted living and Alzheimer's Care all on one site or within close proximity."

CareMatrix Corporation is a leading provider of senior housing services, including assisted living, independent, supportive independent living and specialized programs for people with Alzheimer's disease.

This release contains forward-looking statements regarding the Company’s future plans, operations and prospects. The Company’s actual results could differ materially from the results anticipated in these forward looking statements as a result of uncertainties, including risks relating to demand, pricing, competition, construction, and other factors identified in the Company’s filings with the securities and Exchange Commission.

* Includes impact of conversion of convertible debentures and add back of interest on these debentures.

EDITOR’S NOTE: This release is available on the Internet at http://www.carematrix.com.