CAREMATRIX CORPORATION ANNOUNCES

RESTATEMENT OF PREVIOUSLY ISSUED

FINANCIAL STATEMENTS

Needham, MA, June 19, 2000 – CareMatrix Corporation (NASDAQ:CMDCE), a fully integrated assisted living company announced today that it will restate its financial statements for the year ended December 31, 1998 and subsequent quarterly periods.  The restatement is expected to reduce pre-tax income by at least $13 million for the year ended December 31, 1998, and by at least $8 million for the first three quarters of 1999. The Company also expects to record at least $12 million of additional charges in the fourth quarter of 1999 in addition to the charges previously announced in March by the Company that total at least $25 million. 

The restatement results primarily from the application of complex accounting rules relevant to certain development, management and lease arrangements the Company entered into with both affiliates of Chancellor Senior Housing Group, Inc., as well as other third parties.  An in depth review was initiated in conjunction with the previously announced charges being recorded in 1999.  It was believed at the time of the preparation of the financial statements that the accounting treatment accorded these arrangements was in conformity with generally accepted accounting principles. Subsequently, it was determined that certain management and development fee income need to be reversed, and that certain start-up losses and related costs for certain leased facilities need to be recognized by the Company rather than the facility owner.  Accordingly, the consolidated financial statements for the year ended December 31, 1998 and for each of the first three quarters of 1999 will be restated to reflect this accounting treatment.

The Company is still evaluating the accounting treatment of certain other transactions and the valuation of certain assets.  The Company has not yet determined if the resolution of these issues will require a further restatement of the above-referenced or any other previously issued financial statements.  The Company will be filing its annual report for 1999 on Form 10-K and subsequently, its quarterly report for the first quarter of 2000 on Form 10-Q. 

CareMatrix Corporation is a leading provider of senior housing services including assisted living, 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, financing, collectibility of receivables, and other factors identified in the Company’s filings with the Securities and Exchange Commission.

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