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PRESS RELEASE
April 22,1997

CHRONIMED ANNOUNCES THIRD-QUARTER AND NINE-MONTH RESULTS

MINNEAPOLIS...April 22, 1997-Chronimed Inc. (NASDAQ: CHMD), today announced its third-quarter and nine-month results for the period ended March 28, 1997. For the third quarter, revenues were $27.1 million, up 20 percent from $22.6 million in last year's third quarter. Income from operations was $1.7 million for the quarter compared to $2.0 million last year, while net income per share totaled 10 cents against 11 cents a year ago.

For the nine months, revenue grew to $86.9 million, up 32 percent from $65.9 million for the same period last year. Income from operations improved to $6.1 million for the nine month period compared to $5.0 million last year, while net income per share improved to $.33 against $.29 a year ago.

Maurice R. Taylor, II, Chronimed's chairman, president, and chief executive officer said, "The fundamental operating results of the Company have been good. We are encouraged by recent increases in self injectables patient referrals, new diabetes product introductions and growth in our StatScript subsidiary. Events during the quarter have focused attention on the Quick Check product. Regardless of the long term resolution of the Quick Check matter, we remain very optimistic about Chronimed's future."

Income from operations in the third quarter includes two one-time financial adjustments. First, Chronimed has written off a $1.39 million note receivable from Health Craft International (HCI), recently concluding that the note is not likely to be fully collectible given technical challenges facing the Company's development project for a new continuous membrane blood glucose monitor and the financial status of HCI. Second, as a result of a previously disclosed shipment hold on Quick Check reagent strips being manufactured by Diagnostic Solutions Inc. (DSI), Chronimed has recorded a favorable adjustment to cost of sales of $1.24 million. This reflects the overaccrual of inventory costs that would have been paid had DSI been able to achieve full volume under its contract with Chronimed. Chronimed's contract with DSI was structured so that the highest volume units were the most expensive. The Company chose to record all units at an estimated average cost for the entire expected volume. Thus, since the unit volume was never fully achieved due to the shipment hold, the overaccrual of inventory costs was recaptured as a favorable adjustment in the third quarter.

During the quarter, revenue from managed care contracts grew 43 percent; revenue from proprietary products, although enhanced by a 20 percent growth in Supreme strip sales, dropped an overall 16 percent due to the Quick Check impact; and revenue from patients exercising choice of medical provider, which includes the StatScript Pharmacy acquisition effective July 1, 1996, increased 43 percent.

Overall gross profit performance for the quarter was 32.9 percent of revenue. Excluding the $1.24 million favorable Quick Check adjustment, the underlying gross profit performance was 28.3 percent, slightly below last year's 29.1 percent. The year-to-year reduction comes from an increase in lower-margin Managed Care revenue.

Chronimed Inc. is a health care company specializing in the unique needs of patients with chronic diseases. Chronimed develops, markets and distributes pharmaceuticals, general medical products, and patient educational materials, products directly to the individual and to the patients of managed care and case management companies nationwide, along with institutions that serve these patients.

Chronimed Inc.
(In thousands, except per share data)

Third Quarter Ended Mar 28,1997

Third Quarter Ended Mar 29,1996

Nine Months Ended Mar 28,1997

Nine Months Ended March 29,1996

Revenue

Percent increase

$27,098

20.1%

$22,560

--

$86,936

31.9%

$65,895

--

Operating Income

Percent of revenue

$1,738

6.4%

$1,9828

8.8%

$6,082

7.0%

$4,986

7.6%

Net Income

Percent decrease

$1,163

4.3%

$1,502

6.7%

$4,179

4.8%

$3,849

5.8%

Net income per share

$.10

$.11

$.33

$.29

Average shares outstanding

12,127

13,428

12,611

13,248

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