1136174--3/15/2007--HYTHIAM

related topics

{regulation, government, change}

{property, intellectual, protect}

{customer, product, revenue}

{product, liability, claim}

{stock, price, operating}

{cost, operation, labor}

{financial, litigation, operation}

{product, candidate, development}

{competitive, industry, competition}

{regulation, change, law}

{personnel, key, retain}

{loss, insurance, financial}

{operation, international, foreign}

{acquisition, growth, future}

{system, service, information}

We may fail to successfully manage and maintain the growth of our business, which could adversely affect our results of operations Our treatment protocols may not be as effective as we believe them to be, which could limit our revenues and adversely affect our business Our protocols may not become widely accepted, which could limit our growth Our industry is highly competitive, and we may not be able to compete successfully We depend on key personnel, the loss of which could impact the ability to manage our business We are subject to personal injury claims, which could result in substantial liabilities that may exceed our insurance coverage If government and third-party payers fail to provide coverage and adequate payment rates for treatment using our protocols, our revenue and prospects for profitability will be harmed Our international operations may be subject to foreign regulation, and the success of our foreign operations will depend on many factors We may not realize the expected benefits of the CompCare acquisition, and may not be able to successfully utilize CompCare s infrastructure There may be ongoing legal challenges to our relationship with CompCare, which could adversely affect our results of operations Risks related to CompCare s business CompCare may not be able to accurately predict utilization of its full-risk contracts resulting in contracts priced at levels insufficient to ensure profitability CompCare may be unsuccessful in managing its new Indiana Medicaid contract, or the contract may be significantly more costly than anticipated CompCare s existing and potential managed care clients operate in a highly competitive environment and may be subject to a higher rate of merger, acquisition and regulation than in other industries Many of CompCare s managed care company clients provide services to groups covered by Medicaid or Children s Health Insurance Program (CHIP) plans susceptible to annual changes in reimbursement rates and eligibility requirements that could ultimately affect CompCare Because providers are responsible for claims submission, the timing of which is uncertain, CompCare must estimate the amount of claims incurred but not reported As a result of CompCare s dependence on a limited number of customers, the loss of any one of these customers, or a reduction in business from any one of them, could have a material, adverse effect on its working capital and future results of operations The industry is subject to extensive state and federal regulations, as well as diverse licensure requirements varying by state. Changes in regulations could affect the profitability of CompCare s contracts or its ability to retain clients or to gain new customers CompCare has an annual seasonality in the usage of its provider network, and its financial results may suffer to the extent it cannot adequately manage periods of increased utilization Risks related to our intellectual property We may not be able to adequately protect the proprietary treatment protocols which are the core of our business Confidentiality agreements with employees, licensees and others may not adequately prevent disclosure of trade secrets and other proprietary information We may be subject to claims that we infringe the intellectual property rights of others, and unfavorable outcomes could harm our business Risks related to our industry Our policies and procedures may not fully comply with complex and increasing regulation by state and federal authorities, which could negatively impact our business operations We may be subject to regulatory and investigative proceedings, which could adversely affect our financial condition or operations The promotion of our protocols may be found to violate federal law concerning off-label uses of prescription drugs, which could prevent us from marketing our protocols Treatment using our protocols may be found to require review or approval, which could delay or prevent the study or use of our protocols Failure to comply with FTC laws or similar state laws could result in sanctions or limit the claims we can make Our business practices may be found to constitute illegal fee-splitting or corporate practice of medicine, which may lead to penalties and adversely affect our business Our business practices may be found to violate anti-kickback, self-referral or false claims laws, which may lead to penalties and adversely affect our business We may be subject to healthcare anti-fraud initiatives, which may lead to penalties and adversely affect our business Our use and disclosure of patient information is subject to privacy and security regulations, which may result in increased costs Risks related to our common stock Our stock price may be subject to substantial volatility, and the value of your investment may decline Over 30% of our stock is controlled by a single stockholder who has the ability to substantially influence the election of directors and other matters submitted to stockholders

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1136174--3/15/2007--HYTHIAM_INC