1238631--4/11/2006--CURATIVE_HEALTH_SERVICES

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{acquisition, growth, future}

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{investment, property, distribution}

{customer, product, revenue}

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{financial, litigation, operation}

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Under the terms of our Plan, we expect our existing shareholders investment to be extinguished and intend to become a private company. Operating in bankruptcy imposes significant risks on our operations. We cannot predict when we will confirm a plan of reorganization and successfully emerge from bankruptcy. We may not be able to obtain confirmation of the Plan. The Bankruptcy Court may determine that the Plan does not satisfy one or more of these requirements, in which case it would not be confirmable by the Bankruptcy Court. We are involved in litigation which may harm the value of our business. If we fail to comply with the terms of our settlement agreement with the government, we could be subject to additional litigation or other governmental actions which could be harmful to our business. The industry in which we operate is subject to extensive government regulation, and non-compliance by us, our suppliers, our customers or our referral sources could harm the business. A substantial percentage of our revenue is attributable to the Medicaid and Medicare programs and has been significantly adversely impacted by recent changes in Medi-Cal reimbursement policies and will continue to be subject to changes in reimbursement policies and other legislative or regulatory initiatives aimed at reducing costs associated with various government programs. Our growth strategy includes the expansion of our branch pharmacy network by the opening of new branch pharmacy locations. We have experienced rapid growth by acquisitions. If we are unable to manage our growth effectively or purchase or integrate new companies, our business could be harmed. We operate in a rapidly changing, consolidating and competitive environment. If we are unable to adapt quickly to these changes, our business and results of operations could be seriously harmed. We may need additional capital to finance our growth and capital requirements, which could prevent us from fully pursuing our growth strategy. An impairment of the significant amount of goodwill on our financial statements could adversely affect our results of operations. We are highly dependent on our relationships with a limited number of biopharmaceutical and pharmaceutical suppliers, and the loss of any of these relationships could significantly affect our ability to sustain or grow our revenues. Some biopharmaceutical suppliers in the specialty pharmacy industry have chosen to limit the number of distributors of their products. If we are not selected as a preferred distributor of one or more of our core products, our business and results of operations could be seriously harmed. If we fail to cultivate new or maintain established relationships with the physician referral sources, our revenues may decline. If additional providers obtain access to products we handle at more favorable prices, our business could be harmed. Recent investigations into reporting of average wholesale prices could reduce our pricing and margins. A reduction in the demand for our products and services could result in our reducing the pricing and margins on certain of our products. Our business involves risks of professional, product and hazardous substance liability, and any inability to obtain adequate insurance may adversely affect our business. We rely on key community-based representatives whose absence or loss could harm the business. Our inability to maintain a number of important contractual relationships could adversely affect our operations. Our business will suffer if we lose relationships with payors. Changes in reimbursement rates which cause reductions in the revenues of our operations have adversely affected our Wound Care Management business unit. We are subject to pricing pressures and other risks involved with third-party payors. There is substantial competition in the specialty pharmacy, home infusion and wound care services industries, and we may not be able to compete successfully. If we are unable to effectively adapt to changes in the health care industry, our business will be harmed. There are a number of state and federal laws and regulations that apply to our operations which could harm our business. There is a delay between our performance of services and our reimbursement. We rely heavily on a limited number of shipping providers, and our business could be harmed if their rates are increased or our providers are unavailable. If we do not maintain effective and efficient information systems, our operations may be adversely affected. Provisions of our articles of incorporation and Minnesota law may make it more difficult for a person to receive a change-in-control premium.

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1238631--4/11/2006--CURATIVE_HEALTH_SERVICES_INC