UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000
Commission File No. 1-11993

MIM CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 05-0489664
(State of incorporation) (IRS Employer Identification No.)

100 Clearbrook Road, Elmsford, New York 10523
(914) 460-1600
(Address and telephone number of Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value per share
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant as of March 1, 2001, was approximately $35.8
million. (Reference is made to the fourth paragraph of Part II, Item 5 herein
for a statement of the assumptions upon which this calculation is based.)

On March 1, 2001, there were outstanding 20,434,120 shares of the
registrant's Common Stock.

Documents Incorporated by Reference

None.

PART I

Item 1. Business

Overview

MIM Corporation (the "Company" or "MIM") is a pharmacy benefit
management, specialty pharmaceutical and fulfillment/e-commerce organization
that partners with healthcare providers and sponsors to control prescription
drug costs. MIM's innovative pharmacy benefit products and services use
clinically sound guidelines to ensure cost control and quality care. MIM's
specialty pharmaceutical division specializes in serving the chronically ill
afflicted with life threatening diseases and genetic impairments. MIM's
fulfillment and e-commerce pharmacy specializes in serving individuals that
require long-term maintenance medications. MIM's online pharmacy, www.MIMRx.com,
develops private label websites to offer affinity groups and healthcare
providers innovative and customized health information services and products on
the Internet for the benefit of their members.

PBM Services

The Company's pharmacy benefit management ("PBM") services offer plan
sponsors a broad range of services designed to ensure the cost-effective
delivery of clinically appropriate pharmacy benefits. The Company's PBM programs
include a number of design features and fee structures that are tailored to suit
a customer's particular needs and cost requirements. In addition to traditional
fee-for-service arrangements, under certain circumstances the Company will offer
alternative pricing methodologies for its various PBM services, including a
fixed fee per member (a "capitated" program), sharing costs exceeding
pre-established per member amounts and sharing savings where costs are less than
pre-established per member amounts. Under certain circumstances, the Company
will also enter into profit sharing arrangements with plan sponsors, thereby
incentivizing a plan sponsor to support fully the Company's cost containment
efforts of such sponsor's pharmacy program. Benefit design and formulary
parameters are managed through a point-of-sale ("POS") claims processing system
through which real-time electronic messages are transmitted to pharmacists to
ensure compliance with specified benefit design and formulary parameters before
services are rendered and prescriptions are dispensed. The Company's
organization and programs are clinically oriented, with many staff members
having pharmacological certification, training and experience. The Company
markets its services to large public health plans (primarily in states with
large Medicaid populations), medium to smaller managed care organizations
("MCOs") emphasizing those operating in states with an active Medicaid waiver
program, self-funded groups, small employer groups, labor unions and third party
administrators representing some or all of the aforementioned groups. The
Company primarily relies on its own employees to solicit business from plan
sponsors, but also on third party administrators and commissioned independent
agents and brokers.

PBM services available to the Company's customers include the following:

Formulary Design and Compliance. The Company offers to its health
maintenance organization ("HMO") and other clients flexible formulary designs to
meet their specific requirements. Many of these plan sponsors do not restrict
coverage to a specific list of pharmaceuticals and are said to have "no"
formulary or an "open" formulary that generally covers all FDA-approved drugs
except certain classes of excluded pharmaceuticals (such as certain vitamins and
cosmetics, experimental, investigative or over-the-counter drugs). As a result
of rising pharmacy program costs, the Company believes that both public and
private health plans have become increasingly receptive to controlling pharmacy
costs by restricting the availability of certain drugs within a given
therapeutic class, other than in cases of medical necessity or other
pre-established prior authorization guidelines, to the extent clinically
appropriate. Once a determination has been made by a plan sponsor to utilize a
"restricted" or "closed" formulary, the Company actively involves its clinical
staff with a plan sponsor's Pharmacy and Therapeutics Committees (which
typically consists of local plan sponsors, prescribers, pharmacists and other
health care professionals) to design clinically appropriate formularies in order
to control pharmacy costs. The composition of the formulary is the
responsibility of, and subject to the final approval of, the plan sponsor.

Controlling program costs through formulary design focuses primarily on
two areas to the extent consistent with accepted medical and pharmacy practices
and applicable law: (i) generic substitution, which involves the selection of

generic drugs as a cost-effective alternative to their bio-equivalent brand name
drugs, and/or (ii) therapeutic interchange, which involves the selection of a
lower cost brand name drug as an alternative to a higher priced brand name drug
within a therapeutic category. Generic substitution may also take place in
combination with therapeutic interchange where a bio-equivalent generic
alternative for a selected lower cost brand drug exists after a therapeutic
interchange has occurred. Increased usage of generic drugs by Company-managed
programs also enables the Company to obtain purchasing concessions and other
financial incentives on generic drugs, which may be shared with plan sponsors.
After a formulary has been established by a plan sponsor, rebates on brand name
drugs are also negotiated with drug manufacturers and are often shared with plan
sponsors.

The primary method for assuring formulary compliance on behalf of a
plan sponsor is by controlling pharmacy reimbursement to ensure that
non-formulary drugs are not dispensed to a plan member, subject to certain
limited exceptions. Formulary compliance is managed with the active assistance
of participating network pharmacies, primarily through prior authorization
procedures, and on-line POS edits as to particular subscribers and other network
communications. Overutilization of medication is monitored and managed through
quantity limitations, based upon nationally recognized standards and guidelines
regarding maintenance versus non-maintenance therapy. Step protocols, which are
procedures requiring that preferred therapies be tried and shown ineffective
before less favored therapies are covered, are also established by the Company
in conjunction with the plan sponsors' Pharmacy and Therapeutics Committees to
control improper utilization of certain high-risk or high-cost medications.

Clinical Services. The clients' formularies typically provide a selection
of covered drugs within each therapeutic class to treat appropriately medical
conditions. However, provision is made for the coverage of non-formulary drugs
(other than excluded products) to members when documented to be clinically
appropriate for that member. Since non-formulary drugs ordinarily are
automatically rejected for coverage by the real-time POS system, procedures are
employed to override restrictions on non-formulary medications for a particular
patient and period of treatment. Restrictions on the use of certain high-risk or
high-cost formulary drugs may be similarly overridden through prior
authorization procedures. Non-formulary overrides and prior authorizations are
processed on the basis of documented, clinically supported medical information
and typically are granted or denied within 48 hours after request. Requests for,
and appeals of denials of coverage in those cases are handled by the Company
through its staff of trained pharmacists and board certified pharmacotherapy
specialists, subject to a plan sponsor's ultimate authority over all such
appeals. Further, in the case of a medical emergency, as determined by the
dispensing network pharmacist, the Company authorizes, without prior approval,
short-term supplies of all medication unless specifically excluded by a plan.

Mail Order Pharmacy. Another way in which the Company believes that
program costs may be reduced is through the distribution of pharmaceutical
products directly to plan sponsors' members via mail order pharmacy services.
The Company provides mail order pharmacy services from a new, fully automated
fulfillment facility in Columbus, Ohio for plan members typically receiving
maintenance medications. The facility utilizes the latest pharmacy technology in
the market place. The mail operation is supported by a customer service
department that is available 24 hours per day, 7 days per week. This affords the
Company and its plan sponsors the ability to reduce cost through mail
distribution as opposed to the more costly retail distribution of prescription
products. The Company's mail order facility provides services to the members of
the Company's PBM customers and other individuals and, as discussed below, is a
key component of the Company's specialty pharmacy programs.

Drug Usage Evaluation. Drug usage is evaluated on a concurrent,
prospective and retrospective basis utilizing the real-time POS system and
proprietary information systems for multiple drug interactions, drug-health
condition interactions, duplication of therapy, step therapy protocol
enforcement, minimum/maximum dose range edits, compliance with prescribed
utilization levels and early refill notification. The Company also maintains an
on-going drug utilization review program in which select medication therapies
are reviewed and data is collected, analyzed and reported for management
applications.

Pharmacy Data Services. The Company utilizes claims data to analyze and
evaluate pharmaceutical utilization and cost trends to support our customers'
understanding of such information through the generation of reports for
management and plan sponsor use, and presentation of information vital to the
plan sponsors understanding of their particular pharmaceutical utilization and
cost trends. These services include drug utilization review, quality assurance,
claims analysis and rebate contract administration. The Company has developed
proprietary systems to provide plan sponsors with real-time access to pharmacy,
financial, claims, prescriber and dispensing data.

Disease Management. The Company designs and administers programs to
maximize the benefits of pharmaceutical utilization as a tool in achieving
therapy goals for certain targeted diseases. Programs focus on preventing

high-risk events, such as asthma exacerbation or stroke, through appropriate use
of pharmaceuticals, while eliminating unnecessary or duplicate therapies. Key
components of these programs include health care provider training, integration
of care between health disciplines, monitoring of patient compliance,
measurement of care process and quality, and providing feedback for continuous
improvement in achieving therapy goals. As described more fully below under
"Specialty Pharmacy Programs," many of these same tools are used by the Company
in delivering specialty pharmaceutical services and products to patients
afflicted with the chronic diseases managed by the Company.

Behavioral Health Pharmacy Services. In recent years, plan sponsors,
particularly MCOs have recognized the particular and specialized behavioral
health needs of certain individuals within an MCOs membership. As a result, many
MCOs have separated the behavioral health population into a separate management
area. The Company provides services that encourage the proper and cost-effective
utilization of behavioral health medication to enrollees of behavioral health
organizations, which are traditionally (but not always) affiliated with MCOs.
Through the development of provider education programs, utilization protocols
and prescription dispensing evaluation tools, the Company is able to integrate
pharmaceutical behavioral or mental health therapies with other medical
therapies to enhance patient compliance and minimize unnecessary or sub optimal
prescribing practices. These services are integrated into the plan sponsor's
package of behavioral health care products for marketing to private insurers,
public managed care programs and other health providers.

At December 31, 2000, the Company provided PBM services to 126 plan
sponsors with approximately 5.5 million plan members, including six plan
sponsors providing health care benefits to State of Tennessee residents who were
formerly Medicaid-eligible and certain uninsured state residents under
Tennessee's TennCare(R) Medicaid waiver program. See "The TennCare(R) Program"
below.

Specialty Pharmacy Programs

BioScrip(TM), the Company's specialty pharmacy program, offers clients a
menu of services ranging from a distribution only model to a complete pharmacy
management program. The Company provides specialized pharmaceutical products and
services to plan sponsors' members afflicted with specific chronic illnesses,
genetic impairments or other life threatening conditions. The Company has
developed specialty pharmacy programs for the following chronic illnesses:
HIV/AIDS, multiple sclerosis, hemophilia, Gaucher's disease, arthritis,
infertility, respiratory syncytial virus (RSV), growth hormone deficiency,
hepatitis C, Crohn's disease and transplants. As discussed more fully below, the
Company provides infusion and other high cost pharmaceutical therapies to
patients through IV certified nurse practitioners or a patient's treating
physician through its subsidiary American Disiease Management Associates
("ADIMA").

The Company provides specialty pharmacy products and services to MCOs,
third party administrators and other plan sponsors currently utilizing the
Company's PBM services and to plan sponsors and directly to individuals not
currently utilizing such services. These specialty programs utilize the
Company's clinical and design management expertise to manage chronically ill
patients requiring long-term maintenance therapies and receive such clinical
services in conjunction with the distribution of pharmaceutical prescription
products to patients afflicted with the chronic illnesses managed by the
Company. The goal of these programs is to, among other things, manage the
pharmaceutical utilization of those patients to ensure compliance with
prescribed therapies, thereby avoiding costly follow-up therapies including
hospital admission.

The Company provides specialty pharmaceutical services to patients with
high cost chronic illnesses, chronic disorders and other life threatening
conditions in an effort to improve outcomes for these patients and to reduce the
associated cost of care for the plan sponsor providing health care benefits to
such patients.

The injectable and oral specialty products are generally dispensed to
patients (directly or to their physician's or other clinician's office) from the
Company's mail order fulfillment facility in Columbus, Ohio.

In addition to the delivery of efficacious prescription pharmaceutical
products to patients afflicted with the chronic illnesses managed by the
Company, the Company has designed and administers disease state management
programs to ensure a patient's utilization compliance and to minimize the
debilitating effects of a patient's illness and any associated side effects. The
principal specialty pharmacy services provided by the Company include disease
state management and compliance programs, expert customer service and patient
education programs.

Generally infusion patients are not afflicted with chronic illnesses
but are being administered intravenous medications typically after a patient's
discharge from a hospital after a surgical or other procedure requiring the
administration of post operative intravenous medication, which is most cost
effectively delivered to a patient in their home. Infusion therapy integrates a
combination of services that focus primarily on the administration and
preparation of pharmaceutical infusion solutions for chemotherapy, pain
management, antibiotic therapy and nutritional (parenteral) support.

PBM and Specialty Marketing Efforts

Since the development of the injectable BioScrip(TM) programs and the
ADIMA acquisition, the Company offers plan sponsors comprehensive pharmacy
services that manages all aspects of a plan sponsor's pharmaceutical needs,
including traditional PBM services, specialty pharmacy services to cater to the
needs of the chronically ill and genetically impaired and to those patients
receiving intravenous therapies upon discharge from a hospital environment. The
Company's goal is to provide pharmacy-related pharmaceutical products and
services to all of a plan sponsor's members regardless of that patient's
condition or stage of life.

The Company cross markets its specialty pharmacy products and services
to its existing PBM customers, including MCOs and other plan sponsors to which
the Company provides PBM services. The Company intends to cross-market its
infusion products and services to its injectable program customers and vice
versa. The Company also intends to cross-market its PBM services to its
specialty customers. The Company is actually marketing its specialty
pharmaceutical products and services to other plan sponsors as a result of the
pharmacy services industry's recognition of the Company's superior clinical
expertise. The Company has been successful in contracting to provide specialty
pharmacy services, generally on a non-exclusive basis, to MCOs that would not
have selected the Company as its PBM, although the Company has recently begun to
generate sales through the enrollment of specific patients in these programs.

e-Commerce Services

MIMRx.com, a subsidiary of the Company, markets and sells customized
private label pharmacy related websites for plan sponsors, affinity groups and
other e-commerce merchants ("e-commerce partners"). These websites offer and
sell prescription pharmaceuticals, vitamins, minerals and supplements,
over-the-counter products, nutritional and herbal remedies and supplements,
health and beauty aids and other products typically offered for sale in large
retail pharmacies. In addition, these websites provide users with general
healthcare information and specific information on prescription and
over-the-counter products, as well as on most vitamins, minerals and herbal
products. MIMRx.com, through the Company's fulfillment and mail order
operations, handles all aspects of the fulfillment, distribution of, and in some
cases billing and collection for, products (including prescriptions, vitamins,
OTC's and health and beauty aids) purchased through each e-commerce partner's
private label website. Although numerous competitors dominate the e-commerce
marketplace, many of which have significantly greater resources, MIMRx.com's
strategic goal is to become a leader in developing and providing innovative
customized health information services and products through the Internet. See
"Competition" below.

The TennCare(R) Program

Historically, a majority of the Company's revenues have been derived
from providing PBM services in the State of Tennessee to MCOs participating in
the State of Tennessee's TennCare(R) program and behavioral health organizations
("BHOs") participating in the State of Tennessee's TennCare(R) Partners program.
From January 1994 through December 31, 1998, the Company provided its PBM
services as a subcontractor to RxCare of Tennessee, Inc. ("RxCare"). RxCare is a
pharmacy services administrative organization owned by the Tennessee Pharmacists
Association. Under the agreement with RxCare ("RxCare Contract"), the Company
performed essentially all of RxCare's obligations under its PBM agreements with
plan sponsors and paid RxCare certain amounts, including a share of the profit
from the contracts, if any.

The Company and RxCare did not renew the RxCare Contract, which expired
on December 31, 1998. The negotiated termination of its relationship with
RxCare, among other things, allowed the Company to directly market its services
to Tennessee customers (including those under contract with RxCare at such time)
prior to the expiration of the RxCare Contract. The RxCare Contract had
previously prohibited the Company from soliciting and/or marketing its PBM
services in Tennessee other than on behalf of, and for the benefit of, RxCare.
The Company's marketing efforts resulted in the Company executing agreements
with all of the MCOs for the TennCare(R) lives previously managed under the
RxCare Contract, as well as substantially all third party administrators
("TPAs") and employer groups previously managed under the RxCare Contract.

The TennCare(R) program operates under a demonstration waiver from the
United States Health Care Financing Agency ("HCFA"). That waiver is the basis of
the Company's ongoing service to those MCOs in the TennCare(R) program. The
waiver is due to expire on December 31, 2001. However, the Company believes that
pharmacy benefits will continue to be provided to Medicaid and other eligible
TennCare(R) enrollees through MCOs in one form or another, although there can be
no assurances that such pharmacy benefits will continue or that the Company
would be chosen to continue to provide pharmacy benefits to enrollees of a
successor program. If the waiver is not renewed and the Company is not providing
pharmacy benefits to those lives under a successor program or arrangement, then
the failure to provide such services would have a material and adverse affect on
the financial position and results of operations of the Company. The ongoing
funding for the TennCare(R) program has been the subject of significant
discussion at various governmental levels since its inception. Should the
funding sources for the TennCare(R) program change significantly, the Company's
ability to serve those customers could be impacted and would also materially and
adversely affect the financial position and results of operations of the
Company.

On November 1, 2000, the TennCare(R) program adopted new rules for
recipients to allow for a 14-day supply of a non-formulary medication or a
medication requiring a prior authorization or medical necessity determination
should the dispensing pharmacist be unable to contact the prescribing physician
to switch to a formulary medication or process a prior authorization request for
approval. This mechanism allows for TennCare(R) members to obtain medication
while their request is in an appeal process with TennCare(R) MCOs and the
TennCare(R) Solutions Bureau. The implementation of these rules may impact
formulary adherence resulting in a change to the amount of pharmaceutical
manufacturers rebates earned by the Company. A reduction in rebates would
adversely impact the financial results of the Company. At this time the Company
cannot estimate the financial impact, if any, as a result of the implementation
of new rules.

Other Matters

As a result of providing capitated PBM services to certain TennCare(R)
MCOs, the Company's pharmaceutical claims costs historically have been subject
to significant increases from October through February, which the Company
believes is due to the need for increased medical attention to, and intervention
with, an MCOs' members due to seasonality. The resulting increase in
pharmaceutical costs impacts the profitability of capitated contracts and other
capitated arrangements. For the year ended December 31, 2000, approximately 28%
of the Company's revenues were generated from capitated contracts compared to
approximately 32% in 1999 while non-capitated business (including mail order
services) represented approximately 72% and 68%, respectively. Non-capitated
arrangements mitigate the adverse effect on profitability of higher
pharmaceutical costs incurred under capitated contracts, as higher utilization
positively impacts profitability under fee-for-service (or non-capitated)
arrangements. The Company presently anticipates that approximately 20% of its
revenues in fiscal 2001 will be derived from capitated arrangements.

Changes in prices charged by manufacturers and wholesalers or
distributors for pharmaceuticals, a component of pharmaceutical claims costs,
directly affects the Company's cost of revenue. The Company believes that it is
likely that prices will continue to increase, which could have an adverse effect
on the Company's gross profit on capitated arrangements. Because plan sponsors
are billed for the cost of all prescriptions dispensed in fee-for-service
arrangements, the Company's gross profit is not adversely affected by changes in
pharmaceutical prices. However, under capitated arrangements, the Company is
responsible for increases in prescription costs, which adversely affects the
Company's gross profit. In such instances, the Company may be required to
increase capitated contract rates on new contracts and upon renewal of existing
capitated contracts. However, there can be no assurance that the Company will be
successful in obtaining these rate increases. The greater proportion of
fee-for-service contracts with the Company's customers in 2000 compared to prior
years reduced the potential adverse effects of price increases, although no
assurance can be given that the recent trend towards fee for service
arrangements will continue or that a substantial increase in drug costs or
utilization would not negatively affect the Company's overall profitability in
any period.

Generally, loss contracts arise only on capitated contracts and primarily
result from higher than expected pharmacy utilization rates, higher than
expected inflation in drug costs and the inability of the Company to restrict an
MCOs' formulary to the extent anticipated by the Company at the time contracted
PBM services are implemented, thereby resulting in higher than expected drug
costs. At such time as management estimates that a contract will sustain losses
over its remaining contractual life, a reserve is established for these
estimated losses. There are currently no loss contracts and management does not
believe that there is an overall trend towards losses on its existing capitated
contracts.

Competition

The PBM Market. The PBM and specialty businesses are highly
competitive, and many of the Company's current and potential competitors have
considerably greater financial, technical, marketing and other resources than
the Company. The PBM business includes a number of large, well-capitalized
companies with nationwide operations and many smaller organizations typically
operating on a local or regional basis. One of the larger organizations is owned
by or otherwise related to a brand name drug manufacturer and may have
significant influence on the distribution of pharmaceuticals. Among larger
companies offering PBM services are Merck-Medco Managed Care, L.L.C. (a
subsidiary of Merck & Co., Inc.), Caremark Rx Inc., Advance PCS, Express Scripts
Inc., and National Prescription Administrators, Inc. Numerous health insurance
and Blue Cross Blue Shield plans, MCOs and retail drugstores, such as CVS
Corporation and Rite Aid Corporation also have their own PBM capabilities.

Competition in the PBM business to a large extent is based upon price,
although other factors, including quality and breadth of services and products,
are also important. The Company believes that its ability and willingness, where
appropriate, to assume or share its customers' financial risks, its clinical
orientation, its proprietary suite of technology products and its willingness to
customize pharmacy programs to suit a particular MCO client's particular needs
represent distinct competitive advantages in the PBM business.

Specialty Pharmaceutical. The Company also competes with several
national and regional companies that primarily provide therapeutic
pharmaceutical services to the chronically ill and genetically impaired, such as
Accredo Health Inc., Priority Health Corporation and Gentiva Health Services
Inc., all of which have substantial financial resources. Some of these
competitors have been in the specialty pharmaceutical industry considerably
longer than the Company and have secured long term supply or distribution
arrangements for prescription pharmaceuticals necessary to treat certain chronic
disease states on price terms substantially more favorable than the terms
currently available to the Company. As a result of such advantageous pricing,
the Company may be unable to compete with these companies on particular
prescription products or in particular disease states.

Contracting parties choose a specialty pharmacy supplier for a variety of
reasons including the suppliers technical capabilities, their ability to access
and provide support through pharmaceutical manufacturers programs (including
cost of purchasing product), ability and programs to manage costs, clinical
knowledge, expertise and protocols, support of the patient, including intake and
distribution and the ability to provide tools for reporting global outcomes.

Among the larger competitors offering on-line pharmacy products and
services are Drugstore.com, Inc. (which recently acquired the customers of
PlanetRx.com), CVS.com and WebRx.com (which recently acquired Drug
Emporium.com). Although individual consumers may purchase directly from
MIMRx.com, its sales and marketing efforts do not directly target individual
consumers. Rather, the Company markets its on-line products and content to its
PBM and affinity marketing customers.

e-Commerce. The on-line pharmacy market, like all consumer e-commerce,
is relatively new and rapidly evolving. MIMRx.com's competitors also have
considerable financial resources and include a number of well-capitalized
organizations, some of which are nationally recognized retail chain pharmacies.

Government Regulation

General. As a participant in the healthcare industry, the Company's
operations and relationships are subject to federal and state laws and
regulations and enforcement by federal and state governmental agencies. Various
federal and state laws and regulations govern the purchase, distribution and
management of prescription drugs and related services and affect or may affect
the Company. The Company believes that it is in substantial compliance with all
legal requirements material to its operations.

The Company entered into a corporate integrity agreement with the Office
of Inspector General (the "OIG") within the U.S. Department of Health and Human
Services ("HHS") in connection with the Global Settlement Agreement entered into
with the OIG and the State of Tennessee in June 2000. In order to assist the
Company in maintaining compliance with laws and regulations and the corporate
integrity agreement, the Company implemented its corporate compliance program in
August of 2000. This program includes educational training for all employees on
compliance with laws and regulations relevant to the Company's business and
operations and a formal program of reporting and resolution of possible
violations of laws or regulations, as well as increased oversight by the OIG.
Should the oversight procedures reveal credible evidence of any violation of
federal law, the Company is required to report such potential violations to the
OIG and the U.S. Department of Justice ("DOJ"). The Company is therefore subject
to increased regulatory scrutiny and, if the Company commits legal or regulatory
violations, they may be subject to an increased risk of sanctions or penalties,
including exclusion from participation in the Medicare or Medicaid programs. The
Company anticipates maintaining certain compliance related oversight procedures
after the expiration of the corporate integrity agreement in June 2005.

Among the various Federal and state laws and regulations, which may
govern or impact the Company's current and planned operations are the following:

Mail Service Pharmacy Regulation. The Company is licensed to do business
as a pharmacy in each state in which it is required to be so licensed. Many of
the states into which the Company delivers pharmaceuticals have laws and
regulations that require out-of-state mail service pharmacies to register with,
or be licensed by, the boards of pharmacy or similar regulatory bodies in those
states. These states generally permit the dispensing pharmacy to follow the laws
of the state within which the dispensing pharmacy is located.

However, various states have enacted laws and adopted regulations
directed at restricting or prohibiting the operation of out-of-state pharmacies
by, among other things, requiring compliance with all laws of the states into
which the out-of-state pharmacy dispenses medications, whether or not those laws
conflict with the laws of the state in which the pharmacy is located. To the
extent that such laws or regulations are found to be applicable to the Company's
operations, the Company would be required to comply with them. In addition, to
the extent that any of the foregoing laws or regulations prohibit or restrict
the operation of mail service pharmacies and are found to be applicable to the
Company, they could have an adverse effect on the Company's prescription mail
service operations.

Other statutes and regulations may affect the Company's mail service
operations. The Federal Trade Commission requires mail order sellers of goods
generally to engage in truthful advertising, to stock a reasonable supply of the
products to be sold, to fill mail orders within 30 days, and to provide clients
with refunds when appropriate.

Licensure Laws. Many states have licensure or registration laws governing
certain types of ancillary healthcare organizations, including preferred
provider organizations, third party administrators, and companies that provide
utilization review services. The scope of these laws differs significantly from
state to state, and the application of such laws to the activities of pharmacy
benefit managers often is unclear. The Company has registered under such laws in
those states in which the Company has concluded that such registration is
required.

The Company dispenses prescription drugs pursuant to orders received
through its MIMRx.com internet website, as well as other affiliated websites.
Accordingly, the Company may be subject to laws affecting on-line pharmacies.
Several states have proposed laws to regulate on-line pharmacies and require
on-line pharmacies to obtain state pharmacy licenses. Additionally, federal
regulation by the United States Food and Drug Administration (the "FDA"), or
another federal agency, of on-line pharmacies that dispense prescription drugs
has been proposed. To the extent that such state or federal regulation could
apply to the Company's operations, certain of the Company's operations could be
adversely affected by such licensure legislation.

Other Laws Affecting Pharmacy Operations. The Company is subject to state
and federal statutes and regulations governing the operation of pharmacies,
repackaging of drug products, wholesale distribution, dispensing of controlled
substances, medical waste disposal, and clinical trials. Federal statutes and
regulations govern the labeling, packaging, advertising and adulteration of

prescription drugs and the dispensing of controlled substances. Federal
controlled substance laws require the Company to register its pharmacies and
repackaging facilities with the United States Drug Enforcement Administration
and to comply with security, recordkeeping, inventory control and labeling
standards in order to dispense controlled substances.

State controlled substance laws require registration and compliance with
state pharmacy licensure, registration or permit standards promulgated by the
state pharmacy licensing authority. Such standards often address the
qualification of an applicant's personnel, the adequacy of its prescription
fulfillment and inventory control practices and the adequacy of its facilities.
In general, pharmacy licenses are renewed annually. Pharmacists and pharmacy
technicians employed by each branch must also satisfy applicable state licensing
requirements.

FDA Regulation. The FDA generally has authority to regulate drug
promotional information and materials that are disseminated by a drug
manufacturer or by other persons on behalf of a drug manufacturer. In January
1998, the FDA issued a Draft Guidance regarding its intent to regulate certain
drug promotion and switching activities of PBM companies that are controlled,
directly or indirectly, by drug manufacturers. The FDA effectively withdrew the
Draft Guidance and has indicated that it would not issue a new draft guidance.
However, there can be no assurance that the FDA will not assert jurisdiction
over certain aspects of the Company's PBM business, including the internet sale
of prescription drugs, which could materially adversely affect the Company's
operations.

Network Access Legislation. A majority of states now have some form of
legislation affecting the ability of the Company to limit access to a pharmacy
provider network or remove network providers. Such legislation may require the
Company or its client to admit any retail pharmacy willing to meet the plan's
price and other terms for network participation ("any willing provider"
legislation), or may prohibit the removal of a provider from a network except in
compliance with certain procedures ("due process" legislation) or may prohibit
days' supply limitations or co-payment differentials between mail and retail
pharmacy providers. Many states have exceptions to the applicability of these
statutes for managed care arrangements or other government benefit programs,
including Tennessee.

Legislation Imposing Plan Design Mandates. Some states have enacted
legislation that prohibits a health plan sponsor from implementing certain
restriction design features, and many states have introduced legislation to
regulate various aspects of managed care plans, including provisions relating to
pharmacy benefits. For example, some states provide that members of the plan may
not be required to use network providers, but that must instead be provided with
benefits even if they choose to use non-network providers ("freedom of choice"
legislation), or provide that a patient may sue his or her health plan if care
is denied. Some states have enacted and other states have introduced legislation
regarding plan design mandates, including legislation that prohibits or
restricts therapeutic substitution; requires coverage of all drugs approved by
the FDA; or prohibits denial of coverage for non-FDA approved uses. Some states
mandate coverage of certain benefits or conditions. Such legislation does not
generally apply to the Company, but it may apply to certain of the Company's
customers (generally, HMOs and health insurers). If such legislation were to
become widespread and broad in scope, it could have the effect of limiting the
economic benefits achievable through pharmacy benefit management. To the extent
that such legislation is applicable and is not preempted by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (as to plans
governed by ERISA), certain operations of the Company could be adversely
affected.

Other states have enacted legislation purporting to prohibit health plans
from requiring or offering members financial incentives for use of mail order
pharmacies.

Anti-Kickback Laws. Subject to certain statutory and regulatory
exceptions (including exceptions relating to certain managed care, discount,
group purchasing and personal services arrangements), Federal law prohibits the
payment or receipt of remuneration to induce, arrange for or recommend the
purchase of health care items or services paid for in whole or in part by
Medicare or state health care programs (including Medicaid programs or Medicaid
waiver programs, such as TennCare(R)). Certain state laws may extend the
prohibition to items or services that are paid for by private insurance and
self-pay patients. The Company's arrangements with RxCare and other pharmacy
network administrators, drug manufacturers, marketing agents, brokers, health
plan sponsors, pharmacies and others parties routinely involve payments to or
from persons who provide or purchase, or recommend or arrange for the purchase
of, items or services paid in part by the TennCare(R) program or by other
programs covered by such laws. Management carefully considers the importance of
such "anti-kickback" laws when structuring its operations, and believes the
Company is in compliance therewith. Violation of the Federal anti-kickback
statute could subject the Company to criminal and/or civil penalties, including
exclusion from Medicare and Medicaid (including TennCare(R)) programs or
state-funded programs in the case of state enforcement.

The federal anti-kickback law has been interpreted broadly by courts, the
OIG and administrative bodies. Because of the federal statutes broad scope,
federal regulations establish certain safe harbors from liability. Safe harbors
exist for certain properly reported discounts received from vendors, certain
investment interest, and certain properly disclosed payments made by vendors to
group purchasing organizations, as well as for other transactions or
relationships. In late 1999, the HHS adopted final rules revising the discount
safe harbor to protect certain rebates. Because this revision is fairly recent,
the guidance on how the safe harbor revision will be interpreted is not fully
developed. Nonetheless, a practice that does not fall within a safe harbor is
not necessarily unlawful, but may be subject to scrutiny and challenge. In the
absence of an applicable exception or safe harbor, a violation of the statue may
occur even if only one purpose of a payment arrangement is to induce patient
referrals or purchases. Among the practices that have been identified by the OIG
as potentially improper under the statute are certain "product conversion
programs" in which benefits are given by drug manufacturers to pharmacists or
physicians for changing a prescription (or recommending or requesting such a
change) from one drug to another. Anti-kickback laws have been cited as a
partial basis, along with state consumer protection laws discussed below, for
investigations and multi-state settlements relating to financial incentives
provided by drug manufacturers to retail pharmacies in connection with such
programs.

Certain governmental entities have commenced investigations of PBM
companies and other companies having dealings with the PBM industry and have
identified issues concerning selection of drug formularies, therapeutic
substitution programs and discounts or rebates from prescription drug
manufacturers. Additionally, at least one state has filed a lawsuit concerning
similar issues against a health plan. To date, the Company has not been the
subject of any such investigation or suit and has not received subpoenas or been
requested to produce documents for any such investigation or suit. However,
there can be no assurance that the Company will not receive subpoenas or be
requested to produce documents in pending investigations or litigation in the
future.

The Company believes that it is in compliance with the legal requirements
imposed by the anti-remuneration laws and regulations, and the Company believes
that there are material and substantial differences between drug switching
programs that have been challenged under these laws and the therapeutic
interchange practices and formulary management programs offered by the Company
to its customers. However, there can be no assurance that the Company will not
be subject to scrutiny or challenge under such laws or regulations, or that any
such challenge would not have a material adverse effect upon the Company.

The Stark Laws. The federal law known as "Stark II" became effective in
1995, and was a significant expansion of an earlier federal physician
self-referral law commonly known as "Stark I". Stark II prohibits physicians
from referring Medicare or Medicaid patients for "designated health services" to
an entity with which the physician or an immediate family member of the
physician has a financial relationship. Possible penalties for violation of the
Stark laws include denial of payment, refund of amounts collected in violation
of the statute, civil monetary penalties and program exclusion. The Stark law
standards contain certain exceptions for physician financial arrangements, and
HCFA has released Stark II final regulations, which describe the parameters of
these exceptions in more detail. The Stark II regulations are scheduled to
become effective in January 2002, with the exception of one section relating to
physician referrals to home health care agencies, which was scheduled to become
effective in February 2001.

State Self-Referral Laws. The Company is subject to state statutes and
regulations that prohibit payments for referral of patients and referrals by
physicians to healthcare providers with whom the physicians have a financial
relationship. Some state statutes and regulations apply to services reimbursed
by governmental as well as private payors. Violation of these laws may result in
prohibition of payment for services rendered, loss of pharmacy or health
provider licenses, fines, and criminal penalties. The laws and exceptions or
safe harbors may vary from the federal Stark laws and vary significantly from
state to state. The laws are often vague, and, in many cases, have not been
widely interpreted by courts or regulatory agencies; however, the Company
believes it is in compliance with such laws.

Statutes Prohibiting False Claims and Fraudulent Billing Activities. A
range of federal civil and criminal laws target false claims and fraudulent
billing activities. One of the most significant is the Federal False Claims Act,
which prohibits the submission of a false claim or the making of a false record
or statement in order to secure a reimbursement from a government-sponsored
program. In recent years, the federal government has launched several
initiatives aimed at uncovering practices, which violate false claims or
fraudulent billing laws. Claims under these laws may be brought either by the
government or by private individuals on behalf of the government, through a
"whistleblower" or "qui tam" action.

Reimbursement. Approximately 52.0% of the Company's revenue is derived
directly from Medicare or Medicaid or other government-sponsored healthcare
programs subject to the federal anti-kickback laws and/or the Stark laws. Also,
the Company indirectly provides benefits to managed care entities that provide
services to beneficiaries of Medicare, Medicaid and other government-sponsored
healthcare programs. Should there be material changes to federal or state
reimbursement methodologies, regulations or policies, the Company's
reimbursements from government-sponsored healthcare programs could be adversely
affected. In addition, certain state Medicaid programs only allow for
reimbursement to pharmacies residing in the state or in a border state. While
the Company believes that it can service its current Medicaid patients through
existing pharmacies, there can be no assurance that additional states will not
enact in-state dispensing requirements for their Medicaid programs. To the
extent such requirements are enacted, certain therapeutic pharmaceutical
reimbursements could be adversely affected.

Legislation and Other Matters Affecting Drug Prices. Some states have
adopted legislation providing that a pharmacy participating in the state
Medicaid program must give the state the best price that the pharmacy makes
available to any third party plan ("most favored nation" legislation). Such
legislation may adversely affect the Company's ability to negotiate discounts in
the future from network pharmacies. At least one state has enacted "unitary
pricing" legislation, which mandates that all wholesale purchasers of drugs
within the state be given access to the same discounts and incentives. Such
legislation has not yet been enacted in the states where the Company's mail
service pharmacies are located. Such legislation, if enacted in other states,
could adversely affect the Company's ability to negotiate discounts on its
purchase of prescription drugs to be dispensed by its mail service pharmacies.

Privacy and Confidentiality Legislation. Most of the Company's activities
involve the receipt or use by the Company of confidential medical, pharmacy or
other health-related information concerning individual members, including the
transfer of the confidential information to the member's health benefit plan. In
addition, the Company uses aggregated and blinded (anonymous) data for research
and analysis purposes. Confidentiality provisions of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") required the Secretary of
HHS to issue standards concerning health information privacy if Congress did not
enact health information privacy legislation by August 1999. Since Congress did
not enact health information privacy legislation, the Secretary issued a
proposed rule in November 1999 and the public comment period for this proposed
rule expired on February 17, 2000. The Secretary reopened the comment period on
the new rule until March 30, 2001, and has a scheduled effective date of April
14, 2001. The proposed rule would establish minimum standards and would preempt
state laws, which are less restrictive than HIPAA regarding health information
privacy, but would not preempt more restrictive state laws. The proposed rule
provides that the health information privacy standards would become effective
two years after final issuance. The final HHS rule is likely to require
substantial changes to the Company's systems, policies and procedures, which may
have a material adverse impact on the Company.

In addition to the proposed federal health information privacy
regulations described above, most states have enacted patient confidentiality
laws, which prohibit the disclosure of confidential medical information. It is
unclear which state laws may be preempted by the final HHS rule discussed above.

Consumer Protection Laws. Most states have consumer protection laws that
have been the basis for investigations and multi-state settlements relating to
financial incentives provided by drug manufacturers to pharmacies in connection
with drug switching programs. No assurance can be given that the Company will
not be subject to scrutiny or challenge under one or more of these laws.

Disease Management Services Regulation. All states regulate the practice
of medicine. To the Company's knowledge, no PBM has been found to be engaging in
the practice of medicine by reason of its disease management services. However,
there can be no assurance that a federal or state regulatory authority will not
assert that such services constitute the practice of medicine, thereby
subjecting such services to federal and state laws and regulations applicable to
the practice of medicine.

Comprehensive PBM Regulation. Although no state has passed legislation
regulating PBM activities in a comprehensive manner, such legislation has been
introduced in the past in several states. Such legislation, if enacted in a
state in which the Company conducts a significant amount of business, could have
a material adverse impact on the Company's operations.

Antitrust Laws. Numerous lawsuits have been filed throughout the United
States by retail pharmacies against drug manufacturers challenging certain brand
drug pricing practices under various state and Federal antitrust laws. A

settlement in one such suit would require defendant drug manufacturers to
provide the same types of discounts on pharmaceuticals to retail pharmacies and
buying groups as are provided to managed care entities to the extent that their
respective abilities to affect market share are comparable, a practice which, if
generally followed in the industry, could increase competition from pharmacy
chains and buying groups and reduce or eliminate the availability to the Company
of certain discounts, rebates and fees currently received in connection with its
drug purchasing and formulary administration programs. In addition, to the
extent that the Company or an associated business appears to have actual or
potential market power in a relevant market, business arrangements and practices
may be subject to heightened scrutiny from an anti-competitive perspective and
possible challenge by state or Federal regulators or private parties. For
example, RxCare, which was investigated and found by the Federal Trade
Commission to have potential market power in Tennessee, entered into a consent
decree in June 1996 agreeing not to enforce a policy which had required
participating network pharmacies to accept reimbursement rates from RxCare as
low as rates accepted by them from other pharmacy benefits payors. To date,
enforcement of antitrust laws have not had any material affect on the Company's
business.

While management believes that the Company is in substantial compliance
with all existing laws and regulations stated above, such laws and regulations
are subject to rapid change and often are uncertain in their application. As
controversies continue to arise in the health care industry (for example,
regarding the efforts of plan sponsors and pharmacy benefit managers to limit
formularies, alter drug choice and establish limited networks of participating
pharmacies), Federal and state regulation and enforcement priorities in this
area can be expected to increase, the impact of which on the Company cannot be
predicted. There can be no assurance that the Company will not be subject to
scrutiny or challenge under one or more of these laws or that any such challenge
would not be successful. Any such challenge, whether or not successful, could
have a material adverse effect upon the Company's business and results of
operations.

Employees

At February 10, 2001, the Company employed a total of 288 people,
including 34 licensed pharmacists. The Company's employees are not represented
by any union and, in the opinion of management, the Company's relations with its
employees are satisfactory.

Item 2. Properties

The Company's corporate headquarters are located in leased office space
in Elmsford, New York. The Company also leases commercial office space for its
above-described operations in South Kingstown, Rhode Island; Nashville,
Tennessee; Columbus, Ohio; and Livingston, New Jersey.

Item 3. Legal Proceedings

Since April 1999, the Company has been engaged in commercial arbitration
with Tennessee Health Partnership ("THP") over a number of commercial disputes
surrounding the parties' relationship. The Company has been disputing several
improper reductions of payments by THP that the Company believes were properly
due and owing to it. In addition, a dispute exists over whether or not certain
items should have been included under the Company's capitated arrangements with
THP. In 1999, the Company recorded a special charge of $3.3 million for
estimated future losses related to this dispute and another TennCare(R)
provider.

In early 2001, the Company reached an agreement in principle with THP.
The Company will pay THP $1.3 million in satisfaction of all claims between the
parties. Upon final settlement, any excess of the reserve for future losses will
be credited to income.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Company's security holders
during the fourth quarter of fiscal year 2000.

PART II

Item 5. Market For Registrant's Common Equity and Related Stockholder Matters

The Company's common stock, par value $0.0001 per share ("Common Stock")
began trading on The NASDAQ National Market tier of The NASDAQ Stock Market on
August 15, 1996 under the symbol MIMS. The following table represents the range
of high and low sales prices for the Company's Common Stock for the last eight
quarters. Such prices are interdealer prices, without retail markup, markdown or
commissions, and may not necessarily represent actual transactions.

MIM Common Stock

High Low
------------------------
1999: First Quarter................. $ 4.44 $ 2.13
Second Quarter............... $ 3.13 $ 2.00
Third Quarter................ $ 3.00 $ 1.69
Fourth Quarter............... $ 4.63 $ 1.50

2000: First Quarter................. $ 8.63 $ 2.44
Second Quarter............... $ 4.38 $ 1.69
Third Quarter................ $ 2.75 $ 1.44
Fourth Quarter............... $ 2.13 $ 0.63

The Company has never paid cash dividends on its Common Stock and does
not anticipate doing so in the foreseeable future.

As of March 15, 2001, there were 127 stockholders of record in addition
to approximately 2,609 stockholders whose shares were held in nominee name.

For purposes of calculating the aggregate market value of the shares of
Common Stock held by non-affiliates, as shown on the cover page of this Annual
Report on Form 10-K (the "Report"), it has been assumed that all outstanding
shares of Common Stock were held by non-affiliates except for shares held by
directors and executive officers of the Company and any persons disclosed as
beneficial owners of greater than 10% of the Company's outstanding securities.
However, this should not be deemed to constitute an admission that any or all
such directors and executive officers of the Company are, in fact, affiliates of
the Company, or that there are not other persons who may be deemed to be
affiliates of the Company.

During the three months ended December 31, 2000, the Company did not sell
any securities without registration under the Securities Act of 1933, as amended
(the "Securities Act").

From August 15, 1996 through December 31, 2000, the $46.8 million net
proceeds from the Company's underwritten initial public offering of its Common
Stock (the "Offering"), affected pursuant to a Registration Statement assigned
file number 333-05327 by the Securities and Exchange Commission (the
"Commission") and declared effective by the Commission on August 15, 1996, have
been applied in the following approximate amounts (in thousands):

Construction of plant, building and facilities ................... $ --
Purchase and installation of machinery and equipment ............. $13,970
Purchases of real estate ......................................... $ --
Acquisition of other businesses .................................. $21,825
Repayment of indebtedness ........................................ $ --
Working capital .................................................. $ 9,703
Temporary investments:
Marketable securities ................................. $ --
Overnight cash deposits ............................... $ 1,290

To date, the Company has expended a relatively insignificant portion of
the Offering proceeds on expanding the Company's "preferred generics" business,
which was described more fully in the Offering prospectus and the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. At the time of
the Offering however, as disclosed in the prospectus, the Company intended to
apply approximately $18.6 million of Offering proceeds to fund the expansion of
that business. The Company determined not to apply any material portion of the
Offering proceeds to fund the expansion of that business.

Item 6. Selected Consolidated Financial Data

The selected consolidated financial data presented below should be read
in conjunction with Item 7 of this Report and with the Company's Consolidated
Financial Statements and notes thereto appearing elsewhere in this Report.

Year Ended December 31,
(in thousands, except per share amounts)
----------------------------------------------------------------------
Statement of Operations Data 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------------------------------

Revenue $ 369,794 $ 377,420 $ 451,070 $ 242,291 $ 283,159
Special charges - 6,029(1) 3,700(2) - 26,640(3)
Net (loss) income (4,5) (1,823) (3,785) 4,271 (13,497) (31,754)
Net (loss) income per basic share (0.09) (0.20) 0.28 (1.07) (3.32)
Net (loss) income per diluted share (6) (0.09) (0.20) 0.26 (1.07) (3.32)
Weighted average shares outstanding
used in computing net (loss) income
per basic share 19,930 18,660 15,115 12,620 9,557
Weighted average shares outstanding
used in computing net (loss) income
per diluted share 19,930 18,660 16,324 12,620 9,557

December 31,
(in thousands, except per share amounts)
---------------------------------------------------------------------
Balance Sheet Data 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------------------------------

Cash and cash equivalents $ 1,290 $ 15,306 $ 4,495 $ 9,593 $ 1,834
Investment securities - 5,033 11,694 22,636 37,038
Working (deficit) capital (11,184) 8,995 19,823 9,333 19,569
Total assets 116,402 115,683 110,106 62,727 61,800
Capital lease obligations,
net of current portion 1,621 718 598 756 375
Long-term debt, net of current portion - 2,279 6,185(7) - -
Stockholders' equity 39,505 35,187 39,054 16,810 30,143

- ----------------------------

(1) In 1999, the Company recorded $6,029 of special charges for estimated
losses on contract receivables.
(2) In 1998, the Company recorded $1,500 and $2,200 special charges,
respectively, against earnings in connection with the negotiated
termination of the RxCare relationship and amounts paid in settlement of
the Federal and State of Tennessee investigation relating to the conduct of
two former officers of the Company prior to the Offering, respectively.
Excluding these items, net income for 1998 would have been $8,000, or $0.48
per share.
(3) In 1996, the Company recorded a $26,600 non-recurring, non-cash
stock option charge in connection with the grant by the Company's then
majority stockholder of certain options to then unaffiliated third parties,
who later became officers of the Company.
(4) Net loss (income) includes legal expenses advanced for the defense of two
former officers for the years 2000, 1999, 1998, and 1997 in the amounts of
$3,100, $1,400, $ 1,300, and $800, respectively.
(5) In the fourth quarter of 2000, the Company recorded a provision for loss of
$2,300 on its investment in Wang Healthcare Information Systems.
(6) The historical diluted loss per common share for the years 2000, 1999, 1997
and 1996 excludes the effect of common stock equivalents, as their
inclusion would be antidilutive.
(7) This amount represents long-term debt assumed by the Company in connection
with its acquisition of Continental.

* * * * * * * * * * * * * * *

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

This Report contains statements not purely historical and which may be
considered forward looking statements within the meaning of Section 27A of the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including statements regarding the Company's
expectations, hopes, beliefs, intentions or strategies regarding the future.
Forward looking statements may include statements relating to the Company's
business development activities, sales and marketing efforts, the status of
material contractual arrangements including the negotiation or re-negotiation of
such arrangements, future capital expenditures, the effects of regulation and
competition on the Company's business, future operating performance of the
Company and the results, the benefits and risks associated with integration of
acquired companies, the likely outcome and the effect of legal proceedings on
the Company and its business and operations and/or the resolution or settlement
thereof. Investors are cautioned that any such forward looking statements are
not guarantees of future performance and involve risks and uncertainties, that
actual results may differ materially from those possible results discussed in
the forward looking statements as a result of various factors. These factors
include, among other things, risks associated with risk-based or "capitated"
contracts, increased government regulation related to the health care and
insurance industries in general and more specifically, pharmacy benefit
management organizations, the existence of complex laws and regulations relating
to the Company's business, increased competition from the Company's competitors,
including competitors with greater financial, technical, marketing and other
resources. This Report contains information regarding important factors that
could cause such differences. The Company does not undertake any obligation to
supplement these forward-looking statements to reflect any future events and
circumstances.

Overview

MIM is a PBM, specialty pharmaceutical and fulfillment/e-commerce
organization that partners with healthcare providers and sponsors to control
prescription drug costs. MIM's innovative pharmacy benefit products and services
use clinically sound guidelines to ensure cost control and quality care. MIM's
specialty pharmaceutical division specializes in serving the chronically ill
afflicted with life threatening diseases and genetic impairments. MIM's
fulfillment and e-commerce pharmacy specializes in serving individuals that
require long-term maintenance medications. MIM's online pharmacy, www.MIMRx.com,
develops private label websites to offer affinity groups and other health care
providers innovative, customized health information services and products on the
Internet for their members. A majority of the Company's revenues to date have
been derived from providing PBM services in the State of Tennessee (the "State")
to MCOs participating in the State's TennCare(R) program. At December 31, 2000,
the Company has various PBM service contracts with 126 health plan sponsors with
an aggregate of approximately 5.5 million plan members, of which TennCare(R)
represented six MCOs with approximately 1.2 million plan members. Revenues
derived from the Company's contracts with those TennCare(R) MCOs accounted for
43.4% of the Company's revenues for the year ended December 31, 2000, compared
to 54.0% of the Company's revenues for the year ended December 31, 1999.

Business

The Company derives its revenues primarily from agreements to provide
PBM services, which includes mail order services, to various health plan
sponsors in the United States. The Company also provides specialty pharmacy
services to chronically ill patients that require injection and infusion
therapies.

Acquisition of American Disease Management Associates, L.L.C.

On August 4, 2000, the Company, through its principal PBM operating
subsidiary, MIM Health Plans, Inc., acquired all of the issued and outstanding
membership interests of ADIMA, pursuant to a Purchase Agreement dated as of
August 3, 2000. ADIMA, located in Livingston, New Jersey, provides intravenous
and injectible specialty pharmaceutical products to chronically ill patients
receiving healthcare services from home by IV certified registered nurses,
typically after a hospital discharge.

The aggregate purchase price approximated $24.0 million, and included
$19.0 million in cash and 2.7 million shares of MIM common stock, valued at $5.0
million. The acquisition was treated as a purchase for financial reporting
purposes. Assets acquired approximated $4.5 million and liabilities assumed
approximated $0.1 million resulting in approximately $19.9 million of goodwill,
which will be amortized over the estimated useful life of 20 years. The
consolidated financial statements of the Company include the results of ADIMA
from the date of acquisition.

Results of Operations

Year ended December 31, 2000 compared to year ended December 31, 1999

For the year ended December 31, 2000, the Company recorded revenues of
$369.8 million compared with 1999 revenues of $377.4 million, a decrease of $7.6
million. Contracts with TennCare(R) sponsors accounted for decreased revenues of
$43.3 million, principally the result of the State of Tennessee assuming
financial responsibility for the TennCare(R) dual eligible members and the
decrease in the number of TennCare(R) contracts managed by the Company,
partially offset by an increase in revenue of $1.4 million related to a
settlement of fees associated with 1998 services. Revenue increases from the
acquisition of ADIMA and the increases in commercial PBM and mail order revenues
from both new and existing accounts increased revenue by $34.3 million. For the
years ended December 31, 2000, approximately 28% of the Company's revenue was
generated from capitated contracts compared to approximately 32% in 1999. Based
upon its present contracted arrangements, the Company anticipates that
approximately 20% of its revenues in 2001 will be derived from capitated
contracts.

Cost of revenue for 2000 decreased to $334.6 million from $347.1
million for 1999, a decrease of $12.5 million. Cost of revenue with respect to
contracts with TennCare(R) sponsors decreased $49.7 million from 1999 to 2000.
Cost of revenue from commercial business increased $37.2 million, which includes
an increase of $4.9 million from the purchase of ADIMA. For the year ended
December 31, 2000, gross profit increased $4.9 million to $35.2 million, from
$30.3 million at December 31, 1999. Gross profit increases of $6.4 million in
TennCare(R) business resulted primarily from lower pharmaceutical utilization on
TennCare(R) capitated agreements, as well as $1.4 million related to a
settlement of fees associated with 1998 that was recorded in 2000. Gross profit
increases in TennCare(R) business were offset by decreases in gross profit of
$5.3 million in commercial and mail order business, and increases of $3.8
million contributed by the Company's acquisition of ADIMA.

General and administrative expenses increased $5.9 million to $33.9
million in 2000 from $28.0 million in 1999, an increase of 21%. $2.6 million of
this increase is a result of increased legal expenditures primarily arising out
of the Company's obligations to advance legal fees to former officers. In
addition, the acquisition of ADIMA contributed $1.3 million of the increase and
the remainder was attributable to severance obligations to two executives,
higher levels of depreciation due to capital improvements in our fulfillment
facility, and increased costs associated with a complete sales force in 2000. As
a percentage of revenue, general and administrative expenses increased to 9.2%
in 2000 from 7.4% in 1999.

In 1999, the Company incurred one-time special charges of $6.0 million
for Xantus Healthplans of Tennessee, Inc. ("Xantus"), Preferred Health Plans
("PHP") and THP, as discussed below.

On May 4, 2000, the Company reached a negotiated settlement with PHP,
under which, among other things, the Company retained rebates that would have
otherwise been due and owing PHP. PHP paid the Company an additional $0.9
million and the respective parties released each other from any and all
liability with respect to past or future claims. This agreement did not have a
material effect on the Company's results of operations or financial positions.

For the year ended December 31, 2000, the Company recorded amortization
of goodwill and other intangibles of $1.5 million compared to $1.1 million in
1999. This increase is primarily due to the goodwill amortization for ADIMA.

For the year ended December 31, 2000, the Company recorded interest
income of $0.8 million compared to $1.0 million for the year ended December 31,
1999, a decrease of $0.2 million, primarily due to lower cash balances after the
purchase of ADIMA.

For the year ended December 31, 2000, the Company recorded a net loss
of $1.8 million or $0.09 per share. This includes a one time, non-operating
provision for $2.3 million relating to the Company's investment in Wang
Healthcare Information Systems. This compares with a net loss of $3.8 million,
or $0.20 per share for the year ended December 31, 1999. In 1997, the Company
purchased 1,150,000 shares of the Series B Convertible Preferred Stock of Wang
Healthcare Information Systems, Inc. ("WHIS"), par value $0.01 per share, for an
aggregate purchase price equal to $2.3 million. Due to changes in the financial
situation at WHIS and its ability to access capital, the Company recorded a
provision for loss on this investment in December 2000.

Earnings before interest, taxes, depreciation and amortization
("EBITDA") was $4.8 million for the year ended December 31, 2000, compared to
negative $1.4 million EBITDA for the year ended December 31, 1999. EBITDA for
the year ended December 31, 2000 was approximately $8.0 million, excluding the
Company's advances of legal defense costs of two former officers.

Year ended December 31, 1999 compared to year ended December 31, 1998

For the year ended December 31, 1999, the Company recorded revenues of
$377.4 million compared with 1998 revenues of $451.0 million, a decrease of
$73.6 million. Contracts with TennCare(R) sponsors accounted for decreased
revenues of $122.0 million, as the Company did not retain contracts as of
January 1, 1999 with the two TennCare(R) BHO's previously managed under the
RxCare Contract. In addition, PBM services to another TennCare(R) MCO previously
managed under the RxCare Contract did not begin until May 1, 1999. The loss of
these contracts represents $71.3 million and $47.6 million, respectively, of the
decrease in revenue with additional decreases in other contracts with
TennCare(R) sponsors of approximately $3.1 million. Commercial revenue increased
$69.8 million, offset by a decrease of $21.4 million due to the loss of a
contract with a Nevada-based managed care organization, representing a net
increase of $48.4 million in commercial revenue. The overall decrease in
revenues was partially offset by an increase in revenues of $22.9 million as a
result of the Company's acquisition of Continental.

Cost of revenue for 1999 decreased to $347.1 million from $421.4
million for 1998, a decrease of $74.3 million. Cost of revenue with respect to
contracts with TennCare(R) sponsors decreased $108.6, million as the Company did
not retain contracts as of January 1, 1999 with the two TennCare(R) BHO's
previously managed under the RxCare Contract and did not begin providing PBM
services to another TennCare(R) MCO previously managed under the RxCare Contract
until May 1, 1999. The loss of these contracts represents $68.5 million and
$46.0 million, respectively, of the decrease, with additional increases in other
contracts with TennCare(R) sponsors of approximately $5.9 million. Cost of
revenue from commercial business increased $60.2 million, which included a
decrease in cost of revenue of $25.9 million due to the loss of a contract with
a Nevada-based MCO, representing a net increase of $34.3 million. Such decreases
in cost of revenue were partially offset by increases of $17.1 million as a
result of the Company's acquisition of Continental. As a percentage of revenue,
cost of revenue decreased to 92.0% for the twelve months ended December 31,
1999, from 93.4% for the twelve months ended December 31, 1998, a decrease of
1.4%. This decrease is primarily due to the contribution of Continental's mail
service drug distribution business, which experienced higher profit margins than
historically experienced by the Company's PBM business.

For the years ended December 31, 1999 and 1998, approximately 32% of
the company's revenues were generated from capitated or other risk-based
contracts. Effective January 1, 1999, the Company began providing PBM services
directly to five of the six TennCare(R) MCOs previously managed under the RxCare
Contract. The Company is compensated on a capitated basis under three of the
five TennCare(R) contracts, thereby increasing the Company's financial risk in
1999 as compared to 1998. Based upon its present contracted arrangements, the
Company anticipates that approximately 20% of its revenues in 2000 will be
derived from capitated or other risk-based contracts.

For the year ended December 31, 1999, gross profit increased $0.6
million to $30.3 million, from $29.7 million at December 31, 1998. Gross profit
decreases of $13.4 million in TennCare(R) business resulted primarily from the
termination of the two TennCare(R) BHO contracts, as well as increases in costs
on some of the capitated contracts. Gross profit decreases in TennCare(R)
business were offset by increases in gross profit of $8.3 million in commercial
business, and increases of $5.7 million contributed by the Company's acquisition
of Continental.

General and administrative expenses increased $4.9 million to $28.0
million in 1999 from $23.1 million in 1998, an increase of 21.3%. The
acquisition of Continental comprised $4.5 million of the increase and the

remaining $0.4 million increase was attributable to expenses associated with an
expanded national sales effort and additional operations support needed to
service new business. As a percentage of revenue, general and administrative
expenses increased to 7.4% in 1999 from 5.1% in 1998.

On March 31, 1999, the State of Tennessee, (the "State"), and Xantus,
entered into a consent decree under which Xantus was placed in receivership
under the laws of the State of Tennessee. On September 2, 1999, the Commissioner
of the Tennessee Department of Commerce and Insurance (the "Commissioner"),
acting as receiver of Xantus, filed a proposed plan of rehabilitation (the
"Plan"), as opposed to a liquidation of Xantus. A rehabilitation under
receivership, similar to reorganization under federal bankruptcy laws, was
approved by the Chancery Court (the "Court") of the State of Tennessee, and
allows Xantus to remain operating as a TennCare(R) MCO, providing full health
care related services to its enrollees. Under the Plan, the State, among other
things, agreed to loan to Xantus approximately $30 million to be used solely to
repay pre-petition claims of providers, which claims aggregate approximately $80
million. Under the Plan, the Company received $4.2 million, including $0.6
million of unpaid rebates to Xantus, which the Company was allowed to retain
under the terms of the preliminary rehabilitation plan for Xantus. A plan for
the payment of the remaining amounts has not been finalized and the recovery of
any additional amounts is uncertain. The Company recorded a special charge in
1999 of $2.7 million for the estimated loss to the Company.

The Company has been disputing several improper reductions of payments by
THP. In addition, there exists a dispute over whether or not certain items
should have been included under the Company's respective capitated arrangements
with THP and PHP. In 1999, the Company recorded a special charge of $3.3 million
for estimated future losses related to these disputes.

For the year ended December 31, 1999, the Company recorded amortization
of goodwill and other intangibles of $1.1 million in connection with its
acquisition of Continental, compared to $0.3 million in 1998. This increase
reflects an entire year of amortization in 1999.

For the year ended December 31, 1999, the Company recorded interest
income of $1.0 million compared to $1.7 million for the year ended December 31,
1998, a decrease of $0.7 million.

For the year ended December 31, 1999, the Company recorded a net loss of
$3.8 million or $0.20 per share. This compares with net income of $4.3 million,
or $0.28 per share for the year ended December 31, 1998.

EBITDA was negative $1.4 million for the year ended December 31, 1999,
and $4.2 million for the year ended December 31, 1998.

Liquidity and Capital Resources

The Company utilizes both funds generated from operations and available
credit under its credit facility for capital expenditures and working capital
needs. For the year ended December 31, 2000, net cash provided to the Company
from operating activities totaled $11.3 million primarily due to a reduction of
$9.0 million in accounts receivable as a result of increased collection efforts,
offset by a decrease of $4.4 million in claims payable as a result of the
decrease in TennCare(R) enrollees due to the dual eligible members and an
increase of $4.9 million in payables to plan sponsors and others which
represents changes in rebate share agreements.

Cash used in investing activities was $22.6 million primarily due to the
purchases of ADIMA and Health Management Ventures ("HMV") in August 2000, which
used cash of $19.6 million. The Company also purchased $6.6 million in equipment
primarily in support of the new fulfillment facility in Columbus, Ohio.

Cash used for financing activities in the year ended December 31, 2000
was $2.8 million. In the year ended December 31, 2000, the Company reduced
long-term debt by $2.6 million.

At December 31, 2000, the Company had a working capital deficit of $11.2
million compared to working capital of $9.0 million at December 31, 1999. This
is primarily due to the acquisitions, which reduced cash and cash equivalents by
$14.0 million at December 31, 2000, as well as reducing investment securities by
$5.0 million.

On November 1, 2000 the Company entered into a $45 million secured
revolving credit facility (the "Facility") with HFG Healthco-4 LLC, an affiliate
of Healthcare Finance Group, Inc. ("HFG"). The Facility replaced the Company's

existing credit facilities with its former lenders. The Facility will be used
for working capital purposes and future acquisitions in support of the Company's
business plan. The Facility has a three-year term, provides for borrowing of up
to $45 million at the London InterBank Offered Rate (LIBOR) plus 2.1% and is
secured by receivables of the Company's principal operating subsidiaries. The
facility contains various covenants that, among other things, requires the
Company to maintain certain financial ratios as defined in the agreement
governing the Facility.

As the Company continues to grow, it anticipates that its working
capital needs will also continue to increase. The Company believes that it has
sufficient cash on hand and available credit to fund the Company's anticipated
working capital and other cash needs for at least the next 12 months.

From time to time, the Company may be a party to legal proceedings or
involved in related investigations, inquiries or discussions, in each case,
arising in the ordinary course of the Company's business. Although no assurance
can be given, management does not presently believe that any current matters
would have a material adverse effect on the liquidity, financial position or
results of operations of the Company.

At December 31, 2000, the Company had, for federal tax purposes, unused
net operating loss carry forwards of approximately $44.2 million, which will
begin expiring in 2009. As it is uncertain whether the Company will realize the
full benefit from these carryforwards, the Company has recorded a valuation
allowance equal to the deferred tax asset generated by the carryforwards. The
Company assesses the need for a valuation allowance at each balance sheet date.
The Company has undergone a "change in control" as defined by the Internal
Revenue Code of 1986, as amended ("Code"), and the rules and regulations
promulgated thereunder. The amount of net operating loss carryforwards that may
be utilized in any given year will be subject to a limitation as a result of
this change. The annual limitation approximates $2.7 million. Actual utilization
in any year will vary based on the Company's tax position in that year.

The Company also may pursue joint venture arrangements, business acquisitions
and other transactions designed to expand its PBM, e-commerce or specialty
pharmacy businesses, which the Company would expect to fund from cash on hand,
the Facility, other future indebtedness or, if appropriate, the private and/or
public sale or exchange of equity securities of the Company.

Other Matters

In 1998, the Company recorded a $2.2 million special charge against
earnings in connection with an agreement in principle with respect to a civil
settlement of the Federal and State of Tennessee investigation in connection
with the conduct of two former officers of the Company, prior to the Company's
initial public offering. The definitive agreement covering this settlement was
executed on June 15, 2000, and, among other things, provides for the execution
and delivery by the Company of a $1.8 million promissory note secured by certain
tangible assets.

From January 1994 through December 31, 1998, the Company provided a
broad range of PBM services on behalf of RxCare, to the TennCare(R), TennCare(R)
Partners and other commercial PBM clients under the RxCare Contract. A majority
of the Company's revenues have been derived from providing PBM services in the
State of Tennessee to MCOs participating in the State of Tennessee's TennCare(R)
program and BHO's participating in the State of Tennessee's TennCare(R) Partners
program. From January 1994 through December 31, 1998, the Company provided its
PBM services to the TennCare(R) MCOs as a subcontractor to RxCare.

The Company and RxCare did not renew the RxCare Contract, which expired
on December 31, 1998. The negotiated termination of its relationship with
RxCare, among other things, allowed the Company to directly market its services
to Tennessee customers (including those then under contract with RxCare) prior
to the expiration of the RxCare Contract. The RxCare Contract had previously
prohibited the Company from soliciting and/or marketing its PBM services in
Tennessee other than on behalf of, and for the benefit of, RxCare. The Company's
marketing efforts resulted in the Company executing agreements with all of the
MCOs for the TennCare(R) lives previously managed under the RxCare Contract as
well as substantially all TPAs and employer groups previously managed under the
RxCare Contract.

The TennCare(R) program operates under a demonstration waiver from HCFA.
That waiver is the basis of the Company's ongoing service to those MCOs in

the TennCare(R) program. The waiver is due to expire on December 31, 2001.
However, the Company believes that pharmacy benefits will continue to be
provided to Medicaid and other eligible TennCare(R) enrollees through MCOs in
one form or another, although there can be no assurances that such pharmacy
benefits will continue or that the Company would be chosen to continue to
provide pharmacy benefits to enrolles of a successor program. If the waiver is
not renewed and the Company is not providing pharmacy benefits to those lives
under a successor program or arrangement, then the failure to provide such
services would have a material and adverse affect on the financial position and
results of operations of the Company. The ongoing funding for the TennCare(R)
program has been the subject of significant discussion at various governmental
levels since its inception. Should the funding sources for the TennCare(R)
program change significantly, the Company's ability to serve those customers
could be impacted and would also materially and adversely affect the financial
position and results of operations of the Company.

The ongoing funding for the TennCare(R) program has been the subject of
significant discussion at various governmental levels for some time. Should the
funding sources for the TennCare(R) program change significantly the Company's
ability to serve those customers could be impacted. This would materially affect
the financial position and results of operations of the Company.

On November 1, 2000, the TennCare(R) program adopted new rules for
recipients to appeal adverse determinations in the delivery of health care
services and products requiring prior approval including the rejections of
certain pharmaceutical products under existing formularies or guidelines and to
possibly receive a larger supply of the rejected products at the point of
service. The implementation of these rules may impact the quantity of formulary
products excluded or requiring prior approval that are dispensed to the
recipients potentially resulting in a change to the amount of pharmaceutical
manufacturers rebates earned by the Company. A reduction in rebates would
adversely impact the financial results of the Company. At this time the Company
cannot estimate the financial impact, if any, as a result of the implementation
of new rules.

As a result of providing capitated PBM services to certain TennCare(R)
MCOs, the Company's pharmaceutical claims costs historically have been subject
to significant increases from October through February, which the Company
believes is due to the need for increased medical attention to, and intervention
with, MCOs members during the colder months. The resulting increase in
pharmaceutical costs impacts the profitability of capitated contracts. Capitated
business represented approximately 28% of the Company's revenues while fee-for-
service business (including mail order services) represented approximately 72%
of the Company's revenues for the year ended December 31, 2000 as compared to
32% and 68% for the year ended December 31, 1999, respectively. Fee for service
arrangements mitigate the adverse effect on profitability of higher
pharmaceutical costs incurred under capitated contracts, as higher utilization
positively impacts profitability under fee-for-service (or non-capitated)
arrangements. The Company presently anticipates that approximately 20% of its
revenues in fiscal 2001 will be derived from capitated arrangements.

Changes in prices charged by manufacturers and wholesalers or
distributors for pharmaceuticals, a component of pharmaceutical claims costs,
directly affects the Company's cost of revenue. The Company believes that it is
likely that prices will continue to increase, which could have an adverse effect
on the Company's gross profit on capitated arrangements. Because plan sponsors
are billed for the cost of all prescriptions dispensed in fee-for-service
arrangements, the Company's gross profit is not adversely affected by changes in
pharmaceutical prices. To the extent such cost increases adversely affect the
Company's gross profit, the Company may be required to increase capitated
contract rates on new contracts and upon renewal of existing capitated
contracts. However, there can be no assurance that the Company will be
successful in obtaining these rate increases. The potential greater proportion
of fee-for-service contracts with the Company's customers in 2000 compared to
prior years mitigates the potential adverse effects of price increases, although
no assurance can be given that the recent trend towards fee-for-service
arrangements will continue or that a substantial increase in drug costs or
utilization would not negatively affect the Company's overall profitability in
any period.

Generally, loss contracts arise only on capitated or other risk-based
contracts and primarily result from higher than expected pharmacy utilization
rates, higher than expected inflation in drug costs and the inability of the
Company to restrict its MCO clients' formularies to the extent anticipated by
the Company at the time contracted PBM services are implemented, thereby
resulting in higher than expected drug costs. At such time as management
estimates that a contract will sustain losses over its remaining contractual
life, a reserve is established for these estimated losses. There are currently
no loss contracts and management does not believe that there is an overall trend
towards losses on its existing capitated contracts.

In the first quarter of 2001, the Company commenced a stock repurchase
program pursuant to which the Company intends to repurchase up to $5 million of
the Company's Common Stock from time to time on the open market or in private
transactions. In February, 2001, the Company repurchased 1,298,183 shares of
Common Stock at a price of $2.00 per share in private transactions. See "Certain
Relationships and Related Transactions" below.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk represents the only market risk exposure applicable to
the Company. The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's debt. The Company does not invest in or
otherwise use derivative financial instruments. The table below presents
principal cash flow amounts and related weighted average effective interest
rates by expected (contractual) maturity dates for the Company's financial
instruments subject to interest rate risk:

2001 2002 2003 2004 Thereafter
----------------------------------------------------------
Long-term debt:

Variable rate instruments 165 - - - -
Weighted average rate 7.50% - - - -

In the table above, the weighted average interest rate for fixed and
variable rate financial instruments was computed utilizing the effective
interest rate for that instrument at December 31, 2000, and multiplying by the
percentage obtained by dividing the principal payments expected in that year
with respect to that instrument by the aggregate expected principal payments
with respect to all financial instruments within the same class of instrument.

At December 31, 2000, the carrying values of cash and cash equivalents,
accounts receivable, accounts payable, claims payable, payables to plan sponsors
and others, and debt approximate fair value due to their short-term nature.

Because management does not believe that its exposure to interest rate
market risk is material at this time, the Company has not developed or
implemented a strategy to manage this market risk through the use of derivative
financial instruments or otherwise. The Company will assess the significance of
interest rate market risk from time to time and will develop and implement
strategies to manage that risk as appropriate.

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of MIM Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of MIM
Corporation (a Delaware corporation) and Subsidiaries as of December 31, 2000
and 1999 and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2000. These consolidated financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MIM Corporation and
Subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to the
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements, and in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

Arthur Andersen LLP

Roseland, New Jersey
March 1, 2001

MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(In thousands, except for share amounts)

2000 1999
----------- --------------
ASSETS
Current assets

Cash and cash equivalents $ 1,290 $ 15,306
Investment securities - 5,033
Receivables, less allowance for doubtful accounts of $8,333 and $8,576
at December 31, 2000 and December 31, 1999, respectively 56,809 62,919
Inventory 2,612 777
Prepaid expenses and other current assets 1,680 1,347
----------- --------------
Total current assets 62,391 85,382

Other investments - 2,300
Property and equipment, net 10,813 5,942
Due from affiliate and officer, less allowance for doubtful accounts of $0
and $403 at December 31, 2000 and December 31, 1999, respectively 2,012 1,849
Other assets, net 2,163 249
Intangible assets, net 39,023 19,961
----------- --------------
Total assets $ 116,402 $ 115,683
=========== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations $ 592 $ 514
Current portion of long-term debt 165 493
Accounts payable 2,964 5,039
Claims payable 35,338 39,702
Payables to plan sponsors 29,040 24,171
Accrued expenses and other current liabilities 5,476 6,468
----------- --------------
Total current liabilities 73,575 76,387

Capital lease obligations, net of current portion 1,621 718
Long-term debt, net of current portion - 2,279
Other non-current liabilities 589 -
Minority interest 1,112 1,112
Commitments and contingencies

Stockholders' equity
Preferred stock, $.0001 par value; 5,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, $.0001 par value; 40,000,000 shares authorized,
21,547,312 and 18,829,198 shares issued and outstanding
at December 31, 2000 and December 31, 1999, respectively 2 2

Additional Paid in Capital 97,010 91,614
Accumulated deficit (56,398) (54,575)
Treasury stock, 100,000 shares at cost (338) (338)
Stockholder notes receivable (771) (1,516)
----------- --------------
Total stockholders' equity 39,505 35,187
----------- --------------
Total liabilities and stockholders' equity $ 116,402 $ 115,683
=========== ==============

The accompanying notes are an integral part of these consolidated financial statements.

MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
(In thousands, except per share amounts)

2000 1999 1998
--------------- -------------- ------------

Revenue $ 369,794 $ 377,420 $ 451,070

Cost of revenue 334,614 347,115 421,374
--------------- -------------- ------------

Gross profit 35,180 30,305 29,696

General and administrative expenses 30,811 26,656 21,817
Legal fees due to indemnification responsibility 3,098 1,353 1,275
Amortization of goodwill and other intangibles 1,450 1,064 330
Special charges - 6,029 3,700
--------------- -------------- ------------

(Loss) income from operations (179) (4,797) 2,574

Interest income, net 766 1,012 1,712
Provision for loss on investment (2,300) - -
Other - - (15)
--------------- -------------- ------------

(Loss) income before taxes $ (1,713) $ (3,785) $ 4,271

Income taxes 110 - -
--------------- -------------- ------------

Net (loss) income $ (1,823) $ (3,785) $ 4,271
============== ============= ============

Basic (loss) income per common share (0.09) (0.20) 0.28
============== ============= ============

Diluted (loss) income per common share (0.09) (0.20) 0.26
============== ============= ============

Weighted average common shares used
in computing basic (loss) income per share 19,930 18,660 15,115
============== ============= ============

Weighted average common shares used
in computing diluted (loss) income per share 19,930 18,660 16,324
============== ============= ============

The accompanying notes are an integral part of these consolidated financial statements.

MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)

Additional Accumulated Stockholder Total Stockholders'
Common Stock Treasury Stock Paid-In Capital Deficit Notes Receivable Equity
------------ ------------ ------------- ------------ -------------- ------------

Balance December 31, 1997 $ 1 $ - $ 73,585 $ (55,061) $ (1,715) $ 16,810
============ ============ ============= ============ ============== ============

Stockholder loans, net - - - - (46) (46)
Shares issued in connection with
Continental acquisition 1 - 17,997 - - 17,998
Exercise of stock options - - 5 - - 5
Non-employee stock option
compensation expense - - 16 - - 16
Net income - - - 4,271 - 4,271
------------ ------------ ------------- ------------ -------------- ------------

Balance December 31, 1998 $ 2 $ - $ 91,603 $ (50,790) $ (1,761) $ 39,054
============ ============ ============= ============ ============== ============

Payments of stockholder loans - - - - 245 245
Exercise of stock options - - 5 - - 5
Non-employee stock option
compensation expense - - 6 - - 6
Purchase of treasury stock - (338) - - - (338)
Net loss - - - (3,785) - (3,785)
------------ ------------ ------------- ------------ -------------- ------------

Balance December 31, 1999 $ 2 $ (338) $ 91,614 $ (54,575) $ (1,516) $ 35,187
============ ============ ============= ============ ============== ============

Payments of stockholder loans - - - - 745 745
Exercise of stock options - - 333 - - 333
Shares issued in connection with
ADIMA acquisition - - 5,034 - - 5,034
Non-employee stock option
compensation expense - - 29 - - 29
Net loss - - - (1,823) - (1,823)
------------ ------------ ------------- ------------ -------------- ------------

Balance December 31, 2000 $ 2 $ (338) $ 97,010 $ (56,398) $ (771) $ 39,505
============ ============ ============= ============ ============== ============

The accompanying notes are an integral part of these consolidated financial statements.

MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
SOURCE /(USE) OF CASH
(In thousands)

2000 1999 1998
---------- --------- ----------
Cash flows from operating activities:

Net (loss) income $ (1,823) $ (3,785) $ 4,271
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 4,876 3,220 1,693
Loss on investment 2,300 - -
Issuance of stock to non-employees 29 6 16
Provision for losses on receivables and due from affiliates 571 6,537 58
Changes in assets and liabilities, net of acquisitions
Receivables 8,989 (4,709) (31,864)
Inventory (1,013) 410 (365)
Prepaid expenses and other current assets (297) (490) 142
Accounts payable (2,236) (1,887) (339)
Deferred revenue - - (2,799)
Claims payable (4,364) 6,847 5,274
Payables to plan sponsors and others 4,869 7,681 5,651
Accrued expenses (1,067) (934) 1,885
Non-current liabilities 500 - -
---------- --------- ----------
Net cash provided by (used in) operating activities 11,334 12,896 (16,377)
---------- --------- ----------

Cash flows from investing activities:
Purchases of property and equipment (6,634) (2,180) (2,173)
Purchases of investment securities (4,000) (7,070) (28,871)
Maturities of investment securities 9,033 13,731 39,814
Costs of acquisitions, net of cash acquired (19,638) (669) (750)
Purchases of other investments - (36) (25)
Stockholder notes receivable, net 745 245 (46)
Due from affiliates, net (163) (1,815) (34)
(Increase) decrease in other assets (1,905) 361 (121)
---------- --------- ----------
Net cash (used in) provided by investing activities (22,562) 2,567 7,794
---------- --------- ----------

Cash flows from financing activities:
Principal payments on capital lease obligations (514) (699) (132)
(Decrease) increase in debt (2,607) (3,620) 3,612
Proceeds from exercise of stock options 333 5 5
Purchase of treasury stock - (338) -
---------- --------- ----------
Net cash (used in) provided by financing activities (2,788) (4,652) 3,485
---------- --------- ----------

Net (decrease) increase in cash and cash equivalents (14,016) 10,811 (5,098)

Cash and cash equivalents--beginning of period 15,306 4,495 9,593
---------- --------- ----------

Cash and cash equivalents--end of period $ 1,290 $ 15,306 $ 4,495
========== ======== ========

(continued)

MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,

(In thousands)

Supplemental Disclosures:

The Company paid $657, $277 and $186 for interest for each of the years ended
December 31, 2000, 1999, and 1998, respectively.

Capital lease obligations of $1,495, $807 and $40 were incurred to acquire
equipment for each of the years ended December 31, 2000, 1999, and 1998,
respectively.

In connection with the acquisition of ADIMA, the Company issued 2,700 shares of
common stock valued at $5,034 in the year ended December 31, 2000.

The accompanying notes are an integral part of
these consolidated financial statements.

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share amounts)

NOTE 1--NATURE OF BUSINESS

Corporate Organization

MIM Corporation (the "Company" or "MIM") is a pharmacy benefit management
("PBM"), specialty pharmaceutical and fulfillment/e-commerce organization that
partners with healthcare providers and sponsors to control prescription drug
costs. MIM's innovative pharmacy benefit products and services use clinically
sound guidelines to ensure cost control and quality care. MIM's specialty
pharmaceutical division specializes in serving the chronically ill affected by
life threatening diseases and genetic impairments. MIM's fulfillment and
e-commerce pharmacy specializes in serving individuals that require long-term
maintenance medications. MIM's online pharmacy, www.MIMRx.com, develops private
label websites to offer affinity groups and health care providers innovative,
customized health information services and products on the Internet for their
members.

Business

The Company derives its revenues primarily from agreements to provide PBM
services, which includes mail order services, to various health plan sponsors in
the United States. The Company also provides specialty pharmacy services to
chronically ill patients that require injection and infusion therapies.

A majority of the Company's revenues have been derived from providing PBM
services in the State of Tennessee to managed care organizations ("MCOs")
participating in the State of Tennessee's TennCare(R) program and behavioral
health organizations ("BHOs") participating in the State of Tennessee's
TennCare(R) Partners program. From January 1994 through December 31, 1998, the
Company provided its PBM services to the TennCare(R) MCOs as a subcontractor to
RxCare of Tennessee, Inc. ("RxCare"). RxCare is a pharmacy services
administrative organization owned by the Tennessee Pharmacists Association.
Under the agreement with RxCare, the Company performed essentially all of
RxCare's obligations under its PBM agreements with plan sponsors and paid RxCare
certain amounts including a share of the profit from the contracts, if any.

The Company and RxCare did not renew the RxCare Contract, which expired
on December 31, 1998. The negotiated termination of its relationship with
RxCare, among other things, allowed the Company to directly market its services
to Tennessee customers (including those then under contract with RxCare) prior
to the expiration of the RxCare Contract. The RxCare Contract had previously
prohibited the Company from soliciting and/or marketing its PBM services in
Tennessee other than on behalf of, and for the benefit of, RxCare. The Company's
marketing efforts resulted in the Company executing agreements with all of the
MCOs for the TennCare(R) lives previously managed, under the RxCare Contract, as
well as substantially all third party administrators ("TPAs") and employer
groups previously managed under the RxCare Contract.

In connection with the termination the Company agreed to pay RxCare
$1,500, and waive RxCare's payment obligations with respect to cumulative
losses, including the outstanding advances of $800 which were previously
reserved. The $1,500 was paid in November 1998 and is included in the statement
of operations as a special charge.

On August 4, 2000, the Company acquired all of the issued and outstanding
membership interest of American Disease Management Associates, L.L.C., a
Delaware limited liability company ("ADIMA"). The aggregate purchase price
approximated $24,000, and included $19,000 in cash and 2.7 million shares of MIM
common stock valued at $5,000. ADIMA, located in Livingston, New Jersey,
provides high-tech intravenous and injectible specialty pharmaceutical products
to chronically ill patients receiving healthcare services from home by IV
certified registered nurses, typically after a hospital discharge. The
consolidated financial statements include the results of ADIMA from the date of
acquisition.

The following unaudited consolidated pro forma financial information has
been prepared assuming ADIMA was acquired as of January 1, 1999, with pro forma

adjustments for amortization of goodwill and interest income. The pro forma
financial information is presented for informational purposes only and is not
indicative of the results that would have been realized had the acquisition been
made on January 1, 1999. In addition, this pro forma financial information is
not intended to be a projection of future operating results.

Year ended December 31,
-----------------------------------
2000 1999
--------------------------------
Revenues .................................... $ $380,032 $ 388,611
Net loss .................................... $ (85) $ (1,933)
Basic loss per share ........................ ($0.00) ($0.09)
Diluted loss per share ...................... ($0.00) ($0.09)

The pro forma amounts above include $10,328 and $11,191 of revenues
from the operations of ADIMA for the period from January 1, 2000 through the
acquisition date and for the year ended December 31, 1999, respectively.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The consolidated financial statements include the accounts of MIM
Corporation and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Cash and Cash Equivalents

Cash and cash equivalents include demand deposits, overnight
investments and money market accounts.

Receivables

Receivables include amounts due from plan sponsors under the Company's
PBM contracts, amounts due from pharmaceutical manufacturers for rebates and
service fees resulting from the distribution of certain drugs through retail
pharmacies and amounts due from certain third party payors.

Inventory

Inventory is stated at the lower of cost or market. The cost of the
inventory is determined using the first-in, first-out (FIFO) method.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method over
the estimated useful lives of assets. The estimated useful lives of the
Company's assets is as follows:

Asset Useful Life
- ----- -----------
Computer and office equipment............ 3-5 years
Furniture and fixtures................... 5-7 years

Leasehold improvements and leased assets are amortized using a
straight-line basis over the related lease term or estimated useful life of the
assets, whichever is less. The cost and related accumulated depreciation of
assets sold or retired are removed from the accounts with the gain or loss, if
applicable, recorded in the statement of operations. Maintenance and repairs are
expensed as incurred.

Deferred Financing Costs

Deferred financing costs, which are included in other assets,
represent fees incurred in connection with the issuance of debt and are
amortized over the life of the related debt.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets represent the cost in excess of
the fair market value of the tangible net assets acquired in connection with
acquisitions. Amortization expense for the years ended December 31, 2000, 1999
and 1998, was $1,450, $1,064 and $330, respectively. Goodwill is amortized over
periods ranging from twenty to twenty-five years and other intangible assets are
amortized over four to six years.

Intangible assets comprised of the following as of December 31:

2000 1999
-------- -------
Goodwill $40,607 $20,095
Other intangibles $1,258 $1,258
-------- -------
Total $41,866 $21,353
Less: Amortization of goodwill and other intangibles $2,842 $1,392
-------- -------
Net Intangible Assets $39,023 $19,961
======= =======

Long-Lived Assets

The Company periodically reviews its long-lived assets and certain
related intangibles for impairment whenever changes in circumstances indicate
that the carrying amount of an asset may not be fully recoverable.

Deferred Revenue

Deferred revenues represent fees received in advance from certain plan
sponsors and are recognized as revenue in the month these fees are earned.

Claims Payable

The Company is responsible for all covered prescriptions provided to
plan members during the contract period. At December 31, 2000 and 1999, certain
prescriptions were dispensed to members for whom the related claims had not yet
been presented to the Company for payment. Estimates of $693 and $1,270 at
December 31, 2000 and 1999, respectively, for these claims are included in
claims payable.

Payables to Plan Sponsors

Payables to plan sponsors represent the sharing of pharmaceutical
manufacturers' rebates with the plan sponsors.

Revenue Recognition

Capitated Agreements. The Company's capitated contracts with plan
sponsors require the Company to provide covered pharmacy services to plan
sponsor members in return for a fixed fee per member per month paid by the plan
sponsor. Capitated agreements generally have a one-year term or, if longer,
provide for adjustment of the capitated rate each year. These contracts are
subject to rate adjustment or termination upon the occurrence of certain events.

Payments under capitated contracts are based upon the latest eligible
member data provided to the Company by the plan sponsor. On a monthly basis, the
Company recognizes revenue for those members eligible for the current month,
plus or minus capitation amounts for those members determined to be
retroactively eligible or ineligible for prior months under the contract. The
amount accrued for net retroactive eligibility capitation payments are based
upon management's estimates. Revenues for the years ended December 31, 2000,
1999 and 1998 under capitated agreements were $102,211, $121,617 and $142,960,
respectively.

Generally, loss contracts arise only on capitated contracts and
primarily result from higher than expected pharmacy utilization rates, higher
than expected inflation in drug costs and the inability to restrict formularies,
resulting in higher than expected drug costs. At such time as management
estimates that a contract will sustain losses over its remaining contractual
life, a reserve is established for these estimated losses.

Fee-for-Service Agreements. Under it's fee for service PBM contracts,
revenues from orders dispensed by the Company's pharmacy networks are recognized
when the pharmacy services are reported to the Company by the dispensing
pharmacist, through the on line claims processing systems. The Company assumes
financial risk through having independent contractual arrangements with its plan
sponsors and retail network pharmacy providers. Fee-for-service revenues for the
years ended December 31, 2000, 1999 and 1998 were $217,950, $221,062 and
$297,233, respectively.

Mail Order, e-Commerce Services, and Specialty Pharmacy. The Company's
mail order, e-commerce services, and specialty pharmacy are available to any
plan sponsor's members, as well as the general public. The Company's facilities
dispense the prescribed medication and bill the sponsor, the patient and/or the
patient's health insurance company. Revenue is recorded when the prescription is
dispensed.

Cost of Revenue

Cost of revenue includes pharmacy claims, fees paid to pharmacists and
other direct costs associated with pharmacy management, claims processing
operations and mail order services, offset by volume rebates received from
pharmaceutical manufacturers. For the years ended December 31, 2000, 1999 and
1998, rebates earned net of rebate sharing arrangements on pharmacy benefit
management contracts were $13,608, $16,883 and $21,996, respectively.

Income Taxes

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 utilizes the liability method, and deferred taxes are determined
based on the estimated future tax effects of differences between the financial
statement and tax basis of assets and liabilities at currently enacted tax laws
and rates.

Earnings per Share

Basic earnings (loss) per share are based on the average number of shares
outstanding and diluted earnings per share are based on the average number of
shares outstanding including common stock equivalents. For the years ended
December 31, 2000 and 1999, diluted loss per share is the same as basic loss per
share because the inclusion of common stock equivalents would be anti-dilutive.

Years Ended December 31,
--------------------------------
2000 1999 1998
--------- ---------- -------
Numerator:

Net (loss) income ($1,823) ($3,785) $4,271
================================

Denominator - Basic:
Weighted average number of common
shares outstanding 19,930 18,660 15,115
================================
Basic (loss) income per share ($0.09) ($0.20) $0.28
================================

Denominator - Diluted:
Weighted average number of common
shares outstanding 19,930 18,660 15,115
Common share equivalents of outstanding
stock options 0 0 1,209
--------------------------------
Total shares outstanding 19,930 18,660 16,324
================================
Diluted (loss) income per share ($0.09) ($0.20) $0.26
=================================

Disclosure of Fair Value of Financial Instruments

The Company's financial instruments consist mainly of cash and cash
equivalents, investment securities (see Note 3), accounts receivable, accounts
payable and debt. The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable and debt approximate fair value due to their
short-term nature.

Accounting for Stock-Based Compensation

The Company accounts for employee stock based compensation plans and
non-employee director stock incentive plans in accordance with APB Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). Stock options granted
to non-employees are accounted for in accordance with Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") (See Note 9).

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). The statement establishes accounting and reporting standards requiring
that every derivative instrument be recorded in the balance sheet as either an
asset or liability measured at fair value and that changes in fair value be
recognized currently in earnings, unless specific hedge accounting criteria are
met. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No.
133," which delayed the required adoption of SFAS 133 to fiscal 2001. In June
2000, the FASB issued SFAS 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities," - an amendment of SFAS 133," which was
effective concurrently with SFAS 133. The Company currently does not engage in
derivative activity and the adoption of these standards will not have a material
effect on its results of operations, financial position or cash flows.

In 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB
101 summarized certain of the staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. Subsequent

to the issuance of SAB 101, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF Issue No. 99-19 ("EITF 99-19"), "Recognizing Revenue Gross as
a Principal vs. Net as an Agent." The EITF clarifies whether a company should
recognize revenue based on the gross amount billed (to a customer because it has
earned revenue from the sale of goods or services) or the net amount retained
(the amount billed to the customer less the amount paid to a supplier). The EITF
states that this determination is a matter of judgment that depends on the
relevant facts and circumstances and certain factors must be considered in that
evaluation. The adoption of SAB 101 and EITF 99-19 did not have a material
impact on the Company's financial position or results of operations.

Reclassifications

Certain amounts in the 1999 financial statements have been reclassified to
conform to current year presentation.

NOTE 3--INVESTMENT

On June 23, 1997, the Company acquired an 8% interest in Wang Healthcare
Information Systems, Inc. ("WHIS"), which markets PC-based clinical information
systems to physicians utilizing patented image-based technology. Due to WHIS
issuing additional Convertible Preferred Stock (Series C), the Company's current
interest in WHIS is 5%. The Company purchased 1,150,000 shares of the Series B
Convertible Preferred Stock of WHIS, par value $0.01 per share, for an aggregate
purchase price equal to $2,300. Due to changes in the financial situation at
WHIS and its ability to access capital, the Company recorded a provision for
loss on this investment in December 2000.

NOTE 4--RELATED PARTY TRANSACTIONS

The Company leases one of its facilities from Alchemie Properties, LLC
("Alchemie") pursuant to a ten-year agreement. Alchemie is controlled by a
former officer and director of the Company. Rent expense was approximately $51
for the year ended December 31, 2000, and $56 for each of the years ended
December 31, 1999 and 1998. The Company has spent an aggregate of approximately
$712 for alterations and improvements to this space through December 31, 2000,
which upon termination of the lease will revert to the lessor. The future
minimum rental payments under this agreement are included in Note 7.

Stockholder Notes Receivable

In April 1999, the Company loaned its Chairman and Chief Executive
Officer $1,700 evidenced by a promissory note. The Company has full recourse
against the personal assets of the officer, including a pledge of 1,500,000
shares of the Company's Common Stock. The note requires repayment of principal
and interest by March 31, 2004. Interest accrues monthly at the "Prime Rate"
(9.5% as of December 31, 2000), as defined in the note then in effect.

During 1995, the Company advanced to MIM Holdings $800 for certain
consulting services to be performed for the Company in 1996 and paid $278 for
certain expenses on behalf of MIM Holdings including $150 for consulting
services to MIM Holdings provided by an officer of RxCare. These amounts,
totaling $1,078, were recorded as a stockholder note receivable. $622 of such
amount was recorded as a stockholder distribution during the first quarter of
1996 and the remaining balance of $456 bears interest at 10% per annum, payable
quarterly in arrears, with principal due on March 31, 2001. The note is
guaranteed by a former officer and director of the Company and further secured
by the assignment to the Company of a note due to MIM Holdings in the aggregate
principal amount of $100. The outstanding balance was $502 at December 31, 2000
and $456 at December 31, 1999. Interest income on the note was $46 for each of
the years ended December 31, 2000, 1999 and 1998.

In August 1994, the Company advanced Alchemie $299 for the purposes of
acquiring a building leased by the Company. The balance remaining on the advance
was approximately $269 at December 31, 2000 and $280 at December 31, 1999. The
note bears interest at a rate of 10% per annum with principal due and payable on
December 1, 2004. Interest income was $27 for December 31, 2000 and $29 for each
the years ended December 31, 1999 and 1998. The note is secured by a lien on
Alchemie's rental income.

In June 1994, the Company advanced to a former executive officer,
director, and majority stockholder approximately $979 for purposes of acquiring
a principal residence. In exchange for the funds, the Company received a
promissory note requiring repayment by June 15, 1997, with interest of 5.42% per
annum payable monthly. The note was amended making the principal balance due and
payable on June 15, 2000, together with 7.125% interest. The note was fully
repaid on June 15, 2000. The principal balance outstanding was $780 at December
31, 1999 . Interest income on the notes was $27, $56 and $70 for each of the
years ended December 31, 2000, 1999 and 1998, respectively.

Indemnification

Under certain circumstances, the Company may be obligated to indemnify
and advance defense costs to two former officers (one of which is a former
director and still principal stockholder of the Company) of a subsidiary of the
Company in connection with their involvement in the Federal and State of
Tennessee investigation of which they are the subject. During 2000, 1999 and
1998, the Company advanced and expensed $3,098, $1,353 and $1,275, respectively,
for the former officers' legal costs in this matter.

NOTE 5--PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following at December
31:

2000 1999
----------------------------

Computer and office equipment, including equipment under capital leases 15,483 9,494
Furniture and fixtures 1,095 758
Leasehold improvements 1,056 756
----------------------------
17,634 11,008
Less: Accumulated depreciation (6,821) (5,066)
----------------------------
Property and equipment, net 10,813 5,942
============================

NOTE 6--LONG TERM DEBT

On November 1, 2000 the Company entered into a $45,000 revolving credit
facility (the "Facility") with HFG Healthco-4 LLC, an affiliate of Healthcare
Finance Group, Inc. ("HFG") to be used for working capital purposes and future
acquisitions. The Facility replaced the Company's existing credit facilities
with its former lenders. The Facility has a three-year term and is secured by
the Company's receivables. Interest is payable monthly and provides for
borrowing up to $45,000 at the London Inter-Bank Offered Rate (LIBOR) plus 2.1%.
In connection with the issuance of the Facility, the Company incurred financing
costs of $1,642, which are included in other assets and are being amortized over
the term of the agreement. The facility contains various covenants that, among
other things, require the Company to maintain certain financial ratios, as
defined in the agreement governing the Facility.

In 1999, the Company's long-term debt consisted primarily of a Revolving
Note Agreement (the "Agreement") through May 2001 and installment note
("Installment Note I ") with a bank (the "Bank"), which were assumed by the
Company in connection with the Continental acquisition in 1998.

Long-term debt consists of the following at December 31:

2000 1999
------- ---------
Revolving Note $ - $ 2,097
Installment Note 1 - 232
Other 165 443
------- ---------
165 2,772
Less: Current portion 165 493
------- ---------
$ - $ 2,279
======= =========

NOTE 7--COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company has disputed several improper reductions of payments by
Tennessee Health Partnership ("THP"). In addition, there exists a dispute over
whether or not certain items should have been included under the Company's
respective capitated arrangements with THP and Preferred Health Plans ("PHP").
In 1999, the Company recorded a special charge of $3,300 for estimated future
losses related to these disputes.

In early 2001, the Company reached an agreement in principle with THP.
The Company will pay THP $1,300 in satisfaction of all claims between the
parties. Upon final settlement, any excess of the reserve for future losses will
be credited to income.

On May 4, 2000, the Company reached a negotiated settlement with PHP,
under which, among other things, the Company retained rebates that would have
otherwise been due and owing PHP. PHP paid the Company an additional $900 and
the respective parties released each other from any and all liability with
respect to past or future claims. This agreement did not have a material effect
on the Company's results of operations or financial positions.

On March 31, 1999, the State of Tennessee, (the "State"), and Xantus
Healthplans of Tennessee, Inc. ("Xantus"), entered into a consent decree under
which Xantus was placed in receivership under the laws of the State of
Tennessee. On September 2, 1999, the Commissioner of the Tennessee Department of
Commerce and Insurance (the "Commissioner"), acting as receiver of Xantus, filed
a proposed plan of rehabilitation (the "Plan"), as opposed to a liquidation of
Xantus. A rehabilitation under receivership, similar to reorganization under
federal bankruptcy laws, was approved by the Chancery Court (the "Court") of the
State of Tennessee, and allows Xantus to remain operating as a TennCare(R) MCO,
providing full health care related services to its enrollees. Under the Plan,
the State, among other things, agreed to loan to Xantus approximately $30,000 to
be used solely to repay pre-petition claims of providers, which claims aggregate
approximately $80,000. Under the Plan, the Company received $4,200, including
$600 of unpaid rebates to Xantus, which the Company was allowed to retain under
the terms of the preliminary rehabilitation plan for Xantus. A plan for the
payment of the remaining amounts has not been finalized and the recovery of any
additional amounts is uncertain. The Company recorded a special charge in 1999
of $2,700 for the estimated loss to the Company due to the Plan.

In 1998, the Company recorded a $2,200 special charge against earnings in
connection with an agreement in principle with respect to a civil settlement of
the Federal and State of Tennessee investigation in connection with the conduct
of two former officers of the Company, prior to the Company's initial public
offering. The definitive agreement covering this settlement was executed on June
15, 2000, and required payment of $775 in 2000 and payment of $900 in 2001 and
in 2002. At December 31, 2000, $1,425 is outstanding and included in accrued
expenses and other non-current liabilities.

Government Regulation

Various Federal and state laws and regulations affecting the healthcare
industry do or may impact the Company's current and planned operations,
including, without limitation, Federal and state laws prohibiting kickbacks in
government health programs (including TennCare(R)), Federal and state antitrust
and drug distribution laws, and a wide variety of consumer protection, insurance
and other state laws and regulations. While management believes that the Company
is in substantial compliance with all existing laws and regulations material to
the operation of its business, such laws and regulations are subject to rapid
change and often are uncertain in their application. As controversies continue

to arise in the healthcare industry (for example, regarding the efforts of plan
sponsors and pharmacy benefit managers to limit formularies, alter drug choice
and establish limited networks of participating pharmacies), Federal and state
regulation and enforcement priorities in this area can be expected to increase,
the impact of which on the Company cannot be predicted. There can be no
assurance that the Company will not be subject to scrutiny or challenge under
one or more of these laws or that any such challenge would not be successful.
Any such challenge, whether or not successful, could have a material adverse
effect upon the Company's financial position and results of operations.
Violation of the Federal anti-kickback statute, for example, may result in
substantial criminal penalties, as well as exclusion from the Medicare and
Medicaid (including TennCare) programs. Further, there can be no assurance that
the Company will be able to obtain or maintain any of the regulatory approvals
that may be required to operate its business, and the failure to do so could
have a material adverse effect on the Company's financial position and results
of operations.

The Company entered into a corporate integrity agreement with the Office
of Inspector General (the "OIG") within the Department of Health and Human
Services ("HHS") in connection with the Global Settlement Agreement entered into
with the OIG and the State of Tennessee in June 2000. In order to assist the
Company in maintaining compliance with laws and regulations and the corporate
integrity agreement the Company implemented its corporate compliance program in
August of 2000. This program includes educational training for all employees on
compliance with laws and regulations relevant to the Company's business and
operations and a formal program of reporting and resolution of possible
violations of laws or regulations, as well as increased oversight by the OIG.
Should the oversight procedures reveal credible evidence of any violation of
federal law, the Company is required to report such potential violations to the
OIG and the Department of Justice ("DOJ"). The Company is therefore subject to
increased regulatory scrutiny and, if the Company commits legal or regulatory
violations, they may be subject to an increased risk of sanctions or penalties,
including exclusion from participation in the Medicare or Medicaid programs. The
Company anticipates maintaining certain compliance related oversight procedures
after the expiration of the corporate integrity agreement in June 2005.

Employment Agreements

The Company has entered into employment agreements with certain key
employees that expire at various dates through February 2004. Total minimum
commitments under these agreements are approximately as follows:

2001........................... $ 983
2002........................... 983
2003........................... 941
2004........................... 81

---------
Total $ 2,988
=========

Operating Leases

The Company leases its facilities and certain equipment under various
operating leases. The future minimum lease payments under these operating leases
at December 31 are as follows:

2001........................... 1,360
2002........................... 1,236
2003........................... 1,175
2004........................... 1,037
2005........................... 787
Thereafter................... 3,020

--------
Total $ 8,615
========

Rent expense for non-related party leased facilities and equipment was
approximately $1,292, $995 and $809 for the years ended December 31, 2000, 1999
and 1998, respectively.

Capital Leases

The Company leases certain equipment under various capital leases. Future
minimum lease payments under the capital lease agreements at December 31 are as
follows:

2001........................................... $ 748
2002........................................... 720
2003........................................... 695
2004........................................... 385
-----------
Total minimum lease payments................... 2,548
Less: Amount representing interest............ 335
-----------
Obligations under leases....................... 2,213
Less: Current portion of lease obligations.... 592
-----------
$ 1,621
===========

NOTE 8--INCOME TAXES

The effect of temporary differences that give rise to a significant
portion of federal deferred taxes is as follows as of December 31:

2000 1999
-------------------------
Deferred tax assets (liabilities):

Reserves and accruals not yet deductible for tax purposes.... $ 3,133 $ 2,531
Federal net operating loss carryforwards..................... 15,013 15,511
Property Basis differences 213 (40)
-------------------------
Subtotal..................................................... 18,359 18,002
Less: valuation allowance.................................... (18,359) (18,002)
-------------------------
Net deferred taxes.................................................... $ - $ -
=========================

It is uncertain whether the Company will realize the full benefit from
its deferred tax assets, and it has therefore recorded a valuation allowance
covering its net deferred tax asset. The Company will assess the need for the
valuation allowance at each balance sheet date.

A reconciliation to the tax provision (benefit) at the Federal statutory
rate is presented below:

2000 1999 1998
-------------------------------------------------------

Tax (benefit) provision at statutory rate................ $ (582) $ (1,286) $ 1,452
State tax (benefit) provision, net of federal taxes...... 110 (250) 282
Change in valuation allowance............................ 357 1,088 (1,886)
Amortization of goodwill and other intangibles........... 361 431 134
Other.................................................... (136) 17 18
-------------------------------------------------------
Recorded income taxes.................................... $ 110 $ - $ -
=======================================================

At December 31, 2000, the Company had, for federal tax purposes, unused
net operating loss carry forwards of approximately $44,200, which will begin
expiring in 2009. As it is uncertain whether the Company will realize the full
benefit from these carryforwards, the Company has recorded a valuation allowance
equal to the deferred tax asset generated by the carryforwards. The Company
assesses the need for a valuation allowance at each balance sheet date. The
Company has undergone a "change in control" as defined by the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder.
The amount of net operating loss carryforwards that may be utilized in any given
year will be subject to a limitation as a result of this change. The annual
limitation approximates $2,700. Actual utilization in any year will vary based
on the Company's tax position in that year.

NOTE 9--STOCKHOLDERS' EQUITY

Stock Option Plans

The 1996 Stock Incentive Plan provides for the granting of incentive
stock options ("ISOs") and non-qualified stock options to employees and key
contractors of the Company. Options granted under the Plan generally vest over a
three-year period, but vest in full upon a change in control of the Company and
generally are exercisable for 10 to 15 years after the date of grant subject, in
some cases, to earlier termination in certain circumstances. The exercise price
of ISOs granted under the Plan will not be less than 100% of the fair market
value on the date of grant (110% for ISOs granted to more than a 10%
shareholder). If non-qualified stock options are granted at an exercise price
less than fair market value on the grant date, the amount by which fair market
value exceeds the exercise price will be charged to compensation expense over
the period the options vest. There are 5,200,450 shares authorized for issuance
under the Plan. At December 31, 2000, 30,170 shares remained available for grant
under the Plan.

As of December 31, 2000 and 1999, the exercisable portion of outstanding
options was 924,879 and 660,606, respectively. Stock option activity under the
amended Plan through December 31, 2000, is as follows:

Average
Options Price
----------------------------
Balance, December 31, 1997...... 2,695,281 $4.2074
Granted.................... 917,607 $5.5718
Canceled................... (685,729) $11.4845
Exercised.................. (843,150) $0.0067
----------------------------
Balance, December 31, 1998...... 2,084,009 $4.1132
Granted.................... 969,000 $1.8207
Canceled................... (292,202) $5.8581
Exercised.................. (738,450) $0.0067
----------------------------

Balance, December 31, 1999...... 2,022,357 $4.2621
Granted.................... 615,000 $2.1960
Canceled................... (360,027) $1.3852
Exercised.................. (105,167) $3.1657
-----------------------------
Balance, December 31, 2000...... 2,172,163 $4.2070
=============================

On April 17, 1998, the Company granted a former officer an option to
purchase 1,000,000 shares of Common Stock at $4.50 (then-current market price)
in connection with his employment agreement to become the Company's President,
Chief Operating Officer and Chief Financial Officer. This option was not granted
under the Plan. Under this agreement, options with respect to 500,000 shares
vested immediately upon his commencement of employment with the Company and the
options covering the remaining 500,000 shares vest in two equal installments on
the first two anniversary dates of the date of grant. These options expire 10
years from the date of grant. As of December 31, 2000, the exercisable portion
of outstanding options was 1,000,000 shares.

The 1996 Directors Stock Incentive Plan, (the "Directors Plan") was
adopted to attract and retain qualified individuals to serve as non-employee
directors of the Company ("Outside Directors"), to provide incentives and
rewards to such directors and to associate more closely the interests of such
directors with those of the Company's stockholders. The Directors Plan provides
for the automatic granting of non-qualified stock options to Outside Directors
joining the Company. Each such Outside Director receives an option to purchase
20,000 shares of Common Stock upon his or her initial appointment or election to
the Board of Directors. The exercise price of such options is equal to the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors Plan generally vest over three years. 300,000 shares are authorized
under the Directors Plan. At December 31, 2000, options to purchase 20,000
shares are outstanding at an exercise price of $13.00 and options to purchase
60,000 shares are outstanding at an exercise price of $4.69. At December 31,
2000, 60,000 shares under the Directors Plan were exercisable.

Accounting for Stock-Based Compensation

The fair value of the Company's compensation cost for stock option plans
for employees and directors, had it been determined, in accordance with SFAS
123, would have been as follows for the years ended December 31:

2000 1999 1998
------------------------- --------------------------- -----------------------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
------------------------- --------------------------- -----------------------------

Net (loss) income......... $ (1,823) $ (4,051) $ (3,785) $ (6,019) $4,271 $2,707
Basic (loss) income
per common share...... $ (0.09) $ (0.20) $ (0.20) $ (0.32) $ 0.28 $ 0.18
Diluted (loss) income
per common share...... $ (0.09) $ (0.20) $ (0.20) $ (0.32) $ 0.26 $ 0.17

Because the fair value method prescribed by SFAS No. 123 has not been
applied to options granted prior to January 1, 1995, the resulting pro forma
compensation expense may not be representative of the amount of compensation
expense to be recorded in future years. As pro forma compensation expense for

options granted is recorded over the vesting period, future pro forma
compensation expense may be greater as additional options are granted.

The fair value of each option grant was estimated on the grant date using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:

2000 1999 1998
Volatility 106.6% 95.5% 98.0%
Risk-free interest rate 6.25% 6.00% 5.00%
Expected life of options 4 years 4 years 4 years

The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option-pricing models require the input
of highly subjective assumptions including expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

NOTE 10--CONCENTRATION OF CREDIT RISK

The majority of the Company's revenues have been derived from TennCare(R)
contracts managed by the Company. The following table outlines contracts with
plan sponsors having revenues and/or accounts receivable that individually
exceeded 10% of the Company's total revenues and/or accounts receivables during
the applicable time period:

Plan Sponsor
------------------------------------------------------------------
A B C D E F G
------------------------------------------------------------------
Year ended December 31, 1998

% of total revenue 16% * * 11% 16% 12% *
% of total accounts receivable at period end * * * * * 12% *
Year ended December 31, 1999
% of total revenue 13% * 12% * * 14% 12%
% of total accounts receivable at period end * * * * * 20% 10%
Year ended December 31, 2000
% of total revenue 22% 12% * - - 12% *
% of total accounts receivable at period end * 14% * - - 18% *

- -----------------------------------------------------
* Less than 10%.

NOTE 11--PROFIT SHARING PLAN

The Company maintains a deferred compensation plan under Section 401(k)
of the Internal Revenue Code. Under the plan, employees may elect to defer up to
15% of their salary, subject to Internal Revenue Service limits. The Company may
make a discretionary matching contribution. The Company recorded a $65 matching
contribution for 2000 and a $50 matching contribution for 1999 and 1998.

NOTE 12--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of quarterly financial information for fiscal 2000 and 1999 is
as follows:

----------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
----------------------------------------------------------------------------
2000:

Revenues $ 89,104 $ 95,691 $ 85,101 $ 99,898
Net income (loss) $ 725 $ 1,082 $ 183 $ (3,813)
Basic earnings (loss) per share $ 0.04 $ 0.06 $ 0.01 $ (0.18)
Diluted earnings (loss) per share $ 0.04 $ 0.06 $ 0.01 $ (0.18)

1999:

Revenues $ 74,915 $ 88,894 $101,388 $112,223
Net income (loss) $ 604 $ 737 $ 529 $ (5,655)
Basic earnings (loss) per share $ 0.03 $ 0.04 $ 0.03 $ (0.30)
Diluted earnings (loss) per share $ 0.03 $ 0.04 $ 0.03 $ (0.30)

The net loss for the fourth quarter of 2000 includes a provision for loss
of $2,300 related to the Company's investment in WHIS and $2,270 related to
legal defense costs for two former officers. Due to changes in the financial
situation at WHIS and its ability to access capital, the Company recorded the
provision for loss on this investment in December 2000.

The net loss for the fourth quarter of 1999 includes special charges of
$6,029 relating to estimated losses on contract receivables.

MIM Corporation and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
For the years ended December 31, 2000, 1999 and 1998
(In thousands)

Balance at Charged to
Beginning of Charges to Costs and Other Balance at
Period Receivables Expenses Charges End of Period
-------------------------------------------------------------------------

Year ended December 31, 1998
Accounts receivable, . . . . . . . . . . $ 1,386 $ 595 $ 58 $ - $ 2,039
Accounts receivable, other . . . . . . . $ 2,360 $ (1,957) $ - $ 403
=========================================================================

Year ended December 31, 1999
Accounts receivable, . . . . . . . . . . $ 2,039 $ - $ 6,537 $ - $ 8,576
Accounts receivable, other . . . . . . . $ 403 $ - $ - $ - $ 403
=========================================================================

Year ended December 31, 2000
Accounts receivable, . . . . . . . . . . $ 8,576 $ (814) $ 571 $ - $ 8,333
Accounts receivable, other . . . . . . . $ 403 $ (403) $ - $ - $ -
=========================================================================

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.

PART III

Item 10. Directors and Executive Officers of Registrant

The following table sets forth certain information with respect to the
directors and executive officers of the Company:

Name Age Position
- ---------------------------------------------------------------------------------------------

Richard H. Friedman 50 Chairman of the Board and Chief Executive Officer

Louis A. Luzzi, Ph.D. 68 Director

Richard A. Cirillo 50 Director

Louis DiFazio, Ph.D. 63 Director

Michael Kooper 65 Director

Ronald K. Shelp 59 Director

Barry A. Posner 37 Vice President, Secretary and General Counsel

Edward J. Sitar 40 Vice President, Chief Financial Officer and Treasurer

Recie Bomar 53 President, Sales & Marketing

Rita M. Marcoux 40 Senior Vice President, Pharmacy Benefit Operations, MIM Health Plans

Russel J. Corvese 39 Chief Information Officer, Senior Vice President of MIMRx.com, Inc.

Bruce Blake 37 President, American Disease Management Associates

Richard H. Friedman is currently the Chairman and Chief Executive
Officer of the Company. He joined the Company in April 1996 and was elected a
director of the Company and appointed Chief Financial Officer and Chief
Operating Officer in May 1996. He served as Chief Operating Officer and Chief
Financial Officer until April 1998. Mr. Friedman also served as the Company's
Treasurer from April 1996 until February 1998.

Louis A. Luzzi, Ph.D. has served as a director of the Company since
July 1996. Dr. Luzzi is the Dean of Pharmacy and Provost for Health Science
Affairs of the University of Rhode Island College of Pharmacy. He has been a
Professor of Pharmacy at the University of Rhode Island since 1981.

Richard A. Cirillo has served as a director of the Company since April
1998. Since June 21, 1999, Mr. Cirillo has been a partner of the law firm of
King & Spalding. From 1983 until June 1999, Mr. Cirillo was a member of the law
firm of Rogers & Wells LLP, with which he had been associated with since 1975.
Since Mr. Cirillo joined King & Spalding, that firm has served as the Company's
outside general counsel. Prior to that time, Rogers & Wells LLP had served in
such capacity.

Louis DiFazio, Ph. D. has served as a director of the Company since May
1998. From 1990 through March 1997, Dr. DiFazio served as President of Technical
Operations for the Pharmaceutical Group of Bristol-Myers Squibb and from March
1997 until his retirement in June 1998 served as Group Senior Vice President.
Dr. DiFazio also serves as a member of the Board of Trustees of Rutgers
University and the University of Rhode Island. Dr. DiFazio received his B.S. in
Pharmacy at Rutgers University and his Ph.D. in Pharmaceutical Chemistry from
the University of Rhode Island.

Martin ("Michael") Kooper has served as a director of the Company since
April 1998. Mr. Kooper has served as the President of The Kooper Group since
December 1997, a successor to Michael Kooper Enterprises, an insurance and risk
management consultant firm. From 1980 through December 1997, Mr. Kooper served
as President of Michael Kooper Enterprises.

Ronald K. Shelp has served as a director of the Company since July
2000. Since June 1999, Mr. Shelp has been Chairman of b2bstreet.com, a
business-to-business auction site for small businesses. From 1996 to 1999, Mr.
Shelp served as Chairman of Kent Global Strategies, a consulting firm
specializing in communications, marketing for businesses and not-for-profit
organizations, and domestic and international business transactions.

Barry A. Posner joined the Company in March 1997 as General Counsel and
was appointed Secretary of the Company at that time. On April 16, 1998, Mr.
Posner was appointed Vice President of the Company. From September 1990 through
March 1997, Mr. Posner was associated with the Stamford, Connecticut law firm of
Finn Dixon & Herling LLP, where he practiced corporate law, specializing in the
areas of mergers and acquisitions and securities law, and commercial real estate
law.

Edward J. Sitar joined the Company in August 1998 as Vice President of
Finance. On March 22, 1999, Mr. Sitar was appointed Chief Financial Officer and
Treasurer, relinquishing the position of Vice President of Finance. From May
1996 to August 1998, Mr. Sitar was the Vice President of Finance for Vital
Signs, Inc., a publicly traded manufacturer and distributor of single use
medical products.

Recie Bomar joined the Company in March 1999 as Vice President of Sales
and Marketing. In February 2000, Mr. Bomar was promoted to President of Sales
and Marketing. From 1997 through February 1999, Mr. Bomar was a Vice President
of PharmaCare, a subsidiary of CVS Corporation. Mr. Bomar was a National
Director of Sales & Services for RX Connections from 1996 to 1997.

Rita M. Marcoux has served the Company in various capacities since
1994. On February 1, 2000, Ms. Marcoux was promoted to Senior Vice President of
Pharmacy Benefits Operations for MIM Health Plans, Inc., the Company's PBM
operating subsidiary. Prior to that promotion, Ms. Marcoux had served as Vice
President of Clinical Operations since 1997. From 1996 to 1997, she served as
Executive Director of Business Operations and, from 1994 to 1996, as Director of
Contracting.

Russel J. Corvese has served the Company in various capacities since
May 1994. On February 1, 2000, Mr. Corvese was appointed Senior Vice President
of MIMRx.com, Inc., the Company's wholly owned subsidiary, and is responsible
for MIS, Merchandising and Business Development. Mr. Corvese served as Vice
President of Operations and Chief Information Officer from November 27, 1997 to
February 1, 2000, and continues to be responsible for the Company's information
systems and related computer and technology matters. From November 1996 through
November 1997, Mr. Corvese held the position of Executive Director, MIS.

Bruce Blake has served as an officer of the Company since August 2000,
when the Company acquired American Disease Management Associates, L.L.C. Mr.
Blake has been President of American Disease Management Associate, L.L.C. since
February 1996.

Executive officers are appointed by, and serve at the pleasure of the
Board of Directors of the Company and in some cases, subject to the terms of
their respective employment agreements with the Company which among other things
provide for, each of them, serving in the executive position(s) listed above.

Item 11. Executive Compensation

The following table sets forth certain information concerning the
annual, long-term and other compensation of the Chief Executive Officer, the
former President and Chief Operating Officer and the four other most highly
compensated executive officers of the Company (the "Named Executive Officers")
for services rendered in all capacities to the Company and its subsidiaries
during each of the years ended December 31, 2000, 1999 and 1998, respectively:

Summary Compensation Table

Long-term
Annual Compensation Compensation
----------------------------------------------------------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary (1) Bonus (2) Compensation (3) Options Compensation
- ------------------------------------------------------------------------------------------------------------------------------------

Richard H. Friedman 2000 $451,596 - $40,113 - $3,600 (4)
Chief Executive Officer 1999 $425,097 - $36,930 250,000 $5,710 (4) (5)
1998 $333,462 $212,500 $33,134 - (6) $5,217 (4)

Scott R. Yablon (7) 2000 $262,538 - $26,618 - 125,138 (8)
Former President & Chief Operating 1999 $354,828 - $28,494 - $4,710 (4)
Officer 1998 $207,500 $162,500 $6,678 1,000,000 (9) $4,605 (4)

Barry A. Posner 2000 $241,553 - $17,357 - $3,600 (4)
Vice President, General Counsel 1999 $223,128 - $13,619 - $4,710 (4)
& Secretary 1998 $191,346 $100,000 $10,828 100,000 (10) $5,890 (4)

Edward J. Sitar (11) 2000 $189,470 - $19,232 - $3,600 (4)
Chief Financial Officer 1999 $176,867 - $12,000 - $30,217 (4) (12)
& Treasurer 1998 $54,083 $15,000 $3,000 50,000 (9) -

Recie Bomar (13) 2000 $193,615 - $6,000 - $3,600 (4)
President of Sales & Marketing 1999 $150,198 $0 $5,000 75,000 (9) $50,000 (12) (14)
1998 - - - - -

Russel J. Corvese 2000 $171,192 - 3,600 - -
Chief Information Officer & 1999 $152,290 - 3,600 - -
Senior Vice President, MIMRx.com 1998 $105,431 - 3,300 22,000 (10) -

__________________________________

(1) The annualized base salaries of the Named Executive Officers for 2000 were
as follows: Mr. Friedman ($450,000), Mr. Yablon ($375,000), Mr. Posner
($244,000), Mr. Sitar ($191,000), Mr. Bomar ($200,000) and Mr. Corvese
($175,000).
(2) Please refer to the Long-Term Incentive Plan - Awards in the Last Fiscal
Year Table below for information on certain grants of Performance Units
made during 2000 and the corresponding table in this Report for fiscal 1999
for similar grants made in 1999.
(3) Represents automobile allowances, and for Messrs. Friedman, Yablon, Posner
and Sitar reimbursement for club membership dues and related fees and
expenses of $22,113, $10,118, $5,357 and $7,232, respectively in 2000.
(4) Represents life insurance premiums paid by them and reimbursed by the
Company.
(5) Represents tax return preparation expense paid by the Named Executive
Officer and reimbursed by the Company.
(6) The annual report for fiscal 1998 reflected a grant of 800,000 options to
Mr. Friedman. Such grant was subject to stockholder approval, which was not
obtained at the Company's 1999 Annual Meeting of Stockholders. As such, the
grant of 800,000 options was cancelled.
(7) Mr. Yablon's employment with the Company ended on August 31, 2000.

(8) Represents severance payments made by the Company after Mr. Yablon's
departure on August 31, 2000 and life insurance premiums of $3,600 paid by
him and reimbursed by the Company.
(9) Represents options to purchase shares of Common Stock at market price on
the date of grant.
(10) Represents options with respect to which the exercise price was repriced to
$6.50 per share on July 6, 1998.
(11) Mr. Sitar joined the Company as Vice President - Finance in June 1998.
(12) Represents relocation reimbursement expense received by Messrs. Sitar and
Bomar of $25,000 each.
(13) Mr. Bomar joined the Company as Director of Sales and Marketing in March
1999.
(14) Represents signing bonus received by Mr. Bomar for $25,000.

--------------------------------------------

There were no stock option grants made during fiscal 2000 to any of the
Named Executive Officers.

The following table sets forth for each Named Executive Officer the
number of shares covered by both exercisable and unexercisable stock options
held as of December 31, 2000. Also reported are the values for "in-the-money"
options, which represent the difference between the respective exercise prices
of such stock options and $0.875, the per share closing price of the MIM Common
Stock on December 29, 2000, the last trading day of 2000:

Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values

Number of Securities(1) Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year-End Fiscal Year-End (2)
Acquired on Value -----------------------------------------------------------------------------
Name Exercise # Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------

Richard H. Friedman - - 83,334 166,666 - -
Scott R. Yablon - - 1,000,000 - - -
Barry A. Posner - - 133,332 66,668 - -
Edward J. Sitar - - 66,667 33,334 - -
Recie Bomar - - 25,000 50,000 - -
Russel J. Corvese - - 23,617 7,333 $ 7,771.03 -

_____________________________
(1) Indicated options are to purchase shares of Common Stock from the Company.
(2) Except as indicated, none of the options were "in the money".

--------------------------------------------

The following table sets forth for each Named Executive Officer the
number of performance units and/or restricted shares of Common Stock granted by
the Company during the year ended December 31, 2000. In addition, for each
award, the table also sets forth the related maturation period and future
payments expected to be made under varying circumstances:

Long-Term Incentive Plan -- Awards in Last Fiscal Year

Performance Estimated Future Payments Under
Number of or Period Non-Stock Price-Based Plans
Shares, Units Until Maturation ---------------------------------------------
Name or Rights or Payment Threshold Target Maximum
- ---------------------------------------------------------------------------------------------------------

Barry A. Posner 10,000 (1) 12/31/01 $ 100,000 $ 250,000 $ 400,000
Edward J. Sitar 2,500 (1) 12/31/01 $ 25,000 $ 62,500 $ 100,000
Recie Bomar 5,000 (2) 12/31/01 $ 50,000 $ 125,000 $ 200,000

- -----------------------------

(1) Represents performance units granted to the indicated individual on March
1, 2000. The performance units vest and become payable upon the achievement
by the Company of certain specified levels of after-tax net income in
fiscal 2001. Upon vesting, the performance units are payable in two equal
installments after the earlier of (I) the individual's Date of Termination
and (II) a Change of Control (each as defined in his Performance Units
Agreement) as follows: (a) $10 per unit upon the Company's achievement of a
threshold level of after-tax net income in fiscal 2001; (b) $25 per unit
upon the Company's achievement of a target level of after-tax net income in
fiscal 2001; and (c) $40 per unit upon the Company's achievement of a
maximum level of after-tax net income in fiscal 2001.

(2) Represents performance units granted to the indicated individual on June 1,
2000. The performance units vest and become payable upon the achievement by
the Company of certain specified levels of after-tax net income in fiscal
2001. Upon vesting, the performance units are payable in two equal
installments after the earlier of (I) the individual's Date of Termination
and (II) a Change of Control (each as defined in his Performance Units
Agreement) as follows: (a) $10 per unit upon the Company's achievement of a
threshold level of after-tax net income in fiscal 2001; (b) $25 per unit
upon the Company's achievement of a target level of after-tax net income in
fiscal 2001; and (c) $40 per unit upon the Company's achievement of a
maximum level of after-tax net income in fiscal 2001.

Compensation of Directors

Directors who are not officers of the Company ("Outside Directors")
receive fees of $1,500 per month and $500 per meeting of the Company's Board and
any committee thereof and are reimbursed for expenses incurred in connection
with attending such meetings. In addition, each Outside Director joining the
Company receives options to purchase 20,000 shares of Common Stock under the
Company's 1996 Non-Employee Directors Stock Incentive Plan as amended (the
"Directors Plan"). Directors who are also officers of the Company are not paid
any director fees. Mr. Ronald Shelp received options to purchase 20,000 shares
of Common Stock upon his election as a director in July 2000.

The Directors Plan was adopted in July 1996 to attract and retain
qualified individuals to serve as Outside Directors to provide incentives and
rewards to the Outside Directors and to associate more closely their interests
with those of the Company's stockholders. The Directors Plan provides for the
automatic grant of non-qualified stock options to purchase 20,000 shares of
Common Stock to the Outside Directors joining the Company since the adoption of
the Directors Plan. The exercise price of such options is equal to the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors Plan generally vest over three years. A reserve of 300,000 shares of
the Company Common Stock has been established for issuance under the Directors
Plan, which includes the original 100,000 shares plus 200,000 shares that were
approved at the Company's 1999 Annual Meeting of Stockholders.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Company's Board administers the
Company's stock incentive plans and makes recommendations to the Company's Board
regarding executive officer compensation matters, including policies regarding
the relationship of corporate performance and other factors relating to
executive compensation. During 2000, the following persons served as members of
the Committee: Messrs. Cirillo, Luzzi and DiFazio, none of whom is or ever has
been an officer or employee of the Company. During 2000, Mr. Cirillo was a
partner with the law firm of King & Spalding, the Company's outside counsel,
which received fees from the Company for the provision of legal services.

Compensation Committee Report On Executive Compensation

The Company believes that a strong link should exist between executive
compensation and management's success in maximizing shareholder value. This
belief was adhered to in 2000 by continuing the short-term and long-term
incentive executive compensation programs originally implemented in 1999 in
order to provide competitive compensation, strong incentives for the executives
to stay with the Company and deliver superior financial results, and significant
potential rewards if the Company achieves aggressive financial goals. The
Compensation Committee's role and responsibilities involve the development and
administration of executive compensation policies and programs that are
consistent with, linked to, and supportive of the basic strategic objective of
maximizing shareholder value, while taking into consideration the activities and
responsibilities of management.

In 1998, the Board engaged the professional services of an outside
consultant to review the existing compensation programs and to assist in
developing the desired program. The consultant found that while some of the
executive salaries were within a competitive range, the executive bonus
opportunities were below the level that would be considered appropriate. The
consultant further reported that the long-term compensation portion of the
program should have been a more balanced combination of performance units,
performance shares and stock options instead of relying solely on stock options
for long-term incentive as the Company had done in the past.

At that time, the Board directed its Compensation Committee to work
with that executive compensation consultant to develop and adopt a total
compensation program focused on maximizing shareholder value. In December 1998,
the Compensation Committee adopted the 1998 Total Compensation Program for Key
Employees for other senior management. These actions were based on the
recommendation of the outside consultant and an internal review of the Chief
Executive Officer's recommendations regarding participation and appropriate
grants of units, shares and options. Grants affecting the Chief Executive
Officer's recommendations, as adopted by the Compensation Committee continued to
be awarded in 2000 in the form of performance units.

Compensation Philosophy and Elements

The Compensation Committee adheres to four principles in discharging
its responsibilities, which have been applied through its adoption in December
1998 of the 1998 Total Compensation Program for Key Employees (the "Program").
First, the majority of the annual bonus and long-term compensation for
management and key employees should be in large part at risk, with actual
compensation levels corresponding to the Company's actual financial performance.
Second, over time, incentive compensation of the Company's executives should
focus more heavily on long-term rather than short-term accomplishments and
results. Third, equity-based compensation and equity ownership expectations
should be used on an increasing basis to provide management with clear and
distinct links to stockholder interests. Fourth, the overall compensation
programs should be structured to ensure the Company's ability to attract,
retain, motivate and reward those individuals who are best suited to achieving
the desired performance results, both long and short-term, while taking into
account the duties and responsibilities of the individual.

The Program provides the Compensation Committee with the discretion to
pay cash bonuses and grant (i) performance units payable in cash upon
achievement of certain performance criteria established by the Compensation
Committee, (ii) performance shares which are subject to restrictions on transfer
and encumbrance for a specified period of time, but which restrictions may lapse
early upon achievement of certain performance criteria established by the
Compensation Committee and (iii) both non-qualified and incentive stock options.

The Program provides management and participating employees with the
opportunity to receive cash bonuses and long-term rewards if the corporate,
department and/or individual objectives are achieved. Specifically, participants
may receive significant bonuses if the Company's aggressive annual financial
profit plan and individual objectives are achieved. The maximum amount payable
in any given year to any one individual under the cash bonus and performance
unit portions of the Program is $1 million. Any amounts in excess of such
threshold will be deferred to later years. The $1 million limitation is set
pursuant to regulations concerning "performance-based" compensation plans in
Code Section 162(m) to enable the Compensation Committee "negative discretion"
in determining the actual bonus or performance unit awards.

Compensation of the Chief Executive Officer

In considering the appropriate salary, bonus opportunity, and long-term
incentive for the current Chief Executive Officer, the Compensation Committee
considered his unique role during 1998, 1999 and 2000 and his expected role over
the next three years. The Compensation Committee determined that in a very real
sense, the Company would have faced extreme difficulty in 1998 and 1999, were it
not for the fact that Mr. Friedman accepted the challenge to replace both the
former Vice-Chairman and the former Chairman and Chief Executive Officer and
give the investment community and the Company's stockholders reassurance that
the Company would overcome the problems faced in its primary market. The Board
further determined that Mr. Friedman's demonstrated commitment through the
purchase of a large block of stock, his active and effective involvement in
restructuring the business, and his recruitment and leadership of an aggressive
team were assets that should be protected by the Company. The Committee's
negotiation of a performance-driven, five-year agreement entered into in
December 1998 was based on this recognition of his key role in maximizing future
shareholder value.

Code Section 162(m)

The Chief Executive Officer's total compensation package under his new
employment agreement is believed to qualify as "performance-based" compensation
with the meaning of Code Section 162(m). A Compensation Committee composed
entirely of outside directors adopted the Total Compensation Program and the
entire Board of Directors approved Mr. Friedman's agreement. In order to qualify
for favorable treatment under Code Section 162(m), Mr. Friedman's amended
Employment Agreement was structured such that he will not receive cash
compensation in excess of $1,000,000 in any one year under the cash bonus
portion of the Program. The performance units, performance shares and stock
options for all persons were granted from shares authorized under the plan, but
the form of the awards required certain amendments to the Plan and authorization
of additional shares, which were approved by the stockholders at the 1999 Annual
Meeting of Stockholders.

MIM CORPORATION COMPENSATION COMMITTEE

Richard A. Cirillo
Louis DiFazio, Ph.D.
Louis A. Luzzi, Ph.D.

Employment Agreements

In December 1998, Mr. Friedman entered in to an employment agreement with
the Company (the "1998 Agreement"). The 1998 Agreement did not receive the
required stockholder approval at the Company's 1999 Annual Meeting of
Stockholders. Under the 1998 Agreement, Mr. Friedman was granted options to
purchase 800,000 shares of Common Stock at an exercise price of $4.50 per share
(the market price on December 2, 1998, the date of grant), 200,000 performance
units and 300,000 restricted shares. Such grants were canceled upon the failure
to obtain stockholder approval. Based upon the recommendations of the
Compensation Committee, the 1998 Agreement was amended on October 11, 1999 (the
1998 Agreements as amended, the "Amended Agreement"). The Amended Agreement
provides for Mr. Friedman's employment as the Chairman and Chief Executive
Officer for a term of employment through November 30, 2003 (unless earlier
terminated) at an initial base annual salary of $425,000. Mr. Friedman is
entitled to receive certain fringe benefits, including an automobile allowance,
and is also eligible to participate in the Company's executive bonus program.
Under the Amended Agreement, Mr. Friedman was granted incentive stock options to
purchase 42,194 shares of Common Stock at an exercise price of $2.37 per share
and non-qualified stock options to purchase 207,806 shares of Common Stock at an
exercise price of $2.16 (the market price on October 8, 1999, the date of grant)
and 200,000 performance units. See "Long Term Incentive Plan - Awards in Last
Fiscal Year" above for a description of the terms and conditions applicable to
the performance units.

If Mr. Friedman's employment is terminated early due to his death or
disability, (i) all vested options may be exercised by his estate for one year
following termination, (ii) all performance units shall vest and become
immediately payable at the accrued value measured at the end of the fiscal year
following his termination; provided, however, that should Mr. Friedman remain
disabled for six months following his termination for disability, he shall also
be entitled to receive for a period of two years following termination, his
annual salary at the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled. If Mr.
Friedman's employment is terminated early by the Company without cause, (i) Mr.
Friedman shall be entitled to receive, for the longer of two years following
termination or the period remaining in his term of employment under the
agreement, his annual salary at the time of termination (less the net proceeds
of any long term disability or workers' compensation benefits) and continuing
coverage under all benefit plans and programs to which he was previously
entitled, (ii) all unvested options shall become vested in any other pension or
deferred compensation plans, and (iii) any performance units to which he would
have been entitled at the time of his termination shall become vested and
immediately payable at the then applicable target rate. If the Company
terminates Mr. Friedman for cause, he shall be entitled to receive only salary,
bonus and other benefits earned and accrued through the date of termination. If
Mr. Friedman terminates his employment for good reason, (i) Mr. Friedman shall
be entitled to receive, for a period of two years following termination, his
annual salary at the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled, (ii) all
unvested options shall become vested and immediately exercisable in accordance
with the terms of the options and Mr. Friedman shall become vested in any other
pension or deferred compensation plans, and (iii) all performance units granted
to Mr. Friedman shall become vested and immediately payable at the then
applicable maximum rate. Upon the company undergoing certain specified changes
of control which result in his termination by the Company or a material
reduction in his duties, (i) Mr. Friedman shall be entitled to receive, for the
longer of three years following termination or the period remaining in his term
of employment under the agreement, his annual salary at the time of termination
and continuing coverage under all benefits plans and programs to which he was
previously entitled, (ii) all unvested options shall become vested and
immediately exercisable in accordance with the terms of the options and Mr.
Friedman shall become vested in any other pension or deferred compensation
plans, and (iii) all performance units granted to Mr. Friedman shall become
vested and immediately payable at the then applicable maximum rate; provided
that if the change of control is approved by two-thirds of the Board of
Directors, the performance units shall become vested and payable at the accrued
value measured at the prior fiscal year end.

During the term of employment and for one year following the later of his
termination or his receipt of severance payments, Mr. Friedman may not directly
or indirectly (other than with the Company) participate in the United States in
any pharmacy benefit management business or other business which is at any time
a material part of the Company's overall business. Similarly, for a period of
two years following termination, Mr. Friedman may not solicit or otherwise
interfere with the Company's relationship with any present or former employee or
customer of the Company.

In March 1999, Mr. Posner entered into an employment agreement with the
Company which provides for his employment as the Company's Vice President and
General Counsel for a term of employment through February 28, 2004 (unless
earlier terminated) at an initial base annual salary of $230,000. Under the
agreement, Mr. Posner is entitled to receive certain fringe benefits, including
an automobile allowance, and is also eligible to participate in the Company's
executive bonus program. Under the agreement, Mr. Posner was granted options to
purchase 100,000 shares of Common Stock at an exercise price of $4.50 (the
market price on December 2, 1998, the date of grant). The options vest in three
equal installments on the first three anniversaries of the date of grant. Mr.
Posner was also granted (i) an aggregate of 20,000 Performance Units (10,000
Units in both 1999 and 2000) (See "Long Term Incentive Plan - Awards in Last
Fiscal Year" above for a description of the grant of the performance units to
Mr. Posner in March 2000 and a summary of the terms and conditions applicable to
the performance units) and (ii) 60,000 restricted shares of Company Common Stock
in March 1999. The restricted shares are subject to restrictions on transfer and
encumbrance through December 31, 2006 and are automatically forfeited to the
Company upon termination of Mr. Posner's employment with the Company prior to
December 31, 2006. The restrictions to which the restricted shares are subject
may lapse prior to December 31, 2006 in the event that the Company achieves
certain specified levels of earnings per share in fiscal 2001 or 2002. Mr.
Posner possesses voting rights with respect to the restricted shares, but is not
entitled to receive dividend or other distributions, if any, paid with respect
to the restricted shares. In addition, Mr. Posner's restricted shares shall vest
and become immediately transferable without restriction upon the occurrence of
the following termination events: (i) Mr. Posner is terminated early by the
Company without cause, (ii) Mr. Posner terminates his employment for good
reason, or (iii) after certain changes of control of the Company which results
in Mr. Posner's termination by the Company or a material reduction of his duties
with the Company. In addition, in the event that Mr. Posner is terminated
without cause or terminates his employment for good reason following a change of
control of the Company, (i) all performance units granted to Mr. Posner shall
become vested and immediately payable at the then applicable maximum rate and
(ii) all restricted shares issued to Mr. Posner shall vest and become
immediately payable. Upon termination, Mr. Posner is entitled to substantially
the same entitlements as described above as Mr. Friedman. In addition, Mr.
Posner is subject to the same restrictions on competition and non-interference
as described above with respect to Mr. Friedman.

In March 1999, Mr. Sitar entered into an employment agreement with the
Company, which provides for his employment as Chief Financial Officer for a term
of employment through February 28, 2004 (unless earlier terminated) at an
initial base annual salary of $180,000. Under the agreement, Mr. Sitar is
entitled to receive certain fringe benefits, including an automobile allowance,
and is also eligible to participate in the Company's executive bonus program.
Under the agreement, Mr. Sitar was granted options to purchase 50,000 shares of
Common Stock in 1999 at an exercise price of $4.50 (the market price on the date
of grant). The options vest in three equal installments on the first three
anniversaries of the date of grant. Mr. Sitar was also granted (i) an aggregate
of 5,000 Performance Units (2,500 Units in both 1999 and 2000) (See "Long Term
Incentive Plan - Awards in Last Fiscal Year" above for a description of the
grant of the performance units to Mr. Sitar in March 2000 and a summary of the
terms and conditions applicable to the performance units) and (ii) 15,000
restricted shares of Company Common Stock in March 1999. Mr. Sitar's restricted
shares have the same terms with respect to vesting, forfeiture and acceleration
as Mr. Posner's restricted shares, as described above. Under the agreement, upon
termination, Mr. Sitar is entitled to substantially the same entitlements as
described above with respect to Mr. Posner. In addition, Mr. Sitar is subject to
the same restrictions on competition and non-interference as described above
with respect to Mr. Friedman.

In February 1999, Mr. Bomar entered in to an employment letter agreement
with the Company which provides for his employment as Vice President - Sales and
Marketing until terminated by the Company or Mr. Bomar at an initial base annual
salary of $180,000. Under the agreement, Mr. Bomar is entitled to receive
certain fringe benefits, including automobile and life insurance allowances and
is also eligible to participate in the Company's executive bonus program. Under
the agreement, Mr. Bomar was granted options to purchase 75,000 shares of Common
Stock in 1999 at an exercise price of $2.59 per share (the market price on the
date of grant). The options vest in three equal installments on the first three
anniversaries of the date of grant. Mr. Bomar was also granted (i) an aggregate
of 10,000 Performance Units (5,000 Units in both 1999 and 2000) (See "Long Term
Incentive Plan - Awards in Last Fiscal Year" above for a description of the
grant of the performance units to Mr. Bomar in June 2000 and a summary of the
terms and conditions applicable to the performance units) and (ii) 25,000
restricted shares of Company Common Stock in June 1999. Mr. Bomar's restricted
shares have the same terms with respect to vesting, forfeiture and acceleration
as Mr. Posner's restricted shares, as described above. In addition, in the event
that Mr. Bomar is terminated without cause or terminates his employment for good
reason following a change of control of the Company, (i) all performance units
granted to Mr. Bomar shall become vested and immediately payable at the then
applicable maximum rate and (ii) all restricted shares issued to Mr. Bomar shall
vest and become immediately payable. Under the agreement, if, within three
months following certain changes of control, Mr. Bomar is terminated by the
Company or Mr. Bomar elects to terminate his employment due to a material
reduction in his duties with the Company, he is entitled to receive an amount
equal to six months salary and all outstanding unvested options held by Mr.
Bomar shall become immediately exercisable. In addition, Mr. Bomar is subject to
the same restrictions on competition and non-interference as described above
with respect to Mr. Friedman.

Stockholder Return Performance Graph

The Common Stock first commenced trading on the Nasdaq on August 15,
1996, in connection with the Company's Offering. The graph set forth below
compares, for the period of August 15, 1996 through December 31, 2000, the total
cumulative return to holders of the Company's Common Stock with the cumulative
total return of the Nasdaq Stock Market (U.S.) Index.

COMPARISON OF 54 MONTH CUMULATIVE TOTAL RETURN*
AMONG MIM CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX

[LINE GRAPH REPRESENTING THE FOLLOWING HAS BEEN OMITTED]

8/15/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98

MIM CORPORATION 100 112 38 49 111 75 37 31 37
NASDAQ STOCK MARKET (U.S.) 100 108 114 107 127 148 139 163 167
NASDAQ HEALTH SERVICES 100 104 92 86 96 105 94 103 94

9/98 12/98 3/99 6/99 9/99 12/99 3/00 6/00 9/00 12/00

MIM CORPORATION 24 26 18 19 16 19 33 20 14 7
NASDAQ STOCK MARKET (U.S.) 151 196 219 240 245 354 409 356 327 219
NASDAQ HEALTH SERVICES 71 81 71 89 66 66 67 68 76 89

*$100 invested on 8/15/96 in stock or index-including reinvestment of dividends,
fiscal year ending December 31.

Item 12. Common Stock Ownership by Certain Beneficial Owners and Management

Except as otherwise set forth below, the following table lists, to the
Company's knowledge, as of March 1, 2001, the beneficial ownership of the
Company's Common Stock by (1) each of the Company's Named Executive Officers
including the former President and Chief Operating Officer; (2) each of the
Company's directors; (3) each person or entity known to the Company to own
beneficially five percent (5%) or more of the Company's Common Stock; and (4)
all directors and executive officers of the Company as a group. Such information
is based upon information provided to the Company by such persons:

Number of Shares Beneficially Percent of
Name of Beneficial Owner Address Owned (1) (2) Class
- -----------------------------------------------------------------------------------------------------------------------------------

Richard H. Friedman 100 Clearbrook Road 1,583,334 (3) 7.7%
Elmsford, NY 10523

Barry A. Posner 100 Clearbrook Road 194,932 (4) *
Elmsford, NY 10523

Edward J. Sitar 100 Clearbrook Road 83,166 (5) *
Elmsford, NY 10523

Recie Bomar 100 Clearbrook Road 75,000 (6) *
Elmsford, NY 10523

Russel J. Corvese 100 Clearbrook Road 23,617 (7) *
Elmsford, NY 10523

Richard A. Cirillo c/o King & Spalding 13,333 (8) *
1185 Avenue of the Americas
New York, NY 10036

Louis DiFazio, Ph.D. Unit 1102/Le Parc 15,883 (9) *
4951 Gulfshore Boulevard North
Naples, FL 34103

Michael Kooper 770 Lexington Avenue 13,333 (10) *
New York, NY 10021

Louis A. Luzzi, Ph.D. University of Rhode Island 21,800 (11) *
College of Pharmacy
Forgerty Hall
Kingston, RI 02881

Ronald K. Shelp 5 East 16th Street, 8th Floor - (12) *
New York, NY 10003

Scott R. Yablon 6 Palmer Court 1,000,000 (13) 4.7%
Armonk, NY 10504

Livingston Group LLC 16 East Willow Avenue 2,697,947 (14) 13.2%
Towson, MD 21286

John Chay 2200 Pine Hill Farms Lane 1,348,974 (15) 6.6%
Cockeysville, MD 21030

E. David Corvese 839 E. Ministerial Road 1,662,106 8.1%
Wakefield, RI 02879

All Directors and Executive Officers as a group 2,622,387 (16) 12.6%
(12 persons)

- ---------------------

* Less than 1%.

(1) The inclusion herein of any shares as beneficially owned does not
constitute an admission of beneficial ownership of those shares. Except as
otherwise indicated, each person has sole voting power and sole investment
power with respect to all shares beneficially owned by such person.
(2) Shares deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after March 1, 2001, upon the exercise of an
option and shares with restrictions on transfer and encumbrance, with
respect to which the owner has voting power, are treated as outstanding for
purposes of determining beneficial ownership and the percentage
beneficially owned by such individual.
(3) Includes 83,334 shares issuable upon exercise of the vested portion of
options held by Mr. Friedman. Excludes 166,666 shares subject to the
unvested portion of options held by Mr. Friedman.
(4) Includes 133,332 shares issuable upon exercise of the vested portion of
options and 60,000 shares of Common Stock subject to restrictions on
transfer and encumbrance through December 31, 2006, with respect to which
Mr. Posner possesses voting rights. See "Employment Agreements" in Item 11
of this Annual Report for a description of terms and conditions relating to
these restricted shares. Excludes 66,668 shares subject to the unvested
portion of options held by Mr. Posner.

(5) Includes 66,666 shares issuable upon exercise of the vested portion of
options and 15,000 shares of Common Stock subject to restrictions on
transfer and encumbrance through December 31, 2006, with respect to which
Mr. Sitar possesses voting rights. See "Employment Agreements" in Item 11
of this Annual Report for a description of terms and conditions relating to
these restricted shares. Excludes 33,334 shares subject to the unvested
portion of options held by Mr. Sitar.
(6) Includes 50,000 shares issuable upon exercise of the vested portion of
options and 25,000 shares of Common Stock subject to restrictions on
transfer and encumbrance through December 31, 2006, with respect to which
Mr. Bomar possesses voting rights. See "Employment Agreements" in Item 11
of this Annual Report for a description of terms and conditions relating to
these restricted shares. Excludes 25,000 shares subject to the unvested
portion of options held by Mr. Bomar.
(7) Includes 23,617 shares issuable upon exercise of the vested portion of
options and excludes 7,333 shares subject to the unvested portion of
options held by Mr. Corvese.
(8) Consists of 13,333 shares issuable upon exercise of the vested portion of
options. Excludes 6,667 shares subject to the unvested portion of options.
(9) Consists of 13,333 shares issuable upon exercise of the vested portion of
options and 2,500 shares owned directly by Dr. DiFazio. Excludes 6,667
shares subject to the unvested portion of options.
(10) Consists of 13,333 shares issuable upon exercise of the vested portion of
options. Excludes 6,667 shares subject to the unvested portion of options.

(11) Includes 20,000 shares issuable upon the exercise of the vested portion of
options. Dr. Luzzi and his wife share voting and investment power over
1,800 shares of Common Stock.
(12) Excludes 20,000 shares subject to the unvested portion of options held by
Mr. Shelp.
(13) As of August 31, 2000, Mr. Yablon no longer served as an officer or
director of the Company, and is not included in the calculation of
beneficial ownership of the officers and directors of the company as a
group. Includes 1,000,000 shares issuable upon exercise of the vested
portion of options granted to Mr. Yablon while he was an officer that are
currently vested and held by Mr. Yablon.
(14) In connection with the acquisition by the Company of all of the interests
of American Disease Management LLC ("ADIMA"), the selling members of ADIMA
formed Livingston Group LLC as a holding company to hold those shares of
the Company that the former members of ADIMA received as part of the
consideration for the sale of ADIMA to the Company. According to a Schedule
13G filed on August 14, 2000, by the members of Livingston Group LLC, the
members of Livingston Group LLC share voting and dispositive power over the
shares held by Livingston Group LLC.
(15) According to a Schedule 13G filed on August 14, 2000, by the members of
Livingston Group LLC, Mr. Chay, as a member of Livingston Group LLC, shares
voting and dispositive power with respect to all of the 2,697,947 shares,
but has a pecuniary interest in 1,348,974 of those shares.
(16) Includes 450,398 shares issuable upon exercise of the vested portion of
options and 125,000 shares of Common Stock subject to restrictions on
transfer and encumbrance. See footnotes 2 through 12 above.

Item 13. Certain Relationships and Related Transactions

In April 1999, the Company loaned to Mr. Friedman, its Chairman and Chief
Executive Officer, $1.7 million evidenced by a promissory note secured by a
pledge of 1.5 million shares of the Company's Common Stock. The note requires
repayment of principal and interest by March 31, 2004. Interest accrues monthly
at the "Prime Rate" (as defined in the note) then in effect. The loan was
approved by the Company's Board of Directors in order to provide funds with
which such executive officer could pay the Federal and state tax liability
associated with the exercise of stock options representing 1.5 million shares of
the Company's Common Stock in January 1998. On December 31, 2000, the
outstanding amount of the loan was $1,963,151, including accrued interest.

At December 31, 2000, Alchemie Properties, LLC, a Rhode Island limited
liability company of which Mr. E. David Corvese, the brother of Russel J.
Corvese, is the manager and principal owner ("Alchemie"), was indebted to the
Company in the amount of $269,419 represented a loan received from the Company
in 1994 in the original principal amount of $299,000. The loan bears interest at
a 10% per annum, with interest payable monthly and principal payable in full on
or before December 1, 2004, and secured by a lien on Alchemie's rental income
from the Company at one of its facilities.

During 2000, the Company paid $50,875 in rent to Alchemie pursuant to a
ten-year lease entered into in December 1994 for approximately 7,200 square feet
of office space in Peace Dale, Rhode Island.

At December 31, 2000, MIM Holdings was indebted to the Company in the
amount of $501,567 representing loans received from the Company during 1995 in

the aggregate principal amount of $1,078,000. The Company holds a $456,000
promissory note from MIM Holdings due March 31, 2001 that bears interest at 10%
per annum. Interest generally is payable quarterly, although in December 1996
the note was amended to extend the due date to September 30, 1997, for all
interest accruing from January 1, 1996, to said date. This note is guaranteed by
Mr. E. David Corvese. The remaining $622,000 of indebtedness will not be repaid
and was recorded as a stockholder distribution during the first half of 1996.

As discussed above, under Section 145 of the Delaware General Corporation
Law and the Company's By-Laws, under certain circumstances the Company may be
obligated to indemnify Mr. E. David Corvese as well as Michael J. Ryan, a former
officer of one of the Company's subsidiaries, in connection with their
respective involvement in a Federal and State of Tennessee investigation against
them. In January 2001, the proceedings against Messrs. Corvese and Ryan ended in
a settlement of claims against them. The settlement with the Federal and
Tennessee State governments is subject to, among other things, execution of a
definitive settlement agreement and the approval of the U.S. District Court for
the Western District of Tennessee. A hearing to approve this settlement and
sentencing has been scheduled for April 6, 2001. Regardless of the settlement,
until the Board determines as to whether or not either or both Messrs. Corvese
and Ryan are so entitled to indemnification, the Company is obligated under
Section 145 and its By-Laws to advance the costs of defense to such persons;
however, if the Board determines that either or both of these former officers
are not entitled to indemnification, the Company would seek reimbursement from
such individuals of all amounts so advanced to them. During 2000, the Company
advanced $3.1 million for Messrs. Corvese and Ryan's legal costs in connection
with the matter. The Company is not presently in a position to assess the
likelihood that either or both of these former officers would be entitled to
such indemnification and advancement of defense costs. No assurance can be
given, however, that the Company will recover the costs of defense advanced to
these former officers whether or not it believes it is entitled to such
reimbursement.

On February 16, 2001, the Company repurchased 1,298,183 shares of its
Common Stock at a price of $2.00 per share in private transactions not reported
on NASDAQ, including all 1,135,699 shares of Common Stock beneficially owned by
Michael E. Erlenbach, an owner of greater than 5% of the Company's Common Stock
prior to such transaction. The closing sales price per share for the Common
Stock on February 16, 2001 was $2.00 per share.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(A.) Documents Filed as a Part of this Report

Page

1. Financial Statements:

Report of Independent Public Accountants .....................................................................22

Consolidated Balance Sheets as of December 31, 2000 and 1999..................................................23

Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998....................24

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended
December 31, 2000, 1999 and 1998 ..........................................................................25

Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998....................26

Notes to Consolidated Financial Statements ...................................................................28

2. Financial Statement Schedules:

II. Valuation and Qualifying Accounts for the years ended December 31, 2000, 1999 and
1998........................................................................................42

All other schedules not listed above have been omitted since they are not
applicable or are not required, or because the required information is included
in the Consolidated Financial Statements or Notes thereto.

3. Exhibits:

Exhibit
Number Description Location
- -----------------------------------------------------------------------------------------------------------------------------------

2.1 Agreement and Plan of Merger by and Among MIM
Corporation, CMP Acquisition Corp., Continental
Managed Pharmacy Services, Inc. and Principal
Shareholders dated as of January 27, 1998...............................(6)(Exh. 2.1)

2.2 Purchase Agreement, dated as of August 3, 2000,
among American Disease Management Associates, LLC
its Members and Certain Related Parties, MIM Health
Plans, Inc., and MIM Corporation.......................................(15)(Exh. 2.1)

3.1 Amended and Restated Certificate of Incorporation
of MIM Corporation......................................................(1)(Exh. 3.1)

3.2 Amended and Restated By-Laws of MIM Corporation.........................(7)(Exh. 3(ii))

4.1 Specimen Common Stock Certificate.......................................(6)(Exh. 4.1)

4.2 Registration Rights Agreement, dated as of August 3,
2000, by and between MIM Corporation and Livingston
Group LLC..............................................................(15)(Exh. 4.1)

10.1 Drug Benefit Program Services Agreement between Pro-Mark
Holdings, Inc. and RxCare of Tennessee, Inc., dated as of
March 1, 1994, as amended January 1, 1995...............................(1)(Exh. 10.1)

10.2 Amendment No. 3 to Drug Benefit Program Services
Agreement dated October 1, 1998........................................(10)(Exh.10.2)

10.3 Software Licensing and Support Agreement between
ComCoTec, Inc. and Pro-Mark Holdings, Inc. dated
November 21, 1994 ......................................................(1)(Exh. 10.6)

10.4 Promissory Notes of E. David Corvese and Nancy
Corvese in favor of Pro-Mark Holdings, Inc. dated
June 15, 1994 ..........................................................(1)(Exh. 10.9)

10.5 Amendment to Promissory Note among E. David
Corvese, Nancy Corvese and Pro-Mark Holdings, Inc.
dated as of June 15, 1997 ..............................................(4)(Exh. 10.1)

10.6 Amendment to Promissory Note among E. David
Corvese, Nancy Corvese and Pro-Mark Holdings, Inc.
dated as of June 15, 1997 ..............................................(4)(Exh. 10.2)

10.7 Promissory Note of Alchemie Properties, LLC in favor
of Pro-Mark Holdings, Inc. dated August 14, 1994........................(1)(Exh. 10.10)

10.8 Promissory Note of MIM Holdings, LLC in favor of
MIM Strategic, LLC dated December 31, 1996..............................(2)(Exh. 10.12)

10.9 Promissory Note of MIM Holdings, LLC in favor of
MIM Strategic, LLC dated March 31, 1996.................................(1)(Exh. 10.11)

10.10 Promissory Note of MIM Holdings, LLC in favor of MIM Strategic, LLC
dated December 31, 1996, replacing Promissory Note of MIM Holdings, LLC
in favor of MIM Strategic, LLC dated March 31, 1996.........................(2)(Exh. 10.14)

10.11 Indemnity letter from MIM Holdings, LLC dated
August 5, 1996 .............................................................(1)(Exh. 10.36)

10.12 Assignment from MIM Holdings, LLC to MIM
Corporation dated as of December 31, 1996...................................(2)(Exh. 10.43)

10.13 Guaranty of E. David Corvese in favor of MIM
Corporation dated as of December 31, 1996...................................(2)(Exh. 10.42)

10.14 Employment Agreement between MIM Corporation and
Richard H. Friedman dated as of December 1, 1998*...........................(10) (Exh.10.14)

10.15 Amendment No. 1 to Employment Agreement dated as
of May 15, 1998 between MIM Corporation and Barry
A. Posner* ..................................................................(8)(Exh. 10.50)

10.16 Employment Agreement between MIM Corporation and
Barry A. Posner dated as of March 1, 1999*..................................(10) (Exh.10.17)

10.17 Employment Agreement dated as of April 17, 1998
Between MIM Corporation and Scott R. Yablon*.................................(8)(Exh. 10.49)

10.18 Employment Agreement between MIM Corporation and
Edward J. Sitar dated as of March 1, 1999*..................................(10) (Exh.10.21)

10.19 Separation Agreement dated as of March 31, 1998
between MIM Corporation and E. David Corvese *...............................(7)(Exh.10.47)

10.20 Separation Agreement dated as of May 15, 1998
between MIM Corporation and John H. Klein *..................................(6)(Exh. 10.19)

10.21 Stock Option Agreement between E. David Corvese
and Leslie B. Daniels dated as of May 30, 1996*..............................(1)(Exh. 10.26)

10.22 Registration Rights Agreement-I between MIM
Corporation and John H. Klein, Richard H.
Friedman, Leslie B. Daniels, E. David Corvese and
MIM Holdings, LLC dated July 29, 1996*.......................................(1)(Exh. 10.30)

10.23 Registration Rights Agreement-II between MIM
Corporation and John H. Klein, Richard H. Friedman
and Leslie B. Daniels dated July 29, 1996*...................................(1)(Exh. 10.31)

10.24 Registration Rights Agreement-III between MIM
Corporation and John H. Klein and E. David Corvese
dated July 29, 1996* ........................................................(1)(Exh. 10.32)

10.25 Registration Rights Agreement-IV between MIM
Corporation and John H. Klein, Richard H.
Friedman, Leslie B. Daniels, E. David Corvese and
MIM Holdings, LLC dated July 31, 1996*.......................................(1)(Exh. 10.34)

10.26 Registration Rights Agreement-V between MIM
Corporation and Richard H. Friedman and Leslie B.
Daniels dated July 31, 1996*.................................................(1)(Exh. 10.35)

10.27 Amendment No. 1 dated August 12, 1996 to
Registration Rights Agreement-IV between MIM
Corporation and John H. Klein, Richard H.
Friedman, Leslie B. Daniels, E. David Corvese and
MIM Holdings, LLC dated July 31, 1996*.......................................(2)(Exh.10.29)

10.28 Amendment No. 2 dated June 16, 1998 to
Registration Rights Agreement-IV between MIM
Corporation and John H. Klein, Richard H.
Friedman, Leslie B. Daniels, E. David Corvese and
MIM Holdings, LLC dated July 31, 1996*......................................(10)(Exh.10.31)

10.29 MIM Corporation 1996 Stock Incentive Plan, as
Amended December 9, 1996* ...................................................(2)(Exh. 10.32)

10.30 MIM Corporation 1996 Amended and Restated Stock
Incentive Plan, as amended December 2, 1998*................................(10) (Exh.10.33)

10.31 MIM Corporation 1996 Non-Employee Directors Stock
Incentive Plan* .............................................................(1)(Exh. 10.29)

10.32 Lease between Alchemie Properties, LLC and
Pro-Mark Holdings, Inc., dated as of December 1, 1994 .......................(1)(Exh. 10.27)

10.33 Lease Agreement between Mutual Properties
Stonedale L.P. and MIM Corporation dated April 23,
1997.........................................................................(5)(Exh.10.41)

10.34 Agreement between Mutual Properties Stonedale L.P.
and MIM Corporation dated as of April 23, 1997.............................. (5)(Exh.10.42)

10.35 Lease Amendment and Extension Agreement between
Mutual Properties Stonedale L.P. and MIM
Corporation dated December 10, 1997..........................................(5) (Exh.10.43)

10.36 Lease Amendment and Extension Agreement-II between
Mutual Properties Stonedale L.P. and MIM
Corporation dated March 27, 1998.............................................(5) (Exh.10.44)

10.37 Lease Agreement between Mutual Properties
Stonedale L.P. and Pro-Mark Holdings, Inc. dated
December 23, 1997............................................................(5) (Exh.10.45)

10.38 Lease Amendment and Extension Agreement between
Mutual Properties Stonedale L.P. and Pro-Mark
Holdings, Inc. dated March 27, 1998..........................................(5) (Exh.10.46)

10.39 Lease Agreement between Continental Managed
Pharmacy Services, Inc. and Melvin I. Lazerick
dated May 12, 1998..........................................................(10) (Exh.10.42)

10.40 Amendment No. 1 to Lease Agreement between
Continental Managed Pharmacy Services, Inc.and
Melvin I. Lazerick dated January 29, 1999...................................(10) (Exh.10.43)

10.41 Letter Agreement dated August 24, 1998 between
Continental Managed Pharmacy Services, Inc. and
Comerica Bank...............................................................(10) (Exh.10.44)

10.42 Letter Agreement dated January 28, 1997 between
Continental Managed Pharmacy Services, Inc. and
Comerica Bank...............................................................(10) (Exh.10.45)

10.43 Letter Agreement dated January 24, 1995 between
Continental Managed Pharmacy Services, Inc. and
Comerica Bank...............................................................(10) (Exh.10.46)

10.44 Additional Credit Agreement dated January 23, 1996
between Continental Managed Pharmacy Services,
Inc. and Comerica Bank......................................................(10) (Exh.10.47)

10.45 Guaranty dated August 24, 1998 between MIM
Corporation and Comerica Bank...............................................(10) (Exh.10.48)

10.46 Third Amended and Restated Master Revolving Note
dated August 24, 1998 by Continental Managed
Pharmacy Services, Inc. in favor of Comerica Bank...........................(10)(Exh.10.49)

10.47 Variable Rate Installment Note dated January 24,
1995 by Continental Managed Pharmacy Services,
Inc. in favor of Comerica Bank..............................................(10) (Exh.10.50)

10.48 Variable Rate Installment Note dated January 26,
1996 by Continental Managed Pharmacy Services,
Inc. in favor of Comerica Bank..............................................(10) (Exh.10.51)

10.49 Security Agreement (Equipment) dated January 24,
1995 by Continental Managed Pharmacy Services,
Inc. in favor of Comerica Bank..............................................(10) (Exh.10.52)

10.50 Security Agreement (Accounts and Chattel Paper)
dated January 24, 1995 by Continental Managed
Pharmacy Services, Inc. in favor of Comerica Bank...........................(10) (Exh.10.53)

10.51 Intercreditor Agreement dated January 24, 1995
between Continental Managed Pharmacy Services,
Inc. and Foxmeyer Drug Company..............................................(10) (Exh.10.54)

10.52 Indemnification Agreement dated August 13, 1998
among MIM Corporation, Roulston Investment Trust
L.P., Roulston Ventures L.P. and Michael R.
Erlenbach...................................................................(10) (Exh.10.55)

10.53 Pledge Agreement dated August 13, 1998 among MIM Corporation,
Roulston Investment Trust L.P.,
Roulston Ventures L.P. and Michael R. Erlenbach.............................(10) (Exh.10.56)

10.54 Stock Purchase Agreement dated February 9, 1999
between MIM Corporation and E. David Corvese................................(10) (Exh.10.57)

10.55 Commercial Term Promissory Note, dated April 14, 1999,
by Richard H. Friedman in favor of MIM Corporation..........................(11) (Exh.10.58)

10.56 Pledge Agreement, dated April 14, 1999, by Richard H.
Friedman in favor of MIM Corporation........................................(11) (Exh.10.59)

10.57 Amended and Restated 1996 Non-Employee Directors
Stock Incentive Plan (effective as of March 1, 1999)*.......................(11) (Exh.10.60)

10.58 Amendment No. 1 to Employment Agreement,
dated as of October 11, 1999 between
MIM Corporation an Richard H. Friedman*.....................................(12) (Exh.10.60)

10.59 Form of Performance Shares Agreement*.......................................(12) (Exh.10.61)

10.60 Form of Performance Units Agreement*........................................(12) (Exh.10.62)

10.61 Form of Non-Qualified Stock Option Agreement*...............................(12) (Exh.10.63)

10.62 Credit Agreement, dated as of February 4, 2000,
among MIM Health Plans, Inc., MIM Corporation,
the other Credit Parties signatories thereto,
the other credit parties signatories thereto
and General Electric Capital Corporation,
for itself and as agent for other lenders from
time to time a party to the Credit Agreement................................(13) (Exh. 10)

10.63 Amendment to Credit Agreement, dated May 24, 2000
among MIM Health Plans, Inc., MIM Corporation, the
Credit Parties signatories thereto, and General Electric
Capital Corporation, for itself and as agent for other
lenders from time to time a party to the Credit Agreement..................(14) (Exh. 10.1)

10.64 Corporate Integrity Agreement between the Office of
the Inspector General of the Department of Health and
Human Services and MIM Corporation, dated as of
June 15, 2000..............................................................(14) (Exh. 10.2)

10.65 Employment Agreement, dated August 3, 2000, by and
between American Disease Management Associates, LLC,
an indirect wholly owned subsidiary of MIM Corporation
and Bruce Blake*...........................................................(15) (Exh. 10.1)

10.66 Loan and Security Agreement, dated November 1, 2000,
between MIM Funding LLC and HFG Healthco-4 LLC.............................(16) (Exh. 10.1)

10.67 Receivables Purchase and Transfer Agreement, dated as of
November 1, 2000, among MIM Health Plans, Inc.,
Continental Pharmacy, Inc., American Disease Management
Associates LLC and MIM Funding LLC.........................................(16) (Exh. 10.2)

10.68 Lease Agreement, dated as of February 24, 2000, by and
between American Duke-Weeks Realty Limited Partnership
and Continental Managed Pharmacy Services, Inc.............................(17)

10.69 First Lease Amendment, dated as of February 24, 2000,
by and between Duke-Weeks Realty Limited Partnership
and Continental Managed Pharmacy Services, Inc.............................(17)

10.70 Lease Agreement, dated as of July 22, 1996, by and between
American Disease Management Associates, LLC ("ADIMA")
and Regent Park Associates.................................................(17)

10.71 First Amendment of Agreement of Lease, dated as of June 15,
1999, by and between ADIMA and Five Regent Park Associates.................(17)

10.72 Second Amendment of Agreement of Lease, dated as of February
11, 2000, by and between ADIMA and Five Regent Park
Associates.................................................................(17)

10.73 Employment Letter, dated as of February 8, 1999, between
the Company and Recie Bomar*...............................................(17)

21 Subsidiaries of the Company................................................(17)

27 Financial Data Schedule....................................................(17)

- -----------------------------------------------------------------------------------------------------------------------------------

(1) Incorporated by reference to the indicated exhibit to the Company's
Registration Statement on Form S-1 (File No. 333-05327), as amended, which
became effective on August 14, 1996.

(2) Incorporated by reference to the indicated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.

(3) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997.

(4) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997.

(5) Incorporated by reference to the indicated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997.

(6) Incorporated by reference to the indicated exhibit to the Company's
Registration Statement on Form S-4 (File No. 333-60647), as amended, which
became effective on August 21, 1998.

(7) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998.

(8) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1998,
as amended.

(9) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1998.

(10) Incorporated by reference to the indicated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.

(11) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999.

(12) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1999.

(13) Incorporated by reference to the indicated exhibit to the Company's Current
Report on Form 8-K filed on February 14, 2000.

(14) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000.

(15) Incorporated by reference to the indicated exhibit to the Company's Current
Report on Form 8-K filed on August 10, 2000.

(16) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2000.

(17) Filed herewith.

* Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K and
Regulation SK-601 ss. 10 (iii).

(b) Reports on Form 8-K

One Amendment to Current Report on Form 8-K/A was filed with the Commission
on October 18, 2000. This Form 8-K/A was filed in connection with the
Company's acquisition of ADIMA.

In addition, one Current Report on Form 8-K was filed with the Commission
on November 6, regarding the Company's press release announcing the new
credit facility an affiliate of Healthcare Finance Group, Inc.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 30, 2001.

MIM CORPORATION

/s/ Edward J. Sitar
--------------------------
Edward J. Sitar
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature . Title(s) Date
- -------------------------------------------------------------------------------------------------------------------

Chairman and Chief Executive Officer March 30, 2001
/s/ Richard H. Friedman (principal executive officer)
- -----------------------------------------
Richard H. Friedman

Chief Financial Officer and Treasurer March 30, 2001
/s/ Edward J. Sitar (principal financial officer)
- -----------------------------------------
Edward J. Sitar

/s/Louis DiFazio Director March 30, 2001
- -----------------------------------------
Louis DiFazio, Ph.D

/s/ Louis A. Luzzi Director March 30, 2001
- -----------------------------------------
Louis A. Luzzi, Ph.D.

/s/ Richard A. Cirillo Director March 30, 2001
- -----------------------------------------
Richard A. Cirillo

/s/ Michael Kooper Director March 30, 2001
- -----------------------------------------
Michael Kooper

/s/ Ronald Shelp Director March 30, 2001
- -----------------------------------------
Ronald Shelp

EXHIBIT INDEX

(Exhibits being filed with this Annual Report on Form 10-K)

10.68 Lease Agreement, dated as of February 24, 2000, by and
between American Duke-Weeks Realty Limited Partnership
and Continental Managed Pharmacy Services, Inc.

10.69 First Lease Amendment, dated as of February 24, 2000,
by and between Duke-Weeks Realty Limited Partnership
and Continental Managed Pharmacy Services, Inc.

10.70 Lease Agreement, dated as of July 22, 1996, by and between
American Disease Management Associates, LLC ("ADIMA")
and Regent Park Associates

10.71 First Amendment of Agreement of Lease, dated as of June 15,
1999, by and between ADIMA and Five Regent Park Associates

10.72 Second Amendment of Agreement of Lease, dated as of February
11, 2000, by and between ADIMA and Five Regent Park
Associates

10.73 Employment Letter, dated as of February 8, 1999, between
the Company and Recie Bomar*

21 Subsidiaries of the Company

27 Financial Data Schedule