KRG Capital to Acquire Division of Matria Healthcare.

DENVER -- Denver-based private-equity firm, KRG Capital Partners, announced today that its portfolio company, CCS Medical, signed a definitive agreement to acquire Matria Pharmacy and Lab Supplies ("MPLS"), a division of Matria Healthcare (Nasdaq:MATR). The Board of Directors of each company

has approved the transaction, which is expected to be completed on or about June 30, 2004. The transaction is valued at approximately $130 million. Closing of the transaction is conditioned on completion of specified due diligence requirements and other customary conditions. CCS Medical is a rapidly growing provider of high quality, branded healthcare products and disease management services to predominantly diabetic patients throughout the United States and Puerto Rico.

"The MPLS patient base, growth strategy and operations are very similar to CCS Medical's," said Mark King, Co-Founder and Managing Director of KRG Capital. "We believe that acquiring MLPS will be very synergistic for the combined companies in terms of both size and product/service offerings to our patients, healthcare providers and vendors." The Pharmacy Lab and Supplies Division provides diabetic, respiratory, ostomy and pharmaceutical fulfillment for patients who receive reimbursement from a number of sources including Medicare, various Medicaid plans, Drug Cards, multiple Managed Care Organizations ("MCOs") and other private insurers.

"The sale of our Pharmacy and Supplies business to CCS Medical will allow Matria to continue to offer our clients the ancillary services that support our disease management programs. This transaction reduces our financial leverage and unlocks some of the significant value that we have built in our subsidiaries," said Parker H. Petit, Chairman and CEO of Matria. "The transaction increases our financial flexibility and will allow executive management to focus on strategic health enhancement opportunities that are developing around disease management. These are all components to the total health solution that employers are seeking to add to their benefit programs to support the health, well-being and productivity of their employees."

Petit continued, "We believe that the new Medicare bill offers opportunities for this business unit through the drug card benefit for the Medicare population and competitive bidding process. However, to appropriately capitalize on the opportunities would require additional capital and management attention, which we feel would be best utilized in the growth of our disease management business. We believe these opportunities are best exploited by an organization that has its total strategic focus in that area of healthcare services. Therefore, I believe we have chosen an excellent partner to expand on what we have built with our Pharmacy and Supplies business. It will be an excellent transaction for CCS Medical, as well as Matria Healthcare." MPLS is headquartered in Roanoke, VA with a secondary fulfillment facility located in Santa Ana, CA.

"The leadership team at CCS Medical is extremely excited about the combination of two of the key players in our market. Matria's market presence, together with CCS Medical's operational expertise, is built around world-class customer service that will provide a powerful platform for future growth," said Joseph H. Capper, CEO of CCS Medical. "We are also enthusiastic to begin what we expect to be a long-term partnership with Matria Healthcare's disease management business."

About KRG Capital Partners

Founded in 1996, KRG is a Denver based private equity buyout firm that currently manages over $860 million of committed equity capital and equity co-investments. KRG specializes in acquiring and recapitalizing unique and profitable middle-market companies. The firm seeks investment opportunities for its partners where KRG can work in concert with owners and operating managers who are committed to expanding their companies and becoming industry leaders. The result is a partnership that focuses on creating a significantly larger enterprise through a combination of internal growth and complementary add-on acquisitions. Since inception, KRG has invested in 17 "platform companies" and has completed 51 add-on acquisitions for those platforms. For more information on KRG Capital Partners, please visit www.krgcapital.com.

About CCS Medical

Founded in 1994, CCS Medical has become a leading direct-to-consumer provider of medical supplies to patients suffering from chronic conditions such as Diabetes and COPD. Dedication to providing patients the best medical supplies available and unmatched customer service have earned CCS Medical a reputation of quality with healthcare professionals and patients. CCS Medical has developed strong relationships and select co-marketing agreements with many of the world's leading medical products manufacturers, including Roche Diagnostic, Bayer Diagnostics, Johnson & Johnson, and others. For more information on CCS Medical, please visit www.ccsmed.com.