UBS Warburg

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• UBS Warburg
• Global Healthcare Services Conference
• February 5, 2002

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Safe Harbor Statement

• This presentation contains forward-looking
  statements which involve known and unknown risks
  and uncertainties or other factors that may cause
  actual results, performance or achievements to be
  materially different from any future results,
  performance or achievements expressed or implied
  by such forward-looking statements. For a
  discussion of such risks and uncertainties,
  including but not limited to risks relating to
  demand, pricing, government regulation,
  acquisitions and affiliations, the market for PBM
  services, competition and other factors, readers
  are urged to carefully review and consider
  various disclosures made by NMHC in the Company's
  Annual Report for the fiscal year ended June 30,
  2001 and other Securities and Exchange Commission
  filings.

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NMHC Overview

• Prescription data processing since 1981
• Full service pharmacy benefit management (PBM),
  NMHCRX, since 1995
• National presence
• corporate headquarters in Port Washington, NY
• service center in Little Rock, AR
• service center in Albany, NY

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Demonstrated Growth

• Over 2.5 million covered lives
• 50 - 5 year CAGR
• Over 15 million prescriptions per year processed
• 40 - 5 year CAGR
• Revenue growth 5-year CAGR 40.3
• profitable since 1996
• Over 52,000 contracted pharmacies

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Pharmacy Benefit Management Industry Overview

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Industry Overview
Pharmacy
Patient
Physician
Pharmaceutical company
Payer
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Industry OverviewPharmacy Benefit Management
(PBM)

• Managing the prescription drug component of
  healthcare benefit plans

• self-insured employers
• government
• insurance companies

• managed care organizations
• third party administrators
• Taft-Hartley funds (unions)

• Multiple Service Offerings

• retail pharmacy network
• drug use review and analysis
• disease management services
• reporting
• physician profiling/detailing

• benefit plan design
• claims processing
• mail order pharmacy
• formulary management
• specialty pharmacy

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Industry OverviewMultiple Recurring Revenue
Streams

• Administrative Fees

• Clinical Services Fees

• Retail Prescriptions

• Mail-Order Prescriptions

• Rebates

• Specialty Pharmacy

• Clinical Studies

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Industry OverviewRecent Trends

• PRESENT
• Emphasis is lowering total healthcare costs
• outcome driven
• integration with medical claims
• drug use data reporting, analysis
• efficient claims processing service
• cost shifting

• PAST
• Emphasis was lowering costs for each transaction
• PBM consolidation
• Homogenization

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Industry OverviewGrowth Drivers

• Increasing pharmaceutical costs
• projected increase of 12 - 20 annually
• aging population
• new pharmaceutical technologies
• shorter FDA approval process
• physician detailing
• direct-to-consumer advertising
• Federal government sponsorship of Medicare
  pharmacy plan

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Industry OverviewPharmaceutical Spending Growth
Projected Prescription Drug Expenditures and
Percentage of Total Healthcare Spending
10.9
14-year CAGR 11.11
10.3
Billions
9.6
8.8
8.2
7.2
6.1
5.7
Source HCFA
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National Medical Health Card Systems (NMHC)
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Competitive Advantages

• Customized Service, Actionable Information
• data analysis/reporting helps customers manage
  financial impact and clinical quality of their
  pharmacy benefit program
• Risk Management Services
• help customers manage the trend, as well as the
  cost of pharmacy benefits
• Vertical Services Model
• organized by market segment
• Advanced Technology
• scalable platform with significant capacity

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Long Term Growth Strategy

• Increase Market Share
• targeting 3 specific markets
• Taft-Hartley Funds (unions)
• third party administrators
• managed care organizations
• vertical service model
• strengthened sales staff
• Increase Scope of Services
• develop specialty pharmaceutical business
• in-source mail order pharmacy business
• increase penetration of compliance programs
• Strategic Acquisitions
• three in last two years
• demonstrated ability to integrate

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Proven Acquisition Success

• Pharmacy Associates Inc. - July 2000
• added 200,000 lives, primarily in south-central
• synergies in management, rebates, network rates
  and SGA
• Provider Medical Pharmaceutical - March 2001
• added 90,000 lives, primarily in mid-west
• synergies in management, rebates, network rates
  and SGA
• Both acquisitions exceeded expectations after
  integration
• Transitions transparent to customers

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Purchase of Centrus PBM

• 40 million cash purchase - January 2002
• earnout up to 4 million and 450,000 options to
  management team for ongoing services
• Nearly doubles lives covered to over 2.5 million
• Complementary Business
• strong presence in managed care market
• strong clinical services offerings
• provides significant market scale in northeast
• Expected Integration Synergies
• SGA and operating efficiencies expected to range
  between 3 million and 4 million

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Revenue Growth
Five-Year CAGR 40.3
Millions
Fiscal Year Ended June 30
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Approximate Revenue Composition
Before Centrus Purchase
After Centrus Purchase
Third Party Administrators Taft-Hartley
Funds (unions) Managed Care Organizations
Other
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1Q Results
Change
1Q-02
1Q-01
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Investment Highlights

• Demonstrated Operational and Financial Growth
• 5 year revenue CAGR 40.3
• 5 year covered lives CAGR 50.6
• Acquisition Strategy
• demonstrated ability to capture synergies
• driving consolidation among small to mid-sized
  PBMs
• Full Service, Vertical Market Approach
• strong presence in each of three target markets
• Expanding Service Offerings
• specialty pharmaceuticals
• compliance services
• mail order prescriptions

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Strengthened Management Team

• Bert Brodsky Chairman and CEO
• James Bigl President
• David Gershen CFO and Treasurer
• Tery Baskin COO
• James Thompson SVP Sales and Marketing
• Patrick McLaughlin Exec VP of Managed Care
• Agnes Hall CIO

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