HealthMedia, Inc. Raises $2 Million of Growth Capital

Arboretum Ventures Joins Existing Investors

ANN ARBOR, MI (July 25, 2005)HealthMedia, Inc., the market leader in tailored health behavior change programs, announced today that it has closed a $2 million round of follow-on financing led by Louisville, KY-based Chrysalis Ventures and Ann Arbor-based Arboretum Ventures, which joined Chrysalis and other existing co-investors in this new round of growth capital. Arboretum Managing Partner Tim Petersen will join the company’s board of directors.

“We are delighted to receive continued support from such high quality healthcare investors,” said Ted Dacko, President and CEO of HealthMedia. “With this infusion of capital, HealthMedia is poised to accelerate the growth rate of its market-leading health promotion, disease management and compliance programs.” The company plans to expand the development, sales, and marketing of its tailored behavioral support programs for the pharmaceutical and medical device markets, the healthcare market, which includes healthcare plans and employers, and organizations focused on disease management.

“HealthMedia continues to be an exciting high growth company,” added Koleman Karleski, Chrysalis Ventures Principal, who currently serves on HealthMedia’s board of directors. “This financing round represents a substantial step-up in the company’s valuation and an excellent validation of its success to date.”

According to Tim Petersen, Arboretum Ventures Managing Partner, “HealthMedia’s custom solutions have proven clinically successful at improving health related behavior for the constituents of health plans and self-insured employers, and increasing prescribed regimen compliance and efficacy for pharmaceutical firms, medical device manufacturers, and disease management firms. Moreover, this local investment is a great fit with our firm’s investment strategy which includes healthcare services, medical devices, diagnostics, and drug therapies.”

About HealthMedia
Founded in 1998, Ann Arbor based HealthMedia® is the market leader in behavior change. With its powerful combination of proven science, proven outcomes, and proven impact, HealthMedia delivers individually tailored self-management programs for healthy lifestyle issues, diseases, and conditions. These programs, which are utilized by pharmaceutical/medical device firms, health plans, employers, and organizations focused on disease management, simulate the personal touch and efficacy of a counselor but can reach far more people at dramatically lower costs. HealthMedia’s individually tailored solutions can be offered in both Internet and print form and are proven to produce validated outcomes and positive ROI. The company has created programs for conditions and issues such as diabetes; hypertension; arthritis; chronic condition management; back pain; teen health; smoking cessation; nutrition; weight management; stress management; and health risk assessment. To date, over a million people have successfully taken HMI’s programs. In 2004, HealthMedia, along with Kaiser Permanente (KP), won the prestigious C. Everett Koop National Health Award Honorable Mention for HealthMedia Balance®, a program designed to help KP’s 8.2 million members manage their weight, reduce obesity and improve their overall health. For more information, please visit www.healthmedia.com.

About Chrysalis Ventures
Founded in 1993, Chrysalis Ventures is a leading source of equity capital for young growth companies in the Southeast and Midwest. Chrysalis invests primarily in early-stage and expansion-stage companies in healthcare information technology and services, media and communications, and business services. Based in Louisville, Kentucky, Chrysalis has more than $200 million under management and has made investments in over 45 companies. For more information, please visit www.chrysalisventures.com.

About Arboretum Ventures
Arboretum Ventures is a venture capital firm targeting investments in early stage life science companies. The firm’s areas of focus include medical devices, diagnostics, and drug therapies. Arboretum seeks to invest primarily in the Midwest but will also invest outside of this region when attractive opportunities arise. For more information, please visit www.arboretumvc.com.