Hythiam Procures $6.9mm Private Placement

Los Angeles, California Private Placement — Hythiam, Inc. announces that the Company closed a private placement financing from their business plan and PPM of $6.9 million in common stock and Senior Secured Convertible Debentures to accredited investors. The gross proceeds of $6.9 million are before deducting placement agent fees and expenses of the offering, and are inclusive of the conversion of the senior secured convertible notes entered into by the Company on October 19, 2010 and settlement of certain liabilities. Investors received pro-rata portions of an aggregate of 100,000,000 shares of common stock at a price of $.01 per share (using up substantially all the remaining authorized shares of the Company), and the remainder in Senior Secured Convertible Debentures, which will convert automatically to common stock upon the availability of sufficient authorized shares for issuance upon conversion.

The funds will provide the Company with working capital to deliver services under existing agreements and contracts currently in negotiation. Consistent with the Company’s primary focus of providing its Catasys solution to third-party payors such as health plans and large employers, the Company anticipates seeking approval from stockholders in the proxy to change the Company’s name from Hythiam, Inc. to Catasys, Inc.

If not earlier converted, the Debentures mature two years from the closing date of the financing and bear interest at 12% annually. Within 30 days of the closing of this financing, the Company anticipates filing a proxy statement to seek stockholder approval to effect a reverse stock split to provide sufficient authorized shares for conversion of the Debentures, and to effect the name change referred to above. Upon the effectiveness of the reverse stock split, the Debentures will convert automatically to common stock at a conversion price of $.01 per share (as adjusted to give effect to the split). The reverse stock split will also improve the ability of the Company to reapply for a NASDAQ listing.

Each investor with an investment of at least $2 million or more was eligible to receive warrants to purchase 21,960,000 shares of the Company’s common stock. There were two such investors, Socius Capital Group, LLC and an unaffiliated investor. However, Socius Capital Group, LLC waived its right to the warrants. The warrants have an exercise price of $.01 per share and are exercisable at any time after the closing of the transaction and before the fifth anniversary of such initial issuance date.

Additional details concerning the financing will be will be contained in the Current Report on Form 10-Q to be filed by the Company.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The securities were offered only to accredited investors. The securities referenced herein have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About Hythiam(R)

Hythiam, Inc. provides through its Catasys subsidiary, specialized behavioral health management services to health plans, employers and unions through a network of licensed and company managed health care providers. The Catasys substance dependence program was designed to address substance dependence as a chronic disease. The program seeks to lower costs and improve member health through the delivery of integrated medical and psychosocial interventions in combination with long term care coaching, including their proprietary treatment program for alcoholism and stimulant dependence. Hythiam does not practice medicine or manufacture, distribute, or sell any medications and has no relationship with any manufacturers or distributors of medications used in the program. For further information, please visit www.hythiam.com.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the company’s control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, limited operating history and lack of statistically significant formal research studies, the risk that treatment protocols might not be effective, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the healthcare industry; and additional risks factors as discussed in the reports filed by the company with the Securities and Exchange Commission, which are available on its website at http://www.sec.gov.

SOURCE: Hythiam, Inc.

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