Gentiva® Health Services Reports Third Quarter 2012 Results

         Gentiva® Health Services Reports Third Quarter 2012 Results

PR Newswire

ATLANTA, Nov. 1, 2012

ATLANTA, Nov.1, 2012 /PRNewswire/ --Gentiva Health Services, Inc. (NASDAQ:
GTIV), the largest provider of home health and hospice services in the United
States based on revenue, today reported third quarter 2012 results. Quarterly
highlights include:

  oTotal net revenues of $424.4 million.
  oAdjusted income from continuing operations on a diluted per share basis of
    $0.32.
  oAdjusted EBITDA of $46.1 million.
  oFree cash flow of $23.2 million.

Third quarter 2012 financial highlights include:

  oTotal net revenues of $424.4 million, a decrease of 6% compared to $449.7
    million for the quarter ended September 30, 2011. Excluding the impact of
    branches sold or closed, total net revenues would have been down slightly
    compared to the third quarter of 2011. Net revenues included home health
    episodic revenues of $206.4 million, a decline of 6% compared to $219.6
    million in the 2011 third quarter. Hospice revenues were $189.8 million,
    a decrease of 3% compared to $196.5 million in the 2011 third quarter.
    Hospice represented 45% of total net revenues in the third quarter of
    2012, compared to 44% in the 2011 third quarter.
  oLoss from continuing operations attributable to Gentiva shareholders of
    $0.5 million, or $0.02 per diluted share, compared to a loss of $479.7
    million, or $15.82 per diluted share, for the third quarter of 2011.
    During the third quarter of 2012, the Company recorded a $19.1 million
    non-cash write-off of existing trade name balances in connection with the
    rebranding of its branch operations under the single Gentiva name. In the
    third quarter of 2011, the Company recorded a non-cash impairment charge
    of $643.3 million as a result of its impairment test of goodwill,
    intangibles and other long-lived assets.
  oAdjusted income from continuing operations attributable to Gentiva
    shareholders of $9.9 million, compared with $8.3 million in the comparable
    2011 period. On a diluted per share basis, adjusted income from continuing
    operations attributable to Gentiva shareholders was $0.32 for the third
    quarter of 2012 compared to $0.27 for the third quarter of 2011.
  oAdjusted earnings before interest, taxes, depreciation and amortization
    attributable to continuing operations (Adjusted EBITDA) was $46.1 million
    in the third quarter of 2012 as compared to $41.5 million in the third
    quarter of 2011. Adjusted EBITDA as a percentage of net revenues was
    10.9% in the third quarter of 2012 versus 9.2% in the prior year period. 

Adjusted income from continuing operations attributable to Gentiva
shareholders and Adjusted EBITDA exclude charges related to restructuring,
legal settlements, acquisition and integration activities and other special
items.

Highlights for the nine months ended September 30, 2012 include:

  oTotal net revenues of $1,287.8 million, a decrease of 5% compared to
    $1,349.6 million for the prior year period. Net revenues included home
    health episodic revenues of $624.5 million, a decline of 5%, compared to
    $659.7 million in the comparable 2011 period. Hospice revenues were
    $577.5 million, compared to $585.9 million in the comparable 2011 period.
  oIncome from continuing operations attributable to Gentiva shareholders of
    $18.2 million, or $0.60 per diluted share, compared to a loss of $462.2
    million, or $15.27 per diluted share, in the prior year period.
  oAdjusted income from continuing operations attributable to Gentiva
    shareholders of $28.0 million, compared with $38.0 million in the 2011
    period. On a diluted per share basis, adjusted income from continuing
    operations attributable to Gentiva shareholders was $0.91 for 2012 as
    compared with $1.23 in the corresponding period of 2011. Excluding the
    expenses associated with the March 6, 2012 credit agreement amendment,
    adjusted income from continuing operations attributable to Gentiva
    shareholders was $0.94 on a diluted per share basis for the 2012 period.
  oAdjusted earnings before interest, taxes, depreciation and amortization
    attributable to continuing operations (Adjusted EBITDA) was $136.3 million
    as compared to $152.1 million in the 2011 period. Adjusted EBITDA as a
    percentage of net revenues was 10.6% versus 11.3% in the prior year
    period.

For the third quarter of 2012, the Company reported a net loss attributable to
Gentiva shareholders of $0.5 million, or $0.02 per diluted share, compared to
a net loss of $473.8 million, or $15.62 per diluted share, in the third
quarter of 2011. For the first nine months of 2012, net income attributable to
Gentiva shareholders was $18.2 million, or $0.60 per diluted share, compared
with a net loss of $455.1 million, or $15.04 per diluted share, for the first
nine months of 2011. The results included special items discussed above as
well as the results from discontinued operations.

Cash Flow and Balance Sheet Highlights

At September 30, 2012, the Company reported cash and cash equivalents of
$156.0 million, compared to $155.3 million at June 30, 2012. Total
outstanding debt was $938.1 million as of September 30, 2012. Total Company
days sales outstanding, or DSO's, was 52 days at September 30, 2012,
consistent with June 30, 2012 and down significantly from 61 days at March 31,
2012.

For the third quarter of 2012, net cash provided by operating activities was
$25.5 million, compared to negative $5.5 million in the prior year
period.Free cash flow was $23.2 million for the third quarter of 2012,
compared to negative $11.4 million in the prior year period. 

For the first nine months of 2012, free cash flow was $90.4 million, after
excluding the $25.0 million OIG related payment made in the first quarter of
2012. Free cash flow is calculated as net cash provided by operating
activities less capital expenditures.

During the quarter, Gentiva acquired three agencies to expand the Company's
geographic coverage and leverage its existing home health and hospice
capabilities in given markets. In July 2012, the Company acquired Advocate
Hospice based in Danville, Indiana. In August 2012, the Company acquired
Spokane, Washington based Family Home Care, which provides both home health
and hospice services, and North Mississippi Hospice which is based in Oxford,
Mississippi.

Full-Year 2012 Outlook

Based on results through the first nine months of 2012 and recent trends, the
Company raised its 2012 full-year outlook for adjusted income from continuing
operations attributable to Gentiva shareholders to a range of $1.20 to $1.30
on a diluted per share basis. Additionally, the Company tightened its 2012
full-year net revenue outlook to a range of $1.71 billion to $1.74 billion.
This outlook does not include any potential fourth quarter 2012 impact from
sequestration, which is currently scheduled to become effective on January 1,
2013, or the impact from Hurricane Sandy.

Adjusted income from continuing operations attributable to Gentiva
shareholders excludes charges related to cost savings initiatives,
restructuring, impairment, acquisition, integration activities, the cost of
legal settlements and other special items.

Non-GAAP Financial Measures

The information provided in this press release includes certain non-GAAP
financial measures as defined under SEC rules. In accordance with SEC rules,
the Company has provided, in the supplemental information and the footnotes to
the tables, a reconciliation of those historical measures to the most directly
comparable GAAP measures.

A reconciliation of Adjusted EBITDA to net income, the most directly
comparable GAAP measure, is not accessible on a forward-looking basis without
unreasonable effort due to the inherent difficulties in predicting the costs
of restructuring, legal settlements and merger and acquisition activities, the
results of discontinued operations and the impact of any future acquisitions
or divestitures, which can fluctuate significantly and may have a significant
impact on net income.

Conference Call and Webcast Details

The Company will comment further on its third quarter 2012 results during its
conference call and live webcast to be held today, Thursday, November 1, 2012
at 9:00 a.m. Eastern Time. To participate in the call from the United States,
Canada or an international location, dial (973) 935-2408 and reference call
#37851480. The webcast is an audio-only, one-way event. Webcast listeners who
wish to ask questions must participate in the conference call. Log onto
http://investors.gentiva.com/events.cfm to hear the webcast. A replay of the
call will be available on November 1 and will remain available continuously
through November 8. To listen to a replay of the call from the United States,
Canada or international locations dial (800) 585-8367 or (404) 537-3406 and
enter the following PIN at the prompt: 37851480. Visit
http://investors.gentiva.com/events.cfm to access the webcast archive. This
press release is accessible at http://investors.gentiva.com/releases.cfm and a
transcript of the conference call will be posted on the Company's website.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is the nation's largest provider of home health
and hospice services based on revenue, delivering innovative, high quality
care to patients across the United States. Gentiva is a single source for
skilled nursing; physical, occupational, speech and neurorehabilitation
services; hospice services; social work; nutrition; disease management
education; help with daily living activities; and other therapies and
services. GTIV-G

(unaudited tables and notes follow)



Gentiva Health Services, Inc. and Subsidiaries
Condensed Consolidated Financial Statements and Supplemental Information
(Unaudited)
  (in 000's, except per  3rd Quarter                 Nine Months
  share data)
                         2012         2011           2012        2011
Condensed Statements of
Comprehensive Income
  Net revenues           $       $         $       $    
                         424,444     449,748       1,287,787   1,349,569
  Cost of services sold  223,889      242,943        679,487     707,850
  Gross profit           200,555      206,805        608,300     641,719
  Selling, general and
  administrative         (161,207)    (182,634)      (498,842)   (547,005)
  expenses
  Goodwill, intangibles
  and other long-lived   (19,132)     (643,305)      (19,132)    (643,305)
  asset impairment
  Gain on sale of        -            -              5,447       -
  businesses
  Dividend income        -            3,977          -           8,590
  Interest income        653          659            2,011       1,963
  Interest expense and   (23,547)     (21,332)       (69,062)    (70,305)
  other
  (Loss) income from
  continuing operations
  before income taxes    (2,678)      (635,830)      28,722      (608,343)
  and equity in net
  earnings of
  CareCentrix
  Income tax benefit     1,297        87,538         (10,878)    77,007
  (expense)
  Equity in net earnings 1,006        68,692         1,006       69,582
  of CareCentrix
  (Loss) income from     (375)        (479,600)      18,850      (461,754)
  continuing operations
  Discontinued           -            5,983          -           7,096
  operations, net of tax
  Net (loss) income      (375)        (473,617)      18,850      (454,658)
  Less: Net income
  attributable to        (148)        (134)          (624)       (452)
  noncontrolling
  interests
  Net (loss) income      $       $          $      $    
  attributable to          (523)   (473,751)      18,226   (455,110)
  Gentiva shareholders
  Total comprehensive    $       $          $      $    
  (loss) income            (375)   (473,617)      18,850   (455,136)
 Earnings per Share
  Basic earnings per
  share:
   (Loss) income from
  continuing operations  $       $        $      $      
  attributable to          (0.02)   (15.82)          0.60  (15.27)
  Gentiva shareholders
   Discontinued        -            0.20           -           0.23
  operations, net of tax
   Net (loss) income   $       $        $      $      
  attributable to          (0.02)   (15.62)          0.60  (15.04)
  Gentiva shareholders
   Weighted average    30,423       30,337         30,496      30,257
  shares outstanding
  Diluted earnings per
  share:
   (Loss) income from
  continuing operations  $       $        $      $      
  attributable to          (0.02)   (15.82)          0.60  (15.27)
  Gentiva shareholders
   Discontinued        -            0.20           -           0.23
  operations, net of tax
   Net (loss) income   $       $        $      $      
  attributable to          (0.02)   (15.62)          0.60  (15.04)
  Gentiva shareholders
   Weighted average    30,423       30,337         30,612      30,257
  shares outstanding
  Amounts attributable
  to Gentiva
  shareholders:
  (Loss) income from     $       $          $      $    
  continuing operations    (523)   (479,734)      18,226   (462,206)
  Discontinued           -            5,983          -           7,096
  operations, net of tax
  Net (loss) income      $       $          $      $    
                           (523)   (473,751)      18,226   (455,110)
  (in 000's)
Condensed Balance Sheets
 ASSETS                  Sept 30,     Dec 31, 2011
                         2012
  Cash and cash          $       $     
  equivalents            156,049     164,912
  Accounts receivable,   254,094      290,589
  net (A)
  Deferred tax assets    10,881       26,451
  Prepaid expenses and   54,962       38,379
  other current assets
   Total current     475,986      520,331
  assets
  Notes receivable from  34,949       25,000
  CareCentrix
  Fixed assets, net      43,057       46,246
  Intangible assets, net 195,700      214,874
  Goodwill               656,364      641,669
  Other assets           78,158       82,208
   Total assets       $        $    
                         1,484,214    1,530,328
 LIABILITIES AND EQUITY
  Current portion of     $       $      
  long-term debt          21,693    14,903
  Accounts payable       15,122       12,613
  Payroll and related    29,902       42,027
  taxes
  Deferred revenue       39,116       34,114
  Medicare liabilities   27,979       23,066
  Obligations under      54,101       54,976
  insurance programs
  Accrued nursing home   20,566       24,223
  costs
  Other accrued expenses 56,413       89,270
   Total current     264,892      295,192
  liabilities
  Long-term debt         916,432      973,222
  Deferred tax           44,628       32,498
  liabilities, net
  Other liabilities      35,511       26,885
  Total equity           222,751      202,531
   Total liabilities $        $    
  and equity             1,484,214    1,530,328
  Common shares          30,566       30,779
  outstanding
  (A) Accounts receivable, net included an allowance for doubtful accounts of
  $10.5 million and $11.6 million at September 30, 2012 and December 31, 2011,
  respectively.
  (in 000's)
                         Nine Months
Condensed Statements of  2012         2011
Cash Flows
 OPERATING ACTIVITIES:
 Net income (loss)       $       $    
                          18,850    (454,658)
 Adjustments to
 reconcile net income to
 net cash
 provided by operating
 activities:
  Depreciation and       21,375       22,534
  amortization
  Amortization and
  write-off of debt      10,391       12,857
  issuance costs
  Provision for doubtful 4,183        5,744
  accounts
  Equity-based           5,722        5,863
  compensation expense
  Windfall tax benefits
  associated with        -            (194)
  equity-based
  compensation
  Goodwill, intangibles
  and other long-lived   19,132       643,305
  asset impairment
  Gain on sale of        (5,447)      (9,088)
  businesses
  Equity in net earnings
  of CareCentrix,        -            (69,582)
  including gain on
  sale, net of tax
  Deferred income tax    27,700       (95,672)
  benefit (expense)
 Changes in assets and
 liabilities, net of
 effects from
 acquisitions and
 dispositions:
  Accounts receivable    31,751       (6,431)
  Prepaid expenses and   (25,597)     11,055
  other current assets
  Current liabilities    (40,089)     (51,053)
 Other, net              6,670        (333)
 Net cash provided by    74,641       14,347
 operating activities
 INVESTING ACTIVITIES:
 Purchase of fixed       (9,235)      (14,571)
 assets
 Proceeds from sale of
 assets and businesses,  5,720        142,333
 net of cash transferred
 Acquisition of
 businesses, net of cash (22,520)     (320)
 acquired
 Net cash (used in)
 provided by investing   (26,035)     127,442
 activities
 FINANCING ACTIVITIES:
 Proceeds from issuance  2,421        7,005
 of common stock
 Windfall tax benefits
 associated with         -            194
 equity-based
 compensation
 Repayment of long-term  (50,000)     (43,438)
 debt
 Debt issuance costs     (4,125)      (13,457)
 Repurchase of common    (4,974)      -
 stock
 Repayment of capital    (106)        (210)
 lease obligations
 Other                   (685)        (543)
 Net cash used in        (57,469)     (50,449)
 financing activities
 Net change in cash and  (8,863)      91,340
 cash equivalents
 Cash and cash
 equivalents at          164,912      104,752
 beginning of period
 Cash and cash           $       $     
 equivalents at end of   156,049     196,092
 period
 SUPPLEMENTAL
 DISCLOSURES OF CASH
 FLOW INFORMATION:
 Interest paid           $       $      
                          67,735    69,922
 Income taxes paid       $       $      
                           4,260    9,972
A reconciliation of Free
cash flow to Net cash    Nine Months
provided by operating
activities follows:
                         2012         2011
  Net cash provided by   $       $      
  operating activities    74,641    14,347
  Less: Purchase of      (9,235)      (14,571)
  fixed assets
  Free cash flow         $       $      
                          65,406      (224)
  (in 000's)
Supplemental Information 3rd Quarter                 Nine Months
                         2012         2011           2012        2011
Segment Information (2)
 Net revenues
  Home Health           $       $         $      $     
                         234,670     253,240       710,321    763,622
  Hospice                189,774      196,508        577,466     585,947
 Total net revenues      $       $         $       $    
                         424,444     449,748       1,287,787   1,349,569
 Operating contribution
 (6)
  Home Health           $       $        $      $     
                          32,268    28,717         94,527   105,427
  Hospice                34,798       31,477         102,426     104,301
 Total operating         67,066       60,194         196,953     209,728
 contribution
 Corporate               (21,065)     (28,570)       (66,120)    (92,480)
 administrative expenses
 Depreciation and        (6,653)      (7,453)        (21,375)    (22,534)
 amortization
 Goodwill, intangibles
 and other long-lived    (19,132)     (643,305)      (19,132)    (643,305)
 asset impairment (8)
 Dividend income (9)     -            3,977          -           8,590
 Gain on sale of         -            -              5,447       -
 businesses (5)
 Interest expense and    (22,894)     (20,673)       (67,051)    (68,342)
 other, net (7)
 (Loss) income from
 continuing operations   $       $          $      $    
 before income taxes and  (2,678)   (635,830)      28,722   (608,343)
 equity in net earnings
 of CareCentrix
 Home Health operating   13.8%        11.3%          13.3%       13.8%
 contribution margin %
 Hospice operating       18.3%        16.0%          17.7%       17.8%
 contribution margin %
                         3rd Quarter                 Nine Months
                         2012         2011           2012        2011
 Net Revenues by Major
 Payer Source:
  Medicare:
   Home Health          $       $         $      $     
                         184,980     200,284       561,751    601,666
   Hospice              177,437      181,991        538,990     542,985
   Total Medicare       362,417      382,275        1,100,741   1,144,651
  Medicaid and local     19,154       21,216         56,873      63,160
  government
  Commercial insurance
  and other:
   Paid at episodic     21,442       19,333         62,728      58,070
  rates
   Other                21,431       26,924         67,445      83,688
   Total commercial     42,873       46,257         130,173     141,758
  insurance and other
   Total net         $       $         $       $    
  revenues               424,444     449,748       1,287,787   1,349,569
A reconciliation of
Adjusted EBITDA to Net
(loss) income            3rd Quarter                 Nine Months
attributable to Gentiva
shareholders follows:
                         2012         2011           2012        2011
  Adjusted EBITDA (3)    $        $          $        $   
                         46,054      41,469        136,302    152,104
  Goodwill, intangibles
  and other long-lived   (19,132)     (643,305)      (19,132)    (643,305)
  asset impairment (8)
  Dividend income (9)    -            3,977          -           8,590
  Gain on sale of        -            -              5,447       -
  businesses (5)
  Restructuring, legal
  settlement and         (53)         (9,845)        (5,469)     (34,856)
  acquisition and
  integration costs (6)
  EBITDA (6)             26,869       (607,704)      117,148     (517,467)
  Depreciation and       (6,653)      (7,453)        (21,375)    (22,534)
  amortization
  Interest expense and   (22,894)     (20,673)       (67,051)    (68,342)
  other, net (7)
  (Loss) income from
  continuing operations
  before income taxes    (2,678)      (635,830)      28,722      (608,343)
  and equity in net
  earnings of
  CareCentrix
  Income tax benefit     1,297        87,538         (10,878)    77,007
  (expense) (10)
  Equity in net earnings 1,006        68,692         1,006       69,582
  of CareCentrix
  (Loss) income from     (375)        (479,600)      18,850      (461,754)
  continuing operations
  Discontinued
  operations, net of tax -            5,983          -           7,096
  (4)
  Net (loss) income      (375)        (473,617)      18,850      (454,658)
  Less: Net income
  attributable to        (148)        (134)          (624)       (452)
  noncontrolling
  interests
  Net (loss) income      $       $          $      $    
  attributable to          (523)   (473,751)      18,226   (455,110)
  Gentiva shareholders
A reconciliation of
Adjusted income from
continuing operations
attributable to Gentiva
shareholders
to (Loss)income from
continuing operations
follows: (3)
                         3rd Quarter                 Nine Months
                         2012         2011           2012        2011
  Adjusted income from
  continuing operations  $       $        $      $      
  attributable to          9,854     8,285         27,994   37,953
  Gentiva shareholders
  Goodwill, intangibles
  and other long-lived   (11,352)     (547,118)      (11,352)    (547,118)
  asset impairment (8)
  Gain on sale of
  CareCentrix included
  in equity in net       1,006        68,328         1,006       68,328
  earnings of
  CareCentrix, net of
  tax
  Dividend income (9)    -            2,630          -           5,435
  Gain on sale of        -            -              3,248       -
  businesses (5)
  Cost saving            -            (508)          -           (508)
  initiatives
  Restructuring, legal
  settlement and         (31)         (5,848)        (3,246)     (20,793)
  acquisition and
  integration costs (6)
  Tax valuation
  allowance on OIG legal -            (5,503)        576         (5,503)
  settlement
  (Loss) income from
  continuing operations  (523)        (479,734)      18,226      (462,206)
  attributable to
  Gentiva shareholders
  Add back: Net income
  attributable to        148          134            624         452
  noncontrolling
  interests
  (Loss) income from     $       $          $      $    
  continuing operations    (375)   (479,600)      18,850   (461,754)
  Adjusted income from
  continuing operations  $       $        $      $      
  attributable to           0.32     0.27          0.91    1.23
  Gentiva shareholders
  per diluted share
  Goodwill, intangibles
  and other long-lived   (0.38)       (18.03)        (0.37)      (18.08)
  asset impairment (8)
  Gain on sale of
  CareCentrix included
  in equity in net       0.03         2.24           0.03        2.26
  earnings of
  CareCentrix, net of
  tax
  Dividend income (9)    -            0.09           -           0.18
  Gain on sale of        -            -              0.11        -
  businesses (5)
  Cost saving            -            (0.02)         -           (0.02)
  initiatives
  Restructuring, legal
  settlement and         -            (0.19)         (0.10)      (0.68)
  acquisition and
  integration costs (6)
  Tax valuation
  allowance on OIG legal -            (0.18)         0.02        (0.18)
  settlement
  Impact of exclusion of
  dilutive shares due to 0.01         -              -           0.02
  the anti-dilutive
  effect of the shares
  (Loss) income from
  continuing operations
  attributable to        (0.02)       (15.82)        0.60        (15.27)
  Gentiva shareholders
  per diluted share
  Add back: Net income
  attributable to        0.01         -              0.02        0.01
  noncontrolling
  interests
  (Loss) income from     $       $        $      $      
  continuing operations    (0.01)   (15.82)          0.62  (15.26)
  per diluted share
  Operating Metrics
                         3rd Quarter                 Nine Months
                         2012         2011           2012        2011
  Home Health
  Episodic admissions    48,600       49,900         148,800     150,700
  Total episodes         71,300       72,000         216,000     216,400
  Episodes per admission 1.47         1.44           1.45        1.44
  Revenue per episode    $       $        $      $      
                           2,900     3,050          2,900    3,050
  Hospice
  Admissions             12,200       13,300         38,900      42,100
  Average daily census   13,600       14,100         13,700      13,900
  Patient days (in       1,250        1,300          3,750       3,810
  thousands)
  Revenue per patient    $       $        $      $      
  day                       152     152          154    154
  Length of stay at      101          86             89          94
  discharge (in days)
  Services by patient
  type
   Routine             98%          97%            98%         97%
   General Inpatient & 2%           3%             2%          3%
  Other



Notes:

1.The comparability between reporting periods has been affected by the
    following items:
     a. During the second quarter of 2012, the Company completed the sale
    of eight home health and four hospice branches in Louisiana. In addition,
    the Company completed several acquisitions in the third quarter of 2012.
    During the fourth quarter of 2011, the Company closed 34 locations (25
    home health and 9 hospice) and sold 9 home health branches as a result of
    a comprehensive review of its branch structure, support infrastructure and
    other significant expenditures in response to the challenging Medicare
    reimbursement rate environment. In addition, during the first quarter of
    2012, the Company closed four additional home health branches.
    As a result of this activity, the Company's revenues for the third quarter
    and first nine months of 2012 were negatively impacted by approximately
    $20 million and $62 million, respectively, as compared to the third
    quarter and first nine months of 2011.
     b. The first nine months of 2012 included 274 days of activity as
    compared to 273 days for the first nine months of 2011 due to 29 days in
    February 2012 versus 28 days in February 2011.
2.The Company's senior management evaluates performance and allocates
    resources based on operating contributions of the operating segments,
    which exclude corporate expenses, depreciation, amortization, and interest
    expense and other (net), but include revenues and all other costs directly
    attributable to the specific segment.
3.Adjusted EBITDA, a non-GAAP financial measure, is defined as income from
    continuing operations before interest expense and other (net of interest
    income), income taxes, depreciation and amortization and excluding charges
    relating primarily to restructuring, legal settlements and acquisition and
    integration activities, dividend income and gain on sale of business, net
    of taxes. Management uses Adjusted EBITDA to evaluate overall performance
    and compare current operating results with other companies in the
    healthcare industry. Adjusted EBITDA should not be considered in isolation
    or as a substitute for income from continuing operations, net income,
    operating income or cash flow statement data determined in accordance with
    accounting principles generally accepted in the United States. Because
    Adjusted EBITDA is not a measure of financial performance under accounting
    principles generally accepted in the United States and is susceptible to
    varying calculations, it may not be comparable to similarly titled
    measures in other companies. Adjusted EBITDA presented in the Supplemental
    Information relates to the Company's continuing operations.
    Adjusted income from continuing operations attributable to Gentiva
    shareholders is defined as income from continuing operations attributable
    to Gentiva shareholders, excluding tax reserves relating to the OIG
    settlement and charges relating to restructuring, legal settlements and
    acquisition and integration activities, dividend income and gain on sale
    of business, net of taxes.
4.Discontinued operations consist of the financial results of the Company's
    Rehab Without Walls and IDOA businesses and for the nine month period the
    HME and IV business. Net revenues and operating results associated with
    these operating units for the third quarter and first nine months of
    2011were as follows (dollars in thousands):

                                            3rd Quarter  Nine Months
                                            2011         2011
      Net revenues                          $  6,699    $ 22,636
      Operating income before income taxes  $   840   $  2,686
      Gain on sale of business              9,088        9,088
      Income tax expense                    (3,945)      (4,678)
      Discontinued operations, net of tax   $  5,983    $  7,096

5.During the second quarter of 2012, the Company completed the sale of eight
    home health branches and four hospice branches in Louisiana, pursuant to
    an asset purchase agreement, for total consideration of approximately $6.4
    million. The Company received proceeds of approximately $5.9 million and
    established a receivable of approximately $0.5 million.
    Effective May 31, 2012, the Company completed the sale of its Gentiva
    consulting business to MP Healthcare Partners, LLC pursuant to an asset
    purchase agreement, for cash consideration of approximately $0.3 million.
    In connection with the sales, the Company recorded a gain on sale of
    businesses of approximately $5.4 million for the first nine months of
    2012.
6.Operating contribution and EBITDA included charges relating to
    restructuring, legal settlements and acquisition and integration
    activities of $0.1 million and $5.5 million for the third quarter and
    first nine months of 2012, respectively, and $9.8 million and $34.9
    million for the third quarter and first nine months of 2011, respectively.
    For the third quarter and first nine months of 2012, the Company recorded
    (i) restructuring costs of $0.1 million and $1.5 million, respectively,
    and (ii) legal settlement reserves of $5.0 million, associated with the
    tentative settlement of the Wilkie wage and hour lawsuit, partially offset
    by (iii) a reduction in acquisition and integration costs of $1.0 million,
    primarily relating to favorable lease settlements associated with the
    acquisition of Odyssey HealthCare, Inc.
    For the third quarter and first nine months of 2011, the Company recorded
    (i) restructuring costs of $0.8 million and $2.6 million, respectively,
    (ii) legal settlement reserves of $6.5 million and $25.0 million,
    respectively, associated with a government investigation assumed in the
    Odyssey acquisition, and (iii) acquisition and integration costs of $2.5
    million and $7.3 million, respectively, primarily relating to the
    acquisition of Odyssey HealthCare, Inc.
    These charges were reflected as follows for segment reporting purposes
    (dollars in millions):

                         3rd Quarter      Nine Months
                         2012    2011     2012  2011
      Home Health        $   - $   -  $ 5.7 $ 0.3
      Hospice            -       0.8      0.1   1.6
      Corporate expenses 0.1     9.0      (0.3) 33.0
      Total              $ 0.1   $ 9.8    $ 5.5 $ 34.9

7.Interest expense and other, net for the first nine months of 2012 included
    charges of approximately $0.5 million relating to the write-off of
    deferred debt issuance costs associated with the Company's March 6, 2012
    credit agreement amendment. Interest expense and other, net for the first
    nine months of 2011 included charges of approximately $3.8 million
    relating to the write-off of deferred debt issuance costs and costs of
    terminating the Company's interest rate swaps in connection with the
    refinancing of the indebtedness outstanding under its credit agreement.
8.During the third quarter of 2012, the Company initiated an effort to
    re-brand all of its branch operations under the single Gentiva name. In
    connection with this re-branding effort, the Company recorded a $19.1
    million non-cash write-off of existing trade name balances for the third
    quarter and first nine months of 2012.
    During the third quarter of 2011, the Company performed an impairment test
    of its goodwill, intangibles and other long-lived assets in response to
    changes in our business climate, including uncertainties around Medicare
    reimbursement as the federal government worked to reduce the federal
    deficit. The Company's impairment test indicated that the fair value of
    certain identifiable intangible assets, as well as goodwill, was less than
    their carrying values. In addition, the Company finalized its review of
    alternatives to replacing various field operating systems. As such, the
    Company recorded non-cash impairment charges of approximately $643.3
    million for the third quarter and first nine months of 2011.
9.Dividend income for the third quarter and first nine months of 2011
    represents a 12% cumulative preferred dividend received in connection with
    the sale of the Company's preferred investment in CareCentrix in 2011.
10.The Company's effective tax rate for adjusted income from continuing
    operations was a tax provision of 39.8% and 40.8% for the third quarter
    and first nine months of 2012, respectively, as compared to 39.6% for both
    the third quarter and first nine months of 2011.

Forward-Looking Statement

Certain statements contained in this news release, including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects," "assumes," "trends" and similar expressions, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based upon the
Company's current plans, expectations and projections about future events.
However, such statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
factors include, among others, the following: economic and business
conditions; demographic changes; changes in, or failure to comply with,
existing governmental regulations; the impact on our Company of healthcare
reform legislation and its implementation through governmental regulations;
legislative proposals for healthcare reform; changes in Medicare, Medicaid and
commercial payer reimbursement levels; the outcome of any inquiries into the
Company's operations and business practices by governmental authorities;
effects of competition in the markets in which the Company operates; liability
and other claims asserted against the Company; ability to attract and retain
qualified personnel; ability to access capital markets; availability and terms
of capital; loss of significant contracts or reduction in revenues associated
with major payer sources; ability of customers to pay for services; business
disruption due to natural disasters, pandemic outbreaks, or terrorist acts;
ability to successfully integrate the operations of acquisitions the Company
may make and achieve expected synergies and operational efficiencies within
expected time-frames; ability to maintain compliance with its financial
covenants under the Company's credit agreement; effect on liquidity of the
Company's debt service requirements; and changes in estimates and judgments
associated with critical accounting policies and estimates. For a detailed
discussion of certain of these and other factors that could cause actual
results to differ from those contained in this news release, please refer to
the Company's various filings with the Securities and Exchange Commission,
including the "Risk Factors" section contained in the Company's annual report
on Form 10-K for the year ended December 31, 2011.

Financial and Investor Contact:
     Eric Slusser
     770-951-6101
     eric.slusser@gentiva.com
or   John Mongelli
     770-951-6496
     john.mongelli@gentiva.com
Media Contact:
     Scott Cianciulli
     Brainerd Communicators
     212-986-6667
     cianciulli@braincomm.com



SOURCE Gentiva Health Services, Inc.

Website: http://investors.gentiva.com
 
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