Gentiva® Health Services Reports Fourth Quarter and Full-Year 2012 Results

  Gentiva® Health Services Reports Fourth Quarter and Full-Year 2012 Results

PR Newswire

ATLANTA, Feb. 7, 2013

ATLANTA, Feb. 7, 2013 /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 fourth quarter and full-year 2012
results.

Full-year 2012 financial highlights include:

  oTotal net revenues of $1.71 billion.
  oAdjusted income from continuing operations on a diluted per share basis of
    $1.27, excluding the $0.03 impact from credit agreement amendment fees
    incurred in the first quarter of 2012 and the $0.01 impact from Hurricane
    Sandy in the fourth quarter of 2012.
  oAdjusted EBITDA of $180.5 million.

Fourth quarter 2012 financial highlights include:

  oTotal net revenues of $425.0 million, a decrease of 5% compared to $449.2
    million for the quarter ended December 31, 2011 due to the impact of the
    significant home health Medicare rate reduction in 2012 and the sale or
    closure of branches related to the Company's comprehensive review of its
    branch structure in the third quarter of 2011. Excluding the impact of
    branches sold or closed, total net revenues would have been down 2%
    compared to the fourth quarter of 2011. Net revenues included home health
    episodic revenues of $209.8 million, a decline of 3% compared to $217.1
    million in the 2011 fourth quarter. Hospice revenues were $187.3 million,
    a decrease of 6% compared to $200.3 million in the 2011 fourth quarter.
    Hospice represented 44% of total net revenues in the fourth quarter of
    2012, compared to 45% in the 2011 fourth quarter.
  oIncome from continuing operations attributable to Gentiva shareholders of
    $8.6 million, or $0.28 per diluted share, compared to income of $3.4
    million, or $0.11 per diluted share, for the fourth quarter of 2011.
  oAdjusted income from continuing operations attributable to Gentiva
    shareholders of $9.7 million, compared with $11.3 million in the
    comparable 2011 period. On a diluted per share basis, adjusted income from
    continuing operations attributable to Gentiva shareholders was $0.31 for
    the fourth quarter of 2012 as compared to $0.37 for the fourth quarter of
    2011. Excluding the $0.01 impact of Hurricane Sandy, adjusted income from
    continuing operations attributable to Gentiva shareholders was $0.32 on a
    diluted per share basis for the fourth quarter of 2012.
  oAdjusted earnings before interest, taxes, depreciation and amortization
    attributable to continuing operations (Adjusted EBITDA) was $44.2 million
    in the fourth quarter of 2012 as compared to $47.1 million in the fourth
    quarter of 2011. Adjusted EBITDA as a percentage of net revenues was
    10.4% in the fourth quarter of 2012 versus 10.5% 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 full-year 2012 include:

  oTotal net revenues of $1.71 billion, a decrease of 5% compared to $1.80
    billion for the prior year period due to the impact of the significant
    home health Medicare rate reduction in 2012 and the sale or closure of
    branches related to the Company's comprehensive review of its branch
    structure in the third quarter of 2011. Net revenues included home health
    episodic revenues of $834.2 million, a decline of 5% as compared to $876.9
    million in the comparable 2011 period. Hospice revenues were $764.8
    million, a decrease of 3% compared to $786.2 million in the comparable
    2011 period.
  oIncome from continuing operations attributable to Gentiva shareholders of
    $26.8 million, or $0.87 per diluted share, compared to a loss of $458.8
    million, or $15.13 per diluted share, in the prior year period.
  oAdjusted income from continuing operations attributable to Gentiva
    shareholders of $37.7 million, compared with $49.2 million in the 2011
    period. On a diluted per share basis, adjusted income from continuing
    operations attributable to Gentiva shareholders was $1.23 for 2012 as
    compared with $1.60 in the corresponding period of 2011. Excluding the
    $0.03 impact from expenses associated with the March 6, 2012 credit
    agreement amendment and the $0.01 impact from Hurricane Sandy, adjusted
    income from continuing operations attributable to Gentiva shareholders was
    $1.27 on a diluted per share basis for the 2012 period as compared to
    $1.68 in the prior year period, which excluded an $0.08 impact from
    refinancing charges.
  oAdjusted earnings before interest, taxes, depreciation and amortization
    attributable to continuing operations (Adjusted EBITDA) was $180.5 million
    as compared to $199.2 million in the 2011 period. Adjusted EBITDA as a
    percentage of net revenues was 10.5% versus 11.1% in the prior year
    period.

For the fourth quarter of 2012, the Company reported net income attributable
to Gentiva shareholders of $8.6 million, or $0.28 per diluted share, compared
to net income of $4.6 million, or $0.15 per diluted share, in the fourth
quarter of 2011. For the full-year 2012, net income attributable to Gentiva
shareholders was $26.8 million, or $0.87 per diluted share, compared with a
net loss of $450.5 million, or $14.85 per diluted share, for the full-year
2011. These results included charges related to the special items discussed
above as well as the results from discontinued operations.

Cash Flow and Balance Sheet Highlights

At December 31, 2012, the Company reported cash and cash equivalents of $207.1
million, compared to $156.0 million at September 30, 2012. Total outstanding
debt was $935.2 million as of December 31, 2012, compared to $938.1 million at
September 30, 2012. Total Company days sales outstanding, or DSO's, was 51
days at December 31, 2012, down from 52 days at September 30, 2012.

For the fourth quarter of 2012, net cash provided by operating activities was
$51.3 million, compared to negative $9.2 million in the prior year period.
Free cash flow was $48.8 million for the fourth quarter of 2012, compared to
negative $13.9 million in the prior year period.

Full-year 2012 free cash flow was $114.2 million. Free cash flow is
calculated as net cash provided by operating activities less capital
expenditures.

Full-Year 2013 Outlook Comments

The Company will provide its 2013 guidance once the final sequestration rules
have been issued by the Centers for Medicare and Medicaid Services (CMS) given
the current uncertainties associated with when and how sequestration will be
implemented.

Non-GAAP Financial Measures

The information provided in this press release includes certain non-GAAP
financial measures as defined under Securities and Exchange Commission (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 fourth quarter 2012 results during its
conference call and live webcast to be held today, Thursday, February 7, 2013
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
#90049215. 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.cfmto hear the webcast. A replay of the
call will be available on February 7 and will remain available continuously
through February 14. 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: 90049215. Visit
http://investors.gentiva.com/events.cfmto access the webcast archive. This
press release is accessible at http://investors.gentiva.com/releases.cfmand 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 share   4th Quarter           Fiscal Year
  data)
                                2012       2011       2012         2011
Condensed Statements of
Comprehensive Income
  Net revenues                  $ 425,017  $ 449,209  $ 1,712,804  $ 1,798,778
  Cost of services sold         229,254    240,605    908,741      948,455
  Gross profit                  195,763    208,604    804,063      850,323
  Selling, general and          (156,924)  (183,402)  (655,766)    (730,407)
  administrative expenses
  Goodwill, intangibles and
  other long-lived asset        —          —          (19,132)     (643,305)
  impairment
  Gain on sale of assets and    2,567      1,061      8,014        1,061
  businesses, net
  Dividend income               —          —          —            8,590
  Interest income               650        723        2,661        2,686
  Interest expense and other    (23,546)   (20,991)   (92,608)     (91,296)
  Income (loss) from continuing
  operations before income
  taxes and
   equity in net earnings of  18,510     5,995      47,232       (602,348)
  CareCentrix
  Income tax (expense) benefit  (6,373)    (1,239)    (17,251)     75,768
  Equity in net earnings of     (3,307)    (1,201)    (2,301)      68,381
  CareCentrix
  Income (loss) from continuing 8,830      3,555      27,680       (458,199)
  operations
  Discontinued operations, net  —          1,219      —            8,315
  of tax
  Net income (loss)             8,830      4,774      27,680       (449,884)
  Less: Net income attributable (260)      (189)      (884)        (641)
  to noncontrolling interests
  Net income (loss)
  attributable to Gentiva       $ 8,570    $ 4,585    $ 26,796     $ (450,525)
  shareholders
  Total comprehensive income    $ 8,830    $ 4,774    $ 27,680     $ (450,362)
  (loss)
 Earnings per Share
  Basic earnings per common
  share:
  Income (loss) from continuing
  operations attributable to
  Gentiva
   shareholders               $ 0.28     $ 0.11     $ 0.88       $ (15.13)
  Discontinued operations, net  —          0.04       —            0.28
  of tax
  Net income (loss)
  attributable to Gentiva       $ 0.28     $ 0.15     $ 0.88       $ (14.85)
  shareholders
  Weighted average shares       30,548     30,402     30,509       30,336
  outstanding
  Diluted earnings per common
  share:
  Income (loss) from continuing
  operations attributable to
  Gentiva
   shareholders               $ 0.28     $ 0.11     $ 0.87       $ (15.13)
  Discontinued operations, net  —          0.04       —            0.28
  of tax
  Net income (loss)
  attributable to Gentiva       $ 0.28     $ 0.15     $ 0.87       $ (14.85)
  shareholders
  Weighted average shares       30,891     30,541     30,687       30,336
  outstanding
  Amounts attributable to
  Gentiva shareholders:
  Income (loss) from continuing $ 8,570    $ 3,366    $ 26,796     $ (458,840)
  operations
  Discontinued operations, net  —          1,219      —            8,315
  of tax
  Net income (loss)             $ 8,570    $ 4,585    $ 26,796     $ (450,525)



       (in 000's)
Condensed Balance Sheets
    ASSETS                        December 31, 2012       December 31, 2011
       Cash and cash equivalents  $     207,052           $    164,912
       Accounts receivable, net   251,080                 290,589
       (A)
       Deferred tax assets        12,263                  26,451
       Prepaid expenses and other 45,632                  38,379
       current assets 
       Total current assets       516,027                 520,331
       Notes receivable from      28,471                  25,000
       CareCentrix
       Investment in affiliate    916                     —
       Fixed assets, net          41,414                  46,246
       Intangible assets, net     193,613                 214,874
       Goodwill                   656,364                 641,669
       Other assets               74,129                  82,208
       Total assets               $     1,510,934         $    1,530,328
    LIABILITIES AND EQUITY
       Current portion of         $     25,000            $    14,903
       long-term debt
       Accounts payable           13,445                  12,613
       Payroll and related taxes  45,357                  42,027
       Deferred revenue           37,444                  34,114
       Medicare liabilities       27,122                  23,066
       Obligations under          56,536                  54,976
       insurance programs
       Accrued nursing home costs 18,428                  24,223
       Other accrued expenses     66,567                  89,270
       Total current liabilities  289,899                 295,192
       Long-term debt             910,182                 973,222
       Deferred tax liabilities,  42,165                  32,498
       net
       Other liabilities          33,988                  26,885
       Total equity               234,700                 202,531
       Total liabilities and      $     1,510,934         $    1,530,328
       equity
       Common shares outstanding  30,756                  30,779


(A) Accounts receivable, net included an allowance for doubtful accounts of
$8.8 million and $11.6 million at December 31, 2012 and December 31, 2011,
respectively.



(in 000's)
                                                       Fiscal Year
Condensed Statements of Cash Flows                     2012       2011
OPERATING ACTIVITIES:
Net income (loss)                                      $ 27,680   $ (449,884)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
     Depreciation and amortization                     26,580     30,140
     Amortization and write-off of debt issuance costs 13,761     16,263
     Provision for doubtful accounts                   4,066      8,541
     Equity-based compensation expense                 7,645      7,548
     Windfall tax benefits associated with             (88)       (192)
     equity-based compensation
     Goodwill, intangibles and other long-lived asset  19,132     643,305
     impairment
     (Gain) loss on sale of assets and businesses, net (8,014)    (12,536)
     Equity in net earnings of CareCentrix, including  2,301      (68,381)
     gain on sale, net of tax
     Deferred income tax expense (benefit)             23,513     (86,012)
Changes in assets and liabilities, net of effects from
acquisitions and dispositions:
     Accounts receivable                               34,882     (39,542)
     Prepaid expenses and other current assets         (15,447)   10,467
     Current liabilities                               (15,979)   (54,111)
Other, net                                             5,936      (465)
Net cash provided by operating activities              125,968    5,141
INVESTING ACTIVITIES:
Purchase of fixed assets                               (11,779)   (19,231)
Proceeds from sale of businesses, net of cash          9,220      146,315
transferred
Acquisition of businesses, net of cash acquired        (22,335)   (320)
Net cash (used in) provided by investing activities    (24,894)   126,764
FINANCING ACTIVITIES:
Proceeds from issuance of common stock                 3,980      7,901
Windfall tax benefits associated with equity-based     88         192
compensation
Repayment of long-term debt                            (52,943)   (63,438)
Repurchase of common stock                             (4,974)    —
Debt issuance costs                                    (4,125)    (15,460)
Repayment of capital lease obligations                 (135)      (267)
Other                                                  (825)      (673)
Net cash used in financing activities                  (58,934)   (71,745)
Net change in cash and cash equivalents                42,140     60,160
Cash and cash equivalents at beginning of year         164,912    104,752
Cash and cash equivalents at end of year               $ 207,052  $ 164,912
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid                                          $ 78,783   $ 78,639
Income taxes paid                                      $ 4,375    $ 38,067
                                                        Fiscal Year
A reconciliation of Free cash flow to Net cash         2012       2011
provided by operating activities follows:
     Net cash provided by operating activities         $ 125,968  $ 5,141
     Less: Purchase of fixed assets                    (11,779)   (19,231)
     Free cash flow                                    $ 114,189  $ (14,090)



 (in 000's)
Supplemental Information         4th Quarter          Fiscal Year
                                 2012      2011       2012        2011
Segment Information (2)
 Net revenues
    Home Health                  $ 237,698 $ 248,944  $ 948,019   $ 1,012,566
    Hospice                      187,319   200,265    764,785     786,212
 Total net revenues              $ 425,017 $ 449,209  $ 1,712,804 $ 1,798,778
 Operating contribution (6)
    Home Health                  $ 30,918  $ 20,767   $ 125,445   $ 126,194
    Hospice                      30,707    35,422     133,133     139,723
 Total operating contribution    61,625    56,189     258,578     265,917
 Corporate administrative        (17,580)  (23,381)   (83,700)    (115,861)
 expenses
 Goodwill, intangibles and other —         —          (19,132)    (643,305)
 long-lived asset impairment (8)
 Dividend income (9)             —         —          —           8,590
 Depreciation and amortization   (5,206)   (7,606)    (26,581)    (30,140)
 Gain on sale of businesses (5)  2,567     1,061      8,014       1,061
 Interest expense and other, net (22,896)  (20,268)   (89,947)    (88,610)
 (7)
 Income (loss) from continuing
 operations before income taxes  $ 18,510  $ 5,995    $ 47,232    $ (602,348)
 and equity in net
 earnings of CareCentrix
 Home Health operating           13.0%     8.3%       13.2%       12.5%
 contribution margin %
 Hospice operating contribution  16.4%     17.7%      17.4%       17.8%
 margin %
                                 4th Quarter          Fiscal Year
 Net Revenues by Major Payer     2012      2011       2012        2011
 Source:
    Medicare
    Home Health                  $ 187,291 $ 197,574  $ 749,042   $ 799,240
    Hospice                      176,524   186,047    715,514     729,032
    Total Medicare               363,815   383,621    1,464,556   1,528,272
    Medicaid and local           17,551    19,943     74,424      83,103
    government
    Commercial insurance and
    other:
    Paid at episodic rates       22,472    19,568     85,200      77,638
    Other                        21,179    26,077     88,624      109,765
    Total commercial insurance   43,651    45,645     173,824     187,403
    and other
    Total net revenues           $ 425,017 $ 449,209  $ 1,712,804 $ 1,798,778
                                 4th Quarter          Fiscal Year
A reconciliation of Adjusted
EBITDA to Net income             2012      2011       2012        2011
attributable to Gentiva
shareholders follows:
    Adjusted EBITDA (3)          $ 44,246  $ 47,090   $ 180,548   $ 199,194
    Goodwill, intangibles and
    other long-lived asset       —         —          (19,132)    (643,305)
    impairment (8)
    Dividend income (9)          —         —          —           8,590
    Gain on sale of businesses   2,567     1,061      8,014       1,061
    (5)
    Restructuring, legal
    settlement and acquisition   (201)     (14,282)   (5,670)     (49,138)
    and integration costs (6)
    EBITDA (6)                   46,612    33,869     163,760     (483,598)
    Depreciation and             (5,206)   (7,606)    (26,581)    (30,140)
    amortization
    Interest expense and other,  (22,896)  (20,268)   (89,947)    (88,610)
    net (7)
    Income (loss) from
    continuing operations before
    income taxes and equity in   18,510    5,995      47,232      (602,348)
    net
    earnings of CareCentrix
    Income tax (expense) benefit (6,373)   (1,239)    (17,251)    75,768
    (10)
    Equity in net earnings of    (3,307)   (1,201)    (2,301)     68,381
    CareCentrix
    Income (loss) from           8,830     3,555      27,680      (458,199)
    continuing operations
    Discontinued operations, net —         1,219      —           8,315
    of tax (4)
    Net income (loss)            8,830     4,774      27,680      (449,884)
    Less: Net income
    attributable to              (260)     (189)      (884)       (641)
    noncontrolling interests
    Net income (loss)
    attributable to Gentiva      $ 8,570   $ 4,585    $ 26,796    $ (450,525)
    shareholders



A reconciliation of Adjusted income
from continuing operations attributable 4th Quarter       Fiscal Year
to Gentiva

shareholders to Income from continuing
operations follows (all items presented 2012    2011      2012     2011
are net of tax): (3)
  Adjusted income from continuing
  operations attributable to Gentiva    $ 9,686 $ 11,259  $ 37,679 $ 49,212
  shareholders
  Goodwill, intangibles and other       —       (635)     (11,352) (547,753)
  long-lived asset impairment (8)
  Gain on sale of CareCentrix included
  in equity in net earnings of          (3,307) (1,201)   (2,301)  67,127
  CareCentrix
  Dividend income (9)                   —       —         —        5,435
  Gain on sale of businesses (5)        1,516   631       4,765    631
  Cost savings, restructuring, legal
  settlement and acquisition and        (139)   (8,378)   (3,385)  (29,679)
  integration costs (6)
  Tax valuation allowance on OIG legal  814     1,690     1,390    (3,813)
  settlement
  Income (loss) from continuing
  operations attributable to Gentiva    8,570   3,366     26,796   (458,840)
  shareholders
  Add back: Net income attributable to  260     189       884      641
  noncontrolling interests
  Income (loss) from continuing         $ 8,830 $ 3,555   $ 27,680 $ (458,199)
  operations
  Adjusted income from continuing
  operations attributable to Gentiva
  shareholders per                      $ 0.31  $ 0.37    $ 1.23   $ 1.60

  diluted share
  Goodwill, intangibles and other       —       (0.02)    (0.37)   (18.06)
  long-lived asset impairment (8)
  Gain on sale of CareCentrix included
  in equity in net earnings of          (0.11)  (0.04)    (0.08)   2.21
  CareCentrix
  Dividend income (9)                   —       —         —        0.18
  Gain on sale of businesses (5)        0.05    0.02      0.16     0.02
  Cost savings, restructuring, legal
  settlement and acquisition and        —       (0.27)    (0.11)   (0.98)
  integration costs (6)
  Tax valuation allowance on OIG legal  0.03    0.05      0.04     (0.12)
  settlement
  Impact of exclusion of dilutive
  shares due to the anti-dilutive       —       —         —        0.02
  effect of the shares
  Income (loss) from continuing
  operations attributable to Gentiva    0.28    0.11      0.87     (15.13)
  shareholders per diluted share
  Add back: Net income attributable to  0.01    0.01      0.03     0.02
  noncontrolling interests
  Income (loss) from continuing         $ 0.29  $ 0.12    $ 0.90   $ (15.11)
  operations per diluted share
  Operating Metrics                     4th Quarter       Fiscal Year
  Home Health                           2012    2011      2012     2011
  Episodic admissions                   49,300  48,900    198,000  199,600
  Total episodes                        71,900  71,200    287,800  287,600
  Episodes per admission                1.46    1.46      1.45     1.44
  Revenue per episode                   $ 2,920 $ 3,050   $ 2,900  $ 3,050
  Hospice
  Admissions                            12,600  13,000    51,500   55,100
  Average daily census                  13,200  14,100    13,600   14,000
  Patient days (in thousands)           1,213   1,288     4,959    5,092
  Revenue per patient day               $ 155   $ 155     $ 154    $ 154
  Length of stay at discharge (in days) 105     94        96       89
  Services by patient type:
   Routine                          98%     98%       98%      97%
   General Inpatient & Other        2%      2%        2%       3%



Notes:

1. The comparability between reporting periods has been affected by the
following items:

  a. 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. During the year 2012, the Company completed
  the sale of eight home health and four hospice branches in Louisiana and
  closed four additional home health branches as part of this initiative.

  The Company also completed several other acquisitions and dispositions
  during the year 2012.

  As a result of this activity, the Company's revenues for the fourth quarter
  and full year 2012 were negatively impacted by approximately $9 million and
  $70 million, respectively, as compared to the fourth quarter and full year
  2011.

  b. The full year 2012 included 366 days of activity as compared to 365
  days for the year 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 (i) charges
relating to cost savings and other restructuring, legal settlements, and
acquisition and integration activities, (ii) gain on sale of businesses, (iii)
dividend income, and (iv) goodwill, intangibles and other long-lived asset
impairment. 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 (i) tax reserves relating to the OIG
settlement, (ii) charges relating to cost savings and other restructuring,
legal settlements, and acquisition and integration activities, (iii) gain on
sale of businesses, (iv) dividend income, (v) gain on sale of CareCentrix
included in equity in net earnings of CareCentrix, net of tax, and (vi)
goodwill, intangibles and other long-lived asset impairment.

4. Discontinued operations in 2011 consisted of the financial results
of the Company's Rehab Without Walls and IDOA businesses and the HME and IV
business. Net revenues and operating results associated with these operating
units for the fourth quarter and full year 2011 were as follows (dollars in
thousands):

                                       4th Quarter  Fiscal Year
                                       2011         2011
Net revenues                         $ 183          $   22,819
Operating income before income taxes $ (256)        $   2,430
Gain on sale of business               2,387        11,475
Income tax expense                     (912)        (5,590)
Discontinued operations, net of tax  $ 1,219        $   8,315

5. During the fourth quarter of 2012, the Company completed the sale of
its Phoenix area hospice operations to Banner Health, an Arizona non-profit
corporation, pursuant to an asset purchase agreement for cash consideration of
$3.5 million.

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 $2.6 million and $8.0 million for the fourth
quarter and full year 2012, respectively.

6. Operating contribution and EBITDA included charges relating to cost
savings and other restructuring, legal settlements and acquisition and
integration activities of $0.2 million and $5.7 million for the fourth quarter
and full year 2012, respectively, and $14.3 million and $49.1 million for the
fourth quarter and full year 2011, respectively.

For the fourth quarter and full year 2012, the Company recorded cost savings
and other restructuring costs of $0.2 million and $1.7 million, respectively.
For the full year 2012, the Company recorded legal settlement reserves of $5.0
million, associated with the tentative settlement of the Wilkie wage and hour
lawsuit, partially offset by a reduction in cost savings and other
restructuring costs of $1.0 million, primarily relating to favorable lease
settlements associated with the Company's branch closures.

For the fourth quarter and full year 2011, the Company recorded (i) cost
savings and other restructuring costs of $12.7 million and $15.2 million,
respectively, (ii) legal settlement reserves of $1.0 million and $26.0
million, respectively, associated with a government investigation assumed in
the Odyssey acquisition, and (iii) acquisition and integration costs of $0.6
million and $7.9 million, respectively, primarily relating to the acquisition
of Odyssey HealthCare, Inc.

These charges were reflected as follows for segment reporting purposes
(dollars in millions):

                     4th Quarter   Fiscal Year
                     2012  2011    2012  2011
Home Health          $ —   $ 7.4   $ 5.6 $ 7.7
Hospice              0.3   2.2     0.4   3.7
Corporate expenses (0.1) 4.7     (0.3) 37.7
Total                $ 0.2 $ 14.3  $ 5.7 $ 49.1

7. Interest expense and other, net for the year 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 year 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 year 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 2011.

9. Dividend income for the year 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 38.4% and 39.8% for the fourth quarter and
full year 2012, respectively, as compared to 40.5% and 39.7% for the fourth
quarter and full year 2011, respectively.

Forward-Looking Statements

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://www.gentiva.com
 
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