Gentiva(R) Health Services Reports First Quarter 2010 Results

ATLANTA, May 6 Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of home health and hospice services, today reported first quarter 2010 results.

Highlights for the three months ended April 4, 2010 as presented below reflect results from continuing operations. Discontinued operations represent results of Gentiva’s respiratory therapy and home medical equipment and infusion therapy businesses which were sold on February 1, 2010.

First quarter 2010 highlights include:

“Gentiva’s solid first quarter performance was driven by patient admission growth of more than 10% and improving profitability as we continue to narrow our strategic focus to our home health and hospice operations,” said Gentiva CEO Tony Strange. “The recent passage of healthcare reform legislation brings with it clarity on reimbursement for the next several years and we will continue to work closely with policymakers on future refinements to these regulations as they are implemented.”

Results of discontinued operations in the first quarter 2010 included a net loss of $1.0 million or $0.03 per diluted share as compared to a net loss of $0.2 million or $0.01 per diluted share in the first quarter of 2009.

For the first quarter of 2010, the Company reported net income of $9.3 million or $0.31 per diluted share compared to $18.0 million or $0.60 per diluted share in the first quarter of 2009. These results included special charges and the non-recurring transaction gain discussed above as well as the results from discontinued operations.

At April 4, 2010, the Company reported cash and cash equivalents of $168.9 million and outstanding debt under its credit agreement of $232.0 million.

Full-Year 2010 Outlook

Gentiva reaffirmed its outlook for fiscal 2010 full-year net revenues in a range of $1.23 billion to $1.26 billion and raised its outlook for adjusted net income from continuing operations on a diluted earnings per share basis to between $2.67 and $2.75 as compared to prior guidance of between $2.57 and $2.67. Gentiva raised its earnings outlook for fiscal 2010 based on its strong first quarter operating earnings performance and the passage of the Patient Protection and Affordable Care Act which created a 3% add-on to Medicare payments made for home health services to patients in rural areas effective April 1, 2010. The 2010 estimates exclude net special charges of between $0.30 and $0.35 per diluted share, the results of discontinued operations and the impact of any future acquisitions.

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 measures to the most directly comparable GAAP measures.

Conference Call and Webcast Details

The Company will comment further on its first quarter 2010 results during its conference call and live webcast to be held Thursday, May 6, 2010 at 10:00 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 # 68320639. The webcast is an audio-only, one-way event. Webcast listeners who wish to ask questions must participate in the conference call. Log onto to hear the webcast. A replay of the call will be available on May 6, beginning at approximately 1 p.m. ET, and will remain available continuously through May 13. To listen to a replay of the call from the United States, Canada or international locations, dial (800) 642-1687 or (706) 645-9291 and enter the following PIN at the prompt: 68320639. Visit to access the webcast archive. This press release is accessible at and a transcript of the conference call is expected to be available on the site within 48 hours after the call.

About Gentiva Health Services, Inc.

Gentiva Health Services, Inc. is a leading provider of home health and hospice services, 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. For more information, visit Gentiva’s web site,, and its investor relations section at GTIV-E

(unaudited tables and notes follow)


1) The Company’s senior management evaluates performance and allocates resources based on operating contributions of the operating segments, which exclude corporate administrative expenses, depreciation, amortization, and interest expense (net), but include revenues and all other costs directly attributable to the specific segment.

2) Adjusted EBITDA, a non-GAAP financial measure, is defined as income before interest expense (net of interest income), income taxes, depreciation and amortization and excluding special charges and gains on sale of assets, net. 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 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.

3) On February 1, 2010, the Company consummated the sale of its respiratory therapy and home medical equipment (“HME”) and infusion therapy (“IV”) businesses pursuant to an asset purchase agreement. Total consideration relating to the sale was approximately $16.4 million, consisting of (i) approximately $8.5 million of cash proceeds paid to the Company on the closing date, (ii) approximately $2.5 million of payments by the buyer associated with operating and capital lease obligations of the HME and IV businesses and (iii) approximately $5.4 million of cash in two escrow funds which will be released to the Company following the one year anniversary date of closing based on the achievement of certain post-closing cash collection targets and the resolution of certain post-closing liabilities. In connection with the transaction, the Company retained net accounts receivable of approximately $10 million and liabilities of approximately $3 million associated with the HME and IV businesses.

The financial results of these two operating segments are reported as discontinued operations in the accompanying condensed consolidated financial statements. HME and IV net revenues, operating results and the gain on sale of business for the periods presented were as follows (dollars in thousands):

The condensed balance sheet as of January 3, 2010 reflects the classification of certain assets of these businesses as held for sale and presents the debt repayment required for lenders approval of the transaction as a current liability.

Capital expenditures related to discontinued operations amounted to $0.3 million and $1.2 million for the first quarter of 2010 and 2009, respectively. Depreciation and amortization expense relating to discontinued operations amounted to $1.4 million for the first quarter of 2009. There was no depreciation and amortization expense for the first quarter of 2010 as the assets were treated as held for sale as of January 3, 2010.

4) Operating contribution and EBITDA for the first quarter of 2010 included special charges of $15.5 million. The special charges included (i) settlement costs and legal fees of $5.6 million related to a three-year old commercial contractual dispute involving the Company’s former subsidiary, CareCentrix, (ii) incremental charges of $9.5 million in connection with an agreement in principle, subject to final approvals, between the Company and the Department of Health and Human Services, Office of the Inspector General to resolve the matters which were subject to a 2003 OIG subpoena relating to the Company’s cost reports for the 1998 to 2000 periods and (iii) restructuring and merger and acquisition costs of $0.4 million.

For the first quarter of 2009, operating contribution and EBITDA included special charges of $0.9 million relating to restructuring and merger and acquisition costs.

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

5) Interest expense and other, net for the first quarter of 2009 included a realized loss on auction rate securities of approximately $0.4 million.

6) The Company’s effective tax rate relating to its continuing operations was 38.9% for the first quarter of 2010 and 32.3% for the first quarter of 2009.

During the first quarter of 2009, the Company recorded a pre-tax gain, net of transaction costs, of $5.8 million relating to the sale of several branch offices that specialized in pediatric home health care services. There was no income tax expense relating to the gain on sale of assets in 2009 due to the utilization of a capital loss carryforward. Excluding the impact of the non-recurring gain, the Company’s effective tax rate relating to its continuing operations would have been 41.5% for the first quarter of 2009.

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, including the ability to access capital markets; demographic changes; changes in, or failure to comply with, existing governmental regulations; the impact on our Company of recently passed healthcare reform legislation and its subsequent implementation through governmental regulations; changes in Medicare and Medicaid reimbursement levels; 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; 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; 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 (SEC), including the “Risk Factors” section contained in the Company’s annual report on Form 10-K for the year ended January 3, 2010.

— Total net revenues of $297.1 million, an increase of 7.5% compared to $276.4 million for the quarter ended March 29, 2009. Net revenues included home health episodic revenues of $228.5 million, up 13% compared to $202.2 million in the comparable 2009 period, and hospice revenues of $19.7 million, up approximately 12% from $17.6 million in the 2009 first quarter.

SOURCE Gentiva Health Services, Inc.