10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 1-15669

Gentiva Health Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-4335801
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3350 Riverwood Parkway, Suite 1400, Atlanta, GA 30339-3314

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (770) 951-6450

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s Common Stock, as of November 1, 2012, was 30,633,789.

INDEX

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited) – September 30, 2012 and December 31, 2011	3
	Consolidated Statements of Comprehensive Income (Unaudited) – Three and Nine Months Ended September  30, 2012 and 2011	4
	Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended September 30, 2012 and 2011	5
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	61
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
SIGNATURES		64
EXHIBIT INDEX		65

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Gentiva Health Services, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	156,049		$	164,912
Accounts receivable, less allowance for doubtful accounts of $10,520 and $11,562 at September 30, 2012 and December 31, 2011, respectively	254,094			290,589
Deferred tax assets, net	10,881			26,451
Prepaid expenses and other current assets	54,962			38,379
Total current assets	475,986			520,331
Notes receivable from CareCentrix	34,949			25,000
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 liabilities:
Current portion of long-term debt	$	21,693		$	14,903
Accounts payable	15,122			12,613
Payroll and related taxes	29,902			42,027
Deferred revenue	39,116			34,114
Medicare liabilities	27,979			23,066
Obligations under insurance programs	54,101			54,976
Accrued nursing home costs	20,566			24,223
Other accrued expenses	56,413			89,270
Total current liabilities	264,892			295,192
Long-term debt	916,432			973,222
Deferred tax liabilities, net	44,628			32,498
Other liabilities	35,511			26,885
Equity:
Gentiva shareholders’ equity:
Common stock, $0.10 par value; authorized 100,000,000 shares; issued 31,826,441 and 31,435,264 shares at September 30, 2012 and December 31, 2011, respectively	3,183			3,144
Additional paid-in capital	395,906			387,803
Treasury stock, 1,260,879 and 655,802 shares at September 30, 2012 and December 31, 2011, respectively	(17,852		)	(12,878		)
Accumulated deficit	(159,905		)	(178,131		)
Total Gentiva shareholders’ equity	221,332			199,938
Noncontrolling interests	1,419			2,593
Total equity	222,751			202,531
Total liabilities and equity	$	1,484,214		$	1,530,328

See notes to consolidated financial statements.

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Gentiva Health Services, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
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 expenses	(161,207		)	(182,634		)	(498,842		)	(547,005		)
Goodwill, intangibles and other long-lived asset impairment	(19,132		)	(643,305		)	(19,132		)	(643,305		)
Gain on sale of businesses	—			—			5,447			—
Dividend income	—			3,977			—			8,590
Interest income	653			659			2,011			1,963
Interest expense and other	(23,547		)	(21,332		)	(69,062		)	(70,305		)
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(2,678		)	(635,830		)	28,722			(608,343		)
Income tax benefit (expense)	1,297			87,538			(10,878		)	77,007
Equity in net earnings of CareCentrix	1,006			68,692			1,006			69,582
(Loss) income from continuing operations	(375		)	(479,600		)	18,850			(461,754		)
Discontinued operations, net of tax	—			5,983			—			7,096
Net (loss) income	(375		)	(473,617		)	18,850			(454,658		)
Less: Net income attributable to noncontrolling interests	(148		)	(134		)	(624		)	(452		)
Net (loss) income attributable to Gentiva shareholders	$	(523	)	$	(473,751	)	$	18,226		$	(455,110	)
Comprehensive (loss) income	$	(375	)	$	(473,617	)	$	18,850		$	(455,136	)
Basic earnings per common share:
(Loss) income from continuing operations attributable to Gentiva shareholders	$	(0.02	)	$	(15.82	)	$	0.60		$	(15.27	)
Discontinued operations, net of tax	—			0.20			—			0.23
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)	$	(15.62	)	$	0.60		$	(15.04	)
Weighted average shares outstanding	30,423			30,337			30,496			30,257
Diluted earnings per common share:
(Loss) income from continuing operations attributable to Gentiva shareholders	$	(0.02	)	$	(15.82	)	$	0.60		$	(15.27	)
Discontinued operations, net of tax	—			0.20			—			0.23
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)	$	(15.62	)	$	0.60		$	(15.04	)
Weighted average shares outstanding	30,423			30,337			30,612			30,257
Amounts attributable to Gentiva shareholders:
(Loss) income from continuing operations	$	(523	)	$	(479,734	)	$	18,226		$	(462,206	)
Discontinued operations, net of tax	—			5,983			—			7,096
Net (loss) income	$	(523	)	$	(473,751	)	$	18,226		$	(455,110	)

See notes to consolidated financial statements.

4

Gentiva Health Services, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	For the Nine Months Ended
	September 30, 2012			September 30, 2011
OPERATING ACTIVITIES:
Net income (loss)	$	18,850		$	(454,658	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,375			22,534
Amortization and write-off of debt issuance costs	10,391			12,857
Provision for doubtful accounts	4,183			5,744
Equity-based compensation expense	5,722			5,863
Windfall tax benefits associated with equity-based compensation	—			(194		)
Goodwill, intangibles and other long-lived asset impairment	19,132			643,305
Gain on sale of businesses	(5,447		)	(9,088		)
Equity in net earnings of CareCentrix	(1,006		)	(69,582		)
Deferred income tax expense (benefit)	27,700			(95,672		)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	31,751			(6,431		)
Prepaid expenses and other current assets	(24,591		)	11,055
Accounts payable	2,509			(1,876		)
Payroll and related taxes	(12,180		)	(16,328		)
Deferred revenue	5,002			3,231
Medicare liabilities	4,999			(11,726		)
Obligations under insurance programs	(875		)	(7,347		)
Accrued nursing home costs	(3,657		)	(2,489		)
Other accrued expenses	(35,887		)	(14,518		)
Other, net	6,670			(333		)
Net cash provided by operating activities	74,641			14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	(9,235		)	(14,571		)
Proceeds from sale of businesses, net of cash transferred	5,720			142,333
Acquisition of businesses, net of cash acquired	(22,520		)	(320		)
Net cash (used in) provided by investing activities	(26,035		)	127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421			7,005
Windfall tax benefits associated with equity-based compensation	—			194
Repayment of long-term debt	(50,000		)	(43,438		)
Repurchase of common stock	(4,974		)	—
Debt issuance costs	(4,125		)	(13,457		)
Repayment of capital lease obligations	(106		)	(210		)
Other	(685		)	(543		)
Net cash used in financing activities	(57,469		)	(50,449		)
Net change in cash and cash equivalents	(8,863		)	91,340
Cash and cash equivalents at beginning of period	164,912			104,752

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Cash and cash equivalents at end of period	$	156,049	$	196,092
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	67,735	$	69,922
Income taxes paid	$	4,260	$	9,972

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY:

In connection with the acquisition of The Healthfield Group, Inc. on February 28, 2006, the Company received 14,334 shares of common stock in the second quarter of 2011, from the Healthfield escrow account to satisfy certain pre-acquisition liabilities paid by the Company.

On August 24, 2012, CareCentrix elected to draw seller financing from the escrow fund pursuant to the terms of a stock purchase agreement and, as such, the Company reclassified its escrow receivable of approximately $9.9 million from prepaid expenses and other current assets to notes receivable from CareCentrix. See Note 6 for additional information.

See notes to consolidated financial statements.

6

Gentiva Health Services, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Background and Basis of Presentation

Gentiva Health Services, Inc. (“Gentiva” or the “Company”) provides home health services and hospice care throughout most of the United States. The Company’s continuing operations involve servicing its patients and customers through (i) its Home Health segment and (ii) its Hospice segment.

Effective August 31, 2012, the Company completed its acquisition of the assets and business, pursuant to an asset purchase agreement, of Family Home Care Corporation, a provider of home health and hospice services in the Washington and Idaho markets, for consideration of approximately $12.3 million.

Effective August 31, 2012, the Company completed its acquisition of the assets and business, pursuant to an asset purchase agreement, of North Mississippi Hospice, a provider of hospice services with offices in Oxford, Southhaven and Tupelo, Mississippi, for consideration of approximately $4.7 million.

Effective July 22, 2012, the Company completed its acquisition of the assets and business of Advocate Hospice, a provider of hospice services located in Danville, Indiana, for consideration of approximately $5.5 million, which included entering into an option purchase agreement with a third party covering membership interests in Advocate Hospice. Additional consideration of up to$2 million is payable under the option agreement if certain earnout conditions are met.

During the second quarter of 2012, the Company sold 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 during the first nine months of 2012 and established a receivable of approximately $0.5 million.

Effective October 14, 2011, the Company sold its homemaker services agency business in Illinois (“IDOA”) pursuant to an asset purchase agreement. The financial results of this business are presented as discontinued operations in the Company’s consolidated financial statements for the three and nine months ended September 30, 2011. See Note 3 for additional information.

Effective September 10, 2011, the Company completed the sale of its Rehab Without Walls^® business. The financial results of the Rehab Without Walls^® business are presented as discontinued operations in the Company’s consolidated financial statements for the three and nine months ended September 30, 2011. See Note 3 for additional information.

In addition, the Company has completed various other transactions that have impacted the Company’s results of operations and financial condition and are reflected therein as further described in Note 3.

The accompanying interim consolidated financial statements are unaudited, and have been prepared by the Company using accounting principles consistent with those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair statement of financial position, results of operations and cash flows for each period presented. Certain information and disclosures normally included in the consolidated statements of financial position, comprehensive income and cash flows prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. Results for interim periods are not necessarily indicative of results for a full year. The year-end balance sheet data was derived from audited financial statements.

The Company’s consolidated financial statements include the accounts and operations of the Company and its subsidiaries in which the Company owns more than a 50 percent interest. Noncontrolling interests, which relate to the minority ownership held by third party investors in certain of the Company’s hospice programs, are reported below net income under the heading “Net income attributable to noncontrolling interests” in the Company’s consolidated statements of comprehensive income and presented as a component of equity in the Company’s consolidated balance sheets. All balances and transactions between the consolidated entities have been eliminated.

7

Note 2. Accounting Policies

Cash and Cash Equivalents

The Company considers all investments with a maturity date three months or less from their date of acquisition to be cash equivalents, including money market funds invested in U.S. Treasury securities, short-term treasury bills and commercial paper. Cash and cash equivalents also included amounts on deposit with several major financial institutions in excess of the maximum amount insured by the Federal Deposit Insurance Corporation. Management believes that these major financial institutions are viable entities.

The Company had operating funds of approximately $6.0 million and $5.0 million at September 30, 2012 and December 31, 2011, respectively, which relate exclusively to a non-profit hospice operation managed in Florida.

Investments

At both September 30, 2012 and December 31, 2011, the Company had no remaining ownership interest in CareCentrix Holdings Inc. During the third quarter of 2011, the Company sold its remaining investment in CareCentrix Holdings Inc. The Company recorded accumulated and unpaid dividends on the preferred shares it held of approximately $4.0 million and $8.6 million for the third quarter and first nine months of 2011, respectively, which are reflected in dividend income in the Company's consolidated statements of comprehensive income. The Company also recorded a net gain of approximately $68.3 million, which is reflected in equity in net earnings of CareCentrix, including gain on sale in the Company's consolidated statements of comprehensive income. See Note 6 for additional information.

At September 30, 2012 and December 31, 2011, the Company had assets of $28.4 million and $26.3 million, respectively, held in a Rabbi Trust for the benefit of participants in the Company’s non-qualified defined contribution retirement plan. The corresponding amounts payable to the plan participants are equivalent to the underlying value of the assets held in the Rabbi Trust. Assets held in a Rabbi Trust and amounts payable to plan participants are classified in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets.

Debt Issuance Costs

The Company amortizes deferred debt issuance costs over the term of its credit agreement and senior notes. As of September 30, 2012 and December 31, 2011, the Company had unamortized debt issuance costs of $47.6 million and $53.7 million, respectively, recorded in other assets in the Company’s consolidated balance sheets. During the first nine months of 2012, the Company incurred incremental debt issuance costs of approximately $5.3 million in connection with an amendment to the Company’s credit agreement. Approximately $4.1 million of these costs have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate methodology. In addition, the Company wrote off prepaid debt issuance costs of approximately $0.5 million, which is reflected in interest expense in the Company’s consolidated statement of comprehensive income, associated with the reduction in the revolving credit facility.

During the first nine months of 2011, the Company (i) incurred incremental debt issuance costs of approximately $10.9 million and (ii) recorded a write-off of deferred debt issuance costs of approximately $3.5 million in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

Fixed Assets

Fixed assets, including costs of Company developed software, are stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the life of the lease or the life of the improvement. Repairs and maintenance costs are expensed as incurred. As of September 30, 2012 and December 31, 2011, fixed assets, net were $43.1 million and $46.2 million, respectively.

Goodwill and Other Indefinite-Lived Intangible Assets

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if current events or circumstances require an interim impairment assessment. The Company allocates goodwill to its various operating units upon the acquisition of the assets or stock of another third party business operation. The Company compares the fair value of each operating unit to its carrying amount to determine if there is a potential impairment of goodwill and other indefinite-lived intangible assets. If the fair value of an operating unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the operating unit is less than the carrying value of its goodwill. To determine the fair value of the Company's operating units, the Company uses a present value

8

(discounted cash flow) technique corroborated by market multiples when available, a reconciliation to market capitalization or other valuation methodologies, and reasonableness tests, as appropriate.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values of other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.

The Company completed its annual impairment test of goodwill and indefinite-lived intangible assets for the Company's operating units as of December 31, 2011, which indicated that there was no additional impairment. See Note 8 for additional information.

Obligations Under Self Insurance Programs

As of September 30, 2012 and December 31, 2011, the Company’s obligations under insurance programs were $54.1 million and $55.0 million, respectively. The decrease is primarily attributable to favorable claim trends and the timing of payments.

Workers’ compensation and professional and general liability expenses were $5.8 million and $13.4 million for the third quarter and first nine months of 2012, respectively, as compared to $5.1 million and $11.2 million for the corresponding periods of 2011. Employee health and welfare expenses were $20.1 million and $66.3 million for the third quarter and first nine months of 2012, respectively, as compared to $24.3 million and $68.5 million for the corresponding periods of 2011.

Nursing Home Costs

For patients receiving nursing home care under a state Medicaid program who elect hospice care under Medicare or Medicaid, the Company contracts with nursing homes for the nursing homes to provide patients’ room and board services. The state must pay the Company, in addition to the applicable Medicare or Medicaid hospice daily or hourly rate, an amount equal to at least 95 percent of the Medicaid daily nursing home rate for room and board furnished to the patient by the nursing home. Under the Company’s standard nursing home contracts, the Company pays the nursing home for these room and board services at the Medicaid daily nursing home rate. Nursing home costs are partially offset by nursing home net revenue, and the net amount is included in cost of services sold in the Company’s consolidated statements of comprehensive income.

Note 3. Acquisitions and Dispositions

Acquisitions

Family Home Care Corporation

Effective August 31, 2012, the Company completed its acquisition of the assets and business of Family Home Care Corporation, one of the leading providers of home health and hospice services in the Washington and Idaho markets. Total consideration of $12.3 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.6 million), identifiable intangible assets ($6.2 million) and other assets ($0.5 million).

North Mississippi Hospice

Effective August 31, 2012, the Company completed its acquisition of the assets and business of North Mississippi Hospice, a provider of hospice services with offices in Oxford, Southhaven and Tupelo, Mississippi. Total consideration of $4.7 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($3.3 million) and identifiable intangible assets ($1.4 million).

Advocate Hospice

Effective July 22, 2012, the Company completed its acquisition of the assets and business of Advocate Hospice, a provider of hospice services located in Danville, Indiana, for consideration of $5.5 million, excluding transaction costs and subject to post-closing adjustments, which consideration included entering into an option purchase agreement with a third party covering membership interests in Advocate Hospice. Additional consideration of up to $2.0 million is payable under the option agreement if certain earnout conditions are met, which the Company valued at $1.9 million, on a discounted cash flow basis, and recorded as other accrued expenses on the Company's consolidated balance sheet at September 30, 2012. The consideration was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.8 million) and identifiable intangible assets ($1.6 million).

9

Odyssey Healthcare of Augusta, LLC

Effective April 29, 2011, the Company purchased the outstanding member units representing the noncontrolling interest in Odyssey Healthcare of Augusta, LLC (“Augusta”) for approximately $0.3 million. As a result of the transaction, the Company owns 100 percent of the outstanding member units of Augusta.

Dispositions

Gentiva Consulting, Louisiana Home Health and Hospice Dispositions

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.

During the second quarter of 2012, the Company sold 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 during the first nine months of 2012 and established a receivable of approximately $0.5 million.

In connection with the sales, the Company recorded a gain on sale of businesses in the Company’s consolidated statements of comprehensive income of approximately $5.4 million for the first nine months of 2012.

Home Health and Hospice Branch Dispositions

In the fourth quarter of 2011, the Company entered into asset purchase agreements to sell the assets of certain home health branches in Utah, Michigan and Nevada, as well as a hospice branch in Texas. In addition, the Company entered into an option agreement to sell the assets of the Company’s home health branch in Brooklyn, New York pending approval by the Public Health Council and New York State Agencies.

Homemaker Services Agency and Rehab Without Walls^® Dispositions

Effective October 14, 2011, the Company completed the sale of its IDOA business to Premier Home Health Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $2.4 million, consisting of (i) cash proceeds of approximately $2.0 million and (ii) an escrow fund of approximately $0.4 million, to be received by the Company subject to certain post closing conditions. During the first nine months of 2012, the Company reduced the escrow fund receivable to approximately $0.3 million as a result of certain post closing conditions and received such funds in July 2012.

Effective September 10, 2011, the Company completed the sale of its Rehab Without Walls^® business to Southern Home Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $9.8 million. The consideration consisted of (i) cash proceeds of approximately $9.2 million and (ii) an escrow fund of approximately $0.6 million which was received by the Company in September 2012.

Net revenues and operating results for the third quarter and first nine months of 2011 for the homemaker services agency business in Illinois and the Rehab Without Walls^® and HME and IV businesses were (in thousands):

	Third Quarter			First Nine Months
	2011			2011
Net revenues	$	6,699		$	22,636
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

Note 4. Fair Value of Financial Instruments

The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for the notes receivable from CareCentrix and long-term debt. The fair values for the notes receivable from CareCentrix and non-financial assets, such as fixed assets, intangible assets and goodwill, are measured periodically and adjustments recorded only if an

10

impairment charge is required. The carrying amount of the Company’s accounts receivable, accounts payable and certain other current liabilities approximates fair value due to their short maturities.

Fair value is defined under authoritative guidance as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial Instruments Recorded at Fair Value

The Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis was as follows (in thousands):

	September 30, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	54,066	$	—	$	—	$	54,066	$	54,006	$	—	$	—	$	54,006
Rabbi Trust:
Mutual funds	22,574		—		—		22,574		25,626		—		—		25,626
Money market funds	5,794		—		—		5,794		697		—		—		697
Total assets	$	82,434	$	—	$	—	$	82,434	$	80,329	$	—	$	—	$	80,329
Liabilities:
Payables to plan participants	$	28,368	$	—	$	—	$	28,368	$	26,323	$	—	$	—	$	26,323
Acquisition contingent liability	—		—		1,900		1,900		—		—		—		—
Total liabilities	$	28,368	$	—	$	1,900	$	30,268	$	26,323	$	—	$	—	$	26,323

Assets held in the Rabbi Trust are held for the benefit of participants in the Company’s non-qualified defined contribution retirement plan. The value of assets held in the Rabbi Trust is based on quoted market prices of securities and investments, including money market accounts and mutual funds, maintained within the Rabbi Trust. The corresponding amounts payable to plan participants are equivalent to the underlying value of assets held in the Rabbi Trust. Assets held in the Rabbi Trust and amounts payable to plan participants are classified in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets. Money market funds held in the Company’s account represent cash equivalents and were classified in cash and cash equivalents in the Company’s consolidated balance sheets at September 30, 2012 and December 31, 2011.

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Other Financial Instruments

The carrying amount and estimated fair value of the Company’s other financial instruments were as follows (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Note receivable from CareCentrix	$	25,000	$	25,309	$	25,000	$	26,600
Seller financing note receivable from CareCentrix	9,949		5,533		—		—
Liabilities:
Long-term obligations	$	938,125	$	908,975	$	988,125	$	863,313

The estimated fair values of the notes receivable from CareCentrix were determined from Level 3 inputs based on an income approach using the discounted cash flow method. The fair values represent the net present value of (i) the after tax cash flows relating to each note's annual income stream plus (ii) the return of the invested principal using a maturity date of March 19, 2017, after considering assumptions relating to risk factors and economic conditions. See Note 6 for additional information.

In determining the estimated fair value of long-term debt, Level 2 inputs based on the use of bid and ask prices were considered. Due to the infrequent number of transactions that occur related to the long-term debt, the Company does not believe an active market exists for purposes of this disclosure.

Note 5. Net Revenues and Accounts Receivable

Net revenues in the Home Health and Hospice segments were derived from all major payer classes and were as follows (in millions):

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Medicare:
Home Health	$	185.0	$	200.3	(7.6	)%	$	561.7	$	601.6	(6.6	)%
Hospice	177.4		182.0		(2.5	)%	539.0		543.0		(0.7	)%
Total Medicare	362.4		382.3		(5.2	)%	1,100.7		1,144.6		(3.8	)%
Medicaid and Local Government	19.1		21.2		(9.7	)%	56.9		63.2		(10.0	)%
Commercial Insurance and Other:
Paid at episodic rates	21.4		19.3		10.9	%	62.8		58.1		8.0	%
Other	21.5		26.9		(20.4	)%	67.4		83.7		(19.4	)%
Total Commercial Insurance and Other	42.9		46.2		(7.3	)%	130.2		141.8		(8.2	)%
Total net revenues	$	424.4	$	449.7	(5.6	)%	$	1,287.8	$	1,349.6	(4.6	)%

For the third quarter and first nine months of 2012, the Company recorded hospice Medicare cap expense of $3.0 millionand $6.2 million, respectively, which is reflected in net revenues in the Company’s consolidated statements of comprehensive income. For the third quarter and first nine months of 2011, the Company recorded hospice Medicare cap expense of $1.7 million and $3.4 million, respectively. The Medicare payment cap, which is calculated for each provider by the Medicare fiscal intermediary at the end of the hospice cap period, is determined by multiplying the number of first time patient admissions during the cap period by the Medicare cap amount, subject to certain adjustments. Medicare revenue paid to a provider during the twelve month cap period that ends annually on October 31 cannot exceed the aggregate Medicare payment cap calculated for the related twelve month period. As of September 30, 2012 and December 31, 2011, the Company had Medicare cap liabilities of $20.3 million and $15.6 million, respectively, which was reflected in Medicare liabilities in the Company’s consolidated balance sheets.

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Accounts receivable attributable to major payer sources of reimbursement were as follows (in thousands):

	September 30, 2012			December 31, 2011
Medicare	$	190,997		$	217,028
Medicaid and Local Government	36,608			46,553
Commercial Insurance and Other	37,009			38,570
Gross Accounts Receivable	264,614			302,151
Less: Allowance for doubtful accounts	(10,520		)	(11,562		)
Net Accounts Receivable	$	254,094		$	290,589

The Commercial Insurance and Other payer group included self-pay accounts receivable relating to patient co-payments of $1.7 million and $2.1 million, respectively, as of September 30, 2012 and December 31, 2011.

Note 6. Investment in and Notes Receivable from CareCentrix

Effective September 19, 2011, the Company sold its remaining investment in CareCentrix Holdings. The Company recorded accumulated and unpaid dividends on the preferred shares of approximately $4.0 million and $8.6 million for the third quarter and first nine months of 2011, respectively, which were reflected in dividend income in the Company's consolidated comprehensive statements of income. The Company also recorded a net gain of approximately $68.3 million, including an escrow of approximately $10.6 million, which is reflected in equity in net earnings of CareCentrix, in the Company's consolidated comprehensive statements of income.

The Company holds a $25 million subordinated promissory note from CareCentrix, Inc. In connection with the sale of the Company’s ownership interest in CareCentrix Holdings on September 19, 2011, the maturity date of the note was extended to the earlier of March 19, 2017, which is five years, six months from the closing of the transaction, or a sale of CareCentrix Holdings. The note bears interest at a fixed rate of 10 percent, which is payable quarterly, provided that CareCentrix remains in compliance with its senior debt covenants. Interest on the CareCentrix promissory note, which is included in interest income in the Company’s consolidated statements of comprehensive income, amounted to $0.6 million and $1.9 million for the third quarter and first nine months of both 2012 and 2011, respectively.

Pursuant to the terms of the stock purchase agreement, approximately $10.6 million of the sale price due to the Company was placed into an escrow fund for future indemnification claims. In February and June 2012, approximately $0.7 million of the escrow fund was paid out to cover expenses related to an indemnified claim.

On August 24, 2012, the Company received notification from CareCentrix of its election to draw seller financing from the escrow fund pursuant to the terms of the stock purchase agreement. As such, the Company reclassified its escrow receivable of approximately $9.9 million from prepaid expenses and other current assets to a note receivable from CareCentrix on the Company's consolidated balance sheet as of September 30, 2012. The note receivable, which bears interest at 14 percent through 2012 and 18 percent thereafter, matures on the earlier of March 19, 2017 or upon the sale of CareCentrix Holdings. Interest on the note is payable quarterly, in kind and will accrete as additional principal on the note. On April 1 of each year, 40 percent of the accreted interest for the prior calendar year will be paid in cash. The Company expects to record interest income at the time of receipt of the interest payments.

On September 17, 2012, the Company received a formal notice of claims for indemnification from CareCentrix. In the notice, CareCentrix asserted that the total claimed amounts exceed the total amount in escrow and demanded that the entire principal amount of the seller financing note be reduced to zero. Aresponse to the notice of claims from the Company, together with the other original sellers, is in preparation. Based on the information the Company has at this time, the Company is unable to assess the probable outcome or potential liability, if any, arising from this notice of claims on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this matter at this time.

The Company recognized $1.0 million of equity in the net earnings of CareCentrix for both the third quarter and first nine months of 2012, as compared to $68.7 million and $69.6 million for the third quarter and first nine months of 2011, respectively.

The Company’s financing receivables consist of the previously described $25 million subordinated promissory note from CareCentrix, Inc. dated September 19, 2011 and a $9.9 million seller financing note from CareCentrix, Inc. dated August 24, 2012. The Company measures impairment based on the present value of expected cash flows after considering assumptions relating to risk factors and economic conditions. On an ongoing basis, the Company assesses the credit quality based on the

13

Company’s review of CareCentrix, Inc.’s financial position and receipt of interest payments when due. Based on the Company’s analysis, as of September 30, 2012 and December 31, 2011, the Company had no allowances for credit losses.

Note 7. Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

The Company recorded net charges relating to restructuring, acquisition and integration activities, and legal settlements 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, which were recorded in selling, general and administrative expenses in the Company’s consolidated statements of comprehensive income.

Cost Savings Initiatives and Other Restructuring Costs

During the last half of 2011, the Company undertook a comprehensive review of its branch structure, support infrastructure and other significant expenditures in order to reduce its ongoing operating costs given the challenging rate environment the Company was facing. As a result of this effort, the Company closed or divested of 34 home health branches and 9 hospice branches during the fourth quarter of 2011 and 4 home health branches in the first quarter of 2012, and completed significant reductions in staffing levels in regional, area and corporate support functions. In connection with these activities, the Company recorded charges of $0.1 million and $1.5 million in the third quarter and first nine months of 2012, respectively, related to severance costs, facility lease and other costs.

During the third quarter and first nine months of 2011, the Company recorded charges of $0.8 million and $2.6 million, respectively, in connection with restructuring activities, including severance costs in connection with the termination of personnel and facility lease and other costs. These charges included non-cash charges of approximately $0.4 million, recorded in the first nine months of 2011, associated with the acceleration of compensation expense relating to future vesting of stock options under severance agreements for certain of the Company’s former executive officers.

Acquisition and Integration Activities

The Company recorded positive adjustments of $1.0 million for the first nine months of 2012 related to acquisition and integration activities. During the third quarter and first nine months of 2011, the Company recorded charges of $2.5 million and $7.3 million, respectively, in connection with costs of acquisition and integration activities, primarily related to the Odyssey transaction. These costs consisted of legal, accounting and other professional fees and expenses, severance costs and facility lease costs.

Legal Settlements

During the first nine months of 2012, the Company recorded legal settlements of $5.0 million related to certain of the wage and hour litigation and paid approximately $26.0 million in settlement with the United States regarding Odyssey’s provision of continuous care services prior to the Company’s acquisition of Odyssey in August 2010.

During the third quarter and first nine months of 2011, the Company recorded charges of $6.5 million and $25.0 million, respectively, related to discussions of potential legal settlements associated with the continuous care investigation assumed in connection with the Odyssey transaction.

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The costs incurred and cash expenditures associated with these activities by component were as follows (in thousands):

	Cost Savings and Other Restructuring			Acquisition & Integration			Legal Settlements			Total
Balance at December 31, 2010	$	2,893		$	3,984		$	12,500		$	19,377
Charge in first quarter 2011	1,259			2,506			—			3,765
Cash expenditures	(1,490		)	(2,346		)	—			(3,836		)
Ending balance at March 31, 2011	2,662			4,144			12,500			19,306
Charge in second quarter 2011	504			2,242			18,500			21,246
Cash expenditures	(788		)	(2,198		)	(12,500		)	(15,486		)
Non-cash expenditures	(407		)	—			—			(407		)
Ending balance at June 30, 2011	1,971			4,188			18,500			24,659
Charge in third quarter 2011	824			2,520			6,500			9,844
Cash expenditures	(710		)	(1,491		)	—			(2,201		)
Ending balance at September 30, 2011	$	2,085		$	5,217		$	25,000		$	32,302
Balance at December 31, 2011	$	8,671		$	3,708		$	26,000		$	38,379
Charge in first quarter 2012	842			(409		)	4,958			5,391
Cash expenditures	(3,527		)	(755		)	(25,958		)	(30,240		)
Non-cash expenditures	19			(216		)	—			(197		)
Ending balance at March 31, 2012	6,005			2,328			5,000			13,333
Charge in second quarter 2012	542			(517		)	—			25
Cash expenditures	(2,462		)	(421		)	(5,000		)	(7,883		)
Non-cash expenditures	(114		)	—			—			(114		)
Ending balance at June 30, 2012	3,971			1,390			—			5,361
Charge in third quarter 2012	98			(45		)	—			53
Cash expenditures	(1,466		)	(143		)	—			(1,609		)
Non-cash expenditures	(4		)	—			—			(4		)
Ending balance at September 30, 2012	$	2,599		$	1,202		$	—		$	3,801

The balance of unpaid charges relating to cost savings initiatives and other restructuring costs, acquisition and integration activities and legal settlements approximated $3.8 million at September 30, 2012 and $38.4 million at December 31, 2011, which were included in other accrued expenses in the Company’s consolidated balance sheets.

Note 8. Identifiable Intangible Assets and Goodwill

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if current events or circumstances require an interim impairment assessment. The Company allocates goodwill to its various reporting units upon the acquisition of the assets or stock of another third party business operation. The Company compares the fair value of each reporting unit to its carrying amount to determine if there is a potential impairment of goodwill and other indefinite-lived intangible assets. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than the carrying value of its goodwill. To determine the fair value of the Company's reporting units, the Company uses a present value (discounted cash flow) technique corroborated by market multiples when available, a reconciliation to market capitalization or other valuation methodologies and reasonableness tests, as appropriate.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values of other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.

 The Company operations include two reportable segments: Home Health and Hospice. To determine fair value, the Company considered the income approach, which determines fair value based on estimated future cash flows of each reporting

15

unit, discounted by an estimated weighted-average cost of capital (“discount rate”), which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. The Company determined the discounted cash flow as the best indicator to determine fair value.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. The Company performed an interim impairment test as of August 31, 2012, due to patient census growth that was not in line with previous projections. For purposes of the interim impairment test, the Company applied certain assumptions that included, but were not limited to, patient census projections, gross margin assumptions consistent with the Company's historical trends combined with the expectations of operating efficiencies and economies of scale. The Company used discount rates of 11.6 percent and 10.5 percent to calculate the fair value of its Home Health and Hospice reporting units, respectively. Discount rates of 12.1 percent and 11.7 percent, respectively, percent were used in the annual impairment test performed as of December 31, 2011.

Although the Company determined that there was no goodwill impairment as of August 31, 2012, the future occurrence of a potential indicator of impairment, such as, but not limited to, a significant adverse change in legal factors or business climate, reductions of projected patient census, an adverse action or assessment by a regulator, as well as other unforeseen factors, would require an interim assessment for some or all of the reporting units. Such future assessment may result in an impairment charge if material.

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 remaining trade name balances for the third quarter and first nine months of 2012, which is reflected in goodwill, intangibles and other long-lived asset impairment in the Company's consolidated statements of comprehensive income.

During the third quarter of 2011, the Company determined a triggering event had occurred and performed an interim impairment test of its identifiable intangible assets and goodwill in response to changes in its business climate, uncertainties around Medicare reimbursement as the federal government worked to reduce the federal deficit as well as a significant decline in the price of the Company's common stock during the quarter. The impairment assessment was completed as of August 31, 2011. The interim test concluded that the fair value of certain identifiable intangible assets, as well as goodwill, was less than their carrying value as of that date. The Company utilized a discounted cash flow approach to determine the fair values. The Company then determined the implied fair value of goodwill by determining the fair value of all assets and liabilities. As a result of this process, the Company recorded a non-cash charge of approximately $602.1 million to reduce the carrying value of certain identifiable intangible assets, as well as goodwill, to their estimated fair values. The impairment loss is included within goodwill, intangibles and other long-lived assets impairment in the Company's consolidated statements of comprehensive income for the third quarter and first nine months of 2011.

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The gross carrying amount and accumulated amortization of each category of identifiable intangible assets as of September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012									December 31, 2011									Useful Life
	Home Health			Hospice			Total			Home Health			Hospice			Total
Amortized intangible assets:
Covenants not to compete	$	1,667		$	15,685		$	17,352		$	1,473		$	15,675		$	17,148		2-5 Years
Less: accumulated amortization	(1,433		)	(13,488		)	(14,921		)	(1,411		)	(9,144		)	(10,555		)
Net covenants not to compete	234			2,197			2,431			62			6,531			6,593
Customer relationships	27,196			910			28,106			27,196			910			28,106			5-10 Years
Less: accumulated amortization	(17,064		)	(367		)	(17,431		)	(15,304		)	(299		)	(15,603		)
accumulated impairment losses	(27		)	—			(27		)	(27		)	—			(27		)
Net customer relationships	10,105			543			10,648			11,865			611			12,476
Tradenames	18,215			16,730			34,945			18,215			16,730			34,945			5-10 Years
Less: accumulated amortization	(11,794		)	(3,608		)	(15,402		)	(10,522		)	(2,346		)	(12,868		)
accumulated impairment losses	(6,421		)	(13,122		)	(19,543		)	(411		)	—			(411		)
Net tradenames	—			—			—			7,282			14,384			21,666
Amortized intangible assets	10,339			2,740			13,079			19,209			21,526			40,735
Indefinite-lived intangible assets:
Medicare licenses and certificates of need	225,226			102,587			327,813			220,285			98,526			318,811
Less: accumulated impairment losses	(144,672		)	(520		)	(145,192		)	(144,672		)	—			(144,672		)
Net Medicare licenses and certificates of need	80,554			102,067			182,621			75,613			98,526			174,139
Total identifiable intangible assets	$	90,893		$	104,807		$	195,700		$	94,822		$	120,052		$	214,874

During the first nine months of 2012, the Company recorded a charge of approximately $0.5 million to reflect the transfer of the Medicare licenses associated with the sale of the four hospice branches in Louisiana, which is recorded in gain on sale of businesses in the Company’s consolidated statements of comprehensive income for the nine months endedSeptember 30, 2012. The Company recorded amortization expense of approximately $2.6 million and $8.7 million for the third quarter and first nine months of 2012, respectively, and $3.3 million and $9.8 million for the third quarter and first nine months of 2011, respectively. The estimated amortization expense for the remainder of 2012 is $1.3 million and for each of the next five succeeding years approximates $4.1 million for 2013, $2.4 million for 2014, $2.3 million for 2015, $1.4 million for 2016, and $1.2 million for 2017.

The gross carrying amount of goodwill as of September 30, 2012 and December 31, 2011 and activity during the first nine months of 2012 were as follows (in thousands):

	Home Health			Hospice			Total
Balance at December 31, 2010	$	264,679		$	820,387		$	1,085,066
Goodwill adjustment	2,379			11,261			13,640
Accumulated impairment losses	(263,370		)	(193,667		)	(457,037		)
Balance at December 31, 2011	3,688			637,981			641,669
Goodwill acquired during 2012	5,331			9,364			14,695
Balance at September 30, 2012	$	9,019		$	647,345		$	656,364

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During 2011, the Company reclassified deferred tax assets associated with the classification of deductible intangible assets and goodwill related to a 2006 acquisition. The impact of this reclassification was an increase in goodwill in the Home Health and Hospice segments of $2.4 million and $11.3 million, respectively, and a decrease in non-current deferred tax assets of $13.6 million.

Note 9. Earnings Per Share

Basic and diluted earnings per share for each period presented have been computed by dividing income from continuing operations, discontinued operations, net of tax and net income attributable to Gentiva shareholders by the weighted average number of shares outstanding for each respective period. The computations of the basic and diluted per share amounts were as follows (in thousands, except per share amounts):

	For the Three Months Ended										For the Nine Months Ended
	September 30, 2012					September 30, 2011					September 30, 2012		September 30, 2011
Net (loss) income attributable to Gentiva shareholders	$	(523	)			$	(473,751	)			$	18,226	$	(455,110	)
Basic weighted average common shares outstanding	30,423					30,337					30,496		30,257
Shares issuable upon the assumed exercise of stock options and under stock plans for employees and directors using the treasury stock method	—			(1	)	—			(1	)	116		—			(1	)
Diluted weighted average common shares outstanding	30,423					30,337					30,612		30,257
Basic earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)
Diluted earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)

(1) Due to the reported net loss, there is no dilutive share effect for these reporting periods.

For the third quarter and first nine months of 2012, approximately 3.1 million and 3.3 million stock options and restricted stock awards, respectively, were excluded from the computations of diluted earnings per share, as their inclusion would be anti-dilutive. For the third quarter and first nine months of 2011, approximately 3.2 million and 1.6 million stock options and restricted stock awards, respectively, were excluded from the computations of diluted earnings per share as their inclusion would be anti-dilutive.

Note 10. Long-Term Debt

Credit Arrangements

At September 30, 2012, the Company’s credit arrangements included a senior secured credit agreement providing (i) a $200 million Term Loan A facility, (ii) a $550 million Term Loan B facility and (iii) a $110 million revolving credit facility (collectively, the “Credit Agreement”), and $325 million aggregate principal amount of 11.5% Senior Notes due 2018 (the “Senior Notes”). The Credit Agreement’s revolving credit facility also includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as swing line loans.

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As of September 30, 2012 and December 31, 2011, the Company’s long-term debt consisted of the following (in thousands):

	September 30, 2012			December 31, 2011
Credit Agreement:
Term Loan A, maturing August 17, 2015	$	146,693		$	158,653
Term Loan B, maturing August 17, 2016	466,432			504,472
11.5% Senior Notes due 2018	325,000			325,000
Total debt	938,125			988,125
Less: current portion of long-term debt	(21,693		)	(14,903		)
Total long-term debt	$	916,432		$	973,222

In response to uncertainties around Medicare reimbursement rates and to ensure compliance under its Credit Agreement as of December 31, 2011, on November 28, 2011, the Company entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”). In addition, on March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement (“Amendment No. 3”) in order to provide increased flexibility in the Company’s debt covenants over the remaining term of the Credit Agreement and reasonable assurance with respect to the Company’s ability to remain in compliance with its debt covenants beyond January 1, 2012, including the maximum consolidated leverage ratio and the minimum interest coverage ratio, which are discussed below under “Debt Covenants.” Among other things, Amendment No. 3 also reduced the revolving credit facility from $125 million to $110 million.

As of September 30, 2012, advances under the revolving credit facility may be made, and letters of credit may be issued, up to the $110 million borrowing capacity of the facility at any time prior to the facility expiration date of August 17, 2015. In connection with the reduction in the revolving credit facility, the Company wrote-off prepaid debt issuance costs of approximately $0.5 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the first nine months of 2012, and capitalized costs associated with the revolving credit facility of approximately $0.8 million. Outstanding letters of credit were $45.4 million and $41.8 million at September 30, 2012 and December 31, 2011, respectively. The letters of credit were issued to guarantee payments under the Company’s workers’ compensation program and for certain other commitments. As of September 30, 2012, the Company’s unused and available borrowing capacity under the Credit Agreement was $64.6 million.

As of September 30, 2012, the mandatory aggregate principal payments of long-term debt were $2.9 million in 2012, $25.0 million in each of 2013 and 2014, $93.8 million in 2015 and $466.4 million in 2016 under the Credit Agreement, and $325.0 million thereafter under the Senior Notes. The weighted average cash interest rate on outstanding borrowings was 8.2 percent per annum at September 30, 2012 and 6.9 percent per annum at December 31, 2011.

The Term Loan A facility is subject to mandatory principal payments of $25 million per year, payable in equal quarterly installments, with the remaining balance of the original $200 million loan payable on August 17, 2015. Pursuant to Amendment No. 3, the Company made a prepayment of $12.0 million on its Term Loan A facility in the first quarter of 2012. There are no required payments on the Company’s Term Loan A facility until the end of the fourth quarter of 2012, at which time a principal payment of $2.9 million is required and $6.3 million per quarter thereafter. The Term Loan B facility is subject to mandatory principal payments of $13.8 million per year, payable in equal quarterly installments. Pursuant to Amendment No. 3, the Company made a prepayment of $38.0 million on its Term Loan B facility in the first quarter of 2012. As a result of the prepayment, there are no required payments on the Company’s Term Loan B facility until August 17, 2016, at which time a payment of the outstanding balance of $466.4 million is required.

On March 9, 2011, the Company entered into a First Refinancing Amendment to the Credit Agreement (“Amendment No. 1”), which provided for, among other things, (i) refinancing of the outstanding indebtedness under the Company’s senior secured Term Loan A and Term Loan B facilities, (ii) elimination of the requirement to hedge a certain portion of the Company’s variable rate debt, (iii) a reduction in the minimum Base Rate from 2.75 percent to 2.25 percent, (iv) a reduction in the minimum Eurodollar Rate from 1.75 percent to 1.25 percent, (v) reductions in Term Loan B Applicable Rates to 3.50 percent for Eurodollar Rate Loans and 2.50 percent for Base Rate Loans as compared to 5.00 percent and 4.00 percent, respectively, under the previous arrangement and (vi) reductions in the Applicable Rate for Term Loan A as reflected in the table below.

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	Previous Applicable Rate		Amended Applicable Rate
Consolidated Leverage Ratio	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Loans	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Term A Loans	Base Rate Term B Loans
> 3.0:1	5.00%	4.00%	3.25%	2.25%	2.25%
> 2.0:1 and < 3.0:1	4.50%	3.50%	3.00%	2.00%	2.00%
< 2.0:1	4.00%	3.00%	2.75%	1.75%	1.75%

In addition, Amendment No. 1 provided for a reduction in the Company’s minimum consolidated interest coverage ratio to a ratio of 2.25 to 1.00 from the previous ratio of 2.75 to 1.00. As discussed below under “Debt Covenants,” Amendment No. 3 provided for a further reduction in the minimum consolidated interest coverage ratio.

The interest rate per annum on borrowings under the Credit Agreement is based on, at the option of the Company, (i) the Eurodollar Rate or (ii) the Base Rate, plus an Applicable Rate. The Base Rate represents the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50 percent and (z) the Eurodollar Rate plus 1.00 percent. In connection with determining the interest rates on the Term Loan A and Term Loan B facilities, in no event shall the Eurodollar Rate be less than 1.25 percent and the Base Rate be less than 2.25 percent. The Company may select interest periods of one, two, three or six months for Eurodollar Rate loans. Interest is payable at the end of the selected interest period. From August 17, 2010 through March 9, 2011, the interest rate on borrowings under the Credit Agreement was 6.75 percent per annum. From March 9, 2011 through March 5, 2012, the interest rate on Term Loan A borrowings was 4.50 percent and on Term Loan B borrowings was 4.75 percent. Giving effect to Amendment No. 3, subsequent to March 5, 2012, the interest rate on Term Loan A borrowings is 6.25 percent and on Term Loan B borrowings is 6.50 percent. The Company must also pay a fee of 0.50 percent per annum on unused commitments under the revolving credit facility.

Prior to Amendment No. 1, the Credit Agreement included a requirement that the Company enter into and maintain interest rate swap contracts covering a notional value of not less than 50 percent of the Company’s aggregate consolidated outstanding indebtedness (other than total revolving credit outstanding), including the Senior Notes, for a period of not less than three years. On November 15, 2010, the Company entered into derivative instruments consisting of (i) a one-year interest rate cap with a notional value of $220.0 million and (ii) two-year forward starting interest rate swaps with notional value of $300.0 million. Under the interest rate cap, the Company would pay a fixed rate of 1.75 percent per annum plus an applicable rate (an aggregate of 6.75 percent per annum for the period beginning November 15, 2010 through December 30, 2011) on the $220 million rather than a variable rate plus an applicable rate should the variable rate plus applicable rate exceed 6.75 percent. In connection with Amendment No. 1, the Company terminated the two-year forward starting interest rate swaps and paid a termination fee of approximately $0.3 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the nine months endedSeptember 30, 2011.

The Company may voluntarily repay outstanding loans under the revolving credit facility or Term Loan A at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. For the period from March 9, 2011 to September 9, 2011, the Company was subject to a prepayment premium equal to 1.0 percent of the aggregate principal amount of Term Loan B. Prepayment and commitment reductions will be required in connection with (i) certain asset sales, (ii) certain extraordinary receipts such as certain insurance proceeds, (iii) cash proceeds from the issuance of debt, (iv) 50 percent of the proceeds from the issuance of equity with step-downs based on leverage, with certain exceptions, and (v) 75 percent of “Excess Cash Flow” (as defined in the Credit Agreement) with two step-downs based on the Company’s leverage ratio.

In connection with the refinancing pursuant to Amendment No. 1, the Company paid a two percent prepayment penalty on its Term Loan B facility of approximately $10.9 million which was recorded as deferred debt issuance costs. In accordance with applicable guidance, due to changes in some of the participating lenders, the Company recorded a write-off of a portion of its deferred debt issuance costs of approximately $3.5 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the nine months endedSeptember 30, 2011.

Debt Covenants

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s and its subsidiaries’ ability to incur additional indebtedness or issue certain preferred stock, create liens on assets, enter into sale and leaseback transactions, engage in mergers or consolidations with other companies, sell assets, pay dividends, repurchase capital stock, make investments, loans and advances, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements, repay certain indebtedness, change the nature of the Company’s business, change accounting policies and practices, grant negative pledges and incur capital expenditures. In addition, after giving effect to

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Amendment No. 3, the Credit Agreement requires the Company to maintain no more than a maximum consolidated leverage ratio as shown in the second table below and no less than a minimum cash interest coverage ratio of 2.00 to 1.00 through June 30, 2013, 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and 2.00 to 1.00 thereafter and also contains certain customary affirmative covenants and events of default. The previously required ratio was 2.25 to 1.00 for all periods.

On November 28, 2011, the Company entered into Amendment No. 2, which provided for modification to the definition of “Consolidated EBITDA” contained in the Credit Agreement to allow for the add-back of costs associated with the Company’s cost realignment activities and operating losses associated with branches closed or sold during the fourth quarter of 2011 and to reset the maximum consolidated leverage ratio for the fourth quarter of 2011 to 4.50 to 1.00. As of September 30, 2012, the Company was in compliance with all covenants in the Credit Agreement.

The maximum consolidated leverage ratio under Amendment No. 2 was as follows:

For the period	Maximum Consolidated Leverage Ratio
August 17, 2010 to September 30, 2011	≤ 4.75:1
October 1, 2011 to September 30, 2012	≤ 4.50:1
October 1, 2012 to September 30, 2013	≤ 3.75:1
Thereafter	≤ 3.00:1

On March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement, which provided, among other things, for (i) an increase by 175 basis points per annum of the interest rates applicable to each of outstanding Term Loan A loans and Term Loan B loans, (ii) an increase in the Company’s permitted maximum consolidated leverage ratio as set forth in the table below, (iii) an amendment to the consolidated interest coverage ratio (and corresponding definitions) to provide that consolidated interest charges included in such calculation are such charges paid in cash (as compared with the previous covenant that included non-cash interest charges), along with a decrease in the Company’s permitted minimum consolidated cash interest coverage ratio to (a) 2.00 to 1.00 through June 30, 2013, (b) 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and (c) 2.00 to 1.00 thereafter, (iv) amendments to the definition of “Consolidated EBITDA,” which include the ability to add-back certain costs associated with the Company’s cost realignment and operating losses associated with certain facilities and branches closed or sold by the Company during the fourth quarter of 2011 and during 2012 and an increase in the add-back for litigation settlement costs, (v) an addition of a mechanism for the Company to make discounted prepayments of Term Loan A loans and Term Loan B loans pursuant to Dutch auction procedures and (vi) a reduction of the revolving credit facility from $125 million to $110 million. As a condition to effectiveness of Amendment No. 3, the Company paid $50 million of the outstanding term loans under the Credit Agreement, applied ratably between the Term Loan A facility and the Term Loan B facility. The Company also paid certain fees in connection with Amendment No. 3, including a consent fee to each lender approving Amendment No. 3 in an amount equal to 0.50% of its respective term loans and revolving credit commitments. In connection with Amendment No. 3, the Company incurred costs of approximately $5.3 million. Approximately $4.1 million of these costs (including the $0.8 million associated with the revolving credit facility) have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate.

The increase in Gentiva’s permitted maximum consolidated leverage ratio under Amendment No. 3 is set forth in the following table:

Four Fiscal Quarters Ending	Maximum Consolidated Leverage Ratio
March 31, 2012 to September 30, 2014	≤ 6.25:1
Each fiscal quarter thereafter	≤ 5.75:1

As of September 30, 2012, the Company’s consolidated leverage ratio was 4.7x and the Company’s interest coverage ratio was 2.7x.

Guaranty Agreement and Security Agreement

Gentiva and substantially all of its subsidiaries (the “Guarantor Subsidiaries”) entered into a guaranty agreement pursuant to which the Guarantor Subsidiaries have agreed, jointly and severally, fully and unconditionally to guarantee all of the Company’s obligations under the Credit Agreement. Additionally, Gentiva and its Guarantor Subsidiaries entered into a security agreement pursuant to which a first-priority security interest was granted in substantially all of the Company’s and its Guarantor Subsidiaries’ present and future real, personal and intangible assets, including the pledge of 100 percent of all

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outstanding capital stock of substantially all of the Company’s domestic subsidiaries to secure full payment of all of the Company’s obligations for the ratable benefit of the lenders.

Senior Notes

The Senior Notes are unsecured, senior subordinated obligations of the Company. The Senior Notes are guaranteed by all of Gentiva’s subsidiaries that are guarantors under the Credit Agreement. Interest on the Senior Notes accrues at a rate of 11.5 percent per annum and is payable semi-annually in arrears on March 1 and September 1. Gentiva will make each interest payment to the holders of record on the immediately preceding February 15 and August 15.

The Senior Notes mature on September 1, 2018 and are generally free to be transferred. Gentiva may redeem the Senior Notes, in whole or in part, at any time prior to the first interest payment of 2014, at a price equal to 100 percent of the principal amount of the Senior Notes redeemed plus an applicable make-whole premium based on the present value of the remaining payments discounted at the treasury rate plus 50 basis points plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to September 1, 2013, Gentiva may redeem up to 35 percent of the aggregate principal amount of the Senior Notes with the net cash proceeds of a qualified equity offering at a redemption price equal to 111.5 percent of the aggregate principal amount, provided that (i) at least 65 percent of the aggregate principal amount of Senior Notes originally issued remain outstanding after the occurrence of such redemption and (ii) such redemption occurs within 180 days after the closing of a qualified equity offering.

On or after September 1, 2014, Gentiva may redeem all or part of the Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest, if any, as defined in the indenture relating to the Senior Notes during the twelve month period beginning on September 1 of the years indicated below:

Year	Percentage
2014	105.750%
2015	102.875%
2016 and thereafter	100.000%

Other

The Company has equipment capitalized under capital lease obligations. At September 30, 2012 and December 31, 2011, the Company had no obligations under long-term capital leases. The current portion of obligations under capital leases was $0.1 million at both September 30, 2012 and December 31, 2011 and was recorded in other accrued expenses on the Company’s consolidated balance sheets.

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Note 11. Equity

Changes in equity for the nine months endedSeptember 30, 2012 and 2011 were as follows (in thousands, except share amounts):

	Gentiva Shareholders
	Common Stock			Additional Paid-in			Retained Earnings Accumulated			Accumulated Other Comprehensive			Treasury			Noncontrolling
	Shares	Amount		Capital			(Deficit)			Income (Loss)			Stock			Interests			Total
Balance at December 31, 2010	30,799,091	$	3,080	$	372,106		$	272,394		$	478		$	(12,484	)	$	2,658		$	638,232
Comprehensive (loss) income:
Net (loss) income	—	—		—			(455,110		)	—			—			452			(454,658		)
Changes in fair value of interest rate swaps	—	—		—			—			(768		)	—			—			(768		)
Realized loss on interest rate swaps	—	—		—			—			290			—			—			290
Total comprehensive (loss) income	—	—		—			(455,110		)	(478		)	—			452			(455,136		)
Income tax benefits associated with the exercise of non-qualified stock options	—	—		259			—			—			—			—			259
Equity-based compensation expense	—	—		6,259			—			—			—			—			6,259
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	464,680	47		6,969			—			—			—			—			7,016
Purchase of non-controlling interest	—	—		(352		)	—			—			—			32			(320		)
Distribution to partnership interests	—	—		—			—			—			—			(608		)	(608		)
Treasury shares:
Common stock received from Healthfield escrow (14,334 shares)	—	—		—			—			—			(394		)	—			(394		)
Balance at September 30, 2011	31,263,771	$	3,127	$	385,241		$	(182,716	)	$	—		$	(12,878	)	$	2,534		$	195,308
Balance at December 31, 2011	31,435,264	$	3,144	$	387,803		$	(178,131	)	$	—		$	(12,878	)	$	2,593		$	202,531
Comprehensive income:
Net income	—	—		—			18,226			—			—			624			18,850
Total comprehensive income	—	—		—			18,226			—			—			624			18,850
Equity-based compensation expense	—	—		5,722			—			—			—			—			5,722
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	391,177	39		2,381			—			—			—			—			2,420
Purchase of non-controlling interest	—	—		—			—			—			—			(1,113		)	(1,113		)
Distribution to partnership interests	—	—		—			—			—			—			(685		)	(685		)
Treasury shares:
Stock repurchase (605,077 shares)	—	—		—			—			—			(4,974		)	—			(4,974		)
Balance at September 30, 2012	31,826,441	$	3,183	$	395,906		$	(159,905	)	$	—		$	(17,852	)	$	1,419		$	222,751

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Comprehensive loss amounted to $0.4 million and comprehensive income amounted to $18.9 million for the third quarter and first nine months of 2012, respectively, as compared to comprehensive losses of $473.6 million and $455.1 million for the third quarter and first nine months of 2011, respectively. The amounts reflected in accumulated other comprehensive income (loss) for the nine months endedSeptember 30, 2011 are reflected net of tax of approximately $0.4 million.

On April 14, 2005, the Company announced that its Board of Directors had authorized the repurchase of up to 1,500,000 shares of the Company’s outstanding common stock (the “2005 Repurchase Program”). In addition, on March 13, 2012, the Company announced that its Board of Directors had authorized the repurchase of up to $5,000,000 of shares of the Company’s outstanding common stock (the “2012 Repurchase Program”). During the nine months endedSeptember 30, 2012, the Company repurchased 605,077 shares of its common stock at an average cost of $8.22 per share and a total cost of approximately $5.0 million. Due to these repurchases, as of September 30, 2012, the Company had no remaining shares authorized under the 2005 Repurchase Program and had remaining authorization under the 2012 Repurchase Program to repurchase common stock with an aggregate purchase price of up to $1.5 million, subject to the additional limitations set forth below.

The Company’s Credit Agreement provides for repurchases of the Company’s common stock not to exceed $5.0 million per year, and not to exceed $20.0 million per year if the consolidated leverage ratio is less than or equal to 3.5:1 immediately after giving effect on a pro forma basis to the repurchase. The indenture governing the Company’s Senior Notes also contains limitations on the Company’s repurchases of its common stock.

Note 12. Equity-Based Compensation Plans

The Company provides several equity-based compensation plans under which the Company’s officers, employees and non-employee directors may participate, including (i) the 2004 Equity Incentive Plan (amended and restated) (“2004 Plan”), (ii) the Stock & Deferred Compensation Plan for Non-Employee Directors (“DSU Plan”) and (iii) the Employee Stock Purchase Plan (“ESPP”). Collectively, these equity-based compensation plans permit the grants of (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) restricted stock, (v) performance units, (vi) stock units and (vii) cash, as well as allow employees to purchase shares of the Company’s common stock under the ESPP at a pre-determined discount.

For the third quarter and first nine months of 2012, the Company recorded equity-based compensation expense, as calculated on a straight-line basis over the vesting periods of the related equity instruments, of $2.3 million and $5.7 million, respectively, as compared to $1.9 million and $5.9 million for the corresponding periods of 2011, which were reflected as selling, general and administrative expense in the consolidated statements of comprehensive income. During the second quarter of 2011, the Company recorded non-cash compensation expense of approximately $0.4 million associated with modifications of stock options for a former executive, which is reflected as selling, general and administrative expense in the consolidated statements of comprehensive income and is categorized as restructuring costs. See Note 7.

Stock Options

The weighted average fair values of the Company’s stock options granted during the first nine months of 2012 and 2011 calculated using the Black-Scholes option pricing model and other assumptions, were as follows.

	Nine Months Ended
	September 30, 2012			September 30, 2011
Weighted average fair value of options granted	$	8.46		$	11.30
Risk-free interest rate	0.77% - 0.95%			2.15		%
Expected volatility	64		%	44		%
Contractual life	7 years			7 years
Expected life	3.4 - 5.4 years			4.5 -6.5 years
Expected dividend yield	—		%	—		%

Stock option grants in 2011 and 2012 vest over a three-year period based on a vesting schedule that provides for one-third vesting after each year. Stock option grants in 2006 through 2010 fully vest over a four-year period based on a vesting schedule that provides for one-half vesting after year two and an additional one-fourth vesting after each of years three and four. The Company’s expected volatility assumptions are based on the historical volatility of the Company’s stock price over a period corresponding to the expected term of the stock option. Forfeitures are estimated utilizing the Company’s historical forfeiture experience. The expected life of the Company’s stock options is based on the Company’s historical experience of the exercise patterns associated with its stock options.

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A summary of Gentiva stock option activity as of September 30, 2012 and for the nine months endedSeptember 30, 2012 is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2011	4,228,907		$	15.59
Granted	36,000		8.46
Exercised	(1,200	)	8.74
Cancelled	(357,338	)	13.47
Balance as of September 30, 2012	3,906,369		$	15.73	5.1	$	7,601,985
Exercisable options	2,133,041		$	20.12	4.4	$	219,703

The total intrinsic value of options exercised during the nine months endedSeptember 30, 2011 was $1.9 million and immaterial for corresponding period of 2012. As of September 30, 2012, the Company had $3.2 million of unrecognized compensation expense related to nonvested stock options. This compensation expense is expected to be recognized over a weighted-average period of 1.4 years. The total fair value of options that vested during the first nine months of 2012 was $3.5 million.

Performance Share Units

The Company may grant performance share units under its 2004 Plan. Performance share units result in the issuance of common stock at the end of a three-year period and may range between zero and 150 percent of the performance share units granted at target in 2010 and between zero and 200 percent of the performance share units granted at target in 2011, based on the achievement of defined thresholds of the performance criteria over a three-year period (in the case of performance share units granted in 2010) and at the end of a one-year period (in the case of performance share units granted in 2011).

A summary of Gentiva performance share unit activity as of September 30, 2012 is presented below:

	Number of Performance Share Units		Weighted- Average Exercise Price
Balance as of December 31, 2011	125,800		$	26.33
Granted	—		—
Vested	—		—
Cancelled	(4,200	)	26.74
Balance as of September 30, 2012	121,600		$	26.32

These performance share units carry performance criteria measured on annual diluted earnings per share targets and fully vest at the end of a three-year period provided the performance criteria are met. Forfeitures are estimated utilizing the Company’s historical forfeiture experience.

As of September 30, 2012 and 2011, the Company had $2.0 million and $1.7 million, respectively, of total unrecognized compensation cost related to performance share units. This compensation expense is expected to be recognized over a weighted-average period of 1.2 years and 2.1 years, respectively.

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Restricted Stock

A summary of Gentiva restricted stock activity as of September 30, 2012 is presented below:

	Number of Restricted Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of December 31, 2011	377,750		$	25.30
Granted	—		—
Exercised	—		—
Cancelled	(10,700	)	26.48
Balance as of September 30, 2012	367,050		$	25.26	$	4,154,419

The restricted stock fully vests at the end of a three-year or five-year period, depending on the individual grants. Forfeitures are estimated utilizing the Company’s historical forfeiture experience.

As of September 30, 2012, the aggregate intrinsic value of the restricted stock awards was $4.2 million. The Company had $4.9 million and $6.2 million of total unrecognized compensation cost related to restricted stock as of September 30, 2012 and 2011, respectively. This compensation expense is expected to be recognized over a weighted-average period of 2.6 years years and 3.3 years, respectively.

Directors Deferred Share Units

Under the Company’s DSU Plan, each non-employee director receives an annual deferred stock unit award credited quarterly and paid in shares of the Company’s common stock following termination of the director’s service on the Board of Directors. In May of 2012, the Company’s shareholders approved increasing the aggregate number of shares of common stock available for issuance under the plan by 350,000 shares; therefore, the total number of shares of common stock reserved for issuance under this plan is 650,000, of which295,631 shares were available for future grants as of September 30, 2012. During the first nine months of 2012, the Company granted 56,264 stock units under the DSU Plan at a grant date weighted-average fair value of $7.73 per stock unit. Prior to the increase in the aggregate shares available for issuance in May of 2012, there were insufficient deferred stock units available under the DSU Plan for the full quarterly equity grant to each non-employee director in the first quarter of 2012. Therefore, the Company also made a cash payment of approximately $28,100 to each non-employee director during the first nine months of 2012. Under the DSU Plan, 243,982 stock units were outstanding as of September 30, 2012.

Employee Stock Purchase Plan

The Company provides an ESPP under which the offering period is three months and the purchase price of shares is equal to 85 percent of the fair market value of the Company’s common stock on the last day of the three-month offering period. All employees of the Company are eligible to purchase stock under the ESPP regardless of their actual or scheduled hours of service. During the first nine months of 2012, the Company issued 327,884 shares of common stock under its ESPP. Under the Company’s ESPP, compensation expense is equal to the 15 percent discount from the fair market value of the Company’s common stock on the date of purchase.

On May 10, 2012, the shareholders of the Company authorized an additional 1,800,000 shares of the Company’s stock for issuance under the ESPP Plan.

Note 13. Legal Matters

Litigation

In addition to the matters referenced in this Note 13, the Company is party to certain legal actions arising in the ordinary course of business, including legal actions arising out of services rendered by its various operations, personal injury and employment disputes. Management does not expect that these other legal actions will have a material adverse effect on the business, financial condition, results of operations, liquidity or capital resources of the Company.

On May 10, 2010, a collective and class action complaint entitled Lisa Rindfleisch et al. v. Gentiva Health Services, Inc. was filed in the United States District Court for the Eastern District of New York against the Company in which five former employees alleged wage and hour law violations. The former employees claimed they were paid pursuant to “an unlawful hybrid” compensation plan that paid them on both a per visit and an hourly basis, thereby voiding their exempt status and

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entitling them to overtime pay. The plaintiffs alleged continuing violations of federal and state law and sought damages under the Fair Labor Standards Act (“FLSA”), as well as under the New York Labor Law and North Carolina Wage and Hour Act (“NCWHA”). On October 8, 2010, the Court granted the Company’s motion to transfer the venue of the lawsuit to the United States District Court for the Northern District of Georgia. On April 13, 2011, the Court granted plaintiffs’ motion for conditional certification of the FLSA claims as a collective action. On May 26, 2011, the Court bifurcated the FLSA portion of the suit into a liability phase, in which discovery is scheduled to close on January 15, 2013, and a damages phase, to be scheduled pending outcome of the liability phase. Following a motion for partial summary judgment by the Company regarding the New York state law claims, plaintiffs agreed voluntarily to dismiss those claims in a filing on December 12, 2011. Plaintiffs filed a motion for certification of a North Carolina state law class for NCWHA claims on January 20, 2012. The Company filed a motion for partial summary judgment on plaintiffs’ claims under the NCWHA on March 22, 2012. On August 29, 2012, the Court denied plaintiffs' motion for certification of a North Carolina state law class. Plaintiffs also filed a motion for partial summary judgment with regard to the Company’s liability for plaintiffs’ FLSA claims on April 3, 2012 and continue to seek class certification of allegedly similar employees and seek attorneys’ fees, back wages and liquidated damages going back three years under the FLSA .

Based on the information the Company has at this time in the Rindfleisch lawsuit, the Company is unable to assess the probable outcome or potential liability, if any, arising from this proceeding on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this lawsuit at this time. The Company intends to defend itself vigorously in this lawsuit.

On June 11, 2010, a collective and class action complaint entitled Catherine Wilkie, individually and on behalf of all others similarly situated v. Gentiva Health Services, Inc. was filed in the United States District Court for the Eastern District of California against the Company in which a former employee alleged wage and hour violations under the FLSA and California law. The complaint alleged that the Company paid some of its employees on both a per visit and hourly basis, thereby voiding their exempt status and entitling them to overtime pay. The complaint further alleged that California employees were subject to violations of state laws requiring meal and rest breaks, overtime pay, accurate wage statements and timely payment of wages. The plaintiff sought class certification, attorneys’ fees, back wages, penalties and damages going back three years on the FLSA claim and four years on the state wage and hour claims. The parties held mediation discussions on August 3, 2011 and March 7, 2012. The parties have finalized the terms of a monetary settlement, and the Company has paid $5 million in escrow to settle all claims in the lawsuit, including the plaintiff’s attorney’s fees and costs. The court granted preliminary approval of the settlement on October 5, 2012, and a hearing on the motion for final court approval of the settlement is scheduled for March 25, 2013.

On December 29, 2011, Odyssey HealthCare, Inc. was served with a complaint captioned United States of America and the State of Illinois ex rel. Laurie Geschrey and Laurie Janus v. Generations Healthcare, LLC, Odyssey HealthCare, Inc., Narayan Ponakala and Catherine Ponakala, which was filed on April 19, 2010 as a qui tam action in the United States District Court for the Northern District of Illinois, Eastern Division, Case No. 10 C 2413, under the provisions of the Federal False Claims Act, the Illinois Whistleblower Reward and Protection Act and the Illinois Whistleblower Act. The plaintiffs, two former employees of Generations Healthcare, LLC, a hospice company whose assets were acquired by Odyssey on December 31, 2009, are the relators and allege that defendants committed fraud against the United States and the State of Illinois by, among other things, recruiting and certifying patients as being eligible for hospice care when they were known not to be eligible and falsifying patients’ medical records in support of the claims for reimbursement. Relators further allege that Odyssey was aware of Generations Healthcare’s alleged fraudulent business practices. Both the United States and the State of Illinois declined to intervene in the action, and the complaint was unsealed on December 1, 2011. Relators seek statutory damages, which are three times the amount of any actual damages suffered by the United States and the State of Illinois, the maximum statutory civil penalty due under the statutes plus all costs and attorneys fees. Additionally, relators seek back pay plus interest and other damages because of defendants’ alleged retaliation against relators.

Odyssey filed a motion to dismiss the complaint against it on March 23, 2012. On August 14, 2012, the Court denied that motion as it related to Odyssey. Plaintiffs filed an amended complaint, which added a new retaliation claim. On October 3, 2012, defendants moved to dismiss the new retaliation claim and answered the remaining claims. The parties now expect to proceed to discovery. Odyssey is also pursuing indemnification from Generations Healthcare and its owners, who are defendants in this action. Given the preliminary stage of this action, the Company is unable to assess the probable outcome or potential liability, if any, arising from this action on the business, financial condition, results of operations, liquidity or capital resources of the Company or Odyssey. Odyssey intends to defend itself vigorously in the action.

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Federal Securities Class Action Litigation

Between November 2, 2010 and October 25, 2011, five shareholder class actions were filed against Gentiva and certain of its current and former officers and directors in the United States District Court for the Eastern District of New York. Each of these actions asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with the Company’s participation in the Medicare Home Health Prospective Payment System (“HH PPS”). Following consolidation of the actions, and the appointment of Los Angeles City Employees’ Retirement System as lead plaintiff and Kaplan Fox & Kilsheimer LLP as lead counsel, on April 16, 2012, a consolidated shareholder class action complaint, captioned In re Gentiva Securities Litigation, Civil Action No. 10-CV-5064, was filed in the United States District Court for the Eastern District of New York. The complaint, which names Gentiva and certain current and former officers and directors as defendants, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Sections 11 and 15 of the Securities Act of 1933, in connection with the Company’s participation in the HH PPS. The complaint alleges, among other things, that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purposes of triggering higher reimbursement rates under the HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock during the period between July 31, 2008 and October 4, 2011. On June 15, 2012, defendants filed a motion to dismiss the complaint. That motion is fully briefed and is now pending before the court.

Given the preliminary stage of the action, the Company is unable to assess the probable outcome or potential liability, if any, arising from the action on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for the action at this time. The defendants intend to defend themselves vigorously in the action.

Shareholder Derivative Litigation

On October 7 and October 13, 2011, two actions were filed against certain of Gentiva’s current and former directors and officers in the United States District Court for the Northern District of Georgia, alleging, among other things, that Gentiva’s board of directors breached its fiduciary duties to the Company. The actions also asserted a claim under Section 14(a) of the Securities Exchange Act of 1934. The actions were consolidated and, on March 5, 2012, plaintiffs filed a consolidated complaint (the “Georgia Federal Court Action”). The Georgia Federal Court Action, which names certain of Gentiva’s current and former directors and officers as defendants, alleges, among other things, that Gentiva’s board of directors had actual or constructive knowledge that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock. The complaint further alleges that the Company’s Proxy Statement for its 2010 Annual Meeting of Shareholders was materially false and misleading. On April 16, 2012, defendants filed a motion to dismiss the Georgia Federal Court Action. That motion is fully briefed and is now pending before the court.

Given the preliminary stage of the Georgia Federal Court Action, the Company is unable to assess the probable outcome or potential liability, if any, arising from this action on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this action at this time. The defendants intend to defend themselves vigorously in this action.

On January 4, 2011 and October 31, 2011, two actions were filed against certain of Gentiva’s current and former directors in Superior Court of DeKalb County in the State of Georgia, alleging, among other things, that Gentiva’s board of directors breached its fiduciary duties to the Company. The actions were consolidated and, on February 9, 2012, plaintiffs filed a consolidated complaint (the “Georgia State Court Action”). The Georgia State Court Action, which named certain of Gentiva’s current and former directors as defendants, alleged, among other things, that Gentiva’s board of directors had actual or constructive knowledge that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock. On March 26, 2012, defendants filed a motion to dismiss the Georgia State Court Action and further requested a transfer to the Superior Court of Cobb County. On October 12, 2012, the Cobb County court granted defendants' motion to dismiss the consolidated complaint with prejudice.

Government Matters

PRRB Appeal

In connection with the audit of the Company’s 1997 cost reports, the Medicare fiscal intermediary made certain audit adjustments related to the methodology used by the Company to allocate a portion of its residual overhead costs. The Company filed cost reports for years subsequent to 1997 using the fiscal intermediary’s methodology. The Company believed the

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methodology it used to allocate such overhead costs was accurate and consistent with past practice accepted by the fiscal intermediary; as such, the Company filed appeals with the Provider Reimbursement Review Board (“PRRB”) concerning this issue with respect to cost reports for the years 1997, 1998 and 1999. The Company’s consolidated financial statements for the years 1997, 1998 and 1999 had reflected use of the methodology mandated by the fiscal intermediary. In June 2003, the Company and its Medicare fiscal intermediary signed an Administrative Resolution relating to the issues covered by the appeals pending before the PRRB. Under the terms of the Administrative Resolution, the fiscal intermediary agreed to reopen and adjust the Company’s cost reports for the years 1997, 1998 and 1999 using a modified version of the methodology used by the Company prior to 1997. This modified methodology will also be applied to cost reports for the year 2000, which are currently under audit. The Administrative Resolution required that the process to (i) reopen all 1997 cost reports, (ii) determine the adjustments to allowable costs through the issuance of Notices of Program Reimbursement and (iii) make appropriate payments to the Company, be completed in early 2004. Cost reports relating to years subsequent to 1997 were to be reopened after the process for the 1997 cost reports was completed.

The fiscal intermediary completed the reopening of all 1997, 1998 and 1999 cost reports and determined that the adjustment to allowable costs aggregated $15.9 million which the Company has received and recorded as adjustments to net revenues in the fiscal years 2004 through 2006. The Company is unable to predict when the Centers for Medicare & Medicaid Services (“CMS”) will finalize all items relating to the 2000 cost reports.

Subpoena

On July 13, 2010, the SEC informed the Company that the SEC had commenced an investigation relating to the Company’s participation in the Medicare Home Health Prospective Payment System, and, on July 16, 2010, the Company received a subpoena from the SEC requesting certain documents in connection with its investigation. The SEC subpoena, among other things, focused on issues related to the number of and reimbursement received for therapy visits before and after changes in the Medicare reimbursement system, relationships with physicians, compliance efforts including compliance with fraud and abuse laws, and certain documents previously sent to the Senate Finance Committee. The Company is unable to assess the probable outcome or potential liability, if any, arising from this matter on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this matter at this time.

Investigations Involving Odyssey

On February 14, 2008, Odyssey received a letter from the Medicaid Fraud Control Unit of the Texas Attorney General’s office notifying Odyssey that the Texas Attorney General was conducting an investigation concerning Medicaid hospice services provided by Odyssey, including its practices with respect to patient admission and retention, and requesting medical records of approximately 50 patients served by its programs in the State of Texas. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of this investigation, the Texas Attorney General’s views of the issues being investigated or any actions that the Texas Attorney General may take.

On May 5, 2008, Odyssey received a letter from the U.S. Department of Justice (“DOJ”) notifying Odyssey that the DOJ was conducting an investigation of VistaCare, Inc. (“VistaCare”) and requesting that Odyssey provide certain information and documents related to the DOJ’s investigation of claims submitted by VistaCare to Medicare, Medicaid and the U.S. government health insurance plan for active military members, their families and retirees, formerly the Civilian Health and Medical Program of the Uniformed Services (“TRICARE”), from January 1, 2003 through March 6, 2008, the date Odyssey completed the acquisition of VistaCare. Odyssey has been informed by the DOJ and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office that they are reviewing allegations that VistaCare may have billed the federal Medicare, Medicaid and TRICARE programs for hospice services that were not reasonably or medically necessary or performed as claimed. The basis of the investigation is a qui tam lawsuit filed in the United States District Court for the Northern District of Texas by a former employee of VistaCare. The lawsuit alleges, among other things, that VistaCare submitted false claims to Medicare and Medicaid for hospice services that were not medically necessary and for hospice services that were referred in violation of the anti-kickback statute. The court unsealed the lawsuit on October 5, 2009 and Odyssey was served on January 28, 2010. In connection with the unsealing of the complaint, the DOJ filed a notice with the court declining to intervene in the qui tam action at such time. The Texas Attorney General also filed a notice of non-intervention with the court. These actions should not be viewed as a final assessment by the DOJ or the Texas Attorney General of the merits of this qui tam action. Odyssey continues to cooperate with the DOJ and the Texas Attorney General in their investigation. The relator has continued to pursue the qui tam lawsuit. VistaCare filed motions to dismiss the relator’s complaint on March 30, 2010 and April 2, 2012. The court issued orders on the motions to dismiss on March 9, 2011 and July 23, 2012. Consistent with the court’s orders, relator’s false claims act claims based on alleged medically unnecessary hospice services and for hospice services referred in violation of the anti-kickback statute are permitted to proceed to discovery. Currently, there is no scheduling order in place or trial date. Odyssey denies the allegations made in this qui tam action and will vigorously defend against them. Based on the information

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that Odyssey has at this time, the Company cannot predict the outcome of the qui tam lawsuit, the governments’ continuing investigation, the DOJ’s or Texas Attorney General’s views of the issues being investigated, other than the DOJ’s and Texas Attorney General’s notice declining to intervene in the qui tam action, or any actions that the DOJ or Texas Attorney General may take.

On October 28, 2011, the Assistant United States Attorney for the Northern District of Texas notified Odyssey and the Company of the existence of a second qui tam lawsuit against VistaCare, doing business as VistaCare Hospice, Odyssey Healthcare, and Gentiva Healthcare Services, that had initially been filed on October 29, 2010, in the Northern District of Alabama, but transferred to the Northern District of Texas due to the similarity of allegations with the first qui tam lawsuit. A non-intervention order and unsealing of the second complaint was entered by the District Court for the Northern District of Texas on October 27, 2011. The Company believes this action should not be viewed as a final assessment by the DOJ of the merits of this qui tam action. On February 28, 2012, the court ordered a stay in this qui tam action until the court rules on the pending motion to dismiss in the first qui tam action. The court lifted the stay on July 23, 2012 following the court entry of an order ruling on the motion to dismiss in the first qui tam action. At this time, there is no scheduling order in place or trial date. VistaCare denies the allegations made in the second qui tam action and will vigorously defend against them. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of this second qui tam lawsuit, the government’s continuing investigation, the DOJ’s views of the issues being investigated, other than the DOJ’s non-intervention in the qui tam action, or any actions that the DOJ may take.

On January 5, 2009, Odyssey received a letter from the Georgia State Health Care Fraud Control Unit notifying Odyssey that the Georgia State Health Care Fraud Unit was conducting an investigation concerning Medicaid hospice services provided by VistaCare from 2003 through 2007 and requesting certain documents. Odyssey is cooperating with the Georgia State Health Care Fraud Control Unit and has complied with the document request. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of the investigation, the Georgia State Health Care Fraud Control Unit’s views of the issues being investigated or any actions that the Georgia State Health Care Fraud Control Unit may take.

On February 23, 2010, Odyssey received a subpoena from the Department of Health and Human Services, Office of Inspector General (“OIG”), requesting various documents and certain patient records of one of Odyssey’s hospice programs relating to services performed from January 1, 2006 through December 31, 2009. Odyssey is cooperating with the OIG and has completed its subpoena production. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of the investigation, the OIG’s views of the issues being investigated or any actions that the OIG may take.

The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made at this time with regard to the above investigations involving Odyssey. Based on the limited information that Odyssey has at this time regarding such investigations, the Company is unable to predict the impact, if any, that such investigations may have on Odyssey’s and the Company’s business, financial condition, results of operations, liquidity or capital resources.

Note 14. Income Taxes

The Company recorded an income tax benefit of $1.3 million and an income tax provision $10.9 million for the third quarter and first nine months of 2012, respectively. The Company’s effective income tax rate for the first nine months of 2012 was 37.9 percent. The rate for the first nine months is lower than what is expected for the full year as a result of an issue being effectively settled with the IRS and a reversal of related reserves in the first nine months of 2012 . The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 37.9 percent for the first nine months of 2012 is primarily due to state income taxes, net of federal benefit (approximately 5.0 percent), other items (approximately 0.4 percent), partially offset by changes in tax reserves (approximately 2.5 percent).

The Company recorded income tax benefits of $87.5 million and $77.0 million for the third quarter and first nine months of 2011, respectively. The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 12.7 percent for the first nine months of 2011 is primarily due to state income taxes, net of federal benefit (approximately 4.7 percent), offset by the impact of impairment of goodwill, intangibles and other long-lived assets (approximately 26.2 percent) and changes in tax reserves and other (approximately 0.8 percent).

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Note 15. Business Segment Information

The Company’s operations involve servicing its patients and customers through its Home Health segment and its Hospice segment.

Home Health

The Home Health segment is comprised of direct home nursing and therapy services operations, including specialty programs. The Company conducts direct home nursing and therapy services operations through licensed and Medicare-certified agencies, located in 38 states, from which the Company provides various combinations of skilled nursing and therapy services and paraprofessional nursing services to adult and elder patients. The Company’s direct home nursing and therapy services operations also deliver services to its customers through focused specialty programs that include:

• Gentiva Orthopedics, which provides individualized home orthopedic rehabilitation services to patients recovering from joint replacement or other major orthopedic surgery;

• Gentiva Safe Strides^®, which provides therapies for patients with balance issues who are prone to injury or immobility as a result of falling;

• Gentiva Cardiopulmonary, which helps patients and their physicians manage heart and lung health in a home-based environment;

• Gentiva Neurorehabilitation, which helps patients who have experienced a neurological injury or condition by removing the obstacles to healing in the patient’s home; and

• Gentiva Senior Health, which addresses the needs of patients with age-related diseases and issues to effectively and safely stay in their homes.

In addition, through May 31, 2012, the Company provided consulting services to home health agencies, which included operational support, billing and collection activities, and on-site agency support and consulting. For 2011, the Company’s Rehab Without Walls^® and homemaker services business in Illinois are reflected as discontinued operations in accordance with applicable accounting guidance. See Note 3 for additional information.

Hospice

The Hospice segment serves terminally ill patients and their families through Medicare-certified providers operating in 28 states. Comprehensive management of the healthcare services and products needed by hospice patients and their families are provided through the use of an interdisciplinary team. Depending on a patient’s needs, each hospice patient is assigned an interdisciplinary team comprised of a physician, nurse(s), home health aide(s), medical social worker(s), chaplain, dietary counselor and bereavement coordinator, as well as other care professionals. The Hospice segment also delivers services to its customers through focused specialty programs that include:

• Dementia Specialty Program, which provides an individualized disease management program addressing the physical needs specific to Alzheimer’s and dementia patients and support mechanisms for their caregivers;

• Cancer Specialty Program, which provides advanced pain and symptom management for patients coping with the effects of cancer;

• Cardiac Specialty Program, which helps patients and their physicians aggressively manage symptoms associated with heart disease, focusing on quality of life and pain control; and

• Pulmonary Specialty Program, which addresses the needs of patients who have experienced a respiratory crisis by increasing quality of life and promoting comfort by specialized symptom management.

Corporate Expenses

Corporate expenses consist of costs relating to executive management and corporate and administrative support functions that are not directly attributable to a specific segment, including equity-based compensation expense. Corporate and administrative support functions represent primarily information services, accounting and finance, tax compliance, risk management, procurement, marketing, clinical administration, training, legal and human resource benefits and administration.

Other Information

The Company’s senior management evaluates performance and allocates resources based on operating contributions of the reportable segments, which exclude corporate expenses, depreciation, amortization and net interest costs, but include revenues and all other costs (including special items) directly attributable to the specific segment. Segment assets represent net accounts receivable, identifiable intangible assets, goodwill, and certain other assets associated with segment activities. All other assets are assigned to corporate assets for the benefit of all segments for the purposes of segment disclosure.

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Segment net revenues by major payer source were as follows (in millions):

	Third Quarter
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	185.0	$	177.4	$	362.4	$	200.3	$	182.0	$	382.3
Medicaid and Local Government	12.2		6.9		19.1		13.2		8.0		21.2
Commercial Insurance and Other:
Paid at episodic rates	21.4		—		21.4		19.3		—		19.3
Other	16.1		5.4		21.5		20.4		6.5		26.9
Total net revenues	$	234.7	$	189.7	$	424.4	$	253.2	$	196.5	$	449.7

	First Nine Months
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	561.7	$	539.0	$	1,100.7	$	601.6	$	543.0	$	1,144.6
Medicaid and Local Government	35.7		21.2		56.9		39.8		23.4		63.2
Commercial Insurance and Other:
Paid at episodic rates	62.8		—		62.8		58.1		—		58.1
Other	50.1		17.3		67.4		64.1		19.6		83.7
Total net revenues	$	710.3	$	577.5	$	1,287.8	$	763.6	$	586.0	$	1,349.6

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Segment information about the Company’s operations is as follows (in thousands):

	Home Health				Hospice				Total
For the three months ended September 30, 2012
Net revenue	$	234,670			$	189,774			$	424,444
Operating contribution	$	32,268			$	34,798			$	67,066
Corporate expenses									(21,065		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(6,653		)
Interest expense and other, net									(22,894		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(2,678	)
For the three months ended September 30, 2011
Net revenue	$	253,240			$	196,508			$	449,748
Operating contribution	$	28,717			$	31,477	(1	)	$	60,194
Corporate expenses									(28,570		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(7,453		)
Dividend income									3,977			(2	)
Interest expense and other, net									(20,673		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(635,830	)
For the nine months ended September 30, 2012
Net revenue	$	710,321			$	577,466			$	1,287,787
Operating contribution	$	94,527	(1	)	$	102,426	(1	)	$	196,953
Corporate expenses									(66,120		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(21,375		)
Gain on sale of businesses									5,447
Interest expense and other, net									(67,051		)	(3	)
Income from continuing operations before income taxes and equity in earnings of affiliate									$	28,722
Segment assets	$	242,217	(4	)	$	864,139	(4	)	$	1,106,356
Corporate assets									377,858
Total assets									$	1,484,214
For the nine months ended September 30, 2011
Net revenue	$	763,622			$	585,947			$	1,349,569
Operating contribution	$	105,427	(1	)	$	104,301	(1	)	$	209,728
Corporate expenses									(92,480		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(22,534		)
Dividend income									8,590			(2	)
Interest expense and other, net									(68,342		)	(3	)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(608,343	)
Segment assets	$	244,787	(4	)	$	871,212	(4	)	$	1,115,999
Corporate assets									423,587
Total assets									$	1,539,586

(1) For the third quarter and first nine months of 2012, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $0.1 million and $5.5 million, respectively.

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For the third quarter and first nine months of 2011, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $9.8 million and $34.9 million, respectively. Of these amounts, $25.0 million related to legal settlements associated with the Odyssey acquisition.

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

	Third Quarter				First 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

(2) For the third quarter and first nine months of 2011, the Company recognized dividend income of $4.0 million and $8.6 million, respectively, as a result of the sale of a portion of the Company’s preferred equity in CareCentrix.

(3) For the first nine months of 2012, interest expense and other, net included charges of $0.5 million relating to the write-off of deferred debt issuance costs associated with the revolving credit facility. In addition, interest expense and other, net for the first nine months of 2011 included charges of $3.8 million associated with terminating the Company’s interest rate swaps in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

(4) For both the third quarter and first nine months of 2012, the Company recorded non-cash impairment charges associated with a write-off of its trade name intangibles of $19.1 million in connection with the Company's initiative to re-brand its operations under the Gentiva name. Home Health and Hospice assets were reduced by $6.0 million and $13.1 million, respectively, as of September 30, 2012 as a result of the impairment.

For both the third quarter and first nine months of 2011, the Company recorded non-cash impairment charges associated with goodwill, intangibles and long-lived assets of $643.3 million Home Health, Hospice and Corporate assets were reduced by $$408.4 , $193.7 and $41.2 , respectively, as of September 30, 2011.

Note 16. Supplemental Guarantor and Non-Guarantor Financial Information

Gentiva’s guarantor subsidiaries are guarantors to the Company’s debt securities which are registered under the Securities Act of 1933, as amended. The condensed consolidating financial statements presented below are provided pursuant to Rule 3-10 of Regulation S-X. Separate financial statements of each subsidiary guaranteeing Gentiva’s debt securities are not presented because the guarantor subsidiaries are jointly and severally, fully and unconditionally liable under the guarantees, and 100 percent owned by the Company. There are no restrictions on the ability to obtain funds from these subsidiaries by dividends or other means.

During the third quarter of 2012, the Company reclassified certain cost of services sold as presented within the Company's supplemental guarantor and non-guarantor financial information. The impact of this reclassification was an increase to cost of services sold of approximately $2.3 million and a decrease in income tax expense of approximately $0.8 million for the non-guarantor subsidiaries for the nine months ended September 30, 2012 and a corresponding decrease in the cost of services sold of approximately $2.3 million and increase in the income tax benefit of approximately $0.8 million in the guarantor subsidiaries for the nine months ended September 30, 2012.

The following condensed consolidating financial statements include the balance sheets as of September 30, 2012 and December 31, 2011, statements of comprehensive income for the three months and nine months endedSeptember 30, 2012 and 2011 and statements of cash flows for the nine months endedSeptember 30, 2012 and 2011 of (i) Gentiva Health Services, Inc. and (ii) its guarantor subsidiaries (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting) and its non-guarantor subsidiaries along with eliminations necessary to arrive at the information for the Company on a consolidated basis.

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Condensed Consolidating Balance Sheet

September 30, 2012

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	114,650	$	—	$	41,399	$	—		$	156,049
Receivables, net	—		249,385		17,468		(12,759		)	254,094
Deferred tax assets, net	—		8,897		1,984		—			10,881
Prepaid expenses and other current assets	—		46,114		8,848		—			54,962
Total current assets	114,650		304,396		69,699		(12,759		)	475,986
Notes receivable from CareCentrix	—		34,949		—		—			34,949
Fixed assets, net	—		42,748		309		—			43,057
Intangible assets, net	—		195,600		100		—			195,700
Goodwill	—		650,300		6,064		—			656,364
Investment in subsidiaries	1,044,807		27,049		—		(1,071,856		)	—
Other assets	—		78,151		7		—			78,158
Total assets	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	21,693	$	—	$	—	$	—		$	21,693
Accounts payable	—		27,880		1		(12,759		)	15,122
Other current liabilities	—		180,380		47,697		—			228,077
Total current liabilities	21,693		208,260		47,698		(12,759		)	264,892
Long-term debt	916,432		—		—		—			916,432
Deferred tax liabilities, net	—		44,628		—		—			44,628
Other liabilities	—		35,498		13		—			35,511
Total Gentiva shareholders’ equity	221,332		1,044,807		27,049		(1,071,856		)	221,332
Noncontrolling interests	—		—		1,419		—			1,419
Total equity	221,332		1,044,807		28,468		(1,071,856		)	222,751
Total liabilities and equity	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214

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Condensed Consolidating Balance Sheet

December 31, 2011

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	124,101	$	—	$	40,811	$	—		$	164,912
Receivables, net	—		283,552		18,168		(11,131		)	290,589
Deferred tax assets, net	—		24,560		1,891		—			26,451
Prepaid expenses and other current assets	—		32,619		6,904		(1,144		)	38,379
Total current assets	124,101		340,731		67,774		(12,275		)	520,331
Note receivable from CareCentrix	—		25,000		—		—			25,000
Fixed assets, net	—		45,917		329		—			46,246
Intangible assets, net	—		214,774		100		—			214,874
Goodwill	—		635,605		6,064		—			641,669
Investment in subsidiaries	1,063,962		25,173		—		(1,089,135		)	—
Other assets	—		82,200		8		—			82,208
Total assets	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	14,903	$	—	$	—	$	—		$	14,903
Accounts payable	—		22,913		831		(11,131		)	12,613
Other current liabilities	—		223,165		45,655		(1,144		)	267,676
Total current liabilities	14,903		246,078		46,486		(12,275		)	295,192
Long-term debt	973,222		—		—		—			973,222
Deferred tax liabilities, net	—		32,498		—		—			32,498
Other liabilities	—		26,862		23		—			26,885
Total Gentiva shareholders’ equity	199,938		1,063,962		25,173		(1,089,135		)	199,938
Noncontrolling interests	—		—		2,593		—			2,593
Total equity	199,938		1,063,962		27,766		(1,089,135		)	202,531
Total liabilities and equity	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328

36

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	412,963		$	14,186		$	(2,705	)	$	424,444
Cost of services sold	—			217,767			8,827			(2,705		)	223,889
Gross profit	—			195,196			5,359			—			200,555
Selling, general and administrative expenses	—			(156,771		)	(4,436		)	—			(161,207		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Interest (expense) and other, net	(22,917		)	—			23			—			(22,894		)
Equity in earnings of subsidiaries	12,563			243			—			(12,806		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(10,354		)	19,536			946			(12,806		)	(2,678		)
Income tax benefit (expense)	9,831			(7,979		)	(555		)	—			1,297
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
(Loss) income from continuing operations	(523		)	12,563			391			(12,806		)	(375		)
Discontinued operations, net of tax	—			—			—			—			—
Net (loss) income	(523		)	12,563			391			(12,806		)	(375		)
Noncontrolling interests	—			—			(148		)	—			(148		)
Net (loss) income attributable to Gentiva shareholders	$	(523	)	$	12,563		$	243		$	(12,806	)	$	(523	)
Comprehensive (loss) income	$	(523	)	$	12,563		$	391		$	(12,806	)	$	(375	)

37

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	439,140		$	13,299		$	(2,691	)	$	449,748
Cost of services sold	—			228,306			17,328			(2,691		)	242,943
Gross profit	—			210,834			(4,029		)	—			206,805
Selling, general and administrative expenses	—			(178,773		)	(3,861		)	—			(182,634		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			3,977			—			—			3,977
Interest (expense) and other, net	(20,687		)	—			14			—			(20,673		)
Equity in earnings of subsidiaries	(461,283		)	(7,904		)	—			469,187			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(481,970		)	(615,171		)	(7,876		)	469,187			(635,830		)
Income tax benefit (expense)	8,219			79,399			(80		)	—			87,538
Equity in net earnings of CareCentrix	—			68,692			—			—			68,692
(Loss) income from continuing operations	(473,751		)	(467,080		)	(7,956		)	469,187			(479,600		)
Discontinued operations, net of tax	—			5,797			186			—			5,983
Net (loss) income	(473,751		)	(461,283		)	(7,770		)	469,187			(473,617		)
Noncontrolling interests	—			—			(134		)	—			(134		)
Net (loss) income attributable to Gentiva shareholders	$	(473,751	)	$	(461,283	)	$	(7,904	)	$	469,187		$	(473,751	)
Comprehensive (loss) income	$	(473,751	)	$	(461,283	)	$	(7,770	)	$	469,187		$	(473,617	)

38

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,253,781		$	42,429		$	(8,423	)	$	1,287,787
Cost of services sold	—			661,151			26,759			(8,423		)	679,487
Gross profit	—			592,630			15,670			—			608,300
Selling, general and administrative expenses	—			(486,285		)	(12,557		)	—			(498,842		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Gain on sale of businesses	—			5,449			(2		)	—			5,447
Interest (expense) and other, net	(67,138		)	—			87			—			(67,051		)
Equity in earnings of subsidiaries	50,166			1,260			—			(51,426		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(16,972		)	93,922			3,198			(51,426		)	28,722
Income tax benefit (expense)	35,198			(44,762		)	(1,314		)	—			(10,878		)
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
Income from continuing operations	18,226			50,166			1,884			(51,426		)	18,850
Discontinued operations, net of tax	—			—			—			—			—
Net income	18,226			50,166			1,884			(51,426		)	18,850
Noncontrolling interests	—			—			(624		)	—			(624		)
Net income attributable to Gentiva shareholders	$	18,226		$	50,166		$	1,260		$	(51,426	)	$	18,226
Comprehensive income	$	18,226		$	50,166		$	1,884		$	(51,426	)	$	18,850

39

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,319,162		$	38,801		$	(8,394	)	$	1,349,569
Cost of services sold	—			688,754			27,490			(8,394		)	707,850
Gross profit	—			630,408			11,311			—			641,719
Selling, general and administrative expenses	—			(535,958		)	(11,047		)	—			(547,005		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			8,590			—			—			8,590
Interest (expense) and other, net	(68,387		)	—			45			—			(68,342		)
Equity in earnings of subsidiaries	(405,039		)	(2,244		)	—			407,283			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(473,426		)	(542,509		)	309			407,283			(608,343		)
Income tax benefit (expense)	18,316			61,202			(2,511		)	—			77,007
Equity in net earnings of CareCentrix	—			69,582			—			—			69,582
(Loss) income from continuing operations	(455,110		)	(411,725		)	(2,202		)	407,283			(461,754		)
Discontinued operations, net of tax	—			6,686			410			—			7,096
Net (loss) income	(455,110		)	(405,039		)	(1,792		)	407,283			(454,658		)
Noncontrolling interests	—			—			(452		)	—			(452		)
Net (loss) income attributable to Gentiva shareholders	$	(455,110	)	$	(405,039	)	$	(2,244	)	$	407,283		$	(455,110	)
Comprehensive (loss) income	$	(455,588	)	$	(405,039	)	$	(1,792	)	$	407,283		$	(455,136	)

40

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by operating activities	$	3,710		$	66,138		$	4,793		$	—	$	74,641
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(9,188		)	(47		)	—		(9,235		)
Proceeds from sale of businesses	—			5,720			—			—		5,720
Acquisition of businesses	—			(22,520		)	—			—		(22,520		)
Net cash used in investing activities	—			(25,988		)	(47		)	—		(26,035		)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421			—			—			—		2,421
Repayment of long-term debt	(50,000		)	—			—			—		(50,000		)
Debt issuance costs	(4,125		)	—			—			—		(4,125		)
Repurchase of common stock	(4,974		)	—			—			—		(4,974		)
Repayment of capital lease obligations	(106		)	—			—			—		(106		)
Other	3,501			(28		)	(4,158		)	—		(685		)
Net payments related to intercompany financing	40,122			(40,122		)	—			—		—
Net cash used in financing activities	(13,161		)	(40,150		)	(4,158		)	—		(57,469		)
Net change in cash and cash equivalents	(9,451		)	—			588			—		(8,863		)
Cash and cash equivalents at beginning of period	124,101			—			40,811			—		164,912
Cash and cash equivalents at end of period	$	114,650		$	—		$	41,399		$	—	$	156,049

41

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(31,545	)	$	44,344		$	1,548		$	—	$	14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(14,393		)	(178		)	—		(14,571		)
Proceeds from sale of businesses	—			142,281			52			—		142,333
Acquisition of businesses	—			(320		)	—			—		(320		)
Net cash provided by (used in) investing activities	—			127,568			(126		)	—		127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	7,005			—			—			—		7,005
Windfall tax benefits associated with equity-based compensation	194			—			—			—		194
Repayment of long-term debt	(43,438		)	—			—			—		(43,438		)
Debt issuance costs	(13,457		)	—			—			—		(13,457		)
Repayment of capital lease obligations	(210		)	—			—			—		(210		)
Other	—			1,157			(1,700		)	—		(543		)
Net payments related to intercompany financing	173,069			(173,069		)	—			—		—
Net cash provided by (used in) financing activities	123,163			(171,912		)	(1,700		)	—		(50,449		)
Net change in cash and cash equivalents	91,618			—			(278		)	—		91,340
Cash and cash equivalents at beginning of period	63,816			—			40,936			—		104,752
Cash and cash equivalents at end of period	$	155,434		$	—		$	40,658		$	—	$	196,092

Note 17. Subsequent Event

Divestiture

On October 29, 2012, the Company entered into an asset purchase agreement to sell its Phoenix, Arizona area hospice operations in an all cash transaction. The sale is expected to close on or about December 1, 2012 and includes three locations in the Phoenix area market that provide inpatient and routine hospice services.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this Quarterly Report on Form 10-Q, 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. Such factors include, among others, the following:

• general economic and business conditions;

• demographic changes;

• changes in, or failure to comply with, existing governmental regulations;

• impact on the 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 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.

Forward-looking statements are found throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission (“SEC”), the Company does not have any intention or obligation to publicly release any revisions to forward-looking statements to reflect unforeseen or other events after the date of this report. The Company has provided a detailed discussion of risk factors in its Annual Report on Form 10-K for the year ended December 31, 2011 and in various other filings with the SEC. The reader is encouraged to review these risk factors and filings.

General

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of Gentiva’s results of operations and financial position. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report.

The Company’s results of operations are impacted by various regulations and other matters that are implemented from time to time in its industry, some of which are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and in other filings with the SEC.

Overview

Gentiva Health Services, Inc. (“Gentiva” or the “Company”) is a leading provider of home health services and hospice services serving patients through approximately 420 locations in 41 states.

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The Company provides 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. Gentiva’s revenues are generated from federal and state government programs, commercial insurance and individual consumers.

The federal and state government programs under which the Company generates a majority of its net revenues are subject to legislative and other risk factors that can make it difficult to determine future reimbursement rates for Gentiva’s services to its patients. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“Affordable Care Act”), which represents a $39.5 billion reduction in Medicare home health spending over an extended period. The law phases in the reductions over seven years, including rebasing of Medicare reimbursement rates over a four year period beginning in 2014, with reductions resulting from rebasing not to exceed 3.5 percent in any one year. The Company anticipates that some provisions of the Affordable Care Act may be subject to further clarification and modification through the rule-making process. In addition, various states have addressed budget pressures by considering or implementing reductions in various healthcare programs, including reductions in rates or changes in patient eligibility requirements. The Company has also decided to reduce participation in certain Medicaid and other state and county programs. The commercial insurance industry is also continually seeking ways to control the cost of services to patients that it covers, one way being to require greater efficiencies from its providers, including home healthcare companies.

The Company believes that several marketplace factors can contribute to its future growth. First, the Company is a leader in a highly fragmented home healthcare and hospice industry populated by more than 20,000 Medicare certified providers of varying size and resources. Second, the cost of a home healthcare visit to a patient can be significantly lower than the cost of an average day in a hospital or skilled nursing institution and third, the demand for home care is expected to grow, primarily due to an aging U.S. population. The Company expects to capitalize on these factors through a determined set of strategic priorities, as follows: growing revenues from services provided to the geriatric population, with a particular emphasis on expanding the penetration of the Company’s innovative specialty programs; being the leader in growth in the local markets the Company serves; focusing on clinical associate recruitment, retention and productivity; evaluating and closing opportunistic acquisitions; seeking further operating leverage through more efficient utilization of existing resources; implementing and leveraging technology to support the Company’s various initiatives; strengthening the Company’s balance sheet to support future growth; and educating our legislative and policymaking leaders on the value of the home health and hospice benefits to our nation’s seniors. The Company anticipates executing these strategies by continuing to expand its sales presence, making operational improvements, deploying new technologies, providing employees with leadership training and instituting retention initiatives, ensuring strong ethics and corporate governance, and focusing on shareholder value.

Management intends the discussion of the Company’s financial condition and results of operations that follows to provide information that will assist in understanding its financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect the Company’s financial statements.

The Company’s operations involve servicing its patients and customers through its Home Health segment and its Hospice segment. This presentation aligns financial reporting with the manner in which the Company manages its business operations with a focus on the strategic allocation of resources and separate branding strategies between the business segments. Discontinued operations represent services and products provided to patients through the Company’s Rehab Without Walls^® business, the Company’s homemaker agency business in Illinois and the Company’s HME and IV business. See Note 3 to the Company’s consolidated financial statements for additional information.

Home Health

The Home Health segment is comprised of direct home nursing and therapy services operations, including specialty programs. The Company conducts direct home nursing and therapy services operations through licensed and Medicare-certified agencies, located in 38 states, from which the Company provides various combinations of skilled nursing and therapy services and paraprofessional nursing services to adult and elder patients. The Company’s direct home nursing and therapy services operations also deliver services to its customers through focused specialty programs that include:

• Gentiva Orthopedics, which provides individualized home orthopedic rehabilitation services to patients recovering from joint replacement or other major orthopedic surgery;

• Gentiva Safe Strides^®, which provides therapies for patients with balance issues who are prone to injury or immobility as a result of falling;

• Gentiva Cardiopulmonary, which helps patients and their physicians manage heart and lung health in a home-based environment;

44

• Gentiva Neurorehabilitation, which helps patients who have experienced a neurological injury or condition by removing the obstacles to healing in the patient’s home; and

• Gentiva Senior Health, which addresses the needs of patients with age-related diseases and issues to effectively and safely stay in their homes.

Hospice

The Hospice segment serves terminally ill patients and their families through Medicare-certified providers operating in 28 states. Comprehensive management of the healthcare services and products needed by hospice patients and their families are provided through the use of an interdisciplinary team. Depending on a patient’s needs, each hospice patient is assigned an interdisciplinary team comprised of a physician, nurse(s), home health aide(s), medical social worker(s), chaplain, dietary counselor and bereavement coordinator, as well as other care professionals. The Hospice segment also delivers services to its customers through focused specialty programs that include:

• Dementia Specialty Program, which provides an individualized disease management program addressing the physical needs specific to Alzheimer’s and dementia patients and support mechanisms for their caregivers;

• Cancer Specialty Program, which provides advanced pain and symptom management for patients coping with the effects of cancer;

• Cardiac Specialty Program, which helps patients and their physicians aggressively manage symptoms associated with heart disease, focusing on quality of life and pain control; and

• Pulmonary Specialty Program, which addresses the needs of patients who have experienced a respiratory crisis by increasing quality of life and promoting comfort by specialized symptom management.

Acquisitions

Effective August 31, 2012, the Company completed its acquisition of the assets and business of Family Home Care Corporation, one of the leading providers of home health and hospice services in the Washington and Idaho markets. Total consideration of $12.3 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.6 million), identifiable intangible assets ($6.2 million) and other assets ($0.5 million).

Effective August 31, 2012, the Company completed its acquisition of the assets and business of North Mississippi Hospice, a provider of hospice services with offices in Oxford, Southhaven and Tupelo, Mississippi. Total consideration of $4.7 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($3.3 million) and identifiable intangible assets ($1.4 million).

Effective July 22, 2012, the Company completed its acquisition of the assets and business of Advocate Hospice, a provider of hospice services located in Danville, Indiana, for consideration of $5.5 million, excluding transaction costs and subject to post-closing adjustments, which consideration included entering into an option purchase agreement with a third party covering membership interests in Advocate Hospice. Additional consideration of up to $2.0 million is payable under the option agreement if certain earnout conditions are met, which the Company valued at $1.9 million, on a discounted cash flow basis, and recorded as other accrued expenses on the Company consolidated balance sheet at September 30, 2012. The consideration was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.8 million) and identifiable intangible assets ($1.6 million).

Effective April 29, 2011, the Company purchased the outstanding member units representing the noncontrolling interest in Odyssey Healthcare of Augusta, LLC (“Augusta”) for approximately $0.3 million. As a result of the transaction, the Company owns 100 percent of the outstanding member units of Augusta.

Dispositions

Gentiva Consulting Disposition

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.

Louisiana Home Health and Hospice Dispositions

During the second quarter of 2012, the Company sold 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

45

received proceeds of approximately $5.9 million during the first nine months of 2012 and established a receivable of approximately $0.5 million.

Home Health and Hospice Branch Dispositions

In the fourth quarter of 2011, the Company entered into asset purchase agreements to sell the assets of certain home health branches in Utah, Michigan and Nevada, as well as a hospice branch in Texas. In addition, the Company entered into an option agreement to sell the assets of the Company’s home health branch in Brooklyn, New York pending approval by the Public Health Council and New York State Agencies.

Homemaker Services Agency Disposition

Effective October 14, 2011, the Company completed the sale of its IDOA business to Premier Home Health Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $2.4 million, consisting of (i) cash proceeds of approximately $2.0 million and (ii) an escrow fund of approximately $0.4 million, to be received by the Company subject to certain post closing conditions. During the first nine months of 2012, the Company reduced the escrow fund receivable to approximately $0.3 million as a result of certain post closing conditions and received such funds in July 2012.

Rehab Without Walls^® Disposition

Effective September 10, 2011, the Company completed the sale of its Rehab Without Walls^® business to Southern Home Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $9.8 million. The consideration consisted of (i) cash proceeds of approximately $9.2 million and (ii) an escrow fund of approximately $0.6 million which was received by the Company in September 2012.

Results of Operations

The comparison of results of operations between 2012 and 2011 has been impacted significantly by the following items:

• 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 remaining trade name balances for the third quarter and first nine months of 2012, which is reflected in goodwill, intangibles and other long-lived asset impairment in the Company's consolidated statements of comprehensive income.

• The Company recorded net charges relating to restructuring, acquisition and integration activities and legal settlements of $0.1 million and $5.5 million for third quarter and the first nine months of 2012, respectively, and $9.8 million and $34.9 million in the third quarter and first nine months of 2011, respectively.

• The Company has closed a significant number of branch operations, sold a number of operating units and has completed several acquisitions affecting the reporting periods presented as follows:

• During the third quarter of 2012, the Company completed the acquisitions of Family Home Care, North Mississippi Hospice and Advocate Hospice. See Note 3 to the Company's consolidated financial statements for more information.

• During the second quarter of 2012, the Company sold eight home health branches and four hospice branches in Louisiana.

• 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 these activities, the Company’s net revenues comparisons were negatively impacted for the third quarter and first nine months of 2012 by approximately $20.1 million and $61.5 million, respectively, as compared to the corresponding periods of 2011.

• The Company recognized dividend income of approximately $4.0 million and $8.6 million in the third quarter and first nine months of 2011, respectively, representing a 12% cumulative preferred dividend received on the partial sale of the Company’s preferred stock investment in CareCentrix in April 2011.

• During the third quarter of 2011, the Company determined a triggering event had occurred and performed an interim impairment test of its identifiable intangible assets and goodwill. The triggering event was the change in business climate, including uncertainties around Medicare reimbursement as the federal government worked to reduce the

46

federal deficit. The interim test concluded that the fair value of certain identifiable intangible assets, as well as goodwill, was less than their carrying value. As such, the Company recognized an impairment loss of approximately $602.1 million during the third quarter and first nine months of 2011.

• In connection with the Odyssey acquisition, the Company conducted a strategic evaluation of its various field operating systems to review alternatives towards achieving a comprehensive platform, capable of handling both its Home Health and Hospice business segments. During the third quarter of 2011, the Company continued to progress with its review of alternatives to replacing various field operating systems and in connection with that review recorded a non-cash impairment charge of approximately $40.3 million related to developed software. In addition, the Company conducted a review of real estate it owned in Dothan, Alabama, which indicated that the estimated fair value of the real estate was lower than the carrying value and recorded a non-cash impairment charge of approximately $0.9 million. These charges are recorded in goodwill, intangible assets and other long-lived asset impairment in the Company's consolidated statements of operations for the third quarter and first nine months of 2011.

• The Company disposed of its Rehab Without Walls® business during the third quarter of 2011. The Company recognized a gain of approximately $9.1 million associated with the sale of this business. The Company also concluded that the assets of the homemaker services agency business in Illinois met the definition of assets held for sale and included both the Rehab Without Walls® business and the homemaker services agency business in discontinued operations for all periods presented.

Net Revenues

A summary of the Company’s net revenues by segment follows (in millions):

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Home Health	$	234.7	$	253.2	(7.3	)%	$	710.3	$	763.6	(7.0	)%
Hospice	189.7		196.5		(3.4	)%	577.5		586.0		(1.4	)%
Total net revenues	$	424.4	$	449.7	(5.6	)%	$	1,287.8	$	1,349.6	(4.6	)%

Net revenues by major payer source are as follows (in millions):

	Third Quarter
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	185.0	$	177.4	$	362.4	$	200.3	$	182.0	$	382.3
Medicaid and Local Government	12.2		6.9		19.1		13.2		8.0		21.2
Commercial Insurance and Other:
Paid at episodic rates	21.4		—		21.4		19.3		—		19.3
Other	16.1		5.4		21.5		20.4		6.5		26.9
Total net revenues	$	234.7	$	189.7	$	424.4	$	253.2	$	196.5	$	449.7

	First Nine Months
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	561.7	$	539.0	$	1,100.7	$	601.6	$	543.0	$	1,144.6
Medicaid and Local Government	35.7		21.2		56.9		39.8		23.4		63.2
Commercial Insurance and Other:
Paid at episodic rates	62.8		—		62.8		58.1		—		58.1
Other	50.1		17.3		67.4		64.1		19.6		83.7
Total net revenues	$	710.3	$	577.5	$	1,287.8	$	763.6	$	586.0	$	1,349.6

47

For the third quarter of 2012 as compared to the third quarter of 2011, net revenues decreased by $25.3 million, or 5.6 percent, to $424.4 million from $449.7 million. For the first nine months of 2012 as compared to the first nine months of 2011, net revenues decreased by $61.8 million, or 4.6 percent, to $1.29 billion from $1.35 billion.

Home Health

Home Health segment revenues are derived from all three payer groups: Medicare, Medicaid and Local Government and Commercial Insurance and Other. Third quarter2012 net revenues were $234.7 million, down $18.5 million, or 7.3 percent, from $253.2 million in the prior year period. For the first nine months of 2012, net revenues were $710.3 million, down $53.3 million million, or 7.0 percent, from $763.6 million in the prior year period. The decrease is primarily attributable to closed or divested branches, the net decrease in Medicare reimbursement rates and additional decreases in the Medicaid and Local Government and Commercial Insurance and Other payer sources as the Company continues its strategy to reduce or eliminate certain lower gross margin business.

A summary of the impact on net revenues from branches that were closed, divested or acquired for each of the respective reporting periods in 2011 and 2012 follows (in millions):

	Third quarter							First Nine Months
	2011		2012		Impact			2011		2012		Impact
Medicare	$	13.5	$	1.3	$	(12.2	)	$	40.8	$	4.8	$	(36.0	)
Medicaid and Local Government	0.5		0.4		(0.1		)	1.3		1.0		(0.3		)
Commercial Insurance and Other:
Paid at episodic rates	1.5		—		(1.5		)	4.8		0.6		(4.2		)
Other	2.0		0.2		(1.8		)	6.5		0.5		(6.0		)
Total net revenues	$	17.5	$	1.9	$	(15.6	)	$	53.4	$	6.9	$	(46.5	)

The Company’s episodic revenues decreased 6.0 percent and 5.3 percent for the third quarter and first nine months of 2012, respectively. A summary of the Company’s combined Medicare and non-Medicare Prospective Payment System (“PPS”) business paid at episodic rates follows (in millions):

	Third quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Home Health
Medicare	$	185.0	$	200.3	(7.6	)%	$	561.7	$	601.6	(6.6	)%
Non-Medicare PPS	21.4		19.3		10.9	%	62.8		58.1		8.0	%
Total	$	206.4	$	219.6	(6.0	)%	$	624.5	$	659.7	(5.3	)%

Key Company statistics related to episodic revenues were as follows:

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Episodes	71,300		72,000		(1.0	)%	216,000		216,400		(0.2	)%
Revenue per episode	$	2,900	$	3,050	(5.1	)%	$	2,900	$	3,050	(5.2	)%

Episode volume for the third quarter of 2012 decreased 1.0 percent and for the first nine months of 2012 decreased 0.2 percent as compared to the corresponding periods of 2011. Excluding the impact of branch closures, divestitures and acquisitions, episodes would have increased by 6.1 percent and 6.7 percent, respectively, for the third quarter and first nine months of 2012 compared to the same periods in 2011. Similarly, admissions decreased by 2.6 percent for the third quarter, from 49,900 in the third quarter of 2011 to 48,600 in the third quarter of 2012, and by 1.3 percent for the first nine months of 2012, from 150,700 for the first nine months of 2011 to 148,800 in the first nine months of 2012. Excluding the impact of branch closures, divestitures and acquisitions, admissions would have increased by 4.5 percent and 5.5 percent for third quarter and first nine months of 2012, respectively, compared to the same periods in 2011. There were approximately 1.47 episodes and 1.45 episodes, respectively, for each admission during the third quarter and first nine months of 2012 compared to 1.44 episodes for each admission during both the third quarter and first nine months of 2011.

48

In both the third quarter and first nine months of 2012, Medicare and non-Medicare PPS revenues as a percent of total Home Health revenues were 88 percent as compared to 87 percent for the corresponding periods in 2011.

Revenues from Medicaid and Local Government payer sources were $12.2 million and $35.7 million in the third quarter and first nine months of 2012, respectively, as compared to $13.2 million and $39.8 million in the third quarter and first nine months of 2011, respectively. Revenues from Commercial Insurance and Other payer sources, excluding non-Medicare PPS revenues, were $16.1 million in the third quarter of 2012 as compared to $20.4 million in the third quarter of 2011. For the first nine months of 2012, as compared to the corresponding period of 2011, revenues from Commercial Insurance and Other payer sources were $50.1 million and $64.1 million, respectively.

Net revenues from the Company’s Rehab Without Walls^® business were $4.2 million and $15.5 million in the third quarter and first nine months of 2011, respectively. Net revenues from the Company’s homemaker services agency business in Illinois were $2.5 million and $7.2 million in the third quarter and first nine months of 2011, respectively. These amounts are included within discontinued operations in the Company’s consolidated statements of comprehensive income.

Hospice

Hospice revenues are derived from all three payer groups: Medicare, Medicaid and Local Government and Commercial Insurance and Other. Third quarter and first nine months of 2012 net revenues were $189.7 million and $577.5 million, respectively, as compared to $196.5 million and $586.0 million in the corresponding periods of 2011. The decrease is primarily attributable to the impact of closed or divested branches and lower admission volumes as compared to the 2011 periods.

A summary of the impact on net revenues from branches that were closed, divested or acquired for each of the respective reporting periods in 2011 and 2012 follows (in millions):

	Third Quarter							First Nine Months
	2011		2012		Variance			2011		2012		Variance
Medicare	$	5.6	$	1.5	$	(4.1	)	$	17.4	$	4.1	$	(13.3	)
Medicaid and Local Government	0.2		—		(0.2		)	1.0		—		(1.0		)
Commercial Insurance and Other:	0.2		—		(0.2		)	0.8		0.1		(0.7		)
Total net revenues	$	6.0	$	1.5	$	(4.5	)	$	19.2	$	4.2	$	(15.0	)

Key Company statistics relating to Hospice were as follows:

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Average Daily Census	13,600		14,100		(3.8	)%	13,700		13,900		(1.9	)%
Revenue per Patient Day	$	152	$	152	0.3	%	$	154	$	154	0.1	%

For the third quarter and first nine months of 2012, Average Daily Census (“ADC”) approximated 13,600 patients and 13,700 patients, respectively, as compared to 14,100 patients and 13,900 patients, respectively, for the third quarter and first nine months of 2011. The average length of stay of patients at discharge was 101 days and 89 days for the third quarter and first nine months of 2012, respectively. The average length of stay of patients at discharge was 86 days and 94 days for the third quarter and first nine months of 2011, respectively.

Medicare revenues were $177.4 million and $539.0 million in the third quarter and first nine months of 2012, respectively, as compared to $182.0 million and $543.0 million in the corresponding periods of 2011. Medicaid revenues were $6.9 million and $21.2 million for the third quarter and first nine months of 2012, respectively, as compared to $8.0 million and $23.4 million for the corresponding periods of 2011. Commercial Insurance and Other revenues in the third quarter and first nine months of 2012 were $5.4 million and $17.3 million, respectively, as compared to $6.5 million and $19.6 million in the corresponding periods of 2011.

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Gross Profit

The following table reflects gross profit by business segment for 2012 and 2011 (in millions):

	Third Quarter									First Nine Months
	2012			2011			Variance			2012			2011			Variance
Gross Profit:
Home Health	$	114.5		$	124.3		$	(9.8	)	$	349.2		$	388.2		$	(39.0	)
Hospice	86.1			82.5			3.6			259.1			253.5			5.6
Total	$	200.6		$	206.8		$	(6.2	)	$	608.3		$	641.7		$	(33.4	)
As a percent of revenue:
Home Health	48.8		%	49.1		%	(0.3		)%	49.2		%	50.8		%	(1.6		)%
Hospice	45.3		%	42.0		%	3.3		%	44.9		%	43.3		%	1.6		%
Total	47.3		%	46.0		%	1.3		%	47.2		%	47.6		%	(0.4		)%

Gross profit decreased by $6.2 million, or 3.0 percent, for the third quarter of 2012 as compared to the third quarter of 2011. For the first nine months of 2012, gross profit decreased by $33.4 million, or 5.2 percent, as compared to the first nine months of 2011.

For the third quarter and first nine months of 2012, gross profit as a percentage of revenues within the Home Health segment declined by 0.3 percent and 1.6 percent, respectively, as compared to the corresponding periods of 2011. The decreases resulted from (i) the net decrease in Medicare reimbursement rates for 2012, partially offset by (ii) closed or divested branches with lower gross profit percentages, (iii) growth in the Company’s higher margin specialty programs, and (iv) continued elimination or reduction of certain low margin Medicaid and local government business and commercial business.

Hospice gross profit as a percentage of revenues increased 3.3 percent and 1.6 percent for the third quarter and first nine months of 2012, respectively, as compared to the third quarter and first nine months of 2011. The increases were primarily due to (i) improved management of direct labor and supply costs and (ii) the impact of the closed and divested branches with lower gross profit percentages.

Gross profit was impacted by depreciation expense of approximately $0.2 million in the third quarter of both 2012 and 2011 and $0.7 million in the first nine months of both 2012 and 2011.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 11.7 percent, or $21.4 million, to $161.2 million for the third quarter of 2012, as compared to $182.6 million for the third quarter of 2011, and decreased 8.8 percent, or $48.2 million, to $498.8 million for the first nine months of 2012, as compared to $547.0 million for the first nine months of 2011. If charges, as noted below, relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $0.1 million and $5.5 million in the third quarter and first nine months of 2012, respectively, and $9.8 million and $34.9 million in the third quarter and first nine months of 2011, respectively, were excluded, the decrease in selling, general and administrative expenses would have been approximately 6.7 percent, or $11.6 million, for the third quarter of 2012, as compared to the third quarter of 2011, and 3.7 percent, or $18.8 million, for the first nine months of 2012, as compared to the first nine months of 2011.

The decrease in the third quarter of 2012, as compared to the third quarter of 2011, was primarily attributable to (i) legal settlements ($6.5 million), (ii) Home Health field operating, selling and administrative costs ($13.0 million), (iii) cost savings initiatives and other restructuring costs ($3.3 million), (iv) decrease in provision for doubtful accounts ($1.0 million) and (v) depreciation and amortization ($0.8 million). These costs were partially offset by an increase in (i) corporate administrative expenses ($1.0 million), (ii) Hospice field operating, selling and administrative costs ($1.8 million) and (iii) equity-based compensation expense ($0.4 million).

The decrease in the first nine months of 2012, as compared to the first nine months of 2011, was primarily attributable to (i) legal settlements ($20.0 million), (ii) Home Health field operating, selling and administrative costs ($32.0 million), (iii) cost savings initiatives and other restructuring costs ($9.4 million), (iv) decrease in provision for doubtful accounts ($1.9 million), (v) equity-based compensation expense ($0.2 million) and (vi) depreciation and amortization ($1.2 million). These costs were partially offset by an increase in (i) corporate administrative expenses ($7.0 million) and (ii) Hospice field operating, selling and administrative costs ($9.5 million). During the first nine months of 2012, selling, general and administrative expenses were

50

negatively impacted by the costs associated with Amendment No. 3 to the Company’s credit agreement of approximately $1.2 million.

Depreciation and amortization expense included in selling, general and administrative expenses was $6.4 million and $20.6 million in the third quarter and first nine months of 2012, respectively, as compared to $7.2 million and $21.9 million for the corresponding periods of 2011.

Dividend Income

During the third quarter and first nine months of 2011, the Company sold its remaining investment in CareCentrix Holdings Inc. The Company recognized dividend income in the third quarter and first nine months of 2011 of approximately $4.0 million and $8.6 million, respectively, representing accumulated and unpaid dividends on the preferred shares which were reflected in dividend income in the Company's consolidated statements of comprehensive income. The Company also recognized a net gain of approximately $68.3 million which was reflected in equity in net earnings of CareCentrix, including gain on sale in the Company's consolidated statements of comprehensive income. See Note 2 to the Company’s consolidated financial statements for additional information.

Interest Income and Interest Expense and Other

For the third quarter and first nine months of 2012, net interest expense and other was approximately $22.9 million and $67.1 million, respectively, consisting primarily of interest expense and other of $23.6 million and $69.1 million, respectively, associated with the term loan borrowings, fees associated with the Company’s credit agreement and outstanding letters of credit, and amortization of debt issuance costs, partially offset by interest income of $0.7 million and $2.0 million, respectively, earned on investments and existing cash balances and, for the first nine months of 2012, charges of $0.5 million relating to the write-off of deferred debt issuance costs associated with the Company’s revolving credit facility.

For the third quarter and first nine months of 2011, net interest expense and other was approximately $20.7 million and $68.3 million, respectively, consisting primarily of interest expense and other of $21.3 million and $70.3 million, respectively, associated with borrowings and fees under the credit agreement and outstanding letters of credit and amortization of debt issuance costs, partially offset by interest income of $0.6 million and $2.0 million, respectively, earned on investments and existing cash balances and for the first nine months of 2011, charges of $3.8 million relating to the write-off of deferred debt issuance costs and fees associated with the termination of the Company’s interest rate swaps in connection with the refinancing of the Company’s Term Loan A and Term Loan B facilities.

Income Tax Expense

The Company recorded an income tax benefit of $1.3 million and an income tax provision $10.9 million for the third quarter and first nine months of 2012, respectively. The Company’s effective income tax rate for the first nine months of 2012 was 37.9 percent. The rate for the first nine months is lower than what is expected for the full year as a result of an issue being effectively settled with the IRS and a reversal of related reserves in the first nine months of 2012 . The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 37.9 percent for the first nine months of 2012 is primarily due to state income taxes, net of federal benefit (approximately 5.0 percent), other items (approximately 0.4 percent), partially offset by changes in tax reserves (approximately 2.5 percent).

The Company recorded income tax benefits of $87.5 million and $77.0 million for the third quarter and first nine months of 2011, respectively. The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 12.7 percent for the first nine months of 2011 is primarily due to state income taxes, net of federal benefit (approximately 4.7 percent), offset by the impact of impairment of goodwill, intangibles and other long-lived assets (approximately 26.2 percent) and changes in tax reserves and other (approximately 0.8 percent).

Discontinued Operations, Net of Tax

For the third quarter and first nine months of 2011, discontinued operations, net of tax reflected a gain of $6.0 million, or $0.20 per diluted share, and $7.1 million, or $0.23 per diluted share, respectively, associated with the Company’s homemaker services agency business in Illinois, the Company’s Rehab Without Walls^® business and a change in settlement of the Company’s post closing liabilities in connection with the sale of its HME and IV businesses. For the first nine months of 2011, discontinued operations included a pre-tax gain of approximately $9.1 million on the sale of the Company's Rehab Without Walls^® business.

51

Net Income Attributable to Gentiva Shareholders

For the third quarter of 2012, net loss attributable to Gentiva shareholders was $0.5 million, or $0.02 per diluted share, compared with net loss of $473.8 million, or $15.62 per diluted share, for the corresponding period 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 to a net loss of $455.1 million, or $15.04 per diluted share, for the first nine months of 2011.

The Company uses adjusted income from continuing operations, a non-GAAP financial measure, as a supplemental measure of Company performance. The Company defines adjusted income from continuing operations attributable to Gentiva shareholders as income from continuing operations attributable to Gentiva shareholders, excluding charges relating primarily to cost savings initiatives and other restructuring costs, acquisition and integration activities and legal settlements, including tax reserves on those legal settlements. The Company considers adjusted income from continuing operations to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of the Company’s business on a consistent basis across reporting periods, as it eliminates the effect of items that are not indicative of the Company’s core operating performance. Management uses adjusted income from continuing operations attributable to Gentiva shareholders to evaluate overall performance and compare current operating results with other companies in the healthcare industry and 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. Since adjusted income from continuing operations attributable to Gentiva shareholders 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.

After adjusting for certain items which include cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements, and tax reserves as noted in the tables below, adjusted income from continuing operations attributable to Gentiva shareholders was $9.9 million, or $0.32 per diluted share, for the third quarter of 2012 as compared to $8.3 million, or $0.27 per diluted share, for the corresponding period of 2011. Adjusted income from continuing operations attributable to Gentiva shareholders was $28.0 million, or $0.91 per diluted share, for the first nine months of 2012 as compared to $38.0 million, or $1.23 per diluted share, for the corresponding period of 2011.

A reconciliation of adjusted income from continuing operations attributable to Gentiva shareholders to income from continuing operations, the most directly comparable GAAP financial measure, follows (in thousands, except per share amounts):

	For the Three Months Ended
	September 30, 2012								September 30, 2011
	Gross		Net of Tax			Per Diluted Share			Gross		Net of Tax			Per Diluted Share
Adjusted income from continuing operations attributable to Gentiva shareholders			$	9,854		$	0.32				$	8,285		$	0.27
Goodwill, intangible and other long-lived asset impairment, net of tax	(19,132	)	(11,352		)	(0.38		)	(643,305	)	(547,118		)	(18.03		)
Equity in net (loss) earnings of CareCentrix, including gain on sale, net of tax	(370	)	1,006			0.03			—		68,328			2.24
Dividend income	—		—			—			3,977		2,630			0.09
Cost savings initiatives and other restructuring, legal settlement and acquisition and integration costs	(53	)	(31		)	—			(9,845	)	(6,356		)	(0.21		)
Tax reserves on OIG legal settlement	—		—			—			—		(5,503		)	(0.18		)
Impact of exclusion of dilutive shares due to the anti-dilutive effect of the shares	—		—			0.01			—		—			—
Loss from continuing operations attributable to Gentiva shareholders			(523		)	(0.02		)			(479,734		)	(15.82		)
Add back: Net income attributable to noncontrolling interests			148			0.01					134			—
Loss from continuing operations			$	(375	)	$	(0.01	)			$	(479,600	)	$	(15.82	)

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	For the Nine Months Ended
	September 30, 2012								September 30, 2011
	Gross		Net of Tax			Per Diluted Share			Gross		Net of Tax			Per Diluted Share
Adjusted income from continuing operations attributable to Gentiva shareholders			$	27,994		$	0.91				$	37,953		$	1.23
Goodwill, intangible and other long-lived asset impairment, net of tax	(19,132	)	(11,352		)	(0.37		)	(643,305	)	(547,118		)	(18.08		)
Gain on sale of businesses	5,447		3,248			0.11			—		—			—
Equity in net (loss) earnings of CareCentrix, including gain on sale, net of tax	(370	)	1,006			0.03			—		68,328			2.26
Dividend income	—		—			—			8,590		5,435			—
Cost savings initiatives and other restructuring, legal settlement and acquisition and integration costs	5,469		(3,246		)	(0.10		)	(34,856	)	(21,301		)	(0.70		)
Tax reserves on OIG legal settlement	—		576			0.02			(5,503	)	(5,503		)	(0.18		)
Impact of exclusion of dilutive shares due to the anti-dilutive effect of the shares	—		—			—			—		—			0.02
Income (loss) from continuing operations attributable to Gentiva shareholders			18,226			0.60					(462,206		)	(15.27		)
Add back: Net income attributable to noncontrolling interests			624			0.02					452			0.01
Income (loss) from continuing operations			$	18,850		$	0.62				$	(461,754	)	$	(15.26	)

Liquidity and Capital Resources

Liquidity

The Company’s principal source of liquidity is the collection of its accounts receivable. For healthcare services, the Company grants credit without collateral to its patients, most of whom are insured under governmental payer or third party commercial arrangements. Additional liquidity is provided from existing cash balances and the Company’s credit arrangements, principally through its revolving credit facility, and could be provided in the future through the issuance of up to $300 million of debt or equity securities under a universal shelf registration statement filed with the SEC in October 2010.

The Company’s credit agreement provides for $860.0 million in senior secured credit facilities for the Company, comprising term loan facilities aggregating $750.0 million and a revolving credit facility of $110 million, which was reduced from $125 million as a result of an amendment to the Company’s credit agreement entered into on March 6, 2012. The Company also realized $325.0 million in gross proceeds from the issuance and sale by the Company of senior unsecured notes in 2010. See Note 10 to the Company’s consolidated financial statements for additional information.

During the first nine months of 2012, net cash provided by operating activities was $74.6 million. In addition, the Company had proceeds of $5.7 million from the sale of businesses of and $2.4 million from purchases under the Company’s Employee Stock Purchase Plan (“ESPP”). During the nine months endedSeptember 30, 2012, the Company used $4.1 million for debt issuance costs, $50.0 million for the repayment of debt, $9.2 million for capital expenditures and $5.0 million for repurchases of the Company’s common stock under the Company’s stock repurchase program.

Net cash provided by operating activities increased by $60.3 million in the first nine months of 2012 from $14.3 million for the first nine months of 2011 to $74.6 million. The increase was primarily due to improvements in net cash provided by operations prior to changes in assets and liabilities ($39.8 million), accounts receivable ($38.2 million), changes in current liabilities ($11.0 million), and other ($7.0 million), partially offset by changes in prepaid expenses and other current assets ($35.7 million).

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Adjustments to add back non-cash items affecting net income are summarized as follows (in thousands):

	For the Nine Months Ended
	September 30, 2012			September 30, 2011			Variance
OPERATING ACTIVITIES:
Net income (loss)	$	18,850		$	(454,658	)	$	473,508
Adjustments to add back non-cash items affecting net income:
Depreciation and amortization	21,375			22,534			(1,159		)
Amortization and write-off of debt issuance costs	10,391			12,857			(2,466		)
Provision for doubtful accounts	4,183			5,744			(1,561		)
Equity-based compensation expense	5,722			5,863			(141		)
Windfall tax benefits associated with equity-based compensation	—			(194		)	194
Goodwill, intangibles and other long-lived asset impairment	19,132			643,305			(624,173		)
Gain on sale of businesses	(5,447		)	(9,088		)	3,641
Equity in net earnings of CareCentrix	(1,006		)	(69,582		)	68,576
Deferred income tax expense (benefit)	27,700			(95,672		)	123,372
Total cash provided by operations prior to changes in assets and liabilities	$	100,900		$	61,109		$	39,791

The $39.8 million difference in “Total cash provided by operations prior to changes in assets and liabilities” between the 2012 and 2011 periods is primarily related to net income, after adjusting for components of income that do not have an impact on cash, such as depreciation and amortization, equity-based compensation expense, gain on sale of businesses and deferred income taxes.

A summary of the changes in current liabilities, excluding the current portion of long-term debt, impacting cash flow from operating activities follows (in thousands):

	For the Nine Months Ended
	September 30, 2012			September 30, 2011			Variance
OPERATING ACTIVITIES:
Changes in current liabilities:
Accounts payable	$	2,509		$	(1,876	)	$	4,385
Payroll and related taxes	(12,180		)	(16,328		)	4,148
Deferred revenue	5,002			3,231			1,771
Medicare liabilities	4,999			(11,726		)	16,725
Obligations under insurance programs	(875		)	(7,347		)	6,472
Accrued nursing home costs	(3,657		)	(2,489		)	(1,168		)
Other accrued expenses	(35,887		)	(14,518		)	(21,369		)
Total changes in current liabilities	$	(40,089	)	$	(51,053	)	$	10,964

The primary drivers for the $11.0 million difference resulting from changes in current liabilities that impacted cash flow from operating activities include:

• Accounts payable, which had a positive impact of $4.4 million between the 2012 and 2011 reporting periods, primarily related to timing of payments.

• Payroll and related taxes, which had a positive impact of $4.1 million between the 2012 and 2011 reporting periods, primarily due to timing of the Company’s payroll processing.

• Deferred revenue, which had a positive impact of $1.8 million between the 2012 and 2011 reporting periods.

• Medicare liabilities, which had a positive impact of $16.7 million between the 2012 and 2011 reporting periods.

• Obligations under insurance programs, which had a positive impact on the change in operating cash flow of $6.5 million between the 2012 and 2011 reporting periods, primarily related to timing of payments under the Company’s insurance programs.

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• Accrued nursing home costs, which had a negative impact on the change in operating cash flow of $1.1 million between the 2012 and 2011 reporting periods, due primarily to the timing of payments.

• Other accrued expenses, which had a negative impact on the change in operating cash flow of $21.4 million between the 2012 and 2011 reporting periods, due primarily to the impact of payments associated with the settlement of the Odyssey continuous care investigation, payments associated with the Company’s cost savings initiatives and other restructuring costs, acquisition and integration activities as well as timing of accrued interest payments under the Company’s credit facilities.

Working capital at September 30, 2012 was approximately $211 million, a decrease of $14 million as compared to approximately $225 million at December 31, 2011, primarily due to:

• a $17 million increase in prepaid expenses and other current assets;

• a $9 million decrease in cash and cash equivalents;

• a $36 million decrease in accounts receivable;

• a $16 million decrease in deferred tax assets; and

• a $30 million decrease in current liabilities, consisting of decreases in payroll and related taxes ($12 million), obligations under insurance programs ($1 million), nursing home costs ($4 million), other accrued expenses ($33 million), partially offset by increases in current portion of long-term debt ($7 million), deferred revenue ($5 million)Medicare liabilities ($5 million) and accounts payable ($3 million). The changes in current liabilities are described above in the discussion on net cash provided by operating activities.

As of September 30, 2012, Days Sales Outstanding (“DSO”) relating to continuing operations was 52 days, a decrease of 3 days from December 31, 2011, primarily driven by resolution of hospice accounts receivable associated with a vendor billing system upgrade and processing delays with the Company’s Medicare intermediaries.

At the commencement of an episode of care under the Medicare and non-Medicare PPS for Home Health, the Company records accounts receivable and deferred revenue based on an expected reimbursement amount. Accounts receivable is adjusted upon the receipt of cash and deferred revenue is amortized into revenue over the average patient treatment period. For informational purposes, if net accounts receivable and deferred revenue were combined for purposes of determining an alternative DSO calculation, which measures open net accounts receivable divided by average daily recognized revenues, the alternative DSO would have been 44 days at September 30, 2012 and 48 days at December 31, 2011.

Accounts receivable attributable to major payer sources of reimbursement at September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012
	Total		0 - 90 days		91 - 180 days		181 - 365 days		Over 1 year
Medicare	$	190,997	$	171,737	$	12,927	$	5,033	$	1,300
Medicaid and Local Government	36,608		28,190		4,125		4,217		76
Commercial Insurance and Other	35,306		26,666		4,995		3,498		147
Self - Pay	1,703		833		448		326		96
Gross Accounts Receivable	$	264,614	$	227,426	$	22,495	$	13,074	$	1,619

	December 31, 2011
	Total		0 - 90 days		91 - 180 days		181 - 365 days		Over 1 year
Medicare	$	217,028	$	191,366	$	20,638	$	4,363	$	661
Medicaid and Local Government	46,553		32,576		10,515		3,418		44
Commercial Insurance and Other	36,454		27,230		5,814		2,484		926
Self - Pay	2,116		699		699		563		155
Gross Accounts Receivable	$	302,151	$	251,871	$	37,666	$	10,828	$	1,786

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The Company participates in Medicare, Medicaid and other federal and state healthcare programs. Revenue mix by major payer classifications by segment were as follows:

	Third Quarter Ended
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	79	%	93	%	85	%	79	%	93	%	85	%
Medicaid and Local Government	5	%	4	%	5	%	5	%	4	%	5	%
Commercial Insurance and Other:
Paid at episodic rates	9	%	—		5	%	8	%	—		4	%
Other	7	%	3	%	5	%	8	%	3	%	6	%
Total net revenues	100	%	100	%	100	%	100	%	100	%	100	%

	Nine Months Ended
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	79	%	93	%	86	%	79	%	93	%	85	%
Medicaid and Local Government	5	%	4	%	4	%	5	%	4	%	5	%
Commercial Insurance and Other:
Paid at episodic rates	9	%	—		5	%	8	%	—		4	%
Other	7	%	3	%	5	%	8	%	3	%	6	%
Total net revenues	100	%	100	%	100	%	100	%	100	%	100	%

CMS has implemented various payment updates to the base rates for Medicare home health including (i) annual market basket updates, (ii) beginning in 2008, annual reductions in rates to reduce aggregate case mix increases that CMS believes are unrelated to patients’ health status (“case mix creep adjustment”), (iii) adjustments to rates associated with changes to the home health outlier policy, (iv) wage index and other changes and (v) increases for defined rural areas of the country. During both the third quarter and first nine months of 2012, approximately 24 percent of the Company’s episodic revenue was generated in designated rural areas.

On November 2, 2012, CMS issued a final rule to update and revise Medicare home health payments for calendar year 2013. This is comprised of a net market basket update of 1.30 percent, which includes the 1 percent reduction mandated by the Affordable Care Act, offset by a case mix creep adjustment of 1.32 percent. The net effect of these changes would decrease the base rate for an episode of service by 0.02 percent to $2,138, subject to further impact from wage index adjustments.

A summary of the components of Gentiva’s annual Medicare home health reimbursement base episodic rate adjustment follows:

Calendar Year	Net  Market Basket Update	Case Mix Creep Adjustment	Outlier Payment Adjustment	Rural Add-on / Other	Net Reimbursement Change	Base Episodic Rate
2013	1.30%	(1.32)%	—	—	(0.02)%	$2,138
2012	1.40%	(3.79)%	—	—	(2.39)%	$2,139
2011	1.10%	(3.79)%	(2.50)%	0.30%	(4.89)%	$2,192
2010	2.00%	(2.75)%	2.50%	0.50%	2.25%	$2,313

Actual episodic rates will vary from the base episodic rates noted in the table above due to (i) the determination of case mix which reflects the clinical condition, functional abilities and service needs of each individual patient, (ii) wage indices applicable to the geographic region where the services are performed and (iii) the impact of the rural add-on provision.

As a condition for Medicare payment, the Affordable Care Act mandates that prior to certifying a patient’s eligibility for the home health benefit, the certifying physician must document that the physician or an allowed non-physician practitioner, had a face-to-face encounter with the patient. The encounter must occur within 90 days prior to the start of care or 30 days after

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the start of care. In addition, the Affordable Care Act requires that a hospice physician or nurse practitioner have a face-to-face encounter with hospice patients during the 30-day period prior to the 180th day recertification and each subsequent recertification, and that the certifying hospice physician attest that such a visit took place. The face-to-face requirements for home health and hospice providers became effective January 1, 2011. However, CMS delayed full enforcement of the requirements until April 1, 2011. In addition, in July 2011, CMS proposed comparable face-to-face encounters for people receiving Medicaid home health services.

The Affordable Care Act also imposed additional therapy assessment requirements. A professional qualified therapist assessment must take place at least once every 30 days during a therapy patient’s course of treatment. For those qualified patients needing 13 or more or 19 or more therapy visits, a qualified therapist must perform the therapy service required, re-assess the patient, and measure and document the effectiveness of the 13th visit and the 19th visit for all therapy disciplines caring for the patient. The new therapy assessment requirements were effective April 1, 2011.

In July 2012, CMS released a final rule, effective for services provided October 1, 2012 through September 30, 2013, that provides for a 0.9 percent increase for Medicare hospice rates, consisting of a 2.6 percent market basket increase, offset by a 0.7 percent productivity adjustment factor, a 0.6 percent budget neutrality adjustment factor, estimated wage index changes of 0.1 percent and a reduction of 0.3 percent defined by the Affordable Care Act. In July 2011, CMS released a final rule, effective for services provided October 1, 2011 through September 30, 2012, that provided for a 2.5 percent increase for Medicare hospice rates, consisting of a 3.0 percent market basket increase, offset by a 0.5 percent decrease due to updated wage index data and a budget neutrality adjustment factor.

Overall payments made by Medicare for hospice services are subject to cap amounts calculated by Medicare. Total Medicare payments for hospice services are compared to the aggregate cap amount for the hospice cap period. In July 2012, CMS announced the cap amount for the 2012 cap year of $25,377 per beneficiary, which period ran from November 1, 2011 through October 31, 2012.

There are certain standards and regulations that the Company must adhere to in order to continue to participate in Medicare, Medicaid and other federal and state healthcare programs. As part of these standards and regulations, the Company is subject to periodic audits, examinations and investigations conducted by, or at the direction of, governmental investigatory and oversight agencies. Periodic and random audits conducted or directed by these agencies could result in a delay in or adjustment to the amount of reimbursements received under these programs. Violation of the applicable federal and state health care regulations can result in our exclusion from participating in these programs and can subject the Company to substantial civil and/or criminal penalties. The Company believes that it is currently in compliance with these standards and regulations.

The discussion above on Medicare home health rates and Medicare hospice rates does not consider the impact of the 2 percent reduction in Medicare payment rates under sequestration, which is authorized by the Budget Control Act of 2011 and scheduled to take effect beginning in January 2013.

Credit Arrangements

As of September 30, 2012 , the Company’s credit arrangements include a senior secured credit agreement providing (i) a $200 million Term Loan A facility, (ii) a $550 million Term Loan B facility and (iii) a $110 million revolving credit facility (which was reduced from $125 million on March 6, 2012) (collectively the “Credit Agreement”), and $325 million aggregate principal amount of 11.5% Senior Notes due 2018 (the “Senior Notes”). The Credit Agreement’s revolving credit facility also includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as swing line loans.

In response to uncertainties around Medicare reimbursement rates and to ensure compliance under its Credit Agreement as of December 31, 2011, on November 28, 2011, the Company entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”). In addition, on March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement (“Amendment No. 3”) in order to provide increased flexibility in the Company’s debt covenants over the remaining term of the Credit Agreement and reasonable assurance with respect to the Company’s ability to remain in compliance with its debt covenants beyond January 1, 2012, including the maximum consolidated leverage ratio and the minimum interest coverage ratio, which are discussed below under “Debt Covenants.” Among other things, Amendment No. 3 also reduced the revolving credit facility from $125 million to $110 million.

As of September 30, 2012 , advances under the revolving credit facility may be made, and letters of credit may be issued, up to the $110 million borrowing capacity of the facility at any time prior to the facility expiration date of August 17, 2015. In connection with the reduction in the revolving credit facility, the Company wrote-off prepaid issuance costs of approximately $0.5 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the nine months endedSeptember 30, 2012, and capitalized costs associated with the revolving credit facility of

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approximately $0.8 million. Outstanding letters of credit were $45.4 million at September 30, 2012 and $41.8 million at December 31, 2011. The letters of credit were issued to guarantee payments under the Company’s workers’ compensation program and for certain other commitments. As of September 30, 2012, the Company’s unused and available borrowing capacity under the Credit Agreement was $64.6 million.

As of September 30, 2012, the mandatory aggregate principal payments of long-term debt were $2.9 million in 2012, $25.0 million in each of 2013 and 2014, $93.8 million in 2015 and $466.4 million in 2016 under the Credit Agreement, and $325.0 million thereafter under the Senior Notes. The weighted average cash interest rate on outstanding borrowings was 8.2 percent per annum at June 30, 2012 and 6.9 percent per annum at December 31, 2011.

The Term Loan A facility is subject to mandatory principal payments of $25 million per year, payable in equal quarterly installments, with the remaining balance of the original $200 million loan payable on August 17, 2015. Pursuant to Amendment No. 3, the Company made a prepayment of $12.0 million on its Term Loan A facility in the first quarter of 2012. There are no required payments on the Company’s Term Loan A facility until the end of the fourth quarter of 2012, at which time a principal payment of $2.9 million is required and $6.3 million per quarter thereafter. The Term Loan B facility is subject to mandatory principal payments of $13.8 million per year, payable in equal quarterly installments. Pursuant to Amendment No. 3, the Company made a prepayment of $38.0 million on its Term Loan B facility in the first quarter of 2012. As a result of the prepayment, there are no required payments on the Company’s Term Loan B facility until August 17, 2016, at which time a payment of the outstanding balance of $466.4 million is required.

On March 9, 2011, the Company entered into a First Refinancing Amendment to the Credit Agreement (“Amendment No. 1”), which provided for, among other things, (i) refinancing of the outstanding indebtedness under the Company’s senior secured Term Loan A and Term Loan B facilities, (ii) elimination of the requirement to hedge a certain portion of the Company’s variable rate debt, (iii) a reduction in the minimum Base Rate from 2.75 percent to 2.25 percent, (iv) a reduction in the minimum Eurodollar Rate from 1.75 percent to 1.25 percent, (v) reductions in Term Loan B Applicable Rates to 3.50 percent for Eurodollar Rate Loans and 2.50 percent for Base Rate Loans as compared to 5.00 percent and 4.00 percent, respectively, under the previous arrangement and (vi) reductions in the Applicable Rate for Term Loan A as reflected in the table below.

	Amended Applicable Rate		Previous Applicable Rate
Consolidated Leverage Ratio	Eurodollar Rate Term A  Facility	Base Rate Term A  Facility	Eurodollar Rate Term A  Facility	Base Rate Term A Facility
≥ 3.0:1	3.25%	2.25%	5.00%	4.00%
≥ 2.0:1 and < 3.0:1	3.00%	2.00%	4.50%	3.50%
< 2.0:1	2.75%	1.75%	4.00%	3.00%

The Company may select interest periods of one, two, three or six months for Eurodollar rate loans. Interest is payable at the end of the selected interest period. From August 17, 2010 through March 9, 2011, the interest rate on borrowings under the Credit Agreement was 6.75 percent per annum. From March 9, 2011 through March 5, 2012, the interest rate on Term Loan A borrowings was 4.50 percent and on Term Loan B borrowings was 4.75 percent. Giving effect to Amendment No. 3, subsequent to March 6, 2012, the interest rate on Term Loan A borrowings was 6.25 percent and on Term Loan B borrowings was 6.50 percent. The Company must also pay a fee of 0.50 percent per annum on unused commitments under the revolving credit facility.

In addition, Amendment No. 1 provided for a reduction in the Company’s minimum consolidated interest coverage ratio to a ratio of 2.25 to 1.00 from the previous ratio of 2.75 to 1.00. As discussed below under “Debt Covenants,” Amendment No. 3 provided for a further reduction in the minimum consolidated interest coverage ratio.

The Company may voluntarily repay outstanding loans under the revolving credit facility or Term Loan A at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. For the period from March 9, 2011 to September 9, 2011, the Company was subject to a prepayment premium equal to 1.0 percent of the aggregate principal amount of Term Loan B. Prepayment and commitment reductions will be required in connection with (i) certain asset sales, (ii) certain extraordinary receipts such as certain insurance proceeds, (iii) cash proceeds from the issuance of debt, (iv) 50 percent of the proceeds from the issuance of equity with step-downs based on leverage, with certain exceptions, and (v) 75 percent of “Excess Cash Flow” (as defined in the Credit Agreement) with two step-downs based on the Company’s leverage ratio.

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Debt Covenants

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s and its subsidiaries’ ability to incur additional indebtedness or issue certain preferred stock, create liens on assets, enter into sale and leaseback transactions, engage in mergers or consolidations with other companies, sell assets, pay dividends, repurchase capital stock, make investments, loans and advances, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements, repay certain indebtedness, change the nature of the Company’s business, change accounting policies and practices, grant negative pledges and incur capital expenditures. In addition, after giving effect to Amendment No. 3, the Credit Agreement requires the Company to maintain no more than a maximum consolidated leverage ratio as shown in the second table below and no less than a minimum cash interest coverage ratio of 2.00 to 1.00 through June 30, 2013, 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and 2.00 to 1.00 thereafter and also contains certain customary affirmative covenants and events of default. The previously required ratio was 2.25 to 1.00 for all periods.

On November 28, 2011, the Company entered into Amendment No. 2 to the Credit Agreement, which provided for modification to the definition of “Consolidated EBITDA” contained in the Credit Agreement to allow for the add-back of costs associated with the Company’s cost realignment activities and operating losses associated with branches closed or sold during the fourth quarter of 2011 and to reset the maximum consolidated leverage ratio for the fourth quarter of 2011 to 4.75 to 1.00. As of September 30, 2012, the Company was in compliance with all covenants in the Credit Agreement.

The maximum consolidated leverage ratio under Amendment No. 2 was as follows:

For the period	Maximum Consolidated Leverage Ratio
August 17, 2010 to September 30, 2011	≤ 4.75:1
October 1, 2011 to September 30, 2012	≤ 4.50:1
October 1, 2012 to September 30, 2013	≤ 3.75:1
Thereafter	≤ 3.00:1

On March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement, which provided, among other things, for (i) an increase by 175 basis points per annum of the interest rates applicable to each of outstanding Term Loan A loans and Term Loan B loans, (ii) an increase in the Company’s permitted maximum consolidated leverage ratio as set forth in the table below, (iii) an amendment to the consolidated interest coverage ratio (and corresponding definitions) to provide that consolidated interest charges included in such calculation are such charges paid in cash (as compared with the previous covenant that included non-cash interest charges), along with a decrease in the Company’s permitted minimum consolidated cash interest coverage ratio to (a) 2.00 to 1.00 through June 30, 2013, (b) 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and (c) 2.00 to 1.00 thereafter, (iv) amendments to the definition of “Consolidated EBITDA,” which include the ability to add-back certain costs associated with the Company’s cost realignment and operating losses associated with certain facilities and branches closed or sold by the Company during the fourth quarter of 2011 and during 2012 and an increase in the add-back for litigation settlement costs, (v) an addition of a mechanism for the Company to make discounted prepayments of Term Loan A loans and Term Loan B loans pursuant to Dutch auction procedures, and (vi) a reduction of the revolving credit facility from $125 million to $110 million. As a condition to effectiveness of Amendment No. 3, the Company paid $50 million of the outstanding term loans under the Credit Agreement, applied ratably between the Term Loan A facility and the Term Loan B facility. The Company also paid certain fees in connection with Amendment No. 3, including a consent fee to each lender approving Amendment No. 3 in an amount equal to 0.50% of its respective term loans and revolving credit commitments. In connection with Amendment No. 3, the Company incurred costs of approximately $5.3 million. Approximately $4.1 million of these costs (including the $0.8 million associated with the revolving credit facility) have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate.

The increase in Gentiva’s permitted maximum consolidated leverage ratio under Amendment No. 3 is set forth in the following table:

Four Fiscal Quarters Ending	Maximum Consolidated Leverage Ratio
March 31, 2012 to September 30, 2014	≤ 6.25:1
Each fiscal quarter thereafter	≤ 5.75:1

As of September 30, 2012, the Company’s consolidated leverage ratio was 4.7x and the Company’s interest coverage ratio was 2.7x.

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Insurance Programs

The Company may be subject to workers’ compensation claims and lawsuits alleging negligence or other similar legal claims. The Company maintains various insurance programs to cover these risks with insurance policies subject to substantial deductibles and retention amounts. The Company recognizes its obligations associated with these programs in the period the claim is incurred. The Company estimates the cost of both reported claims and claims incurred but not reported, up to specified deductible limits and retention amounts, based on its own specific historical claims experience and current enrollment statistics, industry statistics and other information. These estimates and the resulting reserves are reviewed and updated periodically.

The Company is responsible for the cost of individual workers’ compensation claims and individual professional liability claims up to $500 thousand per incident which occurred prior to March 15, 2002 and $1 million per incident thereafter. The Company also maintains excess liability coverage relating to professional liability and casualty claims which provides insurance coverage for individual claims of up to $25 million in excess of the underlying coverage limits. Payments under the Company’s workers’ compensation program are guaranteed by letters of credit.

Capital Expenditures

The Company’s capital expenditures for the nine months endedSeptember 30, 2012 were $9.2 million as compared to $14.6 million for the nine months endedSeptember 30, 2011. The Company intends to make investments and other expenditures to upgrade its computer technology and system infrastructure and comply with regulatory changes in the industry, among other things. In this regard, management expects that capital expenditures will range between $12 million and $14 million for 2012. Management expects that the Company’s capital expenditure needs will be met through operating cash flow and available cash reserves.

Cash Resources and Obligations

The Company had cash and cash equivalents of approximately $156.0 million as of September 30, 2012, including operating funds of approximately $6.0 million exclusively relating to a non-profit hospice operation managed in Florida.

The Company anticipates that repayments to Medicare for (i) payments received in excess of hospice cap limits, (ii) partial episode payments and (iii) prior year cost report settlements will be made periodically. These amounts are included in Medicare liabilities in the accompanying consolidated balance sheets.

During the nine months endedSeptember 30, 2012, the Company repurchased 605,077 shares of its outstanding common stock for total consideration of approximately $5.0 million. The Company’s Credit Agreement provides for repurchases of the Company’s common stock not to exceed $5.0 million per year, and not to exceed $20.0 million per year if the consolidated leverage ratio is less than or equal to 3.5:1 immediately after giving effect on a pro forma basis to the repurchase. The indenture governing the Company’s Senior Notes also contains limitations on the Company’s repurchases of its common stock.

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

As of September 30, 2012, the Company had outstanding borrowings of $938.1 million under the term loans of the senior credit facilities and the senior unsecured notes. Debt repayments, future minimum rental commitments for all non-cancelable leases and purchase obligations at September 30, 2012 are as follows (in thousands):

	Payment due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Long-term debt obligations:
Term loan repayments	$	613,125	$	21,693	$	125,000	$	466,432	$	—
Notes repayment	325,000		—		—		—		325,000
Interest payments (1)	365,111		77,191		148,677		101,868		37,375
Capital lease obligations	59		59		—		—		—
Operating lease obligations	123,866		41,694		55,040		19,650		7,482
Other contingent liabilities	1,900		1,900		—		—		—
Total	$	1,429,061	$	142,537	$	328,717	$	587,950	$	369,857

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(1) Long-term debt obligations include variable interest payments based on London Interbank Offered Rate (“LIBOR”) plus an applicable interest rate margin. At September 30, 2012, the cash interest rate on the Company’s term loan borrowings approximated 8.2 percent per annum.

Pursuant to Amendment No. 3, the Company made a prepayment of $12.0 million on its Term Loan A facility on March 6, 2012. There are no required payments on the Company’s Term Loan A facility until the end of the fourth quarter of 2012, at which time a principal payment of $2.9 million is required and $6.3 million per quarter thereafter. The Term Loan B facility is subject to mandatory principal payments of $13.8 million per year, payable in equal quarterly installments. Pursuant to Amendment No. 3, the Company made a prepayment of $38.0 million on its Term Loan B facility on March 6, 2012. As a result of the prepayment, there are no required payments on the Company’s Term Loan B facility until August 17, 2016, at which time a payment of the outstanding balance of $466.4 million is required.

The Company had total letters of credit outstanding of approximately $45.4 million at September 30, 2012 and $41.8 million at December 31, 2011. The letters of credit, which expire one year from date of issuance, were issued to guarantee payments under the Company’s workers’ compensation program and for certain other commitments. The Company has the option to renew these letters of credit or set aside cash funds in a segregated account to satisfy the Company’s obligations. The Company also had outstanding surety bonds of $0.1 million and $0.2 million at September 30, 2012 and December 31, 2011, respectively.

The Company has no other off-balance sheet arrangements and has not entered into any transactions involving unconsolidated, limited purpose entities or commodity contracts.

Management expects that the Company’s working capital needs for 2012 will be met through operating cash flow and existing cash resources. The Company may also consider other alternative uses of cash including, among other things, acquisitions, voluntary prepayments on the term loans, additional share repurchases and cash dividends. These uses of cash may require the approval of the Company’s Board of Directors and may require the approval of its lenders. If cash flows from operations, cash resources or availability under the Credit Agreement fall below expectations, the Company may be forced to delay planned capital expenditures, reduce operating expenses, seek additional financing, pursue the sale of certain assets or other investments or consider other alternatives designed to enhance liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Generally, the fair market value of fixed rate debt will increase as interest rates fall and decrease as interest rates rise. The Company is exposed to market risk from fluctuations in interest rates. The interest rate on the Company’s borrowings under the Credit Agreement can fluctuate based on both the interest rate option (i.e., base rate or Eurodollar rate plus applicable margins) and the interest period. As of September 30, 2012, the total amount of outstanding debt subject to interest rate fluctuations was $613.1 million. A hypothetical 100 basis point change in short-term interest rates as of that date would result in an increase or decrease in interest expense of $6.1 million per year, assuming a similar capital structure.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rule 13a-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of such period to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in internal control over financial reporting

As required by the Exchange Act Rule 13a-15(d), the Company’s Chief Executive Officer and Chief Financial Officer evaluated the Company’s internal control over financial reporting to determine whether any change occurred during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no such change during such quarter.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note 13 Legal Matters to the consolidated financial statements included in this report for a description of certain legal matters and pending legal proceedings, which description is incorporated herein by reference.

_____________________________________

Corporate Integrity Agreement

Odyssey HealthCare, Inc. (“Odyssey”), a wholly-owned subsidiary of the Company, entered into a five-year Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the United States Department of Health and Human Services (“OIG”), which became effective on February 15, 2012, concurrent with the execution of a settlement agreement with the United States, acting through the United States Department of Justice and on behalf of the OIG, that resolved the investigation regarding Odyssey’s provision of continuous care services prior to the Company’s acquisition of Odyssey in August 2010. Although the covered conduct related to services prior to the Company’s acquisition of Odyssey, the CIA, for operational and organizational consistency, relates to all of the Company’s hospice operations.

Under the CIA, Odyssey must maintain its compliance officer and its compliance committee, which must be chaired by the compliance officer and meet at least quarterly. Odyssey must also provide general and special training for covered persons, which include all employees of Odyssey and certain employees of the Company and members of the Company’s Board of Directors. Odyssey must engage an accounting, audit or consulting firm to perform verification and unallowable cost reviews. In addition, Odyssey’s eligibility review team must review the eligibility of Odyssey’s Medicare beneficiaries for the hospice services those beneficiaries received and prepare an eligibility review report. In the event that Odyssey changes locations, closes a business unit or location, purchases or establishes a new business unit or location, or sells any or all of its business units or locations, Odyssey must provide the OIG with at least 30 days’ notice. Odyssey must submit to the OIG annually a report with respect to the status of, and findings regarding, Odyssey’s compliance activities. If Odyssey fails to comply with the terms of the CIA, it will be subject to penalties.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

62

Item 6. Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Company. (1)
3.2	Amended and Restated By-Laws of Company. (2)
4.1	Specimen of common stock. (3)
4.2	Form of Certificate of Designation of Series A Cumulative Non-Voting Redeemable Preferred Stock. (4)
4.3	Indenture, dated August 17, 2010, by and among Gentiva, the Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee. (5)
4.4	Form of 11.5% Senior Note. (5)
4.5	First Supplemental Indenture, dated as of August 17, 2012, among Gentiva, Odyssey HealthCare of Augusta, LLC, the other Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a).*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a).*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.**
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	XBRL Taxonomy Definition Linkbase Document.**
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**

(1)	Incorporated herein by reference to Form 8-K of Company dated and filed May 12, 2008.
(2)	Incorporated herein by reference to Form 8-K of Company dated and filed November 7, 2011.
(3)	Incorporated herein by reference to Amendment No. 4 to the Registration Statement of Company on Form S-4 dated February 9, 2000 (File No. 333-88663).
(4)	Incorporated herein by reference to Amendment No. 3 to the Registration Statement of Company on Form S-4 dated February 4, 2000 (File No. 333-88663).
(5)	Incorporated herein by reference to Form 8-K of Company dated and filed August 17, 2010.

*	Filed herewith
**	Furnished herewith

63

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GENTIVA HEALTH SERVICES, INC. (Registrant)
Date: November 6, 2012	/s/ Tony Strange
	Tony Strange
	Chairman, Chief Executive Officer and President
Date: November 6, 2012	/s/ Eric R. Slusser
	Eric R. Slusser
	Executive Vice President,
	Chief Financial Officer and Treasurer

64

EXHIBIT INDEX

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Company. (1)
3.2	Amended and Restated By-Laws of Company. (2)
4.1	Specimen of common stock. (3)
4.2	Form of Certificate of Designation of Series A Cumulative Non-Voting Redeemable Preferred Stock. (4)
4.3	Indenture, dated August 17, 2010, by and among Gentiva, the Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee. (5)
4.4	Form of 11.5% Senior Note. (5)
4.5	First Supplemental Indenture, dated as of August 17, 2012, among Gentiva, Odyssey HealthCare of Augusta, LLC, the other Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a).*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a).*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.**
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	XBRL Taxonomy Definition Linkbase Document.**
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**

(1)	Incorporated herein by reference to Form 8-K of Company dated and filed May 12, 2008.
(2)	Incorporated herein by reference to Form 8-K of Company dated and filed November 7, 2011.
(3)	Incorporated herein by reference to Amendment No. 4 to the Registration Statement of Company on Form S-4 dated February 9, 2000 (File No. 333-88663).
(4)	Incorporated herein by reference to Amendment No. 3 to the Registration Statement of Company on Form S-4 dated February 4, 2000 (File No. 333-88663).
(5)	Incorporated herein by reference to Form 8-K of Company dated and filed August 17, 2010.

*	Filed herewith
**	Furnished herewith

65

EX-4.5

Exhibit 4.5

FIRST SUPPLEMENTAL INDENTURE

Supplemental Indenture (this “Supplemental Indenture”), dated as of August 17, 2012, among Gentiva Health Services, Inc., a Delaware corporation (the “Issuer”), Odyssey HealthCare of Augusta, LLC, a Delaware limited liability company and wholly owned subsidiary of the Issuer (the “Guaranteeing Subsidiary”), the other guarantors named on Schedule 1 hereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an Indenture (the “Indenture”), dated as of August 17, 2010, providing for the issuance of $325,000,000 aggregate principal amount of 11.5% Senior Notes due 2018 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

WHEREAS, the Issuer has requested that the Trustee execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

(1)    Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2)    Agreement to Guarantee. The Guaranteeing Subsidiary accepts all obligations applicable to a Guarantor under the Indenture, including Article 10 of the Indenture (which is deemed incorporated in this Supplemental Indenture and applicable to this Guarantee) and, as applicable, Sections 5.01 and 5.02 of the Indenture. The Guaranteeing Subsidiary acknowledges that by executing this Supplemental Indenture, it will become a Guarantor under the Indenture and subject to all the terms and conditions applicable to Guarantors contained therein.

(3)    Execution and Delivery. The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(4)    Releases. The Guarantee of the Guaranteeing Subsidiary shall be automatically and unconditionally released and discharged, and no further action by the Guaranteeing Subsidiary, the Issuer or the Trustee is required for the release of the Guaranteeing Subsidiary’s Guarantee, upon satisfaction of the conditions set forth in Section 10.05 of the Indenture.

(5)    No Recourse Against Others. No past, present or future director, officer, employee, incorporator or stockholder of the Issuer or the Guaranteeing Subsidiary shall have any liability for any obligations of the Issuer or the Guarantors (including the Guaranteeing Subsidiary) under the Notes, any Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes was deemed to have waived and released all such liability. The waiver and release were part of the consideration for issuance of the Notes.

(6)    Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(7)    Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

(8)    Effect of Headings. The Section headings herein have been inserted for convenience of reference only, are not considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

(9)    The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer and the Guaranteeing Subsidiary.

(10)    Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

GENTIVA HEALTH SERVICES, INC., the Issuer

By:     /s/ Tony Strange                    Name: Tony Strange        Title: President and CEO

ODYSSEY HEALTHCARE OF AUGUSTA, LLC, the Guaranteeing Subsidiary

By: /s/ Tony Strange                
Name: Tony Strange
Title: President and CEO

EACH SUBSIDIARY GUARANTOR NAMED ON SCHEDULE 1 HERETO

By: /s/ Tony Strange                
Name: Tony Strange
Title: President and CEO

[SIGNATURE PAGE TO FIRST SUPPLEMENAL INDENTURE]

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

By:    /s/ Teresa Petta        Name: Teresa Petta        Title: Vice President

Schedule 1

Access Home Health of Florida, Inc.

Capital CareResources of South Carolina, Inc.

Capital CareResources, Inc.

Capital Health Management Group, Inc.

CareNation, Inc.

Chattahoochee Valley Home Care Services, Inc.

Chattahoochee Valley Home Health, Inc.

CHMG Acquisition Corp.

CHMG of Atlanta, Inc.

CHMG of Griffin, Inc.

Eastern Carolina Home Health Agency, Inc.

Family Hospice, Ltd.

FHI GP, Inc.

FHI Health Systems, Inc.

FHI LP, Inc.

FHI Management, Ltd.

Gentiva Certified Healthcare Corp.

Gentiva Health Services (Certified), Inc.

Gentiva Health Services (USA) Inc.

Gentiva Health Services Holding Corp.

Gentiva Rehab Without Walls, LLC

Gentiva Services of New York, Inc.

Gilbert's Home Health Agency, Inc.

Gilbert's Hospice Care of Mississippi, LLC

Gilbert's Hospice Care, LLC

Healthfield Home Health, Inc.

Healthfield Hospice Services, Inc.

Healthfield of Southwest Georgia, Inc.

Healthfield of Statesboro, Inc.

Healthfield of Tennessee, Inc.

Healthfield Operating Group, Inc.

Healthfield, Inc.

Home Health Care Affiliates of Central Mississippi, L.L.C.

Home Health Care Affiliates of Mississippi, Inc.

Home Health Care Affiliates, Inc.

Home Health Care of Carteret County, Inc.

Horizon Health Network LLC

Mid-South Home Care Services, Inc.

Mid-South Home Care Services, LLC

Mid-South Home Health Agency, Inc.

Mid-South Home Health Agency, LLC

Mid-South Home Health of Gadsden, Inc.

5

New York Healthcare Services, Inc.

Odyssey Healthcare Austin, LLC

Odyssey Healthcare Detroit, LLC

Odyssey Healthcare Fort Worth, LLC

Odyssey HealthCare GP, LLC

Odyssey HealthCare Holding Company

Odyssey HealthCare LP, LLC

Odyssey HealthCare Management, LP

Odyssey HealthCare of Collier County, Inc.

Odyssey Healthcare of Flint, LLC

Odyssey HealthCare of Hillsborough County, Inc.

Odyssey HealthCare of Manatee County, Inc.

Odyssey HealthCare of Marion County, Inc.

Odyssey HealthCare of Northwest Florida, Inc.

Odyssey Healthcare of Pinellas County, Inc.

Odyssey Healthcare of St. Louis, LLC

Odyssey HealthCare Operating A, LP

Odyssey HealthCare Operating B, LP

Odyssey Healthcare, Inc.

OHS Service Corp.

PHHC Acquisition Corp.

QC-Medi New York, Inc.

Quality Care-USA, Inc.

Quality Managed Care, Inc.

Tar Heel Health Care Services, Inc.

Tar Heel Staffing, Inc.

The Healthfield Group, Inc.

Total Care Home Health of Louisburg, Inc.

Total Care Home Health of North Carolina, Inc.

Total Care Home Health of South Carolina, Inc.

Total Care Services, Inc.

Van Winkle Home Health Care, Inc.

Vista Hospice Care, Inc.

VistaCare of Boston, LLC

VistaCare USA, Inc.

VistaCare, Inc.

Wiregrass Hospice Care, Inc.

Wiregrass Hospice LLC

Wiregrass Hospice of South Carolina, LLC

6

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Tony Strange, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gentiva Health Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012

/s/ Tony Strange

Tony Strange

Chairman, Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Eric R. Slusser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gentiva Health Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012

/s/ Eric R. Slusser

Eric R. Slusser

Executive Vice President,

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Furnished (but not filed) as an exhibit to the periodic report identified in the Certification.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Gentiva Health Services, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), I, Tony Strange, Chairman, Chief Executive Officer and President, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2012	/s/ Tony Strange
	Tony Strange
	Chairman, Chief Executive Officer and President

EX-32.2

Exhibit 32.2

Furnished (but not filed) as an exhibit to the periodic report identified in the Certification.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Gentiva Health Services, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), I, Eric R. Slusser, Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2012	/s/ Eric R. Slusser
	Eric R. Slusser
	Executive Vice President, Chief Financial Officer and Treasurer

XML

Acquisitions and Dispositions (Details Textual) (USD $)	3 Months Ended		9 Months Ended			1 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended	3 Months Ended	1 Months Ended	9 Months Ended			1 Months Ended				1 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Apr. 29, 2011	Sep. 30, 2011 Rehab Without Walls [Member]	Sep. 30, 2011 Rehab Without Walls [Member]	Sep. 10, 2011 Rehab Without Walls [Member]	Jun. 30, 2012 Hospice [Member] Louisiana [Member] Branch	Jun. 30, 2012 Home Health and Hospice [Member]	Sep. 30, 2012 Home Health and Hospice [Member]	Jun. 30, 2012 Home Health and Hospice [Member] Louisiana [Member] Branch	Oct. 31, 2011 Homemaker Services Agency and Rehab Without Walls [Member]	Sep. 30, 2012 Homemaker Services Agency and Rehab Without Walls [Member]	Sep. 30, 2011 Homemaker Services Agency and Rehab Without Walls [Member]	Oct. 14, 2011 Homemaker Services Agency and Rehab Without Walls [Member]	May 31, 2012 MP Healthcare Partners [Member]	Aug. 31, 2012 Family Home Care [Member]	Aug. 31, 2012 North Mississippi Hospice [Member]	Jul. 22, 2012 Advocate Hospice Llc [Member]	Apr. 30, 2011 Odyssey Health Care Inc [Member]
Business Acquisition [Line Items]
Business Acquisition, Cost of Acquired Entity, Cash Paid																		$ 12,300,000	$ 4,700,000	$ 5,500,000
Business Acquisition, Purchase Price Allocation, Goodwill Amount																		5,600,000	3,300,000	5,800,000
Business Acquisition, Purchase Price Allocation, Amortizable Intangible Assets																		6,200,000	1,400,000	1,600,000
Business Acquisition, Purchase Price Allocation, Other Assets																		500,000
Business Acquisition, Contingent Consideration, Potential Cash Payment																				2,000,000
Business Acquisition, Contingent Consideration, at Fair Value, Current																				(1,900,000)
Purchased the outstanding member units representing the noncontrolling interest																					300,000
Outstanding member units					100.00%
Dispositions [Abstract]
Total consideration from sale of business						9,800,000				6,400,000			2,400,000				300,000
Number of Branches Sold									4			8
Proceeds from Divestiture of Businesses			5,720,000	142,333,000			9,200,000				5,900,000				2,000,000
Receivables from business dispositions											500,000
Gain on sale of businesses	0	0	5,447,000	0
Escrow fund		10,600,000		10,600,000				600,000								400,000
Reduction in escrow fund receivable			$ 700,000											$ 300,000

XML

Long-Term Debt (Details 1)	Sep. 30, 2012
Eurodollar Rate [Member] | Term Loan A [Member] | Leverage Ratio Range One [Member]
Debt Instrument [Line Items]
Term Loan A Original Eurodollar Rate	5.00%
Term Loan A Amended Eurodollar Rate	3.25%
Eurodollar Rate [Member] | Term Loan A [Member] | Leverage Ratio Range Two [Member]
Debt Instrument [Line Items]
Term Loan A Original Eurodollar Rate	4.50%
Term Loan A Amended Eurodollar Rate	3.00%
Eurodollar Rate [Member] | Term Loan A [Member] | Leverage Ratio Range Three [Member]
Debt Instrument [Line Items]
Term Loan A Original Eurodollar Rate	4.00%
Term Loan A Amended Eurodollar Rate	2.75%
Minimum Base Rate [Member] | Term Loan A [Member] | Leverage Ratio Range One [Member]
Debt Instrument [Line Items]
Term Loan A Original Base Rate	4.00%
Term Loan A Amended Base Rate	2.25%
Minimum Base Rate [Member] | Term Loan A [Member] | Leverage Ratio Range Two [Member]
Debt Instrument [Line Items]
Term Loan A Original Base Rate	3.50%
Term Loan A Amended Base Rate	2.00%
Minimum Base Rate [Member] | Term Loan A [Member] | Leverage Ratio Range Three [Member]
Debt Instrument [Line Items]
Term Loan A Original Base Rate	3.00%
Term Loan A Amended Base Rate	1.75%
Minimum Base Rate [Member] | Term Loan B [Member] | Leverage Ratio Range One [Member]
Debt Instrument [Line Items]
Term Loan B Amended Base Rate	2.25%
Minimum Base Rate [Member] | Term Loan B [Member] | Leverage Ratio Range Two [Member]
Debt Instrument [Line Items]
Term Loan B Amended Base Rate	2.00%
Minimum Base Rate [Member] | Term Loan B [Member] | Leverage Ratio Range Three [Member]
Debt Instrument [Line Items]
Term Loan B Amended Base Rate	1.75%

XML

Identifiable Intangible Assets and Goodwill (Details) (USD $) In Thousands, unless otherwise specified																															9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Home Health [Member]	Dec. 31, 2011 Home Health [Member]	Sep. 30, 2012 Hospice [Member]	Dec. 31, 2011 Hospice [Member]	Sep. 30, 2012 Medicare licenses and certificates of need [Member]	Dec. 31, 2011 Medicare licenses and certificates of need [Member]	Sep. 30, 2012 Medicare licenses and certificates of need [Member] Home Health [Member]	Dec. 31, 2011 Medicare licenses and certificates of need [Member] Home Health [Member]	Sep. 30, 2012 Medicare licenses and certificates of need [Member] Hospice [Member]	Dec. 31, 2011 Medicare licenses and certificates of need [Member] Hospice [Member]	Sep. 30, 2012 Covenants not to compete [Member]	Dec. 31, 2011 Covenants not to compete [Member]	Sep. 30, 2012 Covenants not to compete [Member] Home Health [Member]	Dec. 31, 2011 Covenants not to compete [Member] Home Health [Member]	Sep. 30, 2012 Covenants not to compete [Member] Hospice [Member]	Dec. 31, 2011 Covenants not to compete [Member] Hospice [Member]	Sep. 30, 2012 Customer Relationships [Member]	Dec. 31, 2011 Customer Relationships [Member]	Sep. 30, 2012 Customer Relationships [Member] Home Health [Member]	Dec. 31, 2011 Customer Relationships [Member] Home Health [Member]	Sep. 30, 2012 Customer Relationships [Member] Hospice [Member]	Dec. 31, 2011 Customer Relationships [Member] Hospice [Member]	Sep. 30, 2012 Trade Names [Member]	Dec. 31, 2011 Trade Names [Member]	Sep. 30, 2012 Trade Names [Member] Home Health [Member]	Dec. 31, 2011 Trade Names [Member] Home Health [Member]	Sep. 30, 2012 Trade Names [Member] Hospice [Member]	Dec. 31, 2011 Trade Names [Member] Hospice [Member]	Sep. 30, 2012 Maximum [Member] Covenants not to compete [Member]	Sep. 30, 2012 Maximum [Member] Customer Relationships [Member]	Sep. 30, 2012 Maximum [Member] Trade Names [Member]	Sep. 30, 2012 Minimum [Member] Covenants not to compete [Member]	Sep. 30, 2012 Minimum [Member] Customer Relationships [Member]	Sep. 30, 2012 Minimum [Member] Trade Names [Member]
Amortized intangible assets:
Finite-Lived Intangible Assets, Gross													$ 17,352	$ 17,148	$ 1,667	$ 1,473	$ 15,685	$ 15,675	$ 28,106	$ 28,106	$ 27,196	$ 27,196	$ 910	$ 910	$ 34,945	$ 34,945	$ 18,215	$ 18,215	$ 16,730	$ 16,730
Less: accumulated amortization													(14,921)	(10,555)	(1,433)	(1,411)	(13,488)	(9,144)	(17,431)	(15,603)	(17,064)	(15,304)	(367)	(299)	(15,402)	(12,868)	(11,794)	(10,522)	(3,608)	(2,346)
Finite Lived Intangible Assets, Accumulated Impairment																			(27)	(27)	(27)	(27)	0	0	(19,543)	(411)	(6,421)	(411)	(13,122)	0
Finite-Lived Intangible Assets, Net	13,079	40,735	10,339	19,209	2,740	21,526							2,431	6,593	234	62	2,197	6,531	10,648	12,476	10,105	11,865	543	611	0	21,666	0	7,282	0	14,384
Finite-Lived Intangible Asset, useful life																															5 years	10 years	10 years	2 years	5 years	5 years
Indefinite-lived intangible assets:
Indefinite-Lived Intangible Assets							327,813	318,811	225,226	220,285	102,587	98,526
Indefinite Lived Intangible Assets, Accumulated Impairment							(145,192)	(144,672)	(144,672)	(144,672)	(520)	0
Indefinite Lived Intangible Assets, Net							182,621	174,139	80,554	75,613	102,067	98,526
Total identifiable intangible assets	$ 195,700	$ 214,874	$ 90,893	$ 94,822	$ 104,807	$ 120,052

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Business Segment Information (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended						9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Charges reflecting for segment reporting purposes
Restructuring, Settlement and Impairment Provisions	$ 53	$ 25	$ 5,391	$ 9,844	$ 21,246	$ 3,765	$ 5,469	$ 34,855
Home Health [Member]
Charges reflecting for segment reporting purposes
Restructuring, Settlement and Impairment Provisions	0			0			5,700	300
Hospice [Member]
Charges reflecting for segment reporting purposes
Restructuring, Settlement and Impairment Provisions	0			800			100	1,600
Corporate expenses [Member]
Charges reflecting for segment reporting purposes
Restructuring, Settlement and Impairment Provisions	$ 100			$ 9,000			$ (300)	$ 33,000

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Long-Term Debt (Details 2)	9 Months Ended
	Sep. 30, 2012
Maximum Consolidated Leverage Ratio Subsequent to Amendment No. 2
August 17, 2010 to September 30, 2011	4.75%
October 1, 2011 to September 30, 2012	4.50%
October 1, 2012 to September 30, 2013	3.75%
Thereafter	3.00%

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Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements (Details Textual) (USD $)	3 Months Ended						9 Months Ended			3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Mar. 31, 2012 Home Health [Member]	Dec. 31, 2011 Home Health [Member]	Dec. 31, 2011 Hospice [Member]
Restructuring and Related Activities [Abstract]
Restructuring, Settlement and Impairment Provisions	$ 53,000	$ 25,000	$ 5,391,000	$ 9,844,000	$ 21,246,000	$ 3,765,000	$ 5,469,000	$ 34,855,000
Charge	100,000			800,000			1,500,000	2,600,000
Non cash charges on restructuring activities	4,000	114,000	197,000		407,000			400,000
Business Combination, Integration Related Costs				2,500,000			(1,000,000)	7,300,000
Gain (Loss) Related to Litigation Settlement				6,500,000			5,000,000	25,000,000
Legal Settlement							26,000,000
Restructuring Reserve, Current	$ 3,800,000						$ 3,800,000		$ 38,400,000
Segment Reporting Information [Line Items]
Number of branches divested										4	34	9

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Equity-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Weighted-average fair values of the Company's stock options granted

The weighted average fair values of the Company’s stock options granted during the first nine months of 2012 and 2011 calculated using the Black-Scholes option pricing model and other assumptions, were as follows.

	Nine Months Ended
	September 30, 2012			September 30, 2011
Weighted average fair value of options granted	$	8.46		$	11.30
Risk-free interest rate	0.77% - 0.95%			2.15		%
Expected volatility	64		%	44		%
Contractual life	7 years			7 years
Expected life	3.4 - 5.4 years			4.5 -6.5 years
Expected dividend yield	—		%	—		%

Summary of stock option activity

A summary of Gentiva stock option activity as of September 30, 2012 and for the nine months endedSeptember 30, 2012 is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2011	4,228,907		$	15.59
Granted	36,000		8.46
Exercised	(1,200	)	8.74
Cancelled	(357,338	)	13.47
Balance as of September 30, 2012	3,906,369		$	15.73	5.1	$	7,601,985
Exercisable options	2,133,041		$	20.12	4.4	$	219,703

Summary of performance share unit

A summary of Gentiva performance share unit activity as of September 30, 2012 is presented below:

	Number of Performance Share Units		Weighted- Average Exercise Price
Balance as of December 31, 2011	125,800		$	26.33
Granted	—		—
Vested	—		—
Cancelled	(4,200	)	26.74
Balance as of September 30, 2012	121,600		$	26.32

Summary of restricted stock activity

A summary of Gentiva restricted stock activity as of September 30, 2012 is presented below:

	Number of Restricted Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of December 31, 2011	377,750		$	25.30
Granted	—		—
Exercised	—		—
Cancelled	(10,700	)	26.48
Balance as of September 30, 2012	367,050		$	25.26	$	4,154,419

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Supplemental Guarantor and Non-Guarantor Financial Information (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidating Statement of Comprehensive Income
Total net revenues	$ 424,444,000	$ 449,748,000	$ 1,287,787,000	$ 1,349,569,000
Cost of services sold	223,889,000	242,943,000	679,487,000	707,850,000
Gross profit	200,555,000	206,805,000	608,300,000	641,719,000
Selling, general and administrative expenses	(161,207,000)	(182,634,000)	(498,842,000)	(547,005,000)
Dividend income	0	3,977,000	0	8,590,000
Gain on sale of assets	0	0	5,447,000	0
Goodwill, intangibles and other long-lived asset impairment	(19,132,000)	(643,305,000)	(19,132,000)	(643,305,000)
Interest expense and other, net	(22,894,000)	(20,673,000)	(67,051,000)	(68,342,000)
Equity in earnings (loss) of subsidiaries	0	0	0	0
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	(2,678,000)	(635,830,000)	28,722,000	(608,343,000)
Income tax benefit (expense)	1,297,000	87,538,000	(10,878,000)	77,007,000
Equity in net earnings of CareCentrix	1,006,000	68,692,000	1,006,000	69,582,000
(Loss) Income from continuing operations	(375,000)	(479,600,000)	18,850,000	(461,754,000)
Discontinued operations, net of tax	0	5,983,000	0	7,096,000
Net (loss) income	(375,000)	(473,617,000)	18,850,000	(454,658,000)
Less: Net income attributable to noncontrolling interests	(148,000)	(134,000)	(624,000)	(452,000)
Net (loss) income attributable to Gentiva shareholders	(523,000)	(473,751,000)	18,226,000	(455,110,000)
Comprehensive (loss) income	(375,000)	(473,617,000)	18,850,000	(455,136,000)
Gentiva Health Services, Inc. [Member]
Condensed Consolidating Statement of Comprehensive Income
Total net revenues	0	0	0	0
Cost of services sold	0	0	0	0
Gross profit	0	0	0	0
Selling, general and administrative expenses	0	0	0	0
Dividend income		0		0
Gain on sale of assets			0
Goodwill, intangibles and other long-lived asset impairment	0	0	0	0
Interest expense and other, net	(22,917,000)	(20,687,000)	(67,138,000)	(68,387,000)
Equity in earnings (loss) of subsidiaries	12,563,000	(461,283,000)	50,166,000	(405,039,000)
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	(10,354,000)	(481,970,000)	(16,972,000)	(473,426,000)
Income tax benefit (expense)	9,831,000	8,219,000	35,198,000	18,316,000
Equity in net earnings of CareCentrix	0	0	0	0
(Loss) Income from continuing operations	(523,000)	(473,751,000)	18,226,000	(455,110,000)
Discontinued operations, net of tax	0	0	0	0
Net (loss) income	(523,000)	(473,751,000)	18,226,000	(455,110,000)
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net (loss) income attributable to Gentiva shareholders	(523,000)	(473,751,000)	18,226,000	(455,110,000)
Comprehensive (loss) income	(523,000)	(473,751,000)	18,226,000	(455,588,000)
Guarantor Subsidiaries [Member]
Condensed Consolidating Statement of Comprehensive Income
Total net revenues	412,963,000	439,140,000	1,253,781,000	1,319,162,000
Cost of services sold	217,767,000	228,306,000	661,151,000	688,754,000
Gross profit	195,196,000	210,834,000	592,630,000	630,408,000
Selling, general and administrative expenses	(156,771,000)	(178,773,000)	(486,285,000)	(535,958,000)
Dividend income		3,977,000		8,590,000
Gain on sale of assets			5,449,000
Goodwill, intangibles and other long-lived asset impairment	(19,132,000)	(643,305,000)	(19,132,000)	(643,305,000)
Interest expense and other, net	0	0	0	0
Equity in earnings (loss) of subsidiaries	243,000	(7,904,000)	1,260,000	(2,244,000)
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	19,536,000	(615,171,000)	93,922,000	(542,509,000)
Income tax benefit (expense)	(7,979,000)	79,399,000	(44,762,000)	61,202,000
Equity in net earnings of CareCentrix	1,006,000	68,692,000	1,006,000	69,582,000
(Loss) Income from continuing operations	12,563,000	(467,080,000)	50,166,000	(411,725,000)
Discontinued operations, net of tax	0	5,797,000	0	6,686,000
Net (loss) income	12,563,000	(461,283,000)	50,166,000	(405,039,000)
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net (loss) income attributable to Gentiva shareholders	12,563,000	(461,283,000)	50,166,000	(405,039,000)
Comprehensive (loss) income	12,563,000	(461,283,000)	50,166,000	(405,039,000)
Non-Guarantor Subsidiaries [Member]
Condensed Consolidating Statement of Comprehensive Income
Total net revenues	14,186,000	13,299,000	42,429,000	38,801,000
Cost of services sold	8,827,000	17,328,000	26,759,000	27,490,000
Gross profit	5,359,000	(4,029,000)	15,670,000	11,311,000
Selling, general and administrative expenses	(4,436,000)	(3,861,000)	(12,557,000)	(11,047,000)
Dividend income		0		0
Gain on sale of assets			(2,000)
Goodwill, intangibles and other long-lived asset impairment	0	0	0	0
Interest expense and other, net	23,000	14,000	87,000	45,000
Equity in earnings (loss) of subsidiaries	0	0	0	0
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	946,000	(7,876,000)	3,198,000	309,000
Income tax benefit (expense)	(555,000)	(80,000)	(1,314,000)	(2,511,000)
Equity in net earnings of CareCentrix	0	0	0	0
(Loss) Income from continuing operations	391,000	(7,956,000)	1,884,000	(2,202,000)
Discontinued operations, net of tax	0	186,000	0	410,000
Net (loss) income	391,000	(7,770,000)	1,884,000	(1,792,000)
Less: Net income attributable to noncontrolling interests	(148,000)	(134,000)	(624,000)	(452,000)
Net (loss) income attributable to Gentiva shareholders	243,000	(7,904,000)	1,260,000	(2,244,000)
Comprehensive (loss) income	391,000	(7,770,000)	1,884,000	(1,792,000)
Eliminations [Member]
Condensed Consolidating Statement of Comprehensive Income
Total net revenues	(2,705,000)	(2,691,000)	(8,423,000)	(8,394,000)
Cost of services sold	(2,705,000)	(2,691,000)	(8,423,000)	(8,394,000)
Gross profit	0	0	0	0
Selling, general and administrative expenses	0	0	0	0
Dividend income		0		0
Gain on sale of assets			0
Goodwill, intangibles and other long-lived asset impairment	0	0
Interest expense and other, net	0	0	0	0
Equity in earnings (loss) of subsidiaries	(12,806,000)	469,187,000	(51,426,000)	407,283,000
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	(12,806,000)	469,187,000	(51,426,000)	407,283,000
Income tax benefit (expense)	0	0	0	0
Equity in net earnings of CareCentrix	0	0		0
(Loss) Income from continuing operations	(12,806,000)	469,187,000	(51,426,000)	407,283,000
Discontinued operations, net of tax	0	0	0	0
Net (loss) income	(12,806,000)	469,187,000	(51,426,000)	407,283,000
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net (loss) income attributable to Gentiva shareholders	(12,806,000)	469,187,000	(51,426,000)	407,283,000
Comprehensive (loss) income	$ (12,806,000)	$ 469,187,000	$ (51,426,000)	$ 407,283,000

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Long-Term Debt (Details 4)	9 Months Ended
	Sep. 30, 2012
Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest
2014	105.75%
2015	102.875%
2016 and thereafter	100.00%

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Business Segment Information (Details Textual) (USD $)	3 Months Ended						9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Restructuring, Settlement and Impairment Provisions	$ 53,000	$ 25,000	$ 5,391,000	$ 9,844,000	$ 21,246,000	$ 3,765,000	$ 5,469,000	$ 34,855,000
Interest expense and other, net	(22,894,000)			(20,673,000)			(67,051,000)	(68,342,000)
Impairment finite lived intangible assets	19,132,000						19,132,000
Goodwill, intangibles and other long-lived asset impairment	19,132,000			643,305,000			19,132,000	643,305,000
Segment Reporting Information, Profit (Loss) [Abstract]
Charge	100,000			800,000			1,500,000	2,600,000
Recognized dividend income	0			3,977,000			0	8,590,000
Interest Rate Swap [Member]
Segment Reporting Information [Line Items]
Interest expense and other, net							500,000	3,800,000
Home Health [Member]
Segment Reporting Information [Line Items]
Restructuring, Settlement and Impairment Provisions	0			0			5,700,000	300,000
Number of states in certified providers serving	38						38
Impairment finite lived intangible assets							6,000,000
Goodwill, intangibles and other long-lived asset impairment				(408,400,000)
Hospice [Member]
Segment Reporting Information [Line Items]
Restructuring, Settlement and Impairment Provisions	0			800,000			100,000	1,600,000
Number of states in certified providers serving	28						28
Impairment finite lived intangible assets							13,132,000
Goodwill, intangibles and other long-lived asset impairment				(193,705,000)
Corporate expenses [Member]
Segment Reporting Information [Line Items]
Restructuring, Settlement and Impairment Provisions	100,000			9,000,000			(300,000)	33,000,000
Goodwill, intangibles and other long-lived asset impairment				$ (41,200,000)

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Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

Summary of net revenues and operating results

Net revenues and operating results for the third quarter and first nine months of 2011 for the homemaker services agency business in Illinois and the Rehab Without Walls^® and HME and IV businesses were (in thousands):

	Third Quarter			First Nine Months
	2011			2011
Net revenues	$	6,699		$	22,636
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

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Identifiable Intangible Assets and Goodwill (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Charge	$ 19,132,000	$ 643,305,000	$ 19,132,000	$ 643,305,000
Goodwill, impairment loss		457,037,000		457,037,000	457,037,000
Impairment finite lived intangible assets	19,132,000		19,132,000
Indefinite-lived intangible assets, period increase (decrease)			500,000
Amortization expense	2,600,000	3,300,000	8,700,000	9,800,000
Estimated amortization expense for the remainder of 2012	1,300,000		1,300,000
Estimated amortization expense for 2013	4,100,000		4,100,000
Estimated amortization expense for 2014	2,400,000		2,400,000
Estimated amortization expense for 2015	2,300,000		2,300,000
Estimated amortization expense for 2016	1,400,000		1,400,000
Estimated amortization expense for 2017	1,200,000		1,200,000
Goodwill [Line Items]
Increase in goodwill					13,640,000
Home Health [Member]
Goodwill and Intangible Assets Disclosure [Abstract]
Charge		(408,400,000)
Goodwill, impairment loss					263,370,000
Impairment finite lived intangible assets			6,000,000
Goodwill [Line Items]
Fair Value Inputs, Discount Rate	11.60%				12.10%
Increase in goodwill					2,379,000
Hospice [Member]
Goodwill and Intangible Assets Disclosure [Abstract]
Charge		(193,705,000)
Goodwill, impairment loss					193,667,000
Impairment finite lived intangible assets			13,132,000
Goodwill [Line Items]
Fair Value Inputs, Discount Rate	10.50%				11.70%
Increase in goodwill					$ 11,261,000

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Net Revenues and Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net revenues by major payer classification
Net revenues	$ 424,444	$ 449,748	$ 1,287,787	$ 1,349,569
Percentage variance	(5.60%)		(4.60%)
Home Health [Member]
Net revenues by major payer classification
Net revenues	234,700	253,200	710,300	763,600
Hospice [Member]
Net revenues by major payer classification
Net revenues	189,700	196,500	577,500	586,000
Medicare [Member]
Net revenues by major payer classification
Net revenues	362,400	382,300	1,100,700	1,144,600
Percentage variance	(5.20%)		(3.80%)
Medicare [Member] | Home Health [Member]
Net revenues by major payer classification
Net revenues	185,000	200,300	561,700	601,600
Percentage variance	(7.60%)		(6.60%)
Medicare [Member] | Hospice [Member]
Net revenues by major payer classification
Net revenues	177,400	182,000	539,000	543,000
Percentage variance	(2.50%)		(0.70%)
Medicaid and Local Government [Member]
Net revenues by major payer classification
Net revenues	19,100	21,200	56,900	63,200
Percentage variance	(9.70%)		(10.00%)
Medicaid and Local Government [Member] | Home Health [Member]
Net revenues by major payer classification
Net revenues	12,200	13,200	35,700	39,800
Medicaid and Local Government [Member] | Hospice [Member]
Net revenues by major payer classification
Net revenues	6,900	8,000	21,200	23,400
Commercial Insurance and Other [Member]
Net revenues by major payer classification
Net revenues	$ 42,900	$ 46,200	$ 130,200	$ 141,800
Percentage variance	(7.30%)		(8.20%)
Commercial Insurance and Other [Member] | Paid at Episodic Rates [Member]
Net revenues by major payer classification
Percentage variance	10.90%		8.00%
Commercial Insurance and Other [Member] | Other [Member]
Net revenues by major payer classification
Percentage variance	(20.40%)		(19.40%)

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Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Accounting Policies [Abstract]
Operating funds	$ 6,000,000		$ 6,000,000		$ 5,000,000
Ownership interest in CareCentrix Holdings	0.00%		0.00%		0.00%
Dividend income	0	3,977,000	0	8,590,000
Equity method investment, realized gain on disposal		68,300,000
Assets held in rabbi trust	28,400,000		28,400,000		26,300,000
Unamortized debt issuance costs	47,600,000		47,600,000		53,700,000
Incremental Debt Issuance Costs			5,300,000	10,900,000
Capitalized and amortized Debt issuance cost			4,100,000
Deferred debt issuance costs, write off			500,000	3,500,000
Fixed assets, net	43,057,000		43,057,000		46,246,000
Obligations under insurance programs	54,101,000		54,101,000		54,976,000
Workers compensation and professional and general liability expenses	5,800,000	5,100,000	13,400,000	11,200,000
Employee health and welfare expenses	$ 20,100,000	$ 24,300,000	$ 66,300,000	$ 68,500,000
Percentage of Medicaid daily nursing home rate			95.00%

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Earnings Per Share (Details Textual) (Stock Options [Member]) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Stock Options [Member]
Earnings Per Share (Textual) [Abstract]
Anit-dilutive effect of options and restricted stock awards	3.1	3.2	3.3	1.6

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Income Taxes (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Tax Expense (Benefit) [Abstract]
Income tax benefit (expense)	$ 1,297	$ 87,538	$ (10,878)	$ 77,007
Company's effective rate			37.90%	12.70%
Effective Federal Tax Rate			35.00%	35.00%
Change in tax reserves			(2.50%)
State income taxes, federal benefit			5.00%	4.70%
Effective Income Tax Rate Reconciliation, Other Adjustments				(26.20%)
Other items			0.40%	(0.80%)

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Equity-Based Compensation Plans (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Weighted-average fair values of the Company's stock options granted
Weighted average fair value of options granted	$ 8.46	$ 11.30
Risk-free interest rate		2.15%
Expected volatility	64.00%	44.00%
Contractual life	7 years	7 years
Expected dividend yield	0.00%	0.00%
Maximum [Member]
Weighted-average fair values of the Company's stock options granted
Risk-free interest rate	0.95%
Expected life	5 years 4 months 24 days	6 years 6 months
Minimum [Member]
Weighted-average fair values of the Company's stock options granted
Risk-free interest rate	0.77%
Expected life	3 years 4 months 24 days	4 years 6 months

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Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended						9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Costs incurred and cash expenditures
Beginning Balance	$ 5,361	$ 13,333	$ 38,379	$ 24,659	$ 19,306	$ 19,377	$ 38,379	$ 19,377
Charge	100			800			1,500	2,600
Business Combination, Integration Related Costs				2,500			(1,000)	7,300
Gain (Loss) Related to Litigation Settlement				6,500			5,000	25,000
Restructuring, Settlement and Impairment Provisions	53	25	5,391	9,844	21,246	3,765	5,469	34,855
Cash Expenditure	(1,609)	(7,883)	(30,240)	(2,201)	(15,486)	(3,836)
Non-cash expenditures	(4)	(114)	(197)		(407)			(400)
Ending Balance	3,801	5,361	13,333	32,302	24,659	19,306	3,801	32,302
Cost Savings and Other Restructuring [Member]
Costs incurred and cash expenditures
Beginning Balance	3,971	6,005	8,671	1,971	2,662	2,893	8,671	2,893
Charge	98	542	842	824	504	1,259
Cash Expenditure	(1,466)	(2,462)	(3,527)	(710)	(788)	(1,490)
Non-cash expenditures	(4)	(114)	19		(407)
Ending Balance	2,599	3,971	6,005	2,085	1,971	2,662	2,599	2,085
Acquisition & Integration [Member]
Costs incurred and cash expenditures
Beginning Balance	1,390	2,328	3,708	4,188	4,144	3,984	3,708	3,984
Business Combination, Integration Related Costs	(45)	(517)	(409)	2,520	2,242	2,506
Cash Expenditure	(143)	(421)	(755)	(1,491)	(2,198)	(2,346)
Non-cash expenditures	0	0	(216)		0
Ending Balance	1,202	1,390	2,328	5,217	4,188	4,144	1,202	5,217
Legal Settlements [Member]
Costs incurred and cash expenditures
Beginning Balance	0	5,000	26,000	18,500	12,500	12,500	26,000	12,500
Gain (Loss) Related to Litigation Settlement	0	0	4,958	6,500	18,500	0
Cash Expenditure	0	(5,000)	(25,958)	0	(12,500)	0
Non-cash expenditures	0	0	0		0
Ending Balance	$ 0	$ 0	$ 5,000	$ 25,000	$ 18,500	$ 12,500	$ 0	$ 25,000

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Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

Acquisitions

Family Home Care Corporation

Effective August 31, 2012, the Company completed its acquisition of the assets and business of Family Home Care Corporation, one of the leading providers of home health and hospice services in the Washington and Idaho markets. Total consideration of $12.3 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.6 million), identifiable intangible assets ($6.2 million) and other assets ($0.5 million).

North Mississippi Hospice

Effective August 31, 2012, the Company completed its acquisition of the assets and business of North Mississippi Hospice, a provider of hospice services with offices in Oxford, Southhaven and Tupelo, Mississippi. Total consideration of $4.7 million, excluding transaction costs and subject to post-closing adjustments, was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($3.3 million) and identifiable intangible assets ($1.4 million).

Advocate Hospice

Effective July 22, 2012, the Company completed its acquisition of the assets and business of Advocate Hospice, a provider of hospice services located in Danville, Indiana, for consideration of $5.5 million, excluding transaction costs and subject to post-closing adjustments, which consideration included entering into an option purchase agreement with a third party covering membership interests in Advocate Hospice. Additional consideration of up to $2.0 million is payable under the option agreement if certain earnout conditions are met, which the Company valued at $1.9 million, on a discounted cash flow basis, and recorded as other accrued expenses on the Company's consolidated balance sheet at September 30, 2012. The consideration was paid at the time of closing from the Company's existing cash reserves. The purchase price was allocated to goodwill ($5.8 million) and identifiable intangible assets ($1.6 million).

Odyssey Healthcare of Augusta, LLC

Effective April 29, 2011, the Company purchased the outstanding member units representing the noncontrolling interest in Odyssey Healthcare of Augusta, LLC (“Augusta”) for approximately $0.3 million. As a result of the transaction, the Company owns 100 percent of the outstanding member units of Augusta.

Dispositions

Gentiva Consulting, Louisiana Home Health and Hospice Dispositions

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.

During the second quarter of 2012, the Company sold 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 during the first nine months of 2012 and established a receivable of approximately $0.5 million.

In connection with the sales, the Company recorded a gain on sale of businesses in the Company’s consolidated statements of comprehensive income of approximately $5.4 million for the first nine months of 2012.

Home Health and Hospice Branch Dispositions

In the fourth quarter of 2011, the Company entered into asset purchase agreements to sell the assets of certain home health branches in Utah, Michigan and Nevada, as well as a hospice branch in Texas. In addition, the Company entered into an option agreement to sell the assets of the Company’s home health branch in Brooklyn, New York pending approval by the Public Health Council and New York State Agencies.

Homemaker Services Agency and Rehab Without Walls^® Dispositions

Effective October 14, 2011, the Company completed the sale of its IDOA business to Premier Home Health Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $2.4 million, consisting of (i) cash proceeds of approximately $2.0 million and (ii) an escrow fund of approximately $0.4 million, to be received by the Company subject to certain post closing conditions. During the first nine months of 2012, the Company reduced the escrow fund receivable to approximately $0.3 million as a result of certain post closing conditions and received such funds in July 2012.

Effective September 10, 2011, the Company completed the sale of its Rehab Without Walls^® business to Southern Home Care Services, Inc., pursuant to an asset purchase agreement, for total consideration of approximately $9.8 million. The consideration consisted of (i) cash proceeds of approximately $9.2 million and (ii) an escrow fund of approximately $0.6 million which was received by the Company in September 2012.

Net revenues and operating results for the third quarter and first nine months of 2011 for the homemaker services agency business in Illinois and the Rehab Without Walls^® and HME and IV businesses were (in thousands):

	Third Quarter			First Nine Months
	2011			2011
Net revenues	$	6,699		$	22,636
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

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Equity-Based Compensation Plans (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2012
Summary of stock option activity
Number of options, Beginning balance	4,228,907
Weighted Average Exercise Price, Beginning balance	$ 15.59
Number of Options, Granted	36,000
Weighted Average Exercise Price, Granted	$ 8.46
Number of Options, Exercised	(1,200)
Weighted Average Exercise Price, Exercised	$ 8.74
Number of Options, Cancelled	(357,338)
Weighted Average Exercise Price, Cancelled	$ 13.47
Number of options, Ending balance	3,906,369
Weighted Average Exercise Price, Ending balance	$ 15.73
Weighted Average Remaining Contractual Life-Years	5 years 1 month
Aggregate intrinsic value, Ending balance	$ 7,601,985
Number of Options, Exercisable options	2,133,041
Weighted Average Exercise Price, Exercisable options	$ 20.12
Weighted Average Remaining Contractual Term, Exercisable options	4 years 4 months 15 days
Aggregate Intrinsic Value, Exercisable options	$ 219,703

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Net Revenues and Accounts Receivable (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts receivable attributable to major payer sources of reimbursement
Gross Accounts Receivable	$ 264,614	$ 302,151
Less: Allowance for doubtful accounts	(10,520)	(11,562)
Net Accounts Receivable	254,094	290,589
Medicare [Member]
Accounts receivable attributable to major payer sources of reimbursement
Gross Accounts Receivable	190,997	217,028
Medicaid and Local Government [Member]
Accounts receivable attributable to major payer sources of reimbursement
Gross Accounts Receivable	36,608	46,553
Commercial Insurance and Other [Member]
Accounts receivable attributable to major payer sources of reimbursement
Gross Accounts Receivable	$ 37,009	$ 38,570

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Identifiable Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Gross carrying amount and accumulated amortization of identifiable intangible assets

The gross carrying amount and accumulated amortization of each category of identifiable intangible assets as of September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012									December 31, 2011									Useful Life
	Home Health			Hospice			Total			Home Health			Hospice			Total
Amortized intangible assets:
Covenants not to compete	$	1,667		$	15,685		$	17,352		$	1,473		$	15,675		$	17,148		2-5 Years
Less: accumulated amortization	(1,433		)	(13,488		)	(14,921		)	(1,411		)	(9,144		)	(10,555		)
Net covenants not to compete	234			2,197			2,431			62			6,531			6,593
Customer relationships	27,196			910			28,106			27,196			910			28,106			5-10 Years
Less: accumulated amortization	(17,064		)	(367		)	(17,431		)	(15,304		)	(299		)	(15,603		)
accumulated impairment losses	(27		)	—			(27		)	(27		)	—			(27		)
Net customer relationships	10,105			543			10,648			11,865			611			12,476
Tradenames	18,215			16,730			34,945			18,215			16,730			34,945			5-10 Years
Less: accumulated amortization	(11,794		)	(3,608		)	(15,402		)	(10,522		)	(2,346		)	(12,868		)
accumulated impairment losses	(6,421		)	(13,122		)	(19,543		)	(411		)	—			(411		)
Net tradenames	—			—			—			7,282			14,384			21,666
Amortized intangible assets	10,339			2,740			13,079			19,209			21,526			40,735
Indefinite-lived intangible assets:
Medicare licenses and certificates of need	225,226			102,587			327,813			220,285			98,526			318,811
Less: accumulated impairment losses	(144,672		)	(520		)	(145,192		)	(144,672		)	—			(144,672		)
Net Medicare licenses and certificates of need	80,554			102,067			182,621			75,613			98,526			174,139
Total identifiable intangible assets	$	90,893		$	104,807		$	195,700		$	94,822		$	120,052		$	214,874

Gross carrying amount of goodwill

The gross carrying amount of goodwill as of September 30, 2012 and December 31, 2011 and activity during the first nine months of 2012 were as follows (in thousands):

	Home Health			Hospice			Total
Balance at December 31, 2010	$	264,679		$	820,387		$	1,085,066
Goodwill adjustment	2,379			11,261			13,640
Accumulated impairment losses	(263,370		)	(193,667		)	(457,037		)
Balance at December 31, 2011	3,688			637,981			641,669
Goodwill acquired during 2012	5,331			9,364			14,695
Balance at September 30, 2012	$	9,019		$	647,345		$	656,364

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Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements (Tables)

9 Months Ended

Sep. 30, 2012

Restructuring and Related Activities [Abstract]

Costs incurred and cash expenditures

The costs incurred and cash expenditures associated with these activities by component were as follows (in thousands):

	Cost Savings and Other Restructuring			Acquisition & Integration			Legal Settlements			Total
Balance at December 31, 2010	$	2,893		$	3,984		$	12,500		$	19,377
Charge in first quarter 2011	1,259			2,506			—			3,765
Cash expenditures	(1,490		)	(2,346		)	—			(3,836		)
Ending balance at March 31, 2011	2,662			4,144			12,500			19,306
Charge in second quarter 2011	504			2,242			18,500			21,246
Cash expenditures	(788		)	(2,198		)	(12,500		)	(15,486		)
Non-cash expenditures	(407		)	—			—			(407		)
Ending balance at June 30, 2011	1,971			4,188			18,500			24,659
Charge in third quarter 2011	824			2,520			6,500			9,844
Cash expenditures	(710		)	(1,491		)	—			(2,201		)
Ending balance at September 30, 2011	$	2,085		$	5,217		$	25,000		$	32,302
Balance at December 31, 2011	$	8,671		$	3,708		$	26,000		$	38,379
Charge in first quarter 2012	842			(409		)	4,958			5,391
Cash expenditures	(3,527		)	(755		)	(25,958		)	(30,240		)
Non-cash expenditures	19			(216		)	—			(197		)
Ending balance at March 31, 2012	6,005			2,328			5,000			13,333
Charge in second quarter 2012	542			(517		)	—			25
Cash expenditures	(2,462		)	(421		)	(5,000		)	(7,883		)
Non-cash expenditures	(114		)	—			—			(114		)
Ending balance at June 30, 2012	3,971			1,390			—			5,361
Charge in third quarter 2012	98			(45		)	—			53
Cash expenditures	(1,466		)	(143		)	—			(1,609		)
Non-cash expenditures	(4		)	—			—			(4		)
Ending balance at September 30, 2012	$	2,599		$	1,202		$	—		$	3,801

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Long-Term Debt (Details 3)	9 Months Ended
	Sep. 30, 2012
Increase in Gentiva's permitted maximum consolidated leverage ratio under Amendment No.3
March 31, 2012 to September 30, 2014	6.25%
Each fiscal quarter thereafter	5.75%

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Net Revenues and Accounts Receivable (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Net Revenues and Accounts Receivable [Abstract]
Medicare Hospice Cap Expense	$ 3.0	$ 1.7	$ 6.2	$ 3.4
Medicare Hospice Cap Liabilities	20.3		20.3		15.6
Commercials Insurance self pay accounts receivables related to patient	$ 1.7		$ 1.7		$ 2.1

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Computations of the basic and diluted per share amounts

The computations of the basic and diluted per share amounts were as follows (in thousands, except per share amounts):

	For the Three Months Ended										For the Nine Months Ended
	September 30, 2012					September 30, 2011					September 30, 2012		September 30, 2011
Net (loss) income attributable to Gentiva shareholders	$	(523	)			$	(473,751	)			$	18,226	$	(455,110	)
Basic weighted average common shares outstanding	30,423					30,337					30,496		30,257
Shares issuable upon the assumed exercise of stock options and under stock plans for employees and directors using the treasury stock method	—			(1	)	—			(1	)	116		—			(1	)
Diluted weighted average common shares outstanding	30,423					30,337					30,612		30,257
Basic earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)
Diluted earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)

(1) Due to the reported net loss, there is no dilutive share effect for these reporting periods.

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2012

Long-term Debt, Unclassified [Abstract]

Long-term debt

As of September 30, 2012 and December 31, 2011, the Company’s long-term debt consisted of the following (in thousands):

	September 30, 2012			December 31, 2011
Credit Agreement:
Term Loan A, maturing August 17, 2015	$	146,693		$	158,653
Term Loan B, maturing August 17, 2016	466,432			504,472
11.5% Senior Notes due 2018	325,000			325,000
Total debt	938,125			988,125
Less: current portion of long-term debt	(21,693		)	(14,903		)
Total long-term debt	$	916,432		$	973,222

Applicable Rate for Term Loan A

	Previous Applicable Rate		Amended Applicable Rate
Consolidated Leverage Ratio	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Loans	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Term A Loans	Base Rate Term B Loans
> 3.0:1	5.00%	4.00%	3.25%	2.25%	2.25%
> 2.0:1 and < 3.0:1	4.50%	3.50%	3.00%	2.00%	2.00%
< 2.0:1	4.00%	3.00%	2.75%	1.75%	1.75%

Maximum consolidated leverage ratio

The maximum consolidated leverage ratio under Amendment No. 2 was as follows:

For the period	Maximum Consolidated Leverage Ratio
August 17, 2010 to September 30, 2011	≤ 4.75:1
October 1, 2011 to September 30, 2012	≤ 4.50:1
October 1, 2012 to September 30, 2013	≤ 3.75:1
Thereafter	≤ 3.00:1

Increase in Gentiva's permitted maximum consolidated leverage ratio under Amendment No.3

The increase in Gentiva’s permitted maximum consolidated leverage ratio under Amendment No. 3 is set forth in the following table:

Four Fiscal Quarters Ending	Maximum Consolidated Leverage Ratio
March 31, 2012 to September 30, 2014	≤ 6.25:1
Each fiscal quarter thereafter	≤ 5.75:1

Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest

On or after September 1, 2014, Gentiva may redeem all or part of the Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest, if any, as defined in the indenture relating to the Senior Notes during the twelve month period beginning on September 1 of the years indicated below:

Year	Percentage
2014	105.750%
2015	102.875%
2016 and thereafter	100.000%

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Accounting Policies

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

Cash and Cash Equivalents

The Company considers all investments with a maturity date three months or less from their date of acquisition to be cash equivalents, including money market funds invested in U.S. Treasury securities, short-term treasury bills and commercial paper. Cash and cash equivalents also included amounts on deposit with several major financial institutions in excess of the maximum amount insured by the Federal Deposit Insurance Corporation. Management believes that these major financial institutions are viable entities.

The Company had operating funds of approximately $6.0 million and $5.0 million at September 30, 2012 and December 31, 2011, respectively, which relate exclusively to a non-profit hospice operation managed in Florida.

Investments

At both September 30, 2012 and December 31, 2011, the Company had no remaining ownership interest in CareCentrix Holdings Inc. During the third quarter of 2011, the Company sold its remaining investment in CareCentrix Holdings Inc. The Company recorded accumulated and unpaid dividends on the preferred shares it held of approximately $4.0 million and $8.6 million for the third quarter and first nine months of 2011, respectively, which are reflected in dividend income in the Company's consolidated statements of comprehensive income. The Company also recorded a net gain of approximately $68.3 million, which is reflected in equity in net earnings of CareCentrix, including gain on sale in the Company's consolidated statements of comprehensive income. See Note 6 for additional information.

At September 30, 2012 and December 31, 2011, the Company had assets of $28.4 million and $26.3 million, respectively, held in a Rabbi Trust for the benefit of participants in the Company’s non-qualified defined contribution retirement plan. The corresponding amounts payable to the plan participants are equivalent to the underlying value of the assets held in the Rabbi Trust. Assets held in a Rabbi Trust and amounts payable to plan participants are classified in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets.

Debt Issuance Costs

The Company amortizes deferred debt issuance costs over the term of its credit agreement and senior notes. As of September 30, 2012 and December 31, 2011, the Company had unamortized debt issuance costs of $47.6 million and $53.7 million, respectively, recorded in other assets in the Company’s consolidated balance sheets. During the first nine months of 2012, the Company incurred incremental debt issuance costs of approximately $5.3 million in connection with an amendment to the Company’s credit agreement. Approximately $4.1 million of these costs have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate methodology. In addition, the Company wrote off prepaid debt issuance costs of approximately $0.5 million, which is reflected in interest expense in the Company’s consolidated statement of comprehensive income, associated with the reduction in the revolving credit facility.

During the first nine months of 2011, the Company (i) incurred incremental debt issuance costs of approximately $10.9 million and (ii) recorded a write-off of deferred debt issuance costs of approximately $3.5 million in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

Fixed Assets

Fixed assets, including costs of Company developed software, are stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the life of the lease or the life of the improvement. Repairs and maintenance costs are expensed as incurred. As of September 30, 2012 and December 31, 2011, fixed assets, net were $43.1 million and $46.2 million, respectively.

Goodwill and Other Indefinite-Lived Intangible Assets

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if current events or circumstances require an interim impairment assessment. The Company allocates goodwill to its various operating units upon the acquisition of the assets or stock of another third party business operation. The Company compares the fair value of each operating unit to its carrying amount to determine if there is a potential impairment of goodwill and other indefinite-lived intangible assets. If the fair value of an operating unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the operating unit is less than the carrying value of its goodwill. To determine the fair value of the Company's operating units, the Company uses a present value (discounted cash flow) technique corroborated by market multiples when available, a reconciliation to market capitalization or other valuation methodologies, and reasonableness tests, as appropriate.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values of other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.

The Company completed its annual impairment test of goodwill and indefinite-lived intangible assets for the Company's operating units as of December 31, 2011, which indicated that there was no additional impairment. See Note 8 for additional information.

Obligations Under Self Insurance Programs

As of September 30, 2012 and December 31, 2011, the Company’s obligations under insurance programs were $54.1 million and $55.0 million, respectively. The decrease is primarily attributable to favorable claim trends and the timing of payments.

Workers’ compensation and professional and general liability expenses were $5.8 million and $13.4 million for the third quarter and first nine months of 2012, respectively, as compared to $5.1 million and $11.2 million for the corresponding periods of 2011. Employee health and welfare expenses were $20.1 million and $66.3 million for the third quarter and first nine months of 2012, respectively, as compared to $24.3 million and $68.5 million for the corresponding periods of 2011.

Nursing Home Costs

For patients receiving nursing home care under a state Medicaid program who elect hospice care under Medicare or Medicaid, the Company contracts with nursing homes for the nursing homes to provide patients’ room and board services. The state must pay the Company, in addition to the applicable Medicare or Medicaid hospice daily or hourly rate, an amount equal to at least 95 percent of the Medicaid daily nursing home rate for room and board furnished to the patient by the nursing home. Under the Company’s standard nursing home contracts, the Company pays the nursing home for these room and board services at the Medicaid daily nursing home rate. Nursing home costs are partially offset by nursing home net revenue, and the net amount is included in cost of services sold in the Company’s consolidated statements of comprehensive income.

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Equity (Tables)

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

Changes in Equity

Changes in equity for the nine months endedSeptember 30, 2012 and 2011 were as follows (in thousands, except share amounts):

	Gentiva Shareholders
	Common Stock			Additional Paid-in			Retained Earnings Accumulated			Accumulated Other Comprehensive			Treasury			Noncontrolling
	Shares	Amount		Capital			(Deficit)			Income (Loss)			Stock			Interests			Total
Balance at December 31, 2010	30,799,091	$	3,080	$	372,106		$	272,394		$	478		$	(12,484	)	$	2,658		$	638,232
Comprehensive (loss) income:
Net (loss) income	—	—		—			(455,110		)	—			—			452			(454,658		)
Changes in fair value of interest rate swaps	—	—		—			—			(768		)	—			—			(768		)
Realized loss on interest rate swaps	—	—		—			—			290			—			—			290
Total comprehensive (loss) income	—	—		—			(455,110		)	(478		)	—			452			(455,136		)
Income tax benefits associated with the exercise of non-qualified stock options	—	—		259			—			—			—			—			259
Equity-based compensation expense	—	—		6,259			—			—			—			—			6,259
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	464,680	47		6,969			—			—			—			—			7,016
Purchase of non-controlling interest	—	—		(352		)	—			—			—			32			(320		)
Distribution to partnership interests	—	—		—			—			—			—			(608		)	(608		)
Treasury shares:
Common stock received from Healthfield escrow (14,334 shares)	—	—		—			—			—			(394		)	—			(394		)
Balance at September 30, 2011	31,263,771	$	3,127	$	385,241		$	(182,716	)	$	—		$	(12,878	)	$	2,534		$	195,308
Balance at December 31, 2011	31,435,264	$	3,144	$	387,803		$	(178,131	)	$	—		$	(12,878	)	$	2,593		$	202,531
Comprehensive income:
Net income	—	—		—			18,226			—			—			624			18,850
Total comprehensive income	—	—		—			18,226			—			—			624			18,850
Equity-based compensation expense	—	—		5,722			—			—			—			—			5,722
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	391,177	39		2,381			—			—			—			—			2,420
Purchase of non-controlling interest	—	—		—			—			—			—			(1,113		)	(1,113		)
Distribution to partnership interests	—	—		—			—			—			—			(685		)	(685		)
Treasury shares:
Stock repurchase (605,077 shares)	—	—		—			—			—			(4,974		)	—			(4,974		)
Balance at September 30, 2012	31,826,441	$	3,183	$	395,906		$	(159,905	)	$	—		$	(17,852	)	$	1,419		$	222,751

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Fair Value of Financial Instruments (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial assets measured at fair value on a recurring basis
Assets fair value	$ 82,434	$ 80,329
Liabilities fair value	30,268	26,323
Mutual funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	22,574	25,626
Money Market Funds [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	54,066	54,006
Money Market Funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	5,794	697
Payables To Plan Participant [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	28,368	26,323
Accrued Liabilities [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	1,900	0
Level 1 [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	82,434	80,329
Liabilities fair value	28,368	26,323
Level 1 [Member] | Mutual funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	22,574	25,626
Level 1 [Member] | Money Market Funds [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	54,066	54,006
Level 1 [Member] | Money Market Funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	5,794	697
Level 1 [Member] | Payables To Plan Participant [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	28,368	26,323
Level 1 [Member] | Accrued Liabilities [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	0	0
Level 2 [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Liabilities fair value	0	0
Level 2 [Member] | Mutual funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 2 [Member] | Money Market Funds [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 2 [Member] | Money Market Funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 2 [Member] | Payables To Plan Participant [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	0	0
Level 2 [Member] | Accrued Liabilities [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	0	0
Level 3 [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Liabilities fair value	1,900	0
Level 3 [Member] | Mutual funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 3 [Member] | Money Market Funds [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 3 [Member] | Money Market Funds [Member] | Rabbi Trust [Member]
Financial assets measured at fair value on a recurring basis
Assets fair value	0	0
Level 3 [Member] | Payables To Plan Participant [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	0	0
Level 3 [Member] | Accrued Liabilities [Member]
Financial assets measured at fair value on a recurring basis
Liabilities fair value	$ 1,900	$ 0

XML

Long-Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Long-term debt
Total debt	$ 938,125	$ 988,125
Less: current portion of long-term debt	(21,693)	(14,903)
Total long-term debt	916,432	973,222
11.5% Senior Notes due 2018 [Member]
Long-term debt
Total debt	325,000	325,000
Term Loan A, maturing August 17, 2015 [Member] | Credit Agreement [Member]
Long-term debt
Total debt	146,693	158,653
Term Loan B, maturing August 17, 2016 [Member] | Credit Agreement [Member]
Long-term debt
Total debt	$ 466,432	$ 504,472

XML

Supplemental Guarantor and Non-Guarantor Financial Information (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 156,049	$ 164,912	$ 196,092	$ 104,752
Receivables, net	254,094	290,589
Deferred tax assets, net	10,881	26,451
Prepaid expenses and other current assets	54,962	38,379
Total current assets	475,986	520,331
Note receivable from CareCentrix	34,949	25,000
Fixed assets, net	43,057	46,246
Intangible assets, net	195,700	214,874
Goodwill	656,364	641,669		1,085,066
Investment in subsidiaries	0	0
Other assets	78,158	82,208
Total assets	1,484,214	1,530,328	1,539,586
Current liabilities:
Current portion of long-term debt	21,693	14,903
Accounts payable	15,122	12,613
Other current liabilities	228,077	267,676
Total current liabilities	264,892	295,192
Long-term debt	916,432	973,222
Deferred tax liabilities, net	44,628	32,498
Other liabilities	35,511	26,885
Total Gentiva shareholders' equity	221,332	199,938
Noncontrolling interests	1,419	2,593
Total equity	222,751	202,531	195,308	638,232
Total liabilities and equity	1,484,214	1,530,328
Gentiva Health Services, Inc. [Member]
Current assets:
Cash and cash equivalents	114,650	124,101	155,434	63,816
Receivables, net	0	0
Deferred tax assets, net	0	0
Prepaid expenses and other current assets	0	0
Total current assets	114,650	124,101
Note receivable from CareCentrix	0	0
Fixed assets, net	0	0
Intangible assets, net	0	0
Goodwill	0	0
Investment in subsidiaries	1,044,807	1,063,962
Other assets	0	0
Total assets	1,159,457	1,188,063
Current liabilities:
Current portion of long-term debt	21,693	14,903
Accounts payable	0	0
Other current liabilities	0	0
Total current liabilities	21,693	14,903
Long-term debt	916,432	973,222
Deferred tax liabilities, net	0	0
Other liabilities	0	0
Total Gentiva shareholders' equity	221,332	199,938
Noncontrolling interests	0	0
Total equity	221,332	199,938
Total liabilities and equity	1,159,457	1,188,063
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Receivables, net	249,385	283,552
Deferred tax assets, net	8,897	24,560
Prepaid expenses and other current assets	46,114	32,619
Total current assets	304,396	340,731
Note receivable from CareCentrix	34,949	25,000
Fixed assets, net	42,748	45,917
Intangible assets, net	195,600	214,774
Goodwill	650,300	635,605
Investment in subsidiaries	27,049	25,173
Other assets	78,151	82,200
Total assets	1,333,193	1,369,400
Current liabilities:
Current portion of long-term debt	0	0
Accounts payable	27,880	22,913
Other current liabilities	180,380	223,165
Total current liabilities	208,260	246,078
Long-term debt	0	0
Deferred tax liabilities, net	44,628	32,498
Other liabilities	35,498	26,862
Total Gentiva shareholders' equity	1,044,807	1,063,962
Noncontrolling interests	0	0
Total equity	1,044,807	1,063,962
Total liabilities and equity	1,333,193	1,369,400
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	41,399	40,811	40,658	40,936
Receivables, net	17,468	18,168
Deferred tax assets, net	1,984	1,891
Prepaid expenses and other current assets	8,848	6,904
Total current assets	69,699	67,774
Note receivable from CareCentrix	0	0
Fixed assets, net	309	329
Intangible assets, net	100	100
Goodwill	6,064	6,064
Investment in subsidiaries	0	0
Other assets	7	8
Total assets	76,179	74,275
Current liabilities:
Current portion of long-term debt	0	0
Accounts payable	1	831
Other current liabilities	47,697	45,655
Total current liabilities	47,698	46,486
Long-term debt	0	0
Deferred tax liabilities, net	0	0
Other liabilities	13	23
Total Gentiva shareholders' equity	27,049	25,173
Noncontrolling interests	1,419	2,593
Total equity	28,468	27,766
Total liabilities and equity	76,179	74,275
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Receivables, net	(12,759)	(11,131)
Deferred tax assets, net	0	0
Prepaid expenses and other current assets	0	(1,144)
Total current assets	(12,759)	(12,275)
Note receivable from CareCentrix	0	0
Fixed assets, net	0	0
Intangible assets, net	0	0
Goodwill	0	0
Investment in subsidiaries	(1,071,856)	(1,089,135)
Other assets	0	0
Total assets	(1,084,615)	(1,101,410)
Current liabilities:
Current portion of long-term debt	0	0
Accounts payable	(12,759)	(11,131)
Other current liabilities	0	(1,144)
Total current liabilities	(12,759)	(12,275)
Long-term debt	0	0
Deferred tax liabilities, net	0	0
Other liabilities	0	0
Total Gentiva shareholders' equity	(1,071,856)	(1,089,135)
Noncontrolling interests	0	0
Total equity	(1,071,856)	(1,089,135)
Total liabilities and equity	$ (1,084,615)	$ (1,101,410)

XML

Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 156,049	$ 164,912
Accounts receivable, less allowance for doubtful accounts of $10,520 and $11,562 at September 30, 2012 and December 31, 2011, respectively	254,094	290,589
Deferred tax assets, net	10,881	26,451
Prepaid expenses and other current assets	54,962	38,379
Total current assets	475,986	520,331
Note receivable from CareCentrix	34,949	25,000
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
Current liabilities:
Current portion of long-term debt	21,693	14,903
Accounts payable	15,122	12,613
Payroll and related taxes	29,902	42,027
Deferred revenue	39,116	34,114
Medicare liabilities	27,979	23,066
Obligations under insurance programs	54,101	54,976
Accrued nursing home costs	20,566	24,223
Other accrued expenses	56,413	89,270
Total current liabilities	264,892	295,192
Long-term debt	916,432	973,222
Deferred tax liabilities, net	44,628	32,498
Other liabilities	35,511	26,885
Gentiva shareholders' equity:
Common stock, $0.10 par value; authorized 100,000,000 shares; issued 31,826,441 and 31,435,264 shares at September 30, 2012 and December 31, 2011, respectively	3,183	3,144
Additional paid-in capital	395,906	387,803
Treasury stock, 1,260,879 and 655,802 shares at September 30, 2012 and December 31, 2011, respectively	(17,852)	(12,878)
Accumulated deficit	(159,905)	(178,131)
Total Gentiva shareholders' equity	221,332	199,938
Noncontrolling interests	1,419	2,593
Total equity	222,751	202,531
Total liabilities and equity	$ 1,484,214	$ 1,530,328

XML

Investment in and Notes Receivable from CareCentrix (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2013
Note Receivable from and Investment in Entity [Abstract]
Accumulated and unpaid dividends on the preferred shares		$ 4,000,000		$ 8,600,000
Equity method investment, realized gain on disposal		68,300,000
Escrow fund receivable		10,600,000		10,600,000
Promissory note	25,000,000		25,000,000
Period from closing of transaction to expected maturity date			5 years 6 months
Fixed interest rate on promissory note			10.00%
Investment income, nonoperating	600,000	600,000	1,900,000	1,900,000
Reduction in Escrow Fund Receivable			700,000
Reclassified escrow receivable	9,900,000		9,900,000
Interest rate on promissory note			14.00%		18.00%
Equity in net earnings of CareCentrix	$ 1,006,000	$ 68,692,000	$ 1,006,000	$ 69,582,000

XML

Consolidated Statements of Cash Flows (Parenthetical) (Unaudited) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012
Statement of Cash Flows [Abstract]
Shares of common stock received in connection with acquisition of business	14,334
Reclassified escrow receivable		$ 9.9

XML

Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Comprehensive (loss) income:
Beginning Balance			$ 202,531	$ 638,232
Comprehensive Income
Net (loss) income	(375)	(473,617)	18,850	(454,658)
Changes in fair value of interest rate swaps				(768)
Realized loss on interest rate swap				290
Total comprehensive (loss) income	(375)	(473,617)	18,850	(455,136)
Income tax benefits associated with the exercise of non-qualified stock options				259
Equity-based compensation expense			5,722	6,259
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors			2,420	7,016
Purchase of non-controlling interest			(1,113)	(320)
Distribution to partnership interests			(685)	(608)
Treasury shares:
Common stock received from Healthfield escrow (14,334 shares)				(394)
Stock repurchase (605,077 shares)			(4,974)
Ending Balance	222,751	195,308	222,751	195,308
Common Stock [Member]
Comprehensive (loss) income:
Shares, Beginning Balance			31,435,264	30,799,091
Beginning Balance			3,144	3,080
Comprehensive Income
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors, Shares			391,177	464,680
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors			39	47
Treasury shares:
Shares, Ending Balance	31,826,441	31,263,771	31,826,441	31,263,771
Ending Balance	3,183	3,127	3,183	3,127
Additional Paid-in Capital [Member]
Comprehensive (loss) income:
Beginning Balance			387,803	372,106
Comprehensive Income
Income tax benefits associated with the exercise of non-qualified stock options				259
Equity-based compensation expense			5,722	6,259
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors			2,381	6,969
Purchase of non-controlling interest				(352)
Treasury shares:
Ending Balance	395,906	385,241	395,906	385,241
Retained Earnings / Accumulated (deficit) [Member]
Comprehensive (loss) income:
Beginning Balance			(178,131)	272,394
Comprehensive Income
Net (loss) income			18,226	(455,110)
Total comprehensive (loss) income			18,226	(455,110)
Treasury shares:
Ending Balance	(159,905)	(182,716)	(159,905)	(182,716)
Accumulated Other Comprehensive Income (Loss) [Member]
Comprehensive (loss) income:
Beginning Balance				478
Comprehensive Income
Changes in fair value of interest rate swaps				(768)
Realized loss on interest rate swap				290
Total comprehensive (loss) income				(478)
Treasury shares:
Ending Balance		0		0
Treasury Stock [Member]
Comprehensive (loss) income:
Beginning Balance			(12,878)	(12,484)
Treasury shares:
Common stock received from Healthfield escrow (14,334 shares)				(394)
Stock repurchase (605,077 shares)			(4,974)
Ending Balance	(17,852)	(12,878)	(17,852)	(12,878)
Noncontrolling Interests [Member]
Comprehensive (loss) income:
Beginning Balance			2,593	2,658
Comprehensive Income
Net (loss) income			624	452
Total comprehensive (loss) income			624	452
Purchase of non-controlling interest			(1,113)	32
Distribution to partnership interests			(685)	(608)
Treasury shares:
Ending Balance	$ 1,419	$ 2,534	$ 1,419	$ 2,534

XML

Supplemental Guarantor and Non-Guarantor Financial Information (Tables)

9 Months Ended

Sep. 30, 2012

Supplemental Guarantor and Non-Guarantor Financial Information [Abstract]

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet

September 30, 2012

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	114,650	$	—	$	41,399	$	—		$	156,049
Receivables, net	—		249,385		17,468		(12,759		)	254,094
Deferred tax assets, net	—		8,897		1,984		—			10,881
Prepaid expenses and other current assets	—		46,114		8,848		—			54,962
Total current assets	114,650		304,396		69,699		(12,759		)	475,986
Notes receivable from CareCentrix	—		34,949		—		—			34,949
Fixed assets, net	—		42,748		309		—			43,057
Intangible assets, net	—		195,600		100		—			195,700
Goodwill	—		650,300		6,064		—			656,364
Investment in subsidiaries	1,044,807		27,049		—		(1,071,856		)	—
Other assets	—		78,151		7		—			78,158
Total assets	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	21,693	$	—	$	—	$	—		$	21,693
Accounts payable	—		27,880		1		(12,759		)	15,122
Other current liabilities	—		180,380		47,697		—			228,077
Total current liabilities	21,693		208,260		47,698		(12,759		)	264,892
Long-term debt	916,432		—		—		—			916,432
Deferred tax liabilities, net	—		44,628		—		—			44,628
Other liabilities	—		35,498		13		—			35,511
Total Gentiva shareholders’ equity	221,332		1,044,807		27,049		(1,071,856		)	221,332
Noncontrolling interests	—		—		1,419		—			1,419
Total equity	221,332		1,044,807		28,468		(1,071,856		)	222,751
Total liabilities and equity	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214

Condensed Consolidating Balance Sheet

December 31, 2011

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	124,101	$	—	$	40,811	$	—		$	164,912
Receivables, net	—		283,552		18,168		(11,131		)	290,589
Deferred tax assets, net	—		24,560		1,891		—			26,451
Prepaid expenses and other current assets	—		32,619		6,904		(1,144		)	38,379
Total current assets	124,101		340,731		67,774		(12,275		)	520,331
Note receivable from CareCentrix	—		25,000		—		—			25,000
Fixed assets, net	—		45,917		329		—			46,246
Intangible assets, net	—		214,774		100		—			214,874
Goodwill	—		635,605		6,064		—			641,669
Investment in subsidiaries	1,063,962		25,173		—		(1,089,135		)	—
Other assets	—		82,200		8		—			82,208
Total assets	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	14,903	$	—	$	—	$	—		$	14,903
Accounts payable	—		22,913		831		(11,131		)	12,613
Other current liabilities	—		223,165		45,655		(1,144		)	267,676
Total current liabilities	14,903		246,078		46,486		(12,275		)	295,192
Long-term debt	973,222		—		—		—			973,222
Deferred tax liabilities, net	—		32,498		—		—			32,498
Other liabilities	—		26,862		23		—			26,885
Total Gentiva shareholders’ equity	199,938		1,063,962		25,173		(1,089,135		)	199,938
Noncontrolling interests	—		—		2,593		—			2,593
Total equity	199,938		1,063,962		27,766		(1,089,135		)	202,531
Total liabilities and equity	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328

Condensed Consolidating Statement of Comprehensive Income

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	412,963		$	14,186		$	(2,705	)	$	424,444
Cost of services sold	—			217,767			8,827			(2,705		)	223,889
Gross profit	—			195,196			5,359			—			200,555
Selling, general and administrative expenses	—			(156,771		)	(4,436		)	—			(161,207		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Interest (expense) and other, net	(22,917		)	—			23			—			(22,894		)
Equity in earnings of subsidiaries	12,563			243			—			(12,806		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(10,354		)	19,536			946			(12,806		)	(2,678		)
Income tax benefit (expense)	9,831			(7,979		)	(555		)	—			1,297
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
(Loss) income from continuing operations	(523		)	12,563			391			(12,806		)	(375		)
Discontinued operations, net of tax	—			—			—			—			—
Net (loss) income	(523		)	12,563			391			(12,806		)	(375		)
Noncontrolling interests	—			—			(148		)	—			(148		)
Net (loss) income attributable to Gentiva shareholders	$	(523	)	$	12,563		$	243		$	(12,806	)	$	(523	)
Comprehensive (loss) income	$	(523	)	$	12,563		$	391		$	(12,806	)	$	(375	)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	439,140		$	13,299		$	(2,691	)	$	449,748
Cost of services sold	—			228,306			17,328			(2,691		)	242,943
Gross profit	—			210,834			(4,029		)	—			206,805
Selling, general and administrative expenses	—			(178,773		)	(3,861		)	—			(182,634		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			3,977			—			—			3,977
Interest (expense) and other, net	(20,687		)	—			14			—			(20,673		)
Equity in earnings of subsidiaries	(461,283		)	(7,904		)	—			469,187			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(481,970		)	(615,171		)	(7,876		)	469,187			(635,830		)
Income tax benefit (expense)	8,219			79,399			(80		)	—			87,538
Equity in net earnings of CareCentrix	—			68,692			—			—			68,692
(Loss) income from continuing operations	(473,751		)	(467,080		)	(7,956		)	469,187			(479,600		)
Discontinued operations, net of tax	—			5,797			186			—			5,983
Net (loss) income	(473,751		)	(461,283		)	(7,770		)	469,187			(473,617		)
Noncontrolling interests	—			—			(134		)	—			(134		)
Net (loss) income attributable to Gentiva shareholders	$	(473,751	)	$	(461,283	)	$	(7,904	)	$	469,187		$	(473,751	)
Comprehensive (loss) income	$	(473,751	)	$	(461,283	)	$	(7,770	)	$	469,187		$	(473,617	)

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,253,781		$	42,429		$	(8,423	)	$	1,287,787
Cost of services sold	—			661,151			26,759			(8,423		)	679,487
Gross profit	—			592,630			15,670			—			608,300
Selling, general and administrative expenses	—			(486,285		)	(12,557		)	—			(498,842		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Gain on sale of businesses	—			5,449			(2		)	—			5,447
Interest (expense) and other, net	(67,138		)	—			87			—			(67,051		)
Equity in earnings of subsidiaries	50,166			1,260			—			(51,426		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(16,972		)	93,922			3,198			(51,426		)	28,722
Income tax benefit (expense)	35,198			(44,762		)	(1,314		)	—			(10,878		)
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
Income from continuing operations	18,226			50,166			1,884			(51,426		)	18,850
Discontinued operations, net of tax	—			—			—			—			—
Net income	18,226			50,166			1,884			(51,426		)	18,850
Noncontrolling interests	—			—			(624		)	—			(624		)
Net income attributable to Gentiva shareholders	$	18,226		$	50,166		$	1,260		$	(51,426	)	$	18,226
Comprehensive income	$	18,226		$	50,166		$	1,884		$	(51,426	)	$	18,850

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,319,162		$	38,801		$	(8,394	)	$	1,349,569
Cost of services sold	—			688,754			27,490			(8,394		)	707,850
Gross profit	—			630,408			11,311			—			641,719
Selling, general and administrative expenses	—			(535,958		)	(11,047		)	—			(547,005		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			8,590			—			—			8,590
Interest (expense) and other, net	(68,387		)	—			45			—			(68,342		)
Equity in earnings of subsidiaries	(405,039		)	(2,244		)	—			407,283			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(473,426		)	(542,509		)	309			407,283			(608,343		)
Income tax benefit (expense)	18,316			61,202			(2,511		)	—			77,007
Equity in net earnings of CareCentrix	—			69,582			—			—			69,582
(Loss) income from continuing operations	(455,110		)	(411,725		)	(2,202		)	407,283			(461,754		)
Discontinued operations, net of tax	—			6,686			410			—			7,096
Net (loss) income	(455,110		)	(405,039		)	(1,792		)	407,283			(454,658		)
Noncontrolling interests	—			—			(452		)	—			(452		)
Net (loss) income attributable to Gentiva shareholders	$	(455,110	)	$	(405,039	)	$	(2,244	)	$	407,283		$	(455,110	)
Comprehensive (loss) income	$	(455,588	)	$	(405,039	)	$	(1,792	)	$	407,283		$	(455,136	)

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by operating activities	$	3,710		$	66,138		$	4,793		$	—	$	74,641
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(9,188		)	(47		)	—		(9,235		)
Proceeds from sale of businesses	—			5,720			—			—		5,720
Acquisition of businesses	—			(22,520		)	—			—		(22,520		)
Net cash used in investing activities	—			(25,988		)	(47		)	—		(26,035		)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421			—			—			—		2,421
Repayment of long-term debt	(50,000		)	—			—			—		(50,000		)
Debt issuance costs	(4,125		)	—			—			—		(4,125		)
Repurchase of common stock	(4,974		)	—			—			—		(4,974		)
Repayment of capital lease obligations	(106		)	—			—			—		(106		)
Other	3,501			(28		)	(4,158		)	—		(685		)
Net payments related to intercompany financing	40,122			(40,122		)	—			—		—
Net cash used in financing activities	(13,161		)	(40,150		)	(4,158		)	—		(57,469		)
Net change in cash and cash equivalents	(9,451		)	—			588			—		(8,863		)
Cash and cash equivalents at beginning of period	124,101			—			40,811			—		164,912
Cash and cash equivalents at end of period	$	114,650		$	—		$	41,399		$	—	$	156,049

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(31,545	)	$	44,344		$	1,548		$	—	$	14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(14,393		)	(178		)	—		(14,571		)
Proceeds from sale of businesses	—			142,281			52			—		142,333
Acquisition of businesses	—			(320		)	—			—		(320		)
Net cash provided by (used in) investing activities	—			127,568			(126		)	—		127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	7,005			—			—			—		7,005
Windfall tax benefits associated with equity-based compensation	194			—			—			—		194
Repayment of long-term debt	(43,438		)	—			—			—		(43,438		)
Debt issuance costs	(13,457		)	—			—			—		(13,457		)
Repayment of capital lease obligations	(210		)	—			—			—		(210		)
Other	—			1,157			(1,700		)	—		(543		)
Net payments related to intercompany financing	173,069			(173,069		)	—			—		—
Net cash provided by (used in) financing activities	123,163			(171,912		)	(1,700		)	—		(50,449		)
Net change in cash and cash equivalents	91,618			—			(278		)	—		91,340
Cash and cash equivalents at beginning of period	63,816			—			40,936			—		104,752
Cash and cash equivalents at end of period	$	155,434		$	—		$	40,658		$	—	$	196,092

XML

Equity-Based Compensation Plans (Details Textual) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended						9 Months Ended		12 Months Ended		9 Months Ended		12 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	May 10, 2012	Sep. 30, 2012 Stock option grants in 2011 and 2012 [Member]	Sep. 30, 2012 Stock option grants in 2006 through 2010 [Member]	Sep. 30, 2012 Performance Shares [Member]	Sep. 30, 2011 Performance Shares [Member]	Sep. 30, 2012 Restricted Stock Units R S U [Member]	Sep. 30, 2011 Restricted Stock Units R S U [Member]	Sep. 30, 2012 Restricted Stock [Member]	Sep. 30, 2011 Restricted Stock [Member]	Dec. 31, 2011 Maximum [Member]	Dec. 31, 2010 Maximum [Member]	Sep. 30, 2012 Maximum [Member] Performance Shares [Member]	Sep. 30, 2012 Maximum [Member] Restricted Stock Units R S U [Member]	Dec. 31, 2011 Minimum [Member]	Dec. 31, 2010 Minimum [Member]	Sep. 30, 2012 Minimum [Member] Performance Shares [Member]	Sep. 30, 2012 Minimum [Member] Restricted Stock Units R S U [Member]	Sep. 30, 2012 Selling General and Administrative Expenses [Member]	Sep. 30, 2011 Selling General and Administrative Expenses [Member]	Sep. 30, 2012 Selling General and Administrative Expenses [Member]	Sep. 30, 2011 Selling General and Administrative Expenses [Member]
Equity-Based Compensation Plans (Textual) [Abstract]
Equity-based compensation expense			$ 5,722,000	$ 5,863,000																		$ 2,300,000	$ 1,900,000	$ 5,700,000	$ 5,900,000
Non-cash compensation expense		400,000
Stock option vesting Period						3 years	4 years									3 years	5 years			1 year	3 years
Stock option vesting rights						three-year period	four-year period
Number of Options, Exercised			(1,200)
Intrinsic value of options				1,900,000
Unrecognized compensation expense	3,200,000		3,200,000
Compensation expense recognized over a weighted-average period			1 year 5 months					1 year 2 months	2 years 1 month			2 years 7 months	3 years 3 months
Fair Value of Vested Options			3,500,000
Performance share units vesting period			P3Y
Performance share units granted														200.00%	150.00%			0.00%	0.00%
Unrecognized compensation cost total								2,000,000	1,700,000	4,900,000	6,200,000
Intrinsic Value of restricted stock awards												4,154,419
Number of shares of common stock available for issuance	650,000		650,000
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance	295,631		295,631
Stock & Deferred Compensation Plan for Non-Employee			56,264
Weighted-average fair value			$ 7.73
Approximate cash payment to each non-employee for insufficient deferred stock units			$ 28,100
Share units outstanding under the plan	243,982		243,982
Increasing in aggregate number of shares of common stock available for issuance					350,000
ESPP under which the offering purchase price of shares	85.00%
Offering Period of Employee Stock Purchase Plan			3 months
Stock issued under ESPP			327,884
Company issued common stock under its ESPP	15.00%
Authorization of additional shares under ESPP					1,800,000

XML

Supplemental Guarantor and Non-Guarantor Financial Information

9 Months Ended

Sep. 30, 2012

Supplemental Guarantor and Non-Guarantor Financial Information [Abstract]

Supplemental Guarantor and Non-Guarantor Financial Information

Supplemental Guarantor and Non-Guarantor Financial Information

Gentiva’s guarantor subsidiaries are guarantors to the Company’s debt securities which are registered under the Securities Act of 1933, as amended. The condensed consolidating financial statements presented below are provided pursuant to Rule 3-10 of Regulation S-X. Separate financial statements of each subsidiary guaranteeing Gentiva’s debt securities are not presented because the guarantor subsidiaries are jointly and severally, fully and unconditionally liable under the guarantees, and 100 percent owned by the Company. There are no restrictions on the ability to obtain funds from these subsidiaries by dividends or other means.

During the third quarter of 2012, the Company reclassified certain cost of services sold as presented within the Company's supplemental guarantor and non-guarantor financial information. The impact of this reclassification was an increase to cost of services sold of approximately $2.3 million and a decrease in income tax expense of approximately $0.8 million for the non-guarantor subsidiaries for the nine months ended September 30, 2012 and a corresponding decrease in the cost of services sold of approximately $2.3 million and increase in the income tax benefit of approximately $0.8 million in the guarantor subsidiaries for the nine months ended September 30, 2012.

The following condensed consolidating financial statements include the balance sheets as of September 30, 2012 and December 31, 2011, statements of comprehensive income for the three months and nine months endedSeptember 30, 2012 and 2011 and statements of cash flows for the nine months endedSeptember 30, 2012 and 2011 of (i) Gentiva Health Services, Inc. and (ii) its guarantor subsidiaries (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting) and its non-guarantor subsidiaries along with eliminations necessary to arrive at the information for the Company on a consolidated basis.

Condensed Consolidating Balance Sheet

September 30, 2012

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	114,650	$	—	$	41,399	$	—		$	156,049
Receivables, net	—		249,385		17,468		(12,759		)	254,094
Deferred tax assets, net	—		8,897		1,984		—			10,881
Prepaid expenses and other current assets	—		46,114		8,848		—			54,962
Total current assets	114,650		304,396		69,699		(12,759		)	475,986
Notes receivable from CareCentrix	—		34,949		—		—			34,949
Fixed assets, net	—		42,748		309		—			43,057
Intangible assets, net	—		195,600		100		—			195,700
Goodwill	—		650,300		6,064		—			656,364
Investment in subsidiaries	1,044,807		27,049		—		(1,071,856		)	—
Other assets	—		78,151		7		—			78,158
Total assets	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	21,693	$	—	$	—	$	—		$	21,693
Accounts payable	—		27,880		1		(12,759		)	15,122
Other current liabilities	—		180,380		47,697		—			228,077
Total current liabilities	21,693		208,260		47,698		(12,759		)	264,892
Long-term debt	916,432		—		—		—			916,432
Deferred tax liabilities, net	—		44,628		—		—			44,628
Other liabilities	—		35,498		13		—			35,511
Total Gentiva shareholders’ equity	221,332		1,044,807		27,049		(1,071,856		)	221,332
Noncontrolling interests	—		—		1,419		—			1,419
Total equity	221,332		1,044,807		28,468		(1,071,856		)	222,751
Total liabilities and equity	$	1,159,457	$	1,333,193	$	76,179	$	(1,084,615	)	$	1,484,214

Condensed Consolidating Balance Sheet

December 31, 2011

(In thousands)

	Gentiva Health Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	124,101	$	—	$	40,811	$	—		$	164,912
Receivables, net	—		283,552		18,168		(11,131		)	290,589
Deferred tax assets, net	—		24,560		1,891		—			26,451
Prepaid expenses and other current assets	—		32,619		6,904		(1,144		)	38,379
Total current assets	124,101		340,731		67,774		(12,275		)	520,331
Note receivable from CareCentrix	—		25,000		—		—			25,000
Fixed assets, net	—		45,917		329		—			46,246
Intangible assets, net	—		214,774		100		—			214,874
Goodwill	—		635,605		6,064		—			641,669
Investment in subsidiaries	1,063,962		25,173		—		(1,089,135		)	—
Other assets	—		82,200		8		—			82,208
Total assets	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	14,903	$	—	$	—	$	—		$	14,903
Accounts payable	—		22,913		831		(11,131		)	12,613
Other current liabilities	—		223,165		45,655		(1,144		)	267,676
Total current liabilities	14,903		246,078		46,486		(12,275		)	295,192
Long-term debt	973,222		—		—		—			973,222
Deferred tax liabilities, net	—		32,498		—		—			32,498
Other liabilities	—		26,862		23		—			26,885
Total Gentiva shareholders’ equity	199,938		1,063,962		25,173		(1,089,135		)	199,938
Noncontrolling interests	—		—		2,593		—			2,593
Total equity	199,938		1,063,962		27,766		(1,089,135		)	202,531
Total liabilities and equity	$	1,188,063	$	1,369,400	$	74,275	$	(1,101,410	)	$	1,530,328

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	412,963		$	14,186		$	(2,705	)	$	424,444
Cost of services sold	—			217,767			8,827			(2,705		)	223,889
Gross profit	—			195,196			5,359			—			200,555
Selling, general and administrative expenses	—			(156,771		)	(4,436		)	—			(161,207		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Interest (expense) and other, net	(22,917		)	—			23			—			(22,894		)
Equity in earnings of subsidiaries	12,563			243			—			(12,806		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(10,354		)	19,536			946			(12,806		)	(2,678		)
Income tax benefit (expense)	9,831			(7,979		)	(555		)	—			1,297
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
(Loss) income from continuing operations	(523		)	12,563			391			(12,806		)	(375		)
Discontinued operations, net of tax	—			—			—			—			—
Net (loss) income	(523		)	12,563			391			(12,806		)	(375		)
Noncontrolling interests	—			—			(148		)	—			(148		)
Net (loss) income attributable to Gentiva shareholders	$	(523	)	$	12,563		$	243		$	(12,806	)	$	(523	)
Comprehensive (loss) income	$	(523	)	$	12,563		$	391		$	(12,806	)	$	(375	)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	439,140		$	13,299		$	(2,691	)	$	449,748
Cost of services sold	—			228,306			17,328			(2,691		)	242,943
Gross profit	—			210,834			(4,029		)	—			206,805
Selling, general and administrative expenses	—			(178,773		)	(3,861		)	—			(182,634		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			3,977			—			—			3,977
Interest (expense) and other, net	(20,687		)	—			14			—			(20,673		)
Equity in earnings of subsidiaries	(461,283		)	(7,904		)	—			469,187			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(481,970		)	(615,171		)	(7,876		)	469,187			(635,830		)
Income tax benefit (expense)	8,219			79,399			(80		)	—			87,538
Equity in net earnings of CareCentrix	—			68,692			—			—			68,692
(Loss) income from continuing operations	(473,751		)	(467,080		)	(7,956		)	469,187			(479,600		)
Discontinued operations, net of tax	—			5,797			186			—			5,983
Net (loss) income	(473,751		)	(461,283		)	(7,770		)	469,187			(473,617		)
Noncontrolling interests	—			—			(134		)	—			(134		)
Net (loss) income attributable to Gentiva shareholders	$	(473,751	)	$	(461,283	)	$	(7,904	)	$	469,187		$	(473,751	)
Comprehensive (loss) income	$	(473,751	)	$	(461,283	)	$	(7,770	)	$	469,187		$	(473,617	)

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,253,781		$	42,429		$	(8,423	)	$	1,287,787
Cost of services sold	—			661,151			26,759			(8,423		)	679,487
Gross profit	—			592,630			15,670			—			608,300
Selling, general and administrative expenses	—			(486,285		)	(12,557		)	—			(498,842		)
Goodwill, intangibles and other long-lived asset impairment	—			(19,132		)	—			—			(19,132		)
Gain on sale of businesses	—			5,449			(2		)	—			5,447
Interest (expense) and other, net	(67,138		)	—			87			—			(67,051		)
Equity in earnings of subsidiaries	50,166			1,260			—			(51,426		)	—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(16,972		)	93,922			3,198			(51,426		)	28,722
Income tax benefit (expense)	35,198			(44,762		)	(1,314		)	—			(10,878		)
Equity in net earnings of CareCentrix	—			1,006			—			—			1,006
Income from continuing operations	18,226			50,166			1,884			(51,426		)	18,850
Discontinued operations, net of tax	—			—			—			—			—
Net income	18,226			50,166			1,884			(51,426		)	18,850
Noncontrolling interests	—			—			(624		)	—			(624		)
Net income attributable to Gentiva shareholders	$	18,226		$	50,166		$	1,260		$	(51,426	)	$	18,226
Comprehensive income	$	18,226		$	50,166		$	1,884		$	(51,426	)	$	18,850

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
Net revenues	$	—		$	1,319,162		$	38,801		$	(8,394	)	$	1,349,569
Cost of services sold	—			688,754			27,490			(8,394		)	707,850
Gross profit	—			630,408			11,311			—			641,719
Selling, general and administrative expenses	—			(535,958		)	(11,047		)	—			(547,005		)
Goodwill, intangibles and other long-lived asset impairment	—			(643,305		)	—			—			(643,305		)
Dividend income	—			8,590			—			—			8,590
Interest (expense) and other, net	(68,387		)	—			45			—			(68,342		)
Equity in earnings of subsidiaries	(405,039		)	(2,244		)	—			407,283			—
(Loss) income from continuing operations before income taxes and equity in net earnings of CareCentrix	(473,426		)	(542,509		)	309			407,283			(608,343		)
Income tax benefit (expense)	18,316			61,202			(2,511		)	—			77,007
Equity in net earnings of CareCentrix	—			69,582			—			—			69,582
(Loss) income from continuing operations	(455,110		)	(411,725		)	(2,202		)	407,283			(461,754		)
Discontinued operations, net of tax	—			6,686			410			—			7,096
Net (loss) income	(455,110		)	(405,039		)	(1,792		)	407,283			(454,658		)
Noncontrolling interests	—			—			(452		)	—			(452		)
Net (loss) income attributable to Gentiva shareholders	$	(455,110	)	$	(405,039	)	$	(2,244	)	$	407,283		$	(455,110	)
Comprehensive (loss) income	$	(455,588	)	$	(405,039	)	$	(1,792	)	$	407,283		$	(455,136	)

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2012

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by operating activities	$	3,710		$	66,138		$	4,793		$	—	$	74,641
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(9,188		)	(47		)	—		(9,235		)
Proceeds from sale of businesses	—			5,720			—			—		5,720
Acquisition of businesses	—			(22,520		)	—			—		(22,520		)
Net cash used in investing activities	—			(25,988		)	(47		)	—		(26,035		)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421			—			—			—		2,421
Repayment of long-term debt	(50,000		)	—			—			—		(50,000		)
Debt issuance costs	(4,125		)	—			—			—		(4,125		)
Repurchase of common stock	(4,974		)	—			—			—		(4,974		)
Repayment of capital lease obligations	(106		)	—			—			—		(106		)
Other	3,501			(28		)	(4,158		)	—		(685		)
Net payments related to intercompany financing	40,122			(40,122		)	—			—		—
Net cash used in financing activities	(13,161		)	(40,150		)	(4,158		)	—		(57,469		)
Net change in cash and cash equivalents	(9,451		)	—			588			—		(8,863		)
Cash and cash equivalents at beginning of period	124,101			—			40,811			—		164,912
Cash and cash equivalents at end of period	$	114,650		$	—		$	41,399		$	—	$	156,049

Condensed Consolidating Statement of Cash Flows

For the Nine Months EndedSeptember 30, 2011

(In thousands)

	Gentiva Health Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(31,545	)	$	44,344		$	1,548		$	—	$	14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	—			(14,393		)	(178		)	—		(14,571		)
Proceeds from sale of businesses	—			142,281			52			—		142,333
Acquisition of businesses	—			(320		)	—			—		(320		)
Net cash provided by (used in) investing activities	—			127,568			(126		)	—		127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	7,005			—			—			—		7,005
Windfall tax benefits associated with equity-based compensation	194			—			—			—		194
Repayment of long-term debt	(43,438		)	—			—			—		(43,438		)
Debt issuance costs	(13,457		)	—			—			—		(13,457		)
Repayment of capital lease obligations	(210		)	—			—			—		(210		)
Other	—			1,157			(1,700		)	—		(543		)
Net payments related to intercompany financing	173,069			(173,069		)	—			—		—
Net cash provided by (used in) financing activities	123,163			(171,912		)	(1,700		)	—		(50,449		)
Net change in cash and cash equivalents	91,618			—			(278		)	—		91,340
Cash and cash equivalents at beginning of period	63,816			—			40,936			—		104,752
Cash and cash equivalents at end of period	$	155,434		$	—		$	40,658		$	—	$	196,092

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Background and Basis of Presentation (Details Textual) (USD $)	3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Apr. 29, 2011	Jun. 30, 2012 Home Health and Hospice [Member]	Sep. 30, 2012 Home Health and Hospice [Member]	Aug. 31, 2012 Family Home Care [Member]	Jul. 22, 2012 Advocate Hospice Llc [Member]	Aug. 31, 2012 North Mississippi Hospice [Member]
Segment Reporting Information [Line Items]
Dividend income	$ 0	$ 3,977,000	$ 0	$ 8,590,000
Business Acquisition, Cost of Acquired Entity, Cash Paid								12,300,000	5,500,000	4,700,000
Business Acquisition, Contingent Consideration, Potential Cash Payment									2,000,000
Background and Basis of Presentation (Textual) [Abstract]
Sale of business						6,400,000
Proceeds from Divestiture of Businesses			5,720,000	142,333,000			5,900,000
Receivables from business dispositions							$ 500,000
Background and Basis of Presentation (Additional Textual) [Abstract]
Outstanding member units					50.00%

XML

Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all investments with a maturity date three months or less from their date of acquisition to be cash equivalents, including money market funds invested in U.S. Treasury securities, short-term treasury bills and commercial paper. Cash and cash equivalents also included amounts on deposit with several major financial institutions in excess of the maximum amount insured by the Federal Deposit Insurance Corporation. Management believes that these major financial institutions are viable entities.

The Company had operating funds of approximately $6.0 million and $5.0 million at September 30, 2012 and December 31, 2011, respectively, which relate exclusively to a non-profit hospice operation managed in Florida.

Investments

Investments

At both September 30, 2012 and December 31, 2011, the Company had no remaining ownership interest in CareCentrix Holdings Inc. During the third quarter of 2011, the Company sold its remaining investment in CareCentrix Holdings Inc. The Company recorded accumulated and unpaid dividends on the preferred shares it held of approximately $4.0 million and $8.6 million for the third quarter and first nine months of 2011, respectively, which are reflected in dividend income in the Company's consolidated statements of comprehensive income. The Company also recorded a net gain of approximately $68.3 million, which is reflected in equity in net earnings of CareCentrix, including gain on sale in the Company's consolidated statements of comprehensive income. See Note 6 for additional information.

At September 30, 2012 and December 31, 2011, the Company had assets of $28.4 million and $26.3 million, respectively, held in a Rabbi Trust for the benefit of participants in the Company’s non-qualified defined contribution retirement plan. The corresponding amounts payable to the plan participants are equivalent to the underlying value of the assets held in the Rabbi Trust. Assets held in a Rabbi Trust and amounts payable to plan participants are classified in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets.

Debt Issuance Costs

Debt Issuance Costs

The Company amortizes deferred debt issuance costs over the term of its credit agreement and senior notes. As of September 30, 2012 and December 31, 2011, the Company had unamortized debt issuance costs of $47.6 million and $53.7 million, respectively, recorded in other assets in the Company’s consolidated balance sheets. During the first nine months of 2012, the Company incurred incremental debt issuance costs of approximately $5.3 million in connection with an amendment to the Company’s credit agreement. Approximately $4.1 million of these costs have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate methodology. In addition, the Company wrote off prepaid debt issuance costs of approximately $0.5 million, which is reflected in interest expense in the Company’s consolidated statement of comprehensive income, associated with the reduction in the revolving credit facility.

During the first nine months of 2011, the Company (i) incurred incremental debt issuance costs of approximately $10.9 million and (ii) recorded a write-off of deferred debt issuance costs of approximately $3.5 million in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

Fixed Assets

Fixed Assets

Fixed assets, including costs of Company developed software, are stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the life of the lease or the life of the improvement. Repairs and maintenance costs are expensed as incurred. As of September 30, 2012 and December 31, 2011, fixed assets, net were $43.1 million and $46.2 million, respectively.

Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill and Other Indefinite-Lived Intangible Assets

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if current events or circumstances require an interim impairment assessment. The Company allocates goodwill to its various operating units upon the acquisition of the assets or stock of another third party business operation. The Company compares the fair value of each operating unit to its carrying amount to determine if there is a potential impairment of goodwill and other indefinite-lived intangible assets. If the fair value of an operating unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the operating unit is less than the carrying value of its goodwill. To determine the fair value of the Company's operating units, the Company uses a present value (discounted cash flow) technique corroborated by market multiples when available, a reconciliation to market capitalization or other valuation methodologies, and reasonableness tests, as appropriate.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values of other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.

The Company completed its annual impairment test of goodwill and indefinite-lived intangible assets for the Company's operating units as of December 31, 2011, which indicated that there was no additional impairment. See Note 8 for additional information.

Obligations Under Self Insurance Programs

Obligations Under Self Insurance Programs

As of September 30, 2012 and December 31, 2011, the Company’s obligations under insurance programs were $54.1 million and $55.0 million, respectively. The decrease is primarily attributable to favorable claim trends and the timing of payments.

Workers’ compensation and professional and general liability expenses were $5.8 million and $13.4 million for the third quarter and first nine months of 2012, respectively, as compared to $5.1 million and $11.2 million for the corresponding periods of 2011. Employee health and welfare expenses were $20.1 million and $66.3 million for the third quarter and first nine months of 2012, respectively, as compared to $24.3 million and $68.5 million for the corresponding periods of 2011.

Nursing Home Costs

Nursing Home Costs

For patients receiving nursing home care under a state Medicaid program who elect hospice care under Medicare or Medicaid, the Company contracts with nursing homes for the nursing homes to provide patients’ room and board services. The state must pay the Company, in addition to the applicable Medicare or Medicaid hospice daily or hourly rate, an amount equal to at least 95 percent of the Medicaid daily nursing home rate for room and board furnished to the patient by the nursing home. Under the Company’s standard nursing home contracts, the Company pays the nursing home for these room and board services at the Medicaid daily nursing home rate. Nursing home costs are partially offset by nursing home net revenue, and the net amount is included in cost of services sold in the Company’s consolidated statements of comprehensive income.

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Business Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment net revenues by major payer source
Total net revenues	$ 424,444	$ 449,748	$ 1,287,787	$ 1,349,569
Medicare [Member]
Segment net revenues by major payer source
Total net revenues	362,400	382,300	1,100,700	1,144,600
Medicaid and Local Government [Member]
Segment net revenues by major payer source
Total net revenues	19,100	21,200	56,900	63,200
Commercial Insurance and Other [Member]
Segment net revenues by major payer source
Total net revenues	42,900	46,200	130,200	141,800
Commercial Insurance and Other [Member] | Paid at Episodic Rates [Member]
Segment net revenues by major payer source
Total net revenues	21,400	19,300	62,800	58,100
Commercial Insurance and Other [Member] | Other [Member]
Segment net revenues by major payer source
Total net revenues	21,500	26,900	67,400	83,700
Home Health [Member]
Segment net revenues by major payer source
Total net revenues	234,700	253,200	710,300	763,600
Home Health [Member] | Medicare [Member]
Segment net revenues by major payer source
Total net revenues	185,000	200,300	561,700	601,600
Home Health [Member] | Medicaid and Local Government [Member]
Segment net revenues by major payer source
Total net revenues	12,200	13,200	35,700	39,800
Home Health [Member] | Commercial Insurance and Other [Member] | Paid at Episodic Rates [Member]
Segment net revenues by major payer source
Total net revenues	21,400	19,300	62,800	58,100
Home Health [Member] | Commercial Insurance and Other [Member] | Other [Member]
Segment net revenues by major payer source
Total net revenues	16,100	20,400	50,100	64,100
Hospice [Member]
Segment net revenues by major payer source
Total net revenues	189,700	196,500	577,500	586,000
Hospice [Member] | Medicare [Member]
Segment net revenues by major payer source
Total net revenues	177,400	182,000	539,000	543,000
Hospice [Member] | Medicaid and Local Government [Member]
Segment net revenues by major payer source
Total net revenues	6,900	8,000	21,200	23,400
Hospice [Member] | Commercial Insurance and Other [Member] | Paid at Episodic Rates [Member]
Segment net revenues by major payer source
Total net revenues	0	0	0	0
Hospice [Member] | Commercial Insurance and Other [Member] | Other [Member]
Segment net revenues by major payer source
Total net revenues	$ 5,400	$ 6,500	$ 17,300	$ 19,600

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Background and Basis of Presentation

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

Gentiva Health Services, Inc. (“Gentiva” or the “Company”) provides home health services and hospice care throughout most of the United States. The Company’s continuing operations involve servicing its patients and customers through (i) its Home Health segment and (ii) its Hospice segment.

Effective August 31, 2012, the Company completed its acquisition of the assets and business, pursuant to an asset purchase agreement, of Family Home Care Corporation, a provider of home health and hospice services in the Washington and Idaho markets, for consideration of approximately $12.3 million.

Effective August 31, 2012, the Company completed its acquisition of the assets and business, pursuant to an asset purchase agreement, of North Mississippi Hospice, a provider of hospice services with offices in Oxford, Southhaven and Tupelo, Mississippi, for consideration of approximately $4.7 million.

Effective July 22, 2012, the Company completed its acquisition of the assets and business of Advocate Hospice, a provider of hospice services located in Danville, Indiana, for consideration of approximately $5.5 million, which included entering into an option purchase agreement with a third party covering membership interests in Advocate Hospice. Additional consideration of up to$2 million is payable under the option agreement if certain earnout conditions are met.

During the second quarter of 2012, the Company sold 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 during the first nine months of 2012 and established a receivable of approximately $0.5 million.

Effective October 14, 2011, the Company sold its homemaker services agency business in Illinois (“IDOA”) pursuant to an asset purchase agreement. The financial results of this business are presented as discontinued operations in the Company’s consolidated financial statements for the three and nine months ended September 30, 2011. See Note 3 for additional information.

Effective September 10, 2011, the Company completed the sale of its Rehab Without Walls^® business. The financial results of the Rehab Without Walls^® business are presented as discontinued operations in the Company’s consolidated financial statements for the three and nine months ended September 30, 2011. See Note 3 for additional information.

In addition, the Company has completed various other transactions that have impacted the Company’s results of operations and financial condition and are reflected therein as further described in Note 3.

The accompanying interim consolidated financial statements are unaudited, and have been prepared by the Company using accounting principles consistent with those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair statement of financial position, results of operations and cash flows for each period presented. Certain information and disclosures normally included in the consolidated statements of financial position, comprehensive income and cash flows prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. Results for interim periods are not necessarily indicative of results for a full year. The year-end balance sheet data was derived from audited financial statements.

The Company’s consolidated financial statements include the accounts and operations of the Company and its subsidiaries in which the Company owns more than a 50 percent interest. Noncontrolling interests, which relate to the minority ownership held by third party investors in certain of the Company’s hospice programs, are reported below net income under the heading “Net income attributable to noncontrolling interests” in the Company’s consolidated statements of comprehensive income and presented as a component of equity in the Company’s consolidated balance sheets. All balances and transactions between the consolidated entities have been eliminated.

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Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Accounts receivables, allowance for doubtful accounts	$ 10,520	$ 11,562
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	31,826,441	31,435,264
Treasury stock, shares	1,260,879	655,802

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Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

Equity

Equity

Changes in equity for the nine months endedSeptember 30, 2012 and 2011 were as follows (in thousands, except share amounts):

	Gentiva Shareholders
	Common Stock			Additional Paid-in			Retained Earnings Accumulated			Accumulated Other Comprehensive			Treasury			Noncontrolling
	Shares	Amount		Capital			(Deficit)			Income (Loss)			Stock			Interests			Total
Balance at December 31, 2010	30,799,091	$	3,080	$	372,106		$	272,394		$	478		$	(12,484	)	$	2,658		$	638,232
Comprehensive (loss) income:
Net (loss) income	—	—		—			(455,110		)	—			—			452			(454,658		)
Changes in fair value of interest rate swaps	—	—		—			—			(768		)	—			—			(768		)
Realized loss on interest rate swaps	—	—		—			—			290			—			—			290
Total comprehensive (loss) income	—	—		—			(455,110		)	(478		)	—			452			(455,136		)
Income tax benefits associated with the exercise of non-qualified stock options	—	—		259			—			—			—			—			259
Equity-based compensation expense	—	—		6,259			—			—			—			—			6,259
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	464,680	47		6,969			—			—			—			—			7,016
Purchase of non-controlling interest	—	—		(352		)	—			—			—			32			(320		)
Distribution to partnership interests	—	—		—			—			—			—			(608		)	(608		)
Treasury shares:
Common stock received from Healthfield escrow (14,334 shares)	—	—		—			—			—			(394		)	—			(394		)
Balance at September 30, 2011	31,263,771	$	3,127	$	385,241		$	(182,716	)	$	—		$	(12,878	)	$	2,534		$	195,308
Balance at December 31, 2011	31,435,264	$	3,144	$	387,803		$	(178,131	)	$	—		$	(12,878	)	$	2,593		$	202,531
Comprehensive income:
Net income	—	—		—			18,226			—			—			624			18,850
Total comprehensive income	—	—		—			18,226			—			—			624			18,850
Equity-based compensation expense	—	—		5,722			—			—			—			—			5,722
Net issuance of stock upon exercise of stock options and under stock plans for employees and directors	391,177	39		2,381			—			—			—			—			2,420
Purchase of non-controlling interest	—	—		—			—			—			—			(1,113		)	(1,113		)
Distribution to partnership interests	—	—		—			—			—			—			(685		)	(685		)
Treasury shares:
Stock repurchase (605,077 shares)	—	—		—			—			—			(4,974		)	—			(4,974		)
Balance at September 30, 2012	31,826,441	$	3,183	$	395,906		$	(159,905	)	$	—		$	(17,852	)	$	1,419		$	222,751

Comprehensive loss amounted to $0.4 million and comprehensive income amounted to $18.9 million for the third quarter and first nine months of 2012, respectively, as compared to comprehensive losses of $473.6 million and $455.1 million for the third quarter and first nine months of 2011, respectively. The amounts reflected in accumulated other comprehensive income (loss) for the nine months endedSeptember 30, 2011 are reflected net of tax of approximately $0.4 million.

On April 14, 2005, the Company announced that its Board of Directors had authorized the repurchase of up to 1,500,000 shares of the Company’s outstanding common stock (the “2005 Repurchase Program”). In addition, on March 13, 2012, the Company announced that its Board of Directors had authorized the repurchase of up to $5,000,000 of shares of the Company’s outstanding common stock (the “2012 Repurchase Program”). During the nine months endedSeptember 30, 2012, the Company repurchased 605,077 shares of its common stock at an average cost of $8.22 per share and a total cost of approximately $5.0 million. Due to these repurchases, as of September 30, 2012, the Company had no remaining shares authorized under the 2005 Repurchase Program and had remaining authorization under the 2012 Repurchase Program to repurchase common stock with an aggregate purchase price of up to $1.5 million, subject to the additional limitations set forth below.

The Company’s Credit Agreement provides for repurchases of the Company’s common stock not to exceed $5.0 million per year, and not to exceed $20.0 million per year if the consolidated leverage ratio is less than or equal to 3.5:1 immediately after giving effect on a pro forma basis to the repurchase. The indenture governing the Company’s Senior Notes also contains limitations on the Company’s repurchases of its common stock.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	GENTIVA HEALTH SERVICES INC
Entity Central Index Key	0001096142
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		30,633,789

XML

Equity-Based Compensation Plans

9 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Equity-Based Compensation Plans

Equity-Based Compensation Plans

The Company provides several equity-based compensation plans under which the Company’s officers, employees and non-employee directors may participate, including (i) the 2004 Equity Incentive Plan (amended and restated) (“2004 Plan”), (ii) the Stock & Deferred Compensation Plan for Non-Employee Directors (“DSU Plan”) and (iii) the Employee Stock Purchase Plan (“ESPP”). Collectively, these equity-based compensation plans permit the grants of (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) restricted stock, (v) performance units, (vi) stock units and (vii) cash, as well as allow employees to purchase shares of the Company’s common stock under the ESPP at a pre-determined discount.

For the third quarter and first nine months of 2012, the Company recorded equity-based compensation expense, as calculated on a straight-line basis over the vesting periods of the related equity instruments, of $2.3 million and $5.7 million, respectively, as compared to $1.9 million and $5.9 million for the corresponding periods of 2011, which were reflected as selling, general and administrative expense in the consolidated statements of comprehensive income. During the second quarter of 2011, the Company recorded non-cash compensation expense of approximately $0.4 million associated with modifications of stock options for a former executive, which is reflected as selling, general and administrative expense in the consolidated statements of comprehensive income and is categorized as restructuring costs. See Note 7.

Stock Options

The weighted average fair values of the Company’s stock options granted during the first nine months of 2012 and 2011 calculated using the Black-Scholes option pricing model and other assumptions, were as follows.

	Nine Months Ended
	September 30, 2012			September 30, 2011
Weighted average fair value of options granted	$	8.46		$	11.30
Risk-free interest rate	0.77% - 0.95%			2.15		%
Expected volatility	64		%	44		%
Contractual life	7 years			7 years
Expected life	3.4 - 5.4 years			4.5 -6.5 years
Expected dividend yield	—		%	—		%

Stock option grants in 2011 and 2012 vest over a three-year period based on a vesting schedule that provides for one-third vesting after each year. Stock option grants in 2006 through 2010 fully vest over a four-year period based on a vesting schedule that provides for one-half vesting after year two and an additional one-fourth vesting after each of years three and four. The Company’s expected volatility assumptions are based on the historical volatility of the Company’s stock price over a period corresponding to the expected term of the stock option. Forfeitures are estimated utilizing the Company’s historical forfeiture experience. The expected life of the Company’s stock options is based on the Company’s historical experience of the exercise patterns associated with its stock options.

A summary of Gentiva stock option activity as of September 30, 2012 and for the nine months endedSeptember 30, 2012 is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2011	4,228,907		$	15.59
Granted	36,000		8.46
Exercised	(1,200	)	8.74
Cancelled	(357,338	)	13.47
Balance as of September 30, 2012	3,906,369		$	15.73	5.1	$	7,601,985
Exercisable options	2,133,041		$	20.12	4.4	$	219,703

The total intrinsic value of options exercised during the nine months endedSeptember 30, 2011 was $1.9 million and immaterial for corresponding period of 2012. As of September 30, 2012, the Company had $3.2 million of unrecognized compensation expense related to nonvested stock options. This compensation expense is expected to be recognized over a weighted-average period of 1.4 years. The total fair value of options that vested during the first nine months of 2012 was $3.5 million.

Performance Share Units

The Company may grant performance share units under its 2004 Plan. Performance share units result in the issuance of common stock at the end of a three-year period and may range between zero and 150 percent of the performance share units granted at target in 2010 and between zero and 200 percent of the performance share units granted at target in 2011, based on the achievement of defined thresholds of the performance criteria over a three-year period (in the case of performance share units granted in 2010) and at the end of a one-year period (in the case of performance share units granted in 2011).

A summary of Gentiva performance share unit activity as of September 30, 2012 is presented below:

	Number of Performance Share Units		Weighted- Average Exercise Price
Balance as of December 31, 2011	125,800		$	26.33
Granted	—		—
Vested	—		—
Cancelled	(4,200	)	26.74
Balance as of September 30, 2012	121,600		$	26.32

These performance share units carry performance criteria measured on annual diluted earnings per share targets and fully vest at the end of a three-year period provided the performance criteria are met. Forfeitures are estimated utilizing the Company’s historical forfeiture experience.

As of September 30, 2012 and 2011, the Company had $2.0 million and $1.7 million, respectively, of total unrecognized compensation cost related to performance share units. This compensation expense is expected to be recognized over a weighted-average period of 1.2 years and 2.1 years, respectively.

Restricted Stock

A summary of Gentiva restricted stock activity as of September 30, 2012 is presented below:

	Number of Restricted Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of December 31, 2011	377,750		$	25.30
Granted	—		—
Exercised	—		—
Cancelled	(10,700	)	26.48
Balance as of September 30, 2012	367,050		$	25.26	$	4,154,419

The restricted stock fully vests at the end of a three-year or five-year period, depending on the individual grants. Forfeitures are estimated utilizing the Company’s historical forfeiture experience.

As of September 30, 2012, the aggregate intrinsic value of the restricted stock awards was $4.2 million. The Company had $4.9 million and $6.2 million of total unrecognized compensation cost related to restricted stock as of September 30, 2012 and 2011, respectively. This compensation expense is expected to be recognized over a weighted-average period of 2.6 years years and 3.3 years, respectively.

Directors Deferred Share Units

Under the Company’s DSU Plan, each non-employee director receives an annual deferred stock unit award credited quarterly and paid in shares of the Company’s common stock following termination of the director’s service on the Board of Directors. In May of 2012, the Company’s shareholders approved increasing the aggregate number of shares of common stock available for issuance under the plan by 350,000 shares; therefore, the total number of shares of common stock reserved for issuance under this plan is 650,000, of which295,631 shares were available for future grants as of September 30, 2012. During the first nine months of 2012, the Company granted 56,264 stock units under the DSU Plan at a grant date weighted-average fair value of $7.73 per stock unit. Prior to the increase in the aggregate shares available for issuance in May of 2012, there were insufficient deferred stock units available under the DSU Plan for the full quarterly equity grant to each non-employee director in the first quarter of 2012. Therefore, the Company also made a cash payment of approximately $28,100 to each non-employee director during the first nine months of 2012. Under the DSU Plan, 243,982 stock units were outstanding as of September 30, 2012.

Employee Stock Purchase Plan

The Company provides an ESPP under which the offering period is three months and the purchase price of shares is equal to 85 percent of the fair market value of the Company’s common stock on the last day of the three-month offering period. All employees of the Company are eligible to purchase stock under the ESPP regardless of their actual or scheduled hours of service. During the first nine months of 2012, the Company issued 327,884 shares of common stock under its ESPP. Under the Company’s ESPP, compensation expense is equal to the 15 percent discount from the fair market value of the Company’s common stock on the date of purchase.

On May 10, 2012, the shareholders of the Company authorized an additional 1,800,000 shares of the Company’s stock for issuance under the ESPP Plan.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
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 expenses	(161,207)	(182,634)	(498,842)	(547,005)
Goodwill, intangibles and other long-lived asset impairment	(19,132)	(643,305)	(19,132)	(643,305)
Gain on sale of businesses	0	0	5,447	0
Dividend income	0	3,977	0	8,590
Interest income	653	659	2,011	1,963
Interest expense and other	(23,547)	(21,332)	(69,062)	(70,305)
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	(2,678)	(635,830)	28,722	(608,343)
Income tax benefit (expense)	1,297	87,538	(10,878)	77,007
Equity in net earnings of CareCentrix	1,006	68,692	1,006	69,582
(Loss) Income from continuing operations	(375)	(479,600)	18,850	(461,754)
Discontinued operations, net of tax	0	5,983	0	7,096
Net (loss) income	(375)	(473,617)	18,850	(454,658)
Less: Net income attributable to noncontrolling interests	(148)	(134)	(624)	(452)
Net (loss) income attributable to Gentiva shareholders	(523)	(473,751)	18,226	(455,110)
Comprehensive (loss) income	(375)	(473,617)	18,850	(455,136)
Basic earnings per common share:
(Loss) Income from continuing operations attributable to Gentiva shareholders	$ (0.02)	$ (15.82)	$ 0.60	$ (15.27)
Discontinued operations, net of tax	$ 0.00	$ 0.20	$ 0.00	$ 0.23
Net (loss) income attributable to Gentiva shareholders	$ (0.02)	$ (15.62)	$ 0.60	$ (15.04)
Weighted average shares outstanding	30,423	30,337	30,496	30,257
Diluted earnings per common share:
(Loss) Income from continuing operations attributable to Gentiva shareholders	$ (0.02)	$ (15.82)	$ 0.60	$ (15.27)
Discontinued operations, net of tax	$ 0.00	$ 0.20	$ 0.00	$ 0.23
Net (loss) income attributable to Gentiva shareholders	$ (0.02)	$ (15.62)	$ 0.60	$ (15.04)
Weighted average shares outstanding	30,423	30,337	30,612	30,257
Amounts attributable to Gentiva shareholders:
(Loss) income from continuing operations	(523)	(479,734)	18,226	(462,206)
Discontinued operations, net of tax	0	5,983	0	7,096
Net (loss) income attributable to Gentiva shareholders	$ (523)	$ (473,751)	$ 18,226	$ (455,110)

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Investment in and Notes Receivable from CareCentrix

9 Months Ended

Sep. 30, 2012

Note Receivable from and Investment in Entity [Abstract]

Note Receivable from and Investment in CareCentrix

Investment in and Notes Receivable from CareCentrix

Effective September 19, 2011, the Company sold its remaining investment in CareCentrix Holdings. The Company recorded accumulated and unpaid dividends on the preferred shares of approximately $4.0 million and $8.6 million for the third quarter and first nine months of 2011, respectively, which were reflected in dividend income in the Company's consolidated comprehensive statements of income. The Company also recorded a net gain of approximately $68.3 million, including an escrow of approximately $10.6 million, which is reflected in equity in net earnings of CareCentrix, in the Company's consolidated comprehensive statements of income.

The Company holds a $25 million subordinated promissory note from CareCentrix, Inc. In connection with the sale of the Company’s ownership interest in CareCentrix Holdings on September 19, 2011, the maturity date of the note was extended to the earlier of March 19, 2017, which is five years, six months from the closing of the transaction, or a sale of CareCentrix Holdings. The note bears interest at a fixed rate of 10 percent, which is payable quarterly, provided that CareCentrix remains in compliance with its senior debt covenants. Interest on the CareCentrix promissory note, which is included in interest income in the Company’s consolidated statements of comprehensive income, amounted to $0.6 million and $1.9 million for the third quarter and first nine months of both 2012 and 2011, respectively.

Pursuant to the terms of the stock purchase agreement, approximately $10.6 million of the sale price due to the Company was placed into an escrow fund for future indemnification claims. In February and June 2012, approximately $0.7 million of the escrow fund was paid out to cover expenses related to an indemnified claim.

On August 24, 2012, the Company received notification from CareCentrix of its election to draw seller financing from the escrow fund pursuant to the terms of the stock purchase agreement. As such, the Company reclassified its escrow receivable of approximately $9.9 million from prepaid expenses and other current assets to a note receivable from CareCentrix on the Company's consolidated balance sheet as of September 30, 2012. The note receivable, which bears interest at 14 percent through 2012 and 18 percent thereafter, matures on the earlier of March 19, 2017 or upon the sale of CareCentrix Holdings. Interest on the note is payable quarterly, in kind and will accrete as additional principal on the note. On April 1 of each year, 40 percent of the accreted interest for the prior calendar year will be paid in cash. The Company expects to record interest income at the time of receipt of the interest payments.

On September 17, 2012, the Company received a formal notice of claims for indemnification from CareCentrix. In the notice, CareCentrix asserted that the total claimed amounts exceed the total amount in escrow and demanded that the entire principal amount of the seller financing note be reduced to zero. Aresponse to the notice of claims from the Company, together with the other original sellers, is in preparation. Based on the information the Company has at this time, the Company is unable to assess the probable outcome or potential liability, if any, arising from this notice of claims on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this matter at this time.

The Company recognized $1.0 million of equity in the net earnings of CareCentrix for both the third quarter and first nine months of 2012, as compared to $68.7 million and $69.6 million for the third quarter and first nine months of 2011, respectively.

The Company’s financing receivables consist of the previously described $25 million subordinated promissory note from CareCentrix, Inc. dated September 19, 2011 and a $9.9 million seller financing note from CareCentrix, Inc. dated August 24, 2012. The Company measures impairment based on the present value of expected cash flows after considering assumptions relating to risk factors and economic conditions. On an ongoing basis, the Company assesses the credit quality based on the Company’s review of CareCentrix, Inc.’s financial position and receipt of interest payments when due. Based on the Company’s analysis, as of September 30, 2012 and December 31, 2011, the Company had no allowances for credit losses.

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Net Revenues and Accounts Receivable

9 Months Ended

Sep. 30, 2012

Net Revenues and Accounts Receivable [Abstract]

Net Revenues And Accounts Receivable

Net Revenues and Accounts Receivable

Net revenues in the Home Health and Hospice segments were derived from all major payer classes and were as follows (in millions):

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Medicare:
Home Health	$	185.0	$	200.3	(7.6	)%	$	561.7	$	601.6	(6.6	)%
Hospice	177.4		182.0		(2.5	)%	539.0		543.0		(0.7	)%
Total Medicare	362.4		382.3		(5.2	)%	1,100.7		1,144.6		(3.8	)%
Medicaid and Local Government	19.1		21.2		(9.7	)%	56.9		63.2		(10.0	)%
Commercial Insurance and Other:
Paid at episodic rates	21.4		19.3		10.9	%	62.8		58.1		8.0	%
Other	21.5		26.9		(20.4	)%	67.4		83.7		(19.4	)%
Total Commercial Insurance and Other	42.9		46.2		(7.3	)%	130.2		141.8		(8.2	)%
Total net revenues	$	424.4	$	449.7	(5.6	)%	$	1,287.8	$	1,349.6	(4.6	)%

For the third quarter and first nine months of 2012, the Company recorded hospice Medicare cap expense of $3.0 millionand $6.2 million, respectively, which is reflected in net revenues in the Company’s consolidated statements of comprehensive income. For the third quarter and first nine months of 2011, the Company recorded hospice Medicare cap expense of $1.7 million and $3.4 million, respectively. The Medicare payment cap, which is calculated for each provider by the Medicare fiscal intermediary at the end of the hospice cap period, is determined by multiplying the number of first time patient admissions during the cap period by the Medicare cap amount, subject to certain adjustments. Medicare revenue paid to a provider during the twelve month cap period that ends annually on October 31 cannot exceed the aggregate Medicare payment cap calculated for the related twelve month period. As of September 30, 2012 and December 31, 2011, the Company had Medicare cap liabilities of $20.3 million and $15.6 million, respectively, which was reflected in Medicare liabilities in the Company’s consolidated balance sheets.

Accounts receivable attributable to major payer sources of reimbursement were as follows (in thousands):

	September 30, 2012			December 31, 2011
Medicare	$	190,997		$	217,028
Medicaid and Local Government	36,608			46,553
Commercial Insurance and Other	37,009			38,570
Gross Accounts Receivable	264,614			302,151
Less: Allowance for doubtful accounts	(10,520		)	(11,562		)
Net Accounts Receivable	$	254,094		$	290,589

The Commercial Insurance and Other payer group included self-pay accounts receivable relating to patient co-payments of $1.7 million and $2.1 million, respectively, as of September 30, 2012 and December 31, 2011.

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

Divestiture

On October 29, 2012, the Company entered into an asset purchase agreement to sell its Phoenix, Arizona area hospice operations in an all cash transaction. The sale is expected to close on or about December 1, 2012 and includes three locations in the Phoenix area market that provide inpatient and routine hospice services.

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Legal Matters

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

Litigation

In addition to the matters referenced in this Note 13, the Company is party to certain legal actions arising in the ordinary course of business, including legal actions arising out of services rendered by its various operations, personal injury and employment disputes. Management does not expect that these other legal actions will have a material adverse effect on the business, financial condition, results of operations, liquidity or capital resources of the Company.

On May 10, 2010, a collective and class action complaint entitled Lisa Rindfleisch et al. v. Gentiva Health Services, Inc. was filed in the United States District Court for the Eastern District of New York against the Company in which five former employees alleged wage and hour law violations. The former employees claimed they were paid pursuant to “an unlawful hybrid” compensation plan that paid them on both a per visit and an hourly basis, thereby voiding their exempt status and entitling them to overtime pay. The plaintiffs alleged continuing violations of federal and state law and sought damages under the Fair Labor Standards Act (“FLSA”), as well as under the New York Labor Law and North Carolina Wage and Hour Act (“NCWHA”). On October 8, 2010, the Court granted the Company’s motion to transfer the venue of the lawsuit to the United States District Court for the Northern District of Georgia. On April 13, 2011, the Court granted plaintiffs’ motion for conditional certification of the FLSA claims as a collective action. On May 26, 2011, the Court bifurcated the FLSA portion of the suit into a liability phase, in which discovery is scheduled to close on January 15, 2013, and a damages phase, to be scheduled pending outcome of the liability phase. Following a motion for partial summary judgment by the Company regarding the New York state law claims, plaintiffs agreed voluntarily to dismiss those claims in a filing on December 12, 2011. Plaintiffs filed a motion for certification of a North Carolina state law class for NCWHA claims on January 20, 2012. The Company filed a motion for partial summary judgment on plaintiffs’ claims under the NCWHA on March 22, 2012. On August 29, 2012, the Court denied plaintiffs' motion for certification of a North Carolina state law class. Plaintiffs also filed a motion for partial summary judgment with regard to the Company’s liability for plaintiffs’ FLSA claims on April 3, 2012 and continue to seek class certification of allegedly similar employees and seek attorneys’ fees, back wages and liquidated damages going back three years under the FLSA .

Based on the information the Company has at this time in the Rindfleisch lawsuit, the Company is unable to assess the probable outcome or potential liability, if any, arising from this proceeding on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this lawsuit at this time. The Company intends to defend itself vigorously in this lawsuit.

On June 11, 2010, a collective and class action complaint entitled Catherine Wilkie, individually and on behalf of all others similarly situated v. Gentiva Health Services, Inc. was filed in the United States District Court for the Eastern District of California against the Company in which a former employee alleged wage and hour violations under the FLSA and California law. The complaint alleged that the Company paid some of its employees on both a per visit and hourly basis, thereby voiding their exempt status and entitling them to overtime pay. The complaint further alleged that California employees were subject to violations of state laws requiring meal and rest breaks, overtime pay, accurate wage statements and timely payment of wages. The plaintiff sought class certification, attorneys’ fees, back wages, penalties and damages going back three years on the FLSA claim and four years on the state wage and hour claims. The parties held mediation discussions on August 3, 2011 and March 7, 2012. The parties have finalized the terms of a monetary settlement, and the Company has paid $5 million in escrow to settle all claims in the lawsuit, including the plaintiff’s attorney’s fees and costs. The court granted preliminary approval of the settlement on October 5, 2012, and a hearing on the motion for final court approval of the settlement is scheduled for March 25, 2013.

On December 29, 2011, Odyssey HealthCare, Inc. was served with a complaint captioned United States of America and the State of Illinois ex rel. Laurie Geschrey and Laurie Janus v. Generations Healthcare, LLC, Odyssey HealthCare, Inc., Narayan Ponakala and Catherine Ponakala, which was filed on April 19, 2010 as a qui tam action in the United States District Court for the Northern District of Illinois, Eastern Division, Case No. 10 C 2413, under the provisions of the Federal False Claims Act, the Illinois Whistleblower Reward and Protection Act and the Illinois Whistleblower Act. The plaintiffs, two former employees of Generations Healthcare, LLC, a hospice company whose assets were acquired by Odyssey on December 31, 2009, are the relators and allege that defendants committed fraud against the United States and the State of Illinois by, among other things, recruiting and certifying patients as being eligible for hospice care when they were known not to be eligible and falsifying patients’ medical records in support of the claims for reimbursement. Relators further allege that Odyssey was aware of Generations Healthcare’s alleged fraudulent business practices. Both the United States and the State of Illinois declined to intervene in the action, and the complaint was unsealed on December 1, 2011. Relators seek statutory damages, which are three times the amount of any actual damages suffered by the United States and the State of Illinois, the maximum statutory civil penalty due under the statutes plus all costs and attorneys fees. Additionally, relators seek back pay plus interest and other damages because of defendants’ alleged retaliation against relators.

Odyssey filed a motion to dismiss the complaint against it on March 23, 2012. On August 14, 2012, the Court denied that motion as it related to Odyssey. Plaintiffs filed an amended complaint, which added a new retaliation claim. On October 3, 2012, defendants moved to dismiss the new retaliation claim and answered the remaining claims. The parties now expect to proceed to discovery. Odyssey is also pursuing indemnification from Generations Healthcare and its owners, who are defendants in this action. Given the preliminary stage of this action, the Company is unable to assess the probable outcome or potential liability, if any, arising from this action on the business, financial condition, results of operations, liquidity or capital resources of the Company or Odyssey. Odyssey intends to defend itself vigorously in the action.

Federal Securities Class Action Litigation

Between November 2, 2010 and October 25, 2011, five shareholder class actions were filed against Gentiva and certain of its current and former officers and directors in the United States District Court for the Eastern District of New York. Each of these actions asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with the Company’s participation in the Medicare Home Health Prospective Payment System (“HH PPS”). Following consolidation of the actions, and the appointment of Los Angeles City Employees’ Retirement System as lead plaintiff and Kaplan Fox & Kilsheimer LLP as lead counsel, on April 16, 2012, a consolidated shareholder class action complaint, captioned In re Gentiva Securities Litigation, Civil Action No. 10-CV-5064, was filed in the United States District Court for the Eastern District of New York. The complaint, which names Gentiva and certain current and former officers and directors as defendants, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Sections 11 and 15 of the Securities Act of 1933, in connection with the Company’s participation in the HH PPS. The complaint alleges, among other things, that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purposes of triggering higher reimbursement rates under the HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock during the period between July 31, 2008 and October 4, 2011. On June 15, 2012, defendants filed a motion to dismiss the complaint. That motion is fully briefed and is now pending before the court.

Given the preliminary stage of the action, the Company is unable to assess the probable outcome or potential liability, if any, arising from the action on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for the action at this time. The defendants intend to defend themselves vigorously in the action.

Shareholder Derivative Litigation

On October 7 and October 13, 2011, two actions were filed against certain of Gentiva’s current and former directors and officers in the United States District Court for the Northern District of Georgia, alleging, among other things, that Gentiva’s board of directors breached its fiduciary duties to the Company. The actions also asserted a claim under Section 14(a) of the Securities Exchange Act of 1934. The actions were consolidated and, on March 5, 2012, plaintiffs filed a consolidated complaint (the “Georgia Federal Court Action”). The Georgia Federal Court Action, which names certain of Gentiva’s current and former directors and officers as defendants, alleges, among other things, that Gentiva’s board of directors had actual or constructive knowledge that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock. The complaint further alleges that the Company’s Proxy Statement for its 2010 Annual Meeting of Shareholders was materially false and misleading. On April 16, 2012, defendants filed a motion to dismiss the Georgia Federal Court Action. That motion is fully briefed and is now pending before the court.

Given the preliminary stage of the Georgia Federal Court Action, the Company is unable to assess the probable outcome or potential liability, if any, arising from this action on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this action at this time. The defendants intend to defend themselves vigorously in this action.

On January 4, 2011 and October 31, 2011, two actions were filed against certain of Gentiva’s current and former directors in Superior Court of DeKalb County in the State of Georgia, alleging, among other things, that Gentiva’s board of directors breached its fiduciary duties to the Company. The actions were consolidated and, on February 9, 2012, plaintiffs filed a consolidated complaint (the “Georgia State Court Action”). The Georgia State Court Action, which named certain of Gentiva’s current and former directors as defendants, alleged, among other things, that Gentiva’s board of directors had actual or constructive knowledge that the Company’s public disclosures misrepresented and failed to disclose that the Company improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under HH PPS, which caused an artificial inflation in the price of Gentiva’s common stock. On March 26, 2012, defendants filed a motion to dismiss the Georgia State Court Action and further requested a transfer to the Superior Court of Cobb County. On October 12, 2012, the Cobb County court granted defendants' motion to dismiss the consolidated complaint with prejudice.

Government Matters

PRRB Appeal

In connection with the audit of the Company’s 1997 cost reports, the Medicare fiscal intermediary made certain audit adjustments related to the methodology used by the Company to allocate a portion of its residual overhead costs. The Company filed cost reports for years subsequent to 1997 using the fiscal intermediary’s methodology. The Company believed the methodology it used to allocate such overhead costs was accurate and consistent with past practice accepted by the fiscal intermediary; as such, the Company filed appeals with the Provider Reimbursement Review Board (“PRRB”) concerning this issue with respect to cost reports for the years 1997, 1998 and 1999. The Company’s consolidated financial statements for the years 1997, 1998 and 1999 had reflected use of the methodology mandated by the fiscal intermediary. In June 2003, the Company and its Medicare fiscal intermediary signed an Administrative Resolution relating to the issues covered by the appeals pending before the PRRB. Under the terms of the Administrative Resolution, the fiscal intermediary agreed to reopen and adjust the Company’s cost reports for the years 1997, 1998 and 1999 using a modified version of the methodology used by the Company prior to 1997. This modified methodology will also be applied to cost reports for the year 2000, which are currently under audit. The Administrative Resolution required that the process to (i) reopen all 1997 cost reports, (ii) determine the adjustments to allowable costs through the issuance of Notices of Program Reimbursement and (iii) make appropriate payments to the Company, be completed in early 2004. Cost reports relating to years subsequent to 1997 were to be reopened after the process for the 1997 cost reports was completed.

The fiscal intermediary completed the reopening of all 1997, 1998 and 1999 cost reports and determined that the adjustment to allowable costs aggregated $15.9 million which the Company has received and recorded as adjustments to net revenues in the fiscal years 2004 through 2006. The Company is unable to predict when the Centers for Medicare & Medicaid Services (“CMS”) will finalize all items relating to the 2000 cost reports.

Subpoena

On July 13, 2010, the SEC informed the Company that the SEC had commenced an investigation relating to the Company’s participation in the Medicare Home Health Prospective Payment System, and, on July 16, 2010, the Company received a subpoena from the SEC requesting certain documents in connection with its investigation. The SEC subpoena, among other things, focused on issues related to the number of and reimbursement received for therapy visits before and after changes in the Medicare reimbursement system, relationships with physicians, compliance efforts including compliance with fraud and abuse laws, and certain documents previously sent to the Senate Finance Committee. The Company is unable to assess the probable outcome or potential liability, if any, arising from this matter on the business, financial condition, results of operations, liquidity or capital resources of the Company. The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made for this matter at this time.

Investigations Involving Odyssey

On February 14, 2008, Odyssey received a letter from the Medicaid Fraud Control Unit of the Texas Attorney General’s office notifying Odyssey that the Texas Attorney General was conducting an investigation concerning Medicaid hospice services provided by Odyssey, including its practices with respect to patient admission and retention, and requesting medical records of approximately 50 patients served by its programs in the State of Texas. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of this investigation, the Texas Attorney General’s views of the issues being investigated or any actions that the Texas Attorney General may take.

On May 5, 2008, Odyssey received a letter from the U.S. Department of Justice (“DOJ”) notifying Odyssey that the DOJ was conducting an investigation of VistaCare, Inc. (“VistaCare”) and requesting that Odyssey provide certain information and documents related to the DOJ’s investigation of claims submitted by VistaCare to Medicare, Medicaid and the U.S. government health insurance plan for active military members, their families and retirees, formerly the Civilian Health and Medical Program of the Uniformed Services (“TRICARE”), from January 1, 2003 through March 6, 2008, the date Odyssey completed the acquisition of VistaCare. Odyssey has been informed by the DOJ and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office that they are reviewing allegations that VistaCare may have billed the federal Medicare, Medicaid and TRICARE programs for hospice services that were not reasonably or medically necessary or performed as claimed. The basis of the investigation is a qui tam lawsuit filed in the United States District Court for the Northern District of Texas by a former employee of VistaCare. The lawsuit alleges, among other things, that VistaCare submitted false claims to Medicare and Medicaid for hospice services that were not medically necessary and for hospice services that were referred in violation of the anti-kickback statute. The court unsealed the lawsuit on October 5, 2009 and Odyssey was served on January 28, 2010. In connection with the unsealing of the complaint, the DOJ filed a notice with the court declining to intervene in the qui tam action at such time. The Texas Attorney General also filed a notice of non-intervention with the court. These actions should not be viewed as a final assessment by the DOJ or the Texas Attorney General of the merits of this qui tam action. Odyssey continues to cooperate with the DOJ and the Texas Attorney General in their investigation. The relator has continued to pursue the qui tam lawsuit. VistaCare filed motions to dismiss the relator’s complaint on March 30, 2010 and April 2, 2012. The court issued orders on the motions to dismiss on March 9, 2011 and July 23, 2012. Consistent with the court’s orders, relator’s false claims act claims based on alleged medically unnecessary hospice services and for hospice services referred in violation of the anti-kickback statute are permitted to proceed to discovery. Currently, there is no scheduling order in place or trial date. Odyssey denies the allegations made in this qui tam action and will vigorously defend against them. Based on the information that Odyssey has at this time, the Company cannot predict the outcome of the qui tam lawsuit, the governments’ continuing investigation, the DOJ’s or Texas Attorney General’s views of the issues being investigated, other than the DOJ’s and Texas Attorney General’s notice declining to intervene in the qui tam action, or any actions that the DOJ or Texas Attorney General may take.

On October 28, 2011, the Assistant United States Attorney for the Northern District of Texas notified Odyssey and the Company of the existence of a second qui tam lawsuit against VistaCare, doing business as VistaCare Hospice, Odyssey Healthcare, and Gentiva Healthcare Services, that had initially been filed on October 29, 2010, in the Northern District of Alabama, but transferred to the Northern District of Texas due to the similarity of allegations with the first qui tam lawsuit. A non-intervention order and unsealing of the second complaint was entered by the District Court for the Northern District of Texas on October 27, 2011. The Company believes this action should not be viewed as a final assessment by the DOJ of the merits of this qui tam action. On February 28, 2012, the court ordered a stay in this qui tam action until the court rules on the pending motion to dismiss in the first qui tam action. The court lifted the stay on July 23, 2012 following the court entry of an order ruling on the motion to dismiss in the first qui tam action. At this time, there is no scheduling order in place or trial date. VistaCare denies the allegations made in the second qui tam action and will vigorously defend against them. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of this second qui tam lawsuit, the government’s continuing investigation, the DOJ’s views of the issues being investigated, other than the DOJ’s non-intervention in the qui tam action, or any actions that the DOJ may take.

On January 5, 2009, Odyssey received a letter from the Georgia State Health Care Fraud Control Unit notifying Odyssey that the Georgia State Health Care Fraud Unit was conducting an investigation concerning Medicaid hospice services provided by VistaCare from 2003 through 2007 and requesting certain documents. Odyssey is cooperating with the Georgia State Health Care Fraud Control Unit and has complied with the document request. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of the investigation, the Georgia State Health Care Fraud Control Unit’s views of the issues being investigated or any actions that the Georgia State Health Care Fraud Control Unit may take.

On February 23, 2010, Odyssey received a subpoena from the Department of Health and Human Services, Office of Inspector General (“OIG”), requesting various documents and certain patient records of one of Odyssey’s hospice programs relating to services performed from January 1, 2006 through December 31, 2009. Odyssey is cooperating with the OIG and has completed its subpoena production. Based on the limited information that Odyssey has at this time, the Company cannot predict the outcome of the investigation, the OIG’s views of the issues being investigated or any actions that the OIG may take.

The Company does not believe that an estimate of a reasonably possible loss or range of loss can be made at this time with regard to the above investigations involving Odyssey. Based on the limited information that Odyssey has at this time regarding such investigations, the Company is unable to predict the impact, if any, that such investigations may have on Odyssey’s and the Company’s business, financial condition, results of operations, liquidity or capital resources.

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic and diluted earnings per share for each period presented have been computed by dividing income from continuing operations, discontinued operations, net of tax and net income attributable to Gentiva shareholders by the weighted average number of shares outstanding for each respective period. The computations of the basic and diluted per share amounts were as follows (in thousands, except per share amounts):

	For the Three Months Ended										For the Nine Months Ended
	September 30, 2012					September 30, 2011					September 30, 2012		September 30, 2011
Net (loss) income attributable to Gentiva shareholders	$	(523	)			$	(473,751	)			$	18,226	$	(455,110	)
Basic weighted average common shares outstanding	30,423					30,337					30,496		30,257
Shares issuable upon the assumed exercise of stock options and under stock plans for employees and directors using the treasury stock method	—			(1	)	—			(1	)	116		—			(1	)
Diluted weighted average common shares outstanding	30,423					30,337					30,612		30,257
Basic earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)
Diluted earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$	(0.02	)			$	(15.62	)			$	0.60	$	(15.04	)

(1) Due to the reported net loss, there is no dilutive share effect for these reporting periods.

For the third quarter and first nine months of 2012, approximately 3.1 million and 3.3 million stock options and restricted stock awards, respectively, were excluded from the computations of diluted earnings per share, as their inclusion would be anti-dilutive. For the third quarter and first nine months of 2011, approximately 3.2 million and 1.6 million stock options and restricted stock awards, respectively, were excluded from the computations of diluted earnings per share as their inclusion would be anti-dilutive.

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Equity (Details Textual) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 2005 Repurchase Program [Member]	Apr. 14, 2005 2005 Repurchase Program [Member]	Sep. 30, 2012 2012 Repurchase Program [Member]	Mar. 13, 2012 2012 Repurchase Program [Member]
Equity (Textual) [Abstract]
Repurchase Limitations						1,500,000		5,000,000
Remaining authorization to repurchase common stock under							$ 1,500,000
Remaining shares authorized					0
Equity (Additional Textual) [Abstract]
Comprehensive (loss) income	(375,000)	(473,617,000)	18,850,000	(455,136,000)
Shares of common stock received in connection with acquisition of business				14,334
Accumulated other comprehensive income (loss), tax				400,000
Stock repurchase, shares			605,077
Stock repurchase, average cost			$ 8.22
Stock repurchase, total cost			5,000,000
Senior note governing repurchases of the Company's common stock limitations per year	5,000,000		5,000,000
Limitations per year for leverage ratio less than or equal to 3.5:1	$ 20,000,000		$ 20,000,000
Consolidated Leverage Ratio	less than or equal to 3.5:1		less than or equal to 3.5:1

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Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

9 Months Ended

Sep. 30, 2012

Restructuring and Related Activities [Abstract]

Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

The Company recorded net charges relating to restructuring, acquisition and integration activities, and legal settlements 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, which were recorded in selling, general and administrative expenses in the Company’s consolidated statements of comprehensive income.

Cost Savings Initiatives and Other Restructuring Costs

During the last half of 2011, the Company undertook a comprehensive review of its branch structure, support infrastructure and other significant expenditures in order to reduce its ongoing operating costs given the challenging rate environment the Company was facing. As a result of this effort, the Company closed or divested of 34 home health branches and 9 hospice branches during the fourth quarter of 2011 and 4 home health branches in the first quarter of 2012, and completed significant reductions in staffing levels in regional, area and corporate support functions. In connection with these activities, the Company recorded charges of $0.1 million and $1.5 million in the third quarter and first nine months of 2012, respectively, related to severance costs, facility lease and other costs.

During the third quarter and first nine months of 2011, the Company recorded charges of $0.8 million and $2.6 million, respectively, in connection with restructuring activities, including severance costs in connection with the termination of personnel and facility lease and other costs. These charges included non-cash charges of approximately $0.4 million, recorded in the first nine months of 2011, associated with the acceleration of compensation expense relating to future vesting of stock options under severance agreements for certain of the Company’s former executive officers.

Acquisition and Integration Activities

The Company recorded positive adjustments of $1.0 million for the first nine months of 2012 related to acquisition and integration activities. During the third quarter and first nine months of 2011, the Company recorded charges of $2.5 million and $7.3 million, respectively, in connection with costs of acquisition and integration activities, primarily related to the Odyssey transaction. These costs consisted of legal, accounting and other professional fees and expenses, severance costs and facility lease costs.

Legal Settlements

During the first nine months of 2012, the Company recorded legal settlements of $5.0 million related to certain of the wage and hour litigation and paid approximately $26.0 million in settlement with the United States regarding Odyssey’s provision of continuous care services prior to the Company’s acquisition of Odyssey in August 2010.

During the third quarter and first nine months of 2011, the Company recorded charges of $6.5 million and $25.0 million, respectively, related to discussions of potential legal settlements associated with the continuous care investigation assumed in connection with the Odyssey transaction.

The costs incurred and cash expenditures associated with these activities by component were as follows (in thousands):

	Cost Savings and Other Restructuring			Acquisition & Integration			Legal Settlements			Total
Balance at December 31, 2010	$	2,893		$	3,984		$	12,500		$	19,377
Charge in first quarter 2011	1,259			2,506			—			3,765
Cash expenditures	(1,490		)	(2,346		)	—			(3,836		)
Ending balance at March 31, 2011	2,662			4,144			12,500			19,306
Charge in second quarter 2011	504			2,242			18,500			21,246
Cash expenditures	(788		)	(2,198		)	(12,500		)	(15,486		)
Non-cash expenditures	(407		)	—			—			(407		)
Ending balance at June 30, 2011	1,971			4,188			18,500			24,659
Charge in third quarter 2011	824			2,520			6,500			9,844
Cash expenditures	(710		)	(1,491		)	—			(2,201		)
Ending balance at September 30, 2011	$	2,085		$	5,217		$	25,000		$	32,302
Balance at December 31, 2011	$	8,671		$	3,708		$	26,000		$	38,379
Charge in first quarter 2012	842			(409		)	4,958			5,391
Cash expenditures	(3,527		)	(755		)	(25,958		)	(30,240		)
Non-cash expenditures	19			(216		)	—			(197		)
Ending balance at March 31, 2012	6,005			2,328			5,000			13,333
Charge in second quarter 2012	542			(517		)	—			25
Cash expenditures	(2,462		)	(421		)	(5,000		)	(7,883		)
Non-cash expenditures	(114		)	—			—			(114		)
Ending balance at June 30, 2012	3,971			1,390			—			5,361
Charge in third quarter 2012	98			(45		)	—			53
Cash expenditures	(1,466		)	(143		)	—			(1,609		)
Non-cash expenditures	(4		)	—			—			(4		)
Ending balance at September 30, 2012	$	2,599		$	1,202		$	—		$	3,801

The balance of unpaid charges relating to cost savings initiatives and other restructuring costs, acquisition and integration activities and legal settlements approximated $3.8 million at September 30, 2012 and $38.4 million at December 31, 2011, which were included in other accrued expenses in the Company’s consolidated balance sheets.

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Identifiable Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Identifiable Intangible Assets and Goodwill

Identifiable Intangible Assets and Goodwill

The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if current events or circumstances require an interim impairment assessment. The Company allocates goodwill to its various reporting units upon the acquisition of the assets or stock of another third party business operation. The Company compares the fair value of each reporting unit to its carrying amount to determine if there is a potential impairment of goodwill and other indefinite-lived intangible assets. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than the carrying value of its goodwill. To determine the fair value of the Company's reporting units, the Company uses a present value (discounted cash flow) technique corroborated by market multiples when available, a reconciliation to market capitalization or other valuation methodologies and reasonableness tests, as appropriate.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized. Fair values of other indefinite-lived intangible assets are determined based on discounted cash flows or appraised values, as appropriate.

 The Company operations include two reportable segments: Home Health and Hospice. To determine fair value, the Company considered the income approach, which determines fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital (“discount rate”), which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. The Company determined the discounted cash flow as the best indicator to determine fair value.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. The Company performed an interim impairment test as of August 31, 2012, due to patient census growth that was not in line with previous projections. For purposes of the interim impairment test, the Company applied certain assumptions that included, but were not limited to, patient census projections, gross margin assumptions consistent with the Company's historical trends combined with the expectations of operating efficiencies and economies of scale. The Company used discount rates of 11.6 percent and 10.5 percent to calculate the fair value of its Home Health and Hospice reporting units, respectively. Discount rates of 12.1 percent and 11.7 percent, respectively, percent were used in the annual impairment test performed as of December 31, 2011.

Although the Company determined that there was no goodwill impairment as of August 31, 2012, the future occurrence of a potential indicator of impairment, such as, but not limited to, a significant adverse change in legal factors or business climate, reductions of projected patient census, an adverse action or assessment by a regulator, as well as other unforeseen factors, would require an interim assessment for some or all of the reporting units. Such future assessment may result in an impairment charge if material.

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 remaining trade name balances for the third quarter and first nine months of 2012, which is reflected in goodwill, intangibles and other long-lived asset impairment in the Company's consolidated statements of comprehensive income.

During the third quarter of 2011, the Company determined a triggering event had occurred and performed an interim impairment test of its identifiable intangible assets and goodwill in response to changes in its business climate, uncertainties around Medicare reimbursement as the federal government worked to reduce the federal deficit as well as a significant decline in the price of the Company's common stock during the quarter. The impairment assessment was completed as of August 31, 2011. The interim test concluded that the fair value of certain identifiable intangible assets, as well as goodwill, was less than their carrying value as of that date. The Company utilized a discounted cash flow approach to determine the fair values. The Company then determined the implied fair value of goodwill by determining the fair value of all assets and liabilities. As a result of this process, the Company recorded a non-cash charge of approximately $602.1 million to reduce the carrying value of certain identifiable intangible assets, as well as goodwill, to their estimated fair values. The impairment loss is included within goodwill, intangibles and other long-lived assets impairment in the Company's consolidated statements of comprehensive income for the third quarter and first nine months of 2011.

The gross carrying amount and accumulated amortization of each category of identifiable intangible assets as of September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012									December 31, 2011									Useful Life
	Home Health			Hospice			Total			Home Health			Hospice			Total
Amortized intangible assets:
Covenants not to compete	$	1,667		$	15,685		$	17,352		$	1,473		$	15,675		$	17,148		2-5 Years
Less: accumulated amortization	(1,433		)	(13,488		)	(14,921		)	(1,411		)	(9,144		)	(10,555		)
Net covenants not to compete	234			2,197			2,431			62			6,531			6,593
Customer relationships	27,196			910			28,106			27,196			910			28,106			5-10 Years
Less: accumulated amortization	(17,064		)	(367		)	(17,431		)	(15,304		)	(299		)	(15,603		)
accumulated impairment losses	(27		)	—			(27		)	(27		)	—			(27		)
Net customer relationships	10,105			543			10,648			11,865			611			12,476
Tradenames	18,215			16,730			34,945			18,215			16,730			34,945			5-10 Years
Less: accumulated amortization	(11,794		)	(3,608		)	(15,402		)	(10,522		)	(2,346		)	(12,868		)
accumulated impairment losses	(6,421		)	(13,122		)	(19,543		)	(411		)	—			(411		)
Net tradenames	—			—			—			7,282			14,384			21,666
Amortized intangible assets	10,339			2,740			13,079			19,209			21,526			40,735
Indefinite-lived intangible assets:
Medicare licenses and certificates of need	225,226			102,587			327,813			220,285			98,526			318,811
Less: accumulated impairment losses	(144,672		)	(520		)	(145,192		)	(144,672		)	—			(144,672		)
Net Medicare licenses and certificates of need	80,554			102,067			182,621			75,613			98,526			174,139
Total identifiable intangible assets	$	90,893		$	104,807		$	195,700		$	94,822		$	120,052		$	214,874

During the first nine months of 2012, the Company recorded a charge of approximately $0.5 million to reflect the transfer of the Medicare licenses associated with the sale of the four hospice branches in Louisiana, which is recorded in gain on sale of businesses in the Company’s consolidated statements of comprehensive income for the nine months endedSeptember 30, 2012. The Company recorded amortization expense of approximately $2.6 million and $8.7 million for the third quarter and first nine months of 2012, respectively, and $3.3 million and $9.8 million for the third quarter and first nine months of 2011, respectively. The estimated amortization expense for the remainder of 2012 is $1.3 million and for each of the next five succeeding years approximates $4.1 million for 2013, $2.4 million for 2014, $2.3 million for 2015, $1.4 million for 2016, and $1.2 million for 2017.

The gross carrying amount of goodwill as of September 30, 2012 and December 31, 2011 and activity during the first nine months of 2012 were as follows (in thousands):

	Home Health			Hospice			Total
Balance at December 31, 2010	$	264,679		$	820,387		$	1,085,066
Goodwill adjustment	2,379			11,261			13,640
Accumulated impairment losses	(263,370		)	(193,667		)	(457,037		)
Balance at December 31, 2011	3,688			637,981			641,669
Goodwill acquired during 2012	5,331			9,364			14,695
Balance at September 30, 2012	$	9,019		$	647,345		$	656,364

During 2011, the Company reclassified deferred tax assets associated with the classification of deductible intangible assets and goodwill related to a 2006 acquisition. The impact of this reclassification was an increase in goodwill in the Home Health and Hospice segments of $2.4 million and $11.3 million, respectively, and a decrease in non-current deferred tax assets of $13.6 million.

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Long-Term Debt

9 Months Ended

Sep. 30, 2012

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

Long-Term Debt

Credit Arrangements

At September 30, 2012, the Company’s credit arrangements included a senior secured credit agreement providing (i) a $200 million Term Loan A facility, (ii) a $550 million Term Loan B facility and (iii) a $110 million revolving credit facility (collectively, the “Credit Agreement”), and $325 million aggregate principal amount of 11.5% Senior Notes due 2018 (the “Senior Notes”). The Credit Agreement’s revolving credit facility also includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as swing line loans.

As of September 30, 2012 and December 31, 2011, the Company’s long-term debt consisted of the following (in thousands):

	September 30, 2012			December 31, 2011
Credit Agreement:
Term Loan A, maturing August 17, 2015	$	146,693		$	158,653
Term Loan B, maturing August 17, 2016	466,432			504,472
11.5% Senior Notes due 2018	325,000			325,000
Total debt	938,125			988,125
Less: current portion of long-term debt	(21,693		)	(14,903		)
Total long-term debt	$	916,432		$	973,222

In response to uncertainties around Medicare reimbursement rates and to ensure compliance under its Credit Agreement as of December 31, 2011, on November 28, 2011, the Company entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”). In addition, on March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement (“Amendment No. 3”) in order to provide increased flexibility in the Company’s debt covenants over the remaining term of the Credit Agreement and reasonable assurance with respect to the Company’s ability to remain in compliance with its debt covenants beyond January 1, 2012, including the maximum consolidated leverage ratio and the minimum interest coverage ratio, which are discussed below under “Debt Covenants.” Among other things, Amendment No. 3 also reduced the revolving credit facility from $125 million to $110 million.

As of September 30, 2012, advances under the revolving credit facility may be made, and letters of credit may be issued, up to the $110 million borrowing capacity of the facility at any time prior to the facility expiration date of August 17, 2015. In connection with the reduction in the revolving credit facility, the Company wrote-off prepaid debt issuance costs of approximately $0.5 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the first nine months of 2012, and capitalized costs associated with the revolving credit facility of approximately $0.8 million. Outstanding letters of credit were $45.4 million and $41.8 million at September 30, 2012 and December 31, 2011, respectively. The letters of credit were issued to guarantee payments under the Company’s workers’ compensation program and for certain other commitments. As of September 30, 2012, the Company’s unused and available borrowing capacity under the Credit Agreement was $64.6 million.

As of September 30, 2012, the mandatory aggregate principal payments of long-term debt were $2.9 million in 2012, $25.0 million in each of 2013 and 2014, $93.8 million in 2015 and $466.4 million in 2016 under the Credit Agreement, and $325.0 million thereafter under the Senior Notes. The weighted average cash interest rate on outstanding borrowings was 8.2 percent per annum at September 30, 2012 and 6.9 percent per annum at December 31, 2011.

The Term Loan A facility is subject to mandatory principal payments of $25 million per year, payable in equal quarterly installments, with the remaining balance of the original $200 million loan payable on August 17, 2015. Pursuant to Amendment No. 3, the Company made a prepayment of $12.0 million on its Term Loan A facility in the first quarter of 2012. There are no required payments on the Company’s Term Loan A facility until the end of the fourth quarter of 2012, at which time a principal payment of $2.9 million is required and $6.3 million per quarter thereafter. The Term Loan B facility is subject to mandatory principal payments of $13.8 million per year, payable in equal quarterly installments. Pursuant to Amendment No. 3, the Company made a prepayment of $38.0 million on its Term Loan B facility in the first quarter of 2012. As a result of the prepayment, there are no required payments on the Company’s Term Loan B facility until August 17, 2016, at which time a payment of the outstanding balance of $466.4 million is required.

On March 9, 2011, the Company entered into a First Refinancing Amendment to the Credit Agreement (“Amendment No. 1”), which provided for, among other things, (i) refinancing of the outstanding indebtedness under the Company’s senior secured Term Loan A and Term Loan B facilities, (ii) elimination of the requirement to hedge a certain portion of the Company’s variable rate debt, (iii) a reduction in the minimum Base Rate from 2.75 percent to 2.25 percent, (iv) a reduction in the minimum Eurodollar Rate from 1.75 percent to 1.25 percent, (v) reductions in Term Loan B Applicable Rates to 3.50 percent for Eurodollar Rate Loans and 2.50 percent for Base Rate Loans as compared to 5.00 percent and 4.00 percent, respectively, under the previous arrangement and (vi) reductions in the Applicable Rate for Term Loan A as reflected in the table below.

	Previous Applicable Rate		Amended Applicable Rate
Consolidated Leverage Ratio	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Loans	Eurodollar Rate Loans and Letter of Credit Fees	Base Rate Term A Loans	Base Rate Term B Loans
> 3.0:1	5.00%	4.00%	3.25%	2.25%	2.25%
> 2.0:1 and < 3.0:1	4.50%	3.50%	3.00%	2.00%	2.00%
< 2.0:1	4.00%	3.00%	2.75%	1.75%	1.75%

In addition, Amendment No. 1 provided for a reduction in the Company’s minimum consolidated interest coverage ratio to a ratio of 2.25 to 1.00 from the previous ratio of 2.75 to 1.00. As discussed below under “Debt Covenants,” Amendment No. 3 provided for a further reduction in the minimum consolidated interest coverage ratio.

The interest rate per annum on borrowings under the Credit Agreement is based on, at the option of the Company, (i) the Eurodollar Rate or (ii) the Base Rate, plus an Applicable Rate. The Base Rate represents the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50 percent and (z) the Eurodollar Rate plus 1.00 percent. In connection with determining the interest rates on the Term Loan A and Term Loan B facilities, in no event shall the Eurodollar Rate be less than 1.25 percent and the Base Rate be less than 2.25 percent. The Company may select interest periods of one, two, three or six months for Eurodollar Rate loans. Interest is payable at the end of the selected interest period. From August 17, 2010 through March 9, 2011, the interest rate on borrowings under the Credit Agreement was 6.75 percent per annum. From March 9, 2011 through March 5, 2012, the interest rate on Term Loan A borrowings was 4.50 percent and on Term Loan B borrowings was 4.75 percent. Giving effect to Amendment No. 3, subsequent to March 5, 2012, the interest rate on Term Loan A borrowings is 6.25 percent and on Term Loan B borrowings is 6.50 percent. The Company must also pay a fee of 0.50 percent per annum on unused commitments under the revolving credit facility.

Prior to Amendment No. 1, the Credit Agreement included a requirement that the Company enter into and maintain interest rate swap contracts covering a notional value of not less than 50 percent of the Company’s aggregate consolidated outstanding indebtedness (other than total revolving credit outstanding), including the Senior Notes, for a period of not less than three years. On November 15, 2010, the Company entered into derivative instruments consisting of (i) a one-year interest rate cap with a notional value of $220.0 million and (ii) two-year forward starting interest rate swaps with notional value of $300.0 million. Under the interest rate cap, the Company would pay a fixed rate of 1.75 percent per annum plus an applicable rate (an aggregate of 6.75 percent per annum for the period beginning November 15, 2010 through December 30, 2011) on the $220 million rather than a variable rate plus an applicable rate should the variable rate plus applicable rate exceed 6.75 percent. In connection with Amendment No. 1, the Company terminated the two-year forward starting interest rate swaps and paid a termination fee of approximately $0.3 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the nine months endedSeptember 30, 2011.

The Company may voluntarily repay outstanding loans under the revolving credit facility or Term Loan A at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. For the period from March 9, 2011 to September 9, 2011, the Company was subject to a prepayment premium equal to 1.0 percent of the aggregate principal amount of Term Loan B. Prepayment and commitment reductions will be required in connection with (i) certain asset sales, (ii) certain extraordinary receipts such as certain insurance proceeds, (iii) cash proceeds from the issuance of debt, (iv) 50 percent of the proceeds from the issuance of equity with step-downs based on leverage, with certain exceptions, and (v) 75 percent of “Excess Cash Flow” (as defined in the Credit Agreement) with two step-downs based on the Company’s leverage ratio.

In connection with the refinancing pursuant to Amendment No. 1, the Company paid a two percent prepayment penalty on its Term Loan B facility of approximately $10.9 million which was recorded as deferred debt issuance costs. In accordance with applicable guidance, due to changes in some of the participating lenders, the Company recorded a write-off of a portion of its deferred debt issuance costs of approximately $3.5 million, which is reflected in interest expense and other in the Company’s consolidated statement of comprehensive income for the nine months endedSeptember 30, 2011.

Debt Covenants

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s and its subsidiaries’ ability to incur additional indebtedness or issue certain preferred stock, create liens on assets, enter into sale and leaseback transactions, engage in mergers or consolidations with other companies, sell assets, pay dividends, repurchase capital stock, make investments, loans and advances, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements, repay certain indebtedness, change the nature of the Company’s business, change accounting policies and practices, grant negative pledges and incur capital expenditures. In addition, after giving effect to Amendment No. 3, the Credit Agreement requires the Company to maintain no more than a maximum consolidated leverage ratio as shown in the second table below and no less than a minimum cash interest coverage ratio of 2.00 to 1.00 through June 30, 2013, 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and 2.00 to 1.00 thereafter and also contains certain customary affirmative covenants and events of default. The previously required ratio was 2.25 to 1.00 for all periods.

On November 28, 2011, the Company entered into Amendment No. 2, which provided for modification to the definition of “Consolidated EBITDA” contained in the Credit Agreement to allow for the add-back of costs associated with the Company’s cost realignment activities and operating losses associated with branches closed or sold during the fourth quarter of 2011 and to reset the maximum consolidated leverage ratio for the fourth quarter of 2011 to 4.50 to 1.00. As of September 30, 2012, the Company was in compliance with all covenants in the Credit Agreement.

The maximum consolidated leverage ratio under Amendment No. 2 was as follows:

For the period	Maximum Consolidated Leverage Ratio
August 17, 2010 to September 30, 2011	≤ 4.75:1
October 1, 2011 to September 30, 2012	≤ 4.50:1
October 1, 2012 to September 30, 2013	≤ 3.75:1
Thereafter	≤ 3.00:1

On March 6, 2012, the Company entered into Amendment No. 3 to the Credit Agreement, which provided, among other things, for (i) an increase by 175 basis points per annum of the interest rates applicable to each of outstanding Term Loan A loans and Term Loan B loans, (ii) an increase in the Company’s permitted maximum consolidated leverage ratio as set forth in the table below, (iii) an amendment to the consolidated interest coverage ratio (and corresponding definitions) to provide that consolidated interest charges included in such calculation are such charges paid in cash (as compared with the previous covenant that included non-cash interest charges), along with a decrease in the Company’s permitted minimum consolidated cash interest coverage ratio to (a) 2.00 to 1.00 through June 30, 2013, (b) 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and (c) 2.00 to 1.00 thereafter, (iv) amendments to the definition of “Consolidated EBITDA,” which include the ability to add-back certain costs associated with the Company’s cost realignment and operating losses associated with certain facilities and branches closed or sold by the Company during the fourth quarter of 2011 and during 2012 and an increase in the add-back for litigation settlement costs, (v) an addition of a mechanism for the Company to make discounted prepayments of Term Loan A loans and Term Loan B loans pursuant to Dutch auction procedures and (vi) a reduction of the revolving credit facility from $125 million to $110 million. As a condition to effectiveness of Amendment No. 3, the Company paid $50 million of the outstanding term loans under the Credit Agreement, applied ratably between the Term Loan A facility and the Term Loan B facility. The Company also paid certain fees in connection with Amendment No. 3, including a consent fee to each lender approving Amendment No. 3 in an amount equal to 0.50% of its respective term loans and revolving credit commitments. In connection with Amendment No. 3, the Company incurred costs of approximately $5.3 million. Approximately $4.1 million of these costs (including the $0.8 million associated with the revolving credit facility) have been capitalized and are being amortized over the remaining life of the debt using an effective interest rate.

The increase in Gentiva’s permitted maximum consolidated leverage ratio under Amendment No. 3 is set forth in the following table:

Four Fiscal Quarters Ending	Maximum Consolidated Leverage Ratio
March 31, 2012 to September 30, 2014	≤ 6.25:1
Each fiscal quarter thereafter	≤ 5.75:1

As of September 30, 2012, the Company’s consolidated leverage ratio was 4.7x and the Company’s interest coverage ratio was 2.7x.

Guaranty Agreement and Security Agreement

Gentiva and substantially all of its subsidiaries (the “Guarantor Subsidiaries”) entered into a guaranty agreement pursuant to which the Guarantor Subsidiaries have agreed, jointly and severally, fully and unconditionally to guarantee all of the Company’s obligations under the Credit Agreement. Additionally, Gentiva and its Guarantor Subsidiaries entered into a security agreement pursuant to which a first-priority security interest was granted in substantially all of the Company’s and its Guarantor Subsidiaries’ present and future real, personal and intangible assets, including the pledge of 100 percent of all outstanding capital stock of substantially all of the Company’s domestic subsidiaries to secure full payment of all of the Company’s obligations for the ratable benefit of the lenders.

Senior Notes

The Senior Notes are unsecured, senior subordinated obligations of the Company. The Senior Notes are guaranteed by all of Gentiva’s subsidiaries that are guarantors under the Credit Agreement. Interest on the Senior Notes accrues at a rate of 11.5 percent per annum and is payable semi-annually in arrears on March 1 and September 1. Gentiva will make each interest payment to the holders of record on the immediately preceding February 15 and August 15.

The Senior Notes mature on September 1, 2018 and are generally free to be transferred. Gentiva may redeem the Senior Notes, in whole or in part, at any time prior to the first interest payment of 2014, at a price equal to 100 percent of the principal amount of the Senior Notes redeemed plus an applicable make-whole premium based on the present value of the remaining payments discounted at the treasury rate plus 50 basis points plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to September 1, 2013, Gentiva may redeem up to 35 percent of the aggregate principal amount of the Senior Notes with the net cash proceeds of a qualified equity offering at a redemption price equal to 111.5 percent of the aggregate principal amount, provided that (i) at least 65 percent of the aggregate principal amount of Senior Notes originally issued remain outstanding after the occurrence of such redemption and (ii) such redemption occurs within 180 days after the closing of a qualified equity offering.

On or after September 1, 2014, Gentiva may redeem all or part of the Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest, if any, as defined in the indenture relating to the Senior Notes during the twelve month period beginning on September 1 of the years indicated below:

Year	Percentage
2014	105.750%
2015	102.875%
2016 and thereafter	100.000%

Other

The Company has equipment capitalized under capital lease obligations. At September 30, 2012 and December 31, 2011, the Company had no obligations under long-term capital leases. The current portion of obligations under capital leases was $0.1 million at both September 30, 2012 and December 31, 2011 and was recorded in other accrued expenses on the Company’s consolidated balance sheets.

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Equity-Based Compensation Plans (Details 3) (Restricted Stock [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Restricted Stock [Member]
Summary of restricted Stock activity
Number of Restricted Shares, Beginning balance	377,750
Weighted Average Exercise Price, Beginning balance	$ 25.30
Number of Restricted Shares, Granted	0
Weighted Average Exercise Price, Granted	$ 0
Number of Restricted Shares, Exercised	0
Weighted Average Exercise Price, Exercised	$ 0
Number of Performance Share Units, Cancelled	(10,700)
Weighted Average Exercise Price, Cancelled	$ 26.48
Number of Performance Share Units, Ending balance	367,050
Weighted Average Exercise Price, Ending balance	$ 25.26
Aggregate Intrinsic Value, Ending Balance	$ 4,154,419

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Legal Matters (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Lawsuits Person Plaintiffs
Legal Matters (Textual) [Abstract]
Loss Contingency, Number of Plaintiffs	5
Settlement of damages claims	$ 5
Former employees of Generations Healthcare	2
Shareholder class actions filed against company	5
Number of lawsuits filed against the Company's current Board of Directors	2
Legal Matters Aggregate Adjustment to Allowable Costs	$ 15.9
Number of patients records	50

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Equity-Based Compensation Plans (Details 2) (Performance Shares [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Performance Shares [Member]
Summary of performance share unit
Number of Restricted Shares, Beginning balance	125,800
Weighted Average Exercise Price, Beginning balance	$ 26.33
Number of Performance Share Units, Granted	0
Weighted Average Exercise Price, Granted	$ 0
Number of Performance Share Units, Vested	0
Weighted Average Exercise Price, Vested	$ 0
Number of Performance Share Units, Cancelled	(4,200)
Weighted Average Exercise Price, Cancelled	$ 26.74
Number of Performance Share Units, Ending balance	121,600
Weighted Average Exercise Price, Ending balance	$ 26.32

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Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment net revenues by major payer source

Segment net revenues by major payer source were as follows (in millions):

	Third Quarter
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	185.0	$	177.4	$	362.4	$	200.3	$	182.0	$	382.3
Medicaid and Local Government	12.2		6.9		19.1		13.2		8.0		21.2
Commercial Insurance and Other:
Paid at episodic rates	21.4		—		21.4		19.3		—		19.3
Other	16.1		5.4		21.5		20.4		6.5		26.9
Total net revenues	$	234.7	$	189.7	$	424.4	$	253.2	$	196.5	$	449.7

	First Nine Months
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	561.7	$	539.0	$	1,100.7	$	601.6	$	543.0	$	1,144.6
Medicaid and Local Government	35.7		21.2		56.9		39.8		23.4		63.2
Commercial Insurance and Other:
Paid at episodic rates	62.8		—		62.8		58.1		—		58.1
Other	50.1		17.3		67.4		64.1		19.6		83.7
Total net revenues	$	710.3	$	577.5	$	1,287.8	$	763.6	$	586.0	$	1,349.6

Segment infor

Segment information about the Company's operations

Segment information about the Company’s operations is as follows (in thousands):

	Home Health				Hospice				Total
For the three months ended September 30, 2012
Net revenue	$	234,670			$	189,774			$	424,444
Operating contribution	$	32,268			$	34,798			$	67,066
Corporate expenses									(21,065		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(6,653		)
Interest expense and other, net									(22,894		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(2,678	)
For the three months ended September 30, 2011
Net revenue	$	253,240			$	196,508			$	449,748
Operating contribution	$	28,717			$	31,477	(1	)	$	60,194
Corporate expenses									(28,570		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(7,453		)
Dividend income									3,977			(2	)
Interest expense and other, net									(20,673		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(635,830	)
For the nine months ended September 30, 2012
Net revenue	$	710,321			$	577,466			$	1,287,787
Operating contribution	$	94,527	(1	)	$	102,426	(1	)	$	196,953
Corporate expenses									(66,120		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(21,375		)
Gain on sale of businesses									5,447
Interest expense and other, net									(67,051		)	(3	)
Income from continuing operations before income taxes and equity in earnings of affiliate									$	28,722
Segment assets	$	242,217	(4	)	$	864,139	(4	)	$	1,106,356
Corporate assets									377,858
Total assets									$	1,484,214
For the nine months ended September 30, 2011
Net revenue	$	763,622			$	585,947			$	1,349,569
Operating contribution	$	105,427	(1	)	$	104,301	(1	)	$	209,728
Corporate expenses									(92,480		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(22,534		)
Dividend income									8,590			(2	)
Interest expense and other, net									(68,342		)	(3	)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(608,343	)
Segment assets	$	244,787	(4	)	$	871,212	(4	)	$	1,115,999
Corporate assets									423,587
Total assets									$	1,539,586

(1) For the third quarter and first nine months of 2012, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $0.1 million and $5.5 million, respectively.

For the third quarter and first nine months of 2011, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $9.8 million and $34.9 million, respectively. Of these amounts, $25.0 million related to legal settlements associated with the Odyssey acquisition.

Charges reflecting for segment reporting purposes

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

	Third Quarter				First 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

(2) For the third quarter and first nine months of 2011, the Company recognized dividend income of $4.0 million and $8.6 million, respectively, as a result of the sale of a portion of the Company’s preferred equity in CareCentrix.

(3) For the first nine months of 2012, interest expense and other, net included charges of $0.5 million relating to the write-off of deferred debt issuance costs associated with the revolving credit facility. In addition, interest expense and other, net for the first nine months of 2011 included charges of $3.8 million associated with terminating the Company’s interest rate swaps in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

(4) For both the third quarter and first nine months of 2012, the Company recorded non-cash impairment charges associated with a write-off of its trade name intangibles of $19.1 million in connection with the Company's initiative to re-brand its operations under the Gentiva name. Home Health and Hospice assets were reduced by $6.0 million and $13.1 million, respectively, as of September 30, 2012 as a result of the impairment.

For both the third quarter and first nine months of 2011, the Company recorded non-cash impairment charges associated with goodwill, intangibles and long-lived assets of $643.3 million Home Health, Hospice and Corporate assets were reduced by $$408.4 , $193.7 and $41.2 , respectively, as of September 30, 2011.

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Computations of the basic and diluted per share amounts
Net (loss) income attributable to Gentiva shareholders	$ (523)	$ (473,751)	$ 18,226	$ (455,110)
Basic weighted average common shares outstanding	30,423	30,337	30,496	30,257
Shares issuable upon the assumed exercise of stock options and under stock plans for employees and directors using the treasury stock method	0	0	116	0
Diluted weighted average common shares outstanding	30,423	30,337	30,612	30,257
Basic earnings per common share
Net (loss) income attributable to Gentiva shareholders	$ (0.02)	$ (15.62)	$ 0.60	$ (15.04)
Diluted earnings per common share:
Net (loss) income attributable to Gentiva shareholders	$ (0.02)	$ (15.62)	$ 0.60	$ (15.04)

XML

Business Segment Information

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

The Company’s operations involve servicing its patients and customers through its Home Health segment and its Hospice segment.

Home Health

The Home Health segment is comprised of direct home nursing and therapy services operations, including specialty programs. The Company conducts direct home nursing and therapy services operations through licensed and Medicare-certified agencies, located in 38 states, from which the Company provides various combinations of skilled nursing and therapy services and paraprofessional nursing services to adult and elder patients. The Company’s direct home nursing and therapy services operations also deliver services to its customers through focused specialty programs that include:

• Gentiva Orthopedics, which provides individualized home orthopedic rehabilitation services to patients recovering from joint replacement or other major orthopedic surgery;

• Gentiva Safe Strides^®, which provides therapies for patients with balance issues who are prone to injury or immobility as a result of falling;

• Gentiva Cardiopulmonary, which helps patients and their physicians manage heart and lung health in a home-based environment;

• Gentiva Neurorehabilitation, which helps patients who have experienced a neurological injury or condition by removing the obstacles to healing in the patient’s home; and

• Gentiva Senior Health, which addresses the needs of patients with age-related diseases and issues to effectively and safely stay in their homes.

In addition, through May 31, 2012, the Company provided consulting services to home health agencies, which included operational support, billing and collection activities, and on-site agency support and consulting. For 2011, the Company’s Rehab Without Walls^® and homemaker services business in Illinois are reflected as discontinued operations in accordance with applicable accounting guidance. See Note 3 for additional information.

Hospice

The Hospice segment serves terminally ill patients and their families through Medicare-certified providers operating in 28 states. Comprehensive management of the healthcare services and products needed by hospice patients and their families are provided through the use of an interdisciplinary team. Depending on a patient’s needs, each hospice patient is assigned an interdisciplinary team comprised of a physician, nurse(s), home health aide(s), medical social worker(s), chaplain, dietary counselor and bereavement coordinator, as well as other care professionals. The Hospice segment also delivers services to its customers through focused specialty programs that include:

• Dementia Specialty Program, which provides an individualized disease management program addressing the physical needs specific to Alzheimer’s and dementia patients and support mechanisms for their caregivers;

• Cancer Specialty Program, which provides advanced pain and symptom management for patients coping with the effects of cancer;

• Cardiac Specialty Program, which helps patients and their physicians aggressively manage symptoms associated with heart disease, focusing on quality of life and pain control; and

• Pulmonary Specialty Program, which addresses the needs of patients who have experienced a respiratory crisis by increasing quality of life and promoting comfort by specialized symptom management.

Corporate Expenses

Corporate expenses consist of costs relating to executive management and corporate and administrative support functions that are not directly attributable to a specific segment, including equity-based compensation expense. Corporate and administrative support functions represent primarily information services, accounting and finance, tax compliance, risk management, procurement, marketing, clinical administration, training, legal and human resource benefits and administration.

Other Information

The Company’s senior management evaluates performance and allocates resources based on operating contributions of the reportable segments, which exclude corporate expenses, depreciation, amortization and net interest costs, but include revenues and all other costs (including special items) directly attributable to the specific segment. Segment assets represent net accounts receivable, identifiable intangible assets, goodwill, and certain other assets associated with segment activities. All other assets are assigned to corporate assets for the benefit of all segments for the purposes of segment disclosure.

Segment net revenues by major payer source were as follows (in millions):

	Third Quarter
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	185.0	$	177.4	$	362.4	$	200.3	$	182.0	$	382.3
Medicaid and Local Government	12.2		6.9		19.1		13.2		8.0		21.2
Commercial Insurance and Other:
Paid at episodic rates	21.4		—		21.4		19.3		—		19.3
Other	16.1		5.4		21.5		20.4		6.5		26.9
Total net revenues	$	234.7	$	189.7	$	424.4	$	253.2	$	196.5	$	449.7

	First Nine Months
	2012						2011
	Home Health		Hospice		Total		Home Health		Hospice		Total
Medicare	$	561.7	$	539.0	$	1,100.7	$	601.6	$	543.0	$	1,144.6
Medicaid and Local Government	35.7		21.2		56.9		39.8		23.4		63.2
Commercial Insurance and Other:
Paid at episodic rates	62.8		—		62.8		58.1		—		58.1
Other	50.1		17.3		67.4		64.1		19.6		83.7
Total net revenues	$	710.3	$	577.5	$	1,287.8	$	763.6	$	586.0	$	1,349.6

Segment information about the Company’s operations is as follows (in thousands):

	Home Health				Hospice				Total
For the three months ended September 30, 2012
Net revenue	$	234,670			$	189,774			$	424,444
Operating contribution	$	32,268			$	34,798			$	67,066
Corporate expenses									(21,065		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(6,653		)
Interest expense and other, net									(22,894		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(2,678	)
For the three months ended September 30, 2011
Net revenue	$	253,240			$	196,508			$	449,748
Operating contribution	$	28,717			$	31,477	(1	)	$	60,194
Corporate expenses									(28,570		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(7,453		)
Dividend income									3,977			(2	)
Interest expense and other, net									(20,673		)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(635,830	)
For the nine months ended September 30, 2012
Net revenue	$	710,321			$	577,466			$	1,287,787
Operating contribution	$	94,527	(1	)	$	102,426	(1	)	$	196,953
Corporate expenses									(66,120		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(4	)
Depreciation and amortization									(21,375		)
Gain on sale of businesses									5,447
Interest expense and other, net									(67,051		)	(3	)
Income from continuing operations before income taxes and equity in earnings of affiliate									$	28,722
Segment assets	$	242,217	(4	)	$	864,139	(4	)	$	1,106,356
Corporate assets									377,858
Total assets									$	1,484,214
For the nine months ended September 30, 2011
Net revenue	$	763,622			$	585,947			$	1,349,569
Operating contribution	$	105,427	(1	)	$	104,301	(1	)	$	209,728
Corporate expenses									(92,480		)	(1	)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(4	)
Depreciation and amortization									(22,534		)
Dividend income									8,590			(2	)
Interest expense and other, net									(68,342		)	(3	)
Loss from continuing operations before income taxes and equity in earnings of affiliate									$	(608,343	)
Segment assets	$	244,787	(4	)	$	871,212	(4	)	$	1,115,999
Corporate assets									423,587
Total assets									$	1,539,586

(1) For the third quarter and first nine months of 2012, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $0.1 million and $5.5 million, respectively.

For the third quarter and first nine months of 2011, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $9.8 million and $34.9 million, respectively. Of these amounts, $25.0 million related to legal settlements associated with the Odyssey acquisition.

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

	Third Quarter				First 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

(2) For the third quarter and first nine months of 2011, the Company recognized dividend income of $4.0 million and $8.6 million, respectively, as a result of the sale of a portion of the Company’s preferred equity in CareCentrix.

(3) For the first nine months of 2012, interest expense and other, net included charges of $0.5 million relating to the write-off of deferred debt issuance costs associated with the revolving credit facility. In addition, interest expense and other, net for the first nine months of 2011 included charges of $3.8 million associated with terminating the Company’s interest rate swaps in connection with the refinancing of the Company’s Term Loan A and Term Loan B under the Company’s credit agreement. See Note 10 for additional information.

(4) For both the third quarter and first nine months of 2012, the Company recorded non-cash impairment charges associated with a write-off of its trade name intangibles of $19.1 million in connection with the Company's initiative to re-brand its operations under the Gentiva name. Home Health and Hospice assets were reduced by $6.0 million and $13.1 million, respectively, as of September 30, 2012 as a result of the impairment.

For both the third quarter and first nine months of 2011, the Company recorded non-cash impairment charges associated with goodwill, intangibles and long-lived assets of $643.3 million Home Health, Hospice and Corporate assets were reduced by $$408.4 , $193.7 and $41.2 , respectively, as of September 30, 2011.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Financial assets measured at fair value on a recurring basis

The Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis was as follows (in thousands):

	September 30, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	54,066	$	—	$	—	$	54,066	$	54,006	$	—	$	—	$	54,006
Rabbi Trust:
Mutual funds	22,574		—		—		22,574		25,626		—		—		25,626
Money market funds	5,794		—		—		5,794		697		—		—		697
Total assets	$	82,434	$	—	$	—	$	82,434	$	80,329	$	—	$	—	$	80,329
Liabilities:
Payables to plan participants	$	28,368	$	—	$	—	$	28,368	$	26,323	$	—	$	—	$	26,323
Acquisition contingent liability	—		—		1,900		1,900		—		—		—		—
Total liabilities	$	28,368	$	—	$	1,900	$	30,268	$	26,323	$	—	$	—	$	26,323

Assets held

Carrying amount and estimated fair value of financial instruments

The carrying amount and estimated fair value of the Company’s other financial instruments were as follows (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Note receivable from CareCentrix	$	25,000	$	25,309	$	25,000	$	26,600
Seller financing note receivable from CareCentrix	9,949		5,533		—		—
Liabilities:
Long-term obligations	$	938,125	$	908,975	$	988,125	$	863,313

XML

Identifiable Intangible Assets and Goodwill (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Gross carrying amount of goodwill
Goodwill, Beginning Balance		$ 641,669	$ 1,085,066	$ 1,085,066
Goodwill adjustment				13,640
Accumulated impairment losses	(457,037)		(457,037)	(457,037)
Goodwill acquired during 2012		14,695
Goodwill, Ending Balance		656,364		641,669
Home Health [Member]
Gross carrying amount of goodwill
Goodwill, Beginning Balance		3,688	264,679	264,679
Goodwill adjustment				2,379
Accumulated impairment losses				(263,370)
Goodwill acquired during 2012		5,331
Goodwill, Ending Balance		9,019		3,688
Hospice [Member]
Gross carrying amount of goodwill
Goodwill, Beginning Balance		637,981	820,387	820,387
Goodwill adjustment				11,261
Accumulated impairment losses				(193,667)
Goodwill acquired during 2012		9,364
Goodwill, Ending Balance		$ 647,345		$ 637,981

XML

Fair Value of Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Carrying Amount [Member]
Assets:
Note receivable from CareCentrix	$ 25,000	$ 25,000
Notes, Loans and Financing Receivable, Net, Current	9,949	0
Liabilities:
Long-term obligation	938,125	988,125
Estimate Fair Value [Member]
Assets:
Note receivable from CareCentrix	25,309	26,600
Notes, Loans and Financing Receivable, Net, Current	5,533	0
Liabilities:
Long-term obligation	$ 908,975	$ 863,313

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES:
Net (loss) income	$ 18,850	$ (454,658)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,375	22,534
Amortization and write-off of debt issuance costs	10,391	12,857
Provision for doubtful accounts	4,183	5,744
Equity-based compensation expense	5,722	5,863
Windfall tax benefits associated with equity-based compensation	0	(194)
Goodwill, intangibles and other long-lived asset impairment	19,132	643,305
Gain on sale of businesses	(5,447)	(9,088)
Equity in net earnings of CareCentrix	(1,006)	(69,582)
Deferred income tax expense (benefit)	27,700	(95,672)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	31,751	(6,431)
Prepaid expenses and other current assets	(24,591)	11,055
Accounts payable	2,509	(1,876)
Payroll and related taxes	(12,180)	(16,328)
Deferred revenue	5,002	3,231
Medicare liabilities	4,999	(11,726)
Obligations under insurance programs	(875)	(7,347)
Accrued nursing home costs	(3,657)	(2,489)
Other accrued expenses	(35,887)	(14,518)
Other, net	6,670	(333)
Net cash provided by operating activities	74,641	14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	(9,235)	(14,571)
Proceeds from sale of businesses, net of cash transferred	5,720	142,333
Acquisition of businesses, net of cash acquired	(22,520)	(320)
Net cash (used in) provided by investing activities	(26,035)	127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421	7,005
Windfall tax benefits associated with equity-based compensation	0	194
Repayment of long-term debt	(50,000)	(43,438)
Repurchase of common stock	(4,974)	0
Debt issuance costs	(4,125)	(13,457)
Repayment of capital lease obligations	(106)	(210)
Other	(685)	(543)
Net cash used in financing activities	(57,469)	(50,449)
Net change in cash and cash equivalents	(8,863)	91,340
Cash and cash equivalents at beginning of period	164,912	104,752
Cash and cash equivalents at end of period	156,049	196,092
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	67,735	69,922
Income taxes paid	$ 4,260	$ 9,972

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for the notes receivable from CareCentrix and long-term debt. The fair values for the notes receivable from CareCentrix and non-financial assets, such as fixed assets, intangible assets and goodwill, are measured periodically and adjustments recorded only if an impairment charge is required. The carrying amount of the Company’s accounts receivable, accounts payable and certain other current liabilities approximates fair value due to their short maturities.

Fair value is defined under authoritative guidance as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial Instruments Recorded at Fair Value

The Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis was as follows (in thousands):

	September 30, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	54,066	$	—	$	—	$	54,066	$	54,006	$	—	$	—	$	54,006
Rabbi Trust:
Mutual funds	22,574		—		—		22,574		25,626		—		—		25,626
Money market funds	5,794		—		—		5,794		697		—		—		697
Total assets	$	82,434	$	—	$	—	$	82,434	$	80,329	$	—	$	—	$	80,329
Liabilities:
Payables to plan participants	$	28,368	$	—	$	—	$	28,368	$	26,323	$	—	$	—	$	26,323
Acquisition contingent liability	—		—		1,900		1,900		—		—		—		—
Total liabilities	$	28,368	$	—	$	1,900	$	30,268	$	26,323	$	—	$	—	$	26,323

Assets held in the Rabbi Trust are held for the benefit of participants in the Company’s non-qualified defined contribution retirement plan. The value of assets held in the Rabbi Trust is based on quoted market prices of securities and investments, including money market accounts and mutual funds, maintained within the Rabbi Trust. The corresponding amounts payable to plan participants are equivalent to the underlying value of assets held in the Rabbi Trust. Assets held in the Rabbi Trust and amounts payable to plan participants are classified in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets. Money market funds held in the Company’s account represent cash equivalents and were classified in cash and cash equivalents in the Company’s consolidated balance sheets at September 30, 2012 and December 31, 2011.

Other Financial Instruments

The carrying amount and estimated fair value of the Company’s other financial instruments were as follows (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Note receivable from CareCentrix	$	25,000	$	25,309	$	25,000	$	26,600
Seller financing note receivable from CareCentrix	9,949		5,533		—		—
Liabilities:
Long-term obligations	$	938,125	$	908,975	$	988,125	$	863,313

The estimated fair values of the notes receivable from CareCentrix were determined from Level 3 inputs based on an income approach using the discounted cash flow method. The fair values represent the net present value of (i) the after tax cash flows relating to each note's annual income stream plus (ii) the return of the invested principal using a maturity date of March 19, 2017, after considering assumptions relating to risk factors and economic conditions. See Note 6 for additional information.

In determining the estimated fair value of long-term debt, Level 2 inputs based on the use of bid and ask prices were considered. Due to the infrequent number of transactions that occur related to the long-term debt, the Company does not believe an active market exists for purposes of this disclosure.

XML

Long-Term Debt (Details Textual) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended		3 Months Ended	9 Months Ended			9 Months Ended					3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Mar. 09, 2011	Sep. 30, 2012 Interest Rate Cap [Member]	Nov. 15, 2010 Interest Rate Cap [Member]	Jun. 30, 2011 Interest Rate Swap [Member]	Sep. 30, 2012 Interest Rate Swap [Member]	Sep. 30, 2011 Interest Rate Swap [Member]	Nov. 15, 2010 Interest Rate Swap [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2013 Maximum [Member]	Jun. 30, 2013 Maximum [Member]	Sep. 30, 2011 Maximum [Member]	Sep. 30, 2012 Minimum [Member]	Sep. 30, 2012 Term Loan A [Member]	Mar. 31, 2012 Term Loan A [Member]	Sep. 30, 2012 Term Loan A [Member]	Mar. 05, 2012 Term Loan A [Member]	Sep. 30, 2011 Term Loan A [Member]	Jun. 30, 2011 Term Loan B [Member]	Sep. 30, 2012 Term Loan B [Member]	Sep. 30, 2011 Term Loan B [Member]	Jun. 30, 2011 Term Loan B [Member] Minimum [Member]	Sep. 30, 2012 Term Loan B [Member] Minimum [Member]	Sep. 30, 2012 Leverage Ratio Range Three [Member]	Jun. 30, 2011 Revolving Credit Facility [Member]	Sep. 30, 2012 Revolving Credit Facility [Member]	Mar. 06, 2012 Revolving Credit Facility [Member]	Sep. 30, 2012 Senior Notes [Member]	Sep. 01, 2018 Senior Notes [Member]	Sep. 30, 2011 Senior Notes [Member]
Long-Term Debt (Textual) [Abstract]
Line of credit facility, maximum borrowing capacity																		$ 200,000,000		$ 200,000,000					$ 550,000,000					$ 110,000,000	$ 125,000,000
Effective Interest Rate						6.75%												6.25%		6.25%	4.50%			6.50%										11.50%
Deferred debt issuance costs, write off			500,000	3,500,000
Capitalized cost associated with revolving credit facility			4,100,000																											800,000
Consolidated Interest Coverage Ratio, Original													2.75%
Consolidated Interest Coverage Ratio After Amendment No. 1													2.25%
Minimum Cash Consolidated Interest Coverage Ratio After Amendment No. 3														1.75%	2.00%	2.25%
Outstanding letters of credit																						200,000,000								125,000,000
Unused and available borrowing capacity under the Credit Agreement	64,600,000		64,600,000
Weighted average cash interest rate on outstanding borrowings	8.20%		8.20%		6.90%
Principal payment																				25,000,000			13,800,000
Consolidated leverage ratio	470.00%		470.00%
Consolidated interest coverage ratio	270.00%		270.00%
Principal prepayments term loan																		6,300,000		2,900,000
Refinancing Amendment reduction in the minimum Base Rate																											4.00%
Term Loan A and Term Loan B Amended Minimum Eurodollar Rate													1.75%				1.25%							3.50%
Refinancing Amendment minimum Base Rate Amended													2.75%				2.25%							2.50%
Credit Agreement Interest Rate			The Base Rate represents the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50 percent and (z) the Eurodollar Rate plus 1.00 percent
Commitment fees																										0.50%			0.50%
Notional value consolidated outstanding indebtedness											50.00%
Time Period of Derivative Coverage							3 years
Notional Amount of Interest Rate Derivatives								220,000,000				300,000,000
Derivative Asset Period							1 year			2 years
Description of interest rate risk exposure							Under the interest rate cap, the Company would pay a fixed rate of 1.75 percent per annum plus an applicable rate (an aggregate of 6.75 percent per annum for the period beginning November 15, 2010 through December 30, 2011) on the $220 million rather than a variable rate plus an applicable rate should the variable rate plus applicable rate exceed 6.75 percent.
Maximum Consolidated Leverage Ratio for specified time period			4.75%
Interest expense and other	23,547,000	21,332,000	69,062,000	70,305,000					300,000
Prepayment premium aggregate principal amount																							1.00%
Proceeds from the issuance of equity with step-downs based on leverage																							50.00%
Excess cash flow with two step downs based on company leverage ratio																									75.00%
Pre Payment Penalty on Term Loan																									10,900,000
Maximum Consolidated Leverage Ratio for specified time period													4.5
Cost incurred in connection with Amendment 3																												5,300,000
Pledge of Capital Stock to Lenders Percentage			100.00%
Debt Instrument Redemption Terms																																	Gentiva may redeem up to 35 percent of the aggregate principal amount of the Senior Notes with the net cash proceeds of a qualified equity offering at a redemption price equal to 111.5 percent of the aggregate principal amount, provided that (i) at least 65 percent of the aggregate principal amount of Senior Notes originally issued remain outstanding after the occurrence of such redemption and (ii) such redemption occurs within 180 days after the closing of a qualified equity offering.
Percentage of senior notes to be redeemed																																		35.00%
Senior notes redemption price																																		111.50%
Redemption Clause One																																at least 65 percent of the aggregate principal amount of Senior Notes originally issued remain outstanding after the occurrence of such redemption
Debt Instrument Redemption Clause Two																																such redemption occurs within 180 days after the closing of a qualified equity offering.
Prepayment on Term Loan A facility at the end of fourth quarter of 2012																			12,000,000
Number of days after which redemption can occur			180 days
Prepayment of outstanding Term Loan B facility			50,000,000	43,438,000																				38,000,000
Debt instrument redemption price terms																																Gentiva may redeem the Senior Notes, in whole or in part, at any time prior to the first interest payment of 2014, at a price equal to 100 percent of the principal amount of the Senior Notes redeemed plus an applicable make-whole premium based on the present value of the remaining payments discounted at the treasury rate plus 50 basis points plus accrued and unpaid interest, if any, to the date of redemption.
Long-Term Debt (Additional Textual) [Abstract]
Aggregate principal payments of long term debt for 2012	2,900,000		2,900,000
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months	25,000,000		25,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Two	25,000,000		25,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Three	93,800,000		93,800,000
Long-term Debt, Maturities, Repayments of Principal in Year Four	466,400,000		466,400,000
Long-term Debt, Maturities, Repayments of Principal in Year Five	325,000,000		325,000,000
Aggregate principal payments of long term debt for 2016	466,400,000		466,400,000
Aggregate principal payments of long term debt for 2017 and thereafter	325,000,000		325,000,000
Repayment of borrowings under revolving credit facility			50,000,000
Current portion of obligations under capital leases	100,000		100,000
Outstanding letter of credit	$ 45,400,000		$ 45,400,000		$ 41,800,000
Premium on redemption of senior notes, basis points added to treasury rate			5.00%

XML

Business Segment Information (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Segment information about the Company's operations
Total net revenues	$ 424,444,000	$ 449,748,000	$ 1,287,787,000	$ 1,349,569,000
Operating contribution	67,066,000	60,194,000	196,953,000	209,728,000
Goodwill, intangibles and other long-lived asset impairment	(19,132,000)	(643,305,000)	(19,132,000)	(643,305,000)
Impairment of Intangible Assets, Finite-lived	(19,132,000)		(19,132,000)
Depreciation and amortization	(6,653,000)	(7,453,000)	(21,375,000)	(22,534,000)
Gain on sale of businesses	0	0	5,447,000	0
Dividend income	0	3,977,000	0	8,590,000
Interest expense and other, net	(22,894,000)	(20,673,000)	(67,051,000)	(68,342,000)
(Loss) Income from continuing operations before income taxes and equity in net earnings of CareCentrix	(2,678,000)	(635,830,000)	28,722,000	(608,343,000)
Total assets	1,484,214,000	1,539,586,000	1,484,214,000	1,539,586,000	1,530,328,000
Home Health [Member]
Segment information about the Company's operations
Total net revenues	234,670,000	253,240,000	710,321,000	763,622,000
Operating contribution	32,268,000	28,717,000	94,527,000	105,427,000
Goodwill, intangibles and other long-lived asset impairment		408,400,000
Impairment of Intangible Assets, Finite-lived			(6,000,000)
Segment assets	242,217,000	244,787,000	242,217,000	244,787,000
Hospice [Member]
Segment information about the Company's operations
Total net revenues	189,774,000	196,508,000	577,466,000	585,947,000
Operating contribution	34,798,000	31,477,000	102,426,000	104,301,000
Goodwill, intangibles and other long-lived asset impairment		193,705,000
Impairment of Intangible Assets, Finite-lived			(13,132,000)
Segment assets	864,139,000	871,212,000	864,139,000	871,212,000
Home Health and Hospice [Member]
Segment information about the Company's operations
Segment assets	1,106,356,000	1,115,999,000	1,106,356,000	1,115,999,000
Corporate [Member]
Segment information about the Company's operations
Corporate Expenses	(21,065,000)	(28,570,000)	(66,120,000)	(92,480,000)
Goodwill, intangibles and other long-lived asset impairment		41,200,000
Segment assets	$ 377,858,000	$ 423,587,000	$ 377,858,000	$ 423,587,000

XML

Net Revenues and Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2012

Net Revenues and Accounts Receivable [Abstract]

Net revenues by major payer classification

Net revenues in the Home Health and Hospice segments were derived from all major payer classes and were as follows (in millions):

	Third Quarter						First Nine Months
	2012		2011		Percentage Variance		2012		2011		Percentage Variance
Medicare:
Home Health	$	185.0	$	200.3	(7.6	)%	$	561.7	$	601.6	(6.6	)%
Hospice	177.4		182.0		(2.5	)%	539.0		543.0		(0.7	)%
Total Medicare	362.4		382.3		(5.2	)%	1,100.7		1,144.6		(3.8	)%
Medicaid and Local Government	19.1		21.2		(9.7	)%	56.9		63.2		(10.0	)%
Commercial Insurance and Other:
Paid at episodic rates	21.4		19.3		10.9	%	62.8		58.1		8.0	%
Other	21.5		26.9		(20.4	)%	67.4		83.7		(19.4	)%
Total Commercial Insurance and Other	42.9		46.2		(7.3	)%	130.2		141.8		(8.2	)%
Total net revenues	$	424.4	$	449.7	(5.6	)%	$	1,287.8	$	1,349.6	(4.6	)%

Accounts receivable attributable to major payer sources of reimbursement

Accounts receivable attributable to major payer sources of reimbursement were as follows (in thousands):

	September 30, 2012			December 31, 2011
Medicare	$	190,997		$	217,028
Medicaid and Local Government	36,608			46,553
Commercial Insurance and Other	37,009			38,570
Gross Accounts Receivable	264,614			302,151
Less: Allowance for doubtful accounts	(10,520		)	(11,562		)
Net Accounts Receivable	$	254,094		$	290,589

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Supplemental Guarantor and Non-Guarantor Financial Information (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES:
Net cash provided by operating activities	$ 74,641	$ 14,347
INVESTING ACTIVITIES:
Purchase of fixed assets	(9,235)	(14,571)
Proceeds from sale of businesses, net of cash transferred	5,720	142,333
Acquisition of businesses, net of cash acquired	(22,520)	(320)
Net cash (used in) provided by investing activities	(26,035)	127,442
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421	7,005
Windfall tax benefits associated with equity-based compensation	0	194
Repayment of long-term debt	(50,000)	(43,438)
Debt issuance costs	(4,125)	(13,457)
Repurchase of common stock	(4,974)	0
Repayment of capital lease obligations	(106)	(210)
Other	(685)	(543)
Net payments related to intercompany financing	0	0
Net cash used in financing activities	(57,469)	(50,449)
Net change in cash and cash equivalents	(8,863)	91,340
Cash and cash equivalents at beginning of period	164,912	104,752
Cash and cash equivalents at end of period	156,049	196,092
Gentiva Health Services, Inc. [Member]
OPERATING ACTIVITIES:
Net cash provided by operating activities	3,710	(31,545)
INVESTING ACTIVITIES:
Purchase of fixed assets	0	0
Proceeds from sale of businesses, net of cash transferred	0	0
Acquisition of businesses, net of cash acquired	0	0
Net cash (used in) provided by investing activities	0	0
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	2,421	7,005
Windfall tax benefits associated with equity-based compensation		194
Repayment of long-term debt	(50,000)	(43,438)
Debt issuance costs	(4,125)	(13,457)
Repurchase of common stock	(4,974)
Repayment of capital lease obligations	(106)	(210)
Other	3,501	0
Net payments related to intercompany financing	40,122	173,069
Net cash used in financing activities	(13,161)	123,163
Net change in cash and cash equivalents	(9,451)	91,618
Cash and cash equivalents at beginning of period	124,101	63,816
Cash and cash equivalents at end of period	114,650	155,434
Guarantor Subsidiaries [Member]
OPERATING ACTIVITIES:
Net cash provided by operating activities	66,138	44,344
INVESTING ACTIVITIES:
Purchase of fixed assets	(9,188)	(14,393)
Proceeds from sale of businesses, net of cash transferred	5,720	142,281
Acquisition of businesses, net of cash acquired	(22,520)	(320)
Net cash (used in) provided by investing activities	(25,988)	127,568
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	0	0
Windfall tax benefits associated with equity-based compensation		0
Repayment of long-term debt	0	0
Debt issuance costs	0	0
Repurchase of common stock	0
Repayment of capital lease obligations	0	0
Other	(28)	1,157
Net payments related to intercompany financing	(40,122)	(173,069)
Net cash used in financing activities	(40,150)	(171,912)
Net change in cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	0	0
Non-Guarantor Subsidiaries [Member]
OPERATING ACTIVITIES:
Net cash provided by operating activities	4,793	1,548
INVESTING ACTIVITIES:
Purchase of fixed assets	(47)	(178)
Proceeds from sale of businesses, net of cash transferred	0	52
Acquisition of businesses, net of cash acquired	0	0
Net cash (used in) provided by investing activities	(47)	(126)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	0	0
Windfall tax benefits associated with equity-based compensation		0
Repayment of long-term debt	0	0
Debt issuance costs	0	0
Repurchase of common stock	0
Repayment of capital lease obligations	0	0
Other	(4,158)	(1,700)
Net payments related to intercompany financing	0	0
Net cash used in financing activities	(4,158)	(1,700)
Net change in cash and cash equivalents	588	(278)
Cash and cash equivalents at beginning of period	40,811	40,936
Cash and cash equivalents at end of period	41,399	40,658
Eliminations [Member]
OPERATING ACTIVITIES:
Net cash provided by operating activities	0	0
INVESTING ACTIVITIES:
Purchase of fixed assets	0	0
Proceeds from sale of businesses, net of cash transferred	0	0
Acquisition of businesses, net of cash acquired	0	0
Net cash (used in) provided by investing activities	0	0
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	0	0
Windfall tax benefits associated with equity-based compensation		0
Repayment of long-term debt	0	0
Debt issuance costs	0	0
Repurchase of common stock	0
Repayment of capital lease obligations	0	0
Other	0	0
Net payments related to intercompany financing	0	0
Net cash used in financing activities	0	0
Net change in cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	$ 0	$ 0

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Acquisitions and Dispositions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Summary of net revenues and operating results
Discontinued operations, net of tax	$ 0	$ 5,983	$ 0	$ 7,096
Rehab Without Walls and Homemaker Services Agency [Member]
Summary of net revenues and operating results
Net revenues		6,699		22,636
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

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Expense (Benefit) [Abstract]

Income Taxes

Income Taxes

The Company recorded an income tax benefit of $1.3 million and an income tax provision $10.9 million for the third quarter and first nine months of 2012, respectively. The Company’s effective income tax rate for the first nine months of 2012 was 37.9 percent. The rate for the first nine months is lower than what is expected for the full year as a result of an issue being effectively settled with the IRS and a reversal of related reserves in the first nine months of 2012 . The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 37.9 percent for the first nine months of 2012 is primarily due to state income taxes, net of federal benefit (approximately 5.0 percent), other items (approximately 0.4 percent), partially offset by changes in tax reserves (approximately 2.5 percent).

The Company recorded income tax benefits of $87.5 million and $77.0 million for the third quarter and first nine months of 2011, respectively. The difference between the federal statutory income tax rate of 35 percent and the Company’s effective rate of 12.7 percent for the first nine months of 2011 is primarily due to state income taxes, net of federal benefit (approximately 4.7 percent), offset by the impact of impairment of goodwill, intangibles and other long-lived assets (approximately 26.2 percent) and changes in tax reserves and other (approximately 0.8 percent).