Business Segment Information

The Company’s operations involve servicing its patients and customers through its Home Health, Hospice, and Community Care segments.

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 IDOA businesses are reflected as discontinued operations in accordance with applicable accounting guidance. See Note 4 for additional information.

Hospice

The Hospice segment serves terminally ill patients and their families through Medicare-certified providers operating in 30 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 through focused specialty programs that include:


•	Memory Care 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; and


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

Community Care

The Community Care segment serves patients who have chronic or long-term disabilities who need help with routine personal care operating in 5 states: Texas, Missouri, Oklahoma, North Carolina and Kansas. These services include help with personal needs, such as bathing and dressing, and household activities, such as laundry and shopping, all of which help enable the patient to remain at home. Community Care services are funded primarily through state Medicaid programs which vary state to state.

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):



	Home Health		Hospice		Community Care		Total
For the year ended December 31, 2013
Medicare	$	787.3	$	667.9	$	—	$	1,455.2
Medicaid and Local Government	43.8		28.3		44.5		116.6
Commercial Insurance and Other:
Paid at episodic rates	59.6		—		—		59.6
Other	75.1		19.0		1.1		95.2
Total net revenues	$	965.8	$	715.2	$	45.6	$	1,726.6

For the year ended December 31, 2012
Medicare	$	749.0	$	715.5	$	—	$	1,464.6
Medicaid and Local Government	46.8		27.7		—		74.4
Commercial Insurance and Other:
Paid at episodic rates	85.2		—		—		85.2
Other	67.0		21.6		—		88.6
Total net revenues	$	948.0	$	764.8	$	—	$	1,712.8

For the year ended December 31, 2011
Medicare	$	799.2	$	729.1	$	—	$	1,528.3
Medicaid and Local Government	52.3		30.8		—		83.1
Commercial Insurance and Other:
Paid at episodic rates	77.7		—		—		77.7
Other	83.4		26.3		—		109.7
Total net revenues	$	1,012.6	$	786.2	$	—	$	1,798.8

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



	Home Health			Hospice			Community Care		Total
For the year ended December 31, 2013
Net revenue	$	965,848		$	715,190		$	45,606	$	1,726,644
Operating contribution	$	113,809	(1)	$	78,810	(1)	$	6,385	$	199,004
Corporate expenses									(96,146		)	(1)
Goodwill, intangibles and other long-lived asset impairment									(610,436		)	(3)
Depreciation and amortization									(20,110		)
Interest expense and other, net									(110,384		)	(2)
(Loss) from continuing operations before income taxes and equity in earnings of affiliate									$	(638,072	)
Segment assets	$	406,806		$	357,044	(3)	172,418		$	936,268
Corporate assets									326,349			(3)
Total assets									$	1,262,617
For the year ended December 31, 2012
Net revenue	$	948,019		$	764,785		$	—	$	1,712,804
Operating contribution	$	125,445	(1)	$	133,133	(1)	$	—	$	258,578
Corporate expenses									(83,700		)	(1)
Goodwill, intangibles and other long-lived asset impairment									(19,132		)	(3)
Depreciation and amortization									(26,581		)
Gain on sale of businesses									8,014
Interest expense and other, net									(89,947		)	(2)
Income from continuing operations before income taxes and equity in loss of affiliate									$	47,232
Segment assets	$	242,603	(3)	$	858,502	(3)	$	—	$	1,101,105
Corporate assets									409,829
Total assets									$	1,510,934
For the year ended December 31, 2011
Net revenue	$	1,012,566		$	786,212		$	—	$	1,798,778
Operating contribution	$	126,194	(1)	$	139,723	(1)	$	—	$	265,917
Corporate expenses									(115,861		)	(1)
Goodwill, intangibles and other long-lived asset impairment									(643,305		)	(3)
Dividend income									8,590			(4)
Depreciation and amortization									(30,140		)
Gain on sale of assets and businesses, net									1,061
Interest expense and other, net									(88,610		)	(2)
(Loss) from continuing operations before income taxes and equity in earnings of affiliate									$	(602,348	)
Segment assets	$	239,751	(3)	$	905,284	(3)	$	—	$	1,145,035
Corporate assets									385,293			(3)
Total assets									$	1,530,328


(1)	For the years ended December 31, 2013, 2012 and 2011, the Company recorded charges relating to cost savings initiatives and other restructuring costs, acquisition and integration costs and legal settlements of $27.5 million, $5.7 million and $49.1 million, respectively. See Note 10 for additional information.

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



	2013		2012			2011
Home Health	$	3.3	$	5.6		$	7.7
Hospice	8.2		0.4			3.7
Corporate expenses	16.0		(0.3		)	37.7
Total	$	27.5	$	5.7		$	49.1

(2)

For the year ended December 31, 2013, interest expense and other, net included charges of $19.1 million relating to the write-off of deferred debt issuance costs and fees associated with the Company entering a new credit agreement, dated October 18, 2013. For the year ended December 31, 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 year ended December 31, 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 former credit agreement. See Note 12 for additional information.


(3)	The Company performed its annual impairment test as of December 31, 2013 for its Home Health, Hospice and Community Care segments. Based on this assessment, the Company recorded non-cash impairment charges relating to the goodwill and intangibles of its Hospice segment of approximately $379.8 million and $6.3 million, respectively, for the year 2013.

At March 31, 2013, the Company performed an interim impairment test of its Hospice reporting unit. Based on the results of the interim impairment test, the Company recorded a non-cash impairment charge relating to goodwill of approximately $220.8 million. As part of that analysis, the Company reviewed the valuation of its owned real estate utilized in the Hospice business. The analysis indicated that two of the Company's hospice inpatient units had estimated fair values lower than their carrying values and, as such, the Company recorded a non-cash impairment charge of approximately $1.9 million. In addition, the Company conducted an evaluation of the various systems used to support its field operations. In connection with that review, the Company made a strategic decision to replace its business intelligence software platform and, as such, recorded a non-cash impairment charge, related to developed software, of approximately $1.6 million. Hospice and corporate assets were reduced by $220.8 million and $3.5 million, respectively, as a result of these impairments.

For the year ended December 31, 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 December 31, 2012 as a result of the impairment.

For the year ended December 31, 2011, the Company recorded non-cash impairment charges associated with goodwill, intangibles and other long-lived assets of $643.3 million. This charge was the result of (i) changes in the Company's business climate, (ii) uncertainties around Medicare reimbursement as the federal government worked to reduce the federal deficit, (iii) a significant decline in the price of the Company's common stock during the fiscal year, (iv) a write-down of software and (v) a change in the estimated fair value of real estate. Home Health, Hospice and corporate assets were reduced by $408.4 million, $193.7 million and $41.2 million, respectively, as of December 31, 2011, as a result of the impairment.


(4)	For the year ended December 31, 2011, the Company recognized dividend income of $8.6 million as a result of the sale of a portion of the Company’s combined common and preferred ownership of CareCentrix.