Business Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Business Segment Information

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.

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):

	First Quarter
	2014								2013
	Home Health		Hospice		Community Care		Total		Home Health		Hospice		Total
Medicare	$	208.8	$	163.2	$	—	$	372.0	$	193.1	$	167.3	$	360.4
Medicaid and Local Government	8.5		6.2		56.4		71.1		11.2		7.0		18.2
Commercial Insurance and Other:
Paid at episodic rates	15.6		—		—		15.6		14.3		—		14.3
Other	23.1		5.0		0.7		28.8		17.5		5.2		22.7
Total net revenues	$	256.0	$	174.4	$	57.1	$	487.5	$	236.1	$	179.5	$	415.6

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

	Home Health			Hospice			Community Care		Total
For the three months ended March 31, 2014
Net revenue	$	255,976		$	174,402		$	57,127	$	487,505
Operating contribution	$	29,603	(1)	$	17,544	(1)	$	9,279	$	56,426
Corporate expenses									(24,562		)	(1)
Depreciation and amortization									(6,447		)
Interest expense and other, net									(24,498		)
Income before income taxes									$	919
Segment assets	$	406,783		$	358,652		$	170,717	$	936,152
Corporate assets									298,782
Total assets									$	1,234,934
For the three months ended March 31, 2013
Net revenue	$	236,061		$	179,530		$	—	$	415,591
Operating contribution	$	30,188		$	27,421		$	—	$	57,609
Corporate expenses									(18,687		)	(1)
Goodwill and other long-lived asset impairment									(224,320		)	(2)
Depreciation and amortization									(4,781		)
Interest expense and other, net									(22,293		)
Loss before income taxes									$	(212,472	)
Segment assets	$	248,789		$	634,065	(2)	$	—	$	882,854
Corporate assets									356,444			(2)
Total assets									$	1,239,298

(1) For the three months ended March 31, 2014 and 2013, the Company recorded charges relating to cost savings initiatives and acquisition and integration activities of $5.3 million and $0.1 million, respectively. See Note 8 for additional information.

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

	First Quarter
	2014		2013
Home Health	$	0.6	$	—
Hospice	2.8		—
Corporate expenses	1.9		0.1
Total	$	5.3	$	0.1

(2) 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. See Note 9.

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 the impairment.