Discontinued Operations

12 Months Ended

Dec. 31, 2011

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

7. DISCONTINUED OPERATIONS

Effective March 31, 2010, the Company terminated operations of four nursing centers in Florida under a lease that, as amended, would have expired in August 2010 and transitioned operations at these leased facilities to a new operator. The operating margins of the four facilities subject to this lease did not meet the Company’s long-term goals. These four homes contributed revenues of $6,852,000 and $25,053,000 and net income of $169,000 and $541,000 in the years ended December 31, 2010 and 2009, respectively. Included in the loss on disposal and impairment is a loss of $273,000 ($185,000 net of tax) on lease termination primarily related to severance, legal and other costs incurred to facilitate the transition as well as the transfer of inventory. While the results of discontinued operations reflect the direct expense related to the Florida regional office which has been closed, they do not reflect any allocation of corporate general and administrative expense or any allocation of corporate interest expense.

CMS issued regulations that became effective October 1, 2009, that prohibited the Company from billing Medicare Part B for certain services. These services produced revenues of $974,000 and net income of $204,000 during the year ended December 31, 2009.

The Company owns land related to a North Carolina assisted living facility it closed in April 2006. The net assets of discontinued operations presented in property and equipment on the accompanying consolidated balance sheet represent the real estate related to this assisted living facility. The Company is continuing its efforts to sell this land. Based on an evaluation of the current fair value of the property, the Company determined the carrying value exceeded the fair value. As a result, the Company recorded an impairment charge of $402,000 ($273,000 net of tax) to reduce the carrying value of the land during 2010.

The Company has classified the operations and the real estate described above as discontinued operations for all periods presented in the Company’s Consolidated Financial Statements.