Gentiva Health Services second-quarter total net revenues increase 4% to $297.1 million

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

Highlights for the three and six months ended July 4, 2010 as presented in this press release reflect results from continuing operations. Discontinued operations represent results of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses which were sold on February 1, 2010.  

Second quarter 2010 highlights include:  

• Total net revenues of $297.1 million, an increase of 4% compared to $284.8 million for the quarter ended June 29, 2009. Net revenues included home health episodic revenues of $228.7 million, up 7% compared to $213.3 million in the comparable 2009 period, and hospice revenues of $20.9 million, up approximately 14% from $18.3 million in the 2009 second quarter.  
• Income from continuing operations of $20.2 million, or $0.66 per diluted share which included net restructuring, legal settlement and merger and acquisition costs of $2.5 million or $0.08 per diluted share. Income from continuing operations in the second quarter of 2009 was $17.4 million or $0.59 per diluted share and included restructuring and merger and acquisition costs of $0.6 million or $0.02 per diluted share.
• Adjusted income from continuing operations of $22.7 million, up 27% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations was $0.74 in the 2010 second quarter compared with $0.61 in the corresponding period of 2009.  Adjusted income from continuing operations excluded the net charges described above as well as the impact of any losses on sales of assets.
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) attributable to continuing operations increased 23% to $43.2 million in the second quarter of 2010 as compared to $35.0 million in the second quarter of 2009.  Adjusted EBITDA as a percentage of net revenues improved to 14.5% in the second quarter of 2010 versus 12.3% in the prior-year period. Adjusted EBITDA excluded net charges relating to restructuring, legal settlements and merger and acquisition activities.

"Gentiva had a good second quarter that featured continued strong growth in Hospice, improved operating margins and solid execution as we managed through somewhat softer Home Health episodic volumes," said Gentiva CEO Tony Strange.  "The performance gives us confidence in our earnings projections for the year, and, along with our growing cash position and strong balance sheet, puts us in excellent position to build the business as we prepare to close the Odyssey transaction during the third quarter."

Highlights for the six months ended July 4, 2010 include:  

• Total net revenues of $594.2 million, an increase of approximately 6% compared to $561.2 million for the prior year period. Net revenues included home health episodic revenues of $457.2 million, up 10% compared to $415.5 million in the comparable 2009 period, and hospice revenues of $40.5 million, up approximately 13% from $35.9 million in the prior year period.  
• Income from continuing operations of $30.5 million, or $1.00 per diluted share, which included net charges of $13.7 million or $0.29 per diluted share relating to the impact of settlements of two open legal matters and charges associated with restructuring and merger and acquisition activities of $4.3 million or $0.08 per diluted share. Income from continuing operations in the comparable 2009 period was $35.5 million or $1.20 per diluted share and included (i) a non-recurring pre-tax net gain of $5.7 million or $0.19 per diluted share resulting from the sale of certain branch offices that specialized primarily in pediatric home health care services and (ii) restructuring and merger and acquisition costs of $1.5 million or $0.03 per diluted share.
• Adjusted income from continuing operations of $42.0 million, up 36% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations was $1.37 compared with $1.04 in the corresponding period of 2009.  
• Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) attributable to continuing operations increased approximately 28% to $80.4 million as compared to $63.0 million in the 2009 period.  Adjusted EBITDA excludes the aforementioned charges.

Results of discontinued operations in the second quarter of 2010 included a net loss of $1.3 million or $0.04 per diluted share as compared to a net loss of $0.3 million or $0.01 per diluted share in the second quarter of 2009.  For the first six months of 2010, discontinued operations reflected a net loss of $2.3 million or $0.08 per diluted share compared to a net loss of  $0.4 million or $0.01 per diluted share in the corresponding period of 2009.

For the second quarter of 2010, the Company reported net income of $18.9 million or $0.62 per diluted share compared to $17.1 million or $0.59 per diluted share in the second quarter of 2009.  For the first six months of 2010, net income was $28.2 million or $0.92 per diluted share versus net income of $35.1 million or $1.19 per diluted share for the first six months of 2009. These results included charges for restructuring, legal settlements and merger and acquisition activities  and gains or losses on sales of assets as discussed above as well as the results  from discontinued operations.

At July 4, 2010, the Company reported cash and cash equivalents of $191.1 million and outstanding debt under its credit agreement of $232.0 million.

Full-Year 2010 Outlook

As reported on July 20, 2010, Gentiva's outlook for 2010 reflects revenue between $1.20 billion to $1.23 billion and adjusted income from continuing operations of $2.67 to $2.75 on a diluted per share basis.  The outlook for adjusted income from continuing operations excludes the costs of restructuring, legal settlements and merger and acquisition activities, the results of discontinued operations and the impact of pending and future acquisitions.

Gentiva expects to further revise its full year 2010 outlook after the consummation of the Odyssey HealthCare, Inc. acquisition, which was announced on May 24, 2010 and is expected to close during the 2010 third quarter.