FOR IMMEDIATE RELEASE

Gentiva^® Announces First Quarter 2006 Results

Melville, N.Y., May 10, 2006 -- Gentiva Health Services, Inc. (NASDAQ: GTIV), the nation's largest provider of comprehensive home health and related services, today reported the following financial results for the first quarter ended April 2, 2006:

• Net revenues were $243.2 million, up 17% compared to $207.1 million reported for the first quarter of 2005.
• Net Income was $4.4 million, or $0.17 per diluted share, compared to $4.1 million, or $0.17 per diluted share, for the first quarter of 2005. Net income for the 2006 first quarter reflected an after-tax charge of $0.6 million, or $0.02 per diluted share, due to the prospective adoption of new accounting rules for equity-based compensation.
• EBITDA was $12.5 million versus $8.1 million for the prior year period (See Supplemental Information for a reconciliation between EBITDA and “Net Income – As Reported”).

First quarter 2006 results included:

• $30.8 million in net revenues generated by The Healthfield Group, Inc. for the period subsequent to its February 28, 2006 acquisition by Gentiva,
• $1.9 million in net revenues and operating income relating to the settlement of Gentiva's appeal filed with the U.S. Provider Reimbursement Review Board (PRRB) on the reopening of the Company's 1999 Medicare cost reports, and
• $2.0 million in restructuring and integration costs.

“The quarter was marked by the positive launch of the Healthfield integration, sustained organic growth in Medicare and a strong contribution from our specialty programs,” said Gentiva Chairman and CEO Ron Malone. “During the remainder of the year, we will focus on other strategic priorities, including hospice expansion, home healthcare capacity and clinician productivity, and the optimization of clinical outcomes.”

Segment Results

Following the Healthfield acquisition, Gentiva is now presenting net revenues and operating contribution for three reportable business segments: Home Healthcare Services (home nursing branch operations, including specialty programs), CareCentrix^® (ancillary care benefit management services) and Other Related Services (hospice, durable medical equipment, respiratory therapy, infusion services and consulting). Here are segment results for the first quarter of 2006:

Home Healthcare Services – First quarter 2006 net revenues were $164.8 million, up 25% from $131.8 million in the prior year period. Operating contribution was $20.2 million, an increase of 78% from $11.3 million in the first quarter of 2005. The higher 2006 results were due primarily to Healthfield's contribution to the Company's performance after February 28 and an 18.5% increase in Gentiva's Medicare revenues -- excluding special items and Healthfield -- that was fueled primarily by its specialty programs and continued improvement in revenues per admission.

CareCentrix – First quarter 2006 net revenues were $70.1 million, an 11% decline from $78.9 million reported in the prior year period. Operating contribution was $5.2 million, a decrease of 24% from $6.8 million in the first quarter of 2005. The results reflect previously disclosed changes to some commercial relationships. First quarter 2006 revenues derived from the CIGNA HealthCare relationship were essentially flat compared with the prior year period.

Other Related Services -- First quarter 2006 net revenues were $11.6 million compared to $1.3 million in the prior year period. Operating contribution was $2.6 million compared to $0.3 million in the first quarter of 2005. Growth was due primarily to acquired businesses related to the Healthfield acquisition.

Gentiva reported cash items and short-term investments of $71.6 million as of April 2, 2006 versus $88.4 million as of January 1, 2006. At the end of the first quarter, the Company had $370.0 million in borrowings resulting from the Healthfield acquisition.

2006 Information

Gentiva also reaffirmed its previously announced 2006 financial outlook, which reflects net revenues in a range of $1.12 billion to $1.16 billion and EBITDA in a range between $75 million and $80 million. The EBITDA outlook includes equity compensation expense resulting from the implementation of new accounting rules and excludes the impact of future restructuring charges and integration costs.

The Company also announced that full year 2006 diluted earnings per share, excluding future restructuring and integration costs associated with the Healthfield acquisition, is expected to be in a range between $0.84 and $0.90. This outlook includes an expense of between $0.11 and $0.14 per diluted share relating to the impact of equity compensation accounting and incorporates preliminary results of a valuation study of acquired net assets from the Healthfield acquisition.

Non-GAAP Financial Measures

The information provided in the following tables includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental info rmation and the footnotes to the tables, a reconciliation of those measures to the most directly comparable GAAP measures.

Conference Call and Web Cast Details

The Company will comment further on its first quarter 2006 results during its conference call and live web cast to be held Thursday, May 11, 2006, at 10:00 a.m. Eastern Time. To participate in the call from the United States , Canada or an international location, dial (973) 935-8599 and reference call #7320422. The web cast is an audio only, one-way event. Web cast listeners who wish to ask questions must participate in the conference call. Log onto http://www.gentiva.com/investors/FinancialEvents.asp to hear the web cast. This press release is accessible at http://www.gentiva.com/investors/PressReleases.asp, and a transcript of the conference call is expected to be available on the site within 36 hours after the call.

About Gentiva Health Services, Inc.
Gentiva Health Services, Inc. is the nation's largest provider of comprehensive home health and related services. Gentiva serves patients through more than 500 direct service delivery units within over 400 locations in 36 states, and through CareCentrix^®, which manages home healthcare services for major managed care organizations throughout the United States and delivers them in all 50 states through a network of more than 3,000 third-party provider locations, as well as Gentiva locations. The Company is 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; durable medical and respiratory equipment; infusion therapy services; and other therapies and services. Gentiva's revenues are generated from commercial insurance, federal and state government programs and individual consumers. For more information, visit Gentiva's web site, www.gentiva.com, and its investor relations section at http://www.gentiva.com/investors.

(tables and notes follow)

    (in 000's, except per share data)                     1st Quarter
                                                     2006              2005
    Statements of Income
      Net revenues                                $243,240          $207,107
      Cost of services sold (excluding
       depreciation and amortization)              143,295           127,229
      Gross profit                                  99,945            79,878
      Selling, general and administrative
       expenses                                    (87,473)          (71,759)
      Depreciation and amortization                 (2,973)           (1,736)
      Operating income                               9,499             6,383
      Interest (expense) income, net                (1,916)              463
      Income before income taxes                     7,583             6,846
      Income tax expense                            (3,176)           (2,721)
      Net income                                    $4,407            $4,125

    Earnings per Share
     Net income:
      Basic                                          $0.18             $0.18
      Diluted                                        $0.17             $0.17

     Average shares outstanding:
      Basic                                         24,516            23,445
      Diluted                                       25,497            24,892

    Condensed Balance Sheets
     ASSETS                                    Apr 2, 2006       Jan 1, 2006
      Cash, cash equivalents and
       restricted cash                             $42,504           $38,617
      Short-term investments                        29,100            49,750
      Net receivables                              182,832           139,635
      Deferred tax assets                           25,412            15,974
      Prepaid expenses and other current
       assets                                       14,790             7,816
           Total current assets                    294,638           251,792

      Fixed assets, net                             42,460            24,969
      Deferred tax assets, net                          --            18,099
      Intangible assets, net                       262,909             5,831
      Goodwill                                     235,996             6,763
      Other assets                                  25,396            19,111
          Total assets                            $861,399          $326,565

     LIABILITIES AND SHAREHOLDERS' EQUITY
      Current portion of long-term debt             $3,700               $--
      Accounts payable                              15,852            13,870
      Payroll and related taxes                     30,465             9,777
      Deferred revenue                              25,952             7,455
      Medicare liabilities                           9,129             7,220
      Cost of claims incurred but not reported      22,251            25,276
      Obligations under insurance programs          34,858            32,883
      Other accrued expenses                        34,771            25,985
           Total current liabilities               176,978           122,466

      Long-term debt                               366,300                --
      Deferred tax liabilities, net                 48,154                --
      Other liabilities                             21,918            21,945
      Shareholders' equity                         248,049           182,154
           Total liabilities and
            shareholders' equity                  $861,399          $326,565

      Common shares outstanding                     26,873            23,035

    Note:  Cash, cash equivalents and restricted cash includes restricted
     cash of $23.1 million and $22.0 million, at April 2, 2006 and
     January 1, 2006, respectively.



                                                           1st Quarter
    Condensed Statements of Cash Flows                2006              2005
     OPERATING ACTIVITIES:
     Net income                                      $4,407            $4,125
     Adjustments to reconcile net income
      to net cash provided by operating activities
       Depreciation and amortization                  2,973             1,736
       Provision for doubtful accounts                1,757             1,495
       Employee equity-based compensation
        expense                                         612                --
       Windfall tax benefits associated
        with equity-based compensation               (1,210)               --
       Deferred income taxes                          3,048             1,220
     Changes in assets and liabilities:
       Accounts receivable                            3,545            (6,538)
       Prepaid expenses and other current assets     (4,273)           (1,889)
       Current liabilities                            3,667              (388)
     Other, net                                         226               (61)
     Net cash provided by (used in)
      operating activities                           14,752              (300)

     INVESTING ACTIVITIES:
     Purchase of fixed assets                        (3,130)           (1,230)
     Acquisition of business                       (201,470)               --
     Purchases of short-term investments
      available-for-sale                            (67,045)          (40,400)
     Maturities of short-term investments
      available-for-sale                             87,695            96,500
     Net cash (used in) provided by
      investing activities                         (183,950)           54,870

     FINANCING ACTIVITIES:
     Proceeds from issuance of common stock           5,438             1,085
     Windfall tax benefits associated
      with equity-based compensation                  1,210                --
     Proceeds from issuance of debt                 370,000                --
     Long-term debt repayments                     (195,305)               --
     Changes in book overdrafts                      (1,395)           (1,358)
     Debt issuance costs                             (6,749)               --
     Repurchases of common stock                         --            (7,582)
     Repayment of capital lease obligations            (114)              (67)
     Net cash provided by (used in)
      financing activities                          173,085            (7,922)

     Net change in cash, cash equivalents
      and restricted cash                             3,887            46,648
     Cash, cash equivalents and
      restricted cash at beginning of period         38,617            31,924
     Cash, cash equivalents and
      restricted cash at end of period              $42,504           $78,572

    SUPPLEMENTAL SCHEDULE OF NON CASH
     INVESTING AND FINANCING ACTIVITIES:
      During the three months ended April 2, 2006, the Company issued
      3,194,137 shares of common stock in connection with the acquisition
      of The Healthfield Group, Inc. on February 28, 2006.



     Supplemental Information                              1st Quarter
                                                      2006              2005
    Segment Information
     Net revenues
      Home Healthcare Services                    $164,789          $131,826
      CareCentrix                                   70,052            78,934
      Other Related Services                        11,620             1,257
      Intersegment revenues                         (3,221)           (4,910)
     Total net revenues                           $243,240          $207,107

     Operating contribution (1)
      Home Healthcare Services                     $20,175           $11,341
      CareCentrix                                    5,198             6,842
      Other Related Services                         2,606               265
     Total operating contribution                   27,979            18,448
     Corporate expenses                            (15,507)          (10,329)
     Depreciation and amortization                  (2,973)           (1,736)
     Interest (expense) income, net                 (1,916)              463
     Income before income taxes                     $7,583            $6,846


                                                           1st Quarter
                                                      2006              2005
     Net Revenues by Major Payer Source:
      Medicare (2)                                 $98,944           $61,762
      Medicaid and local government                 40,907            36,644
      Commercial insurance and other               103,389           108,701
           Total net revenues                     $243,240          $207,107


    A reconciliation of EBITDA to Net
     income - As Reported amounts
     follows (in 000's) (3)                                 1st Quarter
                                                      2006              2005
      EBITDA: (4)
        Equity-based compensation
         (SFAS 123 (R)) (5)                          $(612)             $--
        Special items:
          Medicare cost report settlement (2)        1,932               --
          Restructuring and other costs (6)         (1,998)              --
          All Other                                 13,150             8,119
      EBITDA (4)                                    12,472             8,119
      Depreciation and amortization (7)             (2,973)           (1,736)
      Interest (expense) income, net (8)            (1,916)              463
      Income before income taxes                     7,583             6,846
      Income tax expense                            (3,176)           (2,721)
      Net income - As Reported                      $4,407            $4,125


    Notes:

    1) 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
       interest income, but include revenues and all other costs directly
       attributable to the specific segment.

    2) First quarter 2006 results included approximately $1.9 million recorded
       and received from the total settlement received of $5.5 million
       relating to the Company's appeal filed with the U.S. Provider
       Reimbursement Review Board ("PRRB") on the reopening of all of its 1999
       cost reports.

    3) First quarter 2006 results include the operating results of The
       Healthfield Group, Inc. from March 1, 2006 through April 2, 2006.

    4) EBITDA, a non-GAAP financial measure, is defined as income before
       interest expense (net of interest income), income taxes, depreciation
       and amortization.  Following the acquisition of Healthfield, management
       expects to review EBITDA to evaluate overall performance and compare
       current operating results with other companies in the healthcare
       industry.  EBITDA should not be considered in isolation or as a
       substitute for net income, operating income or cash flow statement data
       determined in accordance with accounting principles generally accepted
       in the United States.  Because EBITDA 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.

    5) The Company adopted Statement of Financial Accounting Standards No. 123
       (Revised) "Share-Based Payment" ("SFAS 123 (R)"), effective as of
       January 2, 2006 and recorded compensation expense of approximately
       $612,000 in the first quarter of fiscal 2006.

    6) Restructuring and integration costs for the first quarter of fiscal
       2006 included charges of (i) $0.7 million in connection with a
       restructuring plan associated with the Company's CareCentrix
       operations, and (ii) $1.3 million in connection with integration
       activities relating to the Healthfield acquisition.  The CareCentrix
       restructuring plan provides for the closing and consolidation of two
       regional care centers in response to changes in the nature of services
       provided to CIGNA HealthCare members under an amended contract which
       commenced in early 2006.  The Company expects to complete this
       restructuring during the second quarter of fiscal 2006.  Costs relating
       to integration activities included compensation, severance and other
       costs.

    7) Depreciation and amortization reflects an estimate for amortization of
       identifiable intangible assets acquired in connection with the
       Healthfield transaction of approximately $221,000 in the first quarter
       of fiscal 2006.  The estimate is based on the preliminary results of an
       asset valuation study.  The valuation study is under review and subject
       to change.

    8) Interest expense, net, includes interest expense on a $370 million term
       loan, fees associated with a $75 million revolving credit facility and
       amortization of debt financing costs, net of interest income.

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Last Updated: Monday, December 18, 2006 10:56 AM