Melville, N.Y., August 8, 2001—Gentiva Health Services (Nasdaq: GTIV), the nation's leading provider of specialty pharmaceutical and home health care services, today reported first half 2001 financial results, highlighted by a $77 million cash balance at mid-year, representing the largest cash balance ever reported by the company.

Year to date 2001 net revenues for the company were $692.6 million compared to net revenues of $767.9 million for the first six months of 2000. After adjusting for the sale of the company's staffing and Canadian operations, which were sold in late 2000, year to date company net revenues increased 1.2 percent over the corresponding period of 2000. Net revenues for the first half were impacted positively by a nearly ten percent increase in specialty pharmaceutical services' revenues, which were driven by sales growth in several core chronic therapies.

Second quarter 2001 net revenues for the company were $335.4 million compared to net revenues of $383.3 million for the second quarter of 2000. After adjusting for the sale of the company's staffing and Canadian operations, company-wide net revenues decreased 1.6 percent over the second quarter of 2000.

Net income was $8.4 million for the 2001 year-to-date period, compared with net income of $0.3 million for the corresponding period of 2000. Net income for the second quarter of 2001 was $2.3 million, slightly above net income for the second quarter of 2000, which was $2.2 million. Excluding the impact of special charges, net income for the 2001 and 2000 six-month periods were $11.2 million and $4.2 million, respectively. Net income before special charges was $5.1 million for the second quarter, compared with $2.9 million for the corresponding period of 2000. During the second quarter 2001, the company recorded special charges of $3 million in connection with certain legal matters. Special charges during the prior periods included costs associated with the company's name change and its establishment as an independent, public entity.

Year to date diluted earnings per share, including special charges, were $0.36 per share, compared to $0.01 per share for the corresponding period of 2000. Year to date diluted cash earnings per share were $0.57 per share, compared to $0.20 per share for the corresponding period of 2000. Diluted earnings per share, including special charges, for the second quarter were $0.10 per share, matching the $0.10 earnings per share for the corresponding second quarter of 2000.

The company ended the second quarter 2001 with a $77 million cash balance, the strongest in its history, representing a $28 million increase over the close of the first quarter of 2001. This morning, the company also announced that it has received authorization from its board of directors to redeem its 10 percent convertible subordinated debentures.

"This second quarter was another significant step forward for Gentiva Health Services, as we executed on our plan of improving our company's balance sheet, while continuing to build value for our shareholders," said Edward A. Blechschmidt, Gentiva's chairman, chief executive officer and president. "We also end the second quarter as the market leader in two of health care's most important sectors, specialty pharmaceuticals and home health care, and we believe the prospects are good that we can grow this market leadership further in coming quarters."

Specialty Pharmaceutical Services
Year to date net revenues for Gentiva's specialty pharmaceutical services business were $374.2 million, a 9.8 percent increase over the corresponding period of 2000. For the second quarter 2001, net revenues for the specialty pharmaceutical services business were $178.3 million, an increase of 3.7 percent over the corresponding period of 2000. Revenue growth during the quarter resulted from increased sales in several core chronic therapies, including Flolan®, a pulmonary hypertension therapy, intravenous immune globulin (IVIG), an immunological therapy, growth hormone products and biological response modifiers.

Operating contribution for the specialty pharmaceutical services business has been impacted negatively in 2001 by continued investments in Gentiva's national specialty pharmaceutical sales force and a continued shortage of recombinant factor products used in the treatment of hemophilia. These product shortages have largely affected the entire specialty pharmaceutical industry. However, operating margins for the specialty pharmaceutical business improved during the second quarter by a full percentage point, to 9.6 percent, from 8.6 percent for the first quarter of 2001.

During the second quarter, Gentiva's specialty pharmaceutical business signed two major national contracts with managed care organizations. Under a contract with Aetna U.S. Healthcare, which was activated in July 2001, Gentiva will serve as a preferred provider of infusion therapies on a fee-for-service basis to Aetna's 18 million HMO and non-HMO members. Under a contract with PacifiCare, which took effect August 1, 2001, Gentiva will serve as a preferred provider of infusion and injectable therapies to PacifiCare's four million members across the United States.

Gentiva's specialty pharmaceutical business also took steps during the quarter to further enhance its commitment to clinical excellence. These included a strategic partnership initiated with infusion pump manufacturer Deltec, Inc. during the second quarter. Under this partnership, Gentiva will begin using three Deltec infusion pumps, each with anti-infusion free flow features, in the administration of infusion therapies. The partnership builds on recommendations by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) that infusion therapies be administered through pumps that include these patient safety features. During the quarter, Gentiva also announced new and renewed JCAHO accreditations for several of Gentiva's 39 pharmacies, bringing to over 90 percent the number of Gentiva pharmacies that have been awarded this accreditation.

"Throughout the second quarter, our leadership position in the nation's specialty pharmaceutical industry continued to grow in many ways, as we expanded specialty pharmaceutical revenues and continued to build on our clinical, sales and marketing leadership in this industry," said Blechschmidt. "We end this second quarter as a market leader in a $7 billion industry that may prove to be one of the most promising and dynamic industries of the next decade."

Home Health Services
Year to date net revenues for the home health services business were $365.3 million, a 3.0 percent decrease over the corresponding period of 2000. For the second quarter 2001, net revenues for the home health services business were $179.7 million, a 4.0 percent decrease over the corresponding period of 2000. These anticipated decreases in home health services' revenue are due primarily to the continued transition to the new Medicare reimbursement system, which became effective in October 2000, and closure of nursing branches during the fourth quarter of 2000.

Operating margins for the home health services business for the second quarter were 7.1 percent, which represents a decrease from 8.0 percent over the first quarter of 2001, but an increase of 1.2 percent over the corresponding period of 2000.

Gentiva closed the second quarter with the largest market share position in the United States' home health care industry. "We believe our significant leadership position in the nation's home health industry stands to grow, as the industry benefits from demographic and health care reimbursement trends and as Gentiva focuses on expanding its market presence through organic growth and, potentially, through acquisitions," said Blechschmidt.

Conference Call Details
The company will comment further on its second quarter operating results and provide updated earnings and revenue guidance in its previously announced quarterly conference call, which will be held this morning, August 8, 2001, at 11 a.m. Eastern Daylight Time. To participate in the call from the United States or Canada, call (877) 209-9920. To participate from outside the United States or Canada, call (612) 332-0335.

Gentiva Health Services (Nasdaq: GTIV), a Fortune 1000 company, is the nation's leading provider of specialty pharmaceutical and home health care services. With more than 300 locations in the United States, the company had approximately $1.5 billion in 2000 net revenues. For more information, visit Gentiva's Web site, www.gentiva.com.