Summary of MBF HEALTHCARE ACQUISITION CORP.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with "Selected Financial Data" and our financial statements and notes thereto that appear elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under "Risks Relating to the Company" included in Item 1A and elsewhere in this Annual Report on Form 10-K.
Overview
References to "we", "us", or the "Company" are to MBF Healthcare Acquisition, Corp. Reference to "MBFHP" are to MBF Healthcare Partners, L.P., an affiliate of our officers and directors.
We are a blank check company incorporated in Delaware on June 2, 2006 in order to serve as a vehicle for the acquisition of an operating business through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business combination.
On April 13, 2007, MBFHP purchased an aggregate of 343,750 Private Units from us at a price of $8.00 per unit and 4,250,000 Private Placement Warrants at a purchase price of $1.00 per warrant, for an aggregate purchase price of $7,000,000. Each Private Unit consists of one share of our common stock, $0.0001 par value, and one redeemable common stock purchase warrant (each, a "Unit Warrant" and together with the Private Placement Warrants, the "Private Warrants"). Each Private Warrant entitles the holder to purchase from us one share of common stock at an exercise price of $6.00 commencing on the later of
(a) April 17, 2008 or (b) the completion of a Business Combination with a target business or the distribution of the Trust Account (as hereinafter defined), and expiring four years from the date of the final prospectus for the IPO (as hereinafter defined). At our sole discretion, the Private Warrants will be redeemable at a price of $0.01 per Private Warrant upon 30 days' notice after the Private Warrants become exercisable, only in the event that the last sale price of the common stock is at least $11.50 per share for any 20 trading days within a 30-day trading period ending on the third day prior to the date on which the notice of redemption is given. The Private Warrants will be identical to the Warrants, except that (1) upon a redemption of Private Warrants, MBFHP will have the right to exercise the Private Warrants on a cashless basis and
(2) upon the exercise of the Private Warrants, MBFHP will receive unregistered shares of common stock. On April 23, 2007, we completed our initial public offering ("IPO") of 18,750,000 units ("Units"), consisting of one share of common stock and one warrant, and on May 8, 2007, we completed the closing of an additional 2,812,500 Units that were subject to the underwriters' over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the Private Placement, $170,962,500 was placed in a trust account maintained at Continental Stock Transfer & Trust Company (the "Trust Account"). Except for payment of taxes, the proceeds will not be released from the Trust Account until the earlier of (i) the completion of a Business Combination or (ii) our liquidation. Public stockholders voting against our initial business combination will be entitled to convert their common stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters' discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the business combination is approved and consummated. Public stockholders who convert their stock into a pro rata share of the Trust Account will continue to have the right to exercise any warrants they may hold. Each warrant entitles the registered holder to purchase one share of our common stock at a price of $6.00 per share, commencing on the later of the completion of the initial business combination or April 23, 2008. None of the Warrants issued in the Public Offering will be exercisable and we will not be obligated to issue shares of common stock unless at the time of exercise a prospectus relating to common stock issuable upon exercise of these Warrants is current and the common stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrants. In no event will we be required to net cash settle any Warrant exercise. Under the terms of the Warrant Agreement, we have agreed to use its reasonable best efforts to maintain a current prospectus relating to common stock issuable upon exercise of the Warrants issued in the Public Offering until the expiration of these Warrants. However, the we make no assurance that it will be able to do so and, if we do not maintain a current prospectus relating to the common stock issuable upon exercise of the Warrants issued in the Public Offering, holders will be unable to exercise their Warrants and we will not be required to settle any such Warrant exercise. If the prospectus relating to the common stock issuable upon the exercise of these Warrants is not current, or if the common stock is not qualified or exempt from qualification in jurisdictions in which the holders of the Warrants reside, these Warrants may have no value, the market for these Warrants may be limited and these Warrants may expire worthless. If a registration statement is not effective for any unexercised Warrant, then the purchaser of Units purchased in the Public Offering will be deemed to have paid the full purchase price of $8.00 for the one share of our common stock included in the Unit. Even if the prospectus relating to the common stock issuable upon exercise of the Warrants issued in the Public Offering is not current, the Private Warrants will be exercisable for unregistered shares of common stock. If and when the Warrants become redeemable by us, we may exercise its redemption right even if the Warrants are not exercisable by their holders.

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In connection with our IPO, we paid the underwriters additional underwriting fees of $6,037,500, including units exercised with the over-allotment option which, the underwriters have agreed to defer until the consummation of our initial business combination. We expect that such fees will be paid out of the proceeds held in the Trust Account.
Recent Developments
On February 6, 2008, we entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Critical Homecare Solutions Holdings, Inc. ("CHS"), a Delaware corporation, Kohlberg Investors V, L.P. (the "Seller's Representative") and the other stockholders of CHS (each, together with the Seller's Representative, the "Seller" and collectively the "Sellers").
Pursuant to the terms of the Stock Purchase Agreement, we will acquire all of the outstanding capital stock of CHS for $420.0 million, subject to working capital and certain other customary adjustments as set forth in the Stock Purchase Agreement. We intend to fund the purchase price and the acquisition costs and provide additional capital to CHS for growth and expansion through a combination of approximately $180.0 million of cash in our trust account, approximately $180.0 million of debt, a $35.0 million equity issuance of our common stock to certain Sellers and a commitment from MBFHP to acquire up to an additional $50 million in shares of our common stock. The shares of our common stock to be issued to certain Sellers and the shares that are subject to the commitment from MBFHP will be priced at the closing per share price of our common stock on February 6, 2008, which was $7.65.
The closing of the acquisition and the issuance of equity to MBFHP pursuant to its commitment are subject to stockholder approval. The closing of the acquisition is also subject to customary regulatory approvals, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.
Results of Operations and Known Trends or Future Events We have neither engaged in any operations nor generated revenues to date. Since our inception, our only activities have been organizational activities and those necessary to prepare for our IPO, and thereafter, certain expenses related to pursuing a target business. We will not generate any operating revenues until the completion of a business combination, if any. We have generated non-operating income in the form of interest income on cash and cash equivalents and our other short term investments. Since our IPO, we have been actively engaged in sourcing a suitable business combination candidate. We have met with target companies, service professionals and other intermediaries to discuss our company, the background of our management and our combination preferences. In the course of these discussions, we have also spent time explaining the capital structure of our IPO, the business combination approval process and the timeline under which we may operate before the proceeds of our IPO are returned to investors.
Critical Accounting Policies and Significant Estimates Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we re-evaluate all of our estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions as additional information becomes available in future periods.
Management has discussed the development and selection of critical accounting estimates with the Audit Committee of the Board of Directors and the Audit Committee has reviewed our disclosure relating to critical accounting estimates in this Annual Report.

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Results of Operations, Financial Condition and Liquidity The following table sets forth the results of operations for the year ended December 31, 2007 and the period ended December 31, 2006 and for the period from June 2, 2006 through December 31, 2007.

                                                                                       June 2, 2006                 June 2, 2006
                                                                                    (date of inception)          (date of inception)
                                                            Year ended                    through                      through
                                                         December 31, 2007           December 31, 2006            December 31, 2007
Formation and operating costs                           $          (467,277 )      $             (52,088 )      $            (519,365 )
Interest income (expense)                                         6,186,811                       (5,304 )                  6,181,507
Income (loss) before income tax provision                         5,719,534                      (57,392 )                  5,662,142
Provision for income taxes                                       (2,125,395 )                          -                   (2,125,395 )

Net income (loss)                                       $         3,594,139        $             (57,392 )      $           3,536,747

Weighted average shares outstanding:
Basic                                                            19,765,668                    4,687,500                   14,209,180
Diluted                                                          23,633,342                    4,687,500                   16,651,570
Net income (loss) per share:
Basic                                                   $              0.18        $               (0.01 )      $                0.25
Diluted                                                 $              0.15        $               (0.01 )      $                0.21

Our operating expenses totaled $467,277 and $52,088 respectively, for the year ended December 31, 2007, and for the period from inception to December 31, 2006. Operating expenses were comprised primarily of insurance, accounting and legal expenses.
We had interest income earned on marketable securities held in the Trust Account of $6,138,829 for the year ended December 31, 2007. Interest income earned on funds held in the Trust Account associated with common stock subject to possible conversion and, except for amounts equal to any taxes payable by us relating to such interest earned, will not be released from the Trust Account until the earlier of the completion of a business combination or the expiration of the time period during which we may complete a business combination. The remaining interest income was primarily related to funds held outside of the Trust Fund.
We have provided for an effective tax rate of 38% for the year ended December 31, 2007.
We expect to use substantially all of the proceeds from our IPO to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business and structuring, negotiating and consummating the business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance operations of the target business. We believe we will have sufficient available funds outside of the trust account to operate through April 29, 2009, assuming that a business combination is not consummated during that time. Until we enter into a business combination, we expect to use our available resources for general working capital as well as legal, accounting and due diligence expenses for structuring and negotiating a business combination and legal and accounting fees relating to our Securities and Exchange Commission reporting obligations.

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Impact of Recently Issued Accounting Pronouncements In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). This statement provides a single definition of fair value, a framework for measuring fair value, and expanded disclosures concerning fair value. Previously, different definitions of fair value were contained in various accounting pronouncements creating inconsistencies in measurement and disclosures. SFAS No. 157 applies under those previously issued pronouncements that prescribe fair value as the relevant measure of value, except SFAS No. 123(R) and related interpretations and pronouncements that require or permit measurement similar to fair value but are not intended to measure fair value. This pronouncement is effective for fiscal years beginning after November 15, 2007. We are evaluating the impact of SFAS No. 157, but do not expect the adoption of SFAS No. 157 to have a material impact on our financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 ("SFAS No. 159") "The Fair Value Option for Financial Assets and Financial Liabilities." SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS No. 159 will be effective for the Company beginning January 1, 2008. We are in the process of determining the effect, if any, the adoption of SFAS No. 159 will have on our financial statements.
In December 2007, the FASB issued proposed FASB Staff Position (FSP) 157-b, "Effective Date of FASB Statement No. 157," that would permit a one-year deferral in applying the measurement provisions of SFAS 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity's financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. This deferral does not apply, however, to an entity that applies Statement 157 in interim or annual financial statements before proposed FSP 157-b is finalized. We are currently evaluating the impact, if any, that the adoption of FSP 157-b will have on our operating income or net earnings.
On December 4, 2007, the FASB issued SFAS No. 141R (revised 2007) Business Combinations, which will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including expensing acquisition costs as incurred, capitalization of in-process research and development at fair value, recording noncontrolling interests at fair value and recording acquired contingent liabilities at fair value. SFAS No. 141R will apply prospectively to business combinations with an acquisition date on or after the beginning of the first annual reporting period beginning after December 15, 2008. Both early adoption and retrospective application are prohibited. SFAS No. 141R will have an impact on the accounting for the our business combinations once adopted, but the effect depends on the terms of our business combinations subsequent to January 1, 2009, if any.
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

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