Forward-looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Company's current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following:

• general economic and business conditions;

• demographic changes;

• changes in, or failure to comply with, existing governmental regulations;

• legislative proposals for healthcare reform;

• changes in Medicare and Medicaid reimbursement levels, including changes to the Medicare home health Prospective Payment System effective January 1, 2008;

• effects of competition in the markets in which the Company operates;

• liability and other claims asserted against the Company;

• ability to attract and retain qualified personnel;

• ability to access capital markets;

• availability and terms of capital;

• loss of significant contracts or reduction in revenues associated with major payer sources;

• ability of customers to pay for services;

• business disruption due to natural disasters or terrorist acts;

• ability to successfully integrate the operations of acquisitions the Company may make and achieve expected synergies and operational efficiencies within expected time-frames;

• effect on liquidity of the Company's debt service requirements;

• a material shift in utilization within capitated agreements; and

• changes in estimates and judgments associated with critical accounting policies and estimates.

Forward-looking statements are found throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission ("SEC"), the Company does not have any intention or obligation to publicly release any revisions to forward-looking statements to reflect unforeseen or other events after the date of this report. The Company has provided a detailed discussion of risk factors in its 2007 Annual Report on Form 10-K and various filings with the SEC. The reader is encouraged to review these risk factors and filings.

General

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of Gentiva's results of operations and financial position. This discussion and analysis should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere in this report.

The Company's results of operations are impacted by various regulations and other matters that are implemented from time to time in its industry, some of which are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2007 and in other filings with the SEC.

Prior year income statement line items have been modified to conform with current year presentation.

Overview

Gentiva Health Services, Inc. is a leading provider of comprehensive home health services. Gentiva serves patients through more than 300 locations, and, until September 25, 2008, through CareCentrix, which provides an array of administrative services and coordinates the delivery of home nursing services, acute and chronic infusion therapies, home medical equipment ("HME"), respiratory products, orthotics and prosthetics, and services for managed care organizations and health plans. On September 25, 2008, the Company completed the sale of a majority interest in the CareCentrix ancillary care benefit management business. The Company provides 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; respiratory therapy and HME; infusion therapy services; and other therapies and services. Gentiva's revenues are generated from federal and state government programs, commercial insurance and individual consumers.

The Company has identified three business segments for reporting purposes: Home Health, Other Related Services and, through September 24, 2008, CareCentrix. The Other Related Services segment encompasses the Company's hospice, respiratory therapy and HME, infusion therapy and consulting services businesses. This presentation aligns financial reporting with the manner in which the Company manages its business operations with a focus on the strategic allocation of resources and separate branding strategies among the business segments.

Home Health

The Home Health segment is comprised of direct home nursing and therapy services operations, including specialty programs. The Company conducts direct home nursing and therapy services operations through licensed and Medicare-certified agencies, located in 39 states, from which the Company provides various combinations of skilled nursing and therapy services, paraprofessional nursing services and, to a lesser extent, homemaker services to adult and elder patients. The Company's direct home nursing and therapy services operations also deliver services to its customers through focused specialty programs that include:

• Gentiva Orthopedics, which provides individualized home orthopedic rehabilitation services to patients recovering from joint replacement or other major orthopedic surgery;

• Gentiva Safe Strides ฎ , which provides therapies for patients with balance issues who are prone to injury or immobility as a result of falling; and

• Gentiva Cardiopulmonary, which helps patients and their physicians manage heart and lung health in a home-based environment.

Through its Rehab Without Walls ฎunit, the Company also provides home and community-based neurorehabilitation therapies for patients with traumatic brain injury, cerebrovascular accident injury and acquired brain injury, as well as a number of other complex rehabilitation cases. The Company continues to develop and pilot new specialty programs to address the needs of elderly patients, including the Gentiva Neurorehabilitation and Gentiva Senior Health programs.

CareCentrix

The CareCentrix segment encompasses Gentiva's ancillary care benefit management and the coordination of integrated homecare services for managed care organizations and health benefit plans. CareCentrix operations provide an array of administrative services and coordinate the delivery of home nursing services, acute and chronic infusion therapies, HME, respiratory products, orthotics and prosthetics, and services for managed care organizations and health benefit plans. CareCentrix accepts case referrals from a wide variety of sources, verifies eligibility and benefits and transfers case requirements to the providers for services to the patient. CareCentrix provides services to its customers, including the fulfillment of case requirements, care management, provider credentialing, eligibility and benefits verification, data reporting and analysis, and coordinated centralized billing for all authorized services provided to the customers' enrollees.

Other Related Services

Hospice

Hospice serves terminally ill patients in the southeast United States. Comprehensive management of the healthcare services and products needed by hospice patients and their families are provided through the use of an interdisciplinary team. Depending on a patient's needs, each hospice patient is assigned an interdisciplinary team comprised of a physician, nurse(s), home health aide(s), medical social worker(s), chaplain, dietary counselor and bereavement coordinator, as well as other care professionals.

Respiratory Therapy and Home Medical Equipment

Respiratory therapy and HME services are provided to patients at home through branch locations primarily in the southeast United States. Patients are offered a broad portfolio of products and services that serve as an adjunct to traditional home health nursing and hospice care. Respiratory therapy services are provided to patients who suffer from a variety of conditions including asthma, chronic obstructive pulmonary diseases, cystic fibrosis and other respiratory conditions. HME includes hospital beds, wheelchairs, ambulatory aids, bathroom aids, patient lifts and rehabilitation equipment.

Infusion Therapy

Infusion therapy is provided to patients at home through pharmacy locations in the southeast United States. Infusion therapy serves as a complement to the Company's traditional service offerings, providing clients with a comprehensive home health provider while diversifying the Company's revenue base. Services provided include: (i) enteral nutrition, (ii) antibiotic therapy, (iii) total parenteral nutrition, (iv) pain management, (v) chemotherapy, (vi) patient education and training and (vii) nutrition management.

Consulting

The Company provides consulting services to home health agencies through its Gentiva Consulting unit. These services include billing and collection activities, on-site agency support and consulting, operational support and individualized strategies for reduction of days sales outstanding.

Significant Developments

CareCentrix Disposition

On September 25, 2008, the Company completed the disposition of 69 percent of its equity interest in the Company's CareCentrix ancillary care benefit management business, which was operated through Gentiva CareCentrix, Inc. ("CareCentrix") and Gentiva Health Services IPA, Inc. ("IPA"), pursuant to a Stock Purchase Agreement dated as of August 20, 2008 among the Company, Gentiva Health Services Holding Corp., a wholly-owned subsidiary of the Company ("Gentiva Holding"), and a wholly-owned subsidiary of Water Street Healthcare Partners II, L. P., a Chicago-based private equity firm focused exclusively on the healthcare industry ("Buyer"). A restructuring involving CareCentrix and IPA took place prior to the sale. The restructuring and subsequent sale are referred to herein as the "CareCentrix Transaction." Total consideration for the CareCentrix Transaction approximated $135 million.

Pursuant to the restructuring, (i) Gentiva Holding contributed all of its rights, title and interests in and to all of the outstanding capital stock of IPA to CareCentrix, (ii) CareCentrix redeemed a portion of its outstanding shares of capital stock for two promissory notes issued to Gentiva Holding, namely (A) a redemption note in the principal amount of $38 million and (B) a seller note in the principal amount of $25 million, and (iii) Gentiva Holding contributed all of its remaining shares of capital stock of CareCentrix to CareCentrix Holdings, Inc., a wholly-owned subsidiary of Gentiva Holding ("CareCentrix Holdings"), in exchange for shares of preferred and common stock of CareCentrix Holdings.

In connection with the CareCentrix Transaction, total consideration to the Company consisted of: (i) cash proceeds of $84 million (which included payment in full of the $38 million redemption note), (ii) a $25 million note receivable bearing interest at 10 percent per annum, (iii) an estimated working capital adjustment of $1.4 million based on a preliminary closing balance sheet, and
(iv) reimbursement of $1.5 million of transaction related expenses incurred by the Company. In addition, the Company retained a 31 percent equity interest in CareCentrix Holdings, represented by 234,000 shares of preferred stock and 260,000 shares of common stock. The working capital adjustment is subject to change based on a final closing date balance sheet. Of the $84 million in cash proceeds received by the Company, $58 million was used to repay a portion of the Company's term loan under its credit agreement on the closing date.

The Company recorded its investment in the preferred stock of CareCentrix Holdings at fair value of $23.3 million as of the transaction closing date. The preferred stock carries a 12 percent cumulative dividend, to be paid as declared or upon liquidation or other allowed redemptions, and has a liquidation value of $100 per share plus the accumulated and unpaid dividends. In accordance with

the provisions of Emerging Issues Task Force ("EITF") Abstract 01-2, Interpretations of APB Opinion No. 29, Issue 9, the Company's investment in the common stock of CareCentrix Holdings was recorded on a carryover basis; therefore, the carrying value of the common stock at September 25, 2008 was recorded at no value.

During the third quarter, the Company recognized a pre-tax gain on the sale of approximately $107.9 million, net of approximately $6.4 million of transaction costs. Transaction costs included (i) approximately $4.6 million of professional fees and expenses, including fees associated with an amendment of the Company's credit facility, (ii) $1.2 million related to the write-off of capitalized development costs for software that will not be utilized following the transaction, and (iii) $0.6 million in additional amortization of deferred debt issuance costs related to the debt repayment. Approximately $1.5 million of transaction costs were paid by the Buyer.

The Company's fiscal 2008 results of operations include the CareCentrix operating results through September 24, 2008 and include the Company's equity in the net earnings of CareCentrix Holdings for the period September 25, 2008 through September 28, 2008, the end of the Company's fiscal 2008 third quarter.

Following the closing date of the CareCentrix Transaction, the Company's consolidated statement of income will exclude net revenues, cost of services and goods sold, gross profit and selling, general and administrative expenses of CareCentrix and will include: (i) the Company's 31 percent interest in the earnings of CareCentrix Holdings in the equity in net earnings of affiliate line, (ii) interest income on the seller note of approximately $0.6 million per quarter, and (iii) lower corporate expenses of approximately $2 million per quarter in connection with the Company's Transition Services Agreement and Management Services Agreement.

Hospice of Charleston

On August 2, 2008, the Company acquired certain assets of Hospice of Charleston, a non-profit homecare company that provided hospice services, as well as home health services, for approximately $1.2 million, which was funded from the Company's existing cash reserves. The acquisition will allow the Company to expand its home health services to three CON counties in and around Charleston, South Carolina. See Note 3 to the Company's consolidated financial statements.

Physicians Home Health Care

Effective June 1, 2008, the Company completed the acquisition of CSMMI, Inc., d/b/a Physicians Home Health Care ("PHHC"), a provider of home health services with three locations in Colorado, pursuant to an asset purchase agreement. Total consideration of $12 million, excluding transaction costs and subject to post-closing adjustments, consisted of $11.1 million paid at the time of closing, net of cash acquired of $0.9 million. The Company funded the purchase price using $11.1 million of borrowings under its existing revolving credit facility. The Company acquired PHHC to extend its services into the state of Colorado.

Home Health Care Affiliates, Inc.

On February 29, 2008, the Company completed the acquisition of 100 percent of the equity interest in Home Health Care Affiliates, Inc. and certain of its subsidiaries and affiliates ("HHCA"), a provider of home health and hospice services with 14 locations in Mississippi. Total consideration of $55 million, excluding transaction costs and subject to post-closing adjustments consisted of cash of $47.4 million and assumption of HHCA's existing debt and accrued interest, aggregating $7.4 million, which the Company paid off at the time of closing, net of cash acquired of $0.2 million. The Company funded the purchase price using (i) existing cash balances of $43.4 million and (ii) $11.6 million of borrowings under its existing revolving credit facility, net of debt issuance costs.

The Company acquired HHCA to strengthen and expand its services in the southeast United States. The Company had not previously provided any services in Mississippi, a state which requires providers to have a CON in order to operate a Medicare-certified home health agency. There have been no new CONs issued in Mississippi in recent years.

Results of Operations

The Company's fiscal 2008 results of operations include the CareCentrix operating results through September 24, 2008 and include the Company's equity in the net earnings of CareCentrix Holdings for the period September 25, 2008 through September 28, 2008, the end of the Company's fiscal 2008 third quarter.

Revenues

The Company's net revenues increased by $38.5 million, or 12.4 percent, to $347.6 million for the quarter ended September 28, 2008 as compared to the quarter ended September 30, 2007. For the nine months ended September 28, 2008 as compared to the nine months ended September 30, 2007, net revenues increased by $101.6 million, or 11.1 percent, to $1.02 billion from $915.9 million.

A summary of the Company's net revenues by segment follows:

                                                 Third Quarter                         First Nine Months
                                                               Percentage                               Percentage
(Dollars in millions)                   2008        2007        Variance        2008         2007        Variance
Home Health                            $ 239.3     $ 204.4           17.1 %   $   693.2     $ 614.3           12.8 %
CareCentrix                               75.6        75.3            0.3 %       232.7       214.5            8.5 %
Other Related Services                    33.6        30.3           10.7 %        94.2        91.2            3.3 %
Intersegment revenues                     (0.9 )      (0.9 )          0.0 %        (2.6 )      (4.1 )        (35.9 %)

Total net revenues                     $ 347.6     $ 309.1           12.4 %   $ 1,017.5     $ 915.9           11.1 %

A summary of the Company's net revenues by payer follows:

                                                 Third Quarter                      First Nine Months
                                                             Percentage                            Percentage
(Dollars in millions)                     2008      2007      Variance         2008       2007      Variance
Medicare
Home Health                              $ 165.2   $ 137.1         20.5 %    $   471.5   $ 409.1         15.2 %
Other                                       17.6      14.6         20.7 %         48.0      44.8          7.1 %

Total Medicare                             182.8     151.7         20.5 %        519.5     453.9         14.4 %
Medicaid and Local Government               36.7      37.9         (3.3 %)       108.6     116.5         (6.8 %)
Commercial Insurance and Other             128.1     119.5          7.2 %        389.4     345.5         12.7 %

                                         $ 347.6   $ 309.1         12.4 %    $ 1,017.5   $ 915.9         11.1 %

Home Health

Home Health segment revenues are derived from all three payer groups: Medicare, Medicaid and Local Government and Commercial Insurance and Other. Third quarter 2008 net revenues were $239.3 million, up $34.9 million, or 17.1 percent, from $204.4 million in the prior year period. For the first nine months of fiscal 2008, net revenues were $693.2 million, a $78.9 million or 12.8 percent increase compared to $614.3 million for the corresponding period of fiscal 2007.

Revenues generated from Medicare were $165.2 million in the third quarter of 2008 as compared to $137.1 million in the third quarter of 2007, an increase of $28.1 million or 20.5 percent. For the first nine months of 2008, revenues generated from Medicare were $471.5 million as compared to $409.1 million for the first nine months of 2007, an increase of $62.4 million or 15.2 percent. The increases in Medicare revenues, for the third quarter and first nine months of 2008, resulted from (i) growth in episodes of care of 11 percent and 10 percent, respectively, driven primarily by increased volume in specialty programs in both existing and new markets and the impact of the HHCA and PHHC acquisitions as noted below; and (ii) increases in revenue per episode of approximately 8 percent for the third quarter of 2008 and 5 percent for the first nine months of 2008. Factors contributing to the improvements in the revenue per episode for the third quarter of 2008 include growth in the Company's therapy-based Specialty programs that have a higher level of reimbursement and a shift in mix toward higher acuity cases. Medicare revenue growth, excluding the impact of HHCA and PHHC acquisitions, was approximately 14 percent and 11 percent for the third quarter and first nine months of 2008, respectively.

In addition, non-Medicare Prospective Payment System ("PPS") revenues, which are included in Commercial Insurance and Other and represent Medicare Advantage business paid on an episode basis, were $14.1 million in the third quarter of 2008 as compared to $7.7 million in the third quarter of 2007, an increase of $6.4 million or 83 percent. For the first nine months of 2008 as compared to 2007, non-Medicare episodic revenues were $38.6 million and $20.2 million, respectively, an increase of $18.4 million or 91 percent.

In the third quarter and first nine months of 2008, Medicare revenues as a percentage of total Home Health revenues were 69 percent and 68 percent, respectively, as compared to 67 percent for both the third quarter and first nine months of 2007. Medicare and non-Medicare PPS revenues as a percent of total Home Health revenues were 75 percent and 74 percent for the third quarter and first nine months of 2008 as compared to 71 percent and 70 percent for the corresponding periods of 2007. Home Health revenues derived from the HHCA and PHHC acquisitions approximated $11.2 million and $23.2 million in the third quarter and first nine months of 2008, respectively, the majority of which related to Medicare revenues.

Revenues from Medicaid and Local Government payer sources were $30.6 million and $91.0 million in the third quarter and first nine months of 2008, respectively, as compared to $31.6 million and $98.1 million in the third quarter and first nine months of 2007, respectively. Revenues from Commercial Insurance and Other payer sources, excluding non-Medicare PPS revenues, were

$29.5 million in the third quarter of 2008 as compared to $28.1 million in the third quarter of 2007. For the first nine months of 2008 as compared to the corresponding period of 2007, revenues from Commercial Insurance and Other payer sources, excluding non-Medicare PPS revenues, were $92.1 million and $86.8 million, respectively. The decrease in Medicaid and Local Government revenues and increase in Commercial Insurance and Other revenues resulted primarily from the Company's ongoing strategy to reduce or eliminate certain lower gross margin business as the Company continues to pursue more favorable commercial pricing and a higher mix of Medicare and non-Medicare PPS business.

CareCentrix

CareCentrix segment revenues are derived from the Commercial Insurance and Other payer group only. Third quarter 2008 net revenues were $75.6 million, a 0.3 percent increase from $75.3 million reported in the prior year period. For the first nine months of fiscal 2008, net revenues were $232.7 million, an 8.5 percent increase compared to $214.5 million for the corresponding period of fiscal 2007. Revenues associated with the four days on and after the closing of the CareCentrix Transaction were approximately $3.5 million, primarily associated with the Cigna contract.

The increase in net revenues for the third quarter and the first nine months is due primarily to increased membership enrollments among certain CareCentrix customers, including Cigna's PPO and Open Access plans, and other new business relationships offset somewhat by a decline in membership enrollments under capitated plans. Revenues derived from Cigna decreased by approximately $1.3 million to $61.0 million in the third quarter and increased $12.8 million to $189.5 million for the first nine months of 2008 as compared to the corresponding periods of 2007.

Other Related Services

Other Related Services segment revenues are derived from all three payer groups. Third quarter and first nine months of fiscal 2008 net revenues were $33.6 million and $94.2 million, respectively, as compared to the third quarter and first nine months of fiscal 2007 net revenues of $30.3 million and $91.2 million, respectively. The increase for the third quarter was attributable primarily to a $2.1 million increase in Hospice revenue and a $1.2 million increase in respiratory therapy services and HME revenues, while other segment component revenues remained generally flat as compared to the corresponding period of 2007. The increase for the first nine months of 2008 as compared to 2007 was due to increases in respiratory therapy services and HME (approximately $2.5 million), Hospice (approximately $1.3 million), partially offset by decreases in Pharmacy ($0.6 million) and other services (approximately $0.2 million).

In Other Related Services, Medicare revenues were $17.6 million and $48.0 million, respectively, in the third quarter and first nine months of 2008 as compared to $14.6 million and $44.8 million, respectively, in the corresponding periods of 2007. Medicaid revenues were $6.1 million and $17.7 million in the third quarter and first nine months of 2008 as compared to $6.3 million and $18.4 million for the third quarter and first nine months of 2007. Commercial Insurance and Other revenues in the third quarter and first nine months of 2008 were $9.9 million and $28.6 million as compared to $9.4 million and $28.0 million for the third quarter and first nine months of 2007. Hospice revenues derived from the HHCA and Hospice of Charleston acquisitions approximated $1.9 million and $3.4 million for the third quarter and first nine months of 2008, respectively.

Gross Profit



                                     Third Quarter                        First Nine Months
 (Dollars in millions)      2008        2007        Variance       2008        2007        Variance
. . .