SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission File No. 1-15669

Gentiva Health Services, Inc.
(Exact name of Registrant as specified in its charter)

           Registrant's telephone number, including area code:  (631) 501-7000

           Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X             No     __

The number of shares outstanding of the Registrant's Common Stock,
as of August 12, 2002 was 26,380,483.

INDEX

PART I - FINANCIAL INFORMATION

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Gentiva Health Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

            1.          Accounting Policies

            The accompanying interim consolidated financial statements are unaudited, but have been prepared by Gentiva Health Services, Inc. (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, include all adjustments necessary for a fair presentation of results of operations, financial position and cash flows for each period presented.  Results for interim periods are not necessarily indicative of results for a full year.  The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

                        New Accounting Standards

            In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144 "Accounting for Impairment or Disposal of Long-Lived Assets" ("SFAS 144") which supercedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 144 further refines SFAS 121's requirement that companies recognize an impairment loss if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows and measure an impairment loss as the difference between the carrying amount and fair value of the asset. In addition, SFAS 144 provides guidance on accounting and disclosure issues surrounding long-lived assets to be disposed of by sale. SFAS 144 also extends the presentation of discontinued operations to include more disposal transactions. SFAS 144 is effective for all fiscal quarters of all fiscal years beginning after December 15, 2001 (December 31, 2001 for the Company). The Company's adoption of SFAS 144 did not result in any impairment loss being recorded.

            In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statements No. 13, and Technical Correction" ("SFAS 145"). SFAS 145 rescinds SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt" ("SFAS 4"), SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers" ("SFAS 44") and SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements" ("SFAS 64") and amends SFAS No. 13, "Accounting for Leases" ("SFAS 13"). This statement updates, clarifies and simplifies existing accounting pronouncements. As a result of rescinding SFAS 4 and SFAS 64, the criteria in APB 30 "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" will be used to determine whether gains and losses from extinguishment of debt receive extraordinary item treatment. SFAS 44 was no longer necessary because the transitions under the Motor Carrier Act of 1980 were completed. SFAS 13 was amended to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions and makes technical corrections to existing pronouncements. The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002, with earlier application encouraged. The Company has elected to 

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SFAS 145, effective April 1, 2002. The impact of this adoption resulted in the Company recognizing a write off of approximately $1.5 million of deferred debt issuance costs associated with the terminated credit facility which is reflected in selling, general and administrative expenses in the accompanying consolidated statements of operations.

            In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"), which addresses the recognition, measurement, and reporting of costs associated with exit or disposal activities, and supercedes Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit An Activity (including Certain Costs Incurred in a Restructuring)" ("EITF 94-3"). The principal difference between SFAS 146 and EITF 94-3 relates to the requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity, including those related to employee termination benefits and obligations under operating leases and other contracts, be recognized when the liability is incurred, and not necessarily the date of an entity's commitment to an exit plan, as under EITF 94-3. SFAS 146 also establishes that the initial measurement of a liability recognized under SFAS 146 be based on fair value. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The Company expects to adopt SFAS 146, effective December 30, 2002. For exit or disposal activities initiated prior to December 30, 2002, the Company plans to follow the accounting guidelines outlined in EITF 94-3.  

            2.          Background and Basis of Presentation.

            On June 13, 2002, the Company consummated the sale of substantially all of the assets of the Company's Specialty Pharmaceutical Services ("SPS") business to Accredo Health, Incorporated ("Accredo") pursuant to the asset purchase agreement dated January 2, 2002. See Note 4 for further information. On June 13, 2002, the Company's Board of Directors declared a dividend, payable to shareholders of record on June 13, 2002, of all the common stock consideration and substantially all the cash consideration received from Accredo.  The cash consideration received by the Company was $207.5 million; however, the amount distributed to the Company's shareholders was reduced by $3.5 million to $204 million as a holdback for income taxes the Company expects to incur on the estimated proceeds received in excess of $460 million as detailed in the Company's proxy statement, dated May 10, 2002.

            The operating results of the SPS business, through the closing date of the sale to Accredo, including corporate expenses directly attributable to SPS operations, as well as the gain on the sale, net of transaction costs and related income taxes; are reflected as discontinued operations in the accompanying consolidated statements of operations.  Continuing operations includes the results of the home health services business, including corporate expenses that did not directly relate to SPS, as well as restructuring and special charges.  Results of all prior periods have been reclassified to conform to this presentation.

            In addition, under the Statement of Financial Accounting Standards No. 131 " Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"), the SPS business had been reported as a segment of the Company. Subsequent to the sale of the SPS business, the Company operates its remaining Home Health Services business as a single reporting unit.

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            3.          Earnings per Share

Basic and diluted earnings (loss) per share for each period presented has been computed by dividing the net income (loss) by the weighted average number of shares outstanding for each respective period.  In accordance with Statement of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"), the computation for diluted loss from continuing operations per share for all periods presented excludes the effect of any shares issuable upon the exercise of stock options since their inclusion would have an antidilutive effect on earnings.  Furthermore, as required under SFAS 128, the common shares used in reporting the diluted per share amount for continuing operations is to be used for discontinued operations and cumulative effect of accounting change although the impact may be antidilutive on some periods presented. 

            For the second quarter and first six months of fiscal 2002, the basic and diluted net income (loss) per share has been computed using the weighted average number of shares outstanding of 26,143,000 and 25,993,000, respectively.  Basic and diluted net income (loss) per share for the second quarter and first six months of fiscal 2001 has been computed using the weighted average number of shares outstanding of 22,265,000 and 21,859,000, respectively.

            Dilutive common equivalent shares that would be issued upon the assumed conversion of stock options under the treasury stock method represented 1,226,000 shares and 1,304,000 shares for the second quarter and first six months of fiscal 2002, respectively, and 1,594,000 shares and 1,523,000 shares for the second quarter and first six months of fiscal 2001, respectively. 

            4.          Disposition of Specialty Pharmaceutical Services Business

            On June 13, 2002, the Company consummated the sale of its Specialty Pharmaceutical Services ("SPS") business (the "SPS Sale") to Accredo Health, Incorporated ("Accredo"). The SPS Sale was effected pursuant to an asset purchase agreement (the "Asset Purchase Agreement") dated January 2, 2002, between Gentiva, Accredo and certain of Gentiva's subsidiaries named therein.

            The assets of the SPS business acquired by Accredo in the SPS Sale were assets used by Gentiva in the business of:

• distribution of drugs and other biological and pharmaceutical products and professional support services for individuals with chronic diseases,

• administration of antibiotics, chemotherapy, nutrients and other medications for patients with acute or episodic disease states,

• distribution services for pharmaceutical, biotechnology and medical service firms, and

• clinical support services for pharmaceutical and biotechnology firms.

            The SPS business generated approximately 50 percent of the Company's total net revenues, including intersegment revenues, for fiscal 2001.

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            Pursuant to the terms of the Asset Purchase Agreement, Accredo acquired the SPS business in consideration for:

• The payment to the Company of a cash amount equal to $207.5 million, and

• 5,060,976 shares of Accredo common stock.

            Based on the closing price of the Accredo common stock on June 13, 2002 ($51.89 per share), the value of the stock consideration was $262.6 million. The aggregate proceeds from the sale are subject to adjustments based on the net book value of SPS assets as reflected in the final closing balance sheet.

            In connection with the SPS Sale, the Company's Board of Directors declared a dividend, payable to shareholders of record on June 13, 2002, of all the common stock consideration and substantially all the cash consideration received from Accredo. The cash consideration received by the Company was $207.5 million; however, the amount distributed to the Company's shareholders was reduced by $3.5 million to $204 million as a holdback for income taxes the Company expects to incur on the estimated proceeds received in excess of $460 million as detailed in the Company's proxy statement, dated May 10, 2002. The special dividend, which was delivered to the distribution agent on June 13, 2002 for payment to the Company's shareholders, resulted in shareholders of record on the record date receiving $7.76 in cash and .19253 shares of Accredo common stock for each share of Gentiva common stock held. Cash was paid in lieu of fractional shares.

SPS revenues and operating results for the periods presented were as follows (in thousands):

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 The net assets of the SPS business included in the accompanying consolidated balance sheet as of December 30, 2001 consisted of the following (in thousands):

            5.          Restructuring and Special Charges

            During the second quarter and first six months of fiscal 2002, the Company recorded restructuring and special charges aggregating $46.1 million.  Charges during the period are summarized and further described below (dollars in thousands):

Restructuring Charges

            Business Realignment Activities

            The Company recorded charges of $6.8 million in the second quarter of fiscal 2002 in connection with a restructuring plan. This plan included the closing and consolidation of seven field locations and the realignment and consolidation of certain corporate and administrative support functions due primarily to the sale of the Company's SPS business.  These charges included employee severance of $0.9 million relating to the termination of 115 employees in field locations and certain corporate and administrative departments, and future lease payments and other associated costs of $5.9 million resulting principally from the consolidation of office space at the Company's corporate headquarters and a change in estimated future lease obligations and other costs in excess of sublease rentals relating to a lease for a subsidiary of the Company's former parent company which the Company agreed to assume in connection with its split off in March 2000.  The Company expects the restructuring plan to be fully implemented by the fourth quarter of fiscal 2002.  These charges are reflected in selling, general and administrative expenses in the accompanying consolidated statements of operations.

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Special Charges

            Fiscal 2002

            Option Tender Offer

            During the second quarter of fiscal 2002, the Company commenced a cash tender offer for all outstanding options to purchase its common stock.  The tender offer was based on a purchase price calculated by subtracting the applicable exercise price of the option per share from the market value per share of Gentiva's common stock.  The market value represented the average of the daily closing price of Gentiva's common stock on the Nasdaq National Market for the five trading days ended June 12, 2002.

            In connection with this tender offer, the Company recorded a charge of $21.4 million which is reflected in selling, general and administrative expenses in the accompanying consolidated statements of operations.

            Settlement Costs

            The Company recorded a $7.7 million charge in the second quarter of fiscal 2002 to reflect settlement costs relating to the Fredrickson v. Olsten Health Services Corp. and Olsten Corporation lawsuit as well as estimated settlement costs related to government inquiries regarding cost reporting procedures concerning contracted nursing and home health aide costs (see Note 10).  These costs are reflected in selling, general and administrative costs in the accompanying consolidated statement of operations.

            Insurance Costs

            During the second quarter of 2002, the Company recorded a special charge of $6.3 million related primarily to a refinement in the estimation process used to determine the Company's actuarially computed workers compensation and professional liability insurance reserves. This special charge is reflected in cost of services sold in the accompanying consolidated statement of operations.

            Asset Writedowns and Other

            During the second quarter of fiscal 2002, the Company recorded charges of $3.8 million consisting primarily of a writedown of inventory and other assets associated with the Company's home medical equipment business, and a write off of deferred debt issuance costs associated with the terminated credit facility. The charges are reflected in selling, general and administrative expenses in the accompanying statement of operations. 

            Fiscal 2001

            Settlement Costs

            During the second quarter of fiscal 2001, the Company recorded special charges of approximately $3.0 million in connection with the settlement of the Gile v. Olsten Corporation, et al, and the State of Indiana v. Quantum Health 

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Resources, Inc. and Olsten Health Services, Inc. lawsuits and for various other legal costs.  These special charges are reflected in selling, general and administrative expenses in the accompanying consolidated statements of operations.

            6.          Goodwill and Other Intangible Assets

            In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), which broadens the criteria for recording intangible assets separate from goodwill.  SFAS 142 requires the use of a nonamortization approach to account for purchased goodwill and certain intangibles.  Under a nonamortization approach, goodwill and certain intangibles are not amortized into results of operations, but instead are reviewed for impairment and an impairment charge is recorded in the periods in which the recorded carry