content: 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 April 2, 2000
  
                             Commission File No. 1-15669
                                       -------
  
                            Gentiva Health Services, Inc.
                            -----------------------------
               (Exact name of Registrant as specified in its charter)
  
  
               DELAWARE                                 36-433-5801
             --------------                             -----------
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                   Identification No.)
  
                175 Broad Hollow Road, Melville, New York 11747-8905
                (Address of principal executive offices)  (Zip Code)
  
         Registrant's telephone number, including area code: (631) 844-7800
                                                             --------------
  
  
       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 ____ No _X_
  
  
            The number of shares outstanding of the Registrant's Common Stock, as
            of May 12, 2000, was 20,531,456.
  
  
  
  
  
  
  <PAGE>
  
  
  
                                        INDEX
  
                                                                          Page No.
                                                                          -------
  
  PART I - FINANCIAL INFORMATION
  
       Item 1. Interim Financial Statements
  
               Consolidated Balance Sheets -- April 2, 2000
               (Unaudited) and January 2, 2000                              2
  
               Consolidated Statements of Operations (Unaudited) -
               Quarters Ended April 2, 2000
               and April 4, 1999                                            3
  
               Consolidated Statements of Cash Flows (Unaudited) -
               Three Months Ended April 2, 2000 and April 4, 1999           4
  
               Notes to Consolidated Financial Statements
               (Unaudited)                                                  5-11
  
       Item 2. Management's Discussion and Analysis of Financial
               Condition and Results of Operations                          12-15
  
       Item 3. Quantitative and Qualitative Disclosures about
               Market Risk                                                  16-17
  
  PART II - OTHER INFORMATION
  
       Item 1. Legal Proceedings                                            18-19
  
       Item 2. Change in Securities and Use of Proceeds                     19
  
       Item 3. Defaults Upon Senior Securities                              19
  
       Item 4. Submission of Matters to a Vote of Security Holders          19
  
       Item 5. Other Information                                            19-22
  
       Item 6. Exhibits and Reports on Form 8-K                             22-24
  
  
  SIGNATURES                                                                25
  
  
  <PAGE>
  
                           PART I - FINANCIAL INFORMATION
  
  Item 1. Financial Statements.
          --------------------
  
  <TABLE>
  <CAPTION>
                   Gentiva Health Services, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                        (In thousands, except share amounts)
  
                                                                      April 2, 2000            January 2,
                                                                                                  2000
                                                                  -----------------------  ---------------------
                                                                       (Unaudited)
  ASSETS
  <S>                                                                         <C>                     <C>
  Current Assets:
         Cash and cash equivalents                                            $    4,386              $    2,942
         Receivables, net                                                        604,504                 575,460
         Inventories                                                              82,983                  93,218
         Prepaid expenses and other current assets                                40,380                  87,611
                                                                  -----------------------  ---------------------
               Total current assets                                              732,253                 759,231
  
  Fixed Assets, Net                                                               47,711                  51,809
  
  Intangible Assets, Net                                                         247,474                 250,297
  
  Other Assets                                                                     4,225                   1,678
                                                                  -----------------------  ---------------------
               Total Assets                                                 $  1,031,663            $  1,063,015
                                                                  =======================  =====================
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities:
         Current portion of long-term debt                                  $     78,562            $     78,562
         Accounts payable                                                         75,808                 114,197
         Accrued expenses                                                         81,576                  76,746
         Payroll and related taxes                                                20,997                  20,020
         Insurance costs                                                          30,472                  31,170
                                                                  -----------------------  ---------------------
               Total current liabilities                                         287,415                 320,695
  
  Other Liabilities                                                               37,129                  37,029
  
  Long-Term Debt                                                                  25,477                   -
  
  Gentiva - Obligated Mandatorily Redeemable                                      20,000                   -
  Convertible Securities of a Subsidiary Holding Solely
  Gentiva Debentures
  
  Shareholders' Equity:
         Common stock, $.10 par value; authorized 100,000,000
         shares;
         issued and outstanding 20,345,029 shares                                  2,035                   2,035
         Additional paid-in capital                                              684,120                 725,998
         Accumulated deficit                                                    (22,276)                (20,370)
         Accumulated other comprehensive loss                                    (2,237)                 (2,372)
                                                                  -----------------------  ---------------------
               Total Shareholders' Equity                                        661,642                 705,291
                                                                  -----------------------  ---------------------
  Total Liabilities and Shareholders' Equity                                $  1,031,663            $  1,063,015
                                                                  =======================  =====================
  </TABLE>
  
  See notes to consolidated financial statements.
  
  
                                         2
  <PAGE>
  
  <TABLE>
  <CAPTION>
                   Gentiva Health Services, Inc. and Subsidiaries
                        Consolidated Statements of Operations
                        (In thousands, except share amounts)
                                     (Unaudited)
  
  
                                                                                        First Quarter Ended
                                                                             ------------------------------------
                                                                                April 2, 2000      April 4, 1999
                                                                             ------------------  ----------------
  
  <S>                                                                                 <C>             <C>
  Net revenues                                                                      $   384,607      $  368,160
  
  Cost of services sold                                                                 256,105         242,486
                                                                             ------------------  ----------------
  
           Gross profit                                                                 128,502         125,674
  
  Selling, general and administrative expenses                                          127,532         137,552
  
  Interest expense, net                                                                   4,236           4,273
  
                                                                             ------------------  ----------------
  
           Loss before income taxes                                                      (3,266)        (16,151)
  
  
  Income tax benefit                                                                      1,360           3,345
  
                                                                             ------------------  ----------------
  
   Net loss                                                                         $    (1,906)     $  (12,806)
                                                                             ==================  ================
  
  
  SHARE INFORMATION:
  
  Basic and diluted loss per share:
           Net loss                                                                 $     (0.09)     $    (0.63)
                                                                             ===================  ===============
  
  Average shares outstanding                                                         20,345,029       20,345,029
                                                                             ===================  ===============
  </TABLE>
  
  
  
  
  See notes to consolidated financial statements.
  
  
                                         3
  <PAGE>
  
  
  
  <TABLE>
  <CAPTION>
                   Gentiva Health Services, Inc. and Subsidiaries
                        Consolidated Statements of Cash Flows
                                   (In thousands)
                                     (Unaudited)
  
                                                                                            Three Months Ended
                                                                                    ----------------------------------
                                                                                       April 2, 2000    April 4, 1999
                                                                                    ----------------------------------
  OPERATING ACTIVITIES:
  <S>                                                                                     <C>             <C>
  Net loss                                                                                $  (1,906)      $  (12,806)
  Adjustments to reconcile net loss to net cash
  used in operating activities:
            Depreciation and amortization                                                      8,487            8,733
            Provision for doubtful accounts                                                    7,545            5,787
            Changes in assets and liabilities, net of effect from
            acquisitions:
                        Accounts receivable                                                 (36,589)         (65,009)
                        Inventories                                                           10,235            (867)
                        Prepaid expenses and other current assets                              1,631          (2,600)
                        Current liabilities                                                 (30,596)            7,576
            Other, net                                                                         (732)            (744)
                                                                                    ----------------      -----------
  Net cash used in operating activities                                                     (41,925)         (59,930)
                                                                                    ----------------      -----------
  INVESTING ACTIVITIES:
  Purchase of fixed assets                                                                   (2,186)          (5,283)
  Acquisitions of businesses, net of cash acquired                                              -             (1,655)
                                                                                    ----------------      -----------
  Net cash used in investing activities                                                      (2,186)          (6,938)
                                                                                    ----------------      -----------
  FINANCING ACTIVITIES:
  Net transactions with Olsten                                                                 5,226           72,873
  Decrease in book overdrafts                                                                (2,684)             -
  Retirement of long-term debt                                                                  -             (6,804)
  Proceeds from revolving credit facility                                                     25,477             -
  Issuance of mandatorily redeemable securities                                               20,100             -
  Debt issuance costs                                                                        (2,564)             -
                                                                                    ----------------      -----------
  
  Net cash provided by financing activities                                                   45,555           66,069
                                                                                    ----------------      -----------
  
  Net increase (decrease) in cash and cash equivalents                                         1,444            (799)
  
  Cash and cash equivalents at beginning of period                                             2,942              799
                                                                                    ----------------      -----------
  
  Cash and cash equivalents at end of period                                               $   4,386      $      -
                                                                                    ================      ============
  </TABLE>
  
  See notes to consolidated financial statements.
  
  
                                         4
  <PAGE>
  
                     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 generally accepted accounting principles.
  
  
       2. Background and Basis of Presentation
  
       On March 15, 2000, the Company was split-off (the "split-off") from Olsten
  Corporation ("Olsten") through the issuance of all of the Company's shares of
  common stock to Olsten's shareholders and the Company became an independent,
  publicly-owned company. Prior thereto, the Company operated Olsten's health
  services business as a wholly owned subsidiary of Olsten. The accompanying
  interim consolidated financial statements reflect the results of operations,
  financial position and cash flows of the Company as if it were a separate entity
  for all periods presented. The consolidated financial statements have been
  prepared using the historical basis in the assets and liabilities and historical
  results of operations related to the Company.
  
       Additionally, the Company's selling, general and administrative expenses
  included a management fee of approximately $1.0 million and $1.2 million for the
  first quarters of fiscal 2000 and 1999, respectively. This fee represented an
  allocation of certain general corporate overhead expenses related to Olsten's
  corporate headquarters. Management believes the allocations related to general
  corporate overhead expenses are reasonable; however, the costs of these items
  deemed to be charged to the Company are not necessarily indicative of the costs
  that would have been incurred if the Company had been a stand-alone entity.
  Subsequent to the split-off, the Company began to perform these functions using
  its own resources or purchased services and the Company is responsible for the
  costs and expenses associated with the management of a public corporation.
  Management estimates that had the Company been a separate entity for each period
  presented, selling, general and administrative expenses would have been
  approximately $1.2 million greater than the amounts presented in these
  historical financial statements.
  
       Net interest expense of approximately $4.2 million and $4.3 million during
  the first quarter of fiscal 2000 and 1999, respectively, as presented in the
  consolidated statements of operations included net interest expense of
  approximately $2.7 million for the first quarter of 2000 and $3.3 million for
  the first quarter of 1999 relating to the intercompany balances with
  
  
                                         5
  <PAGE>
  
  Olsten. Such intercompany balances have been reflected as a contribution to
  capital at the end of each period presented herein.
  
       Earnings per share data has been computed based upon 20,345,029 shares of
  common stock. Such amount is based on the number of shares of the Company's
  stock issued on March 15, 2000, the date of the split-off. Pursuant to the terms
  of the split-off, shareholders of Olsten received .25 shares of Gentiva Health
  Services common stock for each share of Olsten common stock or Class B common
  stock that they owned.
  
       At April 2, 2000, outstanding options to purchase 4.6 million shares of
  common stock were not included in the computation of diluted net loss per share
  because to do so would have had an antidilutive effect for the period.
  Similarly, the computation of diluted net loss per share excludes the effect of
  any shares issuable upon the conversion of $78.6 million of 4 3/4% convertible
  subordinated debentures due October 1, 2000 and $20 million of 10% convertible
  trust preferred securities since their inclusion would also have had an
  antidilutive effect.
  
  
       3. Non-recurring and Special Charges
  
       During the quarter ended April 2, 2000, the Company recorded non-recurring
  and special charges aggregating $5.6 million. Of this amount, non-recurring
  charges of $4.1 million were incurred to reflect obligations resulting from the
  Company's split-off from Olsten and transition costs associated with the
  establishment of the Company as an independent, publicly-owned entity. These
  non-recurring charges included change of control, compensation and benefit
  payments of $3.6 million made to certain former employees of the Company and
  Olsten and a current executive officer of the Company, including approximately
  $1.0 million which is based on Olsten's methodology for allocating general
  corporate overhead expenses as discussed in Note 6, and transition costs of $0.5
  million relating to registration costs, professional fees and other items.
  Approximately $1.0 million was unpaid and was included in accrued expenses as of
  April 2, 2000.
  
       Special charges of $1.5 million were incurred during the quarter ended
  April 2, 2000 in connection with the change of the Company's name to Gentiva
  Health Services, Inc. These special charges primarily consisted of costs
  incurred and paid for consulting fees, promotional items and advertising.
  
       In the quarter ended April 4, 1999, the Company recorded a special charge
  aggregating $16.7 million. This charge was for the realignment of business units
  as part of a new restructuring plan, including compensation and severance costs
  of $5 million to be paid to operational support staff, branch administrative
  personnel and management, asset write-offs of $6.5 million related primarily to
  fixed assets being disposed of in offices being closed and facilities being
  consolidated, as well as fixed assets and goodwill attributable to the Company's
  exit from certain business previously acquired but not within the Company's
  strategic objectives, and integration costs of $5.2 million, primarily related
  to obligations under lease agreements for offices and other facilities being
  closed. Substantially all of the closures and consolidations of facilities and
  expected terminations had occurred by January 2, 2000. These activities resulted
  in
  
  
                                         6
  <PAGE>
  
  lower costs than originally estimated and, as a result, the Company recognized a
  benefit of $1.5 million in the fourth quarter of fiscal 1999 to reflect this
  change in estimate. Approximately $2.0 million of this special charge remains
  unpaid as of April 2, 2000, representing compensation and severance costs of
  $1.0 million and integration costs of $1.0 million.
  
  
       4. Long-Term Debt
  
       On March 13, 2000, the Company entered into a credit facility which
  provides for up to $150 million in borrowings, including up to $30 million,
  which is available for letters of credit. The Company may borrow up to a maximum
  of 80 percent of eligible accounts receivable, as defined. At the Company's
  option, the interest rate on borrowings under the credit facility is based on
  the London Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's prime
  rate plus 0.25 percent.
  
       The credit facility, which expires in 2004, includes certain covenants
  requiring the Company to maintain a minimum tangible net worth and minimum
  earnings before interest, taxes, depreciation and amortization and provides
  limitations on certain other activities. Loans under the credit facility are
  collateralized by all of the Company's tangible and intangible personal
  property, other than equipment.
  
       At April 2, 2000, borrowings under the credit facility aggregated $25.5
  million and there were approximately $19 million of standby letters of credit
  outstanding. As of such date, the Company had borrowing capacity of
  approximately $105.5 million available under the credit facility.
  
       The current portion of long-term debt is an aggregate of $78.6 million
  which represents the 4 3/4 convertible subordinated debentures which mature on
  October 1, 2000.
  
       5. Mandatorily Redeemable Securities
  
  Cumulative Preferred Stock
  
       The Company's authorized capital stock includes 25,000,000 shares of
  preferred stock, $.01 par value, of which 1,000 shares have been designated
  Series A Cumulative Non-voting Redeemable Preferred Stock ("cumulative preferred
  stock"). On March 10, 2000, 100 shares of cumulative preferred stock were issued
  for proceeds of $100,000. Such amount is reflected in other liabilities in the
  consolidated balance sheet as of April 2, 2000.
  
       In the event of any voluntary or involuntary liquidation, dissolution or
  other winding up of the Company, or at the option of the Company on or after
  March 10, 2005, or the Holder on or after May 10, 2005, the holders of
  cumulative preferred stock will be entitled to receive the stated liquidation
  preference or redemption price of $1,000 per share.
  
  Gentiva Obligated Mandatorily Redeemable Convertible Securities of a Subsidiary
  Holding Solely Gentiva Debentures
  
       On March 15, 2000, certain of the Company's and Olsten's directors,
  officers and management and other related parties and other investors purchased
  $20 million of 10% convertible trust preferred securities issued by a trust, of
  which the Company owns all the common equity. The Company owns all of the common
  equity of the trust. The convertible trust preferred securities are mandatorily
  redeemable five years from
  
  
                                         7
  <PAGE>
  
  issuance at a declining premium over face amount. Upon a change of control, as
  defined, the holders of convertible trust preferred securities may require the
  trust to purchase these securities at 100 percent of their face amount.
  Dividends are payable quarterly in cash at the rate of 10 percent per annum, but
  the trust may defer dividend payments for up to a total of twenty quarters, in
  which case dividends will accrue. The convertible trust preferred securities are
  convertible into the Company's common stock at a conversion price which is 17.5
  percent above the average closing price of the Company's common stock during the
  ten trading days following the earnings announcement of first quarter 2000
  results.
  
       Simultaneously with, and in connection with the issuance by the trust of
  the convertible trust preferred securities, the Company issued to the trust $20
  million of its 10% convertible subordinated debentures. The convertible
  subordinated debentures have the same terms as the convertible trust preferred
  securities, including but not limited to maturity, interest, conversion and
  redemption price.
  
       The trust which issued the convertible trust preferred securities is a
  special purpose trust. The trust's operations are limited to issuing the
  convertible trust preferred securities and holding the Company's convertible
  subordinated debentures. The trust may pay dividends only to the extent that the
  Company pays interest on its convertible subordinated debentures.
  
       6. Shareholders' Equity
  
  Changes in shareholders' equity during the three months ended April 2, 2000 were
  as follows (in thousands):
  
  <TABLE>
  <CAPTION>
                                                                                               Accumulated
                                                           Additional                             Other
                                               Common        Paid-in       Accumulated        Comprehensive
                                                Stock        Capital         Deficit              Loss             Total
                                             ------------ -------------- ----------------  -------------------- -------------
  
  <S>                                            <C>           <C>            <C>                  <C>              <C>
     Balance at January 2, 2000                  $ 2,035       $725,998       $ (20,370)           $   (2,372)      $705,291
     Comprehensive income (loss):
         Net loss and cumulative
         translation adjustment                                                  (1,906)                   135       (1,771)
  
     True-up payment made by Olsten                               8,851                                                8,851
  
     Obligations assumed in connection
     with the split-off, net of tax benefit                     (1,029)                                              (1,029)
  
     Transfer to Olsten of tax benefits
     relating to net operating losses                          (49,700)                                             (49,700)
                                             ------------ -------------- ----------------  -------------------- -------------
     Balance at April 2, 2000                    $ 2,035       $684,120       $ (22,276)           $   (2,237)      $661,642
                                             ============ ============== ================  ==================== =============
  </TABLE>
  
                                         8
  <PAGE>
  
  
  
  
       See Note 7 for a description of the true-up payment made by Olsten.
  
       Under the terms of the Separation Agreement relating to the split-off, the
  Company assumed the obligation for the funding of liabilities of the
  non-qualified supplemental executive retirement plan for certain of its
  employees and former employees of Olsten. During the first quarter of 2000,
  payments of $12.1 million were made under this program; these payments exceeded
  assets of the plan which were transferred to the Company by $3.6 million due
  primarily to benefits paid to former Olsten employees and a current executive
  officer of the Company. Furthermore, the Company also assumed excise tax
  obligations of approximately $0.8 million for a former executive officer of
  Olsten (and current executive officer of the Company). Approximately $1.0
  million of the aggregate net obligations of $4.4 million were included in
  non-recurring and special charges in the consolidated statement of operations
  based on Olsten's allocation methodology for general corporate overhead
  expenses. The remaining $3.4 million associated with these obligations were
  charged directly to additional paid-in capital.
  
       In addition, under the terms of the separation agreement, the Company also
  agreed to assume the office lease for an Olsten subsidiary commencing September
  2000. In this connection, the present value of future lease obligations and
  other costs exceed estimated sublease rentals by $1.7 million. Such amount was
  charged directly to additional paid-in capital during the first quarter of 2000.
  
       An estimated tax benefit of $4.1 million relating to the aforementioned
  obligations was credited to additional paid-in capital.
  
       In accordance with the Tax Sharing Agreement governing the split-off, any
  net operating losses generated up to the split-off were to be transferred and
  utilized by Olsten. Accordingly, on March 15, 2000 the Company transferred
  approximately $49.7 million of tax benefits relating to those net operating
  losses to Olsten. Such amount is reflected as a reduction of additional paid-in
  capital during the first quarter of 2000.
  
       Total comprehensive loss amounted to $1.8 million and $12.8 million during
  the first quarters of fiscal 2000 and 1999, respectively.
  
       7. Transactions with Olsten
  
       Net transactions with Olsten, included in shareholders' equity, include the
  accumulated excess of cash outlays made on the Company's behalf and management
  fees charged to the Company by Olsten over cash receipts generated by the
  Company. In accordance with the terms of the Separation Agreement, intercompany
  balances at October 31, 1999 of approximately $507 million have been contributed
  to the Company's capital in its entirety. Pursuant to the terms described in the
  Separation Agreement, the Company was to receive approximately $32 million in
  cash (referred to as the true-up amount) on or prior to the split-off date.
  Approximately $23.1 million
  
  
                                         9
  <PAGE>
  
  of the true-up amount was received by the Company prior to January 2, 2000; the
  remaining $8.9 million was received by the Company during the first quarter of
  2000.
  
       Following the split-off, the Company paid Olsten approximately $13 million
  to settle the intercompany account balance which primarily related to advances
  for management fees, additional borrowings and interest expense on intercompany
  balances.
  
       8. Business Segment Information
  
       The Company operates in the United States and Canada, servicing patients
  and customers through the following business segments: Specialty Pharmaceutical
  Services, Home Care Nursing Services and Staffing Services. These segments are
  briefly described below.
  
       Specialty Pharmaceutical Services includes (i) the distribution of drugs
  and other biological and pharmaceutical products and professional support
  services for individuals with chronic diseases, such as hemophilia, primary
  pulmonary hypertension, autoimmune deficiencies and growth disorders, (ii) the
  administration of antibiotics, chemotherapy, nutrients and other medications for
  patients with acute or episodic disease states and (iii) distribution services
  for pharmaceutical, biotechnology and medical service firms.
  
       Home Care Nursing Services includes (i) professional and paraprofessional
  services, including skilled nursing, rehabilitation and other therapies, home
  health aide and personal care services, to individuals with acute illnesses,
  long-term chronic health conditions, permanent disabilities, terminal illnesses
  or post-procedural needs and (ii) care management and coordination for managed
  care organizations and self-insured employees.
  
       Staffing Services includes (i) services to institutional, occupational and
  alternate site health care organizations by providing health care professionals
  to meet supplemental staffing needs and (ii) clinical support services for
  pharmaceutical and biotechnology firms.
  
       The Company evaluates performance and allocates resources based on
  operating contributions of the reportable segments, which excludes corporate
  expenses, depreciation, amortization and interest expense, but includes revenues
  and all other costs directly attributable to the specific segment. Identifiable
  assets of the segments reflect net accounts receivable and inventories
  associated with segment activities. All other assets are assigned to the
  corporation for the benefit of all segments.
  
  
  
  
                                         10
  
  <PAGE>
  
  
  <TABLE>
  <CAPTION>
                        Information about the Company's operations is as follows (in thousands):
  
                                                         Specialty       Home Care
                                                      Pharmaceutical      Nursing        Staffing
                                                         Services         Services       Services         Total
                                                     ----------------- --------------- -------------  --------------
  
  <S>                                                 <C>               <C>             <C>
  Three months ended April 2, 2000
  Net revenues                                        $       180,818   $  167,895      $  35,894     $  384,607
                                                      ===============  ============    ===========    ==============
  
  Operating contribution                              $        25,212   $    8,619      $   2,631     $   36,462
                                                     ================= ============    ===========
  Non-recurring and special charges                                                                      (5,600)
  Corporate expenses                                                                                    (21,405)
                                                                                                      --------------
  Earnings before interest expense, taxes
       depreciation and amortization                                                                       9,457
  Depreciation and amortization                                                                          (8,487)
  Interest expense, net                                                                                  (4,236)
                                                                                                      --------------
  Loss before income taxes                                                                            $  (3,266)
                                                                                                      ==============
  
  Segment assets                                      $     454,918     $  206,314      $  26,255     $  687,487
                                                     ===============   ============    ===========    ==============
  Three months ended April 4, 1999
  Net revenues                                        $     168,419     $  169,730      $  30,011     $  368,160
                                                     ===============   ============    ===========    ==============
  
  Operating contribution before special charges       $      26,753    $     5,323      $   2,448     $   34,524
  Special charges                                           (1,730)       (14,590)          (380)       (16,700)
                                                     ---------------  -------------    -----------    --------------
  Operating contribution                              $      25,023    $   (9,267)      $   2,068         17,824
                                                     ===============  =============    ===========
  Corporate expenses                                                                                    (20,969)
                                                                                                      --------------
  Loss before interest expense, taxes
       depreciation and amortization                                                                     (3,145)
  Depreciation and amortization                                                                          (8,733)
  Interest expense, net                                                                                  (4,273)
                                                                                                      --------------
  Loss before income taxes                                                                            $ (16,151)
                                                                                                      ==============
  
  Segment assets                                      $    397,137     $   187,858      $ 17,688      $  602,583
                                                     ==============   =============    ==========     ==============
  
  </TABLE>
  
                                         11
  <PAGE>
  
  
  Item 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations.
  
       The historical unaudited consolidated financial information presents the
  results of operations and financial position as if the Company was an
  independent company for all periods presented. The historical financial
  information may not be indicative of future performance and may not necessarily
  reflect what the Company's financial position and results of operations would
  have been if it were a separate stand-alone entity during the periods covered.
  As an independent company, the Company expects to incur additional legal, risk
  management, tax, treasury, human resources and administrative and other expenses
  that it did not experience as a wholly-owned subsidiary of Olsten.
  
       On March 15, 2000, the Company was split-off (the "split-off") from Olsten
  Corporation ("Olsten") through the issuance of all of the Company's shares of
  common stock to Olsten's shareholders and the Company became an independent,
  publicly-owned company. Prior thereto, the Company operated Olsten's health
  services business as a wholly owned subsidiary of Olsten. The accompanying
  interim consolidated financial statements reflect the results of operations,
  financial position and cash flows of the Company as if it were a separate entity
  for all periods presented. The consolidated financial statements have been
  prepared using the historical basis in the assets and liabilities and historical
  results of operations related to the Company.
  
       Our results of operations are impacted by various regulations and other
  matters that are implemented from time to time in our industry, some of which
  are described in the Company's Annual Rport on Form 10-K.
  
  First Quarter 2000 and 1999 Results of Operations
  
  Revenues
  
       Net revenues increased by $16 million or 4.5 percent during the first
  quarter of fiscal 2000 as compared to the first quarter of fiscal 1999 driven by
  growth in Specialty Pharmaceutical Services of $12 million or 7.4 percent and
  Staffing Services of $6 million or 19.6 percent. These increases were offset by
  a $2 million or 1.1 percent decrease in net revenues in Home Care Nursing
  Services.
  
  Gross Profit
  
       Gross profit margins, as a percentage of net revenues decreased from 34.1
  percent in the fiscal 1999 first quarter to 33.4 percent in the first quarter of
  fiscal 2000. This decrease in margins is primarily attributable to a change in
  business mix reflecting growth in the lower margin Staffing Services business
  and higher costs attributable to certain biological and pharmaceutical products
  in the Specialty Pharmaceutical Services business due to product shortages,
  partly offset by productivity enhancements and rate increases in Home Care
  Nursing Services.
  
  Selling, General and Administrative Expenses
  
       Selling, general and administrative expenses decreased to $128 million, or
  33.2 percent of net revenues, for the first quarter of fiscal 2000, as compared
  to $138 million or 37.4 percent of net revenues in the first quarter of fiscal
  1999. Excluding the effects of non-recurring and special charges recorded in
  both periods as described below, selling, general and administrative expenses
  were 31.7 percent of net revenues during the fiscal 2000 quarter as compared to
  32.8 percent of net revenues in the fiscal 1999 quarter. The decrease as a
  percentage of net revenues was primarily attributable to the impact of
  efficiency improvement efforts in Home Care Nursing Services and corporate
  administrative support departments partially offset by increased information
  system costs.
  
  
  
                                         12
  <PAGE>
  
       During the quarter ended April 2, 2000, the Company recorded non-recurring
  and special charges aggregating $5.6 million. Of this amount, non-recurring
  charges of $4.1 million were incurred to reflect obligations resulting from the
  Company's split-off from Olsten and transition costs associated with the
  establishment of the Company as an independent, publicly-owned entity. These
  non-recurring charges included change of control, compensation and benefit
  payments of $3.6 million made to certain former employees of the Company and
  Olsten and a current executive officer of the Company, including approximately
  $1.0 million which was based on Olsten's methodology for allocating general
  corporate overhead expenses, and transition costs of $0.5 million relating to
  registration costs, professional fees and other items. Approximately $1.0
  million was unpaid and was included in accrued expenses as of April 2, 2000.
  
       Furthermore, special charges of $1.5 million were incurred during the
  quarter ended April 2, 2000 in connection with the change of the Company's name
  to Gentiva Health Services, Inc. These special charges primarily consisted of
  costs incurred and paid for consulting fees, promotional items and advertising.
  
       In the quarter ended April 4, 1999, the Company recorded a special charge
  aggregating $16.7 million. This charge was for the realignment of business units
  as part of a new restructuring plan, including compensation and severance costs
  of $5 million to be paid to operational support staff, branch administrative
  personnel and management, asset write-offs of $6.5 million related primarily to
  fixed assets being disposed of in offices being closed and facilities being
  consolidated, as well as fixed assets and goodwill attributable to the Company's
  exit from certain business previously acquired but not within the Company's
  strategic objectives, and integration costs of $5.2 million, primarily related
  to obligations under lease agreements for offices and other facilities being
  closed. Substantially all of the closures and consolidations of facilities and
  expected terminations had occurred by January 2, 2000. These activities resulted
  in lower costs than originally estimated and, as a result, the Company
  recognized a benefit of $1.5 million in the fourth quarter of fiscal 1999 to
  reflect this change in estimate. Approximately $2.0 million of this special
  charge remains unpaid as of April 2, 2000, representing compensation and
  severance costs of $1.0 million and integration costs of $1.0 million.
  
  Interest Expense
  
       Interest expense was approximately $4.2 million and $4.3 million in the
  first quarters of fiscal 2000 and 1999, respectively. Interest expense for each
  period represented primarily interest on the outstanding Quantum debentures and
  intercompany borrowings with Olsten.
  
  Income Taxes
  
       The effective income tax rate on income (loss) was 41.6 percent and 20.7
  percent for the first quarter of fiscal 2000 and fiscal 1999, respectively. The
  rates differ from statutory rates primarily because of non-deductible goodwill
  amortization and other non-deductible items.
  
  
                                         13
  <PAGE>
  
  
  
  Liquidity and Capital Resources
  
       Historically, the Company has relied on cash flow from operations and
  advances from Olsten to meet its operating and investing activities. In the
  past, when liquidity needs exceeded cash flow, Olsten provided the necessary
  funds. In accordance with the separation agreement governing the split-off, the
  Company received approximately $32 million in cash (referred to as the true-up
  amount), including $8.9 million during the fiscal 2000 first quarter, prior to
  the March 15, 2000 split-off date. Following the split-off, the Company paid
  Olsten approximately $13 million to settle the intercompany account balance
  which related primarily to management fees, additional advances and interest
  expense on intercompany balances. Furthermore, in connection with the split-off
  the Company assumed certain liabilities, including supplemental executive
  retirement plan and excise tax obligations for former Olsten employees and of
  the office lease obligations for an Olsten subsidiary. As of March 15, 2000, the
  Company is no longer able to use Olsten's capital resources to meet its needs
  and has acquired third party financing, as described below, for such purposes.
  
       The Company received $20 million of proceeds from the issuance by Gentiva
  Trust, a Delaware statutory trust (the "Trust"), of 10% convertible trust
  preferred securities on March 15, 2000. The Company owns all the common equity
  in the Trust. The Trust's only asset is the 10% convertible subordinated
  debentures of the Company. The Company entered into a credit facility, which
  provides for up to $150 million in borrowings, including up to $30 million which
  is available for letters of credit. The Company may borrow up to 80 percent of
  eligible accounts receivable, as defined. The credit facility, which expires in
  2004, includes covenants requiring the Company to maintain a minimum tangible
  net worth and minimum earnings before interest, taxes, depreciation and
  amortization. Other covenants in the credit facility include: limitations on
  mergers, consolidations, acquisitions, indebtedness, liens, capital expenditures
  and disposition of assets and other limitations with respect to the Company's
  operations. The interest rate on borrowings under the credit facility is based
  on the London Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's
  prime rate plus 0.25 percent.
  
       As of April 2, 2000, borrowings under the credit facility aggregated $25.5
  million and there were approximately $19 million of standby letters of credit
  outstanding. As of such date, the Company had an aggregate borrowing capacity of
  approximately $105.5 million under the credit facility. By October 2000, the
  Company will be required to repay its $78.6 million of 4-3/4% convertible
  subordinated debentures. The Company is evaluating various options, including
  use of the new credit facility, to repay these debentures.
  
       Working capital at April 2, 2000 was $445 million, an increase of $7
  million versus $438 million at January 2, 2000. Net receivables increased by $29
  million to $605 million, predominantly due to conversion issues resulting from
  the implementation of and transition to a new billing system for the Specialty
  Pharmaceutical Services business. The Company will continue to make investments
  in billing and accounts receivable systems and has realigned its billing and
  collection units in an effort to improve cash flow from operations.
  
  
                                         14
  <PAGE>
  
  
       Management believes cash flows from operations and borrowings available
  under the new credit facility will be adequate to support the ongoing operations
  and to meet debt service and principal repayment requirements for the
  foreseeable future. The Company intends to make investments and other
  expenditures to, among other things, upgrade its computer technology and system
  infrastructure and relocate its headquarters. If cash flows from operations or
  availability under the credit facility fall below expectations, the Company may
  be forced to delay planned capital expenditures, reduce operating expenses, seek
  additional financing or consider alternatives designed to enhance liquidity for
  operations and to refinance the convertible subordinated debentures which mature
  on October 1, 2000.
  
  
  
                                         15
  <PAGE>
  
  
  Item 3.  Quantitative and Qualitative Disclosures about Market Risk
  
       The Company's exposure to market risk for changes in interest rates relates
  primarily to the fair value of its fixed rate convertible subordinated
  debentures. Generally, the fair market value of fixed rate debt will increase as
  interest rates fall and decrease as interest rates rise.
  
       Based on the overall interest rate exposure on the Company's fixed rate
  borrowings at April 2, 2000, a 10 percent change in market interest rates would
  not have a material effect on the fair value of the Company's debt.
  
       Based on variable rate debt levels, a 10 percent change in market interest
  rates (90 basis points on a weighted average) would have less than a 1 percent
  impact on the Company's interest expense, net.
  
       Other than intercompany transactions between the United States and the
  Company's Canadian subsidiary, the Company generally does not have any
  transactions that are denominated in a currency other than the functional
  currency applicable to each entity.
  
       Although currency fluctuations impact the Company's reported results of
  operations, such fluctuations generally do not affect the Company's cash flow or
  result in actual economic gains or losses. Each of the Company's subsidiaries
  derives revenues and incurs expenses primarily within a single country, and
  consequently, does not generally incur currency risks in connection with the
  conduct of normal business operations.
  
       Fluctuations in currency exchange rates may also impact the shareholders'
  equity of the Company. The assets and liabilities of the Company's Canadian
  subsidiary are translated into U.S dollars at the exchange rates in effect at
  the balance sheet date. Revenues and expenses are translated into U.S. dollars
  at the weighted average exchange rate for the quarter. The resulting translation
  adjustments are recorded in shareholders' equity as accumulated other
  comprehensive income (loss).
  
       Foreign exchange gains and losses have not been significant. The Company
  does not engage in hedging activities. The Company did not hold any derivative
  instruments at April 2, 2000.
  
  
                                         16
  
  <PAGE>
  
  
  OTHER:
  
       INFORMATION CONTAINED HEREIN, OTHER THAN HISTORICAL INFORMATION, SHOULD BE
  CONSIDERED FORWARD-LOOKING AND IS SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES.
  FOR INSTANCE, THE COMPANY'S STRATEGIES AND OPERATIONS INVOLVE RISKS OF
  COMPETITION, CHANGING MARKET CONDITIONS, CHANGES IN LAWS AND REGULATIONS
  AFFECTING THE COMPANY'S INDUSTRIES AND NUMEROUS OTHER FACTORS DISCUSSED IN THIS
  DOCUMENT AND IN OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE
  COMMISSION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
  EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
  
  
  
                                         17
  <PAGE>
  
  
  
  PART  II OTHER INFORMATION
  
  Item 1.    Legal Proceedings
  
       There is presently pending in the U.S. District Court for the Eastern
  District of New York a purported class action filed by some Olsten stockholders
  against Olsten and some of its directors and officers, captioned In re Olsten
  Corporation Securities Litigation, No. 97-5056 (the "Class Action"). The class
  action asserts claims for violations of the Securities Act and the Securities
  Exchange Act, including claims that the directors and officers of Olsten
  misrepresented information to stockholders relating to the government
  investigations into Olsten's health services business described Item 5 - Other
  Information. In December 1998, defendants filed a motion to dismiss the Amended
  Complaint in this Class Action. In response to a request from the parties, the
  Court, by Order dated April 27, 2000, dismissed without prejudice defendants'
  dismissal motion, subject to its being re-filed on the previously-submitted
  papers, and stayed the Class Action pending the outcome of the parties'
  mediation efforts.
  
       There is also pending in the Delaware Chancery Court a purported derivative
  lawsuit filed by some Olsten stockholders against some directors and officers of
  Olsten (and Olsten, as nominal defendant), captioned Rubin v. May, No. 17135-NC
  (the "Derivative Suit"). This purported derivative lawsuit alleges that the
  Olsten directors and officers breached their fiduciary duties to stockholders in
  connection with the above-described class action and the below-described
  government investigations. In September 1999, defendants filed a motion to
  dismiss or, in the alternative, stay this Derivative Lawsuit. That motion has
  not yet been briefed. In April 2000, plaintiffs served defendants with a set of
  document requests; the deadline to respond thereto was adjourned to July 14,
  2000. Subsequently, the parties jointly petitioned the Chancery Court to stay
  all proceedings in the Derivative Lawsuit pending the outcome of the parties'
  mediation efforts.
  
       In July 1999, the Indiana Attorney General's Office filed a lawsuit against
  Olsten in Indiana Superior Court, captioned State of Indiana v. Quantum Health
  Resources, Inc. and Olsten Health Services, Inc., No. 49D029907CP001011,
  alleging that Olsten was overpaid by Medicaid, failed to properly disclose
  information to Medicaid and engaged in improper billing. Discovery continues in
  this matter.
  
       On January 14, 1999, Kimberly Home Health Care, Inc. ("Kimberly") initiated
  three arbitration proceedings against hospitals owned by Columbia/HCA Healthcare
  Corp. ("Columbia/HCA") with which Kimberly had management services agreements to
  provide services to the hospitals' home health agencies. The basis for each of
  the arbitrations is that Columbia/HCA sold the home health agencies without
  assigning the management services agreements and, as a result, Columbia/HCA has
  breached the management services agreements. In response to the arbitrations,
  Columbia/HCA has asserted that the arbitration be consolidated and stayed, in
  part based upon its alleged claims against Kimberly for breach of contract, and
  requested indemnity and possibly return of management fees. Columbia/HCA has not
  yet formally presented these claims in the arbitrations or other legal
  proceedings, and has not yet quantified the claims. The parties agreed to
  suspend the proceedings until June 2000.
  
  
                                         18
  <PAGE>
  
       Because the above lawsuits and arbitration proceedings are in relatively
  preliminary stages and seek unspecified damages, penalties and/or reimbursement
  for costs and expenses, the Company is unable at this time to assess the
  probable outcome or potential liability arising from such litigation.
  
       Furthermore, in connection with the split-off, the Company agreed to
  assume, to the extent permitted by law, and indemnify Olsten for, the above
  lawsuits and arbitration proceedings, together with any other liabilities
  arising out of the health services business before or after the split-off,
  including any such liabilities arising after the split-off in connection with
  the government investigations described below.
  
       Reference is made to the descriptions of legal proceedings in the Company's
  Annual Report on Form 10-K for the year ended January 2, 2000.
  
  
  Item 2. Change in Securities and Use of Proceeds
  
       In March 2000, the Company sold 100 shares of its Series A Cumulative
  non-voting Redeemable Preferred Stock in exchange for services in the amount of
  $100,000. In March 2000, a subsidiary trust of the Company issued $20 million of
  10% convertible trust preferred securities to certain of the Company's and
  Olsten's directors, officers and management, other related parties and other
  investors. The trust used the $20 million of gross proceeds to purchase $20
  million of the Company's 10% Convertible Subordinated Debentures. The Company
  used the net proceeds of the transaction to pay Olsten the amount owed for the
  intercompany balance and for other corporate purposes. The above issuances were
  made in reliance on the exemption from registration provided in Section 4(2) of
  the Securities Act.
  
       Reference is made to the notes to the Consolidated Financial Statements in
  this Form 10-Q for a further description of the above securities.
  
  
  Item 3. Defaults Upon Senior Securities
  
       None
  
  Item 4. Submission of Matters to a Vote of Security Holders
  
       None
  
  
  
                                         19
  <PAGE>
  
  Item 5.    Other Information
  
       The Company's business has been subject to extensive federal and state
  governmental investigations regarding, among other things, the preparation of
  Medicare costs reports, the relationship between it and Columbia/HCA and the
  health services business related to the purchase by Columbia/HCA of some home
  health agencies that were owned by the health services business and subsequently
  managed under contract by a unit of the health services business, and some of
  the health care practices of Quantum Health Resources, Inc. ("Quantum"),
  including alleged improper billing and fraud against various federally funded
  medical assistance programs, which largely occurred during the period prior to
  Olsten's acquisition of Quantum in June 1996, which is referred to as the
  "Quantum Investigation."
  
       In October 1998, Olsten entered into a final settlement agreement with
  several government agencies related to the Quantum Investigation. Under the
  settlement, Olsten reimbursed the government approximately $4.5 million for
  disputed claims under the Medicaid and CHAMPUS programs and entered into a
  corporate integrity agreement.
  
       On January 28, 1999, Olsten announced that it had been advised by the
  United States Attorney's Office for the District of New Mexico ("New Mexico U.S.
  Attorney's Office") that, in connection with the Quantum New Mexico
  Investigation, it had dropped its criminal investigation into allegations of
  improper billing and fraud against various federally funded medical assistance
  programs by Quantum during the period between January 1992 and April 1997. By
  letter dated February 1, 1999, the New Mexico U.S. Attorney's Office advised
  Olsten that, having ended its criminal inquiry, the Office has referred the
  Quantum matter to its Affirmative Civil Enforcement Section. The Company
  continues to cooperate with the civil inquiry into the Quantum matter and to
  explore with the New Mexico U.S. Attorney's Office the possibility of reaching a
  negotiated monetary resolution of the matter. Any negotiated amount could
  include multiple damages, interest and civil penalties.
  
       On July 19, 1999, Olsten entered into written civil and criminal agreements
  with the U.S. Department of Justice and the Office of Inspector General of the
  U.S. Department of Health and Human Services settling the civil and criminal
  aspects of the Cost Reports Investigation and the Columbia/HCA Investigation.
  The settlement agreements provided for the payment of fines and penalties in the
  amount of $61 million by Olsten, Kimberly, then a subsidiary of Olsten, pled
  guilty to certain criminal violations of the federal mail fraud, conspiracy and
  kickback statutes, Kimberly has been permanently excluded from participation in
  Medicare, Medicaid and all other federal health care programs as defined in 42
  U.S.C. ss.1320a-7b(f); and Olsten executed a corporate integrity agreement with
  the Office of Inspector General of the U.S. Department of Health and Human
  Services.
  
       In early December 1999, Olsten received a document subpoena from the
  Department of Health and Human Services, Office of Inspector General, and Office
  of Investigations. After preliminary discussions with the Office of Inspector
  General, the
  
  
                                         20
  <PAGE>
  
  Company believes the subpoena relates to an investigation of possible
  overpayments to it by the Medicare program. In early February 2000, the Company
  received a document subpoena from the Department of Health and Human Services,
  Office of Inspector General, and Office of Investigations. The Company believes
  the subpoena relates to its agencies' cost reporting procedures concerning
  contracted nursing and home health aide costs. The Company intends to provide
  the Office of Inspector General with the requested documents and cooperate fully
  with its investigations. At this time, the Company is unable to assess the
  probable outcome or potential liability, if any, arising from these subpoenas.
  The Company believes that it is possible that one or more of these
  investigations may be triggered by lawsuits under federal or state whistle
  blower statutes against Olsten or the Company.
  
       The Company continues to have discussions with the North Carolina Attorney
  General's Office concerning questions that the Office has raised as to the
  eligibility of a certain class of the Company's patients to receive
  Medicaid-reimbursed home health services and, thus, the Company's entitlement to
  Medicaid reimbursement in connection with those services. At this time, the
  Company is unable to assess the probable outcome of or potential liability
  arising from this matter.
  
       As noted above, in connection with the October 1998 settlement of the
  Quantum Investigation, Olsten executed a corporate integrity agreement with the
  U.S. Department of Justice, the Office of Inspector General of the U.S.
  Department of Health and Human Services, the U.S. Secretary of Defense (for the
  CHAMPUS/Tricare Program) and the Attorneys General for the States of New York
  and Oklahoma that will be in effect until December 31, 2001. Also, in connection
  with the July 19, 1999 settlement with various government agencies, Olsten
  executed a separate corporate integrity agreement with the Office of Inspector
  General of the Department of Health and Human Services which will remain in
  effect until August 18, 2004. Under each of the corporate integrity agreements,
  the Company is, for example, is required:
  
       o    to maintain a corporate compliance officer to develop and implement
            compliance programs;
  
       o    to retain an independent review organization to perform annual
            reviews; and
  
       o    to maintain a compliance program and reporting systems, as well as
            provide certain training to employees.
  
       The corporate integrity agreement entered into in connection with the
  Quantum Investigation applies to the Company's specialty pharmaceutical services
  business and focuses on the training and billing of blood factor products for
  hemophiliacs. The July 19, 1999 corporate integrity agreement applies to the
  Company's businesses that bill the federal government health programs directly
  for services, such as its home care nursing business (but excluding the
  specialty pharmaceutical services business). That corporate integrity
  
  
                                         21
  <PAGE>
  
  agreement focuses on issues and training related to cost report preparation,
  contracting, medical necessity and billing of claims.
  
       The Company's compliance program will be implemented for all newly
  established or acquired business units if their type of business is covered by
  the corporate integrity agreements. Reports under each integrity agreement are
  to be filed annually with the Department of Health and Human Services, Office of
  Inspector General. After each corporate integrity agreement expires, the Company
  is to file a final annual report with the government. If the Company fails to
  comply with the terms of either of its corporate integrity agreements, the
  Company will be subject to penalties ranging from $1,500 to $2,500 for each day
  of the breach.
  
       In March 2000, Gentiva was notified by the U.S. Department of Justice that,
  in light of the Adecco/Olsten merger and the split-off of Gentiva as an
  independent public company, the Company has been substituted for Olsten in
  connection with the civil settlement and corporate integrity agreements
  referenced in this "Government Investigations" section.
  
       Reference is made to the full descriptions of government investigations in
  the Company's Annual Report on the Form 10-K for the year ended January 2, 2000.
  
  Item 6.  Exhibits and Reports on Form 8-K
  
  
  (a)      Exhibit Number    Description
  
       3.1  Restated Certificate of Incorporation of Company. (1)
  
       3.2  Restated By-Laws of Company. (1)
  
       4.1  Specimen of common stock. (3)
  
       4.2  Indenture dated October 8, 1993, between Quantum Health Resources Inc.
            and First Trust National Association, as Trustee. (1)
  
       4.3  Supplemental Indenture dated June 28, 1996, between Quantum Health
            Resources Inc. and First Trust National Association, as Trustee. (1)
  
       4.4  Form of Certificate of Designation of Series A Junior Participating
            Preferred Stock. (2)
  
                                         22
  <PAGE>
  
       4.5  Form of Certificate of Designation of Series A Cumulative Non-Voting
            Redeemable Preferred Stock. (2)
  
       4.6  Second Supplemental Indenture dated March 15, 2000, between Quantum
            Health Resources, Inc. and U.S. Bank Trust National Association
            (formerly known as First Trust National Association) as Trustee. (5)
  
       4.7  Trust Agreement among the Company, Wilmington Trust Company, the
            Administrative Trustees named therein and the holders from time to
            time of the convertible trust preferred securities dated March 9,
            2000. (5)
  
       4.8  Indenture between the Company and Wilmington Trust Company dated March
            15, 2000. (5)
  
       10.1 Separation Agreement dated August 17, 1999, among Olsten Corporation,
            Aaronco Corp. and Adecco SA. (1)
  
       10.2 Omnibus Amendment No. 1 dated October 7, 1999, by and among Olsten
            Corporation, Aaronco Corp., Adecco SA and Olsten Health Services
            Holding Corp. (1)
  
       10.3 Form of Rights Agreement dated March 2, 2000 between the Registrant
            and Equiserve Limited Partnership, as rights agent. (1)
  
       10.4 Company's Executive Officers Bonus Plan. (1)
  
       10.5 Company's 1999 Stock Incentive Plan. (5)
  
       10.6 Company's stock & Deferred Compensation Plan for Non-Employee
            Directors. (5)
  
       10.7 Company's Employee Stock Purchase Plan. (1)
  
       10.8 Omnibus Amendment No. 2 dated January 18, 2000, by and among Olsten
            Corporation, Adecco SA, Olsten Health Services Holding Corp., the
            Company and Staffing Acquisition Corporation. (1)
  
       10.9 Loan and Security Agreement by and between Fleet Capital Corp., on
            behalf of the lenders named therein, the Company, Olsten Health
            Services Holding Corp. and the subsidiaries named therein, dated March
            13, 2000. (5)
  
       10.10 Form of Employment Agreement with Edward A. Blechschmidt. (2)
  
       10.11 Form of Change of Control Agreement with Executive Officers of
             Company. (5)
  
       10.12 Form of Change in Control Agreement with Edward A. Blechschmidt. (5)
  
       10.13 Form of Severance Agreement with Executive Officers of Company. (2)
  
       21.1 List of Subsidiaries of Company. (2)
  
       27   Financial Data Schedule
  
  
                                         23
  <PAGE>
  
       (1)  Incorporated herein by reference to Amendment No. 2 to the
            Registration Statement on Form S-4, dated January 20, 2000 (File No.
            333-88663).
  
       (2)  Incorporated herein by reference to Amendment No. 3 to the
            Registration Statement on Form S-4, dated February 4, 2000 (File No.
            333-88663).
  
       (3)  Incorporated herein by reference to Amendment No. 4 to the
            Registration Statement on Form S-4, dated February 9, 2000 (File No.
            333-88663).
  
       (4)  Incorporated herein by reference to the Post-Effective Amendment No. 1
            on Form S-8 to Form S-4 dated March 27, 2000 (File No. 333-88663).
  
       (5)  Incorporated herein by reference to the Form 10-K for the Registrant
            for the Fiscal year ended January 2, 20000
  
  
  
  (b)  Reports on Form 8-K
  
       No reports on Form 8-K have been filed during the last quarter for the
  period covered by this report.
  
       Exhibit Index
  
       Exhibit                   Description
  
         27                Financial Data Schedule
  
  
  
  
                                         24
  <PAGE>
  
  
  
                                     SIGNATURES
  
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  
  Date:    May 17, 2000                /s/ Edward A. Blechschmidt
                                       ------------------------------------------
                                       Edward A. Blechschmidt
                                       President and Chief Executive
                                       Officer
  
  
  Date:    May 17, 2000                /s/ John J. Collura
                                       -----------------------------------------
                                       John J. Collura
                                       Executive Vice President,
                                       Chief Financial Officer and
                                       Treasurer
  
  
  
  
                                         25
metadata_documents: [{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 71101}]
metadata_filer: {"company-data": {"conformed-name": "GENTIVA HEALTH SERVICES INC", "cik": "0001096142", "assigned-sic": "7363", "irs-number": "364335801", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-15669", "film-number": "638737"}, "business-address": {"street1": "175 BROAD HOLLOW ROAD", "city": "MELVILLE", "state": "NY", "zip": "11747-8905", "phone": "516847800"}, "mail-address": {"street1": "175 BROAD HOLLOW ROAD", "city": "MELVILLE", "state": "NY", "zip": "11747-8905"}, "former-company": {"former-conformed-name": "OLSTEN HEALTH SERVICES HOLDING CORP", "date-changed": "19991001"}}
text: 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 April 2, 2000
  
                             Commission File No. 1-15669
                                       -------
  
                            Gentiva Health Services, Inc.
                            -----------------------------
               (Exact name of Registrant as specified in its charter)
  
               DELAWARE                                 36-433-5801
             --------------                             -----------
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                   Identification No.)
  
                175 Broad Hollow Road, Melville, New York 11747-8905
                (Address of principal executive offices)  (Zip Code)
  
         Registrant's telephone number, including area code: (631) 844-7800
                                                             --------------
  
       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 ____ No _X_
  
            The number of shares outstanding of the Registrant's Common Stock, as
            of May 12, 2000, was 20,531,456.
  INDEX
  
                                                                          Page No.
                                                                          -------
  
  PART I - FINANCIAL INFORMATION
  
       Item 1. Interim Financial Statements
  
               Consolidated Balance Sheets -- April 2, 2000
               (Unaudited) and January 2, 2000                              2
  
               Consolidated Statements of Operations (Unaudited) -
               Quarters Ended April 2, 2000
               and April 4, 1999                                            3
  
               Consolidated Statements of Cash Flows (Unaudited) -
               Three Months Ended April 2, 2000 and April 4, 1999           4
  
               Notes to Consolidated Financial Statements
               (Unaudited)                                                  5-11
  
       Item 2. Management's Discussion and Analysis of Financial
               Condition and Results of Operations                          12-15
  
       Item 3. Quantitative and Qualitative Disclosures about
               Market Risk                                                  16-17
  
  PART II - OTHER INFORMATION
  
       Item 1. Legal Proceedings                                            18-19
  
       Item 2. Change in Securities and Use of Proceeds                     19
  
       Item 3. Defaults Upon Senior Securities                              19
  
       Item 4. Submission of Matters to a Vote of Security Holders          19
  
       Item 5. Other Information                                            19-22
  
       Item 6. Exhibits and Reports on Form 8-K                             22-24
  
  SIGNATURES                                                                25
  PART I - FINANCIAL INFORMATION
  
  Item 1. Financial Statements.
          --------------------
  Gentiva Health Services, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                        (In thousands, except share amounts)
  
                                                                      April 2, 2000            January 2,
                                                                                                  2000
                                                                  -----------------------  ---------------------
                                                                       (Unaudited)
  ASSETS
  Current Assets:
         Cash and cash equivalents                                            $    4,386              $    2,942
         Receivables, net                                                        604,504                 575,460
         Inventories                                                              82,983                  93,218
         Prepaid expenses and other current assets                                40,380                  87,611
                                                                  -----------------------  ---------------------
               Total current assets                                              732,253                 759,231
  
  Fixed Assets, Net                                                               47,711                  51,809
  
  Intangible Assets, Net                                                         247,474                 250,297
  
  Other Assets                                                                     4,225                   1,678
                                                                  -----------------------  ---------------------
               Total Assets                                                 $  1,031,663            $  1,063,015
                                                                  =======================  =====================
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities:
         Current portion of long-term debt                                  $     78,562            $     78,562
         Accounts payable                                                         75,808                 114,197
         Accrued expenses                                                         81,576                  76,746
         Payroll and related taxes                                                20,997                  20,020
         Insurance costs                                                          30,472                  31,170
                                                                  -----------------------  ---------------------
               Total current liabilities                                         287,415                 320,695
  
  Other Liabilities                                                               37,129                  37,029
  
  Long-Term Debt                                                                  25,477                   -
  
  Gentiva - Obligated Mandatorily Redeemable                                      20,000                   -
  Convertible Securities of a Subsidiary Holding Solely
  Gentiva Debentures
  
  Shareholders' Equity:
         Common stock, $.10 par value; authorized 100,000,000
         shares;
         issued and outstanding 20,345,029 shares                                  2,035                   2,035
         Additional paid-in capital                                              684,120                 725,998
         Accumulated deficit                                                    (22,276)                (20,370)
         Accumulated other comprehensive loss                                    (2,237)                 (2,372)
                                                                  -----------------------  ---------------------
               Total Shareholders' Equity                                        661,642                 705,291
                                                                  -----------------------  ---------------------
  Total Liabilities and Shareholders' Equity                                $  1,031,663            $  1,063,015
                                                                  =======================  =====================
  See notes to consolidated financial statements.
  
                                         2
  Gentiva Health Services, Inc. and Subsidiaries
                        Consolidated Statements of Operations
                        (In thousands, except share amounts)
                                     (Unaudited)
  
                                                                                        First Quarter Ended
                                                                             ------------------------------------
                                                                                April 2, 2000      April 4, 1999
                                                                             ------------------  ----------------
  Net revenues                                                                      $   384,607      $  368,160
  
  Cost of services sold                                                                 256,105         242,486
                                                                             ------------------  ----------------
  
           Gross profit                                                                 128,502         125,674
  
  Selling, general and administrative expenses                                          127,532         137,552
  
  Interest expense, net                                                                   4,236           4,273
  
                                                                             ------------------  ----------------
  
           Loss before income taxes                                                      (3,266)        (16,151)
  
  Income tax benefit                                                                      1,360           3,345
  
                                                                             ------------------  ----------------
  
   Net loss                                                                         $    (1,906)     $  (12,806)
                                                                             ==================  ================
  
  SHARE INFORMATION:
  
  Basic and diluted loss per share:
           Net loss                                                                 $     (0.09)     $    (0.63)
                                                                             ===================  ===============
  
  Average shares outstanding                                                         20,345,029       20,345,029
                                                                             ===================  ===============
  See notes to consolidated financial statements.
  
                                         3
  Gentiva Health Services, Inc. and Subsidiaries
                        Consolidated Statements of Cash Flows
                                   (In thousands)
                                     (Unaudited)
  
                                                                                            Three Months Ended
                                                                                    ----------------------------------
                                                                                       April 2, 2000    April 4, 1999
                                                                                    ----------------------------------
  OPERATING ACTIVITIES:
  Net loss                                                                                $  (1,906)      $  (12,806)
  Adjustments to reconcile net loss to net cash
  used in operating activities:
            Depreciation and amortization                                                      8,487            8,733
            Provision for doubtful accounts                                                    7,545            5,787
            Changes in assets and liabilities, net of effect from
            acquisitions:
                        Accounts receivable                                                 (36,589)         (65,009)
                        Inventories                                                           10,235            (867)
                        Prepaid expenses and other current assets                              1,631          (2,600)
                        Current liabilities                                                 (30,596)            7,576
            Other, net                                                                         (732)            (744)
                                                                                    ----------------      -----------
  Net cash used in operating activities                                                     (41,925)         (59,930)
                                                                                    ----------------      -----------
  INVESTING ACTIVITIES:
  Purchase of fixed assets                                                                   (2,186)          (5,283)
  Acquisitions of businesses, net of cash acquired                                              -             (1,655)
                                                                                    ----------------      -----------
  Net cash used in investing activities                                                      (2,186)          (6,938)
                                                                                    ----------------      -----------
  FINANCING ACTIVITIES:
  Net transactions with Olsten                                                                 5,226           72,873
  Decrease in book overdrafts                                                                (2,684)             -
  Retirement of long-term debt                                                                  -             (6,804)
  Proceeds from revolving credit facility                                                     25,477             -
  Issuance of mandatorily redeemable securities                                               20,100             -
  Debt issuance costs                                                                        (2,564)             -
                                                                                    ----------------      -----------
  
  Net cash provided by financing activities                                                   45,555           66,069
                                                                                    ----------------      -----------
  
  Net increase (decrease) in cash and cash equivalents                                         1,444            (799)
  
  Cash and cash equivalents at beginning of period                                             2,942              799
                                                                                    ----------------      -----------
  
  Cash and cash equivalents at end of period                                               $   4,386      $      -
                                                                                    ================      ============
  See notes to consolidated financial statements.
  
                                         4
  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 generally accepted accounting principles.
  
       2. Background and Basis of Presentation
  
       On March 15, 2000, the Company was split-off (the "split-off") from Olsten
  Corporation ("Olsten") through the issuance of all of the Company's shares of
  common stock to Olsten's shareholders and the Company became an independent,
  publicly-owned company. Prior thereto, the Company operated Olsten's health
  services business as a wholly owned subsidiary of Olsten. The accompanying
  interim consolidated financial statements reflect the results of operations,
  financial position and cash flows of the Company as if it were a separate entity
  for all periods presented. The consolidated financial statements have been
  prepared using the historical basis in the assets and liabilities and historical
  results of operations related to the Company.
  
       Additionally, the Company's selling, general and administrative expenses
  included a management fee of approximately $1.0 million and $1.2 million for the
  first quarters of fiscal 2000 and 1999, respectively. This fee represented an
  allocation of certain general corporate overhead expenses related to Olsten's
  corporate headquarters. Management believes the allocations related to general
  corporate overhead expenses are reasonable; however, the costs of these items
  deemed to be charged to the Company are not necessarily indicative of the costs
  that would have been incurred if the Company had been a stand-alone entity.
  Subsequent to the split-off, the Company began to perform these functions using
  its own resources or purchased services and the Company is responsible for the
  costs and expenses associated with the management of a public corporation.
  Management estimates that had the Company been a separate entity for each period
  presented, selling, general and administrative expenses would have been
  approximately $1.2 million greater than the amounts presented in these
  historical financial statements.
  
       Net interest expense of approximately $4.2 million and $4.3 million during
  the first quarter of fiscal 2000 and 1999, respectively, as presented in the
  consolidated statements of operations included net interest expense of
  approximately $2.7 million for the first quarter of 2000 and $3.3 million for
  the first quarter of 1999 relating to the intercompany balances with
  
                                         5
  Olsten. Such intercompany balances have been reflected as a contribution to
  capital at the end of each period presented herein.
  
       Earnings per share data has been computed based upon 20,345,029 shares of
  common stock. Such amount is based on the number of shares of the Company's
  stock issued on March 15, 2000, the date of the split-off. Pursuant to the terms
  of the split-off, shareholders of Olsten received .25 shares of Gentiva Health
  Services common stock for each share of Olsten common stock or Class B common
  stock that they owned.
  
       At April 2, 2000, outstanding options to purchase 4.6 million shares of
  common stock were not included in the computation of diluted net loss per share
  because to do so would have had an antidilutive effect for the period.
  Similarly, the computation of diluted net loss per share excludes the effect of
  any shares issuable upon the conversion of $78.6 million of 4 3/4% convertible
  subordinated debentures due October 1, 2000 and $20 million of 10% convertible
  trust preferred securities since their inclusion would also have had an
  antidilutive effect.
  
       3. Non-recurring and Special Charges
  
       During the quarter ended April 2, 2000, the Company recorded non-recurring
  and special charges aggregating $5.6 million. Of this amount, non-recurring
  charges of $4.1 million were incurred to reflect obligations resulting from the
  Company's split-off from Olsten and transition costs associated with the
  establishment of the Company as an independent, publicly-owned entity. These
  non-recurring charges included change of control, compensation and benefit
  payments of $3.6 million made to certain former employees of the Company and
  Olsten and a current executive officer of the Company, including approximately
  $1.0 million which is based on Olsten's methodology for allocating general
  corporate overhead expenses as discussed in Note 6, and transition costs of $0.5
  million relating to registration costs, professional fees and other items.
  Approximately $1.0 million was unpaid and was included in accrued expenses as of
  April 2, 2000.
  
       Special charges of $1.5 million were incurred during the quarter ended
  April 2, 2000 in connection with the change of the Company's name to Gentiva
  Health Services, Inc. These special charges primarily consisted of costs
  incurred and paid for consulting fees, promotional items and advertising.
  
       In the quarter ended April 4, 1999, the Company recorded a special charge
  aggregating $16.7 million. This charge was for the realignment of business units
  as part of a new restructuring plan, including compensation and severance costs
  of $5 million to be paid to operational support staff, branch administrative
  personnel and management, asset write-offs of $6.5 million related primarily to
  fixed assets being disposed of in offices being closed and facilities being
  consolidated, as well as fixed assets and goodwill attributable to the Company's
  exit from certain business previously acquired but not within the Company's
  strategic objectives, and integration costs of $5.2 million, primarily related
  to obligations under lease agreements for offices and other facilities being
  closed. Substantially all of the closures and consolidations of facilities and
  expected terminations had occurred by January 2, 2000. These activities resulted
  in
  
                                         6
  lower costs than originally estimated and, as a result, the Company recognized a
  benefit of $1.5 million in the fourth quarter of fiscal 1999 to reflect this
  change in estimate. Approximately $2.0 million of this special charge remains
  unpaid as of April 2, 2000, representing compensation and severance costs of
  $1.0 million and integration costs of $1.0 million.
  
       4. Long-Term Debt
  
       On March 13, 2000, the Company entered into a credit facility which
  provides for up to $150 million in borrowings, including up to $30 million,
  which is available for letters of credit. The Company may borrow up to a maximum
  of 80 percent of eligible accounts receivable, as defined. At the Company's
  option, the interest rate on borrowings under the credit facility is based on
  the London Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's prime
  rate plus 0.25 percent.
  
       The credit facility, which expires in 2004, includes certain covenants
  requiring the Company to maintain a minimum tangible net worth and minimum
  earnings before interest, taxes, depreciation and amortization and provides
  limitations on certain other activities. Loans under the credit facility are
  collateralized by all of the Company's tangible and intangible personal
  property, other than equipment.
  
       At April 2, 2000, borrowings under the credit facility aggregated $25.5
  million and there were approximately $19 million of standby letters of credit
  outstanding. As of such date, the Company had borrowing capacity of
  approximately $105.5 million available under the credit facility.
  
       The current portion of long-term debt is an aggregate of $78.6 million
  which represents the 4 3/4 convertible subordinated debentures which mature on
  October 1, 2000.
  
       5. Mandatorily Redeemable Securities
  
  Cumulative Preferred Stock
  
       The Company's authorized capital stock includes 25,000,000 shares of
  preferred stock, $.01 par value, of which 1,000 shares have been designated
  Series A Cumulative Non-voting Redeemable Preferred Stock ("cumulative preferred
  stock"). On March 10, 2000, 100 shares of cumulative preferred stock were issued
  for proceeds of $100,000. Such amount is reflected in other liabilities in the
  consolidated balance sheet as of April 2, 2000.
  
       In the event of any voluntary or involuntary liquidation, dissolution or
  other winding up of the Company, or at the option of the Company on or after
  March 10, 2005, or the Holder on or after May 10, 2005, the holders of
  cumulative preferred stock will be entitled to receive the stated liquidation
  preference or redemption price of $1,000 per share.
  
  Gentiva Obligated Mandatorily Redeemable Convertible Securities of a Subsidiary
  Holding Solely Gentiva Debentures
  
       On March 15, 2000, certain of the Company's and Olsten's directors,
  officers and management and other related parties and other investors purchased
  $20 million of 10% convertible trust preferred securities issued by a trust, of
  which the Company owns all the common equity. The Company owns all of the common
  equity of the trust. The convertible trust preferred securities are mandatorily
  redeemable five years from
  
                                         7
  issuance at a declining premium over face amount. Upon a change of control, as
  defined, the holders of convertible trust preferred securities may require the
  trust to purchase these securities at 100 percent of their face amount.
  Dividends are payable quarterly in cash at the rate of 10 percent per annum, but
  the trust may defer dividend payments for up to a total of twenty quarters, in
  which case dividends will accrue. The convertible trust preferred securities are
  convertible into the Company's common stock at a conversion price which is 17.5
  percent above the average closing price of the Company's common stock during the
  ten trading days following the earnings announcement of first quarter 2000
  results.
  
       Simultaneously with, and in connection with the issuance by the trust of
  the convertible trust preferred securities, the Company issued to the trust $20
  million of its 10% convertible subordinated debentures. The convertible
  subordinated debentures have the same terms as the convertible trust preferred
  securities, including but not limited to maturity, interest, conversion and
  redemption price.
  
       The trust which issued the convertible trust preferred securities is a
  special purpose trust. The trust's operations are limited to issuing the
  convertible trust preferred securities and holding the Company's convertible
  subordinated debentures. The trust may pay dividends only to the extent that the
  Company pays interest on its convertible subordinated debentures.
  
       6. Shareholders' Equity
  
  Changes in shareholders' equity during the three months ended April 2, 2000 were
  as follows (in thousands):
  Accumulated
                                                           Additional                             Other
                                               Common        Paid-in       Accumulated        Comprehensive
                                                Stock        Capital         Deficit              Loss             Total
                                             ------------ -------------- ----------------  -------------------- -------------
  Balance at January 2, 2000                  $ 2,035       $725,998       $ (20,370)           $   (2,372)      $705,291
     Comprehensive income (loss):
         Net loss and cumulative
         translation adjustment                                                  (1,906)                   135       (1,771)
  
     True-up payment made by Olsten                               8,851                                                8,851
  
     Obligations assumed in connection
     with the split-off, net of tax benefit                     (1,029)                                              (1,029)
  
     Transfer to Olsten of tax benefits
     relating to net operating losses                          (49,700)                                             (49,700)
                                             ------------ -------------- ----------------  -------------------- -------------
     Balance at April 2, 2000                    $ 2,035       $684,120       $ (22,276)           $   (2,237)      $661,642
                                             ============ ============== ================  ==================== =============
  8
  See Note 7 for a description of the true-up payment made by Olsten.
  
       Under the terms of the Separation Agreement relating to the split-off, the
  Company assumed the obligation for the funding of liabilities of the
  non-qualified supplemental executive retirement plan for certain of its
  employees and former employees of Olsten. During the first quarter of 2000,
  payments of $12.1 million were made under this program; these payments exceeded
  assets of the plan which were transferred to the Company by $3.6 million due
  primarily to benefits paid to former Olsten employees and a current executive
  officer of the Company. Furthermore, the Company also assumed excise tax
  obligations of approximately $0.8 million for a former executive officer of
  Olsten (and current executive officer of the Company). Approximately $1.0
  million of the aggregate net obligations of $4.4 million were included in
  non-recurring and special charges in the consolidated statement of operations
  based on Olsten's allocation methodology for general corporate overhead
  expenses. The remaining $3.4 million associated with these obligations were
  charged directly to additional paid-in capital.
  
       In addition, under the terms of the separation agreement, the Company also
  agreed to assume the office lease for an Olsten subsidiary commencing September
  2000. In this connection, the present value of future lease obligations and
  other costs exceed estimated sublease rentals by $1.7 million. Such amount was
  charged directly to additional paid-in capital during the first quarter of 2000.
  
       An estimated tax benefit of $4.1 million relating to the aforementioned
  obligations was credited to additional paid-in capital.
  
       In accordance with the Tax Sharing Agreement governing the split-off, any
  net operating losses generated up to the split-off were to be transferred and
  utilized by Olsten. Accordingly, on March 15, 2000 the Company transferred
  approximately $49.7 million of tax benefits relating to those net operating
  losses to Olsten. Such amount is reflected as a reduction of additional paid-in
  capital during the first quarter of 2000.
  
       Total comprehensive loss amounted to $1.8 million and $12.8 million during
  the first quarters of fiscal 2000 and 1999, respectively.
  
       7. Transactions with Olsten
  
       Net transactions with Olsten, included in shareholders' equity, include the
  accumulated excess of cash outlays made on the Company's behalf and management
  fees charged to the Company by Olsten over cash receipts generated by the
  Company. In accordance with the terms of the Separation Agreement, intercompany
  balances at October 31, 1999 of approximately $507 million have been contributed
  to the Company's capital in its entirety. Pursuant to the terms described in the
  Separation Agreement, the Company was to receive approximately $32 million in
  cash (referred to as the true-up amount) on or prior to the split-off date.
  Approximately $23.1 million
  
                                         9
  of the true-up amount was received by the Company prior to January 2, 2000; the
  remaining $8.9 million was received by the Company during the first quarter of
  2000.
  
       Following the split-off, the Company paid Olsten approximately $13 million
  to settle the intercompany account balance which primarily related to advances
  for management fees, additional borrowings and interest expense on intercompany
  balances.
  
       8. Business Segment Information
  
       The Company operates in the United States and Canada, servicing patients
  and customers through the following business segments: Specialty Pharmaceutical
  Services, Home Care Nursing Services and Staffing Services. These segments are
  briefly described below.
  
       Specialty Pharmaceutical Services includes (i) the distribution of drugs
  and other biological and pharmaceutical products and professional support
  services for individuals with chronic diseases, such as hemophilia, primary
  pulmonary hypertension, autoimmune deficiencies and growth disorders, (ii) the
  administration of antibiotics, chemotherapy, nutrients and other medications for
  patients with acute or episodic disease states and (iii) distribution services
  for pharmaceutical, biotechnology and medical service firms.
  
       Home Care Nursing Services includes (i) professional and paraprofessional
  services, including skilled nursing, rehabilitation and other therapies, home
  health aide and personal care services, to individuals with acute illnesses,
  long-term chronic health conditions, permanent disabilities, terminal illnesses
  or post-procedural needs and (ii) care management and coordination for managed
  care organizations and self-insured employees.
  
       Staffing Services includes (i) services to institutional, occupational and
  alternate site health care organizations by providing health care professionals
  to meet supplemental staffing needs and (ii) clinical support services for
  pharmaceutical and biotechnology firms.
  
       The Company evaluates performance and allocates resources based on
  operating contributions of the reportable segments, which excludes corporate
  expenses, depreciation, amortization and interest expense, but includes revenues
  and all other costs directly attributable to the specific segment. Identifiable
  assets of the segments reflect net accounts receivable and inventories
  associated with segment activities. All other assets are assigned to the
  corporation for the benefit of all segments.
  
                                         10
  Information about the Company's operations is as follows (in thousands):
  
                                                         Specialty       Home Care
                                                      Pharmaceutical      Nursing        Staffing
                                                         Services         Services       Services         Total
                                                     ----------------- --------------- -------------  --------------
  Three months ended April 2, 2000
  Net revenues                                        $       180,818   $  167,895      $  35,894     $  384,607
                                                      ===============  ============    ===========    ==============
  
  Operating contribution                              $        25,212   $    8,619      $   2,631     $   36,462
                                                     ================= ============    ===========
  Non-recurring and special charges                                                                      (5,600)
  Corporate expenses                                                                                    (21,405)
                                                                                                      --------------
  Earnings before interest expense, taxes
       depreciation and amortization                                                                       9,457
  Depreciation and amortization                                                                          (8,487)
  Interest expense, net                                                                                  (4,236)
                                                                                                      --------------
  Loss before income taxes                                                                            $  (3,266)
                                                                                                      ==============
  
  Segment assets                                      $     454,918     $  206,314      $  26,255     $  687,487
                                                     ===============   ============    ===========    ==============
  Three months ended April 4, 1999
  Net revenues                                        $     168,419     $  169,730      $  30,011     $  368,160
                                                     ===============   ============    ===========    ==============
  
  Operating contribution before special charges       $      26,753    $     5,323      $   2,448     $   34,524
  Special charges                                           (1,730)       (14,590)          (380)       (16,700)
                                                     ---------------  -------------    -----------    --------------
  Operating contribution                              $      25,023    $   (9,267)      $   2,068         17,824
                                                     ===============  =============    ===========
  Corporate expenses                                                                                    (20,969)
                                                                                                      --------------
  Loss before interest expense, taxes
       depreciation and amortization                                                                     (3,145)
  Depreciation and amortization                                                                          (8,733)
  Interest expense, net                                                                                  (4,273)
                                                                                                      --------------
  Loss before income taxes                                                                            $ (16,151)
                                                                                                      ==============
  
  Segment assets                                      $    397,137     $   187,858      $ 17,688      $  602,583
                                                     ==============   =============    ==========     ==============
  11
  Item 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations.
  
       The historical unaudited consolidated financial information presents the
  results of operations and financial position as if the Company was an
  independent company for all periods presented. The historical financial
  information may not be indicative of future performance and may not necessarily
  reflect what the Company's financial position and results of operations would
  have been if it were a separate stand-alone entity during the periods covered.
  As an independent company, the Company expects to incur additional legal, risk
  management, tax, treasury, human resources and administrative and other expenses
  that it did not experience as a wholly-owned subsidiary of Olsten.
  
       On March 15, 2000, the Company was split-off (the "split-off") from Olsten
  Corporation ("Olsten") through the issuance of all of the Company's shares of
  common stock to Olsten's shareholders and the Company became an independent,
  publicly-owned company. Prior thereto, the Company operated Olsten's health
  services business as a wholly owned subsidiary of Olsten. The accompanying
  interim consolidated financial statements reflect the results of operations,
  financial position and cash flows of the Company as if it were a separate entity
  for all periods presented. The consolidated financial statements have been
  prepared using the historical basis in the assets and liabilities and historical
  results of operations related to the Company.
  
       Our results of operations are impacted by various regulations and other
  matters that are implemented from time to time in our industry, some of which
  are described in the Company's Annual Rport on Form 10-K.
  
  First Quarter 2000 and 1999 Results of Operations
  
  Revenues
  
       Net revenues increased by $16 million or 4.5 percent during the first
  quarter of fiscal 2000 as compared to the first quarter of fiscal 1999 driven by
  growth in Specialty Pharmaceutical Services of $12 million or 7.4 percent and
  Staffing Services of $6 million or 19.6 percent. These increases were offset by
  a $2 million or 1.1 percent decrease in net revenues in Home Care Nursing
  Services.
  
  Gross Profit
  
       Gross profit margins, as a percentage of net revenues decreased from 34.1
  percent in the fiscal 1999 first quarter to 33.4 percent in the first quarter of
  fiscal 2000. This decrease in margins is primarily attributable to a change in
  business mix reflecting growth in the lower margin Staffing Services business
  and higher costs attributable to certain biological and pharmaceutical products
  in the Specialty Pharmaceutical Services business due to product shortages,
  partly offset by productivity enhancements and rate increases in Home Care
  Nursing Services.
  
  Selling, General and Administrative Expenses
  
       Selling, general and administrative expenses decreased to $128 million, or
  33.2 percent of net revenues, for the first quarter of fiscal 2000, as compared
  to $138 million or 37.4 percent of net revenues in the first quarter of fiscal
  1999. Excluding the effects of non-recurring and special charges recorded in
  both periods as described below, selling, general and administrative expenses
  were 31.7 percent of net revenues during the fiscal 2000 quarter as compared to
  32.8 percent of net revenues in the fiscal 1999 quarter. The decrease as a
  percentage of net revenues was primarily attributable to the impact of
  efficiency improvement efforts in Home Care Nursing Services and corporate
  administrative support departments partially offset by increased information
  system costs.
  
                                         12
  During the quarter ended April 2, 2000, the Company recorded non-recurring
  and special charges aggregating $5.6 million. Of this amount, non-recurring
  charges of $4.1 million were incurred to reflect obligations resulting from the
  Company's split-off from Olsten and transition costs associated with the
  establishment of the Company as an independent, publicly-owned entity. These
  non-recurring charges included change of control, compensation and benefit
  payments of $3.6 million made to certain former employees of the Company and
  Olsten and a current executive officer of the Company, including approximately
  $1.0 million which was based on Olsten's methodology for allocating general
  corporate overhead expenses, and transition costs of $0.5 million relating to
  registration costs, professional fees and other items. Approximately $1.0
  million was unpaid and was included in accrued expenses as of April 2, 2000.
  
       Furthermore, special charges of $1.5 million were incurred during the
  quarter ended April 2, 2000 in connection with the change of the Company's name
  to Gentiva Health Services, Inc. These special charges primarily consisted of
  costs incurred and paid for consulting fees, promotional items and advertising.
  
       In the quarter ended April 4, 1999, the Company recorded a special charge
  aggregating $16.7 million. This charge was for the realignment of business units
  as part of a new restructuring plan, including compensation and severance costs
  of $5 million to be paid to operational support staff, branch administrative
  personnel and management, asset write-offs of $6.5 million related primarily to
  fixed assets being disposed of in offices being closed and facilities being
  consolidated, as well as fixed assets and goodwill attributable to the Company's
  exit from certain business previously acquired but not within the Company's
  strategic objectives, and integration costs of $5.2 million, primarily related
  to obligations under lease agreements for offices and other facilities being
  closed. Substantially all of the closures and consolidations of facilities and
  expected terminations had occurred by January 2, 2000. These activities resulted
  in lower costs than originally estimated and, as a result, the Company
  recognized a benefit of $1.5 million in the fourth quarter of fiscal 1999 to
  reflect this change in estimate. Approximately $2.0 million of this special
  charge remains unpaid as of April 2, 2000, representing compensation and
  severance costs of $1.0 million and integration costs of $1.0 million.
  
  Interest Expense
  
       Interest expense was approximately $4.2 million and $4.3 million in the
  first quarters of fiscal 2000 and 1999, respectively. Interest expense for each
  period represented primarily interest on the outstanding Quantum debentures and
  intercompany borrowings with Olsten.
  
  Income Taxes
  
       The effective income tax rate on income (loss) was 41.6 percent and 20.7
  percent for the first quarter of fiscal 2000 and fiscal 1999, respectively. The
  rates differ from statutory rates primarily because of non-deductible goodwill
  amortization and other non-deductible items.
  
                                         13
  Liquidity and Capital Resources
  
       Historically, the Company has relied on cash flow from operations and
  advances from Olsten to meet its operating and investing activities. In the
  past, when liquidity needs exceeded cash flow, Olsten provided the necessary
  funds. In accordance with the separation agreement governing the split-off, the
  Company received approximately $32 million in cash (referred to as the true-up
  amount), including $8.9 million during the fiscal 2000 first quarter, prior to
  the March 15, 2000 split-off date. Following the split-off, the Company paid
  Olsten approximately $13 million to settle the intercompany account balance
  which related primarily to management fees, additional advances and interest
  expense on intercompany balances. Furthermore, in connection with the split-off
  the Company assumed certain liabilities, including supplemental executive
  retirement plan and excise tax obligations for former Olsten employees and of
  the office lease obligations for an Olsten subsidiary. As of March 15, 2000, the
  Company is no longer able to use Olsten's capital resources to meet its needs
  and has acquired third party financing, as described below, for such purposes.
  
       The Company received $20 million of proceeds from the issuance by Gentiva
  Trust, a Delaware statutory trust (the "Trust"), of 10% convertible trust
  preferred securities on March 15, 2000. The Company owns all the common equity
  in the Trust. The Trust's only asset is the 10% convertible subordinated
  debentures of the Company. The Company entered into a credit facility, which
  provides for up to $150 million in borrowings, including up to $30 million which
  is available for letters of credit. The Company may borrow up to 80 percent of
  eligible accounts receivable, as defined. The credit facility, which expires in
  2004, includes covenants requiring the Company to maintain a minimum tangible
  net worth and minimum earnings before interest, taxes, depreciation and
  amortization. Other covenants in the credit facility include: limitations on
  mergers, consolidations, acquisitions, indebtedness, liens, capital expenditures
  and disposition of assets and other limitations with respect to the Company's
  operations. The interest rate on borrowings under the credit facility is based
  on the London Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's
  prime rate plus 0.25 percent.
  
       As of April 2, 2000, borrowings under the credit facility aggregated $25.5
  million and there were approximately $19 million of standby letters of credit
  outstanding. As of such date, the Company had an aggregate borrowing capacity of
  approximately $105.5 million under the credit facility. By October 2000, the
  Company will be required to repay its $78.6 million of 4-3/4% convertible
  subordinated debentures. The Company is evaluating various options, including
  use of the new credit facility, to repay these debentures.
  
       Working capital at April 2, 2000 was $445 million, an increase of $7
  million versus $438 million at January 2, 2000. Net receivables increased by $29
  million to $605 million, predominantly due to conversion issues resulting from
  the implementation of and transition to a new billing system for the Specialty
  Pharmaceutical Services business. The Company will continue to make investments
  in billing and accounts receivable systems and has realigned its billing and
  collection units in an effort to improve cash flow from operations.
  
                                         14
  Management believes cash flows from operations and borrowings available
  under the new credit facility will be adequate to support the ongoing operations
  and to meet debt service and principal repayment requirements for the
  foreseeable future. The Company intends to make investments and other
  expenditures to, among other things, upgrade its computer technology and system
  infrastructure and relocate its headquarters. If cash flows from operations or
  availability under the credit facility fall below expectations, the Company may
  be forced to delay planned capital expenditures, reduce operating expenses, seek
  additional financing or consider alternatives designed to enhance liquidity for
  operations and to refinance the convertible subordinated debentures which mature
  on October 1, 2000.
  
                                         15
  Item 3.  Quantitative and Qualitative Disclosures about Market Risk
  
       The Company's exposure to market risk for changes in interest rates relates
  primarily to the fair value of its fixed rate convertible subordinated
  debentures. Generally, the fair market value of fixed rate debt will increase as
  interest rates fall and decrease as interest rates rise.
  
       Based on the overall interest rate exposure on the Company's fixed rate
  borrowings at April 2, 2000, a 10 percent change in market interest rates would
  not have a material effect on the fair value of the Company's debt.
  
       Based on variable rate debt levels, a 10 percent change in market interest
  rates (90 basis points on a weighted average) would have less than a 1 percent
  impact on the Company's interest expense, net.
  
       Other than intercompany transactions between the United States and the
  Company's Canadian subsidiary, the Company generally does not have any
  transactions that are denominated in a currency other than the functional
  currency applicable to each entity.
  
       Although currency fluctuations impact the Company's reported results of
  operations, such fluctuations generally do not affect the Company's cash flow or
  result in actual economic gains or losses. Each of the Company's subsidiaries
  derives revenues and incurs expenses primarily within a single country, and
  consequently, does not generally incur currency risks in connection with the
  conduct of normal business operations.
  
       Fluctuations in currency exchange rates may also impact the shareholders'
  equity of the Company. The assets and liabilities of the Company's Canadian
  subsidiary are translated into U.S dollars at the exchange rates in effect at
  the balance sheet date. Revenues and expenses are translated into U.S. dollars
  at the weighted average exchange rate for the quarter. The resulting translation
  adjustments are recorded in shareholders' equity as accumulated other
  comprehensive income (loss).
  
       Foreign exchange gains and losses have not been significant. The Company
  does not engage in hedging activities. The Company did not hold any derivative
  instruments at April 2, 2000.
  
                                         16
  OTHER:
  
       INFORMATION CONTAINED HEREIN, OTHER THAN HISTORICAL INFORMATION, SHOULD BE
  CONSIDERED FORWARD-LOOKING AND IS SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES.
  FOR INSTANCE, THE COMPANY'S STRATEGIES AND OPERATIONS INVOLVE RISKS OF
  COMPETITION, CHANGING MARKET CONDITIONS, CHANGES IN LAWS AND REGULATIONS
  AFFECTING THE COMPANY'S INDUSTRIES AND NUMEROUS OTHER FACTORS DISCUSSED IN THIS
  DOCUMENT AND IN OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE
  COMMISSION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
  EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
  
                                         17
  PART  II OTHER INFORMATION
  
  Item 1.    Legal Proceedings
  
       There is presently pending in the U.S. District Court for the Eastern
  District of New York a purported class action filed by some Olsten stockholders
  against Olsten and some of its directors and officers, captioned In re Olsten
  Corporation Securities Litigation, No. 97-5056 (the "Class Action"). The class
  action asserts claims for violations of the Securities Act and the Securities
  Exchange Act, including claims that the directors and officers of Olsten
  misrepresented information to stockholders relating to the government
  investigations into Olsten's health services business described Item 5 - Other
  Information. In December 1998, defendants filed a motion to dismiss the Amended
  Complaint in this Class Action. In response to a request from the parties, the
  Court, by Order dated April 27, 2000, dismissed without prejudice defendants'
  dismissal motion, subject to its being re-filed on the previously-submitted
  papers, and stayed the Class Action pending the outcome of the parties'
  mediation efforts.
  
       There is also pending in the Delaware Chancery Court a purported derivative
  lawsuit filed by some Olsten stockholders against some directors and officers of
  Olsten (and Olsten, as nominal defendant), captioned Rubin v. May, No. 17135-NC
  (the "Derivative Suit"). This purported derivative lawsuit alleges that the
  Olsten directors and officers breached their fiduciary duties to stockholders in
  connection with the above-described class action and the below-described
  government investigations. In September 1999, defendants filed a motion to
  dismiss or, in the alternative, stay this Derivative Lawsuit. That motion has
  not yet been briefed. In April 2000, plaintiffs served defendants with a set of
  document requests; the deadline to respond thereto was adjourned to July 14,
  2000. Subsequently, the parties jointly petitioned the Chancery Court to stay
  all proceedings in the Derivative Lawsuit pending the outcome of the parties'
  mediation efforts.
  
       In July 1999, the Indiana Attorney General's Office filed a lawsuit against
  Olsten in Indiana Superior Court, captioned State of Indiana v. Quantum Health
  Resources, Inc. and Olsten Health Services, Inc., No. 49D029907CP001011,
  alleging that Olsten was overpaid by Medicaid, failed to properly disclose
  information to Medicaid and engaged in improper billing. Discovery continues in
  this matter.
  
       On January 14, 1999, Kimberly Home Health Care, Inc. ("Kimberly") initiated
  three arbitration proceedings against hospitals owned by Columbia/HCA Healthcare
  Corp. ("Columbia/HCA") with which Kimberly had management services agreements to
  provide services to the hospitals' home health agencies. The basis for each of
  the arbitrations is that Columbia/HCA sold the home health agencies without
  assigning the management services agreements and, as a result, Columbia/HCA has
  breached the management services agreements. In response to the arbitrations,
  Columbia/HCA has asserted that the arbitration be consolidated and stayed, in
  part based upon its alleged claims against Kimberly for breach of contract, and
  requested indemnity and possibly return of management fees. Columbia/HCA has not
  yet formally presented these claims in the arbitrations or other legal
  proceedings, and has not yet quantified the claims. The parties agreed to
  suspend the proceedings until June 2000.
  
                                         18
  Because the above lawsuits and arbitration proceedings are in relatively
  preliminary stages and seek unspecified damages, penalties and/or reimbursement
  for costs and expenses, the Company is unable at this time to assess the
  probable outcome or potential liability arising from such litigation.
  
       Furthermore, in connection with the split-off, the Company agreed to
  assume, to the extent permitted by law, and indemnify Olsten for, the above
  lawsuits and arbitration proceedings, together with any other liabilities
  arising out of the health services business before or after the split-off,
  including any such liabilities arising after the split-off in connection with
  the government investigations described below.
  
       Reference is made to the descriptions of legal proceedings in the Company's
  Annual Report on Form 10-K for the year ended January 2, 2000.
  
  Item 2. Change in Securities and Use of Proceeds
  
       In March 2000, the Company sold 100 shares of its Series A Cumulative
  non-voting Redeemable Preferred Stock in exchange for services in the amount of
  $100,000. In March 2000, a subsidiary trust of the Company issued $20 million of
  10% convertible trust preferred securities to certain of the Company's and
  Olsten's directors, officers and management, other related parties and other
  investors. The trust used the $20 million of gross proceeds to purchase $20
  million of the Company's 10% Convertible Subordinated Debentures. The Company
  used the net proceeds of the transaction to pay Olsten the amount owed for the
  intercompany balance and for other corporate purposes. The above issuances were
  made in reliance on the exemption from registration provided in Section 4(2) of
  the Securities Act.
  
       Reference is made to the notes to the Consolidated Financial Statements in
  this Form 10-Q for a further description of the above securities.
  
  Item 3. Defaults Upon Senior Securities
  
       None
  
  Item 4. Submission of Matters to a Vote of Security Holders
  
       None
  
                                         19
  Item 5.    Other Information
  
       The Company's business has been subject to extensive federal and state
  governmental investigations regarding, among other things, the preparation of
  Medicare costs reports, the relationship between it and Columbia/HCA and the
  health services business related to the purchase by Columbia/HCA of some home
  health agencies that were owned by the health services business and subsequently
  managed under contract by a unit of the health services business, and some of
  the health care practices of Quantum Health Resources, Inc. ("Quantum"),
  including alleged improper billing and fraud against various federally funded
  medical assistance programs, which largely occurred during the period prior to
  Olsten's acquisition of Quantum in June 1996, which is referred to as the
  "Quantum Investigation."
  
       In October 1998, Olsten entered into a final settlement agreement with
  several government agencies related to the Quantum Investigation. Under the
  settlement, Olsten reimbursed the government approximately $4.5 million for
  disputed claims under the Medicaid and CHAMPUS programs and entered into a
  corporate integrity agreement.
  
       On January 28, 1999, Olsten announced that it had been advised by the
  United States Attorney's Office for the District of New Mexico ("New Mexico U.S.
  Attorney's Office") that, in connection with the Quantum New Mexico
  Investigation, it had dropped its criminal investigation into allegations of
  improper billing and fraud against various federally funded medical assistance
  programs by Quantum during the period between January 1992 and April 1997. By
  letter dated February 1, 1999, the New Mexico U.S. Attorney's Office advised
  Olsten that, having ended its criminal inquiry, the Office has referred the
  Quantum matter to its Affirmative Civil Enforcement Section. The Company
  continues to cooperate with the civil inquiry into the Quantum matter and to
  explore with the New Mexico U.S. Attorney's Office the possibility of reaching a
  negotiated monetary resolution of the matter. Any negotiated amount could
  include multiple damages, interest and civil penalties.
  
       On July 19, 1999, Olsten entered into written civil and criminal agreements
  with the U.S. Department of Justice and the Office of Inspector General of the
  U.S. Department of Health and Human Services settling the civil and criminal
  aspects of the Cost Reports Investigation and the Columbia/HCA Investigation.
  The settlement agreements provided for the payment of fines and penalties in the
  amount of $61 million by Olsten, Kimberly, then a subsidiary of Olsten, pled
  guilty to certain criminal violations of the federal mail fraud, conspiracy and
  kickback statutes, Kimberly has been permanently excluded from participation in
  Medicare, Medicaid and all other federal health care programs as defined in 42
  U.S.C. ss.1320a-7b(f); and Olsten executed a corporate integrity agreement with
  the Office of Inspector General of the U.S. Department of Health and Human
  Services.
  
       In early December 1999, Olsten received a document subpoena from the
  Department of Health and Human Services, Office of Inspector General, and Office
  of Investigations. After preliminary discussions with the Office of Inspector
  General, the
  
                                         20
  Company believes the subpoena relates to an investigation of possible
  overpayments to it by the Medicare program. In early February 2000, the Company
  received a document subpoena from the Department of Health and Human Services,
  Office of Inspector General, and Office of Investigations. The Company believes
  the subpoena relates to its agencies' cost reporting procedures concerning
  contracted nursing and home health aide costs. The Company intends to provide
  the Office of Inspector General with the requested documents and cooperate fully
  with its investigations. At this time, the Company is unable to assess the
  probable outcome or potential liability, if any, arising from these subpoenas.
  The Company believes that it is possible that one or more of these
  investigations may be triggered by lawsuits under federal or state whistle
  blower statutes against Olsten or the Company.
  
       The Company continues to have discussions with the North Carolina Attorney
  General's Office concerning questions that the Office has raised as to the
  eligibility of a certain class of the Company's patients to receive
  Medicaid-reimbursed home health services and, thus, the Company's entitlement to
  Medicaid reimbursement in connection with those services. At this time, the
  Company is unable to assess the probable outcome of or potential liability
  arising from this matter.
  
       As noted above, in connection with the October 1998 settlement of the
  Quantum Investigation, Olsten executed a corporate integrity agreement with the
  U.S. Department of Justice, the Office of Inspector General of the U.S.
  Department of Health and Human Services, the U.S. Secretary of Defense (for the
  CHAMPUS/Tricare Program) and the Attorneys General for the States of New York
  and Oklahoma that will be in effect until December 31, 2001. Also, in connection
  with the July 19, 1999 settlement with various government agencies, Olsten
  executed a separate corporate integrity agreement with the Office of Inspector
  General of the Department of Health and Human Services which will remain in
  effect until August 18, 2004. Under each of the corporate integrity agreements,
  the Company is, for example, is required:
  
       o    to maintain a corporate compliance officer to develop and implement
            compliance programs;
  
       o    to retain an independent review organization to perform annual
            reviews; and
  
       o    to maintain a compliance program and reporting systems, as well as
            provide certain training to employees.
  
       The corporate integrity agreement entered into in connection with the
  Quantum Investigation applies to the Company's specialty pharmaceutical services
  business and focuses on the training and billing of blood factor products for
  hemophiliacs. The July 19, 1999 corporate integrity agreement applies to the
  Company's businesses that bill the federal government health programs directly
  for services, such as its home care nursing business (but excluding the
  specialty pharmaceutical services business). That corporate integrity
  
                                         21
  agreement focuses on issues and training related to cost report preparation,
  contracting, medical necessity and billing of claims.
  
       The Company's compliance program will be implemented for all newly
  established or acquired business units if their type of business is covered by
  the corporate integrity agreements. Reports under each integrity agreement are
  to be filed annually with the Department of Health and Human Services, Office of
  Inspector General. After each corporate integrity agreement expires, the Company
  is to file a final annual report with the government. If the Company fails to
  comply with the terms of either of its corporate integrity agreements, the
  Company will be subject to penalties ranging from $1,500 to $2,500 for each day
  of the breach.
  
       In March 2000, Gentiva was notified by the U.S. Department of Justice that,
  in light of the Adecco/Olsten merger and the split-off of Gentiva as an
  independent public company, the Company has been substituted for Olsten in
  connection with the civil settlement and corporate integrity agreements
  referenced in this "Government Investigations" section.
  
       Reference is made to the full descriptions of government investigations in
  the Company's Annual Report on the Form 10-K for the year ended January 2, 2000.
  
  Item 6.  Exhibits and Reports on Form 8-K
  
  (a)      Exhibit Number    Description
  
       3.1  Restated Certificate of Incorporation of Company. (1)
  
       3.2  Restated By-Laws of Company. (1)
  
       4.1  Specimen of common stock. (3)
  
       4.2  Indenture dated October 8, 1993, between Quantum Health Resources Inc.
            and First Trust National Association, as Trustee. (1)
  
       4.3  Supplemental Indenture dated June 28, 1996, between Quantum Health
            Resources Inc. and First Trust National Association, as Trustee. (1)
  
       4.4  Form of Certificate of Designation of Series A Junior Participating
            Preferred Stock. (2)
  
                                         22
  4.5  Form of Certificate of Designation of Series A Cumulative Non-Voting
            Redeemable Preferred Stock. (2)
  
       4.6  Second Supplemental Indenture dated March 15, 2000, between Quantum
            Health Resources, Inc. and U.S. Bank Trust National Association
            (formerly known as First Trust National Association) as Trustee. (5)
  
       4.7  Trust Agreement among the Company, Wilmington Trust Company, the
            Administrative Trustees named therein and the holders from time to
            time of the convertible trust preferred securities dated March 9,
            2000. (5)
  
       4.8  Indenture between the Company and Wilmington Trust Company dated March
            15, 2000. (5)
  
       10.1 Separation Agreement dated August 17, 1999, among Olsten Corporation,
            Aaronco Corp. and Adecco SA. (1)
  
       10.2 Omnibus Amendment No. 1 dated October 7, 1999, by and among Olsten
            Corporation, Aaronco Corp., Adecco SA and Olsten Health Services
            Holding Corp. (1)
  
       10.3 Form of Rights Agreement dated March 2, 2000 between the Registrant
            and Equiserve Limited Partnership, as rights agent. (1)
  
       10.4 Company's Executive Officers Bonus Plan. (1)
  
       10.5 Company's 1999 Stock Incentive Plan. (5)
  
       10.6 Company's stock & Deferred Compensation Plan for Non-Employee
            Directors. (5)
  
       10.7 Company's Employee Stock Purchase Plan. (1)
  
       10.8 Omnibus Amendment No. 2 dated January 18, 2000, by and among Olsten
            Corporation, Adecco SA, Olsten Health Services Holding Corp., the
            Company and Staffing Acquisition Corporation. (1)
  
       10.9 Loan and Security Agreement by and between Fleet Capital Corp., on
            behalf of the lenders named therein, the Company, Olsten Health
            Services Holding Corp. and the subsidiaries named therein, dated March
            13, 2000. (5)
  
       10.10 Form of Employment Agreement with Edward A. Blechschmidt. (2)
  
       10.11 Form of Change of Control Agreement with Executive Officers of
             Company. (5)
  
       10.12 Form of Change in Control Agreement with Edward A. Blechschmidt. (5)
  
       10.13 Form of Severance Agreement with Executive Officers of Company. (2)
  
       21.1 List of Subsidiaries of Company. (2)
  
       27   Financial Data Schedule
  
                                         23
  (1)  Incorporated herein by reference to Amendment No. 2 to the
            Registration Statement on Form S-4, dated January 20, 2000 (File No.
            333-88663).
  
       (2)  Incorporated herein by reference to Amendment No. 3 to the
            Registration Statement on Form S-4, dated February 4, 2000 (File No.
            333-88663).
  
       (3)  Incorporated herein by reference to Amendment No. 4 to the
            Registration Statement on Form S-4, dated February 9, 2000 (File No.
            333-88663).
  
       (4)  Incorporated herein by reference to the Post-Effective Amendment No. 1
            on Form S-8 to Form S-4 dated March 27, 2000 (File No. 333-88663).
  
       (5)  Incorporated herein by reference to the Form 10-K for the Registrant
            for the Fiscal year ended January 2, 20000
  
  (b)  Reports on Form 8-K
  
       No reports on Form 8-K have been filed during the last quarter for the
  period covered by this report.
  
       Exhibit Index
  
       Exhibit                   Description
  
         27                Financial Data Schedule
  
                                         24
  SIGNATURES
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  Date:    May 17, 2000                /s/ Edward A. Blechschmidt
                                       ------------------------------------------
                                       Edward A. Blechschmidt
                                       President and Chief Executive
                                       Officer
  
  Date:    May 17, 2000                /s/ John J. Collura
                                       -----------------------------------------
                                       John J. Collura
                                       Executive Vice President,
                                       Chief Financial Officer and
                                       Treasurer
  
                                         25