Amedisys

2010
ANNUAL
REPORT

FINANCIAL HIGHLIGHTS – AMEDISYS, INC. 2010

Year Ended December 31, 2010 

2010 

  2009 

2008

Net Service Revenue 
Operating Income 
Net Income Attributable to Amedisys, Inc. 

Net Income per Diluted Common Share 
Weighted Average Common Shares Outstanding - Diluted 
Amedisys, Inc. Stockholders’ Equity 

$ 
$ 
$ 

$ 

$ 

1,634,319 
193,510 
112,580 

3.95 
28,484 
877,857 

$ 
$ 
$ 

$ 

$ 

1,513,459 
230,748 
135,837 

4.89 
27,759 
735,166 

$ 
$ 
$ 

$ 

$ 

1,187,415 
157,101 
86,682 

3.22 
26,903 
561,335 

(Amounts in thousands, except Per Share Data)

Dear Shareholders,

10 million.
Amedisys provided high quality, cost eff ective health care at home 10 million times last year to 378,450 patients. I am 

humbled by our responsibility. I am also very proud of our team of more than 16,000 talented colleagues for continuing to 

deliver high quality care to our patients during a challenging year.

In 2010 we had to be nimble and decisive to navigate the many challenges we faced. Double-digit growth for six 

consecutive years started to create strain on our infrastructure. The home health industry was questioned in the media 

and subsequently by regulators. The prospect of future cuts to Medicare reimbursement for health care at home led us to 

revamp our cost structure, which included closing or consolidating less-profi table care centers. 

Our team responded swiftly. 

In 2010, we moved quickly to right-size our operations in support of our nationwide care network, which now consists of 

553 care centers in 45 states, Washington D.C. and Puerto Rico. 

Right-sizing and preparing for our next phase of growth.
Our leadership team undertook a transformational eff ort to enhance our operations to support the size and complexity of 

health care provider we had become. We took a hard look at how we were managing our business in every department 

and business unit – how we were structured, our systems and operating costs, and how we were developing our people. 

First, we recognized that the predominantly “centralized” operations structure that served us well when we were a 

company of 79 locations and fewer than 2,000 employees was no longer optimal for managing a much larger and more 

geographically dispersed enterprise. We empowered and equipped our regional and local leaders to manage those things 

that we believe are best handled locally, aiming to create a better balance between a centralized management structure 

and local ownership of key operational decisions. Functions that remain centralized include: research and development, 

human resources, information technology, legal, compliance, billing and collections, accounting and informatics. Previ-

ously centralized functions that are now managed within our business units include clinical operations, fi nancial planning 

and analysis, as well as oversight of our care center-level patient care quality standards. We believe this operational 

and cultural shift has already yielded positive momentum in the form of fresh ideas, better and faster decision-making, 

enhanced effi  ciencies through new processes and improved collaboration. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Second, we saw that gains in both quality and effi  ciency could be achieved through upgrading our information 

technology infrastructure. We invested in PeopleSoft and updated our point-of-care systems and laptops with wireless 

technology and up-to-date software. Implementing PeopleSoft enabled us to consolidate our human resources, fi nancial 

and information technology systems, providing us greater visibility and more accurate information, enabling timelier and 

smarter business decisions. This platform also provides us with the scalability we need to support future growth.

We also invested in upgrading our customer relationship management system to HomecareCRM. With a national busi-

ness development team and approximately 500 clinical Care Transitions Coordinators collaborating on patient service, we 

needed a web-based system to foster the communication of real-time clinical and marketing information. We selected 

and began custom development with HomecareCRM in 2010 and are excited to deploy this powerful tool to our teams 

this summer. 

Our clinical team and sales force will be able to access these new systems via their new laptops and point-of-care 

terminals that are now powered with wireless technology and the latest business software. This technology “refresh” 

initiative was completed in the fi rst quarter of 2011, and we believe it will bolster productivity, reduce travel and overhead 

costs, and ultimately improve the quality of care provided to our patients.

While investing in infrastructure to improve operating eff ectiveness and prepare for future growth, we also focused on 

cost control and undertook a detailed review of our portfolio of agencies. Our cost control eff orts produced a $1.20 

reduction in our home health division cost per visit from the 3rd to 4th quarter after adjusting for quarterly diff erences in 

holiday pay and inclement weather. We continue to see results from our actions with another reduction in 1Q11 of $1.05. 

Our agency portfolio review led to the diffi  cult business decision to close or consolidate 68 unprofi table care centers with 

poor demographic trends and/or competitive dynamics. We also discontinued the startup process of 47 care centers. We 

estimate that these portfolio decisions will have a positive $25 - $30 million impact on EBITDA. We needed to preserve the 

long-term health and alignment of the organization so we can continue to lead innovation in cost-eff ective health care 

responsibly and profi tably.

We press forward, innovating the way health care is delivered – at home.
While we upgraded our operations, we also invested in innovation to help develop new ways of bringing the continuum 

of care to the chronically ill in their homes. We believe this is the future of health care, driven by both overwhelming 

patient preference and simple economics. We also believe our eff orts to expand the range of high quality, patient-

centered health care services delivered in the home will distinguish us from our competitors, and will ultimately be 

rewarded in the marketplace.

 Innovating the way health care is delivered enables Amedisys to be a leader in clinical quality, and is at the center of our 

growth strategy. 

We all know the demographics. We all know that people want to remain at home as independently as possible, for as 

long as possible. We all know that the rising cost of health care is the nation’s number one defi cit problem and that home 

health care is one of the most cost eff ective forms of care available. These undisputable facts point to the enormous 

opportunity that exists through fi nding new ways to deliver increasingly complex, yet continuously cost-eff ective, high 

quality health care in the home setting. 

Innovation is at the heart of our long-term strategic growth planning, but is also helping provide us a competitive 

advantage today. The more patients who have a great health care experience… the more hospitals that select Amedisys 

as a partner or preferred provider… the more physicians who refer patients to Amedisys because of our positive clinical 

outcomes… the greater our opportunity to gain market share in every market we serve. 

We made great strides in clinical innovation in 2010, including the nationwide implementation of our industry-

groundbreaking Care Transitions Program; the initial deployment of our Encore call center to provide intra-episodic clinical 

interventions for higher acuity patients; our partnership with Duke University’s Institute on Care at the End of Life to 

improve the quality of hospice care and provide our hospice clinicians advanced palliative care capabilities; and launching 

a pilot program to add nurse practitioners to our care teams and another pilot program focused on early identifi cation of 

high risk patients and the delivery of advanced chronic care management to help reduce the risk of hospitalization.

All of these innovations meet our two key priorities: 

1.  Better care for a growing and increasingly complex and active population of older Americans

2.  Reducing preventable hospitalizations, which are costly and expose the patient to unnecessary risk

We believe preliminary fi ndings from our Care Transitions Program and advanced chronic care management pilot show 

great promise in reducing acute care hospitalizations. For example, the specifi c goal of our Care Transitions Program is to 

bridge the care gap for patients between the acute care setting and the home by providing health coaching, medication 

reconciliation, skilled nursing and education for care givers. Preliminary results from the implementation of this program 

are showing positive signs that Amedisys Care Transitions will have a meaningful impact on reducing the acute care 

hospitalization rates for our patients. 

As part of the Aff ordable Care Act, hospitals will be incented to prevent their patients from returning to the hospital within 

30 days of discharge. We believe providing post-acute care through innovative home care programs such as Amedisys 

Care Transitions and our advanced chronic care management protocols position Amedisys to be the leading preferred 

partner of hospitals, managed care providers and new health care systems, such as accountable care organizations. 

We believe these advancements position Amedisys for strong internal core business growth and will help enable us to 

achieve our longer-term strategy of becoming the nation’s leading provider of a continuum of care: from initial diagnosis 

or post-acute care through the end-of-life.

Our tipping point.

“ The tipping point is that magic moment when an idea, trend, 
or social behavior crosses a threshold, tips, and spreads like wildfi re.” 

– Malcolm Gladwell (The Tipping Point) 

The home care and hospice industry has a unique opportunity to become a more active and valuable stakeholder in the 

health care community. Amedisys is leading this charge by focusing on both clinical innovation and policy reform. Having 

done the heavy lifting to right-size our operational infrastructure in 2010, I am more confi dent than ever in Amedisys’ 

ability to lead the evolution to a “patient-centered, collaborative, technology-enabled continuum of care model” for our 

nation’s health care system. 

Thank you to the more than 16,000 Amedisys colleagues who make our company great, to our Board of Directors whose 

leadership helped guide our company through a challenging year and to you, our shareholders, who continue to believe 

in our mission. 

Sincerely,

William F. Borne

Chairman and Chief Executive Offi  cer 

 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2010

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

OR

EXCHANGE ACT OF 1934
For the transition period from

to

Commission file number: 0-24260

AMEDISYS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

11-3131700
(IRS Employer
Identification No.)

5959 S. Sherwood Forest Blvd.
Baton Rouge, Louisiana 70816
(Address of principal executive offices, including zip code)
(225) 292-2031 or (800) 467-2662
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, par value $0.001 per share
(Title of each class)

Name of Each Exchange on Which Registered
The NASDAQ Global Select Market
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the issuer is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No È
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 È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes È No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer È

Non-accelerated filer ‘
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, based on the last sale price as
quoted by the NASDAQ Global Select Market on June 30, 2010 (the last business day of the registrant’s most recently completed second fiscal
quarter) was $1,245,717,579. For purposes of this determination shares beneficially owned by executive officers, directors and ten percent
stockholders have been excluded, which does not constitute a determination that such persons are affiliates.
As of February 18, 2011, the registrant had 29,489,289 shares of Common Stock outstanding.

Smaller reporting company ‘

Accelerated filer ‘

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for its 2011 Annual Meeting of Stockholders (the “2011 Proxy Statement”) to be filed
pursuant to the Securities Exchange Act of 1934 with the Securities and Exchange Commission within 120 days of December 31, 2010 are
incorporated herein by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

PART I.

SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS . . . . . . . . . .
ITEM 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3.
RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4.

PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . .
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
ITEM 9.

AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . .
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

1
2
14
28
29
29
29

30
32

33
53
53

53
53
56

56
56

AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 14.

PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56
56

57

58

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

EXHIBIT INDEX

EX-21.1 LIST OF SUBSIDIARIES
EX-23.1 CONSENT OF KPMG LLP
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32.1 SECTION 906 CERTIFICATION OF CEO
EX-32.2 SECTION 906 CERTIFICATION OF CFO
EX-101 INTERACTIVE DATA FILE

SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

When included in this Annual Report on Form 10-K, or in other documents that we file with the Securities and
Exchange Commission (“SEC”) or in statements made by or on behalf of the Company, words like “believes,”
“belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,”
“should” and similar expressions are intended to identify forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and
uncertainties that could cause actual results to differ materially from those described therein. These risks and
uncertainties include, but are not limited to the following: changes in Medicare and other medical payment
levels, our ability to open agencies, acquire additional agencies and integrate and operate these agencies
effectively, changes in or our failure to comply with existing Federal and state laws or regulations or the
inability to comply with new government regulations on a timely basis, competition in the home health industry,
changes in the case mix of patients and payment methodologies, changes in estimates and judgments associated
with critical accounting policies, our ability to maintain or establish new patient referral sources, our ability to
attract and retain qualified personnel, changes in payments and covered services due to the economic downturn
and deficit spending by Federal and state governments, future cost containment initiatives undertaken by third-
party payors, our access to financing due to the volatility and disruption of the capital and credit markets, our
ability to meet debt service requirements and comply with covenants in debt agreements, business disruptions
due to natural disasters or acts of terrorism, our ability to integrate and manage our information systems,
changes in or developments with respect to any litigation or investigations relating to the Company, including
the United States Senate Committee on Finance inquiry, the SEC investigation and the U.S. Department of
Justice Civil Investigative Demand and various other matters, many of which are beyond our control.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be
predicted or quantified, you should not rely on any forward-looking statement as a prediction of future
events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates
or changes in our expectations concerning the forward-looking statements or any changes in events, conditions
or circumstances upon which any forward-looking statement may be based, except as required by law. For a
discussion of some of the factors discussed above as well as additional factors, see Part I, Item 1A—“Risk
Factors” and Part II, Item 7—“Critical Accounting Policies” within “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”

Unless otherwise provided, “Amedisys,” “we,” “us,” “our,” and the “Company” refer to Amedisys, Inc. and
our consolidated subsidiaries and when we refer to 2010, 2009 and 2008, we mean the twelve month period then
ended December 31, unless otherwise provided.

A copy of this Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the SEC,
including all exhibits, is available on our internet website at http://www.amedisys.com on the “Investors” page
under the “SEC Filings” link.

1

ITEM 1. BUSINESS

Overview

PART I

Amedisys, Inc. (NASDAQ: AMED) is a leading health care company focused on bringing home the continuum
of care. We deliver personalized health care services to patients and their families in the comfort of patients’
homes, with approximately 10 million patient care and education encounters per year.

Our state-of-the-art advanced chronic care management programs and leading-edge technology enable us to
deliver quality care based upon the latest evidence-based best practices. Amedisys is a recognized innovator,
being one of the first in the industry to equip its clinicians with point-of-care laptop technology and its referring
physicians with an internet portal that enables real-time coordination of patient care. Amedisys also has the
industry’s first-ever nationwide Care Transitions program. Amedisys Care Transitions is designed to reduce
unnecessary hospital readmissions through patient and caregiver health coaching and care coordination, which
starts in the hospital and continues through completion of the patient’s home health plan of care.

As of December 31, 2010, we owned and operated 486 Medicare-certified home health agencies and 67
Medicare-certified hospice agencies in 45 states within the United States, the District of Columbia and Puerto
Rico. The following is our geographic footprint including the number of home health and hospice agencies by
state:

Our services are primarily paid for by Medicare due to the age demographics of our patient base (average age
83). Medicare represented approximately 86%, 88%, and 87% of our net service revenue in 2010, 2009 and
2008, respectively. We plan to diversify our sources of payment and become less reliant upon Medicare in
response to the needs of our aging population, uncertainty surrounding health care reform and new health care
models currently in development, such as accountable care organizations (“ACOs”).

We were originally incorporated in Louisiana in 1982 by William F. Borne, our founder, Chief Executive Officer
and Chairman of the Board; transferred our operations to a Delaware corporation, which was incorporated in
1994; and became a publicly traded company in August of that year. Our common stock is currently traded on
the NASDAQ Global Select Market under the trading symbol “AMED”.

Home Health Care:

There is no place like home to provide a healing, relaxing environment when recovering from an illness, injury or
surgical procedure. It is the place where family, friends and familiar surroundings make patients feel most

2

comfortable and recover faster. Amedisys’ home care services are provided by highly trained and skilled home
health care professionals dedicated to the care and comfort of our patients.

Home care services offered are:

•

Skilled Nursing

• Home Health Aides

•

Physical Therapy

• Occupational Therapy

•

Speech Therapy

• Medical Social Workers

•

Specialized nursing programs such as cardiac, diabetes, pain management, wound care, infusion
therapy, oncology and psychiatric services

Our Home Health Care division also provides a portfolio of advanced chronic care clinical programs designed
from evidence-based best practices for patients with chronic diseases. These programs incorporate national
clinical standards and use patient education to empower patients and their caregivers with self care management
skills.

Our Clinical Program Portfolio:

Heart @ Home

Diabetes @ Home

Cardiac Disease

Diabetes

Rehab Therapy @
Home

Orthopedic Recovery @
Home

Rehabilita(cid:2)on

Rehabilita(cid:2)on

Chronic Kidney
Disease @ Home

Kidney Disease

COPD @ Home

Chronic Obstruc(cid:2)ve
Pulmonary Disease

Balanced for Life

Fall Preven(cid:2)on

Partners in Wound
Care®

Wound Care

Behavioral Health @
Home

Surgical Recovery @
Home

Pain Management
@ Home

Stroke Recovery
@ Home

Psychiatric

Post Surgery

Chronic Pain

Stroke

Condi(cid:2)on-Specific Programs: Enables our clinical staff to
provide the highest level of care consistently na(cid:3)onwide
while controlling costs through a demonstrated plan of care

Hospice Care:

Hospice is a special form of care that is designed to provide comfort and support for those who are facing a life-
limiting illness. It is a compassionate form of care that promotes dignity and affirms quality of life for the patient,
family members and other loved-ones.

3

Individuals with a terminal illness such as heart disease, pulmonary disease, dementia, Alzheimer’s, HIV/AIDS
or cancer are considered eligible for hospice care, if they have a life expectancy of six months or less.

Amedisys’ specialized team of hospice professionals works with the patient, family members and attending
physician to develop a plan of care that will best meet the patient’s and family’s needs.

The Hospice Care Team is a dedicated support network for the patient and includes:

• The Patient and Family

• Attending Physician

• Hospice Physician

• Nurses

•

Social Workers

• Home Health Aides

•

Physical, Speech and Occupational Therapists

• Volunteers

• Bereavement Counselors

•

Spiritual Counselors

Financial Information:

Financial information for our home health and hospice segments can be found in our consolidated financial
statements included in this Annual Report on Form 10-K.

Vision, Mission and Strategy

Our Vision: To be the premier home health care company in the communities we serve.

Our Mission: To provide cost-efficient, quality health care services to the patients entrusted to our care.

Our Strategy: To offer low-cost, outcome-driven health care at home.

In order to deliver on our vision, mission and strategy, we believe a focus on clinical excellence, growth and
efficiency will continue to be the keys to our success.

Clinical Excellence

Deliver high quality patient outcomes. We believe the clinical outcomes we have achieved for our home health
patients are among the best in the industry. This can be seen in quality data collected and reported by the Centers
for Medicare and Medicaid Services (“CMS”), which shows for 2009, we met or exceeded all of the
measurement categories in the footprint we serve and 11 out of the 12 measurement categories when compared to
the national average.

Deploy best-in-class technology to better coordinate and standardize care for our patients across the
continuum. Amedisys was one of the first in the home health services industry to adopt technology to provide
better, more efficient care for patients, including a patient call center (Encore) and a laptop point-of-care (POC)

4

system that enable us to provide a uniform standard of high quality care. Amedisys was also one of the first to
design a method of communicating electronically with patients’ supervising physicians to provide better, more
responsive care (MercuryDoc).

Provide evidence-based clinical care programs with an industry-leading high-skilled clinical team.
Amedisys has led, and intends to continue to lead, the industry in clinical care and we believe our team members
are the best in the industry at delivering care to our patients. We were one of the first home health care
companies to:

–

–

–

–

Develop and bring to market a multidisciplinary approach to fall prevention with our Balanced for
Life™ program;

Design evidence-based advanced chronic care management programs for diabetes, cardiac disease,
wound care, COPD, stroke and seven other illnesses;

Design and launch a national hospital care transitions and readmission reduction program (called “Care
Transitions”); and

Combine all the resources listed above into a comprehensive care coordination and management
delivery model—C4M™: Comprehensive, Continuous, Chronic Care Management.

Growth

Emphasize internal growth. We believe the rapidly growing population of aging Americans, particurlary the
baby boomer population, creates a significant need for home health and hospice providers to deliver cost-
effective, quality health care for complex chronic conditions. We intend to focus on the internal growth of our
episodic-based patient admissions by: continued development and deployment of our specialty programs,
continued referral source communication enhancements, targeted start-ups, clinical differentiation and health
system and hospital partnerships.

Pursue acquisition opportunities. We believe our focus on evidence-based, high quality health care, our strong
infrastructure, including our people, processes and technology, as well as our financial strength provide us with a
strategic advantage when assessing potential acquisitions. The majority of home health and hospice agencies are
owned either by hospitals or small independent operators. We believe recent and other potential changes to
Medicare home health and hospice payment rates will continue to pressure the home health and hospice industry
to consolidate, which will give us a strategic opportunity to pursue and close acquisitions. In evaluating strategic
acquisitions, we strive to employ a disciplined strategy based on defined criteria, which include, but are not
limited to, high-quality service, a sound compliance track record, a strong referral base and a compatible payor
mix.

Efficiency

Proven, cost-efficient operating model. Our size allows us to take advantage of certain economies of scale in
billing, accounting, marketing,
training and information technologies. Additionally, our size allows us to
negotiate favorable contracts with suppliers. We have developed an operating model that we believe provides a
successful balance between the roles and responsibilities undertaken by our agencies and the roles and
responsibilities undertaken by our consolidated corporate operations. We have deployed standardized clinical
programs and believe this initiative has improved our quality of care and risk management systems and helps us
actively manage clinical compliance across all of our home health agencies.

Integrated technology and management systems. We have invested significant time and resources to improve
our information technology and real-time management and monitoring capabilities. For example, we have
developed and deployed POC laptop devices, developed and deployed a proprietary, Windows™-based clinical

5

software system and implemented an electronic physician communication system (MercuryDoc), which together
are used to collect assessment data, schedule and log patient visits, communicate with our patients’ physicians
regarding plans of care and monitor treatments and outcomes in accordance with established medical standards.
With these integrated technologies, we believe we are able to standardize the care delivered across our network
of agencies and that we are more effectively able to monitor the patients we treat. We believe that our
investments in technology have helped us achieve significant operating efficiencies, enhance our internal
financial and compliance controls, and—most importantly—improve the quality of care we provide to our
patients, permitting our patients to achieve better outcomes more rapidly than before.

Best in class operational infrastructure. At the agency level, we have strived to develop a cost-efficient
operating model. We manage all patient care and utilization on a real-time basis from both a clinical and
financial perspective through a system of exception reporting. At the corporate level, our geographic focus and
investment in infrastructure and information systems enable us to leverage regional and senior management
resources and add new locations without proportionate increases in corporate overhead. We believe we have been
successful at integrating acquisitions. Initial integration activities include converting agencies to our information
systems and implementing standardized operational and clinical processes. Further integration efforts generally
take 18-24 months to complete and include: improving operating efficiencies; recruiting qualified nurses and
account executives as necessary; expanding relationships with local physicians and discharge planners; and
expanding the breadth and quality of services offered to patients.

Our Employees

At January 31, 2011, we employed approximately 16,300 employees, consisting of approximately 13,800 home
health care employees, 1,400 hospice care employees and 1,100 corporate and divisional support employees. We
compensate our visiting staff, which includes our home health care and hospice care employees, predominately
on a pay per visit model. We believe paying clinicians in this manner maximizes efficiency and is the most
equitable means of compensating them.

Payment for Our Services

Home Health Medicare

The Medicare home health benefit is available both for patients who need care following discharge from a
hospital and patients who suffer from chronic conditions that require ongoing but intermittent care. As a
condition of participation under Medicare, beneficiaries must be homebound (meaning that the beneficiary is
unable to leave his/her home without a considerable and taxing effort), require intermittent skilled nursing,
physical
therapy or speech therapy services, and receive treatment under a plan of care established and
periodically reviewed by a physician. Medicare rates are based on the severity of the patient’s condition, his or
her service needs and other factors relating to the cost of providing services and supplies, bundled into 60-day
episodes of care. An episode starts with the first day a billable visit is furnished and ends 60 days later or upon
discharge, if earlier. If a patient is still in treatment on the 60th day, a recertification assessment is undertaken to
determine whether the patient needs additional care. If the patient’s physician determines that further care is
necessary, another episode begins on the 61st day (regardless of whether a billable visit is rendered on that day)
and ends 60 days later. The first day of a consecutive episode, therefore, is not necessarily the new episode’s first
billable visit. Annually, the Medicare program base episodic rates are set through Federal legislation, as follows:

Period

January 1, 2008 through December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2009 through December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2010 through December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2011 through December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Base episode
payment

$2,270
2,272
2,313
2,192

6

Payments can be adjusted for: (a) an outlier payment if our patient’s care was unusually costly; (b) a low
utilization payment adjustment (“LUPA”) if the number of visits during the episode was fewer than five; (c) a
partial payment if our patient transferred to another provider or we received a patient from another provider
before completing the episode; (d) a payment adjustment based upon the level of therapy services required
(thresholds set at 6, 14 and 20 therapy visits); (e) the number of episodes of care provided to the patient (episodes
three or greater are paid at higher rates compared to the first two episodes, even if the episodes of care are
provided by different home health providers); (f) changes in the base episode payments established by the
Medicare program; (g) adjustments to the base episode payments for case mix and geographic wages; and
(h) recoveries of overpayments. In addition, Medicare can also make various adjustments to payments received if
we are unable to produce appropriate billing documentation or acceptable authorizations.

Home Health Non-Medicare

Payments from Medicaid and private insurance carriers are based on episodic-based rates or per visit rates (non-
episodic based) depending upon the terms and conditions established with such payors. Episodic-based rates paid
by our non-Medicare payors are paid in a similar manner and subject to the same adjustments as discussed above
for Medicare; however, these rates can vary based upon negotiated terms.

Hospice Medicare

The Medicare hospice benefit is also available to Medicare-eligible patients with terminal illnesses, certified by a
physician, where life expectancy is six months or less. Medicare rates are based on standard prospective rates for
delivering care over a base 90-day or 60-day period (90-day episodes of care for the first two episodes and
60-day episodes of care for any subsequent episodes). Payments are based on daily rates for each day a
beneficiary is enrolled in the hospice benefit. Rates are set based on specific levels of care, are adjusted by a
wage index to reflect health care labor costs across the country and are established annually through Federal
legislation. The levels of care are routine care, general inpatient care, continuous home care and respite care. For
2010, our Medicare routine care revenue accounted for approximately 99% of our total net Medicare hospice
service revenue and our average Medicare reimbursement was $135 per routine care day.

We bill Medicare for hospice services on a monthly basis and our payments are subject to two fixed annual caps,
which are assessed on a provider number basis. Generally, each hospice agency has its own provider number.
However, where we have created branch agencies to help our parent agencies serve a geographic location, the
parent and branch may have the same provider number. The annual caps per patient, known as hospice caps, are
calculated and published by the Medicare fiscal intermediary on an annual basis and cover the twelve month
period from November 1 through October 31. The caps can be subject to annual and retroactive adjustments,
which can cause providers to owe money back to Medicare if such caps are exceeded.

The two caps are detailed below:

•

Inpatient Cap. This cap limits the number of days of inpatient care (both respite and general) under a
provider number to 20% of the total number of days of hospice care (both inpatient and in-home)
furnished to all patients served. The daily payment rate for any inpatient days of service in excess of
the cap amount is calculated at the routine home care rate, with excess amounts due back to Medicare;
and

• Overall Payment Cap. This cap is calculated by the Medicare fiscal intermediary at the end of each
hospice cap period to determine the maximum allowable payments per provider number. On a monthly
and quarterly basis, we estimate our potential cap exposure using information available for both
inpatient day limits as well as per beneficiary cap amounts. The total cap amount for each provider is
calculated by multiplying the number of beneficiaries electing hospice care during the period by a
statutory amount that is indexed for inflation. The per beneficiary cap amount was $23,875 for the
twelve-month period ended October 31, 2010 and $23,015 for the twelve month period ended
October 31, 2009. Any amounts received in excess of the beneficiary cap amount must be refunded to
Medicare.

7

Our ability to stay within these limitations depends on a number of factors, each determined on a provider
number basis, including the average length of stay and mix in level of care.

Hospice Non-Medicare

Non-Medicare payors pay at rates different from established Medicare rates for hospice services, which are based
on separate, negotiated agreements. We bill and are paid based on these agreements.

Controls over Our Business System Infrastructure

We establish and maintain processes and controls over coding, clinical operations, billing, patient recertifications
and compliance to help monitor and promote compliance with Medicare requirements.

• Coding—Specified diagnosis codes are assigned to each of our patients based on their particular health
condition and ailment (such as diabetes, coronary artery disease or congestive heart failure). Because
coding regulations are complex and are subject to frequent change, we maintain controls surrounding
our coding process. In order to reduce associated risk, we provide coding training for new agency
directors and clinical managers; provide annual coding update training for agency directors and clinical
managers; provide coding training during orientation for new employees; provide monthly specialized
coding education; circulate a clinical operations quality newsletter; obtain outside expert coding
instruction; utilize coding software in our POC system; and have automated coding edits based on
pre-defined compliance metrics in our POC system.

• Clinical Operations—Regulatory requirements allow patients to be admitted to home health care if
they are considered homebound and require certain clinical services. These clinical services include:
their disease; an assessment of observation skills; wound care;
educating the patient about
administering injections or intravenous fluids; and management and evaluation of a patient’s plan of
care. In order to help monitor and promote compliance with regulatory requirements, we complete
audits of patient charts; we use risk forecasting methodologies; we administer survey guideline
education; we hold recurrent homecare regulatory education; we utilize outside expert regulatory
services; and we have a toll-free hotline to offer additional assistance.

• Billing—We maintain controls over our billing processes to help promote accurate and complete
billing. In order to promote the accuracy and completeness of our billing, we have annual billing
limit access to billing systems; use risk
compliance testing; use formalized billing attestations;
forecasting methodologies; perform direct line supervisor audits; hold weekly operational meetings;
use automated daily billing operational indicators; and take prompt corrective action with employees
who knowingly fail to follow our billing policies and procedures in accordance with a well-publicized
“Zero Tolerance Policy”.

• Patient Recertification—In order to be recertified for an additional episode of care, a patient must be
diagnosed with a continuing medical need. This could take the form of a continuing skilled clinical
need or could be caused by changes to the patient’s medical regimen or by modified care protocols
within the episode of care. As with the initial episode of care, a recertification requires approval of the
patient’s physician. Before any employee recommends recertification to a physician, we conduct an
agency level, multidisciplinary care team conference. We also monitor centralized automated
compliance recertification metrics to identify, monitor, and, where appropriate, audit agencies that have
relatively high recertification levels.

• Compliance—The quality and reputation of our personnel and operations are critical to our success.
We develop, implement and maintain ethics, compliance and quality improvement programs as a
component of the centralized corporate services provided to our home health and hospice agencies. Our
ethics and compliance program includes a Code of Ethical Business Conduct for our employees,
officers, directors and affiliates and a process for reporting regulatory or ethical concerns to our Chief

8

Compliance Officer through a confidential hotline. We promote a culture of compliance within our
company through persistent messages from our senior leadership concerning the necessity of strict
compliance with legal requirements and company policies and procedures, and through publicizing and
enforcing our Zero Tolerance Policy. We also employ a comprehensive compliance training program
that includes: annual compliance testing; new hire compliance training; new acquisition compliance
training; sales compliance training; new employee orientation compliance training; billing compliance
training; and compliance presentations at company functions.

Our Regulatory Environment

We are highly regulated by Federal, state and local authorities. Regulations and policies frequently change, and
we monitor changes through trade and governmental publications and associations. We also meet regularly with
a group of financial, legal and regulatory consultants to discuss emerging issues that may affect our business. Our
home health and hospice subsidiaries are certified by CMS and therefore are eligible to receive payment for
services through the Medicare system.

We are also subject to Federal, state and local laws and regulations dealing with issues such as occupational
safety, employment, medical leave, insurance, civil rights, discrimination, building codes, environmental issues
and adverse event reporting and recordkeeping. Federal, state and local governments are expanding the number
of regulatory requirements on businesses.

We have set forth below a discussion of the regulations that we believe most significantly affect our home health
and hospice businesses.

Licensure, Certificates of Need (CON) and Permits of Approval (POA)

Home health and hospice agencies operate under licenses granted by the health authorities of their respective
states. Additionally, certain states, including a number in which we operate, carefully restrict new entrants into
the market based on demographic and/or competitive changes. In such states, expansion by existing providers or
entry into the market by new providers is permitted only where a given amount of unmet need exists, resulting
either from population increases or a reduction in competing providers. These states ration the availability of
markets through a CON process, which is periodically evaluated. Currently, state health authorities in 17 states
and the District of Columbia and Puerto Rico require a CON or, in the State of Arkansas, a POA, in order to
establish and operate a home health agency, and state health authorities in 13 states and the District of Columbia
require a CON to operate a hospice agency.

We operate home health agencies in the following CON states: Alabama, Arkansas (POA), Georgia, Kentucky,
Maryland, Mississippi, New Jersey, New York, North Carolina, South Carolina, Tennessee, Washington and
West Virginia, as well as the District of Columbia and Puerto Rico. We provide hospice related services in the
following CON states: Alabama, Maryland, North Carolina, Tennessee, Washington and West Virginia.

In every state where required, our locations possess a license and/or CON or POA issued by the state health
authority that determines the local service areas for the home health or hospice agency. In general, the process for
opening a home health or hospice agency begins by a provider submitting an application for licensure and
certification to the state and Federal regulatory bodies, which is followed by a testing period of transmitting data
from the applicant to CMS. Once this process is complete, the agency receives a provider agreement and
corresponding number and can begin billing for services that it provides. For those states that require a CON or
POA, the provider must also complete a separate application process before billing can commence. In addition,
states with CON and POA laws place limits on the construction and acquisition of health care facilities and
operations and the expansion of existing facilities and services. In these states, approvals are required for capital
expenditures exceeding amounts above the prescribed thresholds.

9

State CON and POA laws generally provide that, prior to the addition of new capacity, the construction of new
facilities or the introduction of new services, a designated state health planning agency must determine that a
need exists for those beds, facilities or services. The process is intended to promote comprehensive health care
the lowest possible cost and avoid unnecessary
planning, assist
duplication by ensuring that only those health care facilities and operations that are needed will be built and
opened.

in providing high-quality health care at

Medicare Participation

As we expect to continue to receive the majority of our revenue from serving Medicare beneficiaries, our
agencies must comply with regulations promulgated by the United States Department of Health and Human
Services in order to participate in the Medicare program and receive Medicare payments. Among other things,
these regulations, known as “conditions of participation,” relate to the type of facility, its personnel and its
standards of medical care, as well as its compliance with state and local laws and regulations. CMS has indicated
that it will be revising the current home health conditions of participation but has not yet announced the
publication date of such revisions.

CMS has engaged a number of third party firms, including Recovery Audit Contractors (“RACs”), Program
Safeguard Contractors (“PSCs”), Zone Program Integrity Contractors (“ZPICs”) and Medicaid Integrity
Contributors (“MICs”), to conduct extensive reviews of claims data and state and Federal government health care
program laws and regulations applicable to companies that operate home health and hospice agencies. These
audits will evaluate the appropriateness of billings submitted for payment.
In addition to identifying
overpayments, audit contractors can refer suspected violations of law to government enforcement authorities.

Federal and State Anti-Fraud and Anti-Kickback Laws

As a provider under the Medicare and Medicaid systems, we are subject to various anti-fraud and abuse laws,
including the Federal health care programs’ anti-kickback statute and, where applicable,
its state law
counterparts. Subject to certain exceptions, these laws prohibit any offer, payment, solicitation or receipt of any
form of remuneration to induce or reward the referral of business payable under a government health care
program or in return for the purchase, lease, order, arranging for, or recommendation of items or services covered
under a government health care program. Affected government health care programs include any health care
plans or programs that are funded by the United States government (other than certain Federal employee health
insurance benefits/programs), including certain state health care programs that receive Federal funds, such as
Medicaid. A related law forbids the offer or transfer of anything of value, including certain waivers of
co-payment obligations, to a beneficiary of Medicare or Medicaid that is likely to influence the beneficiary’s
selection of health care providers, again subject to certain exceptions. Violations of the anti-fraud and abuse laws
can result in the imposition of substantial civil and criminal penalties and, potentially, exclusion from furnishing
services under any government health care program. In addition, the states in which we operate generally have
laws that prohibit certain direct or indirect payments or fee-splitting arrangements between health care providers
where they are designed to obtain the referral of patients from a particular provider.

Stark Laws

Congress adopted legislation in 1989, known as the “Stark Law,” that generally prohibited a physician from
ordering clinical laboratory services for a Medicare beneficiary where the entity providing that service has a
financial relationship (including direct or indirect ownership or compensation relationships) with the physician
(or a member of his/her immediate family), and further prohibits such entity from billing for or receiving
payment for such services, unless a specified exception is available. The Stark Law was amended through
additional legislation, known as “Stark II,” which became effective January 1, 1993. That legislation extended
the Stark Law prohibitions beyond clinical laboratory services to a more extensive list of statutorily defined
“designated health services,” which includes, among other things, home health services, durable medical

10

equipment and outpatient prescription drugs. Violations of the Stark Law result in payment denials and may also
trigger civil monetary penalties and program exclusion. An exception from the Stark Law that we rely upon is a
safe harbor allowing us to lease office space from certain physicians at fair market value for legitimate and
commercially reasonable business purposes. Several of the states in which we conduct business have also enacted
statutes similar in scope and purpose to the Federal fraud and abuse laws and the Stark Laws. These state laws
may mirror the Federal Stark Laws or may be different in scope. The available guidance and enforcement activity
associated with such state laws varies considerably.

Federal and State Privacy and Security Laws

The Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996,
as amended (“HIPAA”), directed that the Secretary of the U.S. Department of Health and Human Services
(“HHS”) promulgate regulations prescribing standard requirements for electronic health care transactions and
establishing protections for the privacy and security of individually identifiable health information, known as
“protected health information.” The HIPAA transactions regulations establish form, format and data content
requirements for most electronic health care transactions, such as health care claims that are submitted
electronically. The HIPAA privacy regulations establish comprehensive requirements relating to the use and
disclosure of protected health information. The HIPAA security regulations establish minimum standards for the
protection of protected health information that is stored or transmitted electronically. Violations of the privacy
and security regulations are punishable by civil and criminal penalties.

The American Recovery and Economic Reinvestment Act of 2009 (“ARRA”), signed into law by President
Obama on February 17, 2009, contained significant changes to the privacy and security provisions of HIPAA,
including major changes to the enforcement provisions. Among other things, ARRA significantly increased the
amount of civil monetary penalties that can be imposed for violations of HIPAA. ARRA also authorized state
attorneys general to bring civil enforcement actions under HIPAA. These enhanced penalties and enforcement
provisions went into effect immediately upon enactment of ARRA. ARRA also required that HHS promulgate
regulations requiring that certain notifications be made to individuals, to HHS and potentially to the media in the
event of breaches of the privacy of protected health information. These breach notification regulations went into
effect on September 23, 2009, and HHS began to enforce violations on February 22, 2010. Violations of the
breach notification provisions of HIPAA can trigger the increased civil monetary penalties described above.

ARRA’s numerous other changes to HIPAA have delayed effective dates and require the issuance of
implementing regulations by HHS. The changes to HIPAA enacted as part of ARRA reflect a Congressional
intent that HIPAA’s privacy and security provisions be more strictly enforced. It is likely that these changes will
stimulate increased enforcement activity and enhance the potential that health care providers will be subject to
financial penalties for violations of HIPAA.

In addition to the Federal HIPAA regulations, most states also have laws that protect the confidentiality of health
information. Also, in response to concerns about identity theft, many states have adopted so-called “security
breach” notification laws that may impose requirements regarding the safeguarding of personal information, such
as social security numbers and bank and credit card account numbers, and that impose an obligation to notify
persons when their personal information has or may have been accessed by an unauthorized person. Some state
security breach notification laws may also impose physical and electronic security requirements. Violation of
state security breach notification laws can trigger significant monetary penalties.

The False Claims Act

The Federal False Claims Act gives the Federal government an additional way to police false bills or requests for
payment for health care services. Under the False Claims Act, the government may fine any person who
knowingly submits, or participates in submitting, claims for payment to the Federal government which are false
or fraudulent, or which contain false or misleading information. Any person who knowingly makes or uses a

11

false record or statement to avoid paying the Federal government, or knowingly conceals or avoids an obligation
to pay money to the Federal government, may also be subject to fines under the False Claims Act. Under the
False Claims Act, the term “person” means an individual, company, or corporation. The Federal government has
widely used the False Claims Act to prosecute Medicare and other governmental program fraud in areas such as
violations of the Federal anti-kickback statute or the Stark Laws, coding errors, billing for services not provided,
and submitting false cost reports. The False Claims Act has also been used to prosecute people or entities that bill
services at a higher reimbursement rate than is allowed and that bill for care that is not medically necessary. In
addition to government enforcement, the False Claims Act authorizes private citizens to bring qui tam or
“whistleblower” lawsuits, greatly extending the practical reach of the False Claims Act. The penalty for violation
of the False Claims Act is a minimum of $5,500 for each fraudulent claim plus three times the amount of
damages caused to the government as a result of each fraudulent claim.

The Fraud Enforcement and Recovery Act of 2009 (“FERA”), effective May 20, 2009, amended the False
Claims Act with the intent of enhancing the powers of government enforcement authorities and whistleblowers to
bring False Claims Act cases. In particular, FERA attempts to clarify that liability may be established not only
for false claims submitted directly to the government, but also for claims submitted to government contractors
and grantees. FERA also seeks to clarify that liability exists for attempts to avoid repayment of overpayments,
including improper retention of Federal funds. FERA also included amendments to False Claims Act procedures,
expanding the government’s ability to use the Civil Investigative Demand process to investigate defendants, and
permitting government complaints in intervention to relate back to the filing of the whistleblower’s original
complaint. FERA is likely to increase both the volume and liability exposure of False Claims Act cases brought
against health care providers.

In addition to the False Claims Act, the Federal government may use several criminal statutes to prosecute the
submission of false or fraudulent claims for payment to the Federal government. Many states have similar false
claims statutes that impose liability for the types of acts prohibited by the False Claims Act. As part of the Deficit
Reduction Act of 2005 (the “DRA”), Congress provided states an incentive to adopt state false claims acts
consistent with the Federal False Claims Act. Additionally, the DRA required providers who receive $5 million
or more annually from Medicaid to include information on Federal and state false claims acts, whistleblower
protections and the providers’ own policies on detecting and preventing fraud in their written employee policies.

Civil Monetary Penalties

The United States Department of Health and Human Services may impose civil monetary penalties upon any
person or entity who presents, or causes to be presented, certain ineligible claims for medical items or services.
The amount of penalties varies, depending on the offense, from $2,000 to $50,000 per violation. In addition,
persons who have been excluded from the Medicare or Medicaid program and still retain ownership in a
participating entity, or who contract with excluded persons, may be penalized. Penalties also are applicable in
certain other cases, including violations of the Federal anti-kickback statute, payments to limit certain patient
services and improper execution of statements of medical necessity.

FDA Regulation

The U.S. Food and Drug Administration (“FDA”) regulates medical device user facilities, which include home
health care providers. FDA regulations require user facilities to report patient deaths and serious injuries to FDA
and/or the manufacturer of a device used by the facility if the device may have caused or contributed to the death
or serious injury of any patient. FDA regulations also require user facilities to maintain files related to adverse
events and to establish and implement appropriate procedures to ensure compliance with the above reporting and
recordkeeping requirements. User facilities are subject to FDA inspection, and noncompliance with applicable
requirements may result in warning letters or sanctions including civil monetary penalties, injunction, product
seizure, criminal fines and/or imprisonment.

12

Patient Protection and Affordable Care Act

In March 2010, comprehensive health care reform legislation was signed into law in the United States through
the passage of the Patient Protection and Affordable Health Care Act and the Health Care and Education
Reconciliation Act (collectively, “PPACA”). However, it is difficult to predict the full impact of PPACA due to
the law’s complexity and current lack of implementing regulations or interpretive guidance, as well our inability
to foresee how CMS and other participants in the health care industry will respond to the choices available to
them under the law. Many provisions in PPACA are scheduled to become effective over the next several years,
but the implementing regulations for these statutory provisions have not yet been published. It is also possible
that implementation of some or all of the PPACA’s provisions could be delayed or even blocked due to court
challenges, and efforts to repeal or amend the law. PPACA makes a number of changes to Medicare payment
rates and also calls for a rebasing of the home health payment system beginning in 2014 that will be phased in
over a four-year period. These reimbursement changes are described in detail in Part II, Item 7, “Recent
Developments.” PPACA also has established a number of new requirements impacting our business operations,
and promises to give rise to other changes that could significantly impact our businesses in the future. See Part 1,
Item IA, “Risk Factors,” “Risks Related to Laws and Government Regulations” for a more complete discussion
of PPACA and the risks it presents to our businesses.

Our Competitors

There are few barriers to entry in home health and hospice markets that do not require certificates of need or
permits of approval. Our primary competition comes from local privately-owned and hospital-owned health care
providers. We compete based on the availability of personnel; the quality of services, expertise of visiting staff
and value of our services; and in certain instances, on the price of our services. In addition, we compete with a
number of non-profit organizations that finance acquisitions and capital expenditures on a tax-exempt basis or
receive charitable contributions that are unavailable to us.

Available Information

Our company website address is www.amedisys.com. We use our website as a channel of distribution for
important company information. Important information, including press releases, analyst presentations and
financial information regarding our company, is routinely posted on and accessible on the Investor Relations
subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page.
We also use our website to expedite public access to time-critical information regarding our company in advance
of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore,
investors should look to the “Investor Relations” subpage of our web site for important and time-critical
information. Visitors to our website can also register to receive automatic e-mail and other notifications alerting
them when new information is made available on the “Investor Relations” subpage of our website. In addition,
we make available on the Investor Relations subpage of our website (under the link “SEC filings”) free of charge
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, ownership
reports on Forms 3, 4 and 5 and any amendments to those reports as soon as practicable after we electronically
file such reports with the SEC. Further, copies of our Certificate of Incorporation and Bylaws, our Code of
Ethical Business Conduct, our Corporate Governance Guidelines and the charters for the Audit, Compensation,
Nominating and Corporate Governance and Quality of Care Committees of our Board are also available on the
Investor Relations subpage of our website (under the link “Corporate Governance”).

Additionally, the public may read and copy any of the materials we file with the SEC at the SEC’s Public
Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. Our electronically filed reports
can also be obtained on the SEC’s internet site at http://www.sec.gov.

13

ITEM 1A. RISK FACTORS

The risks described below, and risks described elsewhere in this Form 10-K, could have a material adverse effect
on our business and consolidated financial condition, results of operations and cash flows and the actual
outcome of matters as to which forward-looking statements are made in this Form 10-K. The risk factors
described below and elsewhere in this Form 10-K are not the only risks faced by Amedisys. Our business and
consolidated financial condition, results of operations and cash flows may also be materially adversely affected
by factors that are not currently known to us, by factors that we currently consider immaterial or by factors that
are not specific to us, such as general economic conditions.

If any of the following risks are actually realized, our business and consolidated financial condition, results of
operations and cash flows could be materially adversely affected. In that case, the trading price of our common
stock could decline.

You should refer to the explanation of the qualifications and limitations on forward-looking statements under
“Special Caution Concerning Forward-Looking Statements.” All forward-looking statements made by us are
qualified by the risk factors described below.

Risks Related to Reimbursement

Because a high percentage of our revenue is derived from Medicare, reductions in Medicare rates, rate
increases that do not cover cost increases and/or significant changes to the Medicare payment methodology
could have a material adverse effect on our business and consolidated financial condition, results of
operations and cash flows.

Our net service revenue is primarily derived from Medicare, which accounted for 86%, 88% and 87% of our
revenue during 2010, 2009 and 2008, respectively. Payments received from Medicare are subject to changes
made through Federal legislation. These changes, as further detailed in Item 1, “Payment for Our Services,” can
include changes to base episode payments and adjustments for home health services and changes to cap limits
and per diem rates for hospice services. When such changes are implemented, we must also modify our internal
billing processes and procedures accordingly, which can require significant time and expense. Any similar
changes, including retroactive adjustments, adopted in the future by CMS could have a material adverse effect on
our business and our consolidated financial condition, results of operations and cash flows.

There are continuing efforts to reform governmental health care programs that could result in major changes in
the health care delivery and reimbursement system on a national and state level, including changes directly
impacting the reimbursement systems for our home health and hospice agencies. Though we cannot predict what,
if any, reform proposals will be adopted, health care reform and legislation may have a material adverse effect on
our business and our financial condition, results of operations and cash flows through decreasing payments made
for our services. We could be affected adversely by the continuing efforts of governmental and private third party
payors to contain health care costs. We cannot assure you that reimbursement payments under governmental and
private third party payor programs, including Medicare supplemental insurance policies, will remain at levels
to cover the costs allocable to patients eligible for
comparable to present
reimbursement pursuant to these programs. These changes could have a material adverse effect on our business,
our consolidated financial condition, results of operations and cash flows.

levels or will be sufficient

Our hospice operations are subject to two annual Medicare caps. If such caps were to be exceeded by any of
our hospice providers, our business and consolidated financial condition, results of operations and cash flows
could be materially adversely affected.

With respect to our hospice operations, overall payments made by Medicare to each provider number (generally
corresponding to a hospice agency) are subject to an inpatient cap amount and an overall payment cap, which are
calculated and published by the Medicare fiscal intermediary on an annual basis covering the period from

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November 1 through October 31. If payments received by any one of our hospice provider numbers exceeds
either of these caps, we may be required to reimburse Medicare for payments received in excess of the caps,
which could have a material adverse effect on our business and consolidated financial condition, results of
operations and cash flows.

The economic downturn, any deepening of the economic downturn, continued deficit spending by the Federal
government or state budget pressures may result in a reduction in payments and covered services.

Adverse developments in the United States and global economies, continued deficit spending due to economic
conditions, bailout programs directed at specific industries or other governmental measures, could lead to a
reduction in Federal government expenditures,
including governmentally funded programs in which we
participate, such as Medicare and Medicaid. Reductions in expenditures for these programs could have a material
adverse effect on our business and our consolidated financial condition, results of operations and cash flows.

Historically, state budget pressures have resulted in reductions in state spending. Given that Medicaid outlays are
a significant component of state budgets, we can expect continuing cost containment pressures on Medicaid
outlays for our services. In addition, continued unfavorable economic conditions may affect the number of
patients enrolled in managed care programs and the profitability of managed care companies, which could result
in reduced payment rates and could have a material adverse effect on our business and consolidated financial
condition, results of operations and cash flows.

Future cost containment initiatives undertaken by private third party payors may limit our future revenue and
profitability.

Our non-Medicare revenue and profitability are affected by continuing efforts of third party payors to maintain or
reduce costs of health care by lowering payment rates, narrowing the scope of covered services, increasing case
management review of services and negotiating pricing. There can be no assurance that third party payors will
make timely payments for our services, and there is no assurance that we will continue to maintain our current
payor or revenue mix. Any changes in payment levels from third party payors could have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows.

Risks Related to Laws and Government Regulations

We are the subject of a number of inquiries by the Federal government, any of which could result in
substantial penalties against us.

We are the subject of a number of inquiries by the Federal government. We have received a letter of inquiry from
the United States Senate Committee on Finance requesting documents and information relating to our policies
and practices regarding home therapy visits and therapy utilization trends. A similar letter was sent to the other
major publicly traded home health care companies. In addition, we as well as the other major publicly traded
home health care companies received a notice of formal investigation from the SEC accompanied by a subpoena
for documents relating to the matters under review by the United States Senate Committee on Finance and other
matters involving our operations. We have also received a Civil Investigative Demand (CID) issued by the U.S.
Department of Justice pursuant to the Federal False Claims Act, requiring the delivery of a wide range of
documents and information relating to our clinical business operations, including reimbursement and billing
claims submitted to Medicare for home health services, and related compliance activities. We are cooperating
with these investigations and are responding to these requests. However, we cannot predict when these
investigations will be resolved, the outcome of these investigations or their impact on our business. An adverse
outcome in these investigations could include the commencement of civil and/or criminal proceedings,
substantial fines, penalties and/or administrative remedies, including the loss of the right to participate in the
Medicare program. In addition, resolution of these matters could involve the imposition of additional and costly
compliance obligations. Finally, if these investigations continue over a long period of time, they could divert the
attention of management from the day-to-day operations of our business and impose significant administrative

15

burdens on us. These potential consequences, as well as any adverse outcome from these investigations or other
investigations initiated by the government at any time, could have a material adverse effect on our business and
our consolidated financial condition, results of operations and cash flows.

Pending civil litigation could have a material adverse effect on the Company.

We and certain of our current and former directors, senior executives and other employees are defendants in a
Federal securities class action, an ERISA class action and a shareholder derivative action. See Part I, Item 3,
“Legal Proceedings” for a more detailed description of these proceedings. These actions remain in preliminary
stages and it is not yet possible to assess their probable outcome or our potential liability, if any. We cannot
provide any assurances that the legal and other costs associated with the defense of these actions, the amount of
time required to be spent by management on these matters and the ultimate outcome of these actions will not
have a material adverse effect on our business, financial condition and results of operations.

We are subject to extensive government regulation. Any changes to the laws and regulations governing our
business, or to the interpretation and enforcement of those laws or regulations, could have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows.

Our industry is subject to extensive Federal and state laws and regulations. See Part I, Item 1, “Our Regulatory
Environment” for additional information on such laws and regulations. Federal and state laws and regulations
impact how we conduct our business, the services we offer and our interactions with patients, our employees and
the public and impose certain requirements on us such as:

•

•

•

•

•

•

•

•

•

•

•

licensure and certification;

adequacy and quality of health care services;

qualifications of health care and support personnel;

quality and safety of medical equipment;

confidentiality, maintenance and security issues associated with medical records and claims processing;

relationships with physicians and other referral sources;

operating policies and procedures;

polices and procedures regarding employee relations;

addition of facilities and services;

billing for services; and

reporting and maintaining records regarding adverse events.

These laws and regulations, and their interpretations, are subject to change. Changes in existing laws and
regulations, or their interpretations, or the enactment of new laws or regulations could have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows by:

•

•

•

•

•

increasing our administrative and other costs;

increasing or decreasing mandated services;

causing us to abandon business opportunities we might have otherwise pursued;

forcing us to restructure our relationships with referral sources and providers; or

requiring us to implement additional or different programs and systems.

Additionally, we are subject to various routine and non-routine reviews, audits and investigations by the
Medicare and Medicaid programs and other Federal and state governmental agencies, which have various rights
and remedies against us if they assert that we have overcharged the programs or failed to comply with program

16

requirements. Violation of the laws governing our operations, or changes in interpretations of those laws, could
result in the imposition of fines, civil or criminal penalties, and the termination of our rights to participate in
Federal and state-sponsored programs and/or the suspension or revocation of our licenses. If we become subject
to material fines, or if other sanctions or other corrective actions are imposed on us, our business and
consolidated financial condition, results of operations and cash flows could be materially adversely affected.

We face periodic and routine reviews, audits and investigations under our contracts with Federal and state
government agencies and private payors, and these audits could have adverse findings that may negatively
impact our business.

As a result of our participation in the Medicare and Medicaid programs, we are subject to various governmental
reviews, audits and investigations to verify our compliance with these programs and applicable laws and
regulations. We also are subject to audits under various government programs, including the RAC, ZPIC, PSC
and MIC programs, in which third party firms engaged by CMS conduct extensive reviews of claims data and
medical and other records to identify potential improper payments under the Medicare program. Private pay
sources also reserve the right to conduct audits. Our costs to respond to and defend reviews, audits and
investigations may be significant and could have a material adverse effect on our business and consolidated
financial condition, results of operations and cash flows. Moreover, an adverse review, audit or investigation
could result in:

•

•

•

•

required refunding or retroactive adjustment of amounts we have been paid pursuant to the Federal or
state programs or from private payors;

state or Federal agencies imposing fines, penalties and other sanctions on us;

loss of our right to participate in the Medicare program, state programs, or one or more private payor
networks; or

damage to our business and reputation in various markets.

These results could have a material adverse effect on our business and consolidated financial condition, results of
operations and cash flows.

If an agency fails to comply with the conditions of participation in the Medicare program, that agency could
be terminated from the Medicare program.

Each of our agencies must comply with required conditions of participation in the Medicare program. If we fail
to meet the conditions of participation at an agency, we may receive a notice of deficiency from the applicable
state surveyor. If that agency then fails to institute an acceptable plan of correction to remediate the deficiency
within the correction period provided by the state surveyor, that agency could be terminated from the Medicare
program. Any termination of one or more of our agencies from the Medicare program for failure to satisfy the
program’s conditions of participation could have a material adverse effect on our business and reputation and our
consolidated financial condition, results of operations and cash flows. CMS has announced that it is currently
revising the Medicare conditions of participation for home health agencies across the industry, with an unknown
publication date. We do not know at this time what effect the revisions will have on our operations, and there can
be no assurances that the revisions will not have a material adverse effect on our business and consolidated
financial condition, results of operations and cash flows.

We are subject to Federal and state laws that govern our financial relationships with physicians and other
health care providers, including potential or current referral sources.

We are required to comply with Federal and state laws, generally referred to as “anti-kickback laws,” that
prohibit certain direct and indirect payments or other financial arrangements between health care providers that
are designed to encourage the referral of patients to a particular provider for medical services. In addition to these

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anti-kickback laws, the Federal government has enacted specific legislation, commonly known as the “Stark
Law,” that prohibits certain financial relationships, specifically including ownership interests and compensation
arrangements, between physicians (and the immediate family members of physicians) and providers of
designated health services, such as home health agencies, to whom the physicians refer patients. Some of these
same financial relationships are also subject to additional regulation by states. Although we believe we have
structured our relationships with physicians and other potential referral sources to comply with these laws where
applicable we cannot assure you that courts or regulatory agencies will not interpret state and Federal anti-
kickback laws and/or the Stark Law and similar state laws regulating relationships between health care providers
and physicians in ways that will adversely implicate our practices. Violations of these laws could lead to criminal
or civil fines or other sanctions, including denials of government program reimbursement or even exclusion from
participation in governmental health care programs that could have a material adverse effect on our business and
consolidated financial condition, results of operations and cash flows.

We may face significant uncertainty in the industry due to government health care reform.

The health care industry in the United States is subject to fundamental changes due to ongoing health care reform
efforts and related political, economic and regulatory influences. In March 2010, comprehensive health care
reform legislation was signed into law in the United States through the passage of the Patient Protection and
Affordable Health Care Act and the Health Care and Education Reconciliation Act (collectively, “PPACA”).
However, it is difficult to predict the full impact of PPACA due to the law’s complexity and current lack of
implementing regulations or interpretive guidance, as well our inability to foresee how CMS and other
participants in the health care industry will respond to the choices available to them under the law. Many
provisions in PPACA are scheduled to become effective over the next several years, but the implementing
regulations for these statutory provisions have not yet been published. It is also possible that implementation of
some or all of the PPACA’s provisions could be delayed or even blocked due to court challenges and efforts to
repeal or amend the law.

PPACA makes a number of changes to Medicare payment rates and also calls for a rebasing of the home health
payment system beginning in 2014 that will be phased in over a four-year period. These reimbursement changes
are described in detail in Part II, Item 7 “Recent Developments.”

In November of 2010, CMS issued a final payment rule that established Medicare home health rates for 2011 and
implemented new PPACA requirements regarding face-to-face encounters for both home health and hospice
services and regarding assessments needed to support therapy utilization. These new operational changes were
originally slated to become effective January 1, 2011, but CMS announced that it would delay enforcement of
these requirements until April 1, 2011 due to a concern that some providers may need additional time to prepare.
For the home health face-to-face encounter, before certifying a patient for home health services, the certifying
physician must document that the physician (or a non-physician practitioner under the direction of the physician)
has had a face-to-face encounter with the patient, during a timeframe starting 90 days prior to the home health
start of care and ending 30 days after the start of care. For the hospice face-to-face encounter, a hospice physician
or nurse practitioner must have a face-to-face encounter with the patient during the 30-day period prior to the
180th-day recertification (i.e.,
the third benefit period) and each subsequent recertification. These new
face-to-face requirements may increase our costs associated with home health certifications and hospice
recertifications, and may also impact utilization of home health and hospice services by Medicare beneficiaries.
In addition, the November 2010 final rule introduced additional therapy assessment requirements. A professional
qualified therapist assessment must take place at least once every 30 days during a therapy patient’s course of
treatment. Subject to certain exceptions, for those patients needing 13 or 19 therapy visits, a qualified therapist
must perform the therapy services required, assess the patient, and measure and document effectiveness of the
therapy both on the 13th visit and the 19th visit, for all therapy disciplines caring for the patient. These and other
regulations implementing the provisions of the PPACA may similarly increase our costs, decrease our revenues,
expose us to expanded liability or require us to revise the ways in which we conduct our business.

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PPACA also calls for a number of other changes to be made over time that will likely have a significant impact
upon the health care delivery system. For example, PPACA mandates creation of a home health value-based
purchasing program, the development of quality measures, and decreases in home health reimbursement rates, as
further described in Part II, Item 7 “Recent Developments.” In addition, PPACA requires the Secretary of Health
and Human Services to test different models for delivery of care, some of which will involve home health
services. It also requires the Secretary to establish a national pilot program for integrated care for patients with
certain conditions, bundling payment for acute hospital care, physician services, outpatient hospital services
(including emergency department services) and post-acute care services, which would include home health.
PPACA further directs the Secretary to conduct a study to evaluate cost and quality of care among efficient home
health agencies and specifically focusing on access to care and treating Medicare beneficiaries with varying
severity levels of illness, and provide a report to Congress no later than March 1, 2014. At this time, it is not
possible to predict with any certainty how these initiatives will be implemented and what impact they may have
on our business.

In addition, various health care reform proposals similar to the Federal reforms described above have also
emerged at the state level, including in several states in which we operate. Moreover, in January 2011, the
Medicare Payment Advisory Commission voted to recommend to Congress that it make additional changes to the
home health payment system noting that such recommendations may include further payment reductions and/or a
beneficiary copayment obligation. We cannot predict with certainty what health care initiatives, if any, will be
implemented at the state level, or what the ultimate effect of Federal health care reform or any future legislation
or regulation may have on us or on our business, financial condition or results of operations.

Finally,
in addition to impacting our Medicare businesses, PPACA may also significantly affect our
non-Medicare businesses. PPACA makes many changes to the underwriting and marketing practices of private
rates of
payors. The resulting economic pressures could prompt
reimbursement for the services we provide. At this time, it is not possible to estimate what impact PPACA may
have on our non-Medicare businesses.

these payors to seek to lower their

Risks Related to our Growth Strategy

Our growth strategy depends on our ability to open agencies, acquire additional agencies on favorable terms
and integrate and operate these agencies effectively. If our growth strategy is unsuccessful or we are not able
to successfully integrate newly acquired or opened agencies into our existing operations, our business and
consolidated financial condition, results of operations and cash flows could be materially adversely affected.

We expect to continue to open agencies in existing and new markets. Our new agency growth, however, will
depend on several factors, including our ability to:

•

•

•

obtain locations for agencies in markets where need exists;

identify and hire a sufficient number of appropriately trained professionals; and

obtain adequate financing to fund growth.

We focus significant time and resources on acquisitions of agencies, or on assets of agencies, in targeted markets.
Not only do we face competition for acquisition candidates, but we may also be unable to identify, negotiate and
complete suitable acquisition opportunities on favorable terms. As we continue to add acquisition-related revenue
and expand our markets, our growth could strain our resources, including management, information systems,
regulatory compliance, logistics and other controls. This could require us to incur expenses for hiring additional
qualified personnel, retaining professionals to assist in developing the appropriate control systems and expanding
our information technology infrastructure. Additionally, acquisitions involve significant risks and uncertainties,
including difficulties in recouping partial episode payments and other types of misdirected payments for services
from the previous owners; difficulties integrating acquired personnel and business practices into our business; the
potential loss of key employees, referral sources or patients of acquired agencies; the delay in payments

19

associated with change in ownership, control and the internal process of the Medicare fiscal intermediary; and
the assumption of liabilities and exposure to unforeseen liabilities of acquired agencies. We may not be able to
fully integrate the operations of the acquired businesses with our current business structure in an efficient and
cost-effective manner. The failure to effectively integrate any of these businesses could have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows.

Start-up agencies can be delayed from opening in a timely manner due to processing of regulatory approvals.

There can be delays associated with opening a start-up agency. These delays are the result of processing delays
with the state regulatory bodies as well as processing delays by the associated fiscal intermediaries that serve as
billing liaisons between the agency and CMS. In order to initiate operations at a start-up agency we must submit
the necessary applications along with the required documentation to the appropriate state and Federal regulatory
bodies. However, CMS has issued a memorandum which prioritizes the initial surveys for new Medicare
providers as lowest priority for the state regulatory bodies. Moreover, depending on state requirements, the fiscal
intermediary may need to receive the state license before the approval process can move forward. Once the
necessary application and documentation has been submitted to the state and Federal regulatory bodies, there is a
testing period of transmitting data from the applicant to CMS. Once complete, the agency receives a provider
agreement and corresponding number and can begin billing. If we are unable to obtain regulatory approval for
our start-up agencies in a timely manner, such delays could have a material adverse effect on our business and
our consolidated financial condition, results of operations and cash flows.

State efforts to regulate the establishment or expansion of health care providers could impair our ability to
expand our operations.

Some states require health care providers (including skilled nursing facilities, hospice agencies, home health
agencies and assisted living facilities) to obtain prior approval, known as a CON or POA in order to commence
operations. See Part I, Item 1, “Our Regulatory Environment” for additional information on CONs and POAs. If
we are not able to obtain such approvals, our ability to expand our operations could be impaired, which could
have a material adverse effect on our business and consolidated financial condition, results of operations and
cash flows.

Federal regulation may impair our ability to consummate acquisitions or open new agencies.

Changes in Federal laws or regulations may materially adversely impact our ability to acquire agencies or open
new start-up agencies. For example,
the recently enacted PPACA authorized CMS to impose temporary
moratoria on the enrollment of new Medicare providers, if deemed necessary to combat fraud, waste or abuse
under government programs. The moratoria on new enrollments may be applied to categories of providers or to
specific geographic regions. If a moratorium is imposed on the enrollment of new home health or hospice
providers in a geographic area we desire to service, it could have a material impact on our ability to open new
agencies. Additionally, CMS recently adopted and amended a regulation known as the “36 Month Rule” that is
applicable to home health agency acquisitions. Subject to certain exceptions, the 36 Month Rule prohibits buyers
of certain home health agencies – those that either enrolled in Medicare or underwent a change in ownership
fewer than 36 months prior to the acquisition – from assuming the Medicare billing privileges of the acquired
agency. Instead, the acquired agencies must enroll as new providers with Medicare. One of the exceptions for the
36 Month Rule applies to home health agencies that have submitted two consecutive years of Medicare full cost
reports. We believe that this exception applies to the majority of potential acquisition targets. Nonetheless, the
rule may apply to some acquisition targets, the rule may be changed, or it may be interpreted differently by CMS
going forward and could therefore have a material detrimental impact on our acquisition strategy. It may further
increase competition for acquisition targets that are not subject to the rule, and may cause significant Medicare
billing delays for the purchasers of agencies that are subject to the rule.

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We may not succeed in our efforts to evolve from a home health care company to a post acute chronic care
company.

Our long-term strategy is to develop from a home health care to a post acute chronic care company to better serve
the needs of our nation’s seniors and diversify our sources of payment so as to become less reliant upon
Medicare. To this end, we are working to develop new products and business lines that will complement our
existing home care and hospice business, and help seniors manage their health more effectively and stay in their
home longer. Developing new product offerings and lines of business can be time consuming and expensive, and
there can be no certainty that our efforts in these areas will ultimately be successful.

Risks Related to our Operations

Because we are limited in our ability to control rates received for our services, our business and consolidated
financial condition, results of operations and cash flows could be materially adversely affected if we are not
able to maintain or reduce our costs to provide such services.

As Medicare is our primary payor and rates are established through Federal legislation, we have to manage our
costs of providing care to achieve a desired level of profitability. Additionally, non-Medicare rates are difficult
for us to negotiate as such payors are under pressure to reduce their own costs. As a result, we manage our costs
in order to achieve a desired level of profitability including, but not limited to, centralization of various
processes, the use of technology and management of the number of employees utilized. If we are not able to
continue to streamline our processes and reduce our costs, our business and consolidated financial condition,
results of operations and cash flows could be materially adversely affected.

Our industry is highly competitive, with few barriers to entry.

There are few barriers to entry in home health markets that do not require a CON or POA. Our primary
competition comes from local privately-owned and hospital-owned health care providers. We compete based on
the availability of personnel; the quality of services, expertise of visiting staff and value of our services; and in
certain instances, on the price of our services. Increased competition in the future may limit our ability to
maintain or increase our market share.

Further, the introduction of new and enhanced service offerings by others, in combination with industry
consolidation and the development of strategic relationships by our competitors, could cause a decline in revenue
or loss of market acceptance of our services or make our services less attractive. Additionally, we compete with a
number of non-profit organizations that can finance acquisitions and capital expenditures on a tax-exempt basis
or receive charitable contributions that are unavailable to us.

Managed care organizations and other third party payors continue to consolidate to enhance their ability to
influence the delivery of health care services. Consequently, the health care needs of patients in the United States
are increasingly served by a smaller number of managed care organizations. These organizations generally enter
into service agreements with a limited number of providers. Our business and consolidated financial condition,
results of operations and cash flows could be materially adversely affected if these organizations terminate us as
a provider and/or engage our competitors as a preferred or exclusive provider. In addition, should private payors,
including managed care payors, seek to negotiate additional discounted fee structures or the assumption by health
care providers of all or a portion of the financial risk through prepaid capitation arrangements, our business and
consolidated financial condition, results of operations and cash flows could be materially adversely affected.

If we are unable to react competitively to new developments, our operating results may suffer. We cannot assure
you that we will be able to compete successfully against current or future competitors, which could have a
material adverse effect on our business and consolidated financial condition, results of operations and cash flows.

21

If we are unable to maintain relationships with existing patient referral sources or to establish new referral
sources, our business and consolidated financial condition, results of operations and cash flows could be
materially adversely affected.

Our success depends on referrals from physicians, hospitals and other sources in the communities we serve and
on our ability to maintain good relationships with existing referral sources. Our referral sources are not
contractually obligated to refer patients to us and may refer their patients to other providers. Our growth and
profitability depends, in part, on our ability to establish and maintain close working relationships with these
patient referral sources and to increase awareness and acceptance of the benefits of home health and hospice care
by our referral sources and their patients. Our loss of, or failure to maintain, existing relationships or our failure
to develop new referral relationships could have a material adverse effect on our business and consolidated
financial condition, results of operations and cash flows.

Our business depends on our information systems. Our inability to effectively integrate, manage and keep our
information systems secure and operational could disrupt our operations.

Our business depends on effective, secure and operational information systems which include software that is
developed in-house and systems provided by external contractors and other service providers. We have
developed and use a proprietary Windows™-based clinical software system with our POC system to collect
assessment data, schedule and log patient visits, communicate with patients’ physicians regarding their plan of
care and monitor treatments and outcomes in accordance with established medical standards. Our clinical
software system integrates billing and collections functionality; accounting; human resources; payroll; and
employee benefits programs provided by third parties. Problems with, or the failure of, our technology and
systems or any system upgrades or programming changes associated with such technology and systems that have
problems or fail to function properly could have a material adverse effect on data capture, billing, collections,
assessment of internal controls and management and reporting capabilities. Any such problems or failures and
the costs incurred in correcting any such problems or failures, could have a material adverse effect on our
business and consolidated financial condition, results of operations and cash flows. To the extent these external
contractors or other service providers become insolvent or fail to support the software or systems we have
licensed from them, our operations could be materially adversely affected.

Our agencies also depend upon our information systems for accounting, billing, collections, risk management,
quality assurance, human resources, payroll and other information. If we experience a reduction in the
performance, reliability, or availability of our information systems, our operations and ability to produce timely
and accurate reports could be materially adversely affected.

Our information systems and applications require continual maintenance, upgrading and enhancement to meet
our operational needs. Our acquisition activity requires transitions and integration of various information
systems. We regularly upgrade and expand our information systems’ capabilities. If we experience difficulties
with the transition and integration of information systems or are unable to implement, maintain, or expand our
systems properly, we could suffer from, among other things, operational disruptions, regulatory problems and
increases in administrative expenses.

We may be required to expend significant capital and other resources to protect against the threat of security
breaches or to alleviate problems caused by breaches,
including unauthorized access to patient data and
personally identifiable information stored in our information systems, and the introduction of computer viruses to
our systems. Our security measures may be inadequate to prevent security breaches and our business operations
could be materially adversely affected by Federal and state fines and penalties, cancellation of contracts and loss
of patients if security breaches are not prevented.

We have installed privacy protection systems and devices on our network and POC laptops in an attempt to
prevent unauthorized access to information in our database. However, our technology may fail to adequately
secure the confidential health information and personally identifiable information we maintain in our databases.

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In such circumstances, we may be held liable to our patients and regulators, which could result in fines, litigation
or adverse publicity that could have a material adverse effect on our business and consolidated financial
condition, results of operations and cash flows. Even if we are not held liable, any resulting negative publicity
could harm our business and distract the attention of management.

Further, our information systems are vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins and similar events. A failure to restore our information systems after the
occurrence of any of these events could have a material adverse effect on our business and consolidated financial
condition, results of operations and cash flows. Because of the confidential health information we store and
transmit, loss of electronically stored information for any reason could expose us to a risk of regulatory action
and litigation and possible liability and loss.

We believe we have all of the necessary licenses from third parties to use technology and software that we do not
own. A third party could, however, allege that we are infringing its rights and we may not be able to obtain
licenses on commercially reasonable terms from the third party, if at all, or the third party may commence
litigation against us. In addition, we may find it necessary to initiate litigation to protect our trade secrets, to
enforce our intellectual property rights and to determine the scope and validity of any proprietary rights of others.
Any such litigation, or the failure to obtain any necessary licenses or other rights, could materially and adversely
affect our business.

Possible changes in the case mix of patients, as well as payor mix and payment methodologies, could have a
material adverse effect on our business and consolidated financial condition, results of operations and cash
flows.

Our revenue is determined by a number of factors, including our mix of patients and the rates of payment among
payors. Changes in the case mix of our patients, payment methodologies or the payor mix among Medicare,
Medicaid and private payors could have a material adverse effect on our business and our consolidated financial
condition, results of operations and cash flows.

A write off of a significant amount of intangible assets or long-lived assets could have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows.

Because we have grown in part through acquisitions, goodwill and other acquired intangible assets represent a
substantial portion of our assets. Goodwill was approximately $791.4 million as of December 31, 2010 and if we
make additional acquisitions, it is likely that we will record additional intangible assets in our consolidated
financial statements. We also have long-lived assets consisting of property and equipment and other identifiable
intangible assets of $191.9 million as of December 31, 2010, which we review both on a periodic basis as well as
when events or circumstances indicate that the carrying amount of an asset may not be recoverable. If a
determination that a significant impairment in value of our unamortized intangible assets or long-lived assets
occurs, such determination could require us to write off a substantial portion of our assets. A write off of these
assets could have a material adverse effect on our business and consolidated financial condition, results of
operations and cash flows.

A shortage of qualified registered nursing staff and other clinicians, such as therapists, could materially
impact our ability to attract, train and retain qualified personnel and could increase operating costs.

We compete for qualified personnel with other providers of home health and hospice services. Our ability to
attract and retain clinicians depends on several factors, including our ability to provide these personnel with
attractive assignments and competitive salaries and benefits. We cannot be assured we will succeed in any of
these areas. In addition, there are shortages of qualified health care personnel in some of our markets. As a result,
we may face higher costs of attracting clinicians and providing them with attractive benefit packages than we
originally anticipated which could have a material adverse effect on our business and consolidated financial

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condition, results of operations and cash flows. In addition, if we expand our operations into geographic areas
where health care providers historically have been unionized, or if any of our agency employees become
unionized, being subject to a collective bargaining agreement may have a negative impact on our ability to timely
and successfully recruit qualified personnel and may increase our operating costs. Generally, if we are unable to
attract and retain clinicians, the quality of our services may decline and we could lose patients and referral
sources, which could have a material adverse effect on our business and consolidated financial condition, results
of operations and cash flows.

Our insurance liability coverage may not be sufficient for our business needs.

As a result of operating in the home health industry, our business entails an inherent risk of claims, losses and
potential lawsuits alleging incidents involving our employees that are likely to occur in a patient’s home. We
maintain professional liability insurance to provide coverage to us and our subsidiaries against these risks.
However, we cannot assure you claims will not be made in the future in excess of the limits of our insurance, nor
can we assure you that any such claims, if successful and in excess of such limits, will not have a material
adverse effect on our business and consolidated financial condition, results of operations and cash flows. Our
insurance coverage also includes fire, property damage and general liability with varying limits. We cannot
assure you that the insurance we maintain will satisfy claims made against us or that insurance coverage will
continue to be available to us at commercially reasonable rates, in adequate amounts or on satisfactory terms.
Any claims made against us, regardless of their merit or eventual outcome, could damage our reputation and
business.

We may be subject to substantial malpractice or other similar claims.

The services we offer involve an inherent risk of professional liability and related substantial damage awards. As
of January 31, 2011, we had approximately 16,300 employees (13,800 home health, 1,400 hospice and 1,100
corporate employees). In addition, we employ direct care workers on a contractual basis to support our existing
workforce. Due to the nature of our business, we, through our employees and caregivers who provide services on
our behalf, may be the subject of medical malpractice claims. A court could find these individuals should be
considered our agents, and, as a result, we could be held liable for their negligence. We cannot predict the effect
that any claims of this nature, regardless of their ultimate outcome, could have on our business or reputation or
on our ability to attract and retain patients and employees. While we maintain malpractice liability coverage that
we believe is appropriate given the nature and breadth of our operations, any claims against us in excess of
insurance limits could have a material adverse effect on our business and consolidated financial condition, results
of operations and cash flows.

If we are unable to maintain our corporate reputation, our business may suffer.

Our success depends on our ability to maintain our corporate reputation, including our reputation for providing
quality patient care and for compliance with Medicare requirements and the other laws to which we are subject.
Adverse publicity surrounding any aspect of our business, including the death or disability of any of our patients
due to our failure to provide proper care, or due to any failure on our part to comply with Medicare requirements
or other laws to which we are subject, could negatively affect our Company’s overall reputation and the
willingness of referral sources to refer patients to us.

We depend on the services of our executive officers and other key employees.

Our success depends upon the continued employment of members of our senior management team, including our
Chairman and Chief Executive Officer, William F. Borne, our Chief Operating Officer, Michael D. Snow, our
Chief Financial Officer, Dale E. Redman, our Chief Medical Officer, Dr. Michael O. Fleming, our Chief
Development Officer, T.A. “Tim” Barfield, Jr., our Executive Vice President of Human Resources and Chief
Information Officer, G. Patrick Thompson, Jr., our Chief Compliance Officer, Jeffrey D. Jeter, and our General

24

Counsel and Secretary, David R. Bucey. The loss or departure of any one of these executives could have a
material adverse effect on our business and consolidated financial condition, results of operations and cash flows.

Our operations could be impacted by natural disasters.

The occurrence of natural disasters in the markets in which we operate could not only impact the day-to-day
operations of our agencies, but could also disrupt our relationships with patients, employees and referral sources
located in the affected areas and, in the case of our corporate office, our ability to provide administrative support
services, including billing and collection services. In addition, any episode of care that is not completed due to
the impact of a natural disaster will generally result in lower revenue for the episode. For example, our corporate
office and a number of our agencies are located in the southeastern United States and the Gulf Coast Region,
increasing our exposure to hurricanes. Future hurricanes or other natural disasters may have a material adverse
effect on our business and consolidated financial condition, results of operations and cash flows.

Risks Related to Liquidity

Delays in payment may cause liquidity problems.

Our business is characterized by delays from the time we provide services to the time we receive payment for
these services. If we have difficulty in obtaining documentation, such as physician orders, experience
information system problems or experience other issues that arise with Medicare or other payors, we may
encounter additional delays in our payment cycle.

In addition, timing delays may cause working capital shortages. Working capital management, including prompt
and diligent billing and collection, is an important factor in achieving our financial results and maintaining
liquidity. It is possible that documentation support, system problems, Medicare or other provider issues or
industry trends may extend our collection period, which may materially adversely affect our working capital, and
our working capital management procedures may not successfully mitigate this risk.

Additionally, our hospice operations may experience payment delays. We have experienced payment delays
when attempting to collect funds from state Medicaid programs in certain instances. Delays in receiving
payments from these programs may also materially adversely affect our working capital.

The volatility and disruption of the capital and credit markets and adverse changes in the United States and
global economies could impact our ability to access both available and affordable financing, and without such
financing, we may be unable to achieve our objectives for strategic acquisitions and internal growth.

The United States and global capital and credit markets have recently experienced extreme volatility and
disruption at unprecedented levels. Many financial institutions have recorded significant write-downs of asset
values and these write-downs have caused many financial institutions to seek additional capital, to merge with
larger and stronger institutions and, in some cases, to fail. Many lenders and institutional investors have reduced,
and in some cases, ceased to provide funding to borrowers, including other financial institutions, or have
increased their rates significantly.

While we intend to finance strategic acquisitions and internal growth with cash flows from operations and
borrowings under our revolving credit facility, we may require sources of capital in addition to those presently
available to us. Uncertainty in the capital and credit markets may impact our ability to access capital on terms
acceptable to us (i.e. at attractive/affordable rates) or at all, and this may result in our inability to achieve present
objectives for strategic acquisitions and internal growth. Further, in the event we need additional funds, and we
are unable to raise the necessary funds on acceptable terms, our business and consolidated financial condition,
results of operations and cash flows could be materially adversely affected.

25

Our indebtedness could impact our financial condition and impair our ability to fulfill other obligations.

As of December 31, 2010, we had total outstanding indebtedness of approximately $181.9 million, comprised
mainly of indebtedness incurred in March 2008, in connection with the TLC Health Care Services, Inc. (“TLC”)
acquisition. Our level of indebtedness could have a material adverse effect on our business and consolidated
financial position, results of operations and cash flows and impair our ability to fulfill other obligations in several
ways, including:

•

•

•

•

•

it could require us to dedicate a portion of our cash flow from operations to payments on our
indebtedness, which could reduce the availability of cash flow to fund acquisitions, start-ups, working
capital, capital expenditures and other general corporate purposes;

it could limit our ability to borrow money or sell stock for working capital, capital expenditures, debt
service requirements and other purposes;

it could limit our flexibility in planning for, and reacting to, changes in our industry or business;

it could make us more vulnerable to unfavorable economic or business conditions; and

it could limit our ability to make acquisitions or exploit other business opportunities.

In the event we incur additional indebtedness, the risks described above could increase.

The agreements governing our indebtedness contain various covenants that limit our discretion in the
operation of our business and our failure to satisfy requirements in these agreements could have a material
adverse effect on our business and consolidated financial condition, results of operations and cash flows.

The agreements governing our indebtedness (the “Debt Agreements”) contain restrictive covenants that require
us to comply with or maintain certain financial covenants and ratios and restrict our ability to:

•

•

incur additional debt;

redeem or repurchase stock, pay dividends or make other distributions;

• make certain investments;

•

•

create liens;

enter into transactions with affiliates;

• make acquisitions;

• merge or consolidate;

•

•

•

invest in foreign subsidiaries;

amend acquisition documents;

enter into certain swap agreements;

• make certain restricted payments;

•

transfer, sell or leaseback assets; and

• make fundamental changes in our corporate existence and principal business.

In addition, events beyond our control could affect our ability to comply with and maintain the financial
covenants and ratios. Any failure by us to comply with or maintain all applicable financial covenants and ratios
and to comply with all other applicable covenants could result in an event of default with respect to the Debt
Agreements. If we are unable to obtain a waiver from our lenders in the event of any non-compliance, our lenders
could accelerate the maturity of any outstanding indebtedness and terminate the commitments to make further
extensions of credit (including our ability to borrow under our revolving credit facility). Any failure to comply
with these covenants could have a material adverse effect on our business and consolidated financial condition,
results of operations and cash flows.

26

Risks Related to Ownership of Our Common Stock

The price of our common stock may be volatile.

The price at which our common stock trades may be volatile. The stock market from time to time experiences
significant price and volume fluctuations that impact the market prices of securities, particularly those of health
care companies. The market price of our common stock may be influenced by many factors, including:

•

•

•

•

•

•

•

•

•

•

•

our operating and financial performance;

variances in our quarterly financial results compared to research analyst expectations;

the depth and liquidity of the market for our common stock;

future sales of common stock by the Company or large stockholders or the perception that such sales
could occur;

investor, analyst and media perception of our business and our prospects;

developments relating to litigation or governmental investigations;

changes or proposed changes in health care laws or regulations or enforcement of these laws and
regulations, or announcements relating to these matters;

departure of key personnel;

changes in the Medicare, Medicaid and private insurance payment rates for home health and hospice;

announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments; or

general economic and stock market conditions.

In addition, the stock market in general, and the NASDAQ Global Select Market (“NASDAQ”) in particular, has
experienced price and volume fluctuations that we believe have often been unrelated or disproportionate to the
operating performance of health care provider companies. These broad market and industry factors may
materially reduce the market price of our common stock, regardless of our operating performance. Securities
class-action cases have often been brought against companies following periods of volatility in the market price
of their securities.

The activities of short sellers could reduce the price or prevent increases in the price of our common stock.
“Short sale” is defined as the sale of stock by an investor that the investor does not own. Typically, investors who
sell short believe the price of the stock will fall, and anticipate selling shares at a higher price than the purchase
price at which they will buy the stock. As of December 31, 2010, investors held a short position of approximately
5.4 million shares of our common stock which represented 19.0% of our outstanding common stock. The
anticipated downward pressure on our stock price due to actual or anticipated sales of our stock by some
institutions or individuals who engage in short sales of our common stock could cause our stock price to decline.

27

Sales of substantial amounts of our common stock or preferred stock, or the availability of those shares for
future sale, could materially impact our stock price and limit our ability to raise capital.

The following table presents information about our outstanding common and preferred stock and our outstanding
securities exercisable for or convertible into shares of common stock:

As of December 31,
2010

Common stock outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock available under 2008 Omnibus Incentive Compensation

Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options outstanding and exercisable . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested stock outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested stock units outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,232,807
—

1,452,943
298,679
408,350
46,894

If we were to sell substantial amounts of our common stock in the public market or if there was a public
perception that substantial sales could occur, the market price of our common stock could decline. These sales or
the perception of substantial future sales may also make it difficult for us to sell common stock in the future to
raise capital.

Our Board of Directors may use anti-takeover provisions or issue stock to discourage a change of control.

Our certificate of incorporation currently authorizes us to issue up to 60,000,000 shares of common stock and
5,000,000 shares of undesignated preferred stock. Our Board of Directors may cause us to issue additional stock
to discourage an attempt to obtain control of our company. For example, shares of stock could be sold to
purchasers who might support our Board of Directors in a control contest or to dilute the voting or other rights of
a person seeking to obtain control. In addition, our Board of Directors could cause us to issue preferred stock
entitling holders to vote separately on any proposed transaction, convert preferred stock into common stock,
demand redemption at a specified price in connection with a change in control, or exercise other rights designed
to impede a takeover.

The issuance of additional shares may, among other things, dilute the earnings and equity per share of our
common stock and the voting rights of common stockholders.

We have implemented other anti-takeover provisions or provisions that could have an anti-takeover effect,
including advance notice requirements for director nominations and stockholder proposals. These provisions, and
others that our Board of Directors may adopt hereafter, may discourage offers to acquire us and may permit our
Board of Directors to choose not to entertain offers to purchase us, even if such offers include a substantial
premium to the market price of our stock. Therefore, our stockholders may be deprived of opportunities to profit
from a sale of control.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

28

ITEM 2. PROPERTIES

Our corporate headquarters are located in Baton Rouge, Louisiana in an 110,000 square feet building that we
own. As of December 31, 2010, we had adequate space to accommodate our corporate staff located in the Baton
Rouge area; however, we believe this headquarters facility may not be adequate in the future as we continue to
grow. We are currently evaluating how best to meet our growing needs, which may include adding to our
corporate offices and/or leasing additional office space.

In addition to our corporate headquarters, we also lease facilities for our home health and hospice
agencies. Generally, these leases have an initial term of three years, but range from one to seven years. Most of
these leases also contain an option to extend the lease period as deemed necessary. The following table shows the
location of our 486 Medicare-certified home health and 67 hospice agencies at December 31, 2010:

State

Home Health Hospice

State

Home Health Hospice

Alaska . . . . . . . . . . . . . . . . . . . . .
Alabama . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Mississippi

Missouri

. . . . . . . . . . . . . . . . . . .

2
30
6
6
12
2
4
3
47
67
1
1
6
14
3
27
12
10
2
10
5
2
12

6

—

—
—
—
—
—
—
—
5
1

—
—
3
2

—
4

6

New Jersey . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . .
North Carolina . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . .
1 Wisconsin . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . .
Washington, D.C. . . . . . . . . . .
Carolina, Puerto Rico . . . . . . .

—
—
1

—
—

1
1
2
5
2
8
12
9
5
12
1
19
1
54
17
2
24
1
13
2
3
1
1

—

Total . . . . . . . . . . . . . . . .

486

—
—
—
—

1
4
1

—
1
7

—
9

—
10
1

—
1
1
5

—
3

—
—

67

ITEM 3. LEGAL PROCEEDINGS

See Part IV, Item 15, “Note 9, Commitments and Contingencies” for information concerning our legal
proceedings.

ITEM 4. RESERVED

29

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock trades on the NASDAQ under the trading symbol “AMED.” The following table presents the
range of high and low sales prices for our common stock for the periods indicated as reported on NASDAQ:

Year Ended December 31, 2010:

First Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31, 2009:

First Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Price Range of
Common Stock

High

Low

$62.72
64.28
40.00
34.40

$53.30
38.66
46.73
52.61

$49.09
42.21
22.82
22.93

$25.20
26.28
29.71
36.67

As of February 18, 2011, there were approximately 559 holders of record of our common stock.

Dividend Policy

We have not declared or paid any cash dividends on our common stock or any other of our securities and do not
expect to pay cash dividends for the foreseeable future. We currently intend to retain our future earnings, if any,
to fund the development and growth of our business. Future decisions concerning the payment of dividends will
depend upon our results of operations, financial condition, capital expenditure plans and debt service
requirements, as well as such other factors as our Board of Directors, in its sole discretion, may consider relevant.
In addition, our outstanding indebtedness restricts, and we anticipate any additional future indebtedness may
restrict, our ability to pay cash dividends.

Purchases of Equity Securities

We did not purchase any shares of our common stock during the three-month period ended December 31, 2010.

30

Stock Performance Graph

The Performance Graph below compares the cumulative total stockholder return on our common stock, $0.001
par value per share, for the five-year period ended December 31, 2010, with the cumulative total return on the
NASDAQ composite index and an industry peer group over the same period (assuming the investment of $100 in
our common stock, the NASDAQ composite index and the industry peer group) on December 31, 2005 and the
reinvestment of dividends. The peer group we selected is comprised of: Gentiva Health, Inc. (“GTIV”), LHC
Group, Inc. (“LHCG”) and Almost Family, Inc. (“AFAM”). The cumulative total stockholder return on the
following graph is historical and is not necessarily indicative of future stock price performance. No cash
dividends have been declared on our common stock.

Cumulative Total Return as of  December 31

$250

$200

$150

$100

$50

$0

31-Dec-2005

31-Dec-2006

31-Dec-2007

31-Dec-2008

31-Dec-2009

31-Dec-2010

Amedisys, Inc. 

NASDAQ Composite

Peer Group

Amedisys, Inc. . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Composite . . . . . . . . . . . . . . . . . .
Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . .

$100.00
$100.00
$100.00

$103.76
$111.74
$152.36

$153.16
$124.67
$142.22

$130.49
$ 73.77
$223.68

$153.41
$107.12
$205.37

$105.74
$125.93
$195.09

12/31/2005

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

This stock performance information is “furnished” and shall not be deemed to be “soliciting material” or
subject to Regulation 14A, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act,
whether made before or after the date of this report and irrespective of any general incorporation by reference
language in any such filing, except to the extent we specifically incorporate the information by reference.

31

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data presented below is derived from our audited consolidated financial
statements for the five-year period ended December 31, 2010. The financial data for the years ended
December 31, 2010, 2009 and 2008 should be read together with our consolidated financial statements and
related notes included in Part IV, Item 15 “Exhibits and Financial Statement Schedules” and the information
included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
herein.

2010 (1)(2)(3)

2009

2008 (4)(5)

2007 (6)(7)

2006

(Amounts in thousands, except per share data)

Income Statement Data:
Net service revenue . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Amedisys, Inc. . . . . .
Net income per basic share . . . . . . . . . . . . . . . . .
Net income per diluted share . . . . . . . . . . . . . . .

$1,634,319
$ 193,510
$ 112,580
4.02
$
3.95
$

$1,513,459
$ 230,748
$ 135,837
4.99
$
4.89
$

$1,187,415
$ 157,101
86,682
$
3.28
$
3.22
$

$697,934
$ 96,562
$ 65,113
2.52
$
2.48
$

$541,148
$ 65,656
$ 38,255
1.75
$
1.72
$

(1) During 2010, we settled our Georgia indigent care liability for the years 2007 through 2009 for less than
previously accrued and received a CMS bonus payment as the result of a pay for performance demonstration
which are included in net service revenue and amounted to $7.3 million ($4.4 million, net of tax).

(2) During 2010, we incurred certain costs associated with the realignment of our operations and legal expenses
related to the United States Senate Committee on Finance inquiry and SEC and DOJ investigations. These
certain costs were included in general and administrative expenses and amounted to $9.6 million ($5.8
million, net of tax).

(3) During 2010, we incurred costs associated with our exit activities of $13.6 million ($8.3 million, net of tax)

(see Part IV, Item 15, “Note 12, Exit Activity” for further details).

(4) On March 26, 2008, we acquired 100% of the stock of TLC, a privately-held provider of home nursing
services with 92 home health and 11 hospice agencies located in 22 states and the District of Columbia, and
on February 28, 2008, we acquired the stock of Family Home Health Care, Inc. and Comprehensive Home
Healthcare Services, Inc. (“HMA”), a home health provider with 24 agencies in Tennessee and Kentucky.
The results of these acquisitions have been included in our consolidated results as of the dates of purchase
(see Part IV, Item 15, “Note 3, Acquisitions” for further details).

(5) During 2008, certain TLC integration costs were incurred primarily for the payment of severance for TLC
employees and for the conversion of the acquired TLC agencies to our operating systems, including our
POC network. The costs were included in general and administrative expenses and amounted to $4.0 million
($2.4 million, net of tax) for 2008.

(6) During the third quarter of 2007, a Chapter 7 Federal bankruptcy protection case for Alliance Home Health,
Inc. (“Alliance”), one of our wholly owned subsidiaries concluded. As a result, the remaining $4.2 million
of liabilities of Alliance were extinguished and we were not liable for any of these obligations.

(7) During the third and fourth quarters of 2007, we acquired certain assets and certain liabilities of Integricare,
Inc. (“Integricare”) a home health and hospice care service provider with 15 home health and nine hospice
agencies in nine states. The results of Integricare have been included in our consolidated results as of the
dates of the purchase.

2010

2009

2008

2007

2006

(Amounts in thousands)

Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt, including current portion . . . . . . . . .
Total Amedisys, Inc. stockholders’ equity . . . . .
Cash dividends declared per common share . . . .

$1,299,825
$ 181,866
$ 877,857
$

$1,172,351
$ 215,153
$ 735,166

$1,070,194
$ 328,574
$ 561,335

$587,111
$ 24,040
$446,971

$463,756
$
5,337
$364,007
— $ — $ —

— $

— $

32

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis provides information we believe is relevant to an assessment and
understanding of our results of operations and financial condition for 2010, 2009 and 2008. This discussion
should be read in conjunction with our audited financial statements included in Part IV, Item 15, “Exhibits and
Financial Statement Schedules” and Part I, Item 1, “Business” of this Annual Report on Form 10-K. The
following analysis contains forward-looking statements about our future revenues, operating results and
expectations. See “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the risks,
assumptions and uncertainties affecting these statements as well as Part I, Item 1A, “Risk Factors.”

Overview

We are a leading provider of high-quality, low-cost home health services to the chronic, co-morbid, aging
American population. Our services include home health and hospice services and approximately 86%, 88%, and
87% of our revenue was derived from Medicare for 2010, 2009 and 2008, respectively. During 2010, we had
$1.6 billion in net service revenue, recorded earnings per diluted share of $3.95 per share and had cash flow from
operations of $206.3 million.

Our operations involve servicing patients through our two reportable business segments: home health and
hospice. Our home health segment delivers a wide range of services in the homes of individuals who may be
recovering from surgery, have a chronic disability or terminal illness or need assistance with the essential
activities of daily living. Our hospice segment provides palliative care and comfort to terminally ill patients and
their families. As of December 31, 2010, we owned and operated 486 Medicare-certified home health agencies
and 67 Medicare-certified hospice agencies in 45 states within the United States, the District of Columbia and
Puerto Rico as detailed below:

Owned and Operated Agencies

Home health

Hospice

At December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Start-ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

At December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Start-ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closed/Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

At December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

480
8
41
(8)

521
3
40
(78)

486

48
12
7
(2)

65
1
8
(7)

67

When we refer to “same store business,” we mean home health and hospice agencies that we have operated for at
least the last twelve months; when we refer to “acquisitions,” we mean home health and hospice agencies that we
acquired within the last twelve months; and when we refer to “start-ups,” we mean any home health or hospice
agency opened by us in the last twelve months. Once an agency has been in operation for a twelve month period,
the results for that particular agency are included as part of our same store business from that date forward. When
we refer to episodic-based revenue, admissions, recertifications or completed episodes, we mean home health
revenue, admissions, recertifications or completed episodes of care for those payors that pay on an episodic-
basis, which includes Medicare and other insurance carriers including Medicare Advantage programs.

33

Recent Developments

Health Care Reform

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”) and
the Health Care and Education Reconciliation Act of 2010 (“HCERA”), which amends the PPACA (collectively,
the “Health Care Reform Bills”). The Health Care Reform Bills make a number of changes to Medicare payment
rates, including the reinstatement of the 3% home health rural add-on, which began on April 1, 2010 (expiring
January 1, 2016). CMS has recently made several changes to Medicare home health payments for 2011, as
discussed below.

The Health Care Reform Bills also include a systemic rebasing of the amount CMS reimburses for home health
services, to be phased in over four years, beginning in 2014. We anticipate that many of the provisions of the
Health Care Reform Bills may be subject to further clarification and modification through the rule-making
process. It is uncertain at this time the effect the rebasing will have on our future results of operations or cash
flows.

Payment

In November 2010, CMS issued a final rule to update and revise Medicare home health rates for calendar year
2011. The final rule includes the following changes to the base rate: a 1.1% market basket increase which
includes the 1% reduction mandated by the Health Care Reform Bills, a negative 3.79% case-mix adjustment and
a 2.5% reduction to reflect the elimination of the increase in the base reimbursement rate resulting from the
outlier cap introduced in 2010. The net effect of these changes decreases the base rate for 2011 by 5.22% to
$2,192. The change is effective for all episodes completing during 2011, accordingly, all episodes in progress at
December 31, 2010 were impacted. As a result, our 2010 operating results include a reduction in revenue of $5.1
million related to the 2011 rate change.

The rule also finalized two provisions of the PPACA: (1) a face-to-face encounter requirement for home health
and hospice and (2) changes in the therapy assessment schedule. As a condition for Medicare payment, the
PPACA mandates that prior to certifying a patient’s eligibility for the home health benefit, the certifying
physician must document that he or she, or an allowed non-physician practitioner, has had a face-to-face
encounter with the patient. The encounter must occur in the timeframe of 90 days prior to the start of care or 30
days after the start of care. Documentation regarding these encounters must be present on certifications.

The rule also finalized hospice policy for the implementation of a PPACA provision requiring that a hospice
physician or nurse practitioner have a face-to-face encounter with hospice patients during the 30 day period prior
to the 180th-day recertification (third benefit period) and each subsequent recertification, and that the certifying
hospice physician attest that such a visit took place.

The face-to-face encounter requirement for home health and hospice providers was to become effective
January 1, 2011. However, due to concerns that some providers may need additional time to establish operational
protocols necessary to comply with face-to-face encounter requirements, CMS delayed full enforcement of the
requirements until the second quarter of 2011. Beginning with the second quarter, CMS will expect home health
and hospice agencies to have fully established such internal processes and have appropriate documentation of
required encounters.

In addition, the final rule imposed important therapy assessment requirements. A professional qualified therapist
assessment must take place at least once every 30 days during a therapy patient’s course of treatment. For those
qualified patients needing 13 or 19 therapy visits, a qualified therapist must perform the therapy service required,
assess the patient, and measure and document effectiveness of the 13th visit and the 19th visit for all therapy
disciplines caring for the patient. CMS delayed the effective date for all therapy provisions until April 1, 2011 to
allow time for home health agencies to take necessary steps to comply.

34

In July 2010, CMS issued a notice with comment period to update and revise the Medicare hospice wage index
for fiscal year 2011. The notice includes a 2.6% increase in the market basket update offset by a 0.8% decrease
for the updated wage index data and the second year of the 7-year phase out of the budget neutrality adjustment
factor. The net effect of the changes increases the base rate for 2011 by 1.8% and was effective October 1, 2010.
We do not expect this change to have a material impact on our future results of operations or financial condition.

Governmental Inquiries and Investigations and Stockholder Litigation

See Note 9 to our consolidated financial statements for a discussion of the recent governmental inquiry,
investigations and subsequent stockholder litigation we are involved in. No assurances can be given as to the
timing or outcome of these items.

Agency Closures and Consolidations

During 2010, we consolidated 59 operating home health agencies and three hospice agencies with agencies
servicing the same markets, closed 19 operating home health agencies and four operating hospice agencies and
discontinued the start-up process associated with 41 prospective unopened home health locations and six
prospective unopened hospice locations which were incurring expenses.

As part of our exit activities associated with these locations, we recorded $10.2 million in lease liabilities during
2010 associated with future lease obligations, $0.5 million in relocation costs, $0.7 million in severance costs and
$2.2 million for the write-off of intangibles during 2010. The following details the financial performance
(excluding exit activity costs) of the agencies that we are closing or consolidating (amounts in millions):

For the Year Ended December 31, 2010

Home Health

Hospice

Total

Net Service
Revenue

Operating
Loss (1)

Net Service
Revenue

Operating
Loss (1)

Net Service
Revenue

Operating
Loss (1)

Closures . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidations . . . . . . . . . . . . . . . . . . . . . .
Unopened Startups . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8.9
32.9
—

$41.8

$ (4.9)
(9.2)
(5.8)

$(19.9)

$ 1.4
2.3
—

$ 3.7

$(0.5)
(0.3)
(0.9)

$(1.7)

$10.3
35.2
—

$45.5

$ (5.4)
(9.5)
(6.7)

$(21.6)

(1) Excludes the $13.6 million in exit activity costs for 2010.

Results of Operations

During 2010, we completed the acquisition of four home health and hospice agencies compared to 20 home
health and hospice agencies in 2009, opened 48 home health and hospice agencies in each of 2010 and 2009 and
closed/consolidated 85 home health and hospice agencies in 2010 compared to 10 home health and hospice
agencies in 2009. As a result of these acquisitions, start-up activities and agency closures/consolidations, our
operating results may not be comparable for the years presented.

35

During 2010, we incurred certain costs associated with the realignment of operations and legal expenses related
to the United States Senate Committee on Finance inquiry and SEC and DOJ investigation discussed in Note 9 to
the consolidated financial statements and incurred costs associated with our exit activities as discussed in Note 12
to the consolidated financial statements. In addition during 2010, we settled our Georgia indigent care liability
for less than previously accrued for the years 2007 through 2009 and we received a bonus payment from CMS as
the result of a pay for performance demonstration. The following details these items (amounts in millions, except
per share data):

For the Year Ended December 31, 2010

Finanical Statement Line Item Impacted

Net Service
Revenue

Other operating
expenses

Other income
(expense)

Total

Net of tax Diluted EPS

Georgia indigent care liability . . . . . .
CMS bonus payment
. . . . . . . . . . . . .
Exit activities . . . . . . . . . . . . . . . . . . .
Certain costs . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3.7
3.6
—
—

$ 7.3

$ —
—
(13.6)
(7.8)

$(21.4)

$—
—
—
(1.8)

$(1.8)

$ 3.7
3.6
(13.6)
(9.6)

$ 2.2
2.2
(8.3)
(6.0)

$(15.9)

$(9.7)

$ 0.08
0.08
(0.29)
(0.21)

$(0.34)

Consolidated

The following table summarizes our consolidated results of operations (amounts in millions):

For the Years Ended December 31,

2010

2009

2008

Net service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
% of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
% of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,634.3
813.9
49.8%
620.4
38.0%

$1,513.5
789.0
52.1%
558.2
36.9%

$1,187.4
624.8
52.6%
467.7
39.4%

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

193.5

230.8

157.1

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72.3
39.0%

86.2
38.8%

54.7
38.7%

Net income attributable to Amedisys, Inc.

. . . . . . . . . . . . . . . . . . .

$ 112.6

$ 135.8

$

86.7

Net Service Revenue

Our net service revenue increased $120.8 million from 2009 to 2010 and consisted of an increase of $84.0
million in home health revenue and $36.8 million in hospice revenue. Start-ups and acquisitions accounted for
$70.9 million of the increase.

From 2008 to 2009, our net service revenue increased $326.1 million and consisted of an increase of $291.2
million in home health revenue and $34.9 million in hospice revenue. Start-ups and acquisitions accounted for
$162.6 million of the increase.

Gross Margin

The decline in our gross margin percentage from 2009 to 2010 is due primarily to an increase in our cost per
visit. Gross margin was also impacted by a decline in the episodes per patient and an increase in visits per
episode during 2010. Our cost of service consists of salaries, taxes and benefits (including health care insurance

36

and workers’ compensation insurance); travel and training expenses (primarily reimbursed mileage at a standard
rate); and supplies and services expenses (including payments to contract therapists) incurred by our clinical and
clerical personnel in our agencies.

Cost of service increased $161.9 million from 2008 to 2009 and consisted of an increase of $146.5 in home
health cost of service and $15.4 million in hospice cost of service. Our net service revenue and cost of service is
described in more detail in the discussions for our home health and hospice operations.

Operating Income

Our operating income decreased $37.3 million from 2009 and is inclusive of net certain costs of $15.9 million
associated with agency closures, legal expenses, and other costs. Additionally, 2010 includes a $5.1 million
reduction related to the 2011 CMS rate change. While the change in reimbursement is effective January 1, 2011,
it also impacts all episodes in progress as of December 31, 2010.

Other Operating Expenses

Other operating expenses have increased from 2009 to 2010 due to an increase of $29.8 million in salaries and
benefits for our field and corporate support staff. Additionally, other operating expenses include $10.2 million
and $5.8 million in lease terminations and legal costs, respectively. While we ended the year with a net decrease
of 33 agencies, the majority of the closures occurred at the end of the third and into the fourth quarter of 2010. In
addition, other operating expenses for the year include additional costs incurred over 2009 on 48 start-ups and
four acquired agencies. The overall reduction in costs on closed agencies will not be fully realized until 2011.

The increase in other operating expenses from 2008 to 2009 is primarily due to an increase in salaries and
benefits for our field and corporate staff as well as $33.9 million in expenses from our acquisition agencies.

Depreciation and amortization expense added $6.3 million in additional costs from 2009 to 2010 and $7.9 million
from 2008 to 2009. This increase is primarily due to the development of computer software and the purchase of
additional computers and POC tablets for our agencies. The increase from 2009 to 2010 is inclusive of the
write-off of $2.2 million in intangible assets, primarily Medicare licenses, related to agency closures.

Other Expense, Net

Other expense, net is relatively flat from 2009 to 2010 as the $2.5 million decrease in interest expense related to
our continued reduction of our outstanding debt which was offset by a $2.4 million increase in loss on the
disposal of property and equipment.

Other expense, net decreased $7.3 million from 2008 to 2009 primarily as a result of a decrease in interest
expense of $5.0 million as we have reduced our outstanding debt by $113.3 million during 2009 and our
weighted-average interest rate decreased from 4.8% in 2008 to 3.5% in 2009.

Income Taxes

The slight increase in the estimated income tax rate from 2009 to 2010 and from 2008 to 2009 is due to the
expiration of the Federal income tax credits created as a result of the Work Opportunity Tax Credits created by
The Emergency Stabilization Act of 2008.

The increase in income tax expense of $31.5 million from 2008 to 2009 is primarily attributable to an increase in
income before income taxes and a slight increase in the estimated income tax rate as discussed above.

37

Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

Home Health Division

The following table summarizes our home health segment results of operations:

For the Years Ended December 31,

2010

Startups/

2009

Same Store

Acquisitions Exit Activity (1)

Total

Same Store Other (2)

Total

Financial Information (in

millions):

Episodic-based revenue (3) . . . . . $
Non-episodic revenue . . . . . . . . .
Net service revenue . . . . . . . . .

1,368.1 $
71.2
1,439.3

50.4
3.7
54.1

$—
—
—

Same store episodic-based

revenue growth (4) . . . . . . . .

Cost of service . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . .
Other operating expenses . . . . . .
Operating income . . . . . . . . . . . . $

3%

708.9
730.4
344.3
386.1 $

35.7
18.4
36.5
(18.1)

—
—
8.1
$(8.1)

$

$

1,418.5 $
74.9
1,493.4

1,322.1 $
66.8
1,388.9

18.9 $
1.6
20.5

1,341.0
68.4
1,409.4

744.6
748.8
388.9
359.9 $

654.4
734.5
322.8
411.7 $

15.7
4.8
21.8
(17.0)$

670.1
739.3
344.6
394.7

Key Statistical Data:
Admissions:
Episodic-based . . . . . . . . . . . . . .
Non-episodic . . . . . . . . . . . . . . . .
Total admissions . . . . . . . . .

Same store episodic-based

admission growth (4) . . . . . . .

Recertifications:
Episodic-based . . . . . . . . . . . . . .
Non-episodic . . . . . . . . . . . . . . . .
Total recertifications . . . . . .

242,506
38,132
280,638

11,257
2,519
13,776

6%

183,962
18,195
202,157

4,788
470
5,258

Same store episodic-based

recertification growth (4) . . .

(9)%

Completed Episodes:
Episodic-based . . . . . . . . . . . . . .

410,759

14,229

Visits:
Episodic-based . . . . . . . . . . . . . . 7,975,017
789,589
Non-episodic . . . . . . . . . . . . . . . .
Total visits . . . . . . . . . . . . . . 8,764,606

266,084
34,859
300,943

—
—
—

—
—
—

—

—
—
—

253,763
40,651
294,414

228,491
36,026
264,517

3,291
497
3,788

231,782
36,523
268,305

188,750
18,665
207,415

202,198
21,447
223,645

2,559
209
2,768

204,757
21,656
226,413

424,988

405,816

6,159

411,975

824,448

8,241,101 7,779,445 102,043 7,881,488
820,658
9,065,549 8,579,972 122,174 8,702,146

800,527

20,131

Cost per Visit . . . . . . . . . . . . . . . $

80.88 $ 118.77

$—

$

82.13 $

76.26 $ 127.91 $

77.00

Episodic-based visits per

completed episode (5) . . . . . .

19.2

17.2

—

19.1

18.5

17.2

18.5

(1) Exit activity includes the results for the periods subsequent to the agencies closure or consolidation.
(2) Agencies for the prior period which are not considered same store agencies during 2010 (i.e. agencies closed

or consolidated in current period or unopened startups).

(3) Episodic-based revenue includes $1.3 billion and $1.2 billion in Medicare revenue for 2010 and 2009,

respectively.

(4) Same store episodic-based revenue, admissions or recertifications growth is the percent increase in our same
store episodic-based revenue, admissions or recertifications for the period as a percent of the same store
episodic-based revenue, admissions or recertifications of the prior period.

(5) Episodic-based visits per completed episode as the home health episodic-based visits on completed episodes

divided by the home health episodic-based episodes completed during the period.

38

Net Service Revenue

Our home health revenue growth consisted of $50.4 million from our same store agencies, $32.7 million from
our start-up agencies and $21.4 million from our acquisitions, which were offset by a decrease of $20.5 million
from agencies we closed or merged in 2010. Medicare revenue includes $3.6 million received from CMS for our
participation in a pay for performance demonstration, $3.7 million for the settlement of our Georgia indigent care
liability for years 2007 through 2009 and a $5.1 million reduction in revenue for the rate change on our episodes
in progress at December 31, 2010. Excluding the CMS bonus payment and Georgia indigent care settlement, our
total episodic-based revenue increased $70.2 million or 5%. The increase is related to a 4% increase in our
revenue per episode and a 1% increase in our episode volume. The volume growth consisted of a 9% increase in
admissions offset by a 8% decrease in recertifications.

Total episodic-based admissions increased approximately 9% primarily on growth in non-Medicare episodic-
based admissions which increased 40% as we continue to benefit from our national agreement with Humana. Our
Medicare revenue growth was 1% on a same store basis.

We have continued to experience a decline in the number of recertifications and expect the trend to continue into
2011. Our recertifications will vary based on the clinical needs of our patients.

Our average episodic-based revenue per completed episode increased from $3,166 to $3,311 as a result of a 1.8%
increase in our base rate effective January 1, 2010, a 3% increase in the base rate on rural episodes
(approximately 25% of our episodes) completed subsequent to March 31, 2010, and continued deployment and
growth in our therapy intensive specialty programs.

Cost of Service, excluding Depreciation and Amortization

Our home health cost of service increased $74.5 million on a 363,403 increase in visits which accounted for
$28.0 million of the increase with the remainder from the $5.13 increase in cost per visit. The increase in visits is
due to the growth in the number of episodes as well as an increase in the number of visits per episode which is
also a driver in our increase in revenue per episode for 2010. The primary factors contributing to the increase in
cost per visit were an increase in the percentage of total visits performed by therapists, an increase in the number
of clinicians (the majority of which are therapists) that were being paid on a salary basis, and an increase in the
ratio of clinical managers per patient census. During the third and fourth quarters of 2010, we began and
substantially completed the conversion of salaried therapists to our pay per visit model which we anticipate will
result in a lower cost per visit in the future. We are continuing to evaluate our ratio of clinical managers per
patient census.

Other Operating Expenses

Our other operating expenses increased $44.3 million with the primary drivers being salary and benefits and
lease costs. The increase in salaries and benefits is due to additional resources added to agencies and acquisition
and start-up activity. The increase is inclusive of $9.1 million in lease expense related to exit activities.

39

Hospice Division

The following table summarizes our hospice segment results of operations:

For the Year Ended December 31,

2010

Startups/

2009

Same Store

Acquisitions Exit Activity (1)

Total

Same Store Other (2)

Total

Financial Information (in

millions):

Medicare revenue . . . . . . . . . . $
Non-Medicare revenue . . . . . .

117.2 $
6.9

Net service revenue . . . . .

124.1

Same store medicare

revenue growth (3) . . . . . .

20%

Cost of service . . . . . . . . . . . .

64.3

Gross margin . . . . . . . . . . . . . .
Other operating expenses . . . .
Operating income . . . . . . . . . . $

59.8
25.3
34.5 $

16.0
0.8

16.8

11.6

5.2
8.8
(3.6)

Key Statistical Data:
1,572
Hospice admits . . . . . . . . . . . .
122,943
Hospice days . . . . . . . . . . . . . .
Average daily census . . . . . . .
337
Revenue per day . . . . . . . . . . . $ 133.68 $ 136.75
94.54
Cost of service per day . . . . . . $
75
Average length of stay . . . . . .

9,938
928,266
2,543

69.22 $
89

$—
—

—

—

—
0.2
$(0.2)

—
—
—
$—
$—
—

$

133.2 $
7.7

97.3 $
5.8

0.9 $
0.1

98.2
5.9

140.9

103.1

1.0

104.1

75.9

65.0
34.3
30.7 $

52.7

50.4
25.1
25.3 $

1.7

(0.7)
2.5
(3.2) $

54.4

49.7
27.6
22.1

8,899
777,731
2,131

9,002
11,510
784,577
1,051,209
2,880
2,150
134.04 $ 132.68 $136.32 $ 132.71
69.29
72.18 $
82
87

67.73 $246.54 $

103
6,846
19

61

82

$

$
$

(1) Exit activity includes the results for the periods subsequent to the agencies closure or consolidation.
(2) Agencies for the prior period which are not considered same store agencies during 2010 (i.e. agencies closed

or consolidated in current period or unopened startups).

(3) Same Store Medicare revenue growth is the percent increase in our same store Medicare revenue for the

period as a percent of the same store Medicare revenue of the prior period

Net Service Revenue

Our hospice revenue growth consisted of $21.0 million from our same store agencies, $6.1 million from our
start-up agencies and $10.7 million from our acquisitions which were offset by a decrease of $1.0 million from
agencies we closed or merged in 2010. Hospice revenue is primarily impacted by average daily census, levels of
care and payment rates. Overall, our average daily census increased from 2,150 in 2009 to 2,880 in 2010 with
2,543 of our census attributable to our same store agencies during 2010. Our 2010 revenue includes an increase
related to an annual hospice rate increase effective October 1, 2009, which was approximately 1.4%.
Additionally, our 2010 hospice revenue is net of a $1.9 million hospice cap adjustment, which is up $1.8 million
from 2009.

Cost of Service excluding Depreciation and Amortization

Our hospice cost of service increased $21.5 million (39.5%) due to the 34% increase in our average daily census
over 2009. Our hospice clinicians are generally paid on a salaried basis, and our agencies are staffed based on the
average census of the agency.

Other Operating Expenses

Our other operating expenses increased $6.7 million from 2009 primarily due to a $4.7 million increase in
salaries and benefits and a $2.3 million increase in lease expense, which is inclusive of $1.1 million in exit
activity costs. The increase in salaries and benefits is attributable to the 35% increase in net service revenue as
we have seen significant growth in our average daily census, which required additional administrative resources.

40

Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Home Health Division

The following table summarizes our home health segment results of operations:

For the Years Ended December 31,

2009

Same Store

Startups/
Acquisitions

Exit Activity
(1)

Total

Same Store

2008

Other
(2)

Total

Financial Information (in

millions):

Episodic-based revenue (3) . . . . . . $
Non-episodic revenue . . . . . . . . . .
Net service revenue . . . . . . . . . .

1,206.8 $
57.4
1,264.2

134.2
11.0
145.2

$—
—
—

Same store episodic-based

revenue growth (4)

. . . . . . . . .

16%

Cost of service . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . .
Operating income . . . . . . . . . . . . . $

593.0
671.2
288.0
383.2 $

77.1
68.1
55.8
12.3

—
—
0.8
$(0.8)

$

$

1,341.0 $
68.4
1,409.4

1,042.2 $
63.0
1,105.2

10.0 $
3.0
13.0

1,052.2
66.0
1,118.2

670.1
739.3
344.6
394.7 $

513.7
591.5
279.9
311.6 $

9.9
3.1
12.9
(9.8) $

523.6
594.6
292.8
301.8

Key Statistical Data:
Admissions:
Episodic-based . . . . . . . . . . . . . . .
Non-episodic . . . . . . . . . . . . . . . . .
Total admissions . . . . . . . . . .

203,478
30,968
234,446

28,304
5,555
33,859

Same store episodic-based

admission growth (4) . . . . . . . .

3%

Recertifications:
Episodic-based . . . . . . . . . . . . . . .
Non-episodic . . . . . . . . . . . . . . . . .
Total recertifications . . . . . . .

189,052
18,838
207,890

15,705
2,818
18,523

Same store episodic-based

recertification growth (4) . . . .

7%

Completed Episodes:
Episodic-based . . . . . . . . . . . . . . .

Visits:
Episodic-based . . . . . . . . . . . . . . .
Non-episodic . . . . . . . . . . . . . . . . .
Total visits . . . . . . . . . . . . . . .

372,056

39,919

7,112,604
709,459
7,822,063

768,884
111,199
880,083

—
—
—

—
—
—

—

—
—
—

231,782
36,523
268,305

197,760
34,391
232,151

1,611
292
1,903

199,371
34,683
234,054

204,757
21,656
226,413

176,815
21,698
198,513

2,025
375
2,400

178,840
22,073
200,913

411,975

348,205

3,927

352,132

7,881,488
820,658
8,702,146

6,257,885
665,461
6,923,346

64,994
15,860
80,854

6,322,879
681,321
7,004,200

Cost per Visit . . . . . . . . . . . . . . . . $

75.81 $

87.63

$—

$

77.00 $

74.20 $122.43 $

74.76

Episodic-based visits per

completed episode (5) . . . . . . .

18.6

17.7

—

18.5

17.2

17.2

17.2

(1) Exit activity includes the results for the periods subsequent to the agencies closure or consolidation.
(2) Agencies for the prior period which are not considered same store agencies during 2010 (i.e. agencies closed

or consolidated in current period or unopened startups).

(3) Episodic-based revenue includes $1.2 billion and $969.5 million in medicare revenue for 2009 and 2008,

respectively.

(4) Same store episodic-based revenue, admissions or recertifications growth is the percent increase in our same
store episodic-based revenue, admissions or recertifications for the period as a percent of the same store
episodic-based revenue, admissions or recertifications of the prior period.

(5) Episodic-based visits per completed episode as the home health episodic-based visits on completed episodes

divided by the home health episodic-based episodes completed during the period.

41

Net Service Revenue

Our home health revenue growth consisted of $159.0 million from our same store agencies, $40.4 million from
our start-up agencies and $104.8 million from our acquisitions which were offset by a decrease of $13.0 million
from agencies we closed or merged in 2009. The increase in our same store agencies was primarily related to
growth in our same store episodic-based revenue, which increased by $164.6 million or 16% from 2008 to 2009,
with 5% of the increase related to growth in admission and recertification volume and 11% of the increase
attributable to revenue per episode.

Our rate of recertification will vary based on the clinical needs of our patients. While we experienced a drop in
the internal episodic-based recertification growth, our ratio of recertifications to admissions remained relatively
consistent from 2008 to 2009.

Our average episodic-based revenue per completed episode increased from $2,854 to $3,166 from 2008 to 2009
and was due primarily to the continued deployment of our therapy intensive specialty programs to more of our
home health agencies. Additionally, the 2008 average revenue per episode only includes 9 months of episodes
related to our TLC acquisition, whereas the TLC agencies were included for all of 2009. The agencies we
acquired through the TLC acquisition are located in areas with higher wage indexes resulting in higher revenue
per episode.

Cost of Service, excluding Depreciation and Amortization

Of the $146.5 million increase in cost of service from 2008 to 2009, $99.2 million is related to increased costs
from our same store agencies and start-up agencies and $54.1 million is related to acquisitions which were offset
by a decrease of $6.8 million from agencies we closed or merged in 2009. The $99.2 million increase in same
store and start-up agency expenses was primarily related to the increase in the number of visits performed by our
same store and start-up agencies, which increased by 16.3% or approximately 1.1 million visits from 2008.

Our cost per visit increased from $74.76 in 2008 to $77.00 in 2009. Factors contributing to the increase in our
cost per visit include the mix of clinicians performing visits (i.e. registered nurses, therapists, home health aides,
etc), wage inflation and use of contract therapists. While the majority of our clinicians are paid on a per visit
basis, we do hire some clinicians on a salaried basis for an initial period before converting to our pay per visit
model. Also, newly acquired agencies generally have a higher cost per visit and take up to 18 to 24 months to
reach the labor efficiencies of our existing agencies. Additionally contributing to the increase in our cost per visit
during 2009 was an increase in the ratio of clinical managers per patient census. Our clinical managers are
responsible for the clinical oversight of our patient care and we have added these managers as part of our strategy
of continuing to improve our patient outcomes.

42

Hospice Division

The following table summarizes our hospice segment results of operations:

For the Years Ended December 31,

2009
Startups/
Acquisitions

Same Store

2008

Total

Same Store Other (1)

Total

Financial Information (in millions):
Medicare revenue . . . . . . . . . . . . . . . . . . . . . . . . $
Non-Medicare revenue . . . . . . . . . . . . . . . . . . . .

Net service revenue . . . . . . . . . . . . . . . . . .
Same store medicare revenue growth (2) . . . .

Cost of service . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . .

81.6 $
5.1

86.7

26%

43.5

43.2
20.3

16.6 $
0.8

98.2 $
5.9

$— $

64.8
4.4 —

17.4

104.1

69.2 —

10.9

6.5
7.3

54.4

49.7
27.6

38.0

31.2
18.0

13.2

1.0

(1.0)
1.8

$(2.8) $

64.8
4.4

69.2

39.0

30.2
19.8

10.4

Operating income . . . . . . . . . . . . . . . . . . . . . . . . $

22.9 $

(0.8) $

22.1 $

Key Statistical Data:
Hospice admits . . . . . . . . . . . . . . . . . . . . . . . . . .
Hospice days . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average daily census . . . . . . . . . . . . . . . . . . . . .
Revenue per day . . . . . . . . . . . . . . . . . . . . . . . . . $ 132.45 $ 133.25 $ 132.71 $ 128.71
Cost of service per day . . . . . . . . . . . . . . . . . . . . $
70.69
Average length of stay . . . . . . . . . . . . . . . . . . . .

1,543
130,088
357

7,459
654,489
1,793

9,002
784,577
2,150

66.50 $
82

83.38 $
85

69.29 $
82

6,505 —
537,286 —
1,468 —

6,505
537,286
1,468
$— $ 128.71
72.59
$— $
82

82 —

(1) Agencies for the prior period which are not considered same store agencies during 2010 (i.e. agencies closed

or consolidated in current period or unopened startups).

(2) Same Store Medicare revenue growth is the percent increase in our same store Medicare revenue for the

period as a percent of the same store Medicare revenue of the prior period.

Net Service Revenue

Our hospice revenue growth consisted of $17.5 million from our same store agencies, $2.1 million from our
start-up agencies and $15.3 million from our acquisitions. Hospice revenue is primarily impacted by average
daily census, levels of care and payment rates. Overall, our average daily census increased from 1,468 in 2008 to
2,150 for 2009. The key components of changes in average daily census are admissions and the patients’ average
length of stay once they are under our care. Our patient’s average length of stay was 82 days for 2008 and 2009.
Our 2009 revenue includes an increase related to an annual hospice rate increase effective October 1, 2008,
which was approximately 1.9%

43

Liquidity and Capital Resources

Cash Flows

The following table summarizes our cash flows for the periods indicated (amounts in millions):

For the Years Ended
December 31,

2010

2009

2008

Cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . .

$206.3
(73.6)
(46.9)

$ 247.7
(97.3)
(118.7)

$ 150.7
(505.7)
301.6

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . .

85.8
34.5

31.7
2.8

(53.4)
56.2

Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . .

$120.3

$ 34.5

$

2.8

Cash provided by operating activities decreased $41.4 million during 2010 compared to 2009, primarily as a
result of changes in net income, patient accounts receivable, accounts payable and accrued expenses.

Cash used in investing activities decreased $23.7 million during 2010 compared to 2009 primarily due to the
decrease in our acquisition activity during 2010 compared to 2009 offset by an increase in purchases of property
plant and equipment in 2010 compared to 2009.

Cash used in financing activities decreased $71.8 million during 2010 compared to 2009, primarily due to a
decrease in draws and repayments on our revolving credit facility offset by $11.8 million in the repurchase of
stock under our stock repurchase program. We decreased our outstanding long-term obligations net of
borrowings by $33.3 million from December 31, 2009.

Liquidity

Typically, our principal source of liquidity is the collection of our patient accounts receivable, primarily through
the Medicare program; however, from time to time, we can and do obtain additional sources of liquidity through
sales of our equity or by incurrence of additional indebtedness. As of December 31, 2010, we had $120.3 million
in cash and cash equivalents and $234.6 million in availability under our $250.0 million Revolving Credit
Facility.

During 2010, we spent $38.5 million in routine capital expenditures, which primarily included equipment,
furniture and computer software and $25.5 million in capital expenditures related to the implementation of our
enterprise resource planning system and a company-wide refresh of computer hardware. Based on our operating
forecasts and our debt service requirements, we believe we will have sufficient liquidity to fund our operations,
capital requirements and debt service requirements over the next twelve months and into the foreseeable future.

Outstanding Patient Accounts Receivable

Our patient accounts receivable, net decreased $8.8 million from 2009 to 2010 as our cash collection as a
percentage of revenue was 100.7% and 101.1% for 2010 and 2009, respectively.

Our patient accounts receivable includes unbilled receivables, which are aged based upon our initial service date.
At December 31, 2010, the unbilled patient accounts receivable, as a percentage of gross patient accounts
receivable, was 28.3%, or $47.9 million compared to 19.8% or $36.7 million at December 31, 2009. We monitor
unbilled receivables on an agency by agency basis to ensure that all efforts are made to bill claims within timely
filing deadlines. The timely filing deadlines vary by state for Medicaid-reimbursable services and among
insurance companies.

44

Our provision for estimated revenue adjustments (which is deducted from our service revenue to determine net
service revenue) and provision for doubtful accounts were as follows for the periods indicated (in millions). We
fully reserve for both our Medicare and other patient accounts receivable that are aged over 360 days.

Provision for estimated revenue adjustments . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Years Ended
December 31,

2010

$ 7.0
19.2

$26.2

2009

$ 8.8
20.2

$29.0

As a percent of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.6%

1.9%

The following schedule details our patient accounts receivable, net of estimated revenue adjustments, by payor
class, aged based upon initial date of service (amounts in millions, except days revenue outstanding, net):

0-90

91-180

181-365 Over 365

Total

At December 31, 2010:
Medicare patient accounts receivable, net (1) . . . . . . . . . . . . . . . . . . .

$89.4

$16.4

$ 1.3

$—

$107.1

Other patient accounts receivable:

Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.0
27.2

2.2
9.9

2.0
7.0

0.1
1.0

10.3
45.1

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$33.2

$12.1

$ 9.0

$ 1.1

$ 55.4

Allowance for doubtful accounts (2)

. . . . . . . . . . . . . . . . . . . . .

Non-Medicare patient accounts receivable, net

. . . . . . . . . . . . . . . . .

Total patient accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . .

Days revenue outstanding, net (3)

. . . . . . . . . . . . . . . . . . . . . . . . . . .

(21.0)

$ 34.4

$141.5

32.8

0-90

91-180

181-365 Over 365

Total

At December 31, 2009:
Medicare patient accounts receivable, net (1) . . . . . . . . . . . . . . . . . . .

$90.1

$20.4

$ 4.8

$ 0.2

$115.5

Other patient accounts receivable:

Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.3
20.5

2.7
10.6

3.5
9.7

2.8
5.1

15.3
45.9

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$26.8

$13.3

$13.2

$ 7.9

$ 61.2

Allowance for doubtful accounts (2)

. . . . . . . . . . . . . . . . . . . . .

Non-Medicare patient accounts receivable, net

. . . . . . . . . . . . . . . . .

Total patient accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . .

Days revenue outstanding, net (3)

. . . . . . . . . . . . . . . . . . . . . . . . . . .

(26.4)

$ 34.8

$150.3

33.9

45

(1) The following table summarizes the activity and ending balances in our estimated revenue adjustments
(amounts in millions), which is recorded to reduce our Medicare outstanding patient accounts receivable to
their estimated net realizable value, as we do not estimate an allowance for doubtful accounts for our
Medicare claims.

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . .
Provision for estimated revenue adjustments . . . . . . . . . . . .
Write offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Years Ended
December 31,

2010

$ 8.7
7.0
(9.2)

$ 6.5

2009

$ 7.2
8.8
(7.3)

$ 8.7

Our estimated revenue adjustments were 5.7% and 7.0% of our outstanding Medicare patient accounts
receivable at December 31, 2010 and 2009, respectively.

(2) The following table summarizes the activity and ending balances in our allowance for doubtful accounts
(amounts in millions), which is recorded to reduce only our Medicaid and private payer outstanding patient
accounts receivable to their estimated net realizable value.

For the Years Ended
December 31,

2010

2009

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . .
Write offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired through acquisitions . . . . . . . . . . . . . . . . . . . . . . . .

$ 26.4
19.2
(24.6)
—

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 21.0

$ 27.1
20.2
(21.1)
0.2

$ 26.4

Our allowance for doubtful accounts was 37.8% and 43.1% of our outstanding Medicaid and Private patient
accounts receivable at December 31, 2010 and 2009, respectively.

(3) Our calculation of days revenue outstanding, net is derived by dividing our ending net patient accounts
receivable (i.e., net of estimated revenue adjustments and allowance for doubtful accounts) at December 31,
2010 and 2009 by our average daily net patient revenue for the three-month periods ended December 31,
2010 and 2009, respectively.

Indebtedness

Senior Notes, Term Loan and Revolving Credit Facility

In 2008, we entered into a $100.0 million Note Purchase Agreement (the “Note Purchase Agreement”), pursuant
to which we issued and sold on March 26, 2008, three series of Senior Notes (the “Senior Notes”) in an aggregate
principal amount of $100.0 million. Interest on the Senior Notes is payable at the prescribed rates semi-annually
on March 25 and September 25 of each year beginning September 25, 2008. The Senior Notes are unsecured, but
are guaranteed by all of our material subsidiaries.

In 2008, we entered into a $400.0 million Credit Agreement (the “Credit Agreement”), which consists of: (i) a
$150.0 million, five-year Term Loan (the “Term Loan”) and (ii) a $250.0 million, five-year Revolving Credit
Facility (the “Revolving Credit Facility”). The Revolving Credit Facility provides for and includes within its
$250.0 million limit a $15.0 million swingline facility and commitments for up to $25.0 million in letters of
credit. The Revolving Credit Facility may be utilized by us to provide ongoing working capital and for other
general corporate purposes. The Term Loan and Revolving Credit Facility are unsecured, but are guaranteed by
all of our material subsidiaries.

46

The Term Loan is repayable in 20 equal quarterly installments of $7.5 million each plus accrued interest
beginning on June 30, 2008, with any remaining balance due at maturity on March 26, 2013. Upon occurrence of
certain events, including our issuance of capital stock, if our leverage ratio at the time of issuance is equal to or in
excess of 2.50 and certain asset sales by us where the cash proceeds are not reinvested within a specified time
period, mandatory prepayments are required in the amounts specified in the Credit Agreement and Note Purchase
Agreement. Mandatory prepayments are paid ratably to the lenders under the Credit Agreement and the holders
of Senior Notes, based upon the respective indebtedness outstanding. Amounts paid to the lenders under the
Credit Agreement are applied first to the Term Loan, with any excess applied to amounts outstanding under the
Revolving Credit Facility, without reduction in the commitments to make revolving loans under the Revolving
Credit Facility.

Borrowings under the Term Loan and Revolving Credit Facility, which are not within the swingline facility or
letters of credit, are subject to classification as either ABR loans or Eurodollar rate (i.e. LIBOR) loans, as
selected by us. Outstanding principal balances of ABR loans are subject to an interest rate based on the ABR
Rate, which is set as the greater of the Prime Rate or the Federal Funds Rate plus 0.50% per annum plus an
applicable margin, and outstanding principal balances of Eurodollar rate loans are subject to an interest rate as
determined by reference to the Adjusted Eurodollar Rate (as defined in the Credit Agreement) plus an applicable
margin. The applicable margin from the inception of the facility through June 30, 2008 was set at 1.75% per the
terms of the Credit Agreement and for all subsequent quarters is determined based upon our total leverage ratio,
as presented in the table below, for both the Term Loan and the Revolving Credit Facility. Overdue amounts bear
interest at 2% per annum above the applicable rate. We are also subject to a commitment fee under the terms of
the Revolving Credit Facility, payable quarterly in arrears, as presented in the table below.

Total Leverage Ratio
≥ 3.00
< 3.00 and ≥ 2.50
< 2.50 and ≥ 2.00
< 2.00 and ≥ 1.50
< 1.50 and ≥ 1.00
< 1.00

Margin for
ABR Loans

Margin for
Eurodollar Loans

Commitment
Fee

1.00%
0.75%
0.50%
0.25%
0.00%
0.00%

2.00%
1.75%
1.50%
1.25%
1.00%
0.75%

0.40%
0.35%
0.30%
0.25%
0.20%
0.15%

Our weighted-average interest rate for our five year Term Loan was 1.1% and 1.7% for 2010 and 2009,
respectively.

The Credit Agreement and the Note Purchase Agreement require us to meet two financial covenants which are
calculated on a rolling four quarter basis. One is a total leverage ratio of debt to earnings before interest, taxes,
depreciation and amortization (“EBITDA”), which cannot exceed 2.5, and the second is a fixed charge coverage
ratio of adjusted EBITDA plus rent expense to certain fixed charges (i.e. interest expense, required principal
payments, capital expenditures, etc), which is required to be greater than 1.25. The Credit Agreement also
contains customary covenants, including, but not limited to, restrictions on (a) incurrence of liens; (b) incurrence
of additional debt; (c) sales of assets or other fundamental corporate changes; (d) investments; (e) declarations of
dividends; and (f) capital expenditures. These covenants contain customary exclusions and baskets. As of
December 31, 2010, our total leverage ratio (used to compute the margin and commitment fees, described above)
was 0.8, our fixed charge coverage ratio was 1.7, and we were in compliance with the covenants associated with
our long-term obligations.

As of December 31, 2010, our availability under our $250.0 million Revolving Credit Facility was $234.6
million as we had $15.4 million outstanding in letters of credit.

47

Promissory Notes

Our promissory notes outstanding of $14.4 million as of December 31, 2010 were generally issued for two-year
periods in amounts between $0.2 million and $8.7 million and bear interest in a range of 2.32% to 7.25%. These
promissory notes are primarily promissory notes issued in conjunction with our acquisitions for a portion of the
purchase price and also include promissory notes issued for software licenses, unrelated to acquisitions.

Contractual Obligations and Medicare Liabilities

Our future contractual obligations and Medicare liabilities at December 31, 2010 were as follows (amounts in
millions):

Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on long-term obligations (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medicare liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments due by period

Less than
1 Year

1-3
Years

4-5
Years

After 5
Years

$37.2
0.7
7.0
32.2
6.4
4.6

$88.1

$ 78.3

$66.4

$—

11.4
46.7
9.6
—

3.3 —
15.9
0.1
1.3 —
—
—

$146.0

$86.9

$ 0.1

Total

$181.9
0.7
21.7
94.9
17.3
4.6

$321.1

(1)

Interest on debt with variable rates was calculated using the current rate of that particular debt instrument at
December 31, 2010.

Inflation

We do not believe inflation has significantly impacted our results of operations.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated
financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent
assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue
recognition, collectibility of accounts receivable, reserves related to insurance and litigation, goodwill, intangible
assets and contingencies. We base these estimates on our historical experience and various other assumptions that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
experienced may vary materially and adversely from our estimates. To the extent there are material differences
between our estimates and the actual results, our future results of operations may be affected.

We believe the following critical accounting policies represent our most significant judgments and estimates used
in the preparation of our consolidated financial statements.

Revenue Recognition

We earn net service revenue through our home health and hospice agencies by providing a variety of services
almost exclusively in the homes of our patients. This net service revenue is earned and billed either on an episode
of care basis, on a per visit basis or on a daily basis depending upon the payment terms and conditions
established with each payor for services provided. We refer to home health revenue earned and billed on a 60-day
episode of care as episodic-based revenue. For the services we provide, Medicare is our largest payor.

48

When we record our service revenue, we record it net of estimated revenue adjustments and contractual
adjustments to reflect amounts we estimate to be realizable for services provided, as discussed below. We
believe, based on information currently available to us and based on our judgment, that changes to one or more
factors that impact the accounting estimates (such as our estimates related to revenue adjustments, contractual
adjustments and episodes in progress) we make in determining net service revenue, which changes are likely to
occur from period to period, will not materially impact our reported consolidated financial condition, results of
operations, cash flows or our future financial results.

Home Health Revenue Recognition

Medicare Revenue

Net service revenue is recorded under the Medicare payment program (“PPS”) based on a 60-day episode
payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) an outlier
payment if our patient’s care was unusually costly (capped at 10% of total reimbursement); (b) a low utilization
payment adjustment (“LUPA”) if the number of visits was fewer than five; (c) a partial payment if our patient
transferred to another provider or we received a patient from another provider before completing the episode;
(d) a payment adjustment based upon the level of therapy services required (thresholds set at 6, 14 and 20 visits);
(e) the number of episodes of care provided to a patient, regardless of whether the same home health provider
provided care for the entire series of episodes; (f) changes in the base episode payments established by the
Medicare Program; (g) adjustments to the base episode payments for case mix and geographic wages; and
(h) recoveries of overpayments.

We make adjustments to Medicare revenue on completed episodes to reflect differences between estimated and
actual payment amounts, an inability to obtain appropriate billing documentation or authorizations acceptable to
the payor and other reasons unrelated to credit risk. We estimate the impact of such adjustments based on our
historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and
record this estimate during the period in which services are rendered as an estimated revenue adjustment and a
corresponding reduction to patient accounts receivable. Therefore, we believe that our reported net service
revenue and patient accounts receivable will be the amounts ultimately realized from Medicare for services
rendered.

In addition to revenue recognized on completed episodes, we also recognize a portion of revenue associated with
episodes in progress. Episodes in progress are 60-day episodes of care that begin during the reporting period, but
were not completed as of the end of the period. We estimate earned revenue on episodes in progress on a monthly
basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in
progress at the end of the reporting period, expected Medicare revenue per episode and our estimate of the
average percentage complete based on visits performed. As of December 31, 2010 and 2009, the difference
between the cash received from Medicare for a request for anticipated payment (“RAP”) on episodes in progress
and the associated estimated revenue was immaterial and therefore the resulting credits were recorded as a
reduction to our outstanding patient accounts receivable in our consolidated balance sheets for such periods.

Non-Medicare Revenue

Episodic-based Revenue. We recognize revenue in a similar manner as we recognize Medicare revenue for
episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however,
these rates can vary based upon the negotiated terms.

Non-episodic Based Revenue. Gross revenue is recorded on an accrual basis based upon the date of service at
amounts equal to our established or estimated per-visit rates, as applicable. Contractual adjustments are recorded
for the difference between our standard rates and the contracted rates to be realized from patients, third parties
and others for services provided and are deducted from gross revenue to determine net service revenue and are

49

also recorded as a reduction to our outstanding patient accounts receivable. In addition, we receive a minimal
amount of our net service revenue from patients who are either self-insured or are obligated for an insurance
co-payment.

Hospice Revenue Recognition

Hospice Medicare Revenue

Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the estimated
payment rates based on a 90-day episode of care basis for the first two hospice episodes of care and on a 60-day
episode of care basis for any subsequent hospice episodes. The estimated payment rates are daily or hourly rates
for each of the four levels of care we deliver. The four main levels of care we provide are routine care, general
inpatient care, continuous home care and respite care. Routine care accounts for 99%, 98% and 97% of our net
hospice Medicare revenue for 2010, 2009 and 2008, respectively. We make adjustments to Medicare revenue for
an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other
reasons unrelated to credit risk. We estimate the impact of these adjustments based on our historical experience,
which primarily includes our historical collection rate on Medicare claims, and record it during the period
services are rendered as an estimated revenue adjustment and as a reduction to our outstanding patient accounts
receivable.

Additionally, as Medicare hospice revenue is subject to an inpatient cap limit and an overall payment cap, we
monitor our provider numbers and estimate amounts refundable to Medicare if a cap has been exceeded. We
record these adjustments as a reduction to revenue and an increase in other accrued liabilities. As of
December 31, 2010 and 2009, we had $1.9 million and $0.1 million, respectively, recorded for estimated
amounts due back to Medicare in other accrued liabilities in our accompanying consolidated balance sheets. As a
result of our adjustments, we believe our revenue and patients accounts receivable are recorded at amounts that
will be ultimately realized.

Hospice Non-Medicare Revenue

We record gross revenue on an accrual basis based upon the date of service at amounts equal to our established
rates or estimated per visit rates, as applicable. Contractual adjustments are recorded for the difference between
our established rates and the amounts estimated to be realizable from patients, third parties and others for
services provided and are deducted from gross revenue to determine our net service revenue and patient accounts
receivable.

Patient Accounts Receivable

Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other
third-party payors and patients. We believe there is a certain level of credit risk associated with non-Medicare
payors. To provide for our non-Medicare patient accounts receivable that could become uncollectible in the
future, we establish an allowance for doubtful accounts to reduce the carrying amount to its estimated net
realizable value. We believe the credit risk associated with our Medicare accounts, which represent 76% and
77% of our net patient accounts receivable at December 31, 2010 and 2009, respectively, is limited due to (i) our
historical collection rate of over 99% from Medicare and (ii) the fact that Medicare is a U.S. government payor.
Accordingly, we do not record an allowance for doubtful accounts for our Medicare patient accounts receivable,
which are recorded at their net realizable value after recording estimated revenue adjustments as discussed above.
During 2010, 2009 and 2008, we recorded $7.0 million, $8.8 million and $6.4 million, respectively, in estimated
revenue adjustments to Medicare revenue. There is no single payor, other than Medicare, that accounts for more
than 10% of our total outstanding patient receivables, and thus we believe there are no other significant
concentrations of receivables that would subject us to any significant credit risk in the collection of our patient
accounts receivable.

50

We fully reserve for accounts which are aged at 360 days or greater. We write off accounts on a monthly basis
once we have exhausted our collection efforts and deem an account to be uncollectible.

Medicare Home Health

For our home health patients, our pre-billing process includes verifying that we are eligible for payment from
Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure
that our billings are accurate through the utilization of an electronic Medicare claim review. We submit a RAP
for 60% of our estimated payment for the initial episode at the start of care or 50% of the estimated payment for
any subsequent episodes of care contiguous with the first episode for a particular patient. The full amount of the
episode is billed after the episode has been completed (“final billed”). The RAP received for that particular
episode is then deducted from our final payment. If a final bill is not submitted within the greater of 120 days
from the start of the episode, or 60 days from the date the RAP was paid, any RAPs received for that episode will
be recouped by Medicare from any other claims in process for that particular provider number. The RAP and
final claim must then be re-submitted.

Medicare Hospice

For our hospice patients, our pre-billing process includes verifying that we are eligible for payment from
Medicare for the services that we provide to our patients. Once each patient has been confirmed for eligibility,
we will bill Medicare on a monthly basis for the services provided to the patient.

Non-Medicare Home Health and Hospice

For our non-Medicare patients, our pre-billing process primarily begins with verifying a patient’s eligibility for
services with the applicable payor. Once the patient has been confirmed for eligibility, we will provide services
to the patient and bill the applicable payor. We estimate an allowance for doubtful accounts to reduce the
carrying amount of the receivables to the amounts we estimate will be ultimately collected. Our review and
evaluation of non-Medicare accounts receivable includes a detailed review of outstanding balances and special
consideration to concentrations of receivables from particular payors or groups of payors with similar
characteristics that would subject us to any significant credit risk. In addition, the amount of the allowance for
doubtful accounts is based upon our assessment of historical and expected net collections, business and economic
conditions, trends in payment and an evaluation of collectibility based upon the date that the service was
provided. Based upon our best judgment, we believe the allowance for doubtful accounts adequately provides for
accounts that will not be collected due to credit risk.

Insurance

We are obligated for certain costs associated with our insurance programs, including employee health, workers’
compensation and professional liability. While we maintain various insurance programs to cover these risks, we
are self-insured for a substantial portion of our potential claims. We recognize our obligations associated with
these costs in the period in which a claim is incurred, including with respect to both reported claims and claims
incurred but not reported, up to specified deductible limits. These costs have generally been estimated based on
historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by
us on a quarterly basis.

Goodwill and Other Intangible Assets

Goodwill represents the amount of the purchase price in excess of the fair values assigned to the underlying
identifiable net assets of acquired businesses. Goodwill is not amortized, but is subject to an annual impairment
test. Tests are performed more frequently if events occur or circumstances change that would more likely than
not reduce the fair value of the reporting unit below its carrying amount. To determine whether goodwill is

51

impaired, we perform a two-step impairment test. In the first step of the test, the fair values of the reporting units
are compared to their aggregate carrying values, including goodwill. If the fair value of the reporting unit is
greater than its carrying amount, goodwill is not considered impaired and no further testing is required. If the fair
value of the reporting unit is less than its carrying amount, we would proceed to step two of the test. In step two
of the test, the implied fair value of the goodwill of the reporting unit is determined by a hypothetical allocation
of the fair value calculated in step one to all of the assets and liabilities of that reporting unit (including any
recognized and unrecognized intangible assets) as if the reporting unit had been acquired in a business
combination and the fair value was reflective of the price paid to acquire the reporting unit. The implied fair
value of goodwill is the excess, if any, of the calculated fair value after hypothetical allocation to the reporting
unit’s assets and liabilities. If the implied fair value of the goodwill is greater than the carrying amount of the
goodwill at the analysis date, goodwill is not impaired and the analysis is complete. If the implied fair value of
the goodwill is less than the carrying value of goodwill at the analysis date, goodwill is deemed impaired by the
amount of that variance.

We calculate the estimated fair value of our reporting units using discounted cash flows and an analysis of
market capitalization. To determine fair values we must make assumptions about a wide variety of internal and
external factors. Significant assumptions used in the impairment analysis include financial projections of free
cash flow (including significant assumptions about operations, capital requirements and income taxes), long-term
growth rates for determining terminal value, and discount rates. Our estimates of discounted cash flows may
differ from actual cash flows due to, among other things, economic conditions, changes to our business model or
changes in operating performance. Significant differences between these estimates and actual cash flows could
materially adversely affect our future financial results. These factors increase the risk of differences between
projected and actual performance that could impact future estimates of fair value of all reporting units. Where
available and appropriate, comparative market multiples are used to corroborate the results of our discounted
cash flow test.

We completed our annual impairment test of goodwill as of October 31, 2010 and determined that no goodwill
impairment existed as of October 31, 2010. Although we believe that the financial projections used are
reasonable and appropriate for all of our reporting units, there is uncertainty inherent in those projections. As of
December 31, 2010 we determined that no events or circumstances from October 31, 2010 through December 31,
2010 indicated that a further assessment was necessary.

Intangible assets consist of Certificates of Need,
licenses, acquired names, non-compete agreements and
reacquired franchise rights. We amortize non-compete agreements, acquired names that we do not intend to use
in the future and reacquired franchise rights on a straight-line basis over their estimated useful lives, which is
generally three years for non-compete agreements and up to five years for reacquired franchise rights and
acquired names.

Income Taxes

We use the asset and liability approach for measuring deferred tax assets and liabilities based on temporary
differences existing at each balance sheet date using currently enacted tax rates. Our deferred tax calculation
requires us to make certain estimates about future operations. Deferred tax assets are reduced by a valuation
allowance when we believe it is more likely than not that some portion or all of the deferred tax assets will not be
realized. The effect of a change in tax rate is recognized as income or expense in the period that includes the
enactment date.

New Accounting Pronouncements

In August 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-24, Health Care Entities (Topic
954): Presentation of Insurance Claims and Related Insurance Recoveries which clarifies for medical
malpractice claims or similar contingent liabilities, a health care entity should not net insurance recoveries

52

against a related claim liability. The amendments in the this ASU are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2010. We do not expect the adoption of this
ASU to have a material impact on our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from fluctuations in interest rates. Our Revolving Credit Facility and Term Loan
carry a floating interest rate which is tied to the Eurodollar rate (i.e. LIBOR) and the Prime Rate and therefore,
our consolidated statements of operations and our consolidated statements of cash flows will be exposed to
changes in interest rates. As of December 31, 2010, the total amount of outstanding debt subject to interest rate
fluctuations was $67.5 million. A 1.0% interest rate change would cause interest expense to change by
approximately $0.7 million annually.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are listed under Part IV, Item 15, “Exhibits and Financial Statement Schedules” of this
Annual Report on the pages indicated.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure information required to be disclosed
in our reports filed under the Exchange Act is recorded, processed, summarized, disclosed and reported within
the time periods specified in the SEC’s rules and forms. This information is accumulated and communicated to
our management and Board of Directors to allow timely decisions regarding required disclosure.

In connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2010, under the
supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as
such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act.

Based on this evaluation, our principal executive officer and principal financial officer concluded our disclosure
controls and procedures were effective as of December 31, 2010, the end of the period covered by this Annual
Report.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. Under
the supervision and with the participation of our management, including our principal executive officer and our
principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in
Internal Control—Integrated Framework, our management concluded our internal control over financial
reporting was effective as of December 31, 2010.

53

Our internal control system is designed to provide reasonable assurance to our management and Board of
Directors regarding the preparation and fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

KPMG LLP,
the independent registered public accounting firm who audited our consolidated financial
statements included in this Form 10-K, has issued a report on our internal control over financial reporting, which
is included herein.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule
13a-15(f)) that have occurred during the quarter ended December 31, 2010, that have materially impacted, or are
reasonably likely to materially impact, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that
our disclosure controls or our internal controls over financial reporting will prevent or detect all errors and all
fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met. The design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further,
because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud,
if any, have been detected. These inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented
by the individual acts of some persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls is based in part on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject
to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the
degree of compliance with policies and procedures.

54

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Amedisys, Inc.:

We have audited Amedisys, Inc.’s internal control over financial reporting as of December 31, 2010, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Amedisys, Inc.’s management
is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

In our opinion, Amedisys, Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Amedisys, Inc. and subsidiaries as of December 31, 2010 and
2009, and the related consolidated income statements, statements of stockholders’ equity and comprehensive
income, and cash flows for each of the years in the three-year period ended December 31, 2010, and our report
dated February 22, 2011 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Baton Rouge, Louisiana
February 22, 2011

55

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to the 2011 Proxy Statement to be filed with
the SEC within 120 days after the end of the year ended December 31, 2010.

Code of Conduct and Ethics

We have adopted a code of ethics that applies to all of our directors, officers and employees, including our Chief
Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer). This code
of ethics, which is entitled Code of Ethical Business Conduct,
is posted at our internet website, http://
www.amedisys.com. Any amendments to, or waivers of the code of ethics will be disclosed on our website
promptly following the date of such amendment or waiver.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the 2011 Proxy Statement to be filed with
the SEC within 120 days after the end of the year ended December 31, 2010.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by reference to the 2011 Proxy Statement to be filed with
the SEC within 120 days after the end of the year ended December 31, 2010.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by this item is incorporated by reference to the 2011 Proxy Statement to be filed with
the SEC within 120 days after the end of the year ended December 31, 2010.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated by reference to the 2011 Proxy Statement to be filed with
the SEC within 120 days after the end of the year ended December 31, 2010.

56

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

1. Financial Statements

Report of independent registered public accounting firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated balance sheets at December 31, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
For each of the years in the three-year period ended December 31, 2010:

Consolidated income statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated statements of stockholders’ equity and comprehensive income . . . . . . . . . . . . . F-4
Consolidated statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6

2. Financial Statement Schedules

There are no financial statement schedules included in this report.

3. Exhibits

The Exhibits are listed in the Index of Exhibits Required by Item 601 of Regulation S-K included
herewith, which is incorporated by reference.

57

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

AMEDISYS, INC.

By:

/s/ WILLIAM F. BORNE

William F. Borne,
Chief Executive Officer and
Chairman of the Board

Date: February 22, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the date indicated:

Signature

Title

Date

/s/ WILLIAM F. BORNE

William F. Borne

/s/ DALE E. REDMAN

Dale E. Redman

/s/

JAKE L. NETTERVILLE
Jake L. Netterville

/s/ DAVID R. PITTS

David R. Pitts

Chief

and
Executive Officer
Chairman of the Board (Principal
Executive Officer)

Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)

Director

Director

February 22, 2011

February 22, 2011

February 22, 2011

February 22, 2011

/S/ PETER F. RICCHIUTI

Director

February 22, 2011

Peter F. Ricchiuti

/s/ RONALD A. LABORDE

Director

February 22, 2011

Ronald A. Laborde

/s/ DONALD A. WASHBURN

Director

February 22, 2011

Donald A. Washburn

58

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Amedisys, Inc.:

We have audited the accompanying consolidated balance sheets of Amedisys, Inc. and subsidiaries as of
December 31, 2010 and 2009, and the related consolidated income statements, statements of stockholders’ equity
and comprehensive income, and cash flows for each of the years in the three-year period ended December 31,
2010. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Amedisys, Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of their
operations and their cash flows for each of the years in the three-year period ended December 31, 2010, in
conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Amedisys Inc.’s internal control over financial reporting as of December 31, 2010, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 22, 2011, expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Baton Rouge, Louisiana
February 22, 2011

F-1

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)

As of December 31,

2010

2009

Current assets:

ASSETS

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Patient accounts receivable, net of allowance for doubtful accounts of $20,977

and $26,371 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $78,074 and $59,780 . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of accumulated amortization of $17,135 and $11,826 . . . . . . . . .
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 120,295

$

34,485

141,549
9,947
22,139

293,930
138,554
791,412
53,393
22,536

150,269
10,279
23,003

218,036
91,919
786,923
57,608
17,865

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,299,825

$1,172,351

Current liabilities:

LIABILITIES AND EQUITY

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations due Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term obligations, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and Contingencies—Note 9
Equity:

Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.001 par value, 60,000,000 shares authorized; 29,867,701 and

28,303,216 shares issued; and 29,232,807 and 28,191,174 shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
Treasury stock at cost, 634,894 and 112,042 shares of common stock . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Amedisys, Inc. stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,374
100,700
36,149
4,618
37,178
14,285

216,304
144,688
52,286
6,832

420,110

$

16,535
119,619
33,035
4,618
44,254
11,245

229,306
170,899
29,399
6,412

436,016

—

—

29
407,156
(14,022)
25
484,669

877,857
1,858

879,715

28
363,670
(735)
114
372,089

735,166
1,169

736,335

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,299,825

$1,172,351

The accompanying notes are an integral part of these consolidated financial statements.

F-2

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share data)

Net service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service, excluding depreciation and amortization . . . . . . . . . . . .
General and administrative expenses:

Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Years Ended December 31,
2008
2009
2010

$1,634,319
820,460

$1,513,459
724,465

$1,187,415
562,633

357,502
10,634
198,410
19,214
34,589

327,738
7,848
174,170
20,178
28,312

264,029
6,372
152,876
23,998
20,406

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,440,809

1,282,711

1,030,314

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income:

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings from unconsolidated joint ventures . . . . . . . . . . .
Miscellaneous, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total other expense, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (income) loss attributable to noncontrolling interests . . . . . . . . . . . .

193,510

230,748

157,101

435
(9,201)
3,016
(2,178)

(7,928)

185,582
(72,309)

113,273
(693)

213
(11,670)
2,343
760

(8,354)

222,394
(86,171)

136,223
(386)

1,027
(16,627)
890
(1,035)

(15,745)

141,356
(54,743)

86,613
69

Net income attributable to Amedisys, Inc.

. . . . . . . . . . . . . . . . . . . . . . . .

$ 112,580

$ 135,837

$

86,682

Net income per share attributable to Amedisys, Inc. common

stockholders:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

4.02

3.95

$

$

4.99

4.89

$

$

3.28

3.22

Weighted average shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28,032

28,484

27,231

27,759

26,445

26,903

The accompanying notes are an integral part of these consolidated financial statements.

F-3

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND
COMPREHENSIVE INCOME
(Amounts in thousands, except share data)

Amedisys, Inc. Common Stockholders

Total

Comprehensive
Income

Common Stock

Shares Amount

Additional
Paid-in
Capital

Treasury
Stock

Accumulated
Other
Comprehensive
(Loss) Income

Retained
Earnings

Noncontrolling
Interests

26,368,644

$ 26

$297,802 $

(437)

$ 10

$149,570

$ 852

Balance, December 31, 2007 . . . . . . . . $447,823
Issuance of stock—employee stock

purchase plan . . . . . . . . . . . . . . . . . .
Issuance of stock—401(k) plan . . . . . .
Exercise of stock options and

warrants . . . . . . . . . . . . . . . . . . . . . .
Issuance of non-vested stock . . . . . . . .
Non-cash compensation . . . . . . . . . . . .
Tax benefit from stock option

exercises . . . . . . . . . . . . . . . . . . . . . .
Surrendered shares . . . . . . . . . . . . . . . .
Comprehensive income:

Net income . . . . . . . . . . . . . . . . . .
Other comprehensive income:

Unrealized (loss) on deferred

compensation plan
assets . . . . . . . . . . . . . . . . .

3,806
12,384

2,848
—
6,372

2,909
(180)

—
—

—
—
—

—
—

86,613

86,682

(457)

(457)

Comprehensive income . . . . . . . . . . . .

86,156

$ 86,225

Balance, December 31, 2008 . . . . . . . . 562,118
Issuance of stock—employee stock

purchase plan . . . . . . . . . . . . . . . . . .
Issuance of stock—401(k) plan . . . . . .
Exercise of stock options . . . . . . . . . . .
Issuance of non-vested stock . . . . . . . .
Non-cash compensation . . . . . . . . . . . .
Tax benefit from stock option

exercises . . . . . . . . . . . . . . . . . . . . . .
Surrendered shares . . . . . . . . . . . . . . . .
Comprehensive income:

5,342
19,083
3,772
—
7,848

1,506
(118)

—
—
—
—
—

—
—

Net income . . . . . . . . . . . . . . . . . . 136,223
Other comprehensive income:

135,837

Unrealized gain on deferred

compensation plan
assets . . . . . . . . . . . . . . . . .

561

561

Comprehensive income . . . . . . . . . . . . 136,784

$136,398

Balance, December 31, 2009 . . . . . . . . 736,335
Issuance of stock—employee stock

purchase plan . . . . . . . . . . . . . . . . . .
Issuance of stock—401(k) plan . . . . . .
Exercise of stock options . . . . . . . . . . .
Issuance of non-vested stock . . . . . . . .
Non-cash compensation . . . . . . . . . . . .
Tax benefit from stock option

exercises . . . . . . . . . . . . . . . . . . . . . .
Surrendered shares . . . . . . . . . . . . . . . .
Shares repurchased . . . . . . . . . . . . . . . .
Acquired noncontrolling interests . . . .
Noncontrolling interest distribution . . .
Comprehensive income:

6,204
22,762
1,501
—
10,634

2,386
(1,491)
(11,796)
300
(304)

—
—
—
—
—

—
—
—
—
—

Net income . . . . . . . . . . . . . . . . . . 113,273
Other comprehensive income:

112,580

Unrealized (loss) on deferred

compensation plan
assets . . . . . . . . . . . . . . . . .

(89)

(89)

Comprehensive income . . . . . . . . . . . . 113,184

$112,491

96,036 —
265,094

1

3,806
12,383

223,237 —
130,220 —
—

—

—
—

—

—

—

—
—

—

—

—

2,848
—
6,372

2,909
—

—

—

—

—
—

—
—
—

—
(180)

—

—

—

27,083,231

27

326,120

(617)

1

179,272 —
543,140
227,887 —
157,644 —
—

—

—
—

—

—

—

—
—

—

—

—

5,342
19,082
3,772
—
7,848

1,506
—

—

—

—

—
—
—
—
—

—
(118)

—

—

—

28,191,174

28

363,670

(735)

1

188,089 —
579,303
118,220 —
156,021 —
—

—

6,204
22,761
1,501
—
10,634

—
—
—
—
—

—
—
—
—
—

—

—

—

—
—
—
—
—

—

—

—

—
2,386
—
(1,491)
— (11,796)
—
—

—
—

—

—

—

—

—

—

—
—

—
—
—

—
—

—

—
—

—
—
—

—
—

—
—

—
—
—

—
—

86,682

(69)

(457)

—

(447)

—

—

236,252

—
—
—
—
—

—
—

—

561

—

114

—
—
—
—
—

—
—
—
—
—

—

135,837

386

—

—

—

386

372,089

1,169

—
—
—
—
—

—
—

—
—
—
—
—

—
—
—
—
—

112,580

—

(69)

783

—
—
—
—
—

—
—

—
—
—
—
—

—
—
—
300
(304)

693

—

693

(89)

—

—

—

Balance, December 31, 2010 . . . . . . . . $879,715

29,232,807

$ 29

$407,156 $(14,022)

$ 25

$484,669

$1,858

The accompanying notes are an integral part of these consolidated financial statements.

F-4

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

For the Years Ended December 31,

2010

2009

2008

Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $113,273
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
401(k) employer match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write off of deferred debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,589
19,214
10,634
22,762
3,236
25,927
—
(3,016)
1,576
1,765

Changes in operating assets and liabilities, net of impact of acquisitions:

(10,494)
1,856
(2,260)
4,694
(17,903)
420
206,273

Patient accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows from Investing Activities:
Proceeds from sale of deferred compensation plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of property and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of deferred compensation plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of reacquired franchise rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows from Financing Activities:
—
Outstanding checks in excess of bank balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,501
Proceeds from issuance of stock upon exercise of stock options and warrants . . . . . . . . . . . . .
6,204
Proceeds from issuance of stock to employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . .
2,386
Tax benefit from stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(304)
Non-controlling interest distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Proceeds from revolving line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Repayments of revolving line of credit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Proceeds from issuance of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Payment of deferred financing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,796)
Purchase of company stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(44,838)
Principal payments of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46,847)
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85,810
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,485
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,295

2,592
49
(1,089)
(63,971)
(5,000)
(3,821)
(2,376)
(73,616)

$ 136,223

$ 86,613

28,312
20,178
7,848
19,083
822
21,547
—
(2,343)
1,576
980

5,200
(14,951)
2,209
2,493
15,750
2,732
247,659

956
41
(3,107)
(36,359)
—
(53,572)
(5,214)
(97,255)

(4,548)
3,772
5,342
1,506
—
50,200
(130,700)

—
—
—
(44,338)
(118,766)
31,638
2,847
$ 34,485

$

20,406
23,998
6,372
12,384
673
29,436
406
(890)
1,207
337

(60,478)
(4,095)
228
(11,124)
45,378
(110)
150,741

600
32
(1,849)
(28,385)
—

(471,319)
(4,730)
(505,651)

4,548
2,848
3,806
2,909
—
234,200
(153,700)
250,000
(8,124)
—
(34,920)
301,567
(53,343)
56,190
2,847

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

8,339

$ 10,339

$ 12,950

Cash paid for income taxes, net of refunds received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,765

$ 68,635

$ 20,138

Supplemental Disclosures of Non-Cash Financing and Investing Activities:
Notes payable issued for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

750

Notes payable issued for software licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,801

$

$

9,455

1,463

$

$

6,827

2,126

The accompanying notes are an integral part of these consolidated financial statements.

F-5

AMEDISYS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010

1. NATURE OF OPERATIONS AND CONSOLIDATION OF FINANCIAL STATEMENTS

Amedisys, Inc., a Delaware corporation, and its consolidated subsidiaries (“Amedisys,” “we,” “us,” or “our”) are
a multi-state provider of home health and hospice services with approximately 86%, 88% and 87% of our net
service revenue derived from Medicare for 2010, 2009 and 2008, respectively. As of December 31, 2010, we had
486 Medicare-certified home health and 67 Medicare-certified hospice agencies in 45 states within the United
States, the District of Columbia and Puerto Rico.

Use of Estimates

Our accounting and reporting policies conform with U.S. generally accepted accounting principles (“U.S.
GAAP”). In preparing the consolidated financial statements, we are required to make estimates and assumptions
that impact the amounts reported in the consolidated financial statements and accompanying notes. Actual results
could materially differ from those estimates.

Reclassifications and Comparability

Certain reclassifications have been made to prior periods’ financial statements in order to conform to the current
periods’ presentation. As a result of our growth through acquisition and start-up activities and our agency
closures/consolidations, our operating results may not be comparable for the periods that are presented.

Principles of Consolidation

These consolidated financial statements include the accounts of Amedisys, Inc. and our wholly owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in our accompanying
consolidated financial statements, and business combinations accounted for as purchases have been included in
our consolidated financial statements from their respective dates of acquisition. In addition to our wholly owned
subsidiaries, we also have certain equity investments that are accounted for as set forth below.

Equity Investments

We consolidate subsidiaries and/or joint ventures when the entity is a variable interest entity and we are the
primary beneficiary or if we have controlling interests in the entity, which is generally ownership in excess of
50%. Third party equity interests in our consolidated joint ventures are reflected as noncontrolling interests in our
consolidated financial statements.

For subsidiaries or joint ventures in which we do not have a controlling interest or for which we are not the
primary beneficiary, we record such investments under the equity method of accounting.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

We earn net service revenue through our home health and hospice agencies by providing a variety of services
almost exclusively in the homes of our patients. This net service revenue is earned and billed either on an episode
of care basis, on a per visit basis or on a daily basis depending upon the payment terms and conditions
established with each payor for services provided. We refer to home health revenue earned and billed on a 60-day
episode of care as episodic-based revenue. For the services we provide, Medicare is our largest payor.

F-6

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

When we record our service revenue, we record it net of estimated revenue adjustments and contractual
adjustments to reflect amounts we estimate to be realizable for services provided, as discussed below. We
believe, based on information currently available to us and based on our judgment, that changes to one or more
factors that impact the accounting estimates (such as our estimates related to revenue adjustments, contractual
adjustments and episodes in progress) we make in determining net service revenue, which changes are likely to
occur from period to period, will not materially impact our reported consolidated financial condition, results of
operations, cash flows or our future financial results.

Home Health Revenue Recognition

Medicare Revenue

Net service revenue is recorded under the Medicare payment program (“PPS”) based on a 60-day episode
payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) an outlier
payment if our patient’s care was unusually costly (capped at 10% of total reimbursement); (b) a low utilization
payment adjustment (“LUPA”) if the number of visits was fewer than five; (c) a partial payment if our patient
transferred to another provider or we received a patient from another provider before completing the episode;
(d) a payment adjustment based upon the level of therapy services required (thresholds set at 6, 14 and 20 visits);
(e) the number of episodes of care provided to a patient, regardless of whether the same home health provider
provided care for the entire series of episodes; (f) changes in the base episode payments established by the
Medicare Program; (g) adjustments to the base episode payments for case mix and geographic wages; and
(h) recoveries of overpayments.

We make adjustments to Medicare revenue on completed episodes to reflect differences between estimated and
actual payment amounts, an inability to obtain appropriate billing documentation or authorizations acceptable to
the payor and other reasons unrelated to credit risk. We estimate the impact of such adjustments based on our
historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and
record this estimate during the period in which services are rendered as an estimated revenue adjustment and a
corresponding reduction to patient accounts receivable. Therefore, we believe that our reported net service
revenue and patient accounts receivable will be the amounts ultimately realized from Medicare for services
rendered.

In addition to revenue recognized on completed episodes, we also recognize a portion of revenue associated with
episodes in progress. Episodes in progress are 60-day episodes of care that begin during the reporting period, but
were not completed as of the end of the period. We estimate earned revenue on episodes in progress on a monthly
basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in
progress at the end of the reporting period, expected Medicare revenue per episode and our estimate of the
average percentage complete based on visits performed. As of December 31, 2010 and 2009, the difference
between the cash received from Medicare for a request for anticipated payment (“RAP”) on episodes in progress
and the associated estimated revenue was immaterial and therefore the resulting credits were recorded as a
reduction to our outstanding patient accounts receivable in our consolidated balance sheets for such periods.

Non-Medicare Revenue

Episodic-based Revenue. We recognize revenue in a similar manner as we recognize Medicare revenue for
episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however,
these rates can vary based upon the negotiated terms.

Non-episodic Based Revenue. Gross revenue is recorded on an accrual basis based upon the date of service at
amounts equal to our established or estimated per-visit rates, as applicable. Contractual adjustments are recorded

F-7

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

for the difference between our standard rates and the contracted rates to be realized from patients, third parties
and others for services provided and are deducted from gross revenue to determine net service revenue and are
also recorded as a reduction to our outstanding patient accounts receivable. In addition, we receive a minimal
amount of our net service revenue from patients who are either self-insured or are obligated for an insurance
co-payment.

Hospice Revenue Recognition

Hospice Medicare Revenue

Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the estimated
payment rates based on a 90-day episode of care basis for the first two hospice episodes of care and on a 60-day
episode of care basis for any subsequent hospice episodes. The estimated payment rates are daily or hourly rates
for each of the four levels of care we deliver. The four main levels of care we provide are routine care, general
inpatient care, continuous home care and respite care. Routine care accounts for 99%, 98% and 97% of our total
net Medicare hospice service revenue for 2010, 2009 and 2008, respectively. We make adjustments to Medicare
revenue for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and
other reasons unrelated to credit risk. We estimate the impact of these adjustments based on our historical
experience, which primarily includes our historical collection rate on Medicare claims, and record it during the
period services are rendered as an estimated revenue adjustment and as a reduction to our outstanding patient
accounts receivable.

Additionally, as Medicare hospice revenue is subject to an inpatient cap limit and an overall payment cap, we
monitor our provider numbers and estimate amounts refundable to Medicare if a cap has been exceeded. We
record these adjustments as a reduction to revenue and to an increase in other accrued liabilities. As of
December 31, 2010 and 2009, we had $1.9 million and $0.1 million, respectively, recorded for estimated
amounts due back to Medicare in other accrued liabilities in our accompanying consolidated balance sheets. As a
result of our adjustments, we believe our revenue and patients accounts receivable are recorded at amounts that
will be ultimately realized.

Hospice Non-Medicare Revenue

We record gross revenue on an accrual basis based upon the date of service at amounts equal to our established
rates or estimated per visit rates, as applicable. Contractual adjustments are recorded for the difference between
our established rates and the amounts estimated to be realizable from patients, third parties and others for
services provided and are deducted from gross revenue to determine our net service revenue and patient accounts
receivable.

Cash and Cash Equivalents

Cash and cash equivalents include certificates of deposit and all highly liquid debt instruments with maturities of
three months or less when purchased.

Patient Accounts Receivable

Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other
third-party payors and patients. We believe there is a certain level of credit risk associated with non-Medicare
payors. To provide for our non-Medicare patient accounts receivable that could become uncollectible in the
future, we establish an allowance for doubtful accounts to reduce the carrying amount to its estimated net
realizable value. We believe the credit risk associated with our Medicare accounts, which represent 76% and

F-8

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

77% of our net patient accounts receivable at December 31, 2010 and 2009, respectively, is limited due to (i) our
historical collection rate of over 99% from Medicare and (ii) the fact that Medicare is a U.S. government payor.
Accordingly, we do not record an allowance for doubtful accounts for our Medicare patient accounts receivable,
which are recorded at their net realizable value after recording estimated revenue adjustments as discussed above.
During 2010, 2009 and 2008, we recorded $7.0 million, $8.8 million and $6.4 million, respectively, in estimated
revenue adjustments to Medicare revenue. There is no single payor, other than Medicare, that accounts for more
than 10% of our total outstanding patient receivables, and thus we believe there are no other significant
concentrations of receivables that would subject us to any significant credit risk in the collection of our patient
accounts receivable.

We fully reserve for accounts which are aged at 360 days or greater. We write off accounts on a monthly basis
once we have exhausted our collection efforts and deem an account to be uncollectible.

Medicare Home Health

For our home health patients, our pre-billing process includes verifying that we are eligible for payment from
Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure
that our billings are accurate through the utilization of an electronic Medicare claim review. We submit a RAP
for 60% of our estimated payment for the initial episode at the start of care or 50% of the estimated payment for
any subsequent episodes of care contiguous with the first episode for a particular patient. The full amount of the
episode is billed after the episode has been completed (“final billed”). The RAP received for that particular
episode is then deducted from our final payment. If a final bill is not submitted within the greater of 120 days
from the start of the episode, or 60 days from the date the RAP was paid, any RAPs received for that episode will
be recouped by Medicare from any other claims in process for that particular provider number. The RAP and
final claim must then be re-submitted.

Medicare Hospice

For our hospice patients, our pre-billing process includes verifying that we are eligible for payment from
Medicare for the services that we provide to our patients. Once each patient has been confirmed for eligibility,
we will bill Medicare on a monthly basis for the services provided to the patient.

Non-Medicare Home Health and Hospice

For our non-Medicare patients, our pre-billing process primarily begins with verifying a patient’s eligibility for
services with the applicable payor. Once the patient has been confirmed for eligibility, we will provide services
to the patient and bill the applicable payor. We estimate an allowance for doubtful accounts to reduce the
carrying amount of the receivables to the amounts we estimate will be ultimately collected. Our review and
evaluation of non-Medicare accounts receivable includes a detailed review of outstanding balances and special
consideration to concentrations of receivables from particular payors or groups of payors with similar
characteristics that would subject us to any significant credit risk. In addition, the amount of the allowance for
doubtful accounts is based upon our assessment of historical and expected net collections, business and economic
conditions, trends in payment and an evaluation of collectibility based upon the date that the service was
provided. Based upon our best judgment, we believe the allowance for doubtful accounts adequately provides for
accounts that will not be collected due to credit risk.

F-9

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Property and Equipment

Property and equipment is stated at cost and we depreciate it on a straight-line basis over the estimated useful
lives of the assets. Additionally, we have internally developed computer software for our own use. Such software
development costs are capitalized. Additions and improvements (including interest costs for construction of
qualifying long-lived assets) are capitalized. Maintenance and repair expenses are charged to expense as
incurred. The cost of property and equipment sold or disposed of and the related accumulated depreciation are
eliminated from the property and related accumulated depreciation accounts, and any gain or loss is credited or
charged to other income (expense).

We generally provide for depreciation over the following estimated useful service lives, additionally if there are
indicators that certain assets may be potentially impaired we will analyze such assets in accordance with U.S.
GAAP.

Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . .
Equipment and furniture . . . . . . . . . . . . . . . . .
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer software . . . . . . . . . . . . . . . . . . . . . .

39
Lesser of life of lease or expected useful life
3 to 7
5 to 10
3 to 7

Years

The following table summarizes the balances related to our property and equipment for 2010 and 2009 (amounts
in millions):

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

3.2
25.0
114.9
73.5

$

3.2
23.6
90.0
34.9

As of December 31,

2010

2009

Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

216.6
(78.1)

151.7
(59.8)

$138.5

$ 91.9

Depreciation expense, including amortization of assets related to capital leases, for 2010, 2009 and 2008 was
$27.0 million, $24.3 million and $18.6 million, respectively.

Goodwill and Other Intangible Assets

Goodwill represents the amount of the purchase price in excess of the fair values assigned to the underlying
identifiable net assets of acquired businesses. Goodwill is not amortized, but is subject to an annual impairment
test. Tests are performed more frequently if events occur or circumstances change that would more likely than
not reduce the fair value of the reporting unit below its carrying amount. To determine whether goodwill is
impaired, we perform a two-step impairment test. In the first step of the test, the fair values of the reporting units
are compared to their aggregate carrying values, including goodwill. If the fair value of the reporting unit is
greater than its carrying amount, goodwill is not considered impaired and no further testing is required. If the fair
value of the reporting unit is less than its carrying amount, we would proceed to step two of the test. In step two
of the test, the implied fair value of the goodwill of the reporting unit is determined by a hypothetical allocation

F-10

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

of the fair value calculated in step one to all of the assets and liabilities of that reporting unit (including any
recognized and unrecognized intangible assets) as if the reporting unit had been acquired in a business
combination and the fair value was reflective of the price paid to acquire the reporting unit. The implied fair
value of goodwill is the excess, if any, of the calculated fair value after hypothetical allocation to the reporting
unit’s assets and liabilities. If the implied fair value of the goodwill is greater than the carrying amount of the
goodwill at the analysis date, goodwill is not impaired and the analysis is complete. If the implied fair value of
the goodwill is less than the carrying value of goodwill at the analysis date, goodwill is deemed impaired by the
amount of that variance.

We calculate the estimated fair value of our reporting units using discounted cash flows and an analysis of
market capitalization. To determine fair values we must make assumptions about a wide variety of internal and
external factors. Significant assumptions used in the impairment analysis include financial projections of free
cash flow (including significant assumptions about operations, capital requirements and income taxes), long-term
growth rates for determining terminal value, and discount rates. Our estimates of discounted cash flows may
differ from actual cash flows due to, among other things, economic conditions, changes to our business model or
changes in operating performance. Significant differences between these estimates and actual cash flows could
materially adversely affect our future financial results. These factors increase the risk of differences between
projected and actual performance that could impact future estimates of fair value of all reporting units. Where
available and appropriate, comparative market multiples are used to corroborate the results of our discounted
cash flow test.

We completed our annual impairment test of goodwill as of October 31, 2010 and determined that no goodwill
impairment existed as of October 31, 2010. Although we believe that the financial projections used are
reasonable and appropriate for all of our reporting units, there is uncertainty inherent in those projections. As of
December 31, 2010 we determined that no events or circumstances from October 31, 2010 through December 31,
2010 indicated that a further assessment was necessary.

Intangible assets consist of Certificates of Need,
licenses, acquired names, non-compete agreements and
reacquired franchise rights. We amortize non-compete agreements, acquired names that we do not intend to use
in the future and reacquired franchise rights on a straight-line basis over their estimated useful lives, which is
generally three years for non-compete agreements and up to five years for reacquired franchise rights and
acquired names.

Debt Issuance Costs

We amortize deferred debt issuance costs related to our long-term obligations over its term through interest
expense, unless the debt is extinguished, in which case unamortized balances are immediately expensed. We
amortized $1.6 million, $1.5 million and $1.2 million in deferred debt issuance costs in 2010, 2009 and 2008,
respectively. As of December 31, 2010 and 2009, we had unamortized debt issuance costs of $3.8 million and
$5.4 million, respectively recorded as other assets in our accompanying consolidated balance sheets. During the
first quarter of 2008, we expensed $0.4 million of unamortized debt issuance costs from December 31, 2007 as
the associated $100.0 million revolving credit facility was terminated. The unamortized debt issuance costs of
$3.8 million at December 31, 2010 will be amortized over 2.5 years.

F-11

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Fair Value of Financial Instruments

The following details our financial instruments where the carrying value and fair value differ (amounts in
millions):

Financial Instrument

Fair Value at Reporting Date Using

As of
December 31,
2010

Quoted Prices in
Active Markets for
Identical Items
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Long-term obligations, excluding capital leases . . . .

$181.9

$—

$188.4

$—

The estimates of the fair value of our long-term debt are based upon a discounted present value analysis of future
cash flows. Due to the existing uncertainty in the capital and credit markets the actual rates that would be
obtained to borrow under similar conditions could materially differ from the estimates we have used.

U.S. GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered
observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as
follows:

• Level 1—Quoted prices in active markets for identical assets and liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted
prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the
assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and are significant to

the fair value of the assets or liabilities.

For our other financial instruments, including our cash and cash equivalents, patient accounts receivable,
accounts payable and accrued expenses we estimate the carrying amounts’ approximate fair value due to their
short term maturity. Our deferred compensation plan assets are recorded at fair value.

Income Taxes

We use the asset and liability approach for measuring deferred tax assets and liabilities based on temporary
differences existing at each balance sheet date using currently enacted tax rates. Our deferred tax calculation
requires us to make certain estimates about future operations. Deferred tax assets are reduced by a valuation
allowance when we believe it is more likely than not that some portion or all of the deferred tax assets will not be
realized. The effect of a change in tax rate is recognized as income or expense in the period that includes the
enactment date. As of December 31, 2010 and 2009, our net deferred tax liabilities were $66.6 million and $40.6
million, respectively, representing an increase of $26.0 million. The increase was primarily related to an increase
of $12.7 million to the deferred tax liability related to amortization of intangible assets.

Share-Based Compensation

We record all share-based compensation as an expense in the financial statements measured at the fair value of
the award. We recognize compensation cost on a straight-line basis over the requisite service period for each
separately vesting portion of the award. We reflect the excess tax benefits related to stock option exercises as
financing cash flows. Share-based compensation expense for 2010, 2009 and 2008 was $10.6 million, $7.8
million and $6.4 million, respectively, and the total income tax benefit recognized for these expenses was $4.1
million, $3.0 million and $2.5 million, respectively.

F-12

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Weighted-Average Shares Outstanding

Net income per share attributable to Amedisys, Inc. common stockholders, calculated on the treasury stock
method, is based on the weighted average number of shares outstanding during the period. The following table
sets forth, for the periods indicated, shares used in our computation of the weighted-average shares outstanding,
which are used to calculate our basic and diluted net income attributable to Amedisys, Inc. common stockholders
(amounts in thousands):

Weighted average number of shares outstanding—basic . . . . . . . . . .
Effect of dilutive securities:

For the Years Ended December 31,

2010

2009

2008

28,032

27,231

26,445

Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested stock and stock units . . . . . . . . . . . . . . . . . . . . . . . .

125
—
327

200
—
328

316
29
113

Weighted average number of shares outstanding—diluted . . . . . . . .

28,484

27,759

26,903

For 2010, 2009 and 2008, there were 41,047, 3,018 and 1,564 shares, respectively, of additional securities that
were antidilutive to the computation of diluted net income per share attributable to Amedisys, Inc. common
stockholders.

Advertising Costs

We expense advertising costs as incurred. Advertising expense for 2010, 2009 and 2008 was $5.1 million, $5.2
million and $5.5 million, respectively.

Recently Issued Accounting Pronouncements

In August 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-24, Health Care Entities (Topic
954): Presentation of Insurance Claims and Related Insurance Recoveries which clarifies for medical
malpractice claims or similar contingent liabilities, a health care entity should not net insurance recoveries
against a related claim liability. The amendments in this ASU are effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2010. We do not expect the adoption of this ASU to
have a material impact on our consolidated financial statements.

3. ACQUISITIONS

Each of the following acquisitions was completed in order to pursue our strategy of increasing our market
presence by expanding our service base and enhancing our position in certain geographic areas as a leading
provider of home health and hospice services. The purchase price for each acquisition was negotiated through
arm’s length transactions, with consideration based on our analysis of, among other things, comparable
acquisitions and expected cash flows for each transaction. Each of the following acquisitions was accounted for
as a purchase and is included in our consolidated financial statements from the respective acquisition date.
Goodwill generated from the acquisitions was recognized for the excess of the purchase price over tangible and
identifiable intangible assets because of the expected contributions of each acquisition to our overall corporate
strategy.

F-13

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Summary of 2010 Acquisitions

The following table presents details of our acquisitions (dollars in millions):

Purchase Price

Purchase Price Allocation

Number of
Agencies

(1)

Date

Acquired Entity
(location of assets)

Promissory
Note

Cash

Goodwill

Other
Intangible
Assets

Other
Assets
(Liabilities),
Net

Home
Health Hospice

Number
of
States

†

February 1, 2010

† April 5, 2010

†

July 1, 2010

† December 31, 2010

DeQueen Home Health
(Arkansas)
Bluewater Hospice
(Alabama)
Pocahontas Memorial
Hospital (West Virginia)
Valley Baptist (Texas)
(70% ownership interest)

$2.0

$ 0.5

$2.2

$ 0.3

$—

1

—

0.7

0.4

0.7

0.3

—

—

1.1

0.2

1.0

$3.8

$ 0.8

$4.5

0.1

0.2

—

$ 0.6

(0.2)

—

—

(0.3)

$(0.5)

1

1

3

1

—

—

1

1

1

1

1

(1) The acquisitions marked with the cross symbol (†) were asset purchases.

Summary of 2009 Acquisitions

The following table presents details of our acquisitions (dollars in millions):

(1)

Date

Acquired Entity
(location of assets)

Promissory
Note

Cash

Goodwill

Other
Intangible
Assets

Other
Assets
(Liabilities),
Net

Home
Health Hospice

Number
of
States

Purchase Price

Purchase Price
Allocation

Number of
Agencies

† December 31, 2009

†
†

July 31, 2009
June 15, 2009

† April 1, 2009

† March 12, 2009

† February 3, 2009

12.3
2.5

Hackensack University
Medical Center (New Jersey) $22.1
Winyah Community Hospice
Care (South Carolina) and
Allcare Hospice
(Mississippi)
Jackson, Mississippi agency
Upper Chesapeake Health
System and St. Joseph
Medical Center (Baltimore,
Maryland)
White River Health System
(Batesville, Arkansas)
Arizona Home Rehabilitation
and Health Care and Yuma
Home Care (Yuma, Arizona)

9.2

3.2

4.3

$ 1.0

$21.8

$1.4

$(0.1)

1 —

4.6
—

2.3

—

1.5

15.7
2.2

10.7

2.6

1.4
0.3

1.0

0.7

5.0

$58.0

0.8

$5.6

(0.2)
—

—

10
1 —

(0.2)

(0.1)

—

$(0.6)

1

3

1

1

2 —

8

12

$53.6

$ 9.4

1

2
1

1

1

1

(1) The acquisitions marked with the cross symbol (†) were asset purchases.

F-14

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The following table summarizes the activity related to our goodwill for 2010, 2009 and 2008 (amounts in
millions):

Balances at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments related to acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments related to acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill

Home Health Hospice

Total

$299.9
388.1
(5.7)

682.3
42.3
(4.7)

719.9
3.4

$32.6
20.1
(1.1)

$332.5
408.2
(6.8)

51.6
15.7
(0.3)

67.0
1.1

733.9
58.0
(5.0)

786.9
4.5

Balances at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$723.3

$68.1

$791.4

During 2009, we adjusted goodwill by $5.0 million primarily in association with our completion of purchase
accounting adjustments for our 2008 acquisition of TLC, where we allocated an additional $7.5 million to the
estimated fair value of Medicare licenses acquired and decreased the estimated fair value of the deferred tax
liability assumed by $2.9 million.

During 2008, we adjusted goodwill by $6.8 million primarily in association with our completion of purchase
accounting adjustments for our 2007 acquisition of IntegriCare, Inc., where we allocated an additional $4.1
million in value to our investment in unconsolidated joint ventures and $2.9 million was allocated to certificates
of need and licenses.

The following table summarizes the activity related to our other intangible assets, net for 2010, 2009 and 2008
(amounts in millions):

Other Intangible Assets, Net

Certificates of
Need and
Licenses

Acquired
Names of
Business (1)

Non-Compete
Agreements &
Reacquired
Franchise
Rights (2)

Balances at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments related to acquisitions . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments related to acquisitions . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off (closures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8.7
20.9
3.1
—

32.7
3.4
7.3
—

43.4
0.5
(2.2)
—

$ 3.3
—
—
—

3.3
1.4
—
—

4.7
0.1
—
(0.1)

$ 2.3
6.0
(0.2)
(1.7)

6.4
7.0
(0.1)
(3.8)

9.5
2.7
—
(5.2)

Total

$14.3
26.9
2.9
(1.7)

42.4
11.8
7.2
(3.8)

57.6
3.3
(2.2)
(5.3)

Balances at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . .

$41.7

$ 4.7

$ 7.0

$53.4

F-15

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

(1) Acquired Name of Business includes $4.4 million of unamortized acquired names and $0.3 million of

amortized acquired names which have a weighted-average amortization period of 2.6 years.

(2) The weighted-average amortization period of our non-compete agreements and reacquired franchise rights is

2.6 and 2.2 years, respectively.

See “Note 3, Acquisitions” for further details on additions to goodwill and other intangible assets, net.

The estimated aggregate amortization expense for each of the five succeeding years is as follows (amounts in
millions):

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3.4
2.5
1.3
0.1
—

$ 7.3

5. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Additional information regarding certain balance sheet accounts is presented below (amounts in millions):

Other current assets:

Payroll tax escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medicare withholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

Other assets:

Workers’ compensation deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Health insurance deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other miscellaneous deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

As of December 31,

2010

2009

$ 5.9
—
11.7
2.0
2.5

$22.1

$ 4.2
6.3
5.0
2.3
5.2

$23.0

As of December 31,

2010

2009

$ 0.5
1.2
1.8
3.8
6.1
9.1

$22.5

$ 0.4
1.1
1.7
5.4
5.5
3.8

$17.9

F-16

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Accrued expenses:

Legal and other settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charity care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated medicare cap liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

As of December 31,

2010

2009

$ 1.8
7.6
1.5
1.9
23.4

$36.2

$ 0.5
—
7.6
0.1
24.8

$33.0

6. LONG-TERM OBLIGATIONS

Long-term debt, including capital lease obligations, consisted of the following for the periods indicated (amounts
in millions):

As of December 31,

2010

2009

Senior Notes:

$35.0 million Series A Notes; semi-annual interest only payments; interest rate at

6.07% per annum; due March 25, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 35.0

$ 35.0

$30.0 million Series B Notes; semi-annual interest only payments; interest rate at

6.28% per annum; due March 25, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30.0

$35.0 million Series C Notes; semi-annual interest only payments; interest rate at

6.49% per annum; due March 25, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0

$150.0 million Term Loan; $7.5 million principal payments plus accrued interest payable

quarterly; interest rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the
applicable percentage (1.02% at December 31, 2010); due March 26, 2013 . . . . . . . . . . . .
Promissory notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67.5
14.4
—

30.0

35.0

97.5
17.6
0.1

Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

181.9
(37.2)

215.2
(44.3)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$144.7

$170.9

Maturities of debt as of December 31, 2010 are as follows (amounts in millions):

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term
obligations

$ 37.2
33.1
45.2
31.4
35.0

$181.9

Our weighted-average interest rate for our five year Term Loan was 1.1% and 1.7% for 2010 and 2009,
respectively.

F-17

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

The Credit Agreement and the Note Purchase Agreement require us to meet two financial covenants which are
calculated on a rolling four quarter basis. One is a total leverage ratio of debt to earnings before interest, taxes,
depreciation and amortization (“EBITDA”) which cannot exceed 2.5 and the second is a fixed charge coverage
ratio of adjusted EBITDA plus rent expense to certain fixed charges (i.e. interest expense, required principal
payments, capital expenditures, etc) which is required to be greater than 1.25. The Credit Agreement also
contains customary covenants, including, but not limited to, restrictions on (a) incurrence of liens; (b) incurrence
of additional debt; (c) sales of assets or other fundamental corporate changes; (d) investments; (e) declarations of
dividends; and (f) capital expenditures. These covenants contain customary exclusions and baskets. As of
December 31, 2010, our total leverage ratio (used to compute the margin and commitment fees, described above)
was 0.8 and our fixed charge coverage ratio was 1.7.

As of December 31, 2010, our availability under our $250.0 million Revolving Credit Facility was $234.6
million as we had $15.4 million outstanding in letters of credit.

Promissory Notes

Our promissory notes outstanding of $14.4 million as of December 31, 2010 were generally issued for two-year
periods in amounts between $0.3 million and $8.7 million and bear interest in a range of 2.32% to 7.25%. These
promissory notes are primarily promissory notes issued in conjunction with our acquisitions for a portion of the
purchase price and also include promissory notes issued for software licenses, unrelated to acquisitions.

7. INCOME TAXES

We utilize the asset and liability approach to measuring deferred tax assets and liabilities based on temporary
differences existing at each balance sheet date using currently enacted tax rates in accordance with FASB’s
authoritative guidance for income taxes. Deferred tax assets are reduced by a valuation allowance when we
believe it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The total provision for income taxes consist of the following (amounts in millions):

Current income tax expense:

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred income tax expense:

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Years Ended December 31,

2010

2009

2008

$38.1
8.3

46.4

24.2
1.7

25.9

$54.2
10.4

64.6

18.7
2.9

21.6

$18.1
7.2

25.3

28.3
1.1

29.4

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$72.3

$86.2

$54.7

F-18

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Net deferred tax liabilities consist of the following components (amounts in millions):

As of December 31,

2010

2009

Current portion of deferred tax assets (liabilities):
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Self insurance reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

$

Current portion of deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent portion of deferred tax assets (liabilities):
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
Capital loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NOL carry forward, expiring beginning in 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Noncurrent portion of deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.1
1.7
—
6.3
(29.2)
(1.2)

(14.3)

(34.7)
(30.0)
7.4
1.4
0.1
6.5
(3.0)

(52.3)

$ 10.1
2.7
2.6
4.3
(29.7)
(1.2)

(11.2)

(22.0)
(16.1)
5.0
1.2
9.1
5.8
(12.4)

(29.4)

Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

($ 66.6)

($ 40.6)

As of December 31, 2010, we have a capital loss carry forward of $0.1 million that expires in 2014. In addition,
we have state net operating loss carry forwards of approximately $163.0 million, of which $13.2 million were
acquired as part of the TLC acquisition, which began to expire in 2010.

Our recorded valuation allowance above was established against the deferred tax assets to the extent it has been
determined it is more likely than not that those deferred tax assets will not be realized. In addition, deferred tax
assets related to the Housecall, HMA and TLC acquisitions were established through purchase accounting.
Future changes in the determination of the realizability of these deferred tax assets and related valuation
allowance could result in either a decrease or increase in our provision for income taxes.

We establish our valuation allowance on deferred tax assets when it is more likely than not that some portion or
all of our deferred tax asset will not be realized. Our valuation allowance decreased $9.4 million from 2009
primarily due to a decrease of the valuation allowance related to the expired capital loss carryforward.

F-19

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Our provision for income taxes differs from the amount computed by applying the statutory Federal income tax
rate to net income before income taxes. The sources of the tax effects of the differences are as follows:

For the Years Ended
December 31,

2010

2009

2008

Income taxes computed on federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes and other, net of federal benefit
. . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
0.3
Nondeductible expenses and other, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0% 35.0% 35.0%
4.4
3.8
(0.6)
(0.1)
(0.4)
0.4

3.8
0.1
(1.1)
0.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39.0% 38.8% 38.7%

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance for uncertain tax positions.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in
millions):

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plus: additions based on tax positions related to the current year . . . . . . . . . .
Plus: additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . .
Less: reductions made for tax positions of prior years . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Years Ended
December 31,

2010

$ 1.1
—
—
(0.4)
—

$ 0.7

2009

$ 1.1
—
—
—
—

$ 1.1

Included in the balance of unrecognized benefits as December 31, 2010, are $0.5 million of tax benefits that, if
recognized in future periods, would impact our effective tax rate.

To the extent penalties and interest would be assessed on any underpayment of income tax, such amounts have
been accrued and classified as either a component of tax penalties or interest expense in accrued expenses in our
consolidated balance sheets. This is an accounting policy election we made that is a continuation of our historical
policy and we intend to continue to consistently apply this policy in the future. During 2010, we accrued less than
$0.1 million of gross interest and penalties, of which $0.1 million was recorded as a reduction of our retained
earnings in 2007.

We are subject to income taxes in the United States and in many of the 50 individual states, with significant
operations in Louisiana, Alabama, Georgia, and Tennessee. We are open to examination in United States and in
various individual states for tax years ended December 2007 through December 2010. We are also open to
examination in various states for the years ended 2001-2006 resulting from net operating losses generated and
available for carry forward from those years.

We anticipate a reduction of $0.7 million in the balance of unrecognized tax benefits within the next 12 months.

F-20

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

8. CAPITAL STOCK AND SHARE-BASED COMPENSATION

We are authorized by our Certificate of Incorporation to issue 60,000,000 shares of common stock, $0.001 par
value and 5,000,000 shares of preferred stock, $0.001 par value, of which 29,232,807 shares of common stock
and no shares of preferred stock were issued and outstanding at December 31, 2010. Our Board of Directors is
authorized to fix the dividend rights and terms, conversion and voting rights, redemption rights and other
privileges and restrictions applicable to our preferred stock.

Share-Based Awards

Our 2008 Omnibus Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity-
based awards, such as stock awards, restricted stock units, stock appreciation rights and stock options to eligible
participants, which include all of our employees and all employees of our 50% or more owned subsidiaries, our
non-employee directors and certain consultants. The vesting terms of the awards may be tied to continued
employment (or, for our non-employee directors, continued service on the Board of Directors) and/or
achievement of certain pre-determined performance goals. We refer to stock awards subject to service-based
vesting conditions as “non-vested stock” and restricted stock units subject to service-based and/or performance-
based vesting conditions as “non-vested stock units.” Cash bonuses may also be granted under the Plan to certain
eligible senior employees. The Plan is administered by the Compensation Committee of our Board of Directors,
which determines, within the provisions of the Plan, those eligible employees to whom, and the times at which,
awards shall be granted. The Compensation Committee, in its discretion, may delegate its authority and duties
under the Plan to specified officers; however, only the Compensation Committee may approve the terms of
awards to our executive officers.

Equity-based awards may be granted for a number of shares not to exceed, in the aggregate, approximately
1.9 million shares of common stock, and we had 1,452,943 shares available at December 31, 2010. The price per
share for stock options shall be of no less than the greater of (a) 100% of the fair value of a share of common
stock on the date the option is granted or (b) the aggregate par value of the shares of our common stock on the
date the option is granted. If a stock option is granted to any owner of 10% or more of our total combined voting
power of us and our subsidiaries, the price is to be at least 110% of the fair value of a share of our common stock
on the date the award is granted. Each equity-based award vests ratably over a 12 month-to-five year period, with
the exception of those issued under contractual arrangements that specify otherwise, that may be exercised during
a period as determined by our Compensation Committee or as otherwise approved by our Compensation
Committee. The contractual terms of stock options exercised shall not exceed ten years from the date such option
is granted.

F-21

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Employee Stock Purchase Plan (“ESPP”)

We have a plan whereby our eligible employees may purchase our common stock at 85% of the market price at
the time of purchase. On June 7, 2007, our stockholders ratified an amendment adopted by our Board of
Directors to increase the total number of shares of our common stock authorized for issuance under our ESPP
from 1,333,333 shares to 2,500,000 shares, and as of December 31, 2010, there were 648,968 shares available for
future issuance. The following is a detail of the purchases that were made or pending Board of Director approval
under the plan:

Employee Stock Purchase Plan Period

2008 and Prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2009 to March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 1, 2009 to June 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 1, 2009 to September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 1, 2009 to December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2010 to March 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 1, 2010 to June 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 1, 2010 to September 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 1, 2010 to December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares
Issued

1,462,811
63,166
47,709
33,844
34,974
33,377
44,902
74,836
55,413

1,851,032

Price

$ 9.91
23.37
28.07
37.09
41.31
46.94
37.38
20.23
28.48

ESPP expense included in general and administrative expenses in our accompanying consolidated income
statements was $1.1 million, $1.0 million and $0.8 million for 2010, 2009 and 2008, respectively.

Stock Options

We use the Black-Scholes option pricing model to estimate the fair value of our stock-based awards; however,
there have been no stock options granted during 2010, 2009 or 2008. For 2010 and 2009 we had no stock option
compensation expense and $0.2 million for 2008 which was included in general and administrative expenses in
our accompanying consolidated income statements.

The following table summarizes our stock option activity for 2010:

Outstanding options at January 1, 2010 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled, forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares

424,234
—

(118,220)
(7,335)

Weighted
average
exercise
price

$16.75

12.70
27.06

Outstanding options at December 31, 2010 . . . . . . . . . . . . . . . . . .

298,679

$18.10

Exercisable options at December 31, 2010 . . . . . . . . . . . . . . . . . .

298,679

$18.10

Weighted
average
contractual
life (years)

4.04

3.29

3.29

The aggregate intrinsic value of our outstanding options and exercisable options at December 31, 2010 was
$4.6 million. Total intrinsic value of options exercised was $4.3 million, $5.1 million and $7.1 million for 2010,
2009 and 2008, respectively.

F-22

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

All of our outstanding options were vested as of October 2008; therefore, there was no non-vested stock option
activity for 2010.

Non-vested Stock

We issue shares of non-vested stock with vesting terms ranging from one to five years. The compensation
expense is determined based on the market price of our common stock at the date of grant applied to the total
number of shares that are anticipated to fully vest. Non-vested stock compensation expense included in general
and administrative expenses in our accompanying consolidated income statements was $7.6 million, $4.4 million
and $2.4 million for 2010, 2009 and 2008, respectively.

The following table presents our non-vested stock award activity for 2010:

Non-vested stock at January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares

365,457
212,341
(100,390)
(69,058)

Non-vested stock at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

408,350

Weighted
average grant
date fair
value

$35.62
54.29
30.51
42.39

$45.43

At December 31, 2010, there was $7.9 million of unrecognized compensation cost related to non-vested stock
award payments that we expect to be recognized over a weighted-average period of 1.5 years.

Non-vested Stock Units—Service-based and Performance-based Awards

From time to time, we issue non-vested stock unit awards that are service-based, performance-based or a
combination of both with vesting terms ranging from three to four years. Based on the terms and conditions of
these awards, we determine if the awards should be recorded as either equity or liability instruments. The
compensation expense is determined based on the market price of our common stock at the date of grant, applied
to the total number of units that are anticipated to vest, unless the award specifies differently. Non-vested stock
units compensation expense included in general and administrative expenses in our accompanying consolidated
income statements was $2.0 million, $2.4 million and $3.0 million for 2010, 2009 and 2008, respectively. We
account for such awards similar to our non-vested stock awards; however no shares of stock are issued to the
recipient until the stock unit awards have vested and after the pre-determined delivery date has occurred.

The following table presents our non-vested stock units activity during 2010:

Non-vested stock units at January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares

95,384
—
(48,490)
—

Non-vested stock units at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . .

46,894

Weighted
average grant
date fair
value

$39.31
—
40.91
—

$37.65

F-23

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

During the second quarter of 2010, we awarded performance-based awards to certain employees. If we achieve
the targeted level established by the award which is based on hospitalization rate reduction for the years ending
2010 and 2011, then the recipients receive 25,754 non-vested stock units and if we exceed the target objective to
the point of achieving the projected maximum payout, the recipients receive 38,631 non-vested stock units. As of
December 31, 2010, it is not yet determinable if the performance-based objectives established by the award have
been satisfied. These awards have not been included in the table above.

During the second quarter of 2009, we awarded performance-based awards to certain employees. If we achieved
the targeted level established by the award which is based on our performance for the years ending 2009 and
2010, then the recipients would receive 57,319 non-vested stock units and if we exceed the target objective to the
point of achieving the projected maximum payout, the recipients receive 85,977 non-vested stock units. As of
December 31, 2010, it was determined that the performance-based objectives established by the award have been
satisfied at 54.8% and as a result 31,390 non-vested stock units will be awarded. The award stipulates that the
grant date for such awards will be the date of the 2010 earnings release. These awards will begin to vest on
April 1, 2011 and vest over two years. These awards have not been included in the table above.

At December 31, 2010, there was $1.6 million of unrecognized compensation cost related to our non-vested stock
unit payments that we expect to be recognized over a weighted-average period of 1.2 years.

9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In addition to the matters referenced in this note, we are involved in legal actions in the normal course of
business, some of which seek monetary damages, including claims for punitive damages. We do not believe that
these normal course actions, when finally concluded and determined, will have a material impact on our
consolidated financial condition, results of operations or cash flows. We are also involved in the legal actions set
forth below.

United States Senate Committee on Finance Inquiry

On May 12, 2010, we received a letter of inquiry from the United States Senate Committee on Finance
requesting documents and information relating to our policies and practices regarding home therapy visits and
therapy utilization trends. A similar letter was sent to the other major publicly traded home health care
companies. We are cooperating with the Committee with respect to this inquiry. No assurances can be given as to
the timing or outcome of this inquiry.

Securities Class Action Lawsuits

On June 7, 2010, a putative securities class action complaint was filed in the United States District Court for the
Middle District of Louisiana against the Company and certain of our senior executives. Additional putative
securities class actions were filed in the United States District Court for the Middle District of Louisiana on
July 14, July 16, and July 28, 2010.

On October 22, 2010, the Court issued an order consolidating the putative securities class action lawsuits and the
derivative actions (described immediately below) for pre-trial purposes. In the same order, the Court appointed
the Public Employees Retirement System of Mississippi and the Puerto Rico Teachers’ Retirement System as
co-lead plaintiffs (together, the “Co-Lead Plaintiffs”) for the putative class. On December 10, 2010, the Court
also consolidated the ERISA class action lawsuit (described below) with the putative securities class actions and
derivative actions for pre-trial purposes.

F-24

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

On January 18, 2011, the Co-Lead Plaintiffs filed an amended, consolidated class action complaint (the
“Amended Complaint”) which supersedes the earlier-filed securities class action complaints. The Amended
Complaint alleges that we and certain of our senior executives made false and/or misleading statements and
failed to disclose material facts about our business, financial condition, operations and prospects, particularly
relating to our policies and practices regarding home therapy visits under the Medicare home health prospective
payment system and the related alleged impact on our business, financial condition, operations and prospects.
The Amended Complaint seeks a determination that the action may be maintained as a class action on behalf of
all persons who purchased the Company’s securities between August 2, 2005 and September 28, 2010 . The
Company must respond to the Amended Complaint on or before March 21, 2011. The Company intends to
vigorously defend itself, but no assurances can be given as to the timing or outcome of this complaint.

Derivative Actions

On July 2, 2010, an alleged shareholder of the Company filed a derivative lawsuit in the United States District
Court for the Middle District of Louisiana, purporting to assert claims on behalf of the Company against certain
of our officers and directors. Three similar derivative suits were filed in the United States District Court for the
Middle District of Louisiana on July 15, July 21, and August 2, 2010. We are named as a nominal defendant
in all of those actions. As noted above, on October 22, 2010, the United States District Court for the Middle
District of Louisiana issued an order consolidating the derivative actions with the putative securities class action
lawsuits and for pre-trial purposes.

the plaintiffs in the consolidated derivative action filed a consolidated, amended
On January 18, 2011,
complaint (the “Consolidated Complaint”) which supersedes the earlier-filed derivative complaints. The
Consolidated Complaint alleges that our officers and directors breached their fiduciary duties to the Company by
making allegedly false statements, by allegedly failing to establish sufficient internal controls over certain of our
home health and Medicare billing practices, by engaging in alleged insider trading, and by committing
unspecified acts of waste of corporate assets and unjust enrichment. The Defendants must respond to the
Amended Complaint on or before March 21, 2011. The Company intends to vigorously defend itself, but no
assurances can be given as to the timing or outcome of this lawsuit.

On July 23, 2010, a derivative suit was filed in the Nineteenth Judicial District Court, Parish of East Baton
Rouge, State of Louisiana. That action also purports to assert claims on behalf of the Company against certain of
our officers and directors . On December 8, 2010, the Court entered an order staying the action in deference to
the earlier-filed derivative actions pending in federal court. The Company intends to vigorously defend itself, but
no assurances can be given as to the timing or outcome of this lawsuit.

ERISA Class Action Lawsuit

On September 27, 2010 and October 22, 2010, separate putative class action complaints were filed in the United
States District Court for the Middle District of Louisiana against us, certain of our senior executives and current
and certain former members of our 401(k) Plan Administrative Committee. The suits allege violations of the
Employee Retirement Income Security Act (“ERISA”) since January 1, 2006. The plaintiffs brought the
complaints on behalf of themselves and a class of similarly situated participants in our 401(k) plan. The plaintiffs
assert that the defendants breached their fiduciary duties to the 401(k) Plan’s participants by causing the 401(k)
plan to offer and hold Amedisys common stock during the class period when it was an allegedly unduly risky and
imprudent retirement investment because of our alleged improper business practices. The complaints seek a
determination that the actions may be maintained as a class action, an award of unspecified monetary damages
and other unspecified relief. The Company intends to vigorously defend itself, but no assurances can be given as
to the timing or outcome of these complaints.

F-25

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

SEC Investigation

On June 30, 2010, we received notice of a formal investigation from the SEC and received a subpoena for
documents relating to the matters under review by the United States Senate Committee on Finance and other
matters involving our operations. We intend to cooperate with the SEC with respect to this investigation. No
assurances can be given as to the timing or outcome of this investigation.

U.S. Department of Justice Civil Investigative Demand (“CID”)

On September 27, 2010, we received a CID issued by the U.S. Department of Justice pursuant to the federal
False Claims Act. The CID requires the delivery of a wide range of documents and information to the United
States Attorney’s Office for the Northern District of Alabama, relating to the Company’s clinical and business
operations, including reimbursement and billing claims submitted to Medicare for home health services, and
related compliance activities. The CID generally covers the period from January 1, 2003. We are cooperating
with the Department of Justice with respect to this investigation. No assurance can be given as to the timing or
outcome of this investigation.

We are unable to assess the probable outcome or potential liability, if any, arising from the United States Senate
Committee on Finance inquiry, the SEC investigation, the U.S. Department of Justice CID or the related
litigation described above given the preliminary stage of these matters.

We recognize that additional putative securities class action complaints and other litigation could be filed, and
that other investigations and actions could be commenced, relating to matters involving our home therapy visits
and therapy utilization trends or other matters.

Operating Leases

We have leased office space at various locations under non-cancelable agreements that expire between 2011 and
2016, and require various minimum annual rentals. Our typical operating leases are for lease terms of three to
seven years and may include, in addition to base rental amounts, certain landlord pass-through costs for our
pro-rata share of the lessor’s real estate taxes, utilities and common area maintenance costs. Some of our
operating leases contain escalation clauses, in which annual minimum base rentals increase over the term of the
lease.

Total minimum rental commitments at December 31, 2010 are as follows (amounts in millions):

Year ended December 31,

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$32.2
26.0
20.7
12.9
3.0
0.1

$94.9

Rent expense for non-cancelable operating leases was $38.2 million, $34.2 million and $28.3 million for 2010,
2009 and 2008, respectively.

F-26

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

Insurance

We are obligated for certain costs associated with our insurance programs, including employee health, workers’
compensation and professional liability. While we maintain various insurance programs to cover these risks, we
are self-insured for a substantial portion of our potential claims. We recognize our obligations associated with
these costs in the period in which a claim is incurred, including with respect to both reported claims and claims
incurred but not reported, up to specified deductible limits. These costs have generally been estimated based on
historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by
us on a quarterly basis.

The following table presents details of our insurance programs, including amounts accrued for the periods
indicated (amounts in millions) in accrued expenses in our accompanying balance sheets. The amounts accrued
below represent our total estimated liability for individual claims that are less than our noted insurance coverage
amounts, which can include outstanding claims and claims incurred but not reported.

Type of Insurance

Health insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,

2010

$ 8.4
16.1
3.2

27.7
(2.2)

2009

$ 6.6
13.3
3.1

23.0
(2.2)

$25.5

$20.8

Our health insurance has a retention limit of $0.5 million, our workers’ compensation insurance has a retention
limit of $0.4 million and our professional liability insurance has a retention limit of $0.3 million.

Employment Contracts

We have commitments related to employment contracts with a number of our senior executives. These contracts
generally commit us to pay severance benefits under certain circumstances.

Other

We are subject to various other types of claims and disputes arising in the ordinary course of our business. While
the resolution of such issues is not presently determinable, we believe that the ultimate resolution of such matters
will not have a significant effect on our consolidated financial condition, results of operations and cash flows.

10. EMPLOYEE BENEFIT PLANS

401(K) Benefit Plan

We maintain a plan qualified under Section 401(k) of the Internal Revenue Code for all employees who have
reached 21 years of age, effective the first month after hire date. Under the plan, eligible employees may elect to
defer a portion of their compensation, subject to Internal Revenue Service limits.

During 2010, 2009 and 2008, our match of contributions made to each eligible employee contribution was $0.75
for every $1.00 of contribution made up to the first 6% of their salary. Effective January 1, 2011, our match of

F-27

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

contributions to be made to each eligible employee contribution is $0.375 for every $1.00 of contribution made
up to the first 6% of their salary. The match is discretionary and thus is subject to change at the discretion of
management. These contributions are made in the form of our common stock, valued based upon the fair value of
the stock as of the end of each calendar quarter end. We expensed approximately $22.9 million, $19.4 million
and $14.1 million for 2010, 2009 and 2008, respectively.

Deferred Compensation Plan

We have a Deferred Compensation Plan for additional tax-deferred savings to a select group of management or
highly compensated employees. The Deferred Compensation Plan permits participants to defer up to 75% of
compensation that would otherwise be payable to them for the calendar year and up to 100% of their annual
bonus. In addition, we will credit to the participants’ accounts such amounts as would have been contributed to
our 401(k)/Profit Sharing Plan, but for the limitations that are imposed under the Internal Revenue Code based
upon the participants’ status as highly compensated employees. We may also make additional discretionary
allocations as determined by the Compensation Committee. Amounts credited under the Deferred Compensation
Plan are funded into a rabbi trust, which is managed by a trustee. The trustee has the discretion to manage the
assets of the Deferred Compensation Plan as deemed fit, thus the assets are not necessarily reflective of the same
investment choices made by the participants.

11. SHARE REPURCHASE PROGRAM

On August 6, 2010, our Board of Directors authorized a stock repurchase program of up to $60.0 million of our
common stock. Purchases may be made through open market and privately negotiated transactions, at times and
in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading
plans. The share repurchase program is scheduled to expire on September 30, 2011.

The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors,
including the price of our common stock, corporate and regulatory requirements, restrictions under our debt
obligations and other market and economic conditions. The stock repurchase program does not obligate us to
acquire any particular amount of common stock and may be modified, suspended or discontinued at any time.

During 2010, pursuant to this program, we repurchased 495,815 shares of our common stock at a weighted
average price of $23.79 per share and a total cost of approximately $11.8 million. The repurchased shares are
classified as treasury shares.

12. EXIT ACTIVITIES

During 2010, we consolidated 59 operating home health agencies and three hospice agencies with agencies
servicing the same markets, closed 19 operating home health agencies and four operating hospice agencies and
discontinued the start-up process associated with 41 prospective unopened home health locations and six
prospective unopened hospice locations which were incurring expenses.

F-28

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

As part of our exit activities associated with these locations, we have recorded the following as of December 31,
2010 (amounts in millions):

Home Health Hospice

Total

Balance sheet line item

Income statement line item

Lease Termination . . .
Relocation costs . . . . .
Severance . . . . . . . . . .

$ 9.1
0.5
0.6

$ 1.1
—
0.1

$10.2 Accrued expenses
0.5 Accrued expenses
0.7 Payroll and

Impairment

. . . . . . . .

2.1

0.1

2.2

Total . . . . . . . . . . . . . .

$12.3

$ 1.3

$13.6

employee benefits
Intangible Assets

General and administrative - other
General and administrative - other
General and administrative -
salaries and benefits
Depreciation and amortization

Our reserve activity for these closures and consolidations is as follows (amounts in millions):

Balances at December 31, 2009 . . . . . . . . . . . . . . . . . . . .
Charge in 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Expenditures in 2010 . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2010 . . . . . . . . . . . . . . . . . . . .

$ —
10.2
(2.6)

$ 7.6

$—
0.7
(0.5)

$ 0.2

Lease
Termination

Severance

13. VALUATION AND QUALIFYING ACCOUNTS

The following table summarizes the activity and ending balances in our allowance for doubtful accounts and
estimated revenue adjustments (amounts in millions):

Allowance for Doubtful Accounts

Year end

Balance at
beginning
of Year

Provision for
doubtful
accounts

2010 . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . .

$26.4
27.1
13.0

$19.2
20.2
24.0

Write offs

$(24.6)
(21.1)
(13.1)

Acquired
through
acquisitions

Balance at
end of Year

$ —
0.2
3.2

$21.0
26.4
27.1

Estimated Revenue Adjustments

Year end

Balance at
beginning of
Year

Provision for
estimated
revenue
adjustments

2010 . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . .

$ 8.7
7.2
3.6

$ 7.0
8.8
6.4

Write offs

$ (9.2)
(7.3)
(3.2)

Acquired
through
acquisitions

Balance at
end of Year

$ —
—
0.4

$ 6.5
8.7
7.2

14. SEGMENT INFORMATION

Our operations involve servicing patients through our two reportable business segments: home health and
hospice. Our home health segment delivers a wide range of services in the homes of individuals who may be
recovering from surgery, have a chronic disability or terminal illness or need assistance with the essential

F-29

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

activities of daily living. Our hospice segment provides palliative care and comfort to terminally ill patients and
their families. The “other” column in the following tables consist of costs relating to corporate support functions
that are not directly attributable to a specific segment.

Management evaluates performance and allocates resources based on the operating income of the reportable
segments, which exclude corporate expenses, but includes revenues and all other costs directly attributable to the
specific segment. Segment assets are not reviewed by the company’s chief operating decision maker and
therefore are not disclosed below (amounts in millions).

Net service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service, excluding depreciation and

amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,133.5

110.2

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 359.9

$ 30.7

$(197.1)

$ 193.5

For the Year Ended December 31, 2010

Home Health

Hospice

Other

Total

$1,493.4

$140.9

$ —

$1,634.3

744.6
355.7
18.2
15.0

75.9
32.8
1.0
0.5

—
178.0
—
19.1

197.1

820.5
566.5
19.2
34.6

1,440.8

For the Year Ended December 31, 2009

Home Health

Hospice

Other

Total

$1,409.4

$104.1

$ —

$1,513.5

670.1
312.7
18.0
13.9

54.4
24.6
2.2
0.8

82.0

—
172.4
—
13.6

186.0

724.5
509.7
20.2
28.3

1,282.7

Net service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service, excluding depreciation and

amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,014.7

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 394.7

$ 22.1

$(186.0)

$ 230.8

Net service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service, excluding depreciation and

amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Year Ended December 31, 2008

Home Health

Hospice

Other

Total

$1,118.2

$69.2

$ —

$1,187.4

523.6
260.1
22.1
10.6

816.4

39.0
17.2
1.9
0.7

58.8

—
146.0
—
9.1

155.1

562.6
423.3
24.0
20.4

1,030.3

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 301.8

$10.4

$(155.1)

$ 157.1

F-30

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2010

15. UNAUDITED SUMMARIZED QUARTERLY FINANCIAL INFORMATION

The following is a summary of our unaudited quarterly results of operations (amounts in millions, except per
share data):

2010:
1st Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2nd Quarter (2) (3) (4)
. . . . . . . . . . . . . . . . . . . . .
3rd Quarter (2) (3) (4) . . . . . . . . . . . . . . . . . . . . . .
4th Quarter (3) (4) . . . . . . . . . . . . . . . . . . . . . . . . .

2009:
1st Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2nd Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3rd Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4th Quarter

Net income
attributable to
Amedisys, Inc.

Net income attributable to
Amedisys, Inc. common
stockholders (1)

Basic

Diluted

$ 36.6
32.2
21.6
22.2

$112.6

$ 27.0
35.1
35.9
37.8

$135.8

$1.32
1.15
0.77
0.79

4.02

$1.01
1.29
1.31
1.37

4.99

$1.29
1.13
0.76
0.77

3.95

$0.99
1.27
1.29
1.35

4.89

Revenue

$ 413.0
422.3
404.7
394.3

$1,634.3

$ 341.8
377.9
388.3
405.5

$1,513.5

(1) Because of the method used in calculating per share data, the quarterly per share data may not necessarily

total to the per share data as computed for the entire year.

(2) Our results for the three month period ended June 30, 2010 and September 30, 2010, included a payment for
CMS bonus payment of $2.2 million net of income taxes as the result of the pay for performance
demonstration and $2.2 million net of income taxes for the settlement of our Georgia indigent care liability,
respectively.

(3) During the second, third and fourth quarters of 2010, we incurred certain costs associated with the
realignment of our operations and legal expenses related to the United States Senate Committee on Finance
inquiry and SEC investigation. Net of income taxes, these costs amounted to $2.1 million, $1.9 million and
$1.9 million for the three-month periods ended June 30, 2010, September 30, 2010 and December 31, 2010,
respectively.

(4) During the second, third and fourth quarters of 2010, we incurred costs associated with our exit activities.
See Note 12 to the consolidated financial statements for further details. Net of income taxes, these costs
amounted to $0.9 million, $4.2 million and $3.2 million for the three-month periods ended June 30,
2010, September 30, 2010 and December 31, 2010, respectively.

F-31

EXHIBIT INDEX

The exhibits marked with the cross symbol (†) are filed and the exhibits marked with a double cross (††) are
furnished with this Form 10-K. Any exhibits marked with the asterisk symbol (*) are management contracts or
compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

Document Description

Report or Registration Statement

Company’s

The
Current
Report on Form 8-K filed on
April 1, 2008

SEC File or
Registration
Number

Exhibit
or Other
Reference

0-24260

2.1

Exhibit
Number

2.1

2.2

3.1

3.2

Inc.,

Purchase and Sale Agreement dated
February 18, 2008, by and among
TLC
Amedisys,
Health
Acquisition,
Services, Inc., TLC Holdings I, Corp.
(“Holdco”) and the securityholders of
TLC and Holdco

Amedisys
TLC

L.L.C.,

First Amendment to Purchase and Sale
Agreement dated March 25, 2008, by and
among Amedisys, Inc., Amedisys TLC
Acquisition,
Health
Services, Inc., Holdco and Arcapita Inc.,
as Sellers’ Representative on behalf of
the securityholders of TLC and Holdco

L.L.C.,

TLC

Composite of Certificate of Incorporation
all
of
of
amendments through June 14, 2007

the Company

inclusive

Composite of By-Laws of the Company
inclusive of all amendments
through
October 22, 2009

4.1

Common Stock Specimen

4.2

2008

among Amedisys,

Note Purchase Agreement dated March
25,
Inc.,
and the
Amedisys Holding, L.L.C.
Purchasers
identified on Schedule A
thereto, relating to the issuance and sale
of (a) $35,000,000 aggregate principal
amount of their 6.07% Series A Senior
Notes
(b)
$30,000,000 aggregate principal amount
of their 6.28% Series B Senior Notes due
March 25, 2014 and (c) $35,000,000
aggregate principal
their
6.49% Series C Senior Notes due
March 25, 2015

due March

amount of

2013

25,

Company’s

Current
The
Report on Form 8-K filed on
April 1, 2008

0-24260

2.2

The Company’s Quarterly
Report on Form 10-Q for the
quarter ended June 30, 2007

The Company’s Quarterly
Report on Form 10-Q for the
quarter ended September 30,
2009

The Company’s Registration
Statement on Form S-3 filed
August 20, 2007

Company’s

The
Current
Report on Form 8-K filed on
April 1, 2008

0-24260

3.1

0-24260

3.2

333-145582

4.8

0-24260

4.1

4.3

Form of Series A Note due March 25,
2013 (attached as Exhibit 1 to the Note
Purchase Agreement
Incorporated by
reference as Exhibit 4.2 hereto)

Company’s

Current
The
Report on Form 8-K filed on
April 1, 2008

0-24260

4.2

Exhibit
Number

4.4

4.5

SEC File or
Registration
Number

Exhibit
or Other
Reference

0-24260

4.2

Document Description

Report or Registration Statement

Company’s

The
Current
Report on Form 8-K filed on
April 1, 2008

Form of Series B Note due March 25,
2014 (attached as Exhibit 2 to the Note
Purchase Agreement
Incorporated by
reference as Exhibit 4.2 hereto)

Form of Series C Note due March 25,
2015 (attached as Exhibit 3 to the Note
Purchase Agreement
Incorporated by
reference as Exhibit 4.2 hereto)

Company’s

The
Current
Report on Form 8-K filed on
April 1, 2008

0-24260

4.2

10.1

Form of Director
Agreement dated February 12, 2009

Indemnification

Company’s

Annual
The
Report on Form 10-K for the
year ended December 31, 2008

0-24260

10.1

10.2*

Amended and Restated Amedisys, Inc.
Employee Stock Purchase Plan dated
February 12, 2009

Company’s

The
Annual
Report on Form 10-K for the
year ended December 31, 2008

0-24260

10.2

10.3*

Amedisys, Inc. 2008 Omnibus Incentive
Compensation Plan

The Company’s Registration
Statement on Form S-8 filed
July 16, 2008

The Company’s Quarterly
Report on Form 10-Q for the
quarter ended June 30, 2008

333-152359

4.6

0-24260

10.3

The Company’s Quarterly
Report on Form 10-Q for the
quarter ended June 30, 2008

0-24260

10.4

The Company’s Registration
Statement on Form S-8 filed
June 22, 2007

333-143967

4.2

Form of Nonvested Stock Award
Agreement issued under Amedisys, Inc.
2008 Omnibus Incentive Compensation
Plan

Restricted

Form of
Stock Unit
Agreement Issued under Amedisys, Inc.
2008 Omnibus Incentive Compensation
Plan

Composite Amedisys, Inc. 1998 Stock
Option Plan (inclusive of amendments
dated June 10, 2004, June 8, 2006 and
June 22, 2006 and the full text of the
Amedisys, Inc. 1998 Stock Option Plan)

Restricted

Stock Unit
Form of
Agreement under the 1998 Stock Option
Plan

Company’s

Current
The
Report on Form 8-K/A filed
April 24, 2007

0-24260

4.1

Composite Director’s Stock Option Plan
(inclusive of Plan amendments dated
June 10, 2004, and the full text of the
Directors Stock Option Plan)

Amended and Restated Employment
Agreement dated January 3, 2011 by and
among Amedisys,
Inc., Amedisys
Holding, L.L.C. and William F. Borne

Company’s

The
Annual
Report on Form 10-K for the
year ended December 31, 2005

0-24260

10.4

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

0-24260

10.1

10.4*

10.5*

10.6*

10.7*

10.8*

10.9*

Document Description

Report or Registration Statement

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

SEC File or
Registration
Number

Exhibit
or Other
Reference

0-24260

10.2

Exhibit
Number

10.10*

10.11*

10.12.1*

10.12.2*

10.12.3*

10.13.1*

10.13.2*

10.14.1*

10.14.2*

Amended and Restated Employment
Agreement dated January 3, 2011 by
and among Amedisys, Inc., Amedisys
Holding, L.L.C. and Jeffrey D. Jeter

Amended and Restated Employment
Agreement dated January 3, 2011 by
and among Amedisys, Inc., Amedisys
Holding, L.L.C. and Dale E. Redman

Employment Agreement dated January
4, 2010 by and among Amedisys, Inc.,
Amedisys Holding,
and
Michael D. Snow

L.L.C.

Amendment No. 1 dated January 22,
2010 to Employment Agreement dated
January 4, 2010 by and among
Amedisys,
Inc., Amedisys Holding,
L.L.C. and Michael D. Snow

Amendment No. 2 dated January 3,
2011 to Employment Agreement dated
January 4, 2010 by and among
Inc., Amedisys Holding,
Amedisys,
L.L.C. and Michael D. Snow.

Agreement

Employment
dated
January 4, 2010 by and among
Inc., Amedisys Holding,
Amedisys,
L.L.C. and T.A. “Tim” Barfield, Jr.

Amendment No. 1 dated January 3,
2011 to Employment Agreement dated
January 4, 2010 by and among
Amedisys,
Inc., Amedisys Holding,
L.L.C. and T.A. “Tim” Barfield, Jr.

Amended and Restated Employment
Agreement dated July 23, 2010 by and
Inc., Amedisys
among Amedisys,
Holding, L.L.C.
and Michael O.
Fleming, M.D.

to Amended

Amendment No. 1 dated January 3,
2011
and Restated
Employment Agreement dated July 23,
2010 by and among Amedisys, Inc.,
Amedisys Holding,
and
Michael O. Fleming, M.D.

L.L.C.

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

0-24260

10.3

Company’s

Current
The
Report on Form 8-K filed
January 7, 2010

0-24260

10.1

Company’s

Current
The
Report on Form 8-K filed
January 26, 2010

0-24260

10.1

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

0-24260

10.4

Company’s

The
Current
Report on Form 8-K filed
January 7, 2010

0-24260

10.2

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

0-24260

10.5

Company’s

Current
The
Report on Form 8-K filed
July 27, 2010

0-24260

10.1

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

0-24260

10.6

10.15.1*

Amended and Restated Employment
Agreement dated July 23, 2010 by and
among Amedisys,
Inc., Amedisys
Holding, L.L.C. and David R. Bucey

Company’s

Current
The
Report on Form 8-K filed
July 27, 2010

0-24260

10.2

Exhibit
Number

10.15.2*

10.16

†21.1

†23.1

†31.1

†31.2

††32.1

††32.2

Document Description

Report or Registration Statement

Amendment No. 1 dated January 3,
2011 to Employment Agreement
dated July 23, 2010 by and among
Amedisys, Inc., Amedisys Holding,
L.L.C. and David R. Bucey

Company’s

The
Current
Report on Form 8-K filed
January 7, 2011

SEC File or
Registration
Number

Exhibit
or Other
Reference

0-24260

10.7

Company’s

Current
The
Report on Form 8-K filed on
April 1, 2008

0-24260

10.1

to

time,

L.L.C.,

Credit Agreement dated March 26,
Inc., and
2008 among Amedisys,
Amedisys Holding,
as
Borrowers, the Lenders party thereto
JPMorgan
from time
Securities Inc. and UBS Securities
LLC, as Co-Lead Arrangers and Joint
Book Runners, Fifth Third Bank and
Bank of America, N.A., as Co-
Documentation
and
Oppenheimer & Co, Inc. and UBS
Securities LLC, as Co-Syndication
Agents

Agents,

Subsidiaries of the Registrant

Consent of KPMG LLP

Certification of William F. Borne,
Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002

Certification of Dale E. Redman,
Chief Financial Officer, pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002

Certification of William F. Borne,
Chief Executive Officer, pursuant to
18 U.S.C. Section 1350, as adopted
the
pursuant
Sarbanes-Oxley Act of 2002

to Section 906 of

Certification of Dale E. Redman,
Chief Financial Officer, pursuant to
18 U.S.C. Section 1350, as adopted
pursuant
the
Sarbanes-Oxley Act of 2002

to Section 906 of

††101.INS

XBRL Instance

††101.SCH

††101.CAL

††101.DEF

XBRL Taxonomy Extension Schema
Document

XBRL
Calculation Linkbase Document

Taxonomy

Extension

XBRL
Definition Linkbase

Taxonomy

Extension

Exhibit
Number

††101.LAB

††101.PRE

Document Description

Report or Registration Statement

SEC File or
Registration
Number

Exhibit
or Other
Reference

XBRL Taxonomy Extension Labels
Linkbase Document

XBRL
Taxonomy
Presentation Linkbase Document

Extension

CERTIFICATION

Exhibit 31.1

I, William F. Borne, certify that:

1. I have reviewed this Annual Report on Form 10-K of Amedisys, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board
of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2011

/S/ WILLIAM F. BORNE
William F. Borne
Chief Executive Officer and Chairman of the Board

CERTIFICATION

Exhibit 31.2

I, Dale E. Redman, certify that:

1. I have reviewed this Annual Report on Form 10-K of Amedisys, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board
of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2011

/S/ DALE E. REDMAN
Dale E. Redman
Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Amedisys, Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2010 (the “Report”), I, William F. Borne, Chief Executive Officer of the Company, hereby certify
to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities

Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial

condition and result of operations of the Company.

Date: February 22, 2011

/S/ WILLIAM F. BORNE
William F. Borne
Chief Executive Officer and Chairman of the Board

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Amedisys, Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2010 (the “Report”), I, Dale E. Redman, Chief Financial Officer of the Company, hereby certify to
my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities

Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial

condition and result of operations of the Company.

Date: February 22, 2011

/S/ DALE E. REDMAN
Dale E. Redman
Chief Financial Officer

Board of Directors

William F. Borne
Chairman of the Board
and Chief Executive Offi  cer
Amedisys, Inc.

Ronald A. LaBorde
Chief Executive Offi  cer
HR Solutions, LLC
Outsourced Human
Resources Administration

Executive Offi  cers

William F. Borne
Chief Executive Offi  cer

Michael D. Snow
Chief Operating Offi  cer

COMPANY LEADERSHIP

Jake L. Netterville
Chairman of the Board
Postlethwaite & Netterville,
A Professional Accounting 
Corporation

David R. Pitts
Chairman and Chief Executive Offi  cer
Pitts Management Associates, Inc.
Healthcare Management and 
Consulting Services

Peter Ricchiuti
Assistant Dean and Director of Research
of BURKENROAD REPORTS
Tulane University’s A.B. Freeman
School of Business

Donald A. Washburn
Private Investments

Dale E. Redman
Chief Financial Offi  cer

T. A. “Tim” Barfi eld, Jr.
Chief Development Offi  cer

Jeff rey D. Jeter
Chief Compliance Offi  cer

Michael O. Fleming, MD
Chief Medical Offi  cer

David R. Bucey
General Counsel 
and Corporate Secretary

STRATEGIC ADVISORY BOARD

Bruce Leff , MD
Johns Hopkins University School 
of Medicine

Peter Boling, MD
Virginia Commonwealth 
University

Mike Magee, MD
Positive Medicine, Inc.

L. Allen Dobson Jr, MD
Carolinas Healthcare System/
Cabarrus Family Medicine

Steven Landers, MD, MPH
Cleveland Clinic

Frank Opelka, MD
Louisiana State University Health 
Sciences Center

Performance Graph

Independent Accountants

Stock Listing

Form 10-K Exhibits

A performance graph comparing 
the cumulative total stockholder 
return on our common stock 
for the fi ve-year period ended 
December 31, 2010, with the 
cumulative total return on the 
NASDAQ composite index and 
peer-group index over the same 
period is included in the Form 
10-K.

KPMG LLP
Baton Rouge, Louisiana

Annual Meeting

The annual meeting of 
stockholders will take place on 
June 9, 2011, at 12:00 p.m. (CDT) 
at the company’s corporate 
headquarters, 5959 South 
Sherwood Forest Blvd., Baton 
Rouge, Louisiana.

The company’s common stock 
is listed on the NASDAQ Global 
Select Market under the symbol 
“AMED.”

Transfer Agent and Registrar

American Stock Transfer
40 Wall Street, 46th Floor
New York, New York 10005
718.921.8293

A copy of all exhibits to the 
company’s Annual Report 
on Form 10-K as fi led with 
the Securities and Exchange 
Commission is available free of 
charge on the Internet at www.
amedisys.com or by contacting:

Amedisys, Inc. 
Investor Relations Dept.
5959 S. Sherwood Forest Blvd.
Baton Rouge, Louisiana 70816
investor@amedisys.com

Amedisys on the Internet

Our company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. 

Important information, including press releases, analyst presentations and fi nancial information regarding our company, is routinely posted on 

and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home 

page. We also use our website to expedite public access to time-critical information regarding our company in advance of or in lieu of distributing 

a press release or a fi ling with the SEC disclosing the same information. Therefore, investors should look to the “Investor Relations” subpage of our 

website for important and time-critical information. Visitors to our website can also register to receive automatic e-mail and other notifi cations 

alerting them when new information is made available on the “Investor Relations” subpage of our website. In addition, we make available on the 

“Investor Relations” subpage of our website (under the link “SEC fi lings”) free of charge our annual reports on Form 10-K, quarterly reports on Form 

10-Q, current reports on Form 8-K, ownership reports on Forms 3, 4 and 5 and any amendments to those reports as soon as practicable after we 

electronically fi le such reports with the SEC. Further, copies of our Certifi cate of Incorporation and Bylaws, our Code of Ethical Business Conduct, 

our Corporate Governance Guidelines and the charters for the Audit, Compensation, Nominating and Corporate Governance and Quality of Care 

Committees of our Board are also available on the “Investor Relations” subpage of our website (under the link “Corporate Governance”).

Forward-Looking Statements

When included in this document, words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” 

“would,” “should” and similar expressions are intended to identify forward-looking statements as defi ned by the Private Securities Litigation 

Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to diff er 

materially from those described therein. These risks and uncertainties include, but are not limited to the following: changes in Medicare and 

other medical payment levels, our ability to open agencies, acquire additional agencies and integrate and operate these agencies eff ectively, 

changes in or our failure to comply with existing federal and state laws or regulations or the inability to comply with new government 

regulations on a timely basis, competition in the home health industry, changes in the case mix of patients and payment methodologies, 

changes in estimates and judgments associated with critical accounting policies, our ability to maintain or establish new patient referral 

sources, our ability to attract and retain qualifi ed personnel, changes in payments and covered services due to the economic downturn 

and defi cit spending by federal and state governments, future cost containment initiatives undertaken by third-party payors, our access to 

fi nancing due to the volatility and disruption of the capital and credit markets, our ability to meet debt service requirements and comply 

with covenants in debt agreements, business disruptions due to natural disasters or acts of terrorism, our ability to integrate and manage 

our information systems, changes in or developments with respect to any litigation or investigations relating to the company, including the 

United States Senate Committee on Finance inquiry, the SEC investigation and the U.S. Department of Justice Civil Investigative Demand and 

various other matters, many of which are beyond our control. 

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantifi ed, 

you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking 

and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any 

changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law. For a 

discussion of some of the factors discussed above as well as additional factors, see Part I, Item 1A—“Risk Factors” and Part II, Item 7—“Critical 

Accounting Policies” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual 

Report on Form 10-K for the year ended December 31, 2010. 

Th  ere are many

Angels

among us.

Last Winter, Patricia Gulick, an Amedisys therapist, was driving 

home from work when she arrived at the scene of an accident.  

The passenger had been ejected from the vehicle and was face 

down in the snow, slowly suff ocating. 

There was no hesitation from Patricia. She used her clinical 

training  to  properly  secure  the  passenger’s  neck  and  spine 

while  cautiously  turning  her  over.  Patricia  lay  in  the  snow 

alongside  the  passenger  to  provide  care  and  compassion 

until  the  ambulance  arrived  more  than  half  an  hour  later. 

Though  she  developed  pneumonia  and  spent  time  in  the 

hospital recuperating from the ordeal, she knows she did the 

right thing.

Thank  you  to  Patricia  and  the  thousands  of  dedicated 

Amedisys  employees  who  go  above  and  beyond  in  an 

extraordinary way every day. Your spirit will forever bring us 

health and hope.

 
 
www.amedisys.com