SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Income (Loss) Per Share

The following table sets forth the computation of basic and diluted income (loss) per common share (in thousands, except for per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Numerator:
Loss from continuing operations, net of income taxes	$	(605	)	$	(334	)	$	(6,921	)	$	(2,989	)
(Loss) income from discontinued operations, net of income taxes	(10,931		)	882			64,448			4,152
Net income (loss)	$	(11,536	)	$	548		$	57,527		$	1,163

Denominator - Basic:
Weighted average number of common shares outstanding	56,640			54,607			56,019			54,348

Basic loss from continuing operations	$	(0.01	)	$	(0.01	)	$	(0.12	)	$	(0.06	)
Basic (loss) income from discontinued operations	(0.19		)	0.02			1.15			0.08
Basic (loss) income	$	(0.20	)	$	0.01		$	1.03		$	0.02

Denominator - Diluted:
Weighted average number of common shares outstanding	56,640			54,607			56,019			54,348
Common share equivalents of outstanding stock options and restricted awards	—			—			—			—
Total diluted shares outstanding	56,640			54,607			56,019			54,348

Diluted loss from continuing operations	$	(0.01	)	$	(0.01	)	$	(0.12	)	$	(0.06	)
Diluted income (loss) from discontinued operations	(0.19		)	0.02			1.15			0.08
Diluted income (loss)	$	(0.20	)	$	0.01		$	1.03		$	0.02

The computation of diluted shares for the three and nine months ended September 30, 2012 and 2011 excludes the effect of 3.4 million warrants with an exercise price of $10 issued in connection with the acquisition of Critical Homecare Solutions Holdings, Inc. ("CHS") in 2010. In addition to the warrants, the computation of diluted shares for the three months ended September 30, 2012 and 2011 excludes the effect of 5.4 million and 4.5 million, respectively, of other common stock equivalents as their inclusion would be anti-dilutive. The computation of diluted shares for the nine months ended September 30, 2012 and 2011 excludes the effect of 5.4 million and 4.6 million, respectively, of other common stock equivalents as their inclusion would be anti-dilutive.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board ("FASB") issued ASU 2011-08, Testing Goodwill for Impairment (“ASU 2011-08”). ASU 2011-08 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The Company adopted ASU 2011-08 on January 1, 2012. The adoption of this statement did not have a material effect on the Company's Unaudited Consolidated Financial Statements.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU 2011-04”). ASU 2011-04 generally aligns the principles for fair value measurements and the related disclosure requirements under U.S. GAAP and International Financial Reporting Standards. From a U.S. GAAP perspective, the amendments are largely clarifications, but some could have a significant effect on certain companies. A number of new disclosures also are required. Except for certain disclosures, the guidance applies to public and nonpublic companies and is to be applied prospectively. The Company adopted ASU 2011-04 on January 1, 2012. The adoption of this statement is not expected to have a material effect on the Company's Unaudited Consolidated Financial Statements.

In July 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Under this amendment, an entity would not be required to calculate the fair value of the indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2012-02 on its Unaudited Consolidated Financial Statements.