Note

– Business Segments

The Company has

two

reportable operating segments: (

) inpatient services, which includes the operation of skilled nursing facilities and assisted and independent living facilities, and (

) homecare services. These reportable operating segments are consistent with information used by the Company’s Chief Executive Officer, as CODM, to assess performance and allocate resources.

The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office. For additional information on these reportable segments see Note

Summary of Significant Accounting Policies.

The Company’s CODM evaluates performance and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company while enhancing long-term shareholder value. The CODM does

not

review assets by segment in his resource allocation and therefore, assets by segment are

not

disclosed below.

The following table sets forth the Company’s unaudited interim condensed consolidated statements of operations by business segment

(in thousands

	Three Months Ended March 31, 2018
	Inpatient Services		Homecare		All Other			Total
Revenues:
Net patient revenues	$	216,351	$	15,341	$	-		$	231,692
Other revenues		271		-		10,998			11,269
Net operating revenues		216,622		15,341		10,998			242,961

Costs and expenses:
Salaries, wages and benefits		123,380		8,030		8,685			140,095
Other operating		57,835		5,279		2,058			65,172
Rent		8,258		487		1,484			10,229
Depreciation and amortization		9,461		38		843			10,342
Interest		396		-		844			1,240
Total costs and expenses		199,330		13,834		13,914			227,078

Income (loss) from operations		17,292		1,507		(2,916	)		15,883

Non-operating income (loss)		-		-		(3,065	)		(3,065	)
Unrealized losses on marketable equity securities		-		-		(15,517	)		(15,517	)

Income (loss) before income taxes	$	17,292	$	1,507	$	(21,498	)	$	(2,699	)

	Three Months Ended March 31, 2017
(As adjusted)	Inpatient Services		Homecare		All Other			Total
Revenues:
Net patient revenues	$	211,597	$	15,657	$	-		$	227,254
Other revenues		226		-		11,058			11,284
Net operating revenues		211,823		15,657		11,058			238,538

Costs and expenses:
Salaries, wages and benefits		119,623		7,828		10,604			138,055
Other operating		56,165		5,135		1,878			63,178
Rent		8,166		489		1,433			10,088
Depreciation and amortization		9,209		40		1,046			10,295
Interest		449		-		609			1,058
Total costs and expenses		193,612		13,492		15,570			222,674

Income (loss) from operations		18,211		2,165		(4,512	)		15,864

Non-operating income		-		-		4,768			4,768

Income before income taxes	$	18,211	$	2,165	$	256		$	20,632