Segment Information

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements [Abstract]

Segment Information

(8)  Segment Information

We operate predominantly in the long-term care segment of the healthcare industry. We are a provider of long-term, sub-acute and related ancillary care services to nursing home patients.  Our reportable segments are composed of operating segments, which are aggregated, comprising strategic business units that provide different products and services. They are managed separately because each business has different marketing strategies due to differences in types of customers, distribution channels and capital resource needs.  More complete descriptions and accounting policies of the segments are described in Note 13 - "Segment Information" and  Note 2 - "Summary of Significant Accounting Policies" of our 2010 Form 10-K.  The following tables summarize, for the periods indicated, operating results and other financial information, by business segment (in thousands):

As of and for the
Three Months Ended
September 30, 2011
					Rehabilitation		Medical
		Inpatient			Therapy		Staffing					Intersegment
		Services			Services		Services		Corporate			Eliminations			Consolidated
Revenues from external customers	$	435,271		$	29,568	$	20,996	$	15		$	-		$	485,850
Intersegment revenues		-			32,791		757		-			(33,548	)		-
Total net revenues		435,271			62,359		21,753		15			(33,548	)		485,850
Operating salaries and benefits		202,694			54,298		16,231		-			-			273,223
Self-insurance for workers'
compensation and general and
professional liability insurance		14,206			633		344		67			-			15,250
Other operating costs		128,821			2,374		2,989		-			(33,548	)		100,636
General and administrative expenses(1)		10,308			2,309		540		14,825			-			27,982
Provision for losses on
accounts receivable		4,772			73		71		-			-			4,916
Segment operating income (loss)	$	74,470		$	2,672	$	1,578	$	(14,877	)	$	-		$	63,843
Center rent expense		36,874			140		170		-			-			37,184
Depreciation and amortization		6,902			236		187		970			-			8,295
Interest, net		(32	)		-		-		4,867			-			4,835
Net segment income (loss)	$	30,726		$	2,296	$	1,221	$	(20,714	)	$	-		$	13,529
Identifiable segment assets	$	395,840		$	16,254	$	20,039	$	343,550		$	20,881		$	796,564
Goodwill	$	31,071		$	75	$	4,533	$	-		$	-		$	35,679
Segment capital expenditures	$	12,934		$	149	$	63	$	1,044		$	-		$	14,190

______________________________________

(1) General and administrative expenses include operating administrative expenses.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

As of and for the
Three Months Ended
September 30, 2010
				Rehabilitation		Medical
		Inpatient		Therapy		Staffing					Intersegment
		Services		Services		Services		Corporate			Eliminations			Consolidated
Revenues from external customers	$	421,573	$	30,343	$	21,481	$	14		$	-		$	473,411
Intersegment revenues		-		21,397		724		-			(22,121	)		-
Total net revenues		421,573		51,740		22,205		14			(22,121	)		473,411
Operating salaries and benefits		209,375		42,860		16,266		-			-			268,501
Self-insurance for workers'
compensation and general and
professional liability insurance		13,712		435		323		61			-			14,531
Other operating costs		114,253		1,952		3,249		-			(22,121	)		97,333
General and administrative expenses(1)		10,778		1,939		627		18,892			-			32,236
Provision for losses on
accounts receivable		4,639		297		162		-			-			5,098
Segment operating income (loss)	$	68,816	$	4,257	$	1,578	$	(18,939	)	$	-		$	55,712
Center rent expense		18,629		123		202		-			-			18,954
Depreciation and amortization		11,536		173		181		749			-			12,639
Interest, net		2,483		-		-		8,044			-			10,527
Net segment income (loss)	$	36,168	$	3,961	$	1,195	$	(27,732	)	$	-		$	13,592
Identifiable segment assets	$	1,174,539	$	15,047	$	20,631	$	329,881		$	20,867		$	1,560,965
Goodwill	$	332,140	$	75	$	4,533	$	1,616		$	-		$	338,364
Segment capital expenditures	$	12,738	$	370	$	41	$	625		$	-		$	13,774

______________________________________

(1) General and administrative expenses include operating administrative expenses and transaction costs.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

As of and for the
Nine Months Ended
September 30, 2011
					Rehabilitation		Medical
		Inpatient			Therapy		Staffing					Intersegment
		Services			Services		Services		Corporate			Eliminations			Consolidated
Revenues from external customers	$	1,302,431		$	89,645	$	65,309	$	36		$	-		$	1,457,421
Intersegment revenues		-			98,710		2,079		-			(100,789	)		-
Total net revenues		1,302,431			188,355		67,388		36			(100,789	)		1,457,421
Operating salaries and benefits		605,534			161,925		50,789		-			-			818,248
Self-insurance for workers'
compensation and general and
professional liability insurance		42,614			1,918		1,043		204			-			45,779
Other operating costs		383,372			7,082		8,548		-			(100,789	)		298,213
General and administrative expenses(1)		30,970			7,139		1,804		45,156			-			85,069
Provision for losses on
accounts receivable		14,200			713		47		-			-			14,960
Segment operating income (loss)	$	225,741		$	9,578	$	5,157	$	(45,324	)	$	-		$	195,152
Center rent expense		110,203			394		513		-			-			111,110
Depreciation and amortization		19,726			689		561		2,660			-			23,636
Interest, net		(68	)		-		1		14,756			-			14,689
Net segment income (loss)	$	95,880		$	8,495	$	4,082	$	(62,740	)	$	-		$	45,717
Identifiable segment assets	$	395,840		$	16,254	$	20,039	$	343,550		$	20,881		$	796,564
Goodwill	$	31,071		$	75	$	4,533	$	-		$	-		$	35,679
Segment capital expenditures	$	27,310		$	1,102	$	135	$	3,799		$	-		$	32,346

______________________________________

(1) General and administrative expenses include operating administrative expenses.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

As of and for the
Nine Months Ended
September 30, 2010
				Rehabilitation		Medical
		Inpatient		Therapy		Staffing						Intersegment
		Services		Services		Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	1,258,271	$	89,723	$	67,712		$	28		$	-		$	1,415,734
Intersegment revenues		-		63,584		1,364			-			(64,948	)		-
Total net revenues		1,258,271		153,307		69,076			28			(64,948	)		1,415,734
Operating salaries and benefits		622,489		126,670		50,444			-			-			799,603
Self-insurance for workers'
compensation and general and
professional liability insurance		40,999		1,298		953			183			-			43,433
Other operating costs		338,182		5,947		9,898			-			(64,948	)		289,079
General and administrative expenses(1)		30,907		6,065		1,959			51,566			-			90,497
Provision for losses on
accounts receivable		14,904		722		185			-			-			15,811
Segment operating income (loss)	$	210,790	$	12,605	$	5,637		$	(51,721	)	$	-		$	177,311
Center rent expense		55,326		364		616			-			-			56,306
Depreciation and amortization		34,037		484		543			2,385			-			37,449
Interest, net		7,826		-		(1	)		26,280			-			34,105
Net segment income (loss)	$	113,601	$	11,757	$	4,479		$	(80,386	)	$	-		$	49,451
Identifiable segment assets	$	1,174,539	$	15,047	$	20,631		$	329,881		$	20,867		$	1,560,965
Goodwill	$	332,140	$	75	$	4,533		$	1,616		$	-		$	338,364
Segment capital expenditures	$	38,609	$	700	$	190		$	1,989		$	-		$	41,488

______________________________________

(1) General and administrative expenses include operating administrative expenses and transaction costs.

The term "segment operating income (loss)" is defined as earnings before center rent expense, depreciation and amortization, interest, transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

The term "net segment income (loss)" is defined as earnings before transaction costs, restructuring costs, loss on asset impairment, income tax expense and discontinued operations.

Measurement of Segment Income

We evaluate financial performance and allocate resources primarily based on income or loss from operations before income taxes, excluding any unusual items. The following table reconciles net segment income to consolidated income before income taxes and discontinued operations (in thousands):

		For the Three Months Ended
		September 30,
		2011			2010
Net segment income	$	13,529		$	13,592
Loss on sale of assets, net		809			-
Restructuring costs		2,426			-
Loss on asset impairment		317,091			-
Consolidated (loss) income before income taxes and
discontinued operations	$	(306,797	)	$	13,592

		For the Nine Months Ended
		September 30,
		2011			2010
Net segment income	$	45,717		$	49,451
Loss on sale of assets, net		809			-
Restructuring costs		2,728			-
Loss on asset impairment		317,091			-
Consolidated (loss) income before income taxes and
discontinued operations	$	(274,911	)	$	49,451