Annual report pursuant to Section 13 and 15(d)

Leases

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Leases
12 Months Ended
Dec. 31, 2011
Leases [Abstract]  
Leases

8. Leases

In certain instances, state laws may prohibit the sale of a home nursing agency or hospitals may be reluctant to sell their home health agencies. In these instances, the Company, through its wholly owned subsidiaries, enters into a lease agreement for a Medicare and Medicaid license, as well as the associated provider number to provide home health or hospice services. As of December 31, 2011, the Company had four license lease arrangements to operate five home nursing agencies and three hospice agencies.

Two of the leases were entered into in 2007 and expire in 2017. Expense related to these leases was $245,000 in 2011 and $268,000 in 2010. Payments due under these leases are $210,000 in 2012.

Two of the leases were amended during 2010 to extend the lease terms to one year with an automatic renewal clause of four years. Expense related to these leases was $135,892 in 2011 and $201,690 in 2010. The lease payments associated with these leases are based on a percentage of net quarterly profits; therefore, the future payments will vary with the future profits.

The Company leases office space and equipment at its various locations. Many of the leases contain renewal options with varying terms and conditions. Management expects that in the normal course of business, expiring leases will be renewed or, upon making a decision to relocate, replaced by leases for new locations. Operating lease terms range from three to ten years. Rent expense includes insurance, maintenance, and other costs as required by the lease. Total rental expense was approximately $17.3 million in 2011, $15.0 million in 2010 and $13.8 million in 2009. Future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):

 

2012

   $ 12,400   

2013

     9,165   

2014

     5,461   

2015

     3,206   

2016

     1,676   

Thereafter

     1,800   
  

 

 

 
   $ 33,708