UPDATE 1-Gentiva to sell majority stake in ancillary care biz

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Aug 21 (Reuters) - Home healthcare provider Gentiva Health Services Inc (GTIV.O) said it agreed to sell its majority stake in CareCentrix ancillary care business to a Chicago-based private equity firm in a deal valued at about $147 million to focus on its home care and hospice provider businesses. Gentiva, which would be selling its 69 percent stake in CareCentrix to Water Street Healthcare Partners, said it expects to record a related pre-tax gain of over $100 million.

The deal, which is expected to close by the end of the third quarter, is expected to hurt Gentiva's annualized operating earnings by about 10 percent. The company also reaffirmed its 2008 earnings forecast of $1.36 to $1.43 a share, excluding special items.

"Going forward Gentiva will generate 95 percent of its revenues from home health and hospice services," Chief Executive Ron Malone said in a statement.

CareCentrix, a provider of ancillary care benefit management services for managed care organizations, generated revenue of $309 million in the 12 months ended June 29, 2008.

Shares of Gentiva closed at $27 Wednesday on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Deepak Kannan)