HealthSouth Announces Private Exchange Transactions

             HealthSouth Announces Private Exchange Transactions

Newly Issued 2.0% Convertible Notes to be Exchanged for 6.5% Convertible
Preferred Stock

PR Newswire

BIRMINGHAM, Ala., Nov. 12, 2013

BIRMINGHAM, Ala., Nov. 12, 2013 /PRNewswire/ -- HealthSouth Corporation
(NYSE:HLS) today announced that the Company entered into separate, privately
negotiated exchange agreements under which it will issue $320 million in
aggregate principal amount of new 2.0% Convertible Senior Subordinated Notes
due 2043 in exchange for 257,110 shares of the Company's outstanding 6.5%
Series A Convertible Perpetual Preferred Stock, par value $0.10 per share. The
exchange transactions are expected to close on November 18, 2013. Following
the transactions, 96,245 shares of the preferred stock will remain

"The refinancing transactions we announced today provide significant benefits
to the Company and its shareholders," commented Doug Coltharp, Executive Vice
President and Chief Financial Officer of HealthSouth. "This transaction is
immediately cash flow accretive replacing $16.7 million in cash preferred
dividend payments with $6.4 million in cash interest payments, both on an
annual, pre-tax basis. In addition, the transaction is not dilutive to the
share count. As a result of this transaction, we expect a one-time reduction
to net income attributable to HealthSouth common stockholders in the fourth
quarter of 2013 of approximately $71 million, or $0.82 per basic share, as the
repurchase premium over the book value of the preferred stock being exchanged
will be accounted for similar to a preferred dividend payment."

These new convertible notes mature in 2043 and will pay interest of 2.0% per
year on the principal amount, payable semiannually in arrears in cash on June
1 and December 1 of each year, beginning June 1, 2014. Commencing with the
interest period beginning December 1, 2018, the convertible notes may also pay
contingent interest under certain circumstances based on their then current
trading price. The convertible notes are convertible, at the option of the
holders, at any time on or prior to the close of business on the business day
immediately preceding December 1, 2043 into shares of the Company's common
stock at a conversion rate of approximately 25.2194 shares per $1,000 in
principal amount, which is equal to a conversion price of approximately $39.65
per share, subject to customary anti-dilution adjustments. The Company has the
right to redeem the convertible notes before December 1, 2018 if the volume
weighted average price of the Company's common stock is at least 120% of the
conversion price of the convertible notes for a specified period. On or after
December 1, 2018, the Company may, at its option, redeem all or any part of
the convertible notes. In either case, the redemption price will be equal to
100% of the principal amount of the convertible notes to be redeemed, plus
accrued and unpaid interest.

This press release does not constitute an offer to sell or a solicitation of
an offer to buy any securities, nor shall there be any sale of securities in
any state or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the securities law
of any such state or jurisdiction. The convertible notes and the common stock
issuable upon the conversion of the convertible notes have not been and will
not be registered under the Securities Act of 1933, as amended, or the
securities laws of any other jurisdiction and may not be offered or sold in
the United States absent registration or an applicable exemption from
registration requirements.

About HealthSouth
HealthSouth is the nation's largest owner and operator of inpatient
rehabilitation hospitals in terms of patients treated and discharged, revenues
and number of hospitals. Operating in 28 states across the country and in
Puerto Rico, HealthSouth serves patients through its network of inpatient
rehabilitation hospitals, outpatient rehabilitation satellite clinics and home
health agencies. HealthSouth's hospitals provide a higher level of
rehabilitative care to patients who are recovering from conditions such as
stroke and other neurological disorders, cardiac and pulmonary conditions,
brain and spinal cord injuries, complex orthopedic conditions, and
amputations. HealthSouth can be found on the Web at

Forward-Looking Statements
Statements contained in this press release which are not historical facts,
such as the anticipated closing date of, and the amount of the convertible
notes expected to be issued and number of shares of preferred stock expected
to be acquired by the Company and the associated accounting impacts in
connection with the exchange transactions described in this press release, are
forward-looking statements. In addition, HealthSouth, through its senior
management, may from time to time make forward-looking public statements
concerning the matters described herein. All such estimates, projections, and
forward-looking information speak only as of the date hereof, and HealthSouth
undertakes no duty to publicly update or revise such forward-looking
information, whether as a result of new information, future events, or
otherwise. Such forward-looking statements are necessarily estimates based
upon current information, involve a number of risks and uncertainties, and
relate to, among other things, future events, HealthSouth's plan to repurchase
its debt or equity securities, dividend strategies, effective income tax
rates, HealthSouth's business strategy, its financial plans, its future
financial performance, or its projected business results or model, or its
projected capital expenditures, or its leverage ratio. Actual events or
results may differ materially from those anticipated in these forward-looking
statements as a result of a variety of factors. While it is impossible to
identify all such factors, factors which could cause actual events or results
to differ materially from those estimated by HealthSouth include, but are not
limited to, any adverse outcome of various lawsuits, claims, and legal or
regulatory proceedings involving HealthSouth, including its pending HHS-OIG
investigations; potential disruptions, breaches, or other incidents affecting
the proper operation, availability, or security of HealthSouth's information
systems; significant changes in HealthSouth's management team; changes, delays
in (including in connection with resolution of Medicare payment reviews or
appeals), or suspension of reimbursement for HealthSouth's services by
governmental or private payors; changes in the regulation of the healthcare
industry at either or both of the federal and state levels, including as part
of national healthcare reform and deficit reduction; general conditions in the
economy and capital markets; and other factors which may be identified from
time to time in HealthSouth's SEC filings and other public announcements,
including HealthSouth's Annual Report on Form 10-K for the year ended December
31, 2012 and Form 10-Q for the quarters ended March 31, 2013, June 30, 2013,
and September 30, 2013.

Media Contact
Casey Lassiter, 205-410-2777

Investor Relations Contact
Mary Ann Arico, 205-969-6175

SOURCE HealthSouth Corporation

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