HealthSouth Acquires Additional Ownership Interest In Fairlawn Hospital And Updates Guidance

 HealthSouth Acquires Additional Ownership Interest In Fairlawn Hospital And
                               Updates Guidance

PR Newswire

BIRMINGHAM, Ala., June 2, 2014

BIRMINGHAM, Ala., June 2, 2014 /PRNewswire/ -- HealthSouth Corporation (NYSE:
HLS), the nation's largest owner and operator of inpatient rehabilitation
hospitals, today reported it has acquired an additional equity interest in
Fairlawn Rehabilitation Hospital in Worcester, Massachusetts from its joint
venture partner, UMass Memorial Health Care. This transaction increases
HealthSouth's ownership interest from 50% to 80% and results in a change in
accounting for this hospital from the equity method of accounting to a
consolidated entity beginning June 1, 2014. As a result of the consolidation
of this hospital and the remeasurement of its previously held equity interest
to fair value, the Company expects to record a $25 million to $30 million gain
during the second quarter of 2014.

"The additional ownership in Fairlawn Rehabilitation Hospital provides another
opportunity for HealthSouth to grow by investing in its core business," said
Executive Vice President and Chief Operating Officer Mark Tarr. "We look
forward to our continued partnership with UMass Memorial Health Care and
working together to maintain our focus on providing care that is both high
quality and patient centered."

Fairlawn Rehabilitation Hospital is a 110-bed inpatient rehabilitation
hospital. The hospital discharged 2,478 patients in 2013, none of which were
included in HealthSouth's previously disclosed 129,988 discharges for 2013.
Had HealthSouth's 50% investment in the Fairlawn hospital been accounted for
on a consolidated basis for the full year of 2013, its 2013 Adjusted EBITDA
would have been $6.0 million higher.

Guidance

In its earnings release issued on April 28, 2014, HealthSouth disclosed it
expected to be at the high end of the following guidance ranges: Adjusted
EBITDA in the range of $555 million to $565 million and income from continuing
operations attributable to HealthSouth per diluted share in the range of $1.86
to $1.91. As a result of this transaction, HealthSouth now expects to exceed
the high end of these guidance ranges.

                   Fairlawn                 Pro Forma Fairlawn
                                            Rehabilitation
                   Rehabilitation Hospital  Hospital

                   as Equity Method         as Consolidated
                                            Entity
                   Entity
                   Full Year 2013           Full Year 2013 With
                                                                 Difference
                   As Reported              Accounting Change
                   Total         Per Share  Total       Per      Total   Per
                                                        Share            Share
Net income         $  381.4                 $  385.6             $ 4.2
Loss from discops,
net of tax,        1.1                      1.1                  —
attributable to
HealthSouth
Net income
attributable to    (57.8)                   (62.0)               (4.2)
noncontrolling
interests
Income from
continuing
operations        324.7         $  2.59    324.7       $ 2.59   —       $  —
attributable
to HealthSouth
Gov't, class
action, and        (23.5)                   (23.5)               —
related
settlements
Pro fees—acct,     9.5                      9.5                  —
tax, and legal
Provision for      12.7                     17.9                 5.2
income tax expense
Interest expense
and amortization
of debt           100.4                    100.4                —
discounts and
fees
Depreciation and   94.7                     95.5                 0.8
amortization
Loss on early
extinguishment of  2.4                      2.4                  —
debt
Net noncash loss
on disposal of     5.9                      5.9                  —
assets
Stock-based
compensation       24.8                     24.8                 —
expense
Adjusted EBITDA    $  551.6                 $  557.6             $ 6.0
Weighted average
common shares
outstanding:


Basic                            88.1                   88.1             —
Diluted                          102.1                  102.1            —



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 www.healthsouth.com.

Statements contained in this press release which are not historical facts,
such as the financial guidance, 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, its projected business
results or model, its projected capital expenditures, and 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, the price of HealthSouth's common or
preferred stock as it affects the Company's willingness and ability to
repurchase shares and the financial and accounting effects of any repurchases;
any adverse outcome of various lawsuits, claims, and legal or regulatory
proceedings involving HealthSouth, including its pending DOJ and 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; HealthSouth's
ability to successfully complete and integrate de novo developments,
acquisitions, investments, and joint ventures consistent with its growth
strategy; 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; competitive pressures in the healthcare industry and HealthSouth's
response thereto; HealthSouth's ability to obtain and retain favorable
arrangements with third-party payors; HealthSouth's ability to attract and
retain nurses, therapists, and other healthcare professionals in a highly
competitive environment with often severe staffing shortages and the impact on
HealthSouth's labor expenses from potential union activity and staffing
shortages; general conditions in the economy and capital markets; the increase
in the costs of defending and insuring against alleged professional liability
claims and HealthSouth's ability to predict the estimated costs related to
such claims; and other factors which may be identified from time to time in
HealthSouth's SEC filings and other public announcements, including
HealthSouth's Form 10‑K for the year ended December31, 2013 and Form 10-Q for
the quarter ended March31, 2014.

Media Contact
Casey Lassiter, 205-410-2777
casey.lassiter@healthsouth.com 

Investor Relations Contact
Mary Ann Arico, 205-969-6175
maryann.arico@healthsouth.com

SOURCE HealthSouth Corporation

Website: http://www.healthsouth.com
 
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