HealthSouth (HLS) Lowers FY15 EPS Guidance

Subsequent to its earnings release for the fourth quarter of 2014, HealthSouth (NYSE: HLS) assembled an Investor Reference Book, which is attached to this Current Report on Form 8‑K as Exhibit 99.1 (the “Investor Reference Book”). The Investor Reference Book addresses, among other things, an overview of the Company and its industry, a historical perspective of the Company, the Company’s business outlook, the Company’s financial and operational metrics and initiatives, and the Company’s value proposition. The Investor Reference Book is available at
http://investor.healthsouth.com by clicking on an available link.

The Company reiterates as of the date hereof its Adjusted EBITDA guidance for 2015, as previously reported in the Current Report on Form 8-K dated February 24, 2015 and during the Company’s earnings conference call held on February 25, 2015. The Company is revising its previously provided earnings per diluted share guidance for 2015 from a range of $2.24 to $2.29 per share to a range of $2.13 to $2.19 per share to include the impact of the following:

(Note: Street sees FY15 EPS of $2.29)

• On March 11, 2015, the Company gave notice of, and made an irrevocable commitment for, the redemption of all the outstanding principal amount of its 8.125% Senior Notes due 2020. On March 12, 2015, the Company completed its registered public offering of $300 million aggregate principal amount of 5.125% Senior Notes due 2023 at a public offering price of 100.00% of the principal amount and will use the proceeds from this offering, along with cash on hand, to complete the redemption of the 8.125% Senior Notes due 2020 in April 2015. As a result of these transactions, the Company expects to record an approximate $21 million, or $0.12 per diluted share, loss on early extinguishment of debt in the second quarter of 2015. This loss will be offset in part by interest savings.
• On March 22, 2015, the Company entered into an agreement to settle the lawsuit filed on August 16, 2004 by General Medicine and captioned General Medicine, P.C. v. HealthSouth Corp. Although the specific terms of this settlement agreement are confidential, HealthSouth and General Medicine agreed to dismiss with prejudice the lawsuit pending in the Circuit Court of Jefferson County, Alabama and to release all claims between the parties. In exchange for General Medicine’s release, HealthSouth agreed to pay an amount of cash that is not material to the Company.

Earnings per share are presented using income from continuing operations attributable to HealthSouth.

The Company uses “same-store” comparisons to explain the changes in certain performance metrics and line items within its financial statements. Same-store comparisons are calculated based on hospitals open throughout both the full current periods and throughout the full prior periods presented. These comparisons include the financial results of market consolidation transactions in existing markets, as it is difficult to determine, with precision, the incremental impact of these transactions on the Company’s results of operations.

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