BIRMINGHAM, Ala., July 28, 2014 /PRNewswire/ -- HealthSouth
Corporation (NYSE: HLS), the nation's largest owner and operator of
inpatient rehabilitation hospitals, today reported its results of
operations for the second quarter ended June 30, 2014.
"The second quarter was another excellent quarter for
HealthSouth," said Jay Grinney,
HealthSouth President and Chief Executive Officer. "We achieved
revenue growth of 7.1%, increased our Adjusted EBITDA by 13.5%, and
saw our adjusted free cash flow grow to $97.9 million from $72.5
million when compared to the second quarter of 2013. We also
continued to invest in the future growth of the company with the
ongoing development of three new hospitals that are scheduled to
open in the fourth quarter of this year, the execution of a joint
venture agreement with Mountain States Health Alliance to own and
operate Quillen Rehabilitation Hospital in Johnson City, Tennessee, and the execution of
an agreement with Memorial Health to form a joint venture to own
and operate an inpatient rehabilitation hospital in Savannah, Georgia. And, as a result of the
company's strong results, we raised our full-year Adjusted EBITDA
and earnings per share guidance."
Second Quarter Results
- Consolidated net operating revenues were $604.4 million for the second quarter of 2014
compared to $564.5 million for the
second quarter of 2013, or an increase of 7.1%. This increase was
attributable to a 3.0% increase in patient discharges and a 4.9%
increase in net patient revenue per discharge. Discharge growth
included a 1.4% increase in same-store discharges. Approximately 60
basis points of discharge growth from new stores resulted from the
consolidation of Fairlawn Rehabilitation Hospital ("Fairlawn") in
Worcester, Massachusetts effective
June 1, 2014, as discussed below. The
increase in net patient revenue per discharge resulted from price
adjustments, higher average acuity for the patients served, and
contributions from hospitals that opened in the second quarter of
2013 and were undergoing Medicare certification.
- Income from continuing operations attributable to HealthSouth
per diluted share for the second quarter of 2014 was $0.81 per share compared to $1.66 per share for the second quarter of 2013.
Earnings per share for the second quarter of 2014 included strong
operating results and the $27.2
million, or $0.27 per diluted
share, nontaxable gain related to the increase in ownership and
consolidation of Fairlawn. Earnings per share for the second
quarter of 2013 included a $1.15 per
diluted share benefit associated with a settlement with the
Internal Revenue Service.
- Cash flows provided by operating activities were $235.1 million for the six months ended
June 30, 2014 compared to
$226.8 million for the six months
ended June 30, 2013. This increase
was primarily due to increased net operating revenues and continued
disciplined expense management.
- Adjusted EBITDA (see attached supplemental information) for the
second quarter of 2014 was $152.7
million compared to $134.5
million for the second quarter of 2013, or an increase of
13.5%. This improvement was due primarily to continued revenue
growth and disciplined expense management, including contributions
from hospitals that opened in the second quarter of 2013. Adjusted
EBITDA in the second quarter of 2014 also included a $1.4 million benefit from the increase in
ownership and consolidation of Fairlawn.
- Adjusted free cash flow (see attached supplemental information)
for the second quarter of 2014 was $97.9
million compared to $72.5
million for the second quarter of 2013. Adjusted free cash
flow for the second quarter of 2014 benefited from higher Adjusted
EBITDA, lower working capital, and a reduction in preferred
dividends.
"The strength of our cash flow generation was again evidenced by
first half 2014 adjusted free cash flow of $163 million," said Doug
Coltharp, Executive Vice President and Chief Financial
Officer of HealthSouth. "The cash we generated supported
$52.7 million in discretionary
capital expenditures, $43.1 million
in common stock repurchases, $31.6
million in common stock dividends, and the purchase of our
increased equity ownership in Fairlawn."
Acquisition of Additional Ownership Interest in Joint Venture
Hospital
As previously announced, in June
2014, the Company acquired an additional 30% equity interest
from UMass Memorial Health Care, its joint venture partner in
Fairlawn. This transaction increased the Company's ownership
interest from 50% to 80% and resulted in a change in accounting for
this hospital from the equity method of accounting to a
consolidated entity. As a result of its consolidation of this
hospital and the remeasurement of its previously held equity
interest at fair value, the Company recorded a $27.2 million gain as part of other income during
the three and six months ended June 30, 2014. The transaction
was funded using cash on hand.
2014 Guidance
Based on its results for the first half of 2014, including the
impact of the increase in ownership and consolidation of Fairlawn,
the Company is:
- raising its full-year 2014 Adjusted EBITDA guidance to a range
of $570 million to $580 million from
a range of $555 million to $565
million.
- raising its full-year 2014 guidance for income from continuing
operations attributable to HealthSouth per diluted share to
$2.25 to $2.31 per share from
$1.86 to $1.91 per share.
Earnings Conference Call and Webcast
The Company will host an investor conference call at
9:00 a.m. Eastern Time on Tuesday,
July 29, 2014 to discuss its results for the second quarter of
2014. For reference during the call, the Company will post certain
supplemental slides at http://investor.healthsouth.com.
The conference call may be accessed by dialing 877-587-6761 and
giving the pass code 55539778. International callers should dial
706-679-1635 and give the same pass code. Please call approximately
ten minutes before the start of the call to ensure you are
connected. The conference call will also be webcast live and
will be available at http://investor.healthsouth.com by
clicking on an available link.
An on-line replay of the conference call will be available after
the live broadcast at http://investor.healthsouth.com.
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.
Other Information
The information in this press release is summarized and should
be read in conjunction with the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2014 (the "June 2014 Form 10-Q"), when filed, as well as the
Company's Current Report on Form 8-K filed on July 28, 2014.
In addition, the Company will post supplemental slides today on its
website at http://investor.healthsouth.com for reference
during its July 29, 2014 earnings call.
When filed, the June 2014 Form
10-Q can be found on the Company's website at
http://investor.healthsouth.com and the SEC's website at
www.sec.gov.
HealthSouth
Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(In
Millions)
|
Net operating
revenues
|
$
|
604.4
|
|
|
$
|
564.5
|
|
|
$
|
1,195.6
|
|
|
$
|
1,137.1
|
|
Less: Provision for
doubtful accounts
|
(9.3)
|
|
|
(7.0)
|
|
|
(16.8)
|
|
|
(14.4)
|
|
Net operating
revenues less provision for doubtful accounts
|
595.1
|
|
|
557.5
|
|
|
1,178.8
|
|
|
1,122.7
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
285.3
|
|
|
273.6
|
|
|
571.4
|
|
|
548.2
|
|
Other operating
expenses
|
86.3
|
|
|
81.0
|
|
|
170.8
|
|
|
159.1
|
|
Occupancy
costs
|
10.3
|
|
|
11.9
|
|
|
20.8
|
|
|
24.1
|
|
Supplies
|
27.8
|
|
|
26.6
|
|
|
55.4
|
|
|
52.8
|
|
General and
administrative expenses
|
30.2
|
|
|
29.5
|
|
|
60.9
|
|
|
59.7
|
|
Depreciation and
amortization
|
26.4
|
|
|
23.1
|
|
|
52.8
|
|
|
45.2
|
|
Government, class
action, and related settlements
|
(0.8)
|
|
|
(2.0)
|
|
|
(0.8)
|
|
|
(2.0)
|
|
Professional
fees—accounting, tax, and legal
|
2.0
|
|
|
2.2
|
|
|
3.6
|
|
|
3.6
|
|
Total operating
expenses
|
467.5
|
|
|
445.9
|
|
|
934.9
|
|
|
890.7
|
|
Interest expense and
amortization of debt discounts and fees
|
27.8
|
|
|
24.4
|
|
|
55.7
|
|
|
48.6
|
|
Other
income
|
(28.2)
|
|
|
(1.9)
|
|
|
(29.9)
|
|
|
(2.6)
|
|
Equity in net income
of nonconsolidated affiliates
|
(2.6)
|
|
|
(3.3)
|
|
|
(6.9)
|
|
|
(6.2)
|
|
Income from
continuing operations before income tax expense
(benefit)
|
130.6
|
|
|
92.4
|
|
|
225.0
|
|
|
192.2
|
|
Provision for income
tax expense (benefit)
|
36.5
|
|
|
(86.5)
|
|
|
69.3
|
|
|
(53.0)
|
|
Income from
continuing operations
|
94.1
|
|
|
178.9
|
|
|
155.7
|
|
|
245.2
|
|
Income (loss) from
discontinued operations, net of tax
|
3.8
|
|
|
0.1
|
|
|
3.7
|
|
|
(0.3)
|
|
Net
income
|
97.9
|
|
|
179.0
|
|
|
159.4
|
|
|
244.9
|
|
Less: Net income
attributable to noncontrolling interests
|
(14.8)
|
|
|
(13.8)
|
|
|
(29.6)
|
|
|
(28.4)
|
|
Net income
attributable to HealthSouth
|
83.1
|
|
|
165.2
|
|
|
129.8
|
|
|
216.5
|
|
Less: Convertible
perpetual preferred stock dividends
|
(1.5)
|
|
|
(5.8)
|
|
|
(3.1)
|
|
|
(11.5)
|
|
Net income
attributable to HealthSouth common shareholders
|
$
|
81.6
|
|
|
$
|
159.4
|
|
|
$
|
126.7
|
|
|
$
|
205.0
|
|
HealthSouth
Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (Continued)
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
|
2013
|
|
|
(In Millions,
Except Per Share Data)
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
86.7
|
|
|
86.1
|
|
|
87.0
|
|
|
90.0
|
|
Diluted
|
100.6
|
|
|
99.8
|
|
|
100.8
|
|
|
103.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to HealthSouth
common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.89
|
|
|
$
|
1.82
|
|
|
$
|
1.40
|
|
|
$
|
2.24
|
|
Discontinued
operations
|
0.04
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Net income
|
$
|
0.93
|
|
|
$
|
1.82
|
|
|
$
|
1.44
|
|
|
$
|
2.24
|
|
Diluted earnings
per share attributable to HealthSouth
common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.81
|
|
|
$
|
1.66
|
|
|
$
|
1.29
|
|
|
$
|
2.09
|
|
Discontinued
operations
|
0.04
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Net income
|
$
|
0.85
|
|
|
$
|
1.66
|
|
|
$
|
1.33
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.18
|
|
|
$
|
—
|
|
|
$
|
0.36
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to HealthSouth common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
79.3
|
|
|
$
|
165.1
|
|
|
$
|
126.1
|
|
|
$
|
216.8
|
|
Income (loss) from
discontinued operations, net of tax
|
3.8
|
|
|
0.1
|
|
|
3.7
|
|
|
(0.3)
|
|
Net income
attributable to HealthSouth
|
$
|
83.1
|
|
|
$
|
165.2
|
|
|
$
|
129.8
|
|
|
$
|
216.5
|
|
HealthSouth
Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
June 30,
2014
|
|
December 31,
2013
|
|
(In
Millions)
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
65.8
|
|
|
$
|
64.5
|
|
Accounts receivable,
net of allowance for doubtful accounts of $24.8 in 2014; $23.1
in 2013
|
272.3
|
|
|
261.8
|
|
Deferred income tax
assets
|
138.9
|
|
|
139.0
|
|
Other current
assets
|
103.9
|
|
|
115.1
|
|
Total current
assets
|
580.9
|
|
|
580.4
|
|
Property and
equipment, net
|
976.5
|
|
|
910.5
|
|
Goodwill
|
491.7
|
|
|
456.9
|
|
Intangible assets,
net
|
103.3
|
|
|
88.2
|
|
Deferred income tax
assets
|
276.1
|
|
|
354.3
|
|
Other long-term
assets
|
148.0
|
|
|
144.1
|
|
Total
assets
|
$
|
2,576.5
|
|
|
$
|
2,534.4
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
55.7
|
|
|
$
|
61.9
|
|
Accrued expenses and
other current liabilities
|
243.6
|
|
|
249.7
|
|
Total current
liabilities
|
299.3
|
|
|
311.6
|
|
Long-term debt, net
of current portion
|
1,475.1
|
|
|
1,505.2
|
|
Other long-term
liabilities
|
141.1
|
|
|
142.2
|
|
|
1,915.5
|
|
|
1,959.0
|
|
Commitments and
contingencies
|
|
|
|
|
|
Convertible perpetual
preferred stock
|
93.2
|
|
|
93.2
|
|
Redeemable
noncontrolling interests
|
12.4
|
|
|
13.5
|
|
Shareholders'
equity:
|
|
|
|
|
|
HealthSouth
shareholders' equity
|
413.7
|
|
|
344.6
|
|
Noncontrolling
interests
|
141.7
|
|
|
124.1
|
|
Total shareholders'
equity
|
555.4
|
|
|
468.7
|
|
Total liabilities
and shareholders' equity
|
$
|
2,576.5
|
|
|
$
|
2,534.4
|
|
HealthSouth
Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
2014
|
|
2013
|
|
(In
Millions)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
159.4
|
|
|
$
|
244.9
|
|
(Income) loss from
discontinued operations
|
(3.7)
|
|
|
0.3
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities—
|
|
|
|
|
|
Provision for
doubtful accounts
|
16.8
|
|
|
14.4
|
|
Depreciation and
amortization
|
52.8
|
|
|
45.2
|
|
Equity in net income
of nonconsolidated affiliates
|
(6.9)
|
|
|
(6.2)
|
|
Distributions from
nonconsolidated affiliates
|
6.5
|
|
|
5.0
|
|
Stock-based
compensation
|
14.3
|
|
|
12.8
|
|
Deferred tax expense
(benefit)
|
62.7
|
|
|
(53.5)
|
|
Gain on consolidation
of Fairlawn Rehabilitation Hospital
|
(27.2)
|
|
|
—
|
|
Other
|
6.1
|
|
|
0.3
|
|
(Increase) decrease
in assets—
|
|
|
|
|
|
Accounts
receivable
|
(35.6)
|
|
|
(38.8)
|
|
Other
assets
|
8.4
|
|
|
(0.7)
|
|
Increase (decrease)
in liabilities—
|
|
|
|
|
|
Accounts
payable
|
2.7
|
|
|
9.5
|
|
Other
liabilities
|
(20.0)
|
|
|
(6.2)
|
|
Net cash used in
operating activities of discontinued operations
|
(1.2)
|
|
|
(0.2)
|
|
Total
adjustments
|
79.4
|
|
|
(18.4)
|
|
Net cash provided
by operating activities
|
235.1
|
|
|
226.8
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of property
and equipment
|
(89.5)
|
|
|
(69.0)
|
|
Capitalized software
costs
|
(11.0)
|
|
|
(11.9)
|
|
Acquisition of
business, net of cash acquired
|
(15.9)
|
|
|
(28.9)
|
|
Other
|
9.4
|
|
|
8.4
|
|
Net cash used in
investing activities
|
(107.0)
|
|
|
(101.4)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Borrowings on
revolving credit facility
|
65.0
|
|
|
132.0
|
|
Payments on revolving
credit facility
|
(95.0)
|
|
|
(59.0)
|
|
Repurchases of common
stock, including fees and expenses
|
(43.1)
|
|
|
(234.1)
|
|
Dividends paid on
common stock
|
(31.6)
|
|
|
—
|
|
Dividends paid on
convertible perpetual preferred stock
|
(3.1)
|
|
|
(11.5)
|
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(25.4)
|
|
|
(23.9)
|
|
Other
|
6.4
|
|
|
7.0
|
|
Net cash used in
financing activities
|
(126.8)
|
|
|
(189.5)
|
|
Increase
(decrease) in cash and cash equivalents
|
1.3
|
|
|
(64.1)
|
|
Cash and cash
equivalents at beginning of period
|
64.5
|
|
|
132.8
|
|
Cash and cash
equivalents at end of period
|
$
|
65.8
|
|
|
$
|
68.7
|
|
HealthSouth
Corporation and Subsidiaries
Supplemental Information
Earnings Per Share
|
|
|
|
|
QTD
|
|
|
Q2
2014
|
|
Q2
2013
|
|
|
(In Millions,
Except Per Share Data)
|
|
Adjusted
EBITDA
|
$
|
152.7
|
|
|
$
|
134.5
|
|
|
Interest expense and
amortization of debt discounts and fees
|
(27.8)
|
|
|
(24.4)
|
|
|
Depreciation and
amortization
|
(26.4)
|
|
|
(23.1)
|
|
|
Stock-based
compensation expense
|
(7.0)
|
|
|
(6.5)
|
|
|
Noncash loss on
disposal of assets
|
(1.7)
|
|
|
(1.7)
|
|
|
|
89.8
|
|
|
78.8
|
|
|
Certain nonrecurring
expenses:
|
|
|
|
|
|
|
Government, class
action, and related settlements
|
0.8
|
|
|
2.0
|
|
|
Professional
fees—accounting, tax, and legal
|
(2.0)
|
|
|
(2.2)
|
|
|
Gain on consolidation
of Fairlawn Rehabilitation Hospital
|
27.2
|
|
|
—
|
|
|
Pre-tax
income
|
115.8
|
|
|
78.6
|
|
|
Income tax (expense)
benefit (1)
|
(36.5)
|
|
(2)
|
86.5
|
|
(3)
|
Income from
continuing operations (4)
|
$
|
79.3
|
|
|
$
|
165.1
|
|
|
|
|
|
|
|
|
|
Basic
shares
|
86.7
|
|
|
86.1
|
|
|
Diluted
shares
|
100.6
|
|
|
99.8
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share (4)
|
$
|
0.89
|
|
|
$
|
1.82
|
|
|
Diluted earnings
per share (4)
|
$
|
0.81
|
|
|
$
|
1.66
|
|
|
(1) Current income tax expense (benefit) for the
three months ended June 30, 2014 and 2013 was $3.0 million and ($1.3)
million, respectively.
(2) The Company's effective income tax rate was reduced
as a result of the nontaxable gain related to its acquisition of an
additional 30% equity interest in Fairlawn Rehabilitation Hospital,
as discussed elsewhere in this document.
(3) Includes an approximate $115
million, or $1.15 per diluted
share, benefit related to the Company's settlement with the IRS
related to the previous restatement of its 2000 and 2001 financial
statements, as well as certain other tax matters, through
December 31, 2008.
(4) Income from continuing operations attributable to
HealthSouth.
HealthSouth
Corporation and Subsidiaries
Supplemental Information
Earnings Per Share
|
|
|
|
|
YTD
|
|
|
Q2
2014
|
|
Q2
2013
|
|
|
(In Millions,
Except Per Share Data)
|
|
Adjusted
EBITDA
|
$
|
296.8
|
|
|
$
|
273.8
|
|
|
Interest expense and
amortization of debt discounts and fees
|
(55.7)
|
|
|
(48.6)
|
|
|
Depreciation and
amortization
|
(52.8)
|
|
|
(45.2)
|
|
|
Stock-based
compensation expense
|
(14.3)
|
|
|
(12.8)
|
|
|
Noncash loss on
disposal or impairment of assets
|
(3.0)
|
|
|
(1.8)
|
|
|
|
171.0
|
|
|
165.4
|
|
|
Certain nonrecurring
expenses:
|
|
|
|
|
|
|
Government, class
action, and related settlements
|
0.8
|
|
|
2.0
|
|
|
Professional
fees—accounting, tax, and legal
|
(3.6)
|
|
|
(3.6)
|
|
|
Gain on consolidation
of Fairlawn Rehabilitation Hospital
|
27.2
|
|
|
—
|
|
|
Pre-tax
income
|
195.4
|
|
|
163.8
|
|
|
Income tax (expense)
benefit (1)
|
(69.3)
|
|
(2)
|
53.0
|
|
(3)
|
Income from
continuing operations (4)
|
$
|
126.1
|
|
|
$
|
216.8
|
|
|
|
|
|
|
|
|
|
Basic
shares
|
87.0
|
|
|
90.0
|
|
|
Diluted
shares
|
100.8
|
|
|
103.4
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share (4)
|
$
|
1.40
|
|
|
$
|
2.24
|
|
|
Diluted earnings
per share (4)
|
$
|
1.29
|
|
|
$
|
2.09
|
|
|
(1) Current income tax expense for the six months
ended June 30, 2014 and 2013 was $6.6
million and $0.5 million,
respectively.
(2) The Company's effective income tax rate was reduced
as a result of the nontaxable gain related to its acquisition of an
additional 30% equity interest in Fairlawn Rehabilitation Hospital,
as discussed elsewhere in this document.
(3) Includes an approximate $115
million, or $1.11 per diluted
share, benefit related to the Company's settlement with the IRS
related to the previous restatement of its 2000 and 2001 financial
statements, as well as certain other tax matters, through
December 31, 2008.
(4) Income from continuing operations attributable to
HealthSouth.
HealthSouth
Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net Income to Adjusted EBITDA
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
(In
Millions)
|
Net
income
|
$
|
97.9
|
|
|
$
|
179.0
|
|
|
$
|
159.4
|
|
|
$
|
244.9
|
|
(Income) loss from
discontinued operations, net of
tax, attributable to HealthSouth
|
(3.8)
|
|
|
(0.1)
|
|
|
(3.7)
|
|
|
0.3
|
|
Provision for income
tax expense (benefit)
|
36.5
|
|
|
(86.5)
|
|
|
69.3
|
|
|
(53.0)
|
|
Interest expense and
amortization of debt discounts
and fees
|
27.8
|
|
|
24.4
|
|
|
55.7
|
|
|
48.6
|
|
Professional
fees—accounting, tax, and legal
|
2.0
|
|
|
2.2
|
|
|
3.6
|
|
|
3.6
|
|
Government, class
action, and related settlements
|
(0.8)
|
|
|
(2.0)
|
|
|
(0.8)
|
|
|
(2.0)
|
|
Net noncash loss on
disposal or impairment of assets
|
1.7
|
|
|
1.7
|
|
|
3.0
|
|
|
1.8
|
|
Depreciation and
amortization
|
26.4
|
|
|
23.1
|
|
|
52.8
|
|
|
45.2
|
|
Stock-based
compensation expense
|
7.0
|
|
|
6.5
|
|
|
14.3
|
|
|
12.8
|
|
Net income
attributable to noncontrolling interests
|
(14.8)
|
|
|
(13.8)
|
|
|
(29.6)
|
|
|
(28.4)
|
|
Gain on consolidation
of Fairlawn Rehabilitation
Hospital
|
(27.2)
|
|
|
—
|
|
|
(27.2)
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
152.7
|
|
|
$
|
134.5
|
|
|
$
|
296.8
|
|
|
$
|
273.8
|
|
HealthSouth
Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net Cash Provided by Operating Activities to
Adjusted Free Cash Flow
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
Year Ended
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2013
|
|
|
(In
Millions)
|
Net cash provided
by operating activities
|
$
|
128.0
|
|
|
$
|
105.4
|
|
|
$
|
235.1
|
|
|
$
|
226.8
|
|
|
$
|
470.3
|
|
Impact of
discontinued operations
|
1.0
|
|
|
(0.5)
|
|
|
1.2
|
|
|
0.2
|
|
|
1.9
|
|
Net cash provided by
operating activities of
continuing operations
|
129.0
|
|
|
104.9
|
|
|
236.3
|
|
|
227.0
|
|
|
472.2
|
|
Capital expenditures
for maintenance
|
(17.6)
|
|
|
(16.8)
|
|
|
(47.8)
|
|
|
(35.7)
|
|
|
(74.8)
|
|
Dividends paid on
convertible perpetual preferred
stock
|
(1.5)
|
|
|
(5.8)
|
|
|
(3.1)
|
|
|
(11.5)
|
|
|
(23.0)
|
|
Distributions paid to
noncontrolling interests of
consolidated affiliates
|
(13.4)
|
|
|
(10.7)
|
|
|
(25.4)
|
|
|
(23.9)
|
|
|
(46.3)
|
|
Nonrecurring
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium paid on
redemption of bonds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
Cash paid (received)
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional
fees—accounting, tax, and legal
|
2.0
|
|
|
2.2
|
|
|
3.6
|
|
|
3.6
|
|
|
7.0
|
|
Government,
class action, and related settlements
|
(0.6)
|
|
|
(1.3)
|
|
|
(0.6)
|
|
|
(1.3)
|
|
|
(5.9)
|
|
Adjusted free cash
flow
|
$
|
97.9
|
|
|
$
|
72.5
|
|
|
$
|
163.0
|
|
|
$
|
158.2
|
|
|
$
|
330.9
|
|
For the three months ended June 30, 2014, net cash used in
investing activities was $39.2
million and resulted primarily from capital expenditures and
acquisition activity. Net cash used in financing activities during
the three months ended June 30, 2014 was $76.1 million and resulted primarily from net
debt payments, repurchases of common stock, cash dividends on
common stock, and distributions paid to noncontrolling interests of
consolidated affiliates.
For the three months ended June 30, 2013, net cash used in
investing activities was $53.5
million and resulted primarily from capital expenditures and
acquisition activity. Net cash used in financing activities during
the three months ended June 30, 2013 was $63.3 million and resulted primarily from net
debt payments, distributions paid to noncontrolling interests of
consolidated affiliates, and dividends paid on the Company's
convertible perpetual preferred stock.
For the six months ended June 30, 2014, net cash used in
investing activities was $107.0
million and resulted primarily from capital expenditures and
acquisition activity. Net cash used in financing activities during
the six months ended June 30, 2014 was $126.8 million and resulted primarily from
repurchases of common stock, net debt payments, cash dividends on
common stock, and distributions paid to noncontrolling interests of
consolidated affiliates.
For the six months ended June 30, 2013, net cash used in
investing activities was $101.4
million and resulted primarily from capital expenditures and
acquisition activity. Net cash used in financing activities during
the six months ended June 30, 2013 was $189.5 million and resulted primarily from
repurchases of common stock as part of the tender offer completed
in the first quarter of 2013.
For the year ended December 31, 2013, net cash used in
investing activities was $226.2
million and resulted primarily from increased capital
expenditures and the acquisition of Walton Rehabilitation Hospital.
Net cash used in financing activities during the year ended
December 31, 2013 was $312.4
million and resulted primarily from repurchases of common
stock as part of the tender offer completed in the first quarter of
2013.
HealthSouth Corporation and Subsidiaries
Forward-Looking Statements
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, 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, 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, including unauthorized access to
or theft of patient information; 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 December 31,
2013 and Form 10-Q for the quarters ended March 31, 2014, and
June 30, 2014, when filed.
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