BIRMINGHAM, Ala., Feb. 21, 2017 /PRNewswire/ -- HealthSouth
Corporation (NYSE: HLS), one of the nation's largest providers of
post-acute healthcare services, offering both facility-based and
home-based post-acute services, today reported its results of
operations for the fourth quarter ended December 31, 2016.
"We are very pleased with the 2016 operating and financial
results of our facility-based and home-based business segments,"
said Mark Tarr, President and Chief
Executive Officer of HealthSouth. "We've been able to successfully
execute on our stated objectives for the year of integrating
Reliant and CareSouth, adding capacity to both business segments,
increasing clinical collaboration between those segments, reducing
our financial leverage, and continuing our program of shareholder
distributions. With these achievements, we are poised for continued
success in 2017."
Consolidated Results
|
|
|
|
|
Growth
|
|
Q4
2016
|
|
Q4
2015
|
|
Dollars
|
|
Percent
|
|
(In Millions, Except
per Share Data)
|
Net operating
revenues
|
$
|
949.9
|
|
$
|
879.3
|
|
$
|
70.6
|
|
8.0
|
%
|
Income from
continuing operations attributable to
HealthSouth per diluted
share
|
0.68
|
|
0.48
|
|
0.20
|
|
41.7
|
%
|
Adjusted earnings per
share
|
0.72
|
|
0.59
|
|
0.13
|
|
22.0
|
%
|
Cash flows provided
by operating activities
|
116.0
|
|
116.6
|
|
(0.6)
|
|
(0.5)%
|
|
Adjusted
EBITDA
|
198.8
|
|
191.5
|
|
7.3
|
|
3.8
|
%
|
Adjusted free cash
flow
|
78.3
|
|
83.0
|
|
(4.7)
|
|
(5.7)%
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
Cash flows provided
by operating activities
|
605.5
|
|
484.8
|
|
120.7
|
|
24.9
|
%
|
Adjusted free cash
flow
|
462.9
|
|
389.0
|
|
73.9
|
|
19.0
|
%
|
Revenue growth was driven primarily by pricing growth in the
inpatient rehabilitation segment and volume growth in the home
health and hospice segment.
The increase in income from continuing operations attributable
to HealthSouth per diluted share and adjusted earnings per share
primarily resulted from increased Adjusted EBITDA. Both earnings
per share amounts also included the impact of a lower effective tax
rate year over year, lower interest expense resulting from the
redemptions of the Company's 7.75% Senior Notes due 2022 in the
first nine months of 2016, and a lower share count resulting from
share repurchases. The Company benefited from a lower state tax
rate driven by the Reliant and CareSouth acquisitions.
Cash flows provided by operating activities were relatively flat
for the fourth quarter of 2016 compared to the fourth quarter of
2015. Growth in cash flows provided by operating activities for
full-year 2016 primarily resulted from revenue growth.
Revenue growth also was the primary driver of the increase in
Adjusted EBITDA.
Adjusted free cash flow decreased in the fourth quarter of 2016
compared to the fourth quarter of 2015 due to increased maintenance
capital expenditures, as discussed below, and increased cash
payments for taxes due to the exhaustion of the Company's federal
net operating loss in December 2016
and the tax impact of the gain on the sale of its pediatric home
health assets in November 2016.
Adjusted free cash flow for full-year 2016 grew 19.0% due to
increased Adjusted EBITDA and favorable working capital changes.
Working capital changes were mainly attributable to the recovery of
payments that were delayed for administrative reasons at the
Company's largest Medicare Administrative Contractor ("MAC") and
the timing of payroll-related liabilities. Adjusted free cash flow
in 2016 also included increased cash interest expense related to
the financing of the Reliant and CareSouth acquisitions, increased
cash payments for taxes, as discussed above, and increased
maintenance capital expenditures. Increased maintenance capital
expenditures in 2016 resulted from growth in the Company's
inpatient rehabilitation segment, enhancements to the hospital
maintenance program, and refurbishments at certain larger
hospitals.
See attached supplemental information for calculations of
non-GAAP measures and reconciliations to their most comparable GAAP
measure.
Inpatient Rehabilitation Segment Results
|
|
|
|
|
Growth
|
|
Q4
2016
|
|
Q4
2015
|
|
Dollars
|
|
Percent
|
Net operating
revenues:
|
(In
Millions)
|
Inpatient
|
$
|
740.9
|
|
$
|
696.8
|
|
$
|
44.1
|
|
6.3
|
%
|
Outpatient and
other
|
26.7
|
|
29.1
|
|
(2.4)
|
|
(8.2)%
|
|
Total segment
revenue
|
$
|
767.6
|
|
$
|
725.9
|
|
$
|
41.7
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
(Actual
Amounts)
|
Discharges
|
41,474
|
|
40,891
|
|
583
|
|
1.4
|
%
|
Same-store discharge
growth
|
|
|
|
|
|
|
0.1
|
%
|
Net patient
revenue per discharge
|
$
|
17,864
|
|
$
|
17,040
|
|
$
|
824
|
|
4.8
|
%
|
|
|
|
(In
Millions)
|
Adjusted
EBITDA
|
$
|
197.6
|
|
$
|
189.9
|
|
$
|
7.7
|
|
4.1
|
%
|
- Revenue - Revenue growth resulted primarily from an
increase in net patient revenue per discharge and new-store volume
growth. Growth in net patient revenue per discharge resulted from
patient mix (higher percentage of stroke patients and the
integration of the Reliant hospitals). Discharge growth from new
stores resulted from the Company's joint ventures in Hot Springs, Arkansas (February 2016), Bryan,
Texas (August 2016), and
Broken Arrow, Oklahoma
(August 2016), as well as the opening
of wholly owned hospitals in Franklin,
Tennessee (December 2015) and
Modesto, California (October 2016).
The decrease in outpatient and
other revenues primarily was due to the closure of six outpatient
programs in certain markets.
- Adjusted EBITDA - The increase in Adjusted EBITDA for
the inpatient rehabilitation segment resulted primarily from
revenue growth. Salaries and benefits increased as a percent of net
operating revenues due to the ramp up of new stores and staffing
increases at the Reliant hospitals since their acquisition on
October 1, 2015. Hospital operating
expenses as a percent of net operating revenues decreased by 20
basis points year over year as higher self-insurance costs were
offset by continued supply chain efficiencies, including the
continued transition of brand name drugs to generic. Bad debt
expense as a percent of net operating revenues decreased from 1.8%
in the fourth quarter of 2015 to 1.7% in the fourth quarter of 2016
due primarily to the recovery of payments that were delayed for
administrative reasons at the Company's largest MAC.
Home Health and Hospice Segment Results
|
|
|
|
|
Growth
|
|
Q4
2016
|
|
Q4
2015
|
|
Dollars
|
|
Percent
|
Net operating
revenues:
|
(In
Millions)
|
Home health
|
$
|
165.2
|
|
$
|
144.4
|
|
$
|
20.8
|
|
14.4
|
%
|
Hospice and
other
|
17.1
|
|
9.0
|
|
8.1
|
|
90.0
|
%
|
Total segment
revenue
|
$
|
182.3
|
|
$
|
153.4
|
|
$
|
28.9
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
(Actual
Amounts)
|
Admissions
|
27,957
|
|
22,892
|
|
5,065
|
|
22.1
|
%
|
Same-store admissions
growth
|
|
|
|
|
|
|
14.0
|
%
|
Episodes
|
49,253
|
|
42,697
|
|
6,556
|
|
15.4
|
%
|
Same-store episode
growth
|
|
|
|
|
|
|
12.4
|
%
|
Revenue per
episode
|
$
|
3,023
|
|
$
|
3,005
|
|
$
|
18
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
(In
Millions)
|
Adjusted
EBITDA
|
$
|
28.0
|
|
$
|
26.5
|
|
$
|
1.5
|
|
5.7
|
%
|
- Revenue - Revenue growth resulted from strong same-store
and new-store volume growth. Growth from new stores resulted
primarily from the acquisition of CareSouth (acquired November 2, 2015).
Higher revenue per episode was due
to patient mix offset partially by Medicare reimbursement rate
cuts. The shift in patient mix was driven by increased clinical
collaboration with HealthSouth's inpatient rehabilitation hospitals
and the integration of CareSouth.
- Adjusted EBITDA - Growth in Adjusted EBITDA resulted
primarily from revenue growth. Adjusted EBITDA for the segment was
impacted by higher cost per visit (driven by an increased
percentage of therapy patients), salary and benefit cost increases,
and expenses related to the integration of CareSouth.
Repurchases of Common Stock
During the fourth quarter of 2016, the Company repurchased
1,054,754 shares of its common stock for $41.5 million in the open market. Throughout
2016, the Company repurchased a total of 1,666,721 shares of its
common stock for approximately $64
million. As of December 31,
2016, the Company had a remaining repurchase authorization
of approximately $96 million.
Full-Year Consolidated Results
|
Full-Year
|
|
Growth
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
(In Millions, Except
per Share Data)
|
Net operating
revenues
|
$
|
3,707.2
|
|
$
|
3,162.9
|
|
$
|
544.3
|
|
17.2
|
%
|
Income from
continuing operations attributable to
HealthSouth per diluted
share
|
2.59
|
|
1.92
|
|
0.67
|
|
34.9
|
%
|
Adjusted earnings per
share
|
2.67
|
|
2.24
|
|
0.43
|
|
19.2
|
%
|
Adjusted
EBITDA
|
793.6
|
|
682.5
|
|
111.1
|
|
16.3
|
%
|
Revenue growth primarily resulted from strong volumes in both of
the Company's operating segments and included the effect of the
Company's acquisitions of Reliant on October
1, 2015 and CareSouth on November 2,
2015.
The increase in income from continuing operations attributable
to HealthSouth per diluted share and adjusted earnings per share
primarily resulted from increased Adjusted EBITDA. Both earnings
per share amounts included the impact of higher depreciation and
amortization related to acquisitions and capital investments,
higher interest expense related to the financing of the Reliant and
CareSouth acquisitions, and a lower share count resulting from
share repurchases. See the attached supplemental information for
additional details regarding these calculations.
"Our substantial free cash flow generation in 2016 allowed us to
further strengthen our balance sheet, reducing our financial
leverage, while we continued our shareholder distributions," said
Doug Coltharp, Executive Vice
President and Chief Financial Officer of HealthSouth. "In 2017, we
will continue to enjoy significant flexibility in how we allocate
free cash flow."
2017 Guidance
In a current report on Form 8-K dated January 9, 2017, the Company provided its initial
guidance ranges for 2017. The Company is confirming the following
guidance ranges.
Full-Year 2017
Guidance Ranges
|
(In Millions, Except
Per Share Data)
|
Net operating
revenues
|
$3,850 to
$3,950
|
Adjusted
EBITDA
|
$800 to
$820
|
Adjusted earnings per
share from continuing operations attributable
to HealthSouth
|
$2.61 to
$2.73
|
For additional considerations regarding the Company's 2017
guidance ranges, see the supplemental information posted on the
Company's website at http://investor.healthsouth.com. See also the
"Other Information" section below for an explanation of why the
Company does not provide guidance for comparable GAAP measures for
Adjusted EBITDA and adjusted earnings per share.
Earnings Conference Call and Webcast
The Company will host an investor conference call at
9:00 a.m. Eastern Time on Wednesday,
February 22, 2017 to discuss its results for the fourth
quarter of 2016. For reference during the call, the Company will
post certain supplemental information at
http://investor.healthsouth.com.
The conference call may be accessed by dialing 877 587-6761 and
giving the pass code 53698402. 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 one of the nation's largest providers of
post-acute healthcare services, offering both facility-based and
home-based post-acute services in 35 states and Puerto Rico through its network of inpatient
rehabilitation hospitals, home health agencies, and hospice
agencies. 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 Annual Report on Form
10-K for the year ended December 31, 2016 (the "2016 Form
10-K"), when filed, as well as the Company's Current Report on Form
8-K filed on February 21, 2017 (the "Q4 Earnings Form 8-K"),
to which this press release is attached as Exhibit 99.1. In
addition, the Company will post supplemental information today on
its website at http://investor.healthsouth.com or reference during
its February 22, 2017 earnings call.
The financial data contained in the press release and
supplemental information include non-GAAP financial measures,
including the Company's adjusted earnings per share, leverage
ratio, Adjusted EBITDA, and adjusted free cash flow.
Reconciliations to their most comparable GAAP measure, except with
regard to non-GAAP guidance, are included below or in the Q4
Earnings Form 8-K. Readers are encouraged to review the "Note
Regarding Presentation of Non-GAAP Financial Measures" included in
the Q4 Earnings Form 8-K which provides further explanation and
disclosure regarding the Company's use of these non-GAAP financial
measures.
Excluding net operating revenues, the Company does not provide
guidance on a GAAP basis because it is unable to predict, with
reasonable certainty, the future impact of items that are deemed to
be outside the control of the Company or otherwise non-indicative
of its ongoing operations. Such items include government, class
action, and related settlements; professional fees—accounting, tax,
and legal; mark-to-market adjustments for stock appreciation
rights; gains or losses related to hedging instruments; loss on
early extinguishment of debt; adjustments to its income tax
provision (such as valuation allowance adjustments and settlements
of income tax claims); items related to corporate and facility
restructurings; and certain other items the Company believes to be
non-indicative of its ongoing operations. These items cannot be
reasonably predicted and will depend on several factors, including
industry and market conditions, and could be material to the
Company's results computed in accordance with GAAP.
However, the following reasonably estimable GAAP measures for
2017 would be included in the reconciliation for Adjusted
EBITDA:
- Provision for doubtful accounts - estimate of 1.8% to 2.0% of
net operating revenues
- Interest expense and amortization of debt discounts and fees -
estimate of $165 million to $175
million
- Amortization of debt-related items - approximately $15 million
The Q4 Earnings Form 8-K and, when filed, the 2016 Form 10-K 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)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
(In
Millions)
|
Net operating
revenues
|
$
|
949.9
|
|
|
$
|
879.3
|
|
|
$
|
3,707.2
|
|
|
$
|
3,162.9
|
Less: Provision for
doubtful accounts
|
(14.5)
|
|
|
(14.0)
|
|
|
(61.2)
|
|
|
(47.2)
|
Net operating
revenues less provision for doubtful
accounts
|
935.4
|
|
|
865.3
|
|
|
3,646.0
|
|
|
3,115.7
|
Operating
expenses:
|
|
|
|
|
|
|
|
Salaries and
benefits
|
516.3
|
|
|
466.8
|
|
|
1,985.9
|
|
|
1,670.8
|
Other operating
expenses
|
125.1
|
|
|
118.0
|
|
|
492.1
|
|
|
432.1
|
Occupancy
costs
|
17.8
|
|
|
16.8
|
|
|
71.3
|
|
|
53.9
|
Supplies
|
35.8
|
|
|
34.6
|
|
|
140.0
|
|
|
128.7
|
General and
administrative expenses
|
36.8
|
|
|
36.0
|
|
|
133.4
|
|
|
133.3
|
Depreciation and
amortization
|
43.8
|
|
|
41.4
|
|
|
172.6
|
|
|
139.7
|
Government, class
action, and related settlements
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
7.5
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
0.3
|
|
|
1.9
|
|
|
3.0
|
Total operating
expenses
|
775.6
|
|
|
713.4
|
|
|
2,997.2
|
|
|
2,569.0
|
Loss on early
extinguishment of debt
|
—
|
|
|
2.4
|
|
|
7.4
|
|
|
22.4
|
Interest expense and
amortization of debt discounts and
fees
|
41.6
|
|
|
44.6
|
|
|
172.1
|
|
|
142.9
|
Other
income
|
(0.8)
|
|
|
(1.3)
|
|
|
(2.9)
|
|
|
(5.5)
|
Equity in net income
of nonconsolidated affiliates
|
(2.5)
|
|
|
(2.4)
|
|
|
(9.8)
|
|
|
(8.7)
|
Income from
continuing operations before income tax
expense
|
121.5
|
|
|
108.6
|
|
|
482.0
|
|
|
395.6
|
Provision for income
tax expense
|
39.7
|
|
|
43.5
|
|
|
163.9
|
|
|
141.9
|
Income from
continuing operations
|
81.8
|
|
|
65.1
|
|
|
318.1
|
|
|
253.7
|
Income (loss) from
discontinued operations, net of tax
|
0.3
|
|
|
0.7
|
|
|
—
|
|
|
(0.9)
|
Net
income
|
82.1
|
|
|
65.8
|
|
|
318.1
|
|
|
252.8
|
Less: Net income
attributable to noncontrolling interests
|
(16.8)
|
|
|
(18.8)
|
|
|
(70.5)
|
|
|
(69.7)
|
Net income
attributable to HealthSouth
|
65.3
|
|
|
47.0
|
|
|
247.6
|
|
|
183.1
|
Less: Convertible
perpetual preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
Net income
attributable to HealthSouth common
shareholders
|
$
|
65.3
|
|
|
$
|
47.0
|
|
|
$
|
247.6
|
|
|
$
|
181.5
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Operations (Continued)
|
(Unaudited)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
(In Millions,
Except Per Share Data)
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
88.6
|
|
|
90.1
|
|
|
89.1
|
|
|
89.4
|
Diluted
|
99.2
|
|
|
100.6
|
|
|
99.5
|
|
|
101.0
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to HealthSouth
common shareholders:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.73
|
|
|
$
|
0.51
|
|
|
$
|
2.77
|
|
|
$
|
2.03
|
Discontinued
operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
(0.01)
|
Net income
|
$
|
0.73
|
|
|
$
|
0.52
|
|
|
$
|
2.77
|
|
|
$
|
2.02
|
Diluted earnings
per share attributable to
HealthSouth common
shareholders:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.68
|
|
|
$
|
0.48
|
|
|
$
|
2.59
|
|
|
$
|
1.92
|
Discontinued
operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
(0.01)
|
Net income
|
$
|
0.68
|
|
|
$
|
0.49
|
|
|
$
|
2.59
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.94
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
Amounts
attributable to HealthSouth common
shareholders:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
65.0
|
|
|
$
|
46.3
|
|
|
$
|
247.6
|
|
|
$
|
184.0
|
Income (loss) from
discontinued operations, net of tax
|
0.3
|
|
|
0.7
|
|
|
—
|
|
|
(0.9)
|
Net income
attributable to HealthSouth
|
$
|
65.3
|
|
|
$
|
47.0
|
|
|
$
|
247.6
|
|
|
$
|
183.1
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
(In
Millions)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
40.5
|
|
$
|
61.6
|
Restricted
cash
|
60.9
|
|
45.9
|
Accounts receivable,
net of allowance for doubtful accounts of $53.9 in 2016;
$39.3
in 2015
|
443.8
|
|
410.5
|
Prepaid expenses and
other current assets
|
109.3
|
|
80.7
|
Total current
assets
|
654.5
|
|
598.7
|
Property and
equipment, net
|
1,391.8
|
|
1,310.1
|
Goodwill
|
1,927.2
|
|
1,890.1
|
Intangible assets,
net
|
411.3
|
|
419.4
|
Deferred income tax
assets
|
75.8
|
|
190.8
|
Other long-term
assets
|
221.3
|
|
197.0
|
Total
assets
|
$
|
4,681.9
|
|
$
|
4,606.1
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
37.1
|
|
$
|
36.8
|
Accounts
payable
|
68.3
|
|
61.6
|
Accrued
payroll
|
147.3
|
|
126.2
|
Accrued interest
payable
|
25.8
|
|
29.7
|
Other current
liabilities
|
197.1
|
|
172.1
|
Total current
liabilities
|
475.6
|
|
426.4
|
Long-term debt, net
of current portion
|
2,979.3
|
|
3,134.7
|
Self-insured
risks
|
110.4
|
|
101.6
|
Other long-term
liabilities
|
49.6
|
|
43.0
|
|
3,614.9
|
|
3,705.7
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
138.3
|
|
121.1
|
Shareholders'
equity:
|
|
|
|
HealthSouth
shareholders' equity
|
735.9
|
|
611.4
|
Noncontrolling
interests
|
192.8
|
|
167.9
|
Total shareholders'
equity
|
928.7
|
|
779.3
|
Total liabilities
and shareholders' equity
|
$
|
4,681.9
|
|
$
|
4,606.1
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
For the Year Ended
December 31,
|
|
2016
|
|
2015
|
|
(In
Millions)
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
318.1
|
|
$
|
252.8
|
Loss from
discontinued operations, net of tax
|
—
|
|
0.9
|
Adjustments to
reconcile net income to net cash provided by operating
activities—
|
|
|
|
Provision for
doubtful accounts
|
61.2
|
|
47.2
|
Provision for
government, class action, and related settlements
|
—
|
|
7.5
|
Depreciation and
amortization
|
172.6
|
|
139.7
|
Amortization of
debt-related items
|
13.8
|
|
14.3
|
Loss on early
extinguishment of debt
|
7.4
|
|
22.4
|
Equity in net income
of nonconsolidated affiliates
|
(9.8)
|
|
(8.7)
|
Distributions from
nonconsolidated affiliates
|
8.5
|
|
7.7
|
Stock-based
compensation
|
27.4
|
|
26.2
|
Deferred tax
expense
|
132.9
|
|
127.1
|
Other, net
|
0.1
|
|
(0.6)
|
Change in assets and
liabilities, net of acquisitions—
|
|
|
|
Accounts
receivable
|
(127.5)
|
|
(134.1)
|
Prepaid expenses and
other assets
|
(3.3)
|
|
(9.6)
|
Accounts
payable
|
6.3
|
|
0.9
|
Accrued
payroll
|
9.8
|
|
(18.1)
|
Other
liabilities
|
11.8
|
|
13.8
|
Premium received on
bond issuance
|
—
|
|
9.8
|
Premium paid on
redemption of bonds
|
(5.8)
|
|
(13.7)
|
Windfall tax benefits
from share-based compensation
|
(17.3)
|
|
—
|
Net cash used in
operating activities of discontinued operations
|
(0.7)
|
|
(0.7)
|
Total
adjustments
|
287.4
|
|
231.1
|
Net cash provided
by operating activities
|
605.5
|
|
484.8
|
|
|
|
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows (Continued)
|
(Unaudited)
|
|
|
For the Year Ended
December 31,
|
|
2016
|
|
2015
|
|
(In
Millions)
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions of
businesses, net of cash acquired
|
(48.1)
|
|
(985.1)
|
Purchases of property
and equipment
|
(177.7)
|
|
(128.4)
|
Additions to
capitalized software costs
|
(25.2)
|
|
(28.1)
|
Proceeds from
disposal of assets
|
23.9
|
|
4.0
|
Proceeds from sale of
marketable securities
|
—
|
|
12.8
|
Purchase of
restricted investments
|
(1.3)
|
|
(7.1)
|
Net change in
restricted cash
|
(15.1)
|
|
2.7
|
Other, net
|
(1.6)
|
|
(1.1)
|
Net cash provided by
investing activities of discontinued operations
|
0.1
|
|
0.5
|
Net cash used in
investing activities
|
(245.0)
|
|
(1,129.8)
|
Cash flows from
financing activities:
|
|
|
|
Principal borrowing
on term loan facilities
|
—
|
|
250.0
|
Proceeds from bond
issuance
|
—
|
|
1,400.0
|
Principal payments on
debt, including pre-payments
|
(202.1)
|
|
(597.4)
|
Borrowings on
revolving credit facility
|
335.0
|
|
540.0
|
Payments on revolving
credit facility
|
(313.0)
|
|
(735.0)
|
Principal payments
under capital lease obligations
|
(13.3)
|
|
(11.0)
|
Debt amendment and
issuance costs
|
—
|
|
(31.9)
|
Repurchases of common
stock, including fees and expenses
|
(65.6)
|
|
(45.3)
|
Dividends paid on
common stock
|
(83.8)
|
|
(77.2)
|
Dividends paid on
convertible perpetual preferred stock
|
—
|
|
(3.1)
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(64.9)
|
|
(54.4)
|
Windfall tax benefits
from share-based compensation
|
17.3
|
|
—
|
Other, net
|
8.8
|
|
5.2
|
Net cash (used in)
provided by financing activities
|
(381.6)
|
|
639.9
|
(Decrease)
increase in cash and cash equivalents
|
(21.1)
|
|
(5.1)
|
Cash and cash
equivalents at beginning of period
|
61.6
|
|
66.7
|
Cash and cash
equivalents at end of period
|
$
|
40.5
|
|
$
|
61.6
|
Supplemental
schedule of noncash financing activity:
|
|
|
|
Preferred stock
conversion
|
$
|
—
|
|
$
|
93.2
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Earnings Per
Share
|
|
|
QTD
|
|
YTD
|
|
|
Q4
2016
|
|
|
Q4
2015
|
|
Q4
2016
|
|
|
Q4
2015
|
|
|
(In Millions,
Except Per Share Data)
|
Adjusted
EBITDA
|
$
|
198.8
|
|
|
$
|
191.5
|
|
$
|
793.6
|
|
|
$
|
682.5
|
|
Interest expense and
amortization of debt discounts
and fees
|
(41.6)
|
|
|
(44.6)
|
|
(172.1)
|
|
|
(142.9)
|
|
Depreciation and
amortization
|
(43.8)
|
|
|
(41.4)
|
|
(172.6)
|
|
|
(139.7)
|
|
Stock-based
compensation expense
|
(10.0)
|
|
|
(4.4)
|
|
(27.4)
|
|
|
(26.2)
|
|
Noncash gain (loss) on
disposal or impairment of
assets
|
1.3
|
|
|
(2.4)
|
|
(0.7)
|
|
|
(2.6)
|
|
|
104.7
|
|
|
98.7
|
|
420.8
|
|
|
371.1
|
|
Certain items
non-indicative of ongoing operations:
|
|
|
|
|
|
|
|
|
Government, class
action, and related settlements
|
—
|
|
|
0.5
|
|
—
|
|
|
(7.5)
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
(0.3)
|
|
(1.9)
|
|
|
(3.0)
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(2.4)
|
|
(7.4)
|
|
|
(22.4)
|
|
Transaction
costs
|
—
|
|
|
(6.7)
|
|
—
|
|
|
(12.3)
|
|
Pre-tax
income
|
104.7
|
|
|
89.8
|
|
411.5
|
|
|
325.9
|
|
Income tax expense
(1)
|
(39.7)
|
|
|
(43.5)
|
(2)
|
(163.9)
|
|
|
(141.9)
|
(2)
|
Income from
continuing operations (3)
|
$
|
65.0
|
|
|
$
|
46.3
|
|
$
|
247.6
|
|
|
$
|
184.0
|
|
|
|
|
|
|
|
|
|
|
Basic
shares
|
88.6
|
|
|
90.1
|
|
89.1
|
|
|
89.4
|
|
Diluted
shares
|
99.2
|
|
|
100.6
|
|
99.5
|
|
|
101.0
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share (3)
|
$
|
0.73
|
|
|
$
|
0.51
|
|
$
|
2.77
|
|
|
$
|
2.03
|
|
Diluted earnings
per share (3)
|
$
|
0.68
|
|
|
$
|
0.48
|
|
$
|
2.59
|
|
|
$
|
1.92
|
|
|
|
(1)
|
Current income tax
expense for the three months ended December 31, 2016 and 2015
was $17.4 million and $4.4
million, respectively. Current income tax expense for the year
ended December 31, 2016 and 2015 was $31.0
million and $14.8 million, respectively.
|
(2)
|
The Company's
effective income tax rate was higher than the statutory rate due to
an increase in the Company's
valuation allowance related to certain state net operating
losses.
|
(3)
|
Income from
continuing operations attributable to HealthSouth.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
Q4
|
|
Full
Year
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Earnings per
share, as reported
|
$
|
0.68
|
|
|
$
|
0.48
|
|
|
$
|
2.59
|
|
|
$
|
1.92
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
Government, class
action, and related settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
0.04
|
Professional fees —
accounting, tax, and legal
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.02
|
Mark-to-market
adjustments for stock appreciation rights
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
Income tax valuation
allowance and other tax adjustments
|
(0.01)
|
|
|
0.05
|
|
|
(0.01)
|
|
|
0.05
|
Transaction
costs
|
—
|
|
|
0.05
|
|
|
—
|
|
|
0.08
|
Loss on early
extinguishment of debt
|
—
|
|
|
0.01
|
|
|
0.04
|
|
|
0.13
|
Sale of home health
pediatric assets and hospital
|
0.03
|
|
|
—
|
|
|
0.02
|
|
|
—
|
Adjusted earnings
per share*
|
$
|
0.72
|
|
|
$
|
0.59
|
|
|
$
|
2.67
|
|
|
$
|
2.24
|
|
|
*
|
Adjusted EPS may not
sum due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Three
Months Ended December 31, 2016
|
|
|
Adjustments
|
|
|
|
|
As
Reported
|
|
Mark-to-
Market
Adjustment
for Stock
Appreciation
Rights
|
|
Sale of
Pediatric
Home Health
Assets and
Hospital
|
|
Income Tax
Valuation
and Other
Adjustments
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA*
|
$
|
198.8
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
198.8
|
Depreciation and
amortization
|
(43.8)
|
|
—
|
|
—
|
|
—
|
|
(43.8)
|
Interest expense and
amortization of debt discounts and fees
|
(41.6)
|
|
—
|
|
—
|
|
—
|
|
(41.6)
|
Stock-based
compensation
|
(10.0)
|
|
3.0
|
|
—
|
|
—
|
|
(7.0)
|
Loss on disposal or
impairment of assets
|
1.3
|
|
—
|
|
(3.3)
|
|
—
|
|
(2.0)
|
Income from
continuing operations before income tax expense
|
104.7
|
|
3.0
|
|
(3.3)
|
|
—
|
|
104.4
|
Provision for income
tax expense
|
(39.7)
|
|
(1.1)
|
|
6.1
|
|
(0.6)
|
|
(35.3)
|
Income from
continuing operations attributable to HealthSouth
|
$
|
65.0
|
|
$
|
1.9
|
|
$
|
2.8
|
|
$
|
(0.6)
|
|
$
|
69.1
|
Add: Interest on
convertible debt, net of tax
|
2.5
|
|
|
|
|
|
|
|
2.5
|
Numerator for
diluted earnings per share
|
$
|
67.5
|
|
|
|
|
|
|
|
$
|
71.6
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations**
|
$
|
0.68
|
|
$
|
0.02
|
|
$
|
0.03
|
|
$
|
(0.01)
|
|
$
|
0.72
|
Diluted shares
used in calculation
|
99.2
|
|
|
|
|
|
|
|
|
|
|
*
|
See reconciliation of
net income to Adjusted EBITDA
|
**
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Three
Months Ended December 31, 2015
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Gov't,
Class
Action, &
Related
Settlements
|
|
Prof.
Fees -
Acct.,
Tax, &
Legal
|
|
Income Tax
Valuation
Allowance
& Other
Adj.
|
|
Transaction
Costs
|
|
Loss on
Early
Exting.
of Debt
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA*
|
$
|
191.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
191.5
|
Depreciation and
amortization
|
(41.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41.4)
|
Government, class
action, and related settlements
|
0.5
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Professional fees -
accounting, tax, and legal
|
(0.3)
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Loss on early
extinguishment of debt
|
(2.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
Interest expense and
amortization of debt discounts and fees
|
(44.6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.6)
|
Stock-based
compensation
|
(4.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.4)
|
Loss on disposal or
impairment of assets
|
(2.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.4)
|
Transaction
costs
|
(6.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.7
|
|
|
—
|
|
|
—
|
Income from
continuing operations before income tax
expense
|
89.8
|
|
|
(0.5)
|
|
|
0.3
|
|
|
—
|
|
|
6.7
|
|
|
2.4
|
|
|
98.7
|
Provision for income
tax expense
|
(43.5)
|
|
|
0.2
|
|
|
(0.1)
|
|
|
4.7
|
|
|
(2.1)
|
|
|
(1.0)
|
|
|
(41.8)
|
Income from
continuing operations attributable to
HealthSouth
|
$
|
46.3
|
|
|
$
|
(0.3)
|
|
|
$
|
0.2
|
|
|
$
|
4.7
|
|
|
$
|
4.6
|
|
|
$
|
1.4
|
|
|
$
|
56.9
|
Add: Interest on
convertible debt, net of tax
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
2.4
|
Numerator for
diluted earnings per share
|
$
|
48.7
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations**
|
$
|
0.48
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.59
|
Diluted shares
used in calculation
|
100.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
See reconciliation of
net income to Adjusted EBITDA
|
**
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Year Ended
December 31, 2016
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Prof.
Fees -
Acct.,
Tax, &
Legal
|
|
Mark-to-
Market
Adjustment
for Stock
Appreciation
Rights
|
|
Loss on
Early
Exting.
of Debt
|
|
Sale of
Pediatric
Home
Health
Assets and
Hospital
|
|
Income Tax
Valuation
and Other
Adjustments
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA*
|
$
|
793.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
793.6
|
Depreciation and
amortization
|
(172.6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172.6)
|
Professional fees -
accounting, tax, and legal
|
(1.9)
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Loss on early
extinguishment of debt
|
(7.4)
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
—
|
Interest expense and
amortization of debt discounts and fees
|
(172.1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172.1)
|
Stock-based
compensation
|
(27.4)
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25.8)
|
Loss on disposal or
impairment of assets
|
(0.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.2)
|
|
|
—
|
|
|
(4.9)
|
Income from
continuing operations before income
tax expense
|
411.5
|
|
|
1.9
|
|
|
1.6
|
|
|
7.4
|
|
|
(4.2)
|
|
|
—
|
|
|
418.2
|
Provision for income
tax expense
|
(163.9)
|
|
|
(0.8)
|
|
|
(0.6)
|
|
|
(3.0)
|
|
|
6.5
|
|
|
(0.6)
|
|
|
(162.4)
|
Income from
continuing operations attributable to
HealthSouth
|
$
|
247.6
|
|
|
$
|
1.1
|
|
|
$
|
1.0
|
|
|
$
|
4.4
|
|
|
$
|
2.3
|
|
|
$
|
(0.6)
|
|
|
$
|
255.8
|
Add: Interest on
convertible debt, net of tax
|
9.7
|
|
|
|
|
|
|
|
|
|
|
|
|
9.7
|
Numerator for
diluted earnings per share
|
$
|
257.3
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
265.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing
operations**
|
$
|
2.59
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
(0.01)
|
|
|
$
|
2.67
|
Diluted shares
used in calculation
|
99.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
See reconciliation of
net income to Adjusted EBITDA
|
**
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Year Ended
December 31, 2015
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Gov't,
Class
Action, &
Related
Settlements
|
|
Prof.
Fees -
Acct.,
Tax,
& Legal
|
|
Income Tax
Valuation
Allowance
& Other
Adj.
|
|
Mark-to-
Market
Adjustment
for Stock
Appreciation
Rights
|
|
Transaction
Costs
|
|
Loss
on
Early
Exting.
of Debt
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA*
|
$
|
682.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
682.5
|
Depreciation and
amortization
|
(139.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139.7)
|
Government, class
action, and related settlements
|
(7.5)
|
|
|
7.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Professional fees -
accounting, tax, and legal
|
(3.0)
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Loss on early
extinguishment of debt
|
(22.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.4
|
|
|
—
|
Interest expense and
amortization of debt discounts and fees
|
(142.9)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(142.9)
|
Stock-based
compensation
|
(26.2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
(25.0)
|
Loss on disposal or
impairment of assets
|
(2.6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.6)
|
Transaction
costs
|
(12.3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.3
|
|
|
—
|
|
|
—
|
Income from
continuing operations before income tax
expense
|
325.9
|
|
|
7.5
|
|
|
3.0
|
|
|
—
|
|
|
1.2
|
|
|
12.3
|
|
|
22.4
|
|
|
372.3
|
Provision for income
tax expense
|
(141.9)
|
|
|
(3.0)
|
|
|
(1.2)
|
|
|
4.7
|
|
|
(0.5)
|
|
|
(4.1)
|
|
|
(9.0)
|
|
|
(155.0)
|
Income from
continuing operations attributable to
HealthSouth
|
$
|
184.0
|
|
|
$
|
4.5
|
|
|
$
|
1.8
|
|
|
$
|
4.7
|
|
|
$
|
0.7
|
|
|
$
|
8.2
|
|
|
$
|
13.4
|
|
|
$
|
217.3
|
Add: Interest on
convertible debt, net of tax
|
9.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.4
|
Numerator for
diluted earnings per share
|
$
|
193.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
226.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations**
|
$
|
1.92
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
2.24
|
Diluted shares
used in calculation
|
101.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
See reconciliation of
net income to Adjusted EBITDA
|
**
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
|
Supplemental
Information
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
(In
Millions)
|
Net
income
|
$
|
82.1
|
|
|
$
|
65.8
|
|
|
$
|
318.1
|
|
|
$
|
252.8
|
(Income) loss from
discontinued operations, net of tax,
attributable to
HealthSouth
|
(0.3)
|
|
|
(0.7)
|
|
|
—
|
|
|
0.9
|
Provision for income
tax expense
|
39.7
|
|
|
43.5
|
|
|
163.9
|
|
|
141.9
|
Interest expense and
amortization of debt discounts and fees
|
41.6
|
|
|
44.6
|
|
|
172.1
|
|
|
142.9
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
0.3
|
|
|
1.9
|
|
|
3.0
|
Government, class
action, and related settlements
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
7.5
|
Loss on early
extinguishment of debt
|
—
|
|
|
2.4
|
|
|
7.4
|
|
|
22.4
|
Net noncash (gain)
loss on disposal or impairment of assets
|
(1.3)
|
|
|
2.4
|
|
|
0.7
|
|
|
2.6
|
Depreciation and
amortization
|
43.8
|
|
|
41.4
|
|
|
172.6
|
|
|
139.7
|
Stock-based
compensation expense
|
10.0
|
|
|
4.4
|
|
|
27.4
|
|
|
26.2
|
Net income
attributable to noncontrolling interests
|
(16.8)
|
|
|
(18.8)
|
|
|
(70.5)
|
|
|
(69.7)
|
Transaction
costs
|
—
|
|
|
6.7
|
|
|
—
|
|
|
12.3
|
Adjusted
EBITDA
|
$
|
198.8
|
|
|
$
|
191.5
|
|
|
$
|
793.6
|
|
|
$
|
682.5
|
Reconciliation of
Segment Adjusted EBITDA to Income from Continuing Operations Before
Income Tax Expense
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
In
Millions
|
Total segment
Adjusted EBITDA
|
$
|
225.6
|
|
|
$
|
216.4
|
|
|
$
|
899.6
|
|
|
$
|
774.1
|
General and
administrative expenses
|
(36.8)
|
|
|
(36.0)
|
|
|
(133.4)
|
|
|
(133.3)
|
Depreciation and
amortization
|
(43.8)
|
|
|
(41.4)
|
|
|
(172.6)
|
|
|
(139.7)
|
Gain (loss) on
disposal or impairment of assets
|
1.3
|
|
|
(2.4)
|
|
|
(0.7)
|
|
|
(2.6)
|
Government, class
action, and related settlements
|
—
|
|
|
0.5
|
|
|
—
|
|
|
(7.5)
|
Professional fees —
accounting, tax, and legal
|
—
|
|
|
(0.3)
|
|
|
(1.9)
|
|
|
(3.0)
|
Loss on early
extinguishment of debt
|
—
|
|
|
(2.4)
|
|
|
(7.4)
|
|
|
(22.4)
|
Interest expense and
amortization of debt discounts and fees
|
(41.6)
|
|
|
(44.6)
|
|
|
(172.1)
|
|
|
(142.9)
|
Net income
attributable to noncontrolling interests
|
16.8
|
|
|
18.8
|
|
|
70.5
|
|
|
69.7
|
Gain related to SCA
equity interest
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
Income from
continuing operations before income tax expense
|
$
|
121.5
|
|
|
$
|
108.6
|
|
|
$
|
482.0
|
|
|
$
|
395.6
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Reconciliation of
Net Cash Provided by Operating Activities to Adjusted
EBITDA
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
(In
Millions)
|
Net cash provided
by operating activities
|
$
|
116.0
|
|
|
$
|
116.6
|
|
|
$
|
605.5
|
|
|
$
|
484.8
|
Provision for
doubtful accounts
|
(14.5)
|
|
|
(14.0)
|
|
|
(61.2)
|
|
|
(47.2)
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
0.3
|
|
|
1.9
|
|
|
3.0
|
Interest expense and
amortization of debt discounts
and fees
|
41.6
|
|
|
44.6
|
|
|
172.1
|
|
|
142.9
|
Equity in net income
of nonconsolidated affiliates
|
2.5
|
|
|
2.4
|
|
|
9.8
|
|
|
8.7
|
Net income
attributable to noncontrolling interests in
continuing operations
|
(16.8)
|
|
|
(18.8)
|
|
|
(70.5)
|
|
|
(69.7)
|
Amortization of
debt-related items
|
(3.5)
|
|
|
(3.4)
|
|
|
(13.8)
|
|
|
(14.3)
|
Distributions from
nonconsolidated affiliates
|
(2.6)
|
|
|
(3.2)
|
|
|
(8.5)
|
|
|
(7.7)
|
Current portion of
income tax expense
|
17.4
|
|
|
4.4
|
|
|
31.0
|
|
|
14.8
|
Change in assets and
liabilities
|
41.3
|
|
|
53.6
|
|
|
102.9
|
|
|
147.1
|
Net premium paid on
bond transactions
|
—
|
|
|
1.9
|
|
|
5.8
|
|
|
3.9
|
Windfall tax benefits
from share-based compensation
|
17.3
|
|
|
—
|
|
|
17.3
|
|
|
—
|
Cash used in
(provided by) operating activities of
discontinued operations
|
0.1
|
|
|
(0.1)
|
|
|
0.7
|
|
|
0.7
|
Transaction
costs
|
—
|
|
|
6.7
|
|
|
—
|
|
|
12.3
|
Other
|
—
|
|
|
0.5
|
|
|
0.6
|
|
|
3.2
|
Consolidated
Adjusted EBITDA
|
$
|
198.8
|
|
|
$
|
191.5
|
|
|
$
|
793.6
|
|
|
$
|
682.5
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Reconciliation of
Net Cash Provided by Operating Activities to Adjusted Free Cash
Flow
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
(In
Millions)
|
Net cash provided
by operating activities
|
$
|
116.0
|
|
|
$
|
116.6
|
|
|
$
|
605.5
|
|
|
$
|
484.8
|
Impact of
discontinued operations
|
0.1
|
|
|
(0.1)
|
|
|
0.7
|
|
|
0.7
|
Net cash provided by
operating activities of continuing
operations
|
116.1
|
|
|
116.5
|
|
|
606.2
|
|
|
485.5
|
Capital expenditures
for maintenance
|
(39.7)
|
|
|
(27.1)
|
|
|
(104.2)
|
|
|
(83.1)
|
Dividends paid on
convertible perpetual preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.1)
|
Distributions paid to
noncontrolling interests of
consolidated affiliates
|
(15.4)
|
|
|
(14.8)
|
|
|
(64.9)
|
|
|
(54.4)
|
Items
non-indicative of ongoing operations:
|
|
|
|
|
|
|
|
Net premium on bond
issuance/repayment
|
—
|
|
|
1.9
|
|
|
5.8
|
|
|
4.0
|
Transaction costs and
related assumed liabilities
|
—
|
|
|
6.5
|
|
|
0.8
|
|
|
28.3
|
Windfall tax benefits
from share-based compensation
|
17.3
|
|
|
—
|
|
|
17.3
|
|
|
—
|
Cash paid
for:
|
|
|
|
|
|
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
0.3
|
|
|
1.9
|
|
|
4.1
|
Government, class
action, and related settlements
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
7.7
|
Adjusted free cash
flow
|
$
|
78.3
|
|
|
$
|
83.0
|
|
|
$
|
462.9
|
|
|
$
|
389.0
|
For the three months ended December 31,
2016, net cash used in investing activities was $88.7 million and resulted primarily from capital
expenditures and acquisitions of businesses offset by the proceeds
from the disposal of the home health pediatric assets. Net cash
used in financing activities during the three months ended
December 31, 2016 was $63.2
million and resulted primarily from repurchases of common
stock in the open market and cash dividends paid on common
stock.
For the three months ended December 31, 2015, net cash used
in investing activities was $950.4
million and resulted primarily from the acquisitions of
Reliant and CareSouth. Net cash provided by financing activities
during the three months ended December 31, 2015 was
$93.8 million and resulted primarily
from funding of the acquisitions of Reliant and CareSouth.
For the year ended December 31, 2016, net cash used in
investing activities was $245.0
million and resulted primarily from capital expenditures and
acquisitions of businesses offset by the proceeds from the disposal
of the home health pediatric assets. Net cash used in financing
activities during the year ended December 31, 2016 was
$381.6 million and resulted primarily
from the redemption of the Company's 7.75% Senior Notes due 2022,
cash dividends paid on common stock, repurchases of common stock in
the open market, and distributions to noncontrolling interests of
consolidated affiliates.
For the year ended December 31, 2015, net cash used in
investing activities was $1,129.8 and
resulted primarily from the acquisitions of Reliant and CareSouth.
Net cash provided by financing activities during the year ended
December 31, 2015 was $639.9
million and resulted primarily from net debt issuances
associated with the funding of the Reliant acquisition.
HealthSouth Corporation and Subsidiaries
Forward-Looking Statements
Statements contained in this press release which are not
historical facts, such as those relating to financial guidance and
assumptions, balance sheet and cash flow plans, and anticipated
acquisitions, 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 ability to return value to
shareholders, its projected capital expenditures, its leverage
ratio, its acquisition opportunities, and the impact of future
legislation or regulation. 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 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
and any matters related to yet undiscovered issues, if any, in
acquired operations; HealthSouth's ability to attract and retain
key management personnel, including as a part of executive
management succession planning; any adverse effects on
HealthSouth's stock price resulting from the integration of
acquired operations; 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, business associate, or other sensitive
information or inability to provide patient care because of system
unavailability as well as unforeseen issues, if any, related to
integration of acquired systems; the ability to successfully
integrate acquired operations, including realization of anticipated
tax benefits, revenues, and cost savings, minimizing the negative
impact on margins arising from the changes in staffing and other
operating practices, and avoidance of unforeseen exposure to
liabilities; 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 control costs,
particularly labor and employee benefit costs, including group
medical expenses; adverse effects resulting from coverage
determinations made by Medicare Administrative Contractors
regarding its Medicare reimbursement claims and lengthening delays
in HealthSouth's ability to recover improperly denied claims
through the administrative appeals process on a timely basis;
HealthSouth's ability to adapt to changes in the healthcare
delivery system, including involvement in coordinated care
initiatives or programs that may arise with its referral sources;
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, including any crisis resulting from uncertainty in the
sovereign debt market; 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, 2016, when filed.
Media Contact
Casey Lassiter, 205 641-1118
casey.lassiter@healthsouth.com
Investor Relations Contact
Crissy Carlisle, 205 970-5860
crissy.carlisle@healthsouth.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/healthsouth-reports-strong-revenue-and-earnings-growth-for-fourth-quarter-2016-and-reiterates-full-year-2017-guidance-300410982.html
SOURCE HealthSouth Corporation