BIRMINGHAM, Ala., May 26, 2017 /PRNewswire/ -- HealthSouth
Corporation (NYSE:HLS) today announced it has given notice of its
intent to redeem all remaining outstanding 2.00% Convertible Senior
Subordinated Notes due 2043 (the "Notes") amounting to an aggregate
principal amount of approximately $320
million. The redemption date will be June 26, 2017. HealthSouth expects to fund the
redemption using available cash and borrowings under its revolving
credit facility.
The redemption price is equal to $1,000 per $1,000
principal amount of the Notes plus accrued and unpaid interest to,
but excluding, the redemption date. Payment of the redemption price
will be made upon surrender of the Notes at the address provided by
the trustee of the Notes in the notice of redemption. A copy of the
notice of redemption may be obtained from Wells Fargo Bank,
National Association, as trustee, paying agent and conversion
agent, by calling +1(800)344-5128.
In lieu of receiving the redemption price, the holders of the
Notes have the right until 5 p.m., Eastern
time, on June 23, 2017 to
convert their Notes into shares of common stock of HealthSouth at a
conversion rate of 27.2221 shares per $1,000 principal amount of Notes, which rate will
be increased by a make-whole premium. The make-whole premium will
be based on HealthSouth stock prices preceding the conversion date
and calculated in accordance with the terms of the indenture for
the Notes. In the event any holder delivers a conversion notice as
provided in the indenture, HealthSouth intends to satisfy its
conversion obligation with respect to each $1,000 principal amount of Notes tendered by
delivering shares of its common stock. Holders who wish to convert
their Notes must deliver a conversion notice in the form found on
the back of each Note before the deadline and comply with the other
procedures in the indenture.
Additional detail regarding the Notes is provided in the
following table (in millions):
Debt balance on
balance sheet as of March 31, 2017
|
$278.2
|
Fully diluted shares
as of March 31, 2017*
|
8.6
|
Cash interest expense
(annualized)
|
$6.4
|
* For purposes of calculating diluted earnings per share
attributable to HealthSouth common shareholders, convertible shares
are included in the denominator (diluted weighted average common
shares outstanding), while the Notes' associated interest expense,
net of tax, is excluded from the numerator (net income attributable
to HealthSouth common shareholders).
|
The estimated accounting impact assuming holders elect to
convert all of the outstanding Notes is provided in the following
table (in millions):
Make-whole premium
(shares)**
|
~0.2
|
Loss on early
extinguishment of debt***
|
~$8.0
|
** Assuming stock price calculated per the indenture of
$46.00
|
*** Assuming
current market conditions
|
In light of the notice of redemption and assuming all of the
holders elect to convert their Notes, the Company reiterates as of
the date hereof its guidance previously reported in the Current
Reports on Form 8-K, dated May 16,
2017 and April 27, 2017, and
during the Company's earnings conference call held on April 28, 2017. Accordingly, the Company
continues to expect the following full-year 2017 ranges:
- Net operating revenues of $3,850 million
to $3,950 million
- Adjusted EBITDA of $800 million to $820
million
- Adjusted earnings per share from continuing operations
attributable to HealthSouth of $2.61 to
$2.73
Contact information for the conversion agent is as follows:
Wells Fargo Bank, National Association
Corporate Trust Services
600 S. 4th Street, 6th Floor | N9300-060
Minneapolis, MN 55415
Tel. +1(800)344-5128
Fax +1(612)667-9825
Email cmesconversions@wellsfargo.com
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 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 one of the nation's largest providers of
post-acute healthcare services, offering both facility-based and
home-based post-acute services in 36 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.
Note Regarding Presentation of Non-GAAP Financial
Measures
The financial guidance contained in this press release includes
non-GAAP financial measures, adjusted earnings per share and
Adjusted EBITDA.
Excluding net operating revenues, HealthSouth 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 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 are uncertain 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
Forward-Looking Statements
Statements contained in this press release which are not
historical facts, such as the redemption or the conversion of the
convertible notes, the expected settlement consideration upon
conversion, the financial, tax or accounting impacts of the
redemption or any conversions, and 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 and involve a number of risks and
uncertainties. 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, HealthSouth's ability to comply with extensive,
complex, and ever-changing regulations in the healthcare industry;
the price of HealthSouth's common stock as it affects the tax and
accounting impacts resulting from conversions of the Notes; the
price of HealthSouth's common stock as it affects the Company's
willingness and ability to settle conversions in shares of common
stock or the holders' decisions to elect conversion; 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, at acquired companies; HealthSouth's ability to
attract and retain key management personnel, including as a part of
executive management succession planning; 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; 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; 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 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 and Form 10-Q for the quarter
ended March 31, 2017.
Media Contact
Casey Lassiter, 205-410-2777
casey.lassiter@healthsouth.com
Investor Relations Contact
Crissy Carlisle, 205-970-5860
crissy.carlisle@healthsouth.com
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SOURCE HealthSouth Corporation