BIRMINGHAM, Ala., Oct. 26, 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 patient care, today reported its results of operations
for the third quarter ended September 30, 2017.
"The third quarter was another strong quarter for HealthSouth
with positive trends in volume and pricing, despite disruptions
from three hurricanes," said Mark
Tarr, President and Chief Executive Officer of HealthSouth.
"In addition to the continued good performance and growth of our
Company in both segments, we remain focused on developing and
leveraging technology to improve patient care and operating
efficiencies. These investments include the installation of our
rehabilitation-specific electronic clinical information system and
the formation of the Post-Acute Innovation Center."
Consolidated
Results
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
Q3
2017
|
|
Q3
2016
|
|
Dollars
|
|
Percent
|
|
(In Millions, Except
per Share Data)
|
Net operating
revenues
|
$
|
995.6
|
|
|
$
|
926.8
|
|
|
$
|
68.8
|
|
|
7.4
|
%
|
Income from
continuing operations attributable to
HealthSouth per
share
|
0.67
|
|
|
0.64
|
|
|
0.03
|
|
|
4.7
|
%
|
Adjusted earnings per
share
|
0.66
|
|
|
0.65
|
|
|
0.01
|
|
|
1.5
|
%
|
Cash flows provided
by operating activities
|
173.8
|
|
|
177.6
|
|
|
(3.8)
|
|
|
(2.1)
|
%
|
Adjusted
EBITDA
|
204.6
|
|
|
198.4
|
|
|
6.2
|
|
|
3.1
|
%
|
Adjusted free cash
flow
|
122.1
|
|
|
139.8
|
|
|
(17.7)
|
|
|
(12.7)%
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
Cash flows provided
by operating activities
|
$
|
505.8
|
|
|
$
|
499.4
|
|
|
$
|
6.4
|
|
|
1.3
|
%
|
Adjusted free cash
flow
|
376.1
|
|
|
394.5
|
|
|
(18.4)
|
|
|
(4.7)
|
%
|
Revenue growth was driven by volume and 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 share and adjusted earnings per share resulted
primarily from increased revenue. Growth in both earnings per share
amounts was negatively impacted by higher stock-based compensation
expense and higher depreciation and amortization related to capital
investments.
Cash flows provided by operating activities increased in the
first nine months of 2017 compared to the first nine months of 2016
primarily due to revenue growth.
Adjusted free cash flow for the first nine months of 2017
compared to the first nine months of 2016 decreased due to cash
payments for taxes (due to exhaustion of the Company's federal net
operating loss in the first quarter of 2017) and increased
maintenance capital expenditures in 2017.
See attached supplemental information for calculations of
non-GAAP measures and reconciliations to their most comparable GAAP
measure.
Inpatient
Rehabilitation Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
Q3
2017
|
|
Q3
2016
|
|
Dollars
|
|
Percent
|
Net operating
revenues:
|
(In
Millions)
|
Inpatient
|
$
|
768.6
|
|
|
$
|
724.1
|
|
|
$
|
44.5
|
|
|
6.1
|
%
|
Outpatient and
other
|
26.2
|
|
|
27.6
|
|
|
(1.4)
|
|
|
(5.1)%
|
|
Total segment
revenue
|
$
|
794.8
|
|
|
$
|
751.7
|
|
|
$
|
43.1
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
(Actual
Amounts)
|
Discharges
|
42,948
|
|
|
41,368
|
|
|
1,580
|
|
|
3.8
|
%
|
Same-store discharge
growth
|
|
|
|
|
|
|
1.4
|
%
|
Net patient
revenue per discharge
|
$
|
17,896
|
|
|
$
|
17,504
|
|
|
$
|
392
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
(In
Millions)
|
Adjusted
EBITDA
|
$
|
200.3
|
|
|
$
|
198.6
|
|
|
$
|
1.7
|
|
|
0.9
|
%
|
- Revenue - Revenue growth resulted from volume growth and
an increase in net patient revenue per discharge. Discharge growth
from new stores resulted from the Company's joint ventures in
Bryan, Texas (August 2016), Broken
Arrow, Oklahoma (August 2016),
Gulfport, Mississippi
(April 2017), Westerville, Ohio (April 2017), and Jackson, Tennessee (July 2017), as well as a wholly owned hospital in
Modesto, California (October 2016). Same-store discharge growth of
1.4% in the third quarter of 2017 was negatively impacted 200 to
250 discharges, or 50 to 60 basis points, due to Hurricanes Harvey,
Irma, and Maria. Growth in net patient revenue per discharge
primarily resulted from patient mix. Net patient revenue per
discharge in the third quarter of 2016 included the benefit of a
retroactive indirect medical education ("IME") adjustment of
approximately $4 million at the
former Reliant hospital in Woburn,
Massachusetts.
The decrease in outpatient and other revenues primarily was due to
the closure of six outpatient programs in the latter half of
2016.
- Adjusted EBITDA - The increase in Adjusted EBITDA for
the inpatient rehabilitation segment primarily resulted from
revenue growth. Expense ratios in the third quarter of 2017
compared to the third quarter of 2016 were negatively impacted by
the aforementioned IME adjustment and $2.5
million in hurricane-related expenses in the third quarter
of 2017. Salaries and benefits as a percent of net operating
revenues were further impacted by salary and benefit cost
increases, staffing increases at the former Reliant hospitals, and
the ramping up of new stores. Bad debt expense as a percent of net
operating revenues decreased from 1.8% in the third quarter of 2016
to 1.4% in the third quarter of 2017 primarily due to a reduction
in new pre-payment claims denials.
Home Health and
Hospice Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
Q3
2017
|
|
Q3
2016
|
|
Dollars
|
|
Percent
|
Net operating
revenues:
|
(In
Millions)
|
Home health
|
$
|
181.2
|
|
|
$
|
162.0
|
|
|
$
|
19.2
|
|
|
11.9
|
%
|
Hospice and
other
|
19.6
|
|
|
13.1
|
|
|
6.5
|
|
|
49.6
|
%
|
Total segment
revenue
|
$
|
200.8
|
|
|
$
|
175.1
|
|
|
$
|
25.7
|
|
|
14.7
|
%
|
|
|
|
|
|
|
|
|
|
(Actual
Amounts)
|
Admissions
|
31,471
|
|
|
27,239
|
|
|
4,232
|
|
|
15.5
|
%
|
Same-store admissions
growth
|
|
|
|
|
|
|
8.8
|
%
|
Episodes
|
53,757
|
|
|
46,866
|
|
|
6,891
|
|
|
14.7
|
%
|
Same-store episode
growth
|
|
|
|
|
|
|
9.5
|
%
|
Revenue per
episode
|
$
|
3,022
|
|
|
$
|
3,032
|
|
|
$
|
(10)
|
|
|
(0.3)%
|
|
|
|
|
|
|
|
|
|
|
(In
Millions)
|
Adjusted
EBITDA
|
$
|
34.8
|
|
|
$
|
25.8
|
|
|
$
|
9.0
|
|
|
34.9
|
%
|
- Revenue - Revenue growth resulted from strong same-store
and new-store volume growth. Same-store admission growth of 8.8% in
the third quarter of 2017 was negatively impacted 325 to 375
admissions, or 120 to 140 basis points, due to Hurricanes Harvey
and Irma. The decrease in revenue per episode resulted from
Medicare reimbursement rate cuts partially offset by changes in
patient mix and reconciliation payments attributed to various
alternative payment models (e.g., BPCI; ACOs).
The increase in hospice and other revenue primarily resulted from
acquisitions completed in 2016.
- Adjusted EBITDA - Growth in Adjusted EBITDA primarily
resulted from revenue growth and staffing productivity gains.
Adjusted EBITDA for the home health and hospice segment for the
third quarter of 2017 included a $0.9
million benefit from the true-up to the purchase price of a
2016 acquisition. Adjusted EBITDA for the third quarter of 2017
also included approximately $0.3
million in hurricane-related expenses.
Corporate General
and Administrative Expenses
|
|
|
Q3
2017
|
|
% of
Consolidated
Revenue
|
|
Q3
2016
|
|
% of
Consolidated
Revenue
|
|
(In
Millions)
|
General and
administrative expenses,
excluding stock-based compensation
|
$
|
30.5
|
|
|
3.1%
|
|
$
|
26.0
|
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
- General and administrative expenses increased as a
percent of consolidated revenue primarily due to expenses
associated with the Company's rebranding and name change and
TeamWorks clinical collaboration initiative. During the third
quarter of 2017, the Company invested $1.5
million in its rebranding and name change and $2.3 million in its TeamWorks clinical
collaboration initiative, all of which was included in general and
administrative expenses.
2017 Guidance
Based on its results for the first nine months of 2017 and its
current expectations for the remainder of 2017, the Company is
updating its full-year guidance ranges.
|
Full-Year 2017
Guidance Ranges
|
|
Previous
Guidance
|
|
Updated
Guidance
|
|
(In Millions, Except
Per Share Data)
|
Net operating
revenues
|
$3,875 to
$3,950
|
|
$3,900 to
$3,950
|
Adjusted
EBITDA
|
$805 to
$820
|
|
$810 to
$820
|
Adjusted earnings per
share from continuing
operations attributable to HealthSouth
|
$2.64 to
$2.73
|
|
$2.67 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.
Post-Acute Innovation Center
During the third quarter of 2017, the Company announced the
formation of the Post-Acute Innovation Center in collaboration with
Cerner Corporation to develop enhanced tools to manage patients
across the continuum of care. Cerner is a global leader in health
information technology and collaborated with HealthSouth on the
development and implementation of its clinical information system.
The Post-Acute Innovation Center will develop clinical decision
support tools designed to more effectively and efficiently manage
patients across multiple care settings. The objective of the
Innovation Center is to use diverse data sets from multiple care
settings to develop initiatives that facilitate efficient and
high-quality patient care, enhanced care coordination, post-acute
network performance, and cost management across the post-acute
continuum.
Amendment of Credit Agreement Governing Senior Secured Credit
Facility
In the third quarter of 2017, the Company amended the credit
agreement governing its senior secured credit facility. The
amendment increased the size of its revolver from $600 million to $700
million, decreased the balance of its term loan facilities
by approximately $110 million to $300
million, reduced the interest rate spread by 25 basis
points, and extended the agreement's maturity by two years to 2022.
As a result of this exercise, the Company recorded a $0.3 million loss on early extinguishment of debt
in the third quarter of 2017.
"The restructuring of our credit facility further enhances our
liquidity and financial flexibility," said Doug Coltharp, Executive Vice President and
Chief Financial Officer of HealthSouth. "This action is consistent
with our strategy of proactively managing our capital structure to
maintain a strong balance sheet."
Rebranding and Name Change
As a reminder, effective January 1,
2018, HealthSouth Corporation will change its name to
Encompass Health Corporation, with a corresponding ticker symbol
change from "HLS" to "EHC." Both of the Company's business segments
will transition to the Encompass Health branding.
Earnings Conference Call and Webcast
The Company will host an investor conference call at
9:00 a.m. Eastern Time on Friday,
October 27, 2017 to discuss its results for the third quarter
of 2017. 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 87444165. 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 patient care 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.
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 September 30, 2017 (the
"September 2017 Form 10-Q"), when
filed, as well as the Company's Current Report on Form 8-K filed on
October 26, 2017 (the "Q3 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 for reference during its
October 27, 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 Q3
Earnings Form 8-K. Readers are encouraged to review the "Note
Regarding Presentation of Non-GAAP Financial Measures" included in
the Q3 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 operating performance. 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 a reconciliation for Adjusted EBITDA if
the other reconciling GAAP measures could be reasonably
predicted:
- Provision for doubtful accounts - estimate of 1.6% to 1.8% of
net operating revenues
- Interest expense and amortization of debt discounts and fees -
estimate of $155 million to $160
million
- Amortization of debt-related items - approximately $10 million
The Q3 Earnings Form 8-K and, when filed, the September 2017 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In
Millions)
|
Net operating
revenues
|
$
|
995.6
|
|
|
$
|
926.8
|
|
|
$
|
2,951.7
|
|
|
$
|
2,757.3
|
|
Less: Provision for
doubtful accounts
|
(12.6)
|
|
|
(14.8)
|
|
|
(42.7)
|
|
|
(46.7)
|
|
Net operating
revenues less provision for doubtful accounts
|
983.0
|
|
|
912.0
|
|
|
2,909.0
|
|
|
2,710.6
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Salaries and
benefits
|
542.1
|
|
|
497.4
|
|
|
1,600.0
|
|
|
1,469.6
|
|
Other operating
expenses
|
137.6
|
|
|
126.3
|
|
|
397.2
|
|
|
367.0
|
|
Occupancy
costs
|
18.6
|
|
|
17.6
|
|
|
54.8
|
|
|
53.5
|
|
Supplies
|
36.5
|
|
|
34.8
|
|
|
110.6
|
|
|
104.2
|
|
General and
administrative expenses
|
39.7
|
|
|
30.3
|
|
|
128.6
|
|
|
96.6
|
|
Depreciation and
amortization
|
46.2
|
|
|
43.5
|
|
|
137.2
|
|
|
128.8
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
Total operating
expenses
|
820.7
|
|
|
749.9
|
|
|
2,428.4
|
|
|
2,221.6
|
|
Loss on early
extinguishment of debt
|
0.3
|
|
|
2.6
|
|
|
10.7
|
|
|
7.4
|
|
Interest expense and
amortization of debt discounts and fees
|
36.8
|
|
|
42.5
|
|
|
118.5
|
|
|
130.5
|
|
Other
income
|
(1.0)
|
|
|
(0.8)
|
|
|
(2.9)
|
|
|
(2.1)
|
|
Equity in net income
of nonconsolidated affiliates
|
(2.1)
|
|
|
(2.5)
|
|
|
(6.2)
|
|
|
(7.3)
|
|
Income from
continuing operations before income tax expense
|
128.3
|
|
|
120.3
|
|
|
360.5
|
|
|
360.5
|
|
Provision for income
tax expense
|
43.1
|
|
|
42.1
|
|
|
111.4
|
|
|
124.2
|
|
Income from
continuing operations
|
85.2
|
|
|
78.2
|
|
|
249.1
|
|
|
236.3
|
|
Loss from
discontinued operations, net of tax
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.3)
|
|
Net
income
|
85.1
|
|
|
78.1
|
|
|
248.9
|
|
|
236.0
|
|
Less: Net income
attributable to noncontrolling interests
|
(19.2)
|
|
|
(16.4)
|
|
|
(53.2)
|
|
|
(53.7)
|
|
Net income
attributable to HealthSouth
|
$
|
65.9
|
|
|
$
|
61.7
|
|
|
$
|
195.7
|
|
|
$
|
182.3
|
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Operations (Continued)
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In Millions,
Except Per Share Data)
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
97.8
|
|
|
89.1
|
|
|
92.3
|
|
|
89.3
|
|
Diluted
|
99.0
|
|
|
99.4
|
|
|
99.1
|
|
|
99.5
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to HealthSouth common
shareholders:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.67
|
|
|
$
|
0.69
|
|
|
$
|
2.11
|
|
|
$
|
2.03
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
0.67
|
|
|
$
|
0.69
|
|
|
$
|
2.11
|
|
|
$
|
2.03
|
|
Diluted earnings
per share attributable to HealthSouth common
shareholders:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
$
|
2.08
|
|
|
$
|
1.90
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
$
|
2.08
|
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.25
|
|
|
$
|
0.24
|
|
|
$
|
0.73
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to HealthSouth common shareholders:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
66.0
|
|
|
$
|
61.8
|
|
|
$
|
195.9
|
|
|
$
|
182.6
|
|
Loss from
discontinued operations, net of tax
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.3)
|
|
Net income
attributable to HealthSouth
|
$
|
65.9
|
|
|
$
|
61.7
|
|
|
$
|
195.7
|
|
|
$
|
182.3
|
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
(In
Millions)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
67.6
|
|
|
$
|
40.5
|
|
Accounts receivable,
net of allowance for doubtful accounts of $58.5 in 2017; $53.9 in
2016
|
441.6
|
|
|
443.8
|
|
Other current
assets
|
178.2
|
|
|
170.2
|
|
Total current
assets
|
687.4
|
|
|
654.5
|
|
Property and
equipment, net
|
1,482.3
|
|
|
1,391.8
|
|
Goodwill
|
1,971.7
|
|
|
1,927.2
|
|
Intangible assets,
net
|
405.1
|
|
|
411.3
|
|
Deferred income tax
assets
|
91.6
|
|
|
75.8
|
|
Other long-term
assets
|
245.3
|
|
|
221.3
|
|
Total
assets
|
$
|
4,883.4
|
|
|
$
|
4,681.9
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
31.1
|
|
|
$
|
37.1
|
|
Accounts
payable
|
81.8
|
|
|
68.3
|
|
Accrued expenses and
other current liabilities
|
398.3
|
|
|
370.2
|
|
Total current
liabilities
|
511.2
|
|
|
475.6
|
|
Long-term debt, net
of current portion
|
2,591.3
|
|
|
2,979.3
|
|
Other long-term
liabilities
|
186.4
|
|
|
160.0
|
|
|
3,288.9
|
|
|
3,614.9
|
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
221.3
|
|
|
138.3
|
|
Shareholders'
equity:
|
|
|
|
HealthSouth
shareholders' equity
|
1,136.4
|
|
|
735.9
|
|
Noncontrolling
interests
|
236.8
|
|
|
192.8
|
|
Total shareholders'
equity
|
1,373.2
|
|
|
928.7
|
|
Total liabilities
and shareholders' equity
|
$
|
4,883.4
|
|
|
$
|
4,681.9
|
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(In
Millions)
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
248.9
|
|
|
$
|
236.0
|
|
Loss from
discontinued operations, net of tax
|
0.2
|
|
|
0.3
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities—
|
|
|
|
Provision for
doubtful accounts
|
42.7
|
|
|
46.7
|
|
Depreciation and
amortization
|
137.2
|
|
|
128.8
|
|
Loss on early
extinguishment of debt
|
10.7
|
|
|
7.4
|
|
Equity in net income
of nonconsolidated affiliates
|
(6.2)
|
|
|
(7.3)
|
|
Distributions from
nonconsolidated affiliates
|
6.6
|
|
|
5.9
|
|
Stock-based
compensation
|
37.9
|
|
|
17.4
|
|
Deferred tax
expense
|
51.3
|
|
|
110.6
|
|
Other, net
|
9.8
|
|
|
11.7
|
|
Change in assets and
liabilities, net of acquisitions—
|
|
|
|
Accounts
receivable
|
(54.2)
|
|
|
(75.7)
|
|
Other
assets
|
(7.4)
|
|
|
(4.4)
|
|
Accounts
payable
|
6.1
|
|
|
1.9
|
|
Accrued
payroll
|
3.1
|
|
|
8.7
|
|
Accrued interest
payable
|
7.3
|
|
|
6.0
|
|
Other
liabilities
|
12.5
|
|
|
11.8
|
|
Premium paid on
redemption of bonds
|
—
|
|
|
(5.8)
|
|
Net cash used in
operating activities of discontinued operations
|
(0.7)
|
|
|
(0.6)
|
|
Total
adjustments
|
256.7
|
|
|
263.1
|
|
Net cash provided
by operating activities
|
505.8
|
|
|
499.4
|
|
|
|
|
|
HealthSouth
Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows (Continued)
|
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(In
Millions)
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(155.7)
|
|
|
(113.9)
|
|
Additions to
capitalized software costs
|
(14.6)
|
|
|
(17.5)
|
|
Acquisitions of
businesses, net of cash acquired
|
(36.6)
|
|
|
(19.6)
|
|
Net change in
restricted cash
|
(9.9)
|
|
|
(7.1)
|
|
Other, net
|
7.6
|
|
|
1.8
|
|
Net cash used in
investing activities
|
(209.2)
|
|
|
(156.3)
|
|
Cash flows from
financing activities:
|
|
|
|
Principal payments on
debt, including pre-payments
|
(125.4)
|
|
|
(195.2)
|
|
Borrowings on
revolving credit facility
|
241.3
|
|
|
260.0
|
|
Payments on revolving
credit facility
|
(255.3)
|
|
|
(240.0)
|
|
Repurchases of common
stock, including fees and expenses
|
(38.1)
|
|
|
(24.1)
|
|
Dividends paid on
common stock
|
(67.0)
|
|
|
(62.4)
|
|
Proceeds from
exercising stock warrants
|
26.6
|
|
|
—
|
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(38.3)
|
|
|
(49.5)
|
|
Taxes paid on behalf
of employees for shares withheld
|
(19.8)
|
|
|
(9.9)
|
|
Other, net
|
6.5
|
|
|
(7.2)
|
|
Net cash used in
financing activities
|
(269.5)
|
|
|
(328.3)
|
|
Increase in cash
and cash equivalents
|
27.1
|
|
|
14.8
|
|
Cash and cash
equivalents at beginning of period
|
40.5
|
|
|
61.6
|
|
Cash and cash
equivalents at end of period
|
$
|
67.6
|
|
|
$
|
76.4
|
|
|
|
|
|
Supplemental
schedule of noncash financing activity:
|
|
|
|
Conversion of
convertible debt
|
$
|
319.4
|
|
|
$
|
—
|
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Earnings Per
Share
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In Millions,
Except Per Share Data)
|
Adjusted
EBITDA
|
$
|
204.6
|
|
|
$
|
198.4
|
|
|
$
|
614.9
|
|
|
$
|
594.8
|
|
Interest expense and
amortization of debt discounts and fees
|
(36.8)
|
|
|
(42.5)
|
|
|
(118.5)
|
|
|
(130.5)
|
|
Depreciation and
amortization
|
(46.2)
|
|
|
(43.5)
|
|
|
(137.2)
|
|
|
(128.8)
|
|
Stock-based
compensation expense
|
(9.2)
|
|
|
(4.3)
|
|
|
(37.9)
|
|
|
(17.4)
|
|
Noncash loss on
disposal of assets
|
(3.0)
|
|
|
(1.6)
|
|
|
(3.3)
|
|
|
(2.0)
|
|
|
109.4
|
|
|
106.5
|
|
|
318.0
|
|
|
316.1
|
|
Certain items
non-indicative of ongoing operations:
|
|
|
|
|
|
|
|
Loss on early
extinguishment of debt
|
(0.3)
|
|
|
(2.6)
|
|
|
(10.7)
|
|
|
(7.4)
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9)
|
|
Pre-tax
income
|
109.1
|
|
|
103.9
|
|
|
307.3
|
|
|
306.8
|
|
Income tax expense
(1)
|
(43.1)
|
|
|
(42.1)
|
|
|
(111.4)
|
|
|
(124.2)
|
|
Income from
continuing operations (2)
|
$
|
66.0
|
|
|
$
|
61.8
|
|
|
$
|
195.9
|
|
|
$
|
182.6
|
|
|
|
|
|
|
|
|
|
Basic shares
(3)
|
97.8
|
|
|
89.1
|
|
|
92.3
|
|
|
89.3
|
|
Diluted
shares
|
99.0
|
|
|
99.4
|
|
|
99.1
|
|
|
99.5
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share (2)
|
$
|
0.67
|
|
|
$
|
0.69
|
|
|
$
|
2.11
|
|
|
$
|
2.03
|
|
Diluted earnings
per share (2)
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
$
|
2.08
|
|
|
$
|
1.90
|
|
|
|
(1)
|
Current income tax
expense for the three months ended September 30, 2017 and 2016
was $36.0 million and $4.6 million, respectively. Current income
tax expense for the nine months ended September 30, 2017 and
2016 was $60.1 million and $13.6 million, respectively.
|
(2)
|
Income from
continuing operations attributable to HealthSouth.
|
(3)
|
Increased basic share
count in 2017 resulted from the Company's exercise of its early
redemption option on its 2.0% Convertible Senior Subordinated Notes
in the second quarter of 2017
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
Q3
|
|
9
Months
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Earnings per
share, as reported
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
$
|
2.08
|
|
|
$
|
1.90
|
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Mark-to-market
adjustments for stock appreciation rights
|
(0.01)
|
|
|
(0.01)
|
|
|
0.08
|
|
|
(0.01)
|
|
Sale of
hospital
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Loss on early
extinguishment of debt(1)
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.04
|
|
Income tax
adjustments(2)
|
—
|
|
|
—
|
|
|
(0.10)
|
|
|
—
|
|
Adjusted earnings
per share(3)
|
$
|
0.66
|
|
|
$
|
0.65
|
|
|
$
|
2.07
|
|
|
$
|
1.95
|
|
|
|
(1)
|
The interest and
amortization and the loss on early extinguishment of debt related
to the convertible senior subordinated notes must be added to
income from continuing operations when calculating diluted earnings
per share because the debt was assumed to have been converted at
the beginning of the period, and the applicable shares were
included in the diluted share count.
|
(2)
|
New guidance in ASU
2016-09, "Improvements to Employee Share-Based Payment Accounting,"
requires entities to record all of the tax effects related to
share-based payments at settlement (or expiration) through the
income statement. Historically, HealthSouth recorded such tax
effects to equity.
|
(3)
|
Adjusted EPS may not
sum due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Three
Months Ended September 30, 2017
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Mark-to-Market
Adjustment for Stock Appreciation Rights
|
|
Income Tax
Adjustments(1)
|
|
Loss on Early
Extinguishment of Debt
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA(2)
|
$
|
204.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
204.6
|
|
Depreciation and
amortization
|
(46.2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46.2)
|
|
Loss on early
extinguishment of debt
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Interest expense and
amortization of debt discounts and fees
|
(36.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.8)
|
|
Stock-based
compensation
|
(9.2)
|
|
|
(1.0)
|
|
|
—
|
|
|
—
|
|
|
(10.2)
|
|
Loss on disposal of
assets
|
(3.0)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.0)
|
|
Income from
continuing operations before income tax expense
|
109.1
|
|
|
(1.0)
|
|
|
—
|
|
|
0.3
|
|
|
108.4
|
|
Provision for income
tax expense
|
(43.1)
|
|
|
0.4
|
|
|
(0.4)
|
|
|
(0.1)
|
|
|
(43.2)
|
|
Income from
continuing operations attributable to HealthSouth
|
$
|
66.0
|
|
|
$
|
(0.6)
|
|
|
$
|
(0.4)
|
|
|
$
|
0.2
|
|
|
$
|
65.2
|
|
Add: Interest,
amortization, and loss on extinguishment of
convertible debt, net of tax
|
—
|
|
|
|
|
|
|
|
|
—
|
|
Numerator for
diluted earnings per share
|
$
|
66.0
|
|
|
|
|
|
|
|
|
$
|
65.2
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations, as
reported(3)
|
$
|
0.67
|
|
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.66
|
|
Diluted shares
used in calculation
|
99.0
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
New guidance in ASU
2016-09, "Improvements to Employee Share-Based Payment Accounting,"
requires entities to record all of the tax effects related to
share-based payments at settlement (or expiration) through the
income statement. Historically, HealthSouth recorded such tax
effects to equity.
|
(2)
|
See reconciliation of
net income to Adjusted EBITDA
|
(3)
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Three
Months Ended September 30, 2016
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Mark-to-Market
Adjustment for Stock Appreciation Rights
|
|
Loss on Early
Extinguishment of Debt
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA(1)
|
$
|
198.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
198.4
|
|
Depreciation and
amortization
|
(43.5)
|
|
|
—
|
|
|
—
|
|
|
(43.5)
|
|
Loss on early
extinguishment of debt
|
(2.6)
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
Interest expense and
amortization of debt discounts and fees
|
(42.5)
|
|
|
—
|
|
|
—
|
|
|
(42.5)
|
|
Stock-based
compensation
|
(4.3)
|
|
|
(1.8)
|
|
|
—
|
|
|
(6.1)
|
|
Loss on disposal of
assets
|
(1.6)
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
|
Income from
continuing operations before income tax expense
|
103.9
|
|
|
(1.8)
|
|
|
2.6
|
|
|
104.7
|
|
Provision for income
tax expense
|
(42.1)
|
|
|
0.7
|
|
|
(1.0)
|
|
|
(42.4)
|
|
Income from
continuing operations attributable to HealthSouth
|
$
|
61.8
|
|
|
$
|
(1.1)
|
|
|
$
|
1.6
|
|
|
$
|
62.3
|
|
Add: Interest on
convertible debt, net of tax
|
2.4
|
|
|
|
|
|
|
2.4
|
|
Numerator for
diluted earnings per share
|
$
|
64.2
|
|
|
|
|
|
|
$
|
64.7
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations(2)
|
$
|
0.64
|
|
|
$
|
(0.01)
|
|
|
$
|
0.02
|
|
|
$
|
0.65
|
|
Diluted shares
used in calculation
|
99.4
|
|
|
|
|
|
|
|
|
|
(1)
|
See reconciliation of
net income to Adjusted EBITDA
|
(2)
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Nine
Months Ended September 30, 2017
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Mark-to-Market
Adjustment for Stock Appreciation Rights
|
|
Loss on Early
Extinguishment of Debt
|
|
Income Tax
Adjustments(1)
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA(2)
|
$
|
614.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
614.9
|
|
Depreciation and
amortization
|
(137.2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(137.2)
|
|
Loss on early
extinguishment of debt
|
(10.7)
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
(10.4)
|
|
Interest expense and
amortization of debt discounts and fees
|
(118.5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(118.5)
|
|
Stock-based
compensation
|
(37.9)
|
|
|
13.9
|
|
|
—
|
|
|
—
|
|
|
(24.0)
|
|
Loss on disposal of
assets
|
(3.3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3)
|
|
Income from
continuing operations before income tax expense
|
307.3
|
|
|
13.9
|
|
|
0.3
|
|
|
—
|
|
|
321.5
|
|
Provision for income
tax expense
|
(111.4)
|
|
|
(5.6)
|
|
|
(0.1)
|
|
|
(10.4)
|
|
|
(127.5)
|
|
Income from
continuing operations attributable to HealthSouth
|
$
|
195.9
|
|
|
$
|
8.3
|
|
|
$
|
0.2
|
|
|
$
|
(10.4)
|
|
|
$
|
194.0
|
|
Add: Interest,
amortization, and loss on extinguishment of convertible debt, net
of tax
|
10.8
|
|
|
|
|
|
|
|
|
10.8
|
|
Numerator for
diluted earnings per share
|
$
|
206.7
|
|
|
|
|
|
|
|
|
$
|
204.8
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations, as
reported(3)
|
$
|
2.08
|
|
|
$
|
0.08
|
|
|
$
|
—
|
|
|
$
|
(0.10)
|
|
|
$
|
2.07
|
|
Diluted shares
used in calculation
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
New guidance in ASU
2016-09, "Improvements to Employee Share-Based Payment Accounting,"
requires entities to record all of the tax effects related to
share-based payments at settlement (or expiration) through the
income statement. Historically, HealthSouth recorded such tax
effects to equity.
|
(2)
|
See reconciliation of
net income to Adjusted EBITDA
|
(3)
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Adjusted Earnings
Per Share
|
|
|
For the Nine
Months Ended September 30, 2016
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Professional
Fees—Accounting, Tax, and Legal
|
|
Mark-to-Market
Adjustment for Stock Appreciation Rights
|
|
Loss on Early
Extinguishment of Debt
|
|
Sale of
Hospital
|
|
As
Adjusted
|
|
(In Millions,
Except Per Share Amounts)
|
Adjusted
EBITDA(1)
|
$
|
594.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
594.8
|
|
Depreciation and
amortization
|
(128.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(128.8)
|
|
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
|
(130.5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(130.5)
|
|
Stock-based
compensation
|
(17.4)
|
|
|
—
|
|
|
(1.4)
|
|
|
—
|
|
|
—
|
|
|
(18.8)
|
|
Loss on disposal of
assets
|
(2.0)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
(2.9)
|
|
Income from
continuing operations before income tax expense
|
306.8
|
|
|
1.9
|
|
|
(1.4)
|
|
|
7.4
|
|
|
(0.9)
|
|
|
313.8
|
|
Provision for income
tax expense
|
(124.2)
|
|
|
(0.8)
|
|
|
0.5
|
|
|
(3.0)
|
|
|
0.4
|
|
|
(127.1)
|
|
Income from
continuing operations attributable to HealthSouth
|
$
|
182.6
|
|
|
$
|
1.1
|
|
|
$
|
(0.9)
|
|
|
$
|
4.4
|
|
|
$
|
(0.5)
|
|
|
$
|
186.7
|
|
Add: Interest on
convertible debt, net of tax
|
7.2
|
|
|
|
|
|
|
|
|
|
|
7.2
|
|
Numerator for
diluted earnings per share
|
$
|
189.8
|
|
|
|
|
|
|
|
|
|
|
$
|
193.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from continuing operations(2)
|
$
|
1.90
|
|
|
$
|
0.01
|
|
|
$
|
(0.01)
|
|
|
$
|
0.04
|
|
|
$
|
(0.01)
|
|
|
$
|
1.95
|
|
Diluted shares
used in calculation
|
99.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See reconciliation of
net income to Adjusted EBITDA
|
(2)
|
Adjusted EPS may not
sum across due to rounding.
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In
Millions)
|
Net
income
|
$
|
85.1
|
|
|
$
|
78.1
|
|
|
$
|
248.9
|
|
|
$
|
236.0
|
|
Loss from
discontinued operations, net of tax, attributable to
HealthSouth
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
Provision for income
tax expense
|
43.1
|
|
|
42.1
|
|
|
111.4
|
|
|
124.2
|
|
Interest expense and
amortization of debt discounts and fees
|
36.8
|
|
|
42.5
|
|
|
118.5
|
|
|
130.5
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
Loss on early
extinguishment of debt
|
0.3
|
|
|
2.6
|
|
|
10.7
|
|
|
7.4
|
|
Net noncash loss on
disposal of assets
|
3.0
|
|
|
1.6
|
|
|
3.3
|
|
|
2.0
|
|
Depreciation and
amortization
|
46.2
|
|
|
43.5
|
|
|
137.2
|
|
|
128.8
|
|
Stock-based
compensation expense
|
9.2
|
|
|
4.3
|
|
|
37.9
|
|
|
17.4
|
|
Net income
attributable to noncontrolling interests
|
(19.2)
|
|
|
(16.4)
|
|
|
(53.2)
|
|
|
(53.7)
|
|
Adjusted
EBITDA
|
$
|
204.6
|
|
|
$
|
198.4
|
|
|
$
|
614.9
|
|
|
$
|
594.8
|
|
Reconciliation of
Segment Adjusted EBITDA to Income from Continuing Operations Before
Income Tax Expense
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Year Ended
December 31, 2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(In
Millions)
|
Total segment
Adjusted EBITDA
|
$
|
235.1
|
|
|
$
|
224.4
|
|
|
$
|
705.6
|
|
|
$
|
674.0
|
|
|
$
|
899.6
|
|
General and
administrative expenses
|
(39.7)
|
|
|
(30.3)
|
|
|
(128.6)
|
|
|
(96.6)
|
|
|
(133.4)
|
|
Depreciation and
amortization
|
(46.2)
|
|
|
(43.5)
|
|
|
(137.2)
|
|
|
(128.8)
|
|
|
(172.6)
|
|
Loss on disposal of
assets
|
(3.0)
|
|
|
(1.6)
|
|
|
(3.3)
|
|
|
(2.0)
|
|
|
(0.7)
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9)
|
|
|
(1.9)
|
|
Loss on early
extinguishment of debt
|
(0.3)
|
|
|
(2.6)
|
|
|
(10.7)
|
|
|
(7.4)
|
|
|
(7.4)
|
|
Interest expense and
amortization of debt discounts and fees
|
(36.8)
|
|
|
(42.5)
|
|
|
(118.5)
|
|
|
(130.5)
|
|
|
(172.1)
|
|
Net income
attributable to noncontrolling interests
|
19.2
|
|
|
16.4
|
|
|
53.2
|
|
|
53.7
|
|
|
70.5
|
|
Income from
continuing operations before income tax expense
|
$
|
128.3
|
|
|
$
|
120.3
|
|
|
$
|
360.5
|
|
|
$
|
360.5
|
|
|
$
|
482.0
|
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Reconciliation of
Net Cash Provided by Operating Activities to Adjusted EBITDA
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended September 30,
|
|
Year Ended
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
(In
Millions)
|
Net cash provided
by operating activities
|
$
|
173.8
|
|
|
$
|
177.6
|
|
|
$
|
505.8
|
|
|
$
|
499.4
|
|
|
$
|
634.4
|
|
|
$
|
502.0
|
|
Provision for
doubtful accounts
|
(12.6)
|
|
|
(14.8)
|
|
|
(42.7)
|
|
|
(46.7)
|
|
|
(61.2)
|
|
|
(47.2)
|
|
Professional
fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
1.9
|
|
|
3.0
|
|
Interest expense and
amortization of debt discounts and fees
|
36.8
|
|
|
42.5
|
|
|
118.5
|
|
|
130.5
|
|
|
172.1
|
|
|
142.9
|
|
Equity in net income
of nonconsolidated affiliates
|
2.1
|
|
|
2.5
|
|
|
6.2
|
|
|
7.3
|
|
|
9.8
|
|
|
8.7
|
|
Net income
attributable to noncontrolling interests in continuing
operations
|
(19.2)
|
|
|
(16.4)
|
|
|
(53.2)
|
|
|
(53.7)
|
|
|
(70.5)
|
|
|
(69.7)
|
|
Amortization of
debt-related items
|
(1.0)
|
|
|
(3.5)
|
|
|
(7.7)
|
|
|
(10.3)
|
|
|
(13.8)
|
|
|
(14.3)
|
|
Distributions from
nonconsolidated affiliates
|
(2.2)
|
|
|
(2.9)
|
|
|
(6.6)
|
|
|
(5.9)
|
|
|
(8.5)
|
|
|
(7.7)
|
|
Current portion of
income tax expense
|
36.0
|
|
|
4.6
|
|
|
60.1
|
|
|
13.6
|
|
|
31.0
|
|
|
14.8
|
|
Change in assets and
liabilities
|
(9.8)
|
|
|
6.4
|
|
|
32.6
|
|
|
51.7
|
|
|
91.3
|
|
|
129.9
|
|
Net premium paid on
bond transactions
|
—
|
|
|
1.9
|
|
|
—
|
|
|
5.8
|
|
|
5.8
|
|
|
3.9
|
|
Net cash used in
operating activities of discontinued operations
|
0.1
|
|
|
0.1
|
|
|
0.7
|
|
|
0.6
|
|
|
0.7
|
|
|
0.7
|
|
Transaction
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.3
|
|
Other
|
0.6
|
|
|
0.4
|
|
|
1.2
|
|
|
0.6
|
|
|
0.6
|
|
|
3.2
|
|
Consolidated
Adjusted EBITDA
|
$
|
204.6
|
|
|
$
|
198.4
|
|
|
$
|
614.9
|
|
|
$
|
594.8
|
|
|
$
|
793.6
|
|
|
$
|
682.5
|
|
HealthSouth
Corporation and Subsidiaries
|
Supplemental
Information
|
Reconciliation of
Net Cash Provided by Operating Activities to Adjusted Free Cash
Flow
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In
Millions)
|
Net cash provided
by operating activities
|
$
|
173.8
|
|
|
$
|
177.6
|
|
|
$
|
505.8
|
|
|
$
|
499.4
|
|
Impact of
discontinued operations
|
0.1
|
|
|
0.1
|
|
|
0.7
|
|
|
0.6
|
|
Net cash provided by
operating activities of continuing operations
|
173.9
|
|
|
177.7
|
|
|
506.5
|
|
|
500.0
|
|
Capital expenditures
for maintenance
|
(37.6)
|
|
|
(23.9)
|
|
|
(92.1)
|
|
|
(64.5)
|
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(14.2)
|
|
|
(15.9)
|
|
|
(38.3)
|
|
|
(49.5)
|
|
Items
non-indicative of ongoing operations:
|
|
|
|
|
|
|
|
Cash paid for
professional fees—accounting, tax, and legal
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
Transaction costs and
related assumed liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
Net premium on bond
issuance/repayment
|
—
|
|
|
1.9
|
|
|
—
|
|
|
5.8
|
|
Adjusted free cash
flow
|
$
|
122.1
|
|
|
$
|
139.8
|
|
|
$
|
376.1
|
|
|
$
|
394.5
|
|
For the three months ended September 30, 2017, net cash
used in investing activities was $77.6
million and primarily resulted from capital expenditures and
acquisitions of businesses. Net cash used in financing activities
during the three months ended September 30, 2017 was
$99.7 million and primarily resulted
from net debt payments, cash dividends paid on common stock,
repurchases of common stock, and distributions paid to
noncontrolling interests of consolidated affiliates.
For the three months ended September 30, 2016, net cash
used in investing activities was $50.7
million and primarily resulted from capital expenditures.
Net cash used in financing activities during the three months ended
September 30, 2016 was $120.7
million and primarily resulted from the redemption of
$76 million of 7.75% Senior Notes due
2022 in September 2016, cash
dividends paid on common stock, and distributions paid to
noncontrolling interests of consolidated affiliates.
For the nine months ended September 30, 2017, net cash used
in investing activities was $209.2
million and primarily resulted from capital expenditures and
acquisitions of businesses. Net cash used in financing activities
during the nine months ended September 30, 2017 was
$269.5 million and primarily resulted
from net debt payments, cash dividends paid on common stock,
distributions paid to noncontrolling interests of consolidated
affiliates, and repurchases of common stock.
For the nine months ended September 30, 2016, net cash used
in investing activities was $156.3
million and primarily resulted from capital expenditures and
acquisitions of businesses. Net cash used in financing activities
during the nine months ended September 30, 2016 was
$328.3 million and primarily resulted
from net debt payments, including the redemptions of $176 million of 7.75% Senior Notes due 2022, cash
dividends on common stock, distributions paid to noncontrolling
interests of consolidated affiliates, and repurchases of common
stock.
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 Company's
ongoing rebranding and name change initiative and the impact on
HealthSouth's common stock price and existing operations, including
the Company's ability to attract patient referrals to its hospitals
as well as the associated costs with the rebranding; 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; HealthSouth's ability to maintain its
operations, including adequate supplies, utilities, and staffing,
during times of significant disaster disruption; 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 quarters ended March 31,
2017, June 30, 2017, and September 30, 2017, when
filed.
Media
Contact
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Casey Lassiter, 205
447-6410
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casey.lassiter@healthsouth.com
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Investor Relations
Contact
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Crissy Carlisle, 205
970-5860
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crissy.carlisle@healthsouth.com
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SOURCE HealthSouth Corporation