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"The first quarter was another solid quarter for HealthSouth," said Jay Grinney, president and chief executive officer of HealthSouth. "Despite weather-related disruptions in several markets, we saw an overall increase in the number of patients treated and, through better pricing and disciplined expense management, achieved strong growth across all key, financial metrics. Additionally, our development pipeline remains strong, as evidenced by the recent announcement that we've signed a definitive agreement to purchase a 50-bed rehabilitation hospital in Las Vegas. We are exploring additional development projects and are on track to achieve our growth objectives for the year."
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First Quarter Results
"The first quarter's strong Adjusted Consolidated EBITDA growth reduced the Company's leverage ratio and contributed to the $36 million of growth in cash and cash equivalents on our balance sheet," said Ed Fay, senior vice president and treasurer of HealthSouth. "Based on the trailing four quarters' Adjusted Consolidated EBITDA, the Company reduced its leverage ratio from 4.3x at the end of 2009 to 4.2x at the end of the first quarter of 2010. Looking ahead, our strong cash flows will allow us to continue to improve our capital structure and take advantage of new growth opportunities."
2010 Guidance
In the Company's Current Report on Form 8-K dated February 22, 2010 and related earnings release, the Company provided 2010 guidance which consisted of adjusted income from continuing operations in the range of $1.60 to $1.70 per diluted share and Adjusted Consolidated EBITDA in the range of $397 million to $407 million. Based on its results for the first quarter of 2010, the Company expects its 2010 full-year results to be at the higher end of these guidance ranges.
Earnings Conference Call and Webcast
The Company will host an investor conference call at 9:30 a.m. Eastern Time on Wednesday, May 5, 2010 to discuss its results for the first quarter of 2010. For reference during the call, the Company will post certain supplemental slides at http://investor.healthsouth.com.
The conference call may be accessed by dialing (866) 406-5369 and giving the pass code 66222877. International callers should dial (973) 582-2847 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.
A replay of the conference call will be available, beginning approximately two hours after the completion of the conference call, from May 5 until May 19, 2010. To access the replay, please dial 800-642-1687. International callers should dial (706) 645-9291. The webcast will also be archived for replay purposes after the live broadcast at http://investor.healthsouth.com.
About HealthSouth
HealthSouth is the nation's largest provider of inpatient rehabilitative healthcare services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellite clinics, and home health agencies. HealthSouth strives to be the nation's preeminent provider of inpatient rehabilitative healthcare services and can be found on the Web at www.healthsouth.com.
Other Information
The Company's leverage ratio that is referenced in this release and elsewhere from time to time is defined in the Company's credit agreement as the ratio of consolidated total debt to Adjusted Consolidated EBITDA for the trailing four quarters. Reconciliations of net income to Adjusted Consolidated EBITDA can be found in the following schedules.
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 March 31, 2010, when filed, as well as the Company's Current Report on Form 8-K filed on May 4, 2010. In addition, the Company will post supplemental slides today on its website at http://investor.healthsouth.com for reference during its May 5, 2010 earnings call.
The Company expects to file its first quarter 2010 Form 10-Q this week. When filed, the report can be found on the Company's website at http://investor.healthsouth.com and the SEC's website at www.sec.gov.
Statements contained in this press release which are not historical facts 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. HealthSouth's actual results may differ materially from the results 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 results to differ materially from those estimated by HealthSouth include, but are not limited to, any adverse outcome of various lawsuits, claims, and legal or regulatory proceedings that may be brought against the Company; significant changes in HealthSouth's management team; HealthSouth's ability to continue to operate in the ordinary course and manage its relationships with its creditors, including its lenders, bondholders, vendors and suppliers, employees, and customers; 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; competitive pressures in the healthcare industry and HealthSouth's response thereto; HealthSouth's ability to obtain and retain favorable arrangements with third-party payors; HealthSouth's ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment with often severe staffing shortages and the impact on HealthSouth's labor expenses from potential union activity and staffing shortages; general conditions in the economy and capital markets; and other factors which may be identified from time to time in HealthSouth's SEC filings and other public announcements, including HealthSouth's Form 10K for the year ended December 31, 2009 and Form 10-Q for the quarterly period ended March 31, 2010, which is expected to be filed later this week.
-- Consolidated net operating revenues were $491.0 million for the first quarter of 2010 compared to $472.9 million for the first quarter of 2009, or an increase of 3.8%. This increase was attributable to higher net patient revenue per discharge and a 1.1% increase in patient discharges. Net patient revenue per discharge increased 3.6% quarter over quarter due primarily to the Medicare pricing changes that became effective October 1, 2009, as well as a shift in our payor mix to more Medicare patients and a slight increase in the acuity of the patients we served. Volumes were below expectations primarily as a result of a steep ramp-up in January 2010 and heavy snow falls in February 2010 which affected many of our markets. Discharge growth returned to expected levels in March 2010. -- Reported net income per diluted share for the first quarter of 2010 was $0.37 per share compared to $0.44 per diluted share for the first quarter of 2009, which included a net gain of $15.9 million, or $0.16 per diluted share, associated with government, class action, and related settlements. Furthermore, there was a 7% quarter-over-quarter increase in diluted weighted average common shares outstanding in the first quarter of 2010 due primarily to the five million shares issued on September 30, 2009 in full satisfaction of the Company's obligation to do so under the securities litigation settlement. -- Adjusted net income from continuing operations (see attached supplemental information) grew 23.1% from $0.39 per diluted share for the first quarter of 2009 to $0.48 per diluted share for the first quarter of 2010. The Company experienced quarter-over-quarter growth due primarily to increased revenues, lower interest expense, and effective expense management offset partially by the increased share count discussed above. -- Cash flows provided by operating activities were $84.8 million for the first quarter of 2010 compared to $183.1 million for the first quarter of 2009, which included approximately $123 million related to the Company's settlement with UBS and the receipt of income tax refunds related to prior periods. Cash flows provided by operating activities for the first quarter of 2010 included $6.6 million of state income tax refunds associated with prior periods. -- Adjusted Consolidated EBITDA (see attached supplemental information) for the first quarter of 2010 was $106.4 million compared to $98.4 million in the first quarter of 2009, or an increase of 8.1%.
SOURCE HealthSouth Corporation
