This is the Tagline, edited under "Misc Content"
HEALTHSOUTH Corporation
For the nine months ended September 30, 2002, HEALTHSOUTH's revenues were $3.387 billion, compared to $3.265 billion for the 2001 period. Net income for the 2002 period was $135.7 million, compared to net income of $134.5 million for the 2001 period. Earnings per share (assuming dilution) were $0.34 for the 2002 period, compared to $0.34 for the 2001 period. Operating earnings for the 2002 period were $259.7 million, compared to operating earnings of $237.5 million for the 2001 period. Operating earnings per share (assuming dilution) were $0.65 for the 2002 period, compared to $0.60 for the 2001 period.
Operating earnings exclude the effects of certain items that are included in net income, including unusual and non-recurring items of gain or loss and changes in accounting principles. Operating earnings for the third quarter of 2002 exclude the effects of the $25 million gain on early extinguishment of debt described above. Operating earnings for the nine months ended September 30, 2002 exclude the effects of such gain as well as the effects of a loss on the sale of assets, a loss on the early extinguishment of debt and the cumulative effect of a change in accounting principle relating to the impairment of assets under the requirements of Financial Accounting Standards Board Statement No. 142, all of which were incurred in the second quarter of 2002 and described in HEALTHSOUTH's second quarter earnings release. A reconciliation of operating earnings to net income as determined under generally accepted accounting principles is provided in the accompanying financial information. Management believes that operating earnings and operating earnings per share excluding such unusual and non-recurring gains or losses and non-cash impairment charges provide a clearer picture of the Company's operational performance than net income and earnings per share standing alone.
"The third quarter was a challenging one, and we are glad to have it behind us," said Richard M. Scrushy, Chairman of the Board of HEALTHSOUTH. "However, in the midst of all the difficulties, there were positive things happening. While our outpatient rehabilitation business showed a 17% decrease in revenue and a decline in volumes, we saw higher revenues in each of our other lines of business, including a 12% increase in inpatient rehabilitation revenue over the third quarter of 2001. We also saw same-store volume growth in our inpatient rehabilitation, diagnostic and surgery center businesses, including a 10% same-store increase in inpatient rehabilitation discharges. In addition, we added 52 new physician partners in our surgery centers during the quarter, resulting in our ninth consecutive quarter of same-store growth in that division."
William T. Owens, President and Chief Executive Officer of HEALTHSOUTH, said, "Our revenue decline in the third quarter was driven by a decrease in reimbursement in our outpatient rehabilitation business of approximately $23 million as compared to the second quarter, primarily related to the impact of Medicare Program Transmittal 1753 and its policies regarding the use of the group therapy billing code, and a decline in volumes in our outpatient rehabilitation business that resulted in approximately a $34 million decrease in revenue. This decline in volumes related to several factors. First, we closed or consolidated outpatient facilities in some markets to eliminate duplication and enhance efficiency, so we operated fewer facilities during the quarter. In addition, our number of referrals and visits per referral were both down. Finally, the demands on management resources in the quarter, combined with confusion among our therapists on scheduling and staffing requirements under the new Medicare policy, negatively affected our ability to restore lost volumes during the quarter. All of these factors contributed to a decline of about two patient visits per outpatient facility per day as compared to the second quarter of 2002. In addition, we saw increases of approximately $39 million in operating unit expenses as compared to the second quarter of 2002, primarily attributable to field training for therapists in the new policies, increased recruiting and labor costs, higher insurance premiums and new marketing initiatives, and an approximately $12 million increase in corporate general and administrative expenses from the second quarter. This increase in corporate-level expenses resulted primarily from increased legal, accounting and other professional fees related both to pending litigation and the proposed tax-free separation of our surgery center division and corporate-level marketing initiatives aimed at restoring patient volumes."
Owens added, "We are in the midst of our 2003 budget process, and we are intensely focused on both corporate and field expenses as well as on efforts to rebuild our outpatient volumes. We will also be evaluating some of our facilities for any necessary impairment charges under FASB Statement No. 142, and we expect the results of that evaluation to be complete in the fourth quarter. While the overall results of the third quarter were below what we had expected due to the impact of the factors we have described, it is important to note that we had an $8.4 million sequential-quarter increase in revenues in our inpatient rehabilitation operations due to our successful response to the inpatient rehabilitation prospective payment system and strong same-store growth, despite the impact of Transmittal 1753 on outpatient services provided in our inpatient division. We also repurchased over $440 million in public debt, including approximately $214 million of our $567.7 million in convertible subordinated debentures that mature in April 2003. Outside of those debentures, we have no significant debt maturities until 2005, and we had over $1 billion in availability under our revolving credit facility at the end of the quarter. We have ample liquidity to meet our foreseeable needs at this time."
At September 30, 2002, the Company's balance sheet reflected total debt of $3.212 billion and cash and cash equivalents of $390.4 million, resulting in net debt of $2.822 billion, a decline of $111.3 million from June 30, 2002. Accounts receivable days increased 7.5 days, to 86.5 days, from the second quarter of 2002, primarily as a result of decreased revenues in the third quarter.
Cash flow from operations totaled approximately $141 million, compared to $170 million in the 2001 quarter. Capital spending was approximately $75.0 million in the quarter.
In conclusion, Scrushy noted, "During the third quarter, we have taken a number of steps to respond to issues that are important to our investors. We added two new independent members to our Board of Directors, and formed a special corporate governance committee to review our governance policies and recommend changes to ensure that we are responsive to all of our constituencies. We have also undertaken an extensive review, led by highly respected outside counsel, of concerns that have been raised in the press and elsewhere, and we have fully cooperated with the Securities and Exchange Commission in their previously announced investigation, volunteering to provide the Commission with information even before we had been advised of any investigation. We have devoted a great deal of time to meeting with our stockholders and bondholders, and we have responded to their concerns. This quarter has been difficult, and the difficulties will not go away overnight. However, our Board of Directors and our management team are fully committed to overcoming the challenges that face us and to continuing to act in the best interests of our stockholders, our dedicated employees and the other constituencies that we serve."
HEALTHSOUTH is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with approximately 1,800 locations in all 50 states, the United Kingdom, Australia, Puerto Rico, Saudi Arabia and Canada. HEALTHSOUTH can be found on the Web at http://www.healthsouth.com/.
HEALTHSOUTH will hold a conference call to discuss its third quarter results at 9:00 a.m. Central Standard Time on Tuesday, November 5, 2002. Simultaneously with the conference call, a webcast of the call will be available to interested parties at http://www.healthsouth.com/ via an Internet link under the "Investor Relations" section. A replay of the call will be available at the same Internet site address for 15 days following the call.
Statements contained in this press release which are not historical facts are forward-looking statements. Without limiting the generality of the preceding statement, all statements in this press release concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results 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. Such forward-looking statements are necessarily estimates based upon current information, involve a number of risks and uncertainties and are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. HEALTHSOUTH's actual results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors, including those identified in this press release and in the public filings made by HEALTHSOUTH with the Securities and Exchange Commission, including HEALTHSOUTH's Annual Report on Form 10-K for the year ended December 31, 2001 and its Quarterly Reports on Form 10-Q, and forward-looking statements contained in this press release or in other public statements of HEALTHSOUTH or its senior management should be considered in light of those factors. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.
HEALTHSOUTH Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - In thousands, except per share amounts)
Three Months Ended
Sept 30,
2002 2001
Revenues $ 1,093,785 $ 1,075,874
Operating unit expenses 786,947 714,750
Corporate general and administrative
expenses 55,125 38,958
Provision for doubtful accounts 23,898 23,980
Depreciation and amortization 79,505 95,790
Early extinguishment of debt (25,078) 0
Loss on sale of assets 0 0
Interest expense 57,972 50,914
Interest income (1,938) (1,430)
976,431 922,962
Income before income taxes
and minority interests 117,354 152,912
Provision for income taxes 33,919 51,659
Income before minority interests 83,435 101,253
Minority interests (29,821) (22,127)
Income before cumulative effect of
accounting change 53,614 79,126
Cumulative effect of accounting change -- --
Net income $ 53,614 $ 79,126
Weighted average common shares outstanding 397,237 390,455
Income per common share before
cumulative effect of accounting change 0.14 0.20
Cumulative effect of accounting change -- --
Net income per common share $ 0.14 $ 0.20
Weighted average common shares
outstanding -- assuming dilution 399,352 401,074
Income per common share before
cumulative effect of accounting
change -- assuming dilution 0.13 0.20
Cumulative effect of accounting change -- --
Net income per common share --
assuming dilution $ 0.13 $ 0.20
Add-back to income for diluted
earnings per share: Interest and
amortization on convertible debt. $ -- $ --
* *
* The effect of these securities was
antidilutive.
Income per common share before
cumulative effect of accounting change $ 53,614 $ 79,126
Add back non-recurring items
Non-recurring items (25,078) --
Tax benefit (provision) 9,718 --
Operating income $ 38,254 $ 79,126
Weighted average common shares outstanding 397,237 390,455
Weighted average common shares
outstanding -- assuming dilution 399,352 401,074
Operating income per common share $ 0.10 $ 0.20
Operating income per common share --
assuming dilution $ 0.10 $ 0.20
Add-back to income for diluted
earnings per share: Interest and
amortization on convertible debt. $ -- $ --
* *
* The effect of these securities was antidilutive.
HEALTHSOUTH Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - In thousands, except per share amounts)
Nine Months Ended
Sept 30, Sept 30,
2002 2001
Revenues $ 3,387,243 $ 3,265,324
Operating unit expenses 2,270,760 2,173,500
Corporate general and administrative
expenses 138,382 122,827
Provision for doubtful accounts 74,534 83,221
Depreciation and amortization 242,428 280,231
Early extinguishment of debt (25,078) 6,475
Loss on sale of assets 76,690 139,883
Interest expense 158,907 165,580
Interest income (4,205) (5,742)
2,932,418 2,965,975
Income before income taxes
and minority interests 454,825 299,349
Provision for income taxes 147,869 93,193
Income before minority interests 306,956 206,156
Minority interests (88,087) (71,667)
Income before cumulative effect of
accounting change 218,869 134,489
Cumulative effect of accounting change (83,165) --
Net income $ 135,704 $ 134,489
Weighted average common shares outstanding 394,867 389,135
Income per common share before
cumulative effect of accounting change 0.55 0.35
Cumulative effect of accounting change (0.21) --
Net income per common share $ 0.34 $ 0.35
Weighted average common shares
outstanding -- assuming dilution 400,334 399,077
Income per common share before
cumulative effect of accounting change --
assuming dilution 0.55 0.34
Cumulative effect of accounting change (0.21) --
Net income per common share --
assuming dilution $ 0.34 $ 0.34
Add-back to income for diluted
earnings per share: Interest and
amortization on convertible debt. $ -- $ --
* *
* The effect of these securities was
antidilutive.
Income per common share before
cumulative effect of accounting change $ 218,869 $ 134,489
Add back non-recurring items
Non-recurring items 57,146 164,906
Tax benefit (provision) (16,331) (61,880)
Operating income $ 259,684 $ 237,515
Weighted average common shares outstanding 394,867 389,135
Weighted average common shares
outstanding -- assuming dilution 415,836 397,993
Operating income per common share $ 0.66 $ 0.61
Operating income per common share --
assuming dilution $ 0.65 $ 0.60
Add-back to income for diluted
earnings per share: Interest and
amortization on convertible debt. $ 9,459 $ --
*
* The effect of these securities was antidilutive.
HEALTHSOUTH Corporation and Subsidiaries
Consolidated Statements of Income
Nine Months Ended September 30,2002
(UNAUDITED - In thousands, except per share amounts)
Nine Months
Ended
September
Less 30, 2002
Unusual Before
Nine Months and Unusual and
Ended Non- Non-
September Recurring Recurring
30, 2002 Items Items
Revenues $ 3,387,243 $ 3,387,243
Operating unit expenses 2,270,760 2,270,760
Corporate general and
administrative expenses 138,382 138,382
Provision for doubtful accounts 74,534 74,534
Depreciation and amortization 242,428 5,534 (1) 236,894
Early extinguishment of debt (25,078) (25,078) (1) -
Loss on sale of assets 76,690 76,690 (2) -
Interest expense 158,907 158,907
Interest income (4,205) (4,205)
2,932,418 57,146 2,875,272
Income before income taxes,
minority interests and
cumulative effect of accounting
change 454,825 (57,146) 511,971
Provision for income taxes 147,869 (16,331) 164,200
Income before minority interests
and cumulative effect of
accounting change 306,956 (40,815) 347,771
Minority interests (88,087) (88,087)
Income before cumulative effect of
accounting change 218,869 (40,815) 259,684
Cumulative effect of accounting
change (83,165) (83,165) --
Net income $ 135,704 $ (123,980) $ 259,684
Weighted average common shares
outstanding 394,867 394,867
Income per common share before
cumulative effect of accounting
change 0.55 0.66
Cumulative effect of accounting
change (0.21) --
Net income per common share $ 0.34 $ 0.66
Weighted average common shares
outstanding -- assuming dilution 400,334 415,836
Income per common share before
cumulative effect of accounting
change -- assuming dilution 0.55 0.65
Cumulative effect of accounting
change (0.21) --
Net income per common share --
assuming dilution $ 0.34 $ 0.65
Add-back to income for diluted
earnings per share:
Interest and amortization on
convertible debt * $ 9,459
*
* The effect of these securities was antidilutive.
(1) Effect of early extinguishment of debt.
(2) Loss related to the sale of certain facilities.
HEALTHSOUTH Corporation and Subsidiaries
Consolidated Statements of Income
Three Months Ended September 30, 2002
(UNAUDITED - In thousands, except per share amounts)
Three
Months Ended
September
Less 30, 2002
Unusual Before
Three and Unusual and
Months Ended Non- Non-
September Recurring Recurring
30, 2002 Items Items
Revenues $ 1,093,785 $ 1,093,785
Operating unit expenses 786,947 786,947
Corporate general and
administrative expenses 55,125 55,125
--
Provision for doubtful accounts 23,898 23,898
Depreciation and amortization 79,505 79,505
Early extinguishment of debt (25,078) (25,078) (1) --
Interest expense 57,972 57,972
Interest income (1,938) (1,938)
976,431 (25,078) 1,001,509
Income before income taxes and
minority interests 117,354 25,078 92,276
Provision for income taxes 33,919 9,718 24,201
Income before minority interests 83,435 15,360 68,075
Minority interests (29,821) (29,821)
Net income $ 53,614 $ 15,360 $ 38,254
Weighted average common shares
outstanding 397,237 397,237
Net income per common share $ 0.14 $ 0.10
Weighted average common shares
outstanding -- assuming
dilution 399,352 399,352
Net income per common share -
assuming dilution $ 0.13 $ 0.10
Add-back to income for
diluted earnings per share:
Interest and amortization
on convertible debt * $ -- $ --
* *
* The effect of these securities was antidilutive
(1) Effect of early extinguishment of debt.
HEALTHSOUTH Corporation and Subsidiaries
Summary Consolidated Balance Sheets
(UNAUDITED - In Thousands)
September 30, December 31,
2002 2001
(Unaudited)
ASSETS
Cash and cash equivalents $ 390,441 $ 278,456
Accounts receivable -- net 1,028,562 940,414
Other current assets 465,448 517,585
Total Current Assets 1,884,451 1,736,455
Net Property and Equipment 3,067,666 2,774,736
Net Intangibles 2,651,614 2,725,103
Other 326,734 342,943
Total Assets $ 7,930,465 $ 7,579,237
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $30,738 $37,085
Other current liabilities 300,828 299,999
Current portion of long-term debt 376,112 21,912
Total Current Liabilities 707,678 358,996
Long-Term Debt 2,835,699 3,005,035
Other 261,661 263,741
Minority Interests 161,579 154,541
Stockholders' Equity 3,963,848 3,796,924
Total Liabilities and Stockholders'
Equity $ 7,930,465 $ 7,579,237
HEALTHSOUTH Corporation
Quarterly Statistics (Unaudited)
For Period Ending September 30, 2002
3Q 2002 3Q 2001
Outpatient Rehab
Total Visits: 2,058,005 2,243,112
Total Volume Growth (Y/Y): -8.3 %
Same Store Volume Growth (Y/Y): -3.8 %
Average Revenue per Visit: $89 $98
Facility Count: 1,331 1,435
Surgery Centers
Total Cases: 220,120 211,570
Total Volume Growth (Y/Y): 4.0 %
Same Store Volume Growth (Y/Y): 5.8 %
Average Revenue per Case: $1,146 $1,104
Facility Count: 206 217
Diagnostic Imaging
Total Scans: 275,791 275,908
Total Volume Growth (Y/Y): 0.0 %
Same Store Volume Growth (Y/Y): 5.3 %
Average Revenue per Scan: $300 $300
Facility Count: 136 137
Inpatient Division
Total Discharges: 30,231 27,519
Total Volume Growth (Y/Y): 9.9 %
Same Store Volume Growth (Y/Y): 10.0 %
Average Revenue per $16,34
Discharge: 2 $16,025
Facility Count: 118 122
Medical Centers
Total Days: 25,129 24,238
Total Volume Growth (Y/Y): 3.7 %
Same Store Volume Growth (Y/Y): 3.7 %
Average Revenue per Day: $2,851 $2,857
Facility Count: 4 4
For more information, contact:
Investor Relations: Jason Brown, (205) 968-4429
Media: HEALTHSOUTH Public Relations, (205) 969-7584
SOURCE: HEALTHSOUTH Corporation
CONTACT: Media - HEALTHSOUTH Public Relations, +1-205-969-7584;
Investor Relations - Jason Brown, +1-205-968-4429, of HEALTHSOUTH Corporation
Web site: http://www.healthsouth.com/