2014 Q2 Form 10-Q Financial Statement

#000078516114000043 Filed on July 29, 2014

View on sec.gov

Income Statement

Concept 2014 Q2 2013 Q2
Revenue $604.4M $564.5M
YoY Change 7.07% 5.83%
Cost Of Revenue $27.80M $26.60M
YoY Change 4.51% 2.7%
Gross Profit $567.3M $530.9M
YoY Change 6.86% 5.97%
Gross Profit Margin 93.86% 94.05%
Selling, General & Admin $327.8M $317.2M
YoY Change 3.34% 4.62%
% of Gross Profit 57.78% 59.75%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $26.40M $23.10M
YoY Change 14.29% 15.5%
% of Gross Profit 4.65% 4.35%
Operating Expenses $439.7M $419.3M
YoY Change 4.87% 5.46%
Operating Profit $127.6M $111.6M
YoY Change 14.34% 7.93%
Interest Expense -$25.20M -$21.10M
YoY Change 19.43% 6.03%
% of Operating Profit -19.75% -18.91%
Other Income/Expense, Net $28.20M $1.900M
YoY Change 1384.21% 375.0%
Pretax Income $130.6M $92.40M
YoY Change 41.34% 10.92%
Income Tax $36.50M -$86.50M
% Of Pretax Income 27.95% -93.61%
Net Earnings $83.10M $165.2M
YoY Change -49.7% 253.75%
Net Earnings / Revenue 13.75% 29.26%
Basic Earnings Per Share $0.93 $1.82
Diluted Earnings Per Share $0.85 $1.66
COMMON SHARES
Basic Shares Outstanding 86.70M shares 86.10M shares
Diluted Shares Outstanding 100.6M shares 99.80M shares

Balance Sheet

Concept 2014 Q2 2013 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $65.80M $68.70M
YoY Change -4.22% 67.15%
Cash & Equivalents $65.80M $68.70M
Short-Term Investments
Other Short-Term Assets $103.9M $111.6M
YoY Change -6.9% -18.95%
Inventory
Prepaid Expenses
Receivables $272.3M $273.7M
Other Receivables $0.00 $0.00
Total Short-Term Assets $580.9M $591.5M
YoY Change -1.79% 39.34%
LONG-TERM ASSETS
Property, Plant & Equipment $976.5M $793.3M
YoY Change 23.09% 10.35%
Goodwill $34.80M $13.70M
YoY Change 154.01% -96.75%
Intangibles $103.3M $86.80M
YoY Change 19.01% 25.8%
Long-Term Investments
YoY Change
Other Assets $148.0M $138.1M
YoY Change 7.17% 7.22%
Total Long-Term Assets $1.996B $1.920B
YoY Change 3.93% 1.53%
TOTAL ASSETS
Total Short-Term Assets $580.9M $591.5M
Total Long-Term Assets $1.996B $1.920B
Total Assets $2.577B $2.512B
YoY Change 2.58% 8.46%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $55.70M $57.30M
YoY Change -2.79% -3.86%
Accrued Expenses $243.6M $254.3M
YoY Change -4.21% -4.04%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $299.3M $311.6M
YoY Change -3.95% -4.0%
LONG-TERM LIABILITIES
Long-Term Debt $1.475B $1.320B
YoY Change 11.78% 8.23%
Other Long-Term Liabilities $141.1M $131.4M
YoY Change 7.38% -3.24%
Total Long-Term Liabilities $141.1M $131.4M
YoY Change 7.38% -90.3%
TOTAL LIABILITIES
Total Short-Term Liabilities $299.3M $311.6M
Total Long-Term Liabilities $141.1M $131.4M
Total Liabilities $1.916B $1.763B
YoY Change 8.67% 4.94%
SHAREHOLDERS EQUITY
Retained Earnings -$1.971B -$2.208B
YoY Change -10.73%
Common Stock $1.000M $1.000M
YoY Change 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost) $457.6M $404.0M
YoY Change 13.27%
Treasury Stock Shares 16.24M shares 14640B shares
Shareholders Equity $413.7M $274.8M
YoY Change
Total Liabilities & Shareholders Equity $2.577B $2.512B
YoY Change 2.58% 8.46%

Cashflow Statement

Concept 2014 Q2 2013 Q2
OPERATING ACTIVITIES
Net Income $83.10M $165.2M
YoY Change -49.7% 253.75%
Depreciation, Depletion And Amortization $26.40M $23.10M
YoY Change 14.29% 15.5%
Cash From Operating Activities $128.0M $105.4M
YoY Change 21.44% -7.54%
INVESTING ACTIVITIES
Capital Expenditures -$36.90M -$42.70M
YoY Change -13.58% -29.19%
Acquisitions $15.90M $28.90M
YoY Change -44.98% 1276.19%
Other Investing Activities -$2.300M -$10.80M
YoY Change -78.7% -320.41%
Cash From Investing Activities -$39.20M -$53.50M
YoY Change -26.73% -3.43%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -76.10M -63.30M
YoY Change 20.22% 2.43%
NET CHANGE
Cash From Operating Activities 128.0M 105.4M
Cash From Investing Activities -39.20M -53.50M
Cash From Financing Activities -76.10M -63.30M
Net Change In Cash 12.70M -11.40M
YoY Change -211.4% 256.25%
FREE CASH FLOW
Cash From Operating Activities $128.0M $105.4M
Capital Expenditures -$36.90M -$42.70M
Free Cash Flow $164.9M $148.1M
YoY Change 11.34% -15.03%

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Contingencies and Other Commitments</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims, and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of any such lawsuits, claims, or legal and regulatory proceedings could materially and adversely affect our financial position, results of operations, and cash flows in a given period. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Litigation By and Against Former Independent Auditor&#8212;</font></div><div style="line-height:120%;padding-bottom:13px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2003, claims on behalf of HealthSouth were brought against Ernst &amp; Young, LLP in a stockholder derivative lawsuit initially filed in the Circuit Court of Jefferson County, Alabama on August&#160;28, 2002 and captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Tucker v. Scrushy</font><font style="font-family:inherit;font-size:10pt;">. The </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Tucker</font><font style="font-family:inherit;font-size:10pt;"> derivative litigation, including the claims against various other defendants and the </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$2.9 billion</font><font style="font-family:inherit;font-size:10pt;"> judgment against Mr.&#160;Scrushy, our former chairman and chief executive officer, is more fully described in &#8220;Derivative Litigation&#8221; and &#8220;Litigation By and Against Former Independent Auditor&#8221; in Note 18, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Contingencies and Other Commitments</font><font style="font-family:inherit;font-size:10pt;">, to the consolidated financial statements accompanying the 2013 Form 10-K. The </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Tucker</font><font style="font-family:inherit;font-size:10pt;"> complaint alleges that from 1996 through 2002, when Ernst &amp; Young served as our independent auditor, Ernst &amp; Young acted recklessly and with gross negligence in performing its duties, and specifically that Ernst &amp; Young failed to perform reviews and audits of our financial statements with due professional care as required by law and by its contractual agreements with us. The claims further allege Ernst &amp; Young either knew of or, in the exercise of due care, should have discovered and investigated the fraudulent and improper accounting practices being directed by certain officers and employees, and should have reported them to our board of directors and the audit committee. The claims seek compensatory and punitive damages, disgorgement of fees received from us by Ernst &amp; Young, and attorneys&#8217; fees and costs. </font></div><div style="line-height:120%;padding-bottom:13px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On March&#160;18, 2005, Ernst&#160;&amp; Young filed a lawsuit captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Ernst&#160;&amp; Young LLP v. HealthSouth Corp.</font><font style="font-family:inherit;font-size:10pt;"> in the Circuit Court of Jefferson County, Alabama. The complaint alleges we provided Ernst&#160;&amp; Young with fraudulent management representation letters, financial statements, invoices, bank reconciliations, and journal entries in an effort to conceal accounting fraud. Ernst&#160;&amp; Young claims that as a result of our actions, Ernst&#160;&amp; Young&#8217;s reputation has been injured and it has and will incur damages, expenses, and legal fees. On April&#160;1, 2005, we answered Ernst&#160;&amp; Young&#8217;s claims and asserted counterclaims related or identical to those asserted in the </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Tucker</font><font style="font-family:inherit;font-size:10pt;"> action. Upon Ernst&#160;&amp; Young&#8217;s motion, the Alabama state court referred Ernst&#160;&amp; Young&#8217;s claims and our counterclaims to arbitration pursuant to a clause in the engagement agreements between HealthSouth and Ernst &amp; Young. In August 2006, we and the derivative plaintiffs agreed to jointly prosecute the claims against Ernst &amp; Young in arbitration.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The trial phase of the arbitration process began on July 12, 2010 before a three-person arbitration panel selected under rules of the American Arbitration Association (the &#8220;AAA&#8221;). On December 18, 2012, the AAA panel granted Ernst &amp; Young&#8217;s motion to dismiss our claims on the grounds that HealthSouth is not permitted to pursue its claims since certain of its former officers and employees committed fraudulent acts. The panel also denied and dismissed Ernst&#160;&amp; Young&#8217;s claims against us. On December&#160;18, 2012, we, together with the stockholder derivative plaintiffs, filed a notice of appeal of the panel&#8217;s decision in the Circuit Court of Jefferson County, Alabama. On December 28, 2012, we filed a motion to vacate the decision. We assert that the panel&#8217;s decision is contrary to the Federal Arbitration Act and the duties of a public accounting firm to its corporate clients, and that the arbitrators exceeded their authority by entering an award contrary to Alabama law. On April 25, 2013, the court denied our motion to vacate. On June 4, 2013, we filed a notice of appeal to the Supreme Court of Alabama seeking review of the circuit court's denial of our motion to vacate the arbitration panel's decision. On June 13, 2014, the Supreme Court of Alabama affirmed the decision by the circuit court. On June 27, 2014, we filed an application for rehearing with the Supreme Court of Alabama. At this time, we do not know when the court will rule on that application.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Based on the ruling of the arbitration panel, we do not believe there is a reasonable possibility of a loss that might result from an adverse judgment or a settlement of this case.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">General Medicine Action&#8212;</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On August&#160;16, 2004, General Medicine, P.C. filed a lawsuit against us captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">General Medicine, P.C. v. HealthSouth Corp.</font><font style="font-family:inherit;font-size:10pt;"> seeking the recovery of allegedly fraudulent transfers involving assets of Horizon/CMS Healthcare Corporation, a former subsidiary of HealthSouth. The lawsuit is pending in the Circuit Court of Jefferson County, Alabama (the &#8220;Alabama Action&#8221;).</font></div><div style="line-height:120%;padding-bottom:13px;padding-top:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">General Medicine&#8217;s underlying claim against Horizon/CMS originates from a services contract entered into in 1995 between General Medicine and Horizon/CMS whereby General Medicine agreed to provide medical director services to skilled nursing facilities owned by Horizon/CMS for a term of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three years</font><font style="font-family:inherit;font-size:10pt;">. Horizon/CMS terminated the agreement for cause six months after it was executed, and General Medicine then initiated a lawsuit against Horizon/CMS in the United States District Court for the Eastern District of Michigan in 1996 (the &#8220;Michigan Action&#8221;). General Medicine&#8217;s complaint in the Michigan Action alleged that Horizon/CMS breached the services contract by wrongfully terminating General Medicine. We acquired Horizon/CMS in 1997 and sold it to Meadowbrook Healthcare, Inc. in 2001 pursuant to a stock purchase agreement. In 2004, Meadowbrook, without the knowledge of HealthSouth, consented to the entry of a final judgment in the Michigan Action in favor of General Medicine against Horizon/CMS for the alleged wrongful termination of the contract with General Medicine in the amount of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$376 million</font><font style="font-family:inherit;font-size:10pt;">, plus interest from the date of the judgment until paid at the rate of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">10%</font><font style="font-family:inherit;font-size:10pt;"> per annum (the &#8220;Consent Judgment&#8221;). The </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$376 million</font><font style="font-family:inherit;font-size:10pt;"> damages figure was unilaterally selected by General Medicine and was not tested or opposed by Meadowbrook. Additionally, the settlement agreement (the &#8220;Settlement&#8221;) used as the basis for the Consent Judgment provided that Meadowbrook would pay only </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$300,000</font><font style="font-family:inherit;font-size:10pt;"> to General Medicine to settle the Michigan Action and that General Medicine would seek to recover the remaining balance of the Consent Judgment solely from us. We were not a party to the Michigan Action, the Settlement negotiated by Meadowbrook, or the Consent Judgment. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The complaint filed by General Medicine against us in the Alabama Action alleges that while Horizon/CMS was our wholly owned subsidiary, General Medicine was an existing creditor of Horizon/CMS by virtue of the breach of contract claim underlying the Settlement. The complaint also alleges we caused Horizon/CMS to transfer its assets to us for less than a reasonably equivalent value or, in the alternative, with the actual intent to defraud creditors of Horizon/CMS, including General Medicine, in violation of the Alabama Uniform Fraudulent Transfer Act. General Medicine further alleges in its amended complaint that we are liable for the Consent Judgment despite not being a party to it because as Horizon/CMS&#8217;s parent we failed to observe corporate formalities in our operation and ownership of Horizon/CMS, misused our control of Horizon/CMS, stripped assets from Horizon/CMS, and engaged in other conduct which amounted to a fraud on Horizon/CMS&#8217;s creditors. General Medicine has requested relief including recovery of the unpaid amount of the Consent Judgment, the avoidance of the subject transfers of assets, attachment of the assets transferred to us, appointment of a receiver over the transferred properties, and a monetary judgment for the value of properties transferred. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We have denied liability to General Medicine and asserted defenses and counterclaims against General Medicine for fraud, tortious interference with business relations, conspiracy, abuse of process, and other causes of action. In our counterclaims, we alleged the Consent Judgment is the product of fraud and collusion by General Medicine and Meadowbrook and, further, that these parties were guilty of a conspiracy to manufacture a lawsuit against HealthSouth in favor of General Medicine. Consequently, we assert that the Consent Judgment is not evidence of a legitimate debt owed by Horizon/CMS to General Medicine that is collectible from HealthSouth under any theory of liability.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In 2008, after we obtained discovery concerning the circumstances that led to the entry of the Consent Judgment, we filed a motion in the Michigan Action asking the court to set aside the Consent Judgment on grounds that it was the product of fraud on the court and collusion by the parties. On May 21, 2009, the court granted our motion to set aside the Consent Judgment on grounds that it was the product of fraud on the court. On March 9, 2010, General Medicine filed an appeal of the court's decision to the Sixth Circuit Court of Appeals. The parties agreed to a voluntary stay of the Alabama Action pending the outcome of General Medicine's appeal to the Sixth Circuit Court of Appeals. On April 10, 2012, the Sixth Circuit Court of Appeals reversed the lower court's ruling and reinstated the Consent Judgment. Due to the conclusion of the appeal in the Michigan Action, General Medicine requested reactivation of the Alabama Action in the Circuit Court of Jefferson County, Alabama. On January 10, 2013, we filed a motion for partial summary judgment in the Alabama Action seeking a declaration that the Consent Judgment obtained by General Medicine is not enforceable against us because, among other reasons, it was the result of collusion. On February 27, 2013, the court denied our motion. The court also indicated it concurred with the Sixth Circuit Court of Appeals that the Consent Judgment did nothing more than establish Horizon/CMS's liability to General Medicine and did not establish the amount of General Medicine&#8217;s damages claim against Horizon/CMS or the merits of General Medicine's separate fraudulent conveyance claims against HealthSouth.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On January 9, 2014 and on February 18, 2014, the court in the Alabama Action entered rulings which together provided that the </font><font style="font-family:inherit;font-size:10pt;">$376 million</font><font style="font-family:inherit;font-size:10pt;"> damages figure contained in the Consent Judgment is not admissible at trial and that the issue of collusion with respect to the amount of the Consent Judgment is now moot. Instead of relying on the Consent Judgment to prove damages against Horizon/CMS, General Medicine will be required to prove the amount of any damages it has against Horizon/CMS. On March 31, 2014, General Medicine filed a motion seeking partial summary judgment and requesting dismissal of our defenses and counterclaims which allege the Consent Judgment was the product of fraud and collusion. On July 15, 2014, the court issued an order denying General Medicine&#8217;s motion for partial summary judgment. Accordingly, at trial we will be permitted to present our defenses and counterclaims of fraud and collusion against General Medicine.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On May 3, 2014, the Consent Judgment expired under applicable Michigan law without renewal by General Medicine. Based on the expiration, on July 23, 2014, we filed a motion for summary judgment requesting dismissal of General Medicine&#8217;s lawsuit against us on grounds that General Medicine is no longer a &#8220;creditor&#8221; of Horizon/CMS, which is an essential element of the fraudulent transfer and alter ego claims against us. On August 7, 2014, the court will hear our motion, as well as General Medicine&#8217;s motion for partial summary judgment arguing that the Consent Judgment has not expired and that it remains a valid basis for a fraudulent transfer claim. The Alabama Action is set for trial beginning on September 15, 2014.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We intend to vigorously defend ourselves against General Medicine&#8217;s claims and to vigorously prosecute our counterclaims for fraud and collusion against General Medicine. Based on the stage of litigation, review of the current facts and circumstances as we understand them, the nature of the underlying claim, the results of the proceedings to date, and the nature and scope of the defense we continue to mount, we do not believe an adverse judgment or settlement is probable in this matter, and it is also not possible to estimate the amount of loss, if any, or range of possible loss that might result from an adverse judgment or settlement of this case.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Other Litigation&#8212;</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We have been named as a defendant in a lawsuit filed March 28, 2003 by several individual stockholders in the Circuit Court of Jefferson County, Alabama, captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Nichols v. HealthSouth Corp</font><font style="font-family:inherit;font-size:10pt;">. The plaintiffs allege that we, some of our former officers, and our former investment bank engaged in a scheme to overstate and misrepresent our earnings and financial position. The plaintiffs are seeking compensatory and punitive damages. This case was consolidated with the </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Tucker</font><font style="font-family:inherit;font-size:10pt;"> case for discovery and other pretrial purposes and was stayed in the Circuit Court on August&#160;8, 2005. The plaintiffs filed an amended complaint on November 9, 2010 to which we responded with a motion to dismiss filed on December 22, 2010. During a hearing on February&#160;24, 2012, plaintiffs&#8217; counsel indicated his intent to dismiss certain claims against us. Instead, on March 9, 2012, the plaintiffs amended their complaint to include additional securities fraud claims against HealthSouth and add several former officers to the lawsuit. On September 12, 2012, the plaintiffs further amended their complaint to request certification as a class action. One of those named officers has repeatedly attempted to remove the case to federal district court, most recently on December 11, 2012. We filed our latest motion to remand the case back to state court on January 10, 2013. On September 27, 2013, the federal court remanded the case back to state court. We intend to vigorously defend ourselves in this case. Based on the stage of litigation, review of the current facts and circumstances as we understand them, the nature of the underlying claim, the results of the proceedings to date, and the nature and scope of the defense we continue to mount, we do not believe an adverse judgment or settlement is probable in this matter, and it is also not possible to estimate the amount of loss, if any, or range of possible loss that might result from an adverse judgment or settlement of this case.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Governmental Inquiries and Investigations&#8212;</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On June 24, 2011, we received a document subpoena addressed to HealthSouth Hospital of Houston, a long-term acute care hospital (&#8220;LTCH&#8221;) we closed in August 2011, and issued from the Dallas, Texas office of the U.S. Department of Health and Human Services, Office of the Inspector General (the &#8220;HHS-OIG&#8221;). The subpoena stated it was in connection with an investigation of possible false or otherwise improper claims submitted to Medicare and Medicaid and requested documents and materials relating to patient admissions, length of stay, and discharge matters at this closed LTCH. We furnished the documents requested and have heard nothing from HHS-OIG since December 2012.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On March 4, 2013, we received document subpoenas from an office of the HHS-OIG addressed to </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">four</font><font style="font-family:inherit;font-size:10pt;"> of our hospitals. Those subpoenas also requested complete copies of medical records for </font><font style="font-family:inherit;font-size:10pt;">100</font><font style="font-family:inherit;font-size:10pt;"> patients treated at each of those hospitals between September 2008 and June 2012. The investigation is being conducted by the United States Department of Justice (the &#8220;DOJ&#8221;). On April 24, 2014, we received document subpoenas relating to an additional </font><font style="font-family:inherit;font-size:10pt;">seven</font><font style="font-family:inherit;font-size:10pt;"> of our hospitals. The new subpoenas reference substantially similar investigation subject matter as the original subpoenas and request materials from the period January 2008 through December 2013. Two of the four hospitals addressed in the original set of subpoenas have received supplemental subpoenas to cover this new time period. The new subpoenas do not include requests for specific patient files, but it is expected that such requests will be made for the new group of hospitals. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">All of the subpoenas are in connection with an investigation of alleged improper or fraudulent claims submitted to Medicare and Medicaid and requests documents and materials relating to practices, procedures, protocols and policies, of certain pre- and post-admissions activities at these hospitals including, among other things, marketing functions, pre-admission screening, post-admission physician evaluations, patient assessment instruments, individualized patient plans of care, and compliance with the Medicare </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">60%</font><font style="font-family:inherit;font-size:10pt;"> rule. Under the Medicare rule commonly referred to as the &#8220;</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">60%</font><font style="font-family:inherit;font-size:10pt;"> rule,&#8221; an inpatient rehabilitation hospital must treat </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">60%</font><font style="font-family:inherit;font-size:10pt;"> or more of its patients from at least one of a specified list of medical conditions in order to be reimbursed at the inpatient rehabilitation hospital payment rates, rather than at the lower acute care hospital payment rates. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We are cooperating fully with the DOJ in connection with these subpoenas and are currently unable to predict the timing or outcome of the related investigations. </font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Other Matters&#8212;</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The False Claims Act, 18 U.S.C. &#167; 287, allows private citizens, called &#8220;relators,&#8221; to institute civil proceedings alleging violations of the False Claims Act. These </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">qui tam</font><font style="font-family:inherit;font-size:10pt;"> cases are generally sealed by the court at the time of filing. The only parties typically privy to the information contained in the complaint are the relator, the federal government, and the presiding court. It is possible that </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">qui tam</font><font style="font-family:inherit;font-size:10pt;"> lawsuits have been filed against us and that those suits remain under seal or that we are unaware of such filings or prevented by existing law or court order from discussing or disclosing the filing of such suits. We may be subject to liability under one or more undisclosed </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">qui tam</font><font style="font-family:inherit;font-size:10pt;"> cases brought pursuant to the False Claims Act.</font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">It is our obligation as a participant in Medicare and other federal healthcare programs to routinely conduct audits and reviews of the accuracy of our billing systems and other regulatory compliance matters. As a result of these reviews, we have made, and will continue to make, disclosures to the HHS-OIG and the United States Centers for Medicare and Medicaid Services relating to amounts we suspect represent over-payments from these programs, whether due to inaccurate billing or otherwise. Some of these disclosures have resulted in, or may result in, HealthSouth refunding amounts to Medicare or other federal healthcare programs.</font></div></div>
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CY2014Q2 hls Equity In Net Income Of Consolidated Affiliates
EquityInNetIncomeOfConsolidatedAffiliates
0 USD
CY2013Q2 hls Equity In Net Income Of Consolidated Affiliates
EquityInNetIncomeOfConsolidatedAffiliates
0 USD
hls Equity In Net Income Of Consolidated Affiliates
EquityInNetIncomeOfConsolidatedAffiliates
0 USD
hls Equity Method Investment Summarized Financial Information Operating Expenses
EquityMethodInvestmentSummarizedFinancialInformationOperatingExpenses
-19400000 USD
hls Equity Method Investment Summarized Financial Information Operating Expenses
EquityMethodInvestmentSummarizedFinancialInformationOperatingExpenses
-22200000 USD
CY2013Q2 hls Equity Method Investment Summarized Financial Information Operating Expenses
EquityMethodInvestmentSummarizedFinancialInformationOperatingExpenses
-11000000 USD
CY2014Q2 hls Equity Method Investment Summarized Financial Information Operating Expenses
EquityMethodInvestmentSummarizedFinancialInformationOperatingExpenses
-8200000 USD
CY2014Q1 hls Expirationof Warrants
ExpirationofWarrants
100000 shares
CY2014Q2 hls Government Class Action And Related Settlements Gain Loss
GovernmentClassActionAndRelatedSettlementsGainLoss
-800000 USD
hls Government Class Action And Related Settlements Gain Loss
GovernmentClassActionAndRelatedSettlementsGainLoss
-800000 USD
CY2013Q2 hls Government Class Action And Related Settlements Gain Loss
GovernmentClassActionAndRelatedSettlementsGainLoss
-2000000 USD
hls Government Class Action And Related Settlements Gain Loss
GovernmentClassActionAndRelatedSettlementsGainLoss
-2000000 USD
hls Income Loss From Continuing Operations Attributable To Common Shareholders Basic
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersBasic
121400000 USD
hls Income Loss From Continuing Operations Attributable To Common Shareholders Basic
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersBasic
201800000 USD
CY2014Q2 hls Income Loss From Continuing Operations Attributable To Common Shareholders Basic
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersBasic
76700000 USD
CY2013Q2 hls Income Loss From Continuing Operations Attributable To Common Shareholders Basic
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersBasic
156400000 USD
CY2013Q2 hls Income Loss From Continuing Operations Attributable To Common Shareholders Diluted
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersDiluted
165100000 USD
hls Income Loss From Continuing Operations Attributable To Common Shareholders Diluted
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersDiluted
216800000 USD
CY2014Q2 hls Income Loss From Continuing Operations Attributable To Common Shareholders Diluted
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersDiluted
81600000 USD
hls Income Loss From Continuing Operations Attributable To Common Shareholders Diluted
IncomeLossFromContinuingOperationsAttributableToCommonShareholdersDiluted
130600000 USD
hls Net Income Loss Availableto Common Stockholders
NetIncomeLossAvailabletoCommonStockholders
125000000 USD
CY2013Q2 hls Net Income Loss Availableto Common Stockholders
NetIncomeLossAvailabletoCommonStockholders
156500000 USD
CY2014Q2 hls Net Income Loss Availableto Common Stockholders
NetIncomeLossAvailabletoCommonStockholders
80400000 USD
hls Net Income Loss Availableto Common Stockholders
NetIncomeLossAvailabletoCommonStockholders
201500000 USD
hls Net Income Loss Including Portion Attributable To Nonredeemable Noncontrolling Interest Total
NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterestTotal
242300000 USD
hls Net Income Loss Including Portion Attributable To Nonredeemable Noncontrolling Interest Total
NetIncomeLossIncludingPortionAttributableToNonredeemableNoncontrollingInterestTotal
155800000 USD
hls Net Operating Revenues Less Provision For Doubtful Accounts
NetOperatingRevenuesLessProvisionForDoubtfulAccounts
1122700000 USD
CY2014Q2 hls Net Operating Revenues Less Provision For Doubtful Accounts
NetOperatingRevenuesLessProvisionForDoubtfulAccounts
595100000 USD
CY2013Q2 hls Net Operating Revenues Less Provision For Doubtful Accounts
NetOperatingRevenuesLessProvisionForDoubtfulAccounts
557500000 USD
hls Net Operating Revenues Less Provision For Doubtful Accounts
NetOperatingRevenuesLessProvisionForDoubtfulAccounts
1178800000 USD
CY2014Q2 hls Number Of General Or Limited Partnerships Limited Liability Companies Or Joint Ventures
NumberOfGeneralOrLimitedPartnershipsLimitedLiabilityCompaniesOrJointVentures
8 facilities
CY2014Q2 hls Number Of Partially Owned Subsidiaries Nonconsolidated
NumberOfPartiallyOwnedSubsidiariesNonconsolidated
9 facilities
hls Occupancy Cost
OccupancyCost
20800000 USD
CY2014Q2 hls Occupancy Cost
OccupancyCost
10300000 USD
CY2013Q2 hls Occupancy Cost
OccupancyCost
11900000 USD
hls Occupancy Cost
OccupancyCost
24100000 USD
CY2007Q4 hls Option Contract Annual Premium
OptionContractAnnualPremium
0.15
CY2007Q4 hls Option Contract Exercisable
OptionContractExercisable
0.30
hls Ownership Percentage Of Subsidiary Guarantors
OwnershipPercentageOfSubsidiaryGuarantors
1.00
hls Percentage Of Net Operating Revenues Medicaid
PercentageOfNetOperatingRevenuesMedicaid
0.011
CY2013Q2 hls Percentage Of Net Operating Revenues Managed Care
PercentageOfNetOperatingRevenuesManagedCare
0.184
hls Percentage Of Net Operating Revenues Managed Care
PercentageOfNetOperatingRevenuesManagedCare
0.184
hls Percentage Of Net Operating Revenues Managed Care
PercentageOfNetOperatingRevenuesManagedCare
0.184
CY2014Q2 hls Percentage Of Net Operating Revenues Managed Care
PercentageOfNetOperatingRevenuesManagedCare
0.187
CY2013Q2 hls Percentage Of Net Operating Revenues Medicaid
PercentageOfNetOperatingRevenuesMedicaid
0.010
CY2014Q2 hls Percentage Of Net Operating Revenues Medicaid
PercentageOfNetOperatingRevenuesMedicaid
0.018
CY2014Q2 hls Percentage Of Net Operating Revenues Medicare
PercentageOfNetOperatingRevenuesMedicare
0.741
CY2013Q2 hls Percentage Of Net Operating Revenues Medicare
PercentageOfNetOperatingRevenuesMedicare
0.746
hls Percentage Of Net Operating Revenues Medicare
PercentageOfNetOperatingRevenuesMedicare
0.746
hls Percentage Of Net Operating Revenues Medicare
PercentageOfNetOperatingRevenuesMedicare
0.747
CY2013Q2 hls Percentage Of Net Operating Revenues Other Income
PercentageOfNetOperatingRevenuesOtherIncome
0.019
CY2014Q2 hls Percentage Of Net Operating Revenues Other Income
PercentageOfNetOperatingRevenuesOtherIncome
0.016
hls Percentage Of Net Operating Revenues Other Income
PercentageOfNetOperatingRevenuesOtherIncome
0.017
hls Percentage Of Net Operating Revenues Other Income
PercentageOfNetOperatingRevenuesOtherIncome
0.016
hls Percentage Of Net Operating Revenues Other Third Party Payors
PercentageOfNetOperatingRevenuesOtherThirdPartyPayors
0.016
hls Percentage Of Net Operating Revenues Other Third Party Payors
PercentageOfNetOperatingRevenuesOtherThirdPartyPayors
0.017
CY2014Q2 hls Percentage Of Net Operating Revenues Other Third Party Payors
PercentageOfNetOperatingRevenuesOtherThirdPartyPayors
0.017
CY2013Q2 hls Percentage Of Net Operating Revenues Other Third Party Payors
PercentageOfNetOperatingRevenuesOtherThirdPartyPayors
0.017
CY2014Q2 hls Percentage Of Net Operating Revenues Patients
PercentageOfNetOperatingRevenuesPatients
0.009
hls Percentage Of Net Operating Revenues Patients
PercentageOfNetOperatingRevenuesPatients
0.012
CY2013Q2 hls Percentage Of Net Operating Revenues Patients
PercentageOfNetOperatingRevenuesPatients
0.012
hls Percentage Of Net Operating Revenues Patients
PercentageOfNetOperatingRevenuesPatients
0.010
CY2014Q2 hls Percentage Of Net Operating Revenues Total
PercentageOfNetOperatingRevenuesTotal
1.000
hls Percentage Of Net Operating Revenues Total
PercentageOfNetOperatingRevenuesTotal
1.000
CY2013Q2 hls Percentage Of Net Operating Revenues Total
PercentageOfNetOperatingRevenuesTotal
1.000
hls Percentage Of Net Operating Revenues Total
PercentageOfNetOperatingRevenuesTotal
1.000
hls Percentage Of Net Operating Revenues Workers Compensation
PercentageOfNetOperatingRevenuesWorkersCompensation
0.013
CY2013Q2 hls Percentage Of Net Operating Revenues Workers Compensation
PercentageOfNetOperatingRevenuesWorkersCompensation
0.012
CY2014Q2 hls Percentage Of Net Operating Revenues Workers Compensation
PercentageOfNetOperatingRevenuesWorkersCompensation
0.012
hls Percentage Of Net Operating Revenues Workers Compensation
PercentageOfNetOperatingRevenuesWorkersCompensation
0.012
CY2013Q2 hls Professional Fees Accounting Tax And Legal
ProfessionalFeesAccountingTaxAndLegal
2200000 USD
hls Professional Fees Accounting Tax And Legal
ProfessionalFeesAccountingTaxAndLegal
3600000 USD
hls Professional Fees Accounting Tax And Legal
ProfessionalFeesAccountingTaxAndLegal
3600000 USD
CY2014Q2 hls Professional Fees Accounting Tax And Legal
ProfessionalFeesAccountingTaxAndLegal
2000000 USD
CY2014Q2 hls Seniorsecuredleverageratiomaximum
Seniorsecuredleverageratiomaximum
1.5
hls Treasury Stock Reacquired
TreasuryStockReacquired
5800000 USD
hls Treasury Stock Reacquired
TreasuryStockReacquired
9700000 USD
hls Treasury Stock Value Acquired Cost Method Common Stock
TreasuryStockValueAcquiredCostMethodCommonStock
234100000 USD
hls Treasury Stock Value Acquired Cost Method Common Stock
TreasuryStockValueAcquiredCostMethodCommonStock
43100000 USD
hls Undistributed Earnings From Discontinued Operations Allocatedto Participating Securities
UndistributedEarningsFromDiscontinuedOperationsAllocatedtoParticipatingSecurities
-100000 USD
hls Undistributed Earnings From Discontinued Operations Allocatedto Participating Securities
UndistributedEarningsFromDiscontinuedOperationsAllocatedtoParticipatingSecurities
0 USD
CY2014Q2 hls Undistributed Earnings From Discontinued Operations Allocatedto Participating Securities
UndistributedEarningsFromDiscontinuedOperationsAllocatedtoParticipatingSecurities
-100000 USD
CY2013Q2 hls Undistributed Earnings From Discontinued Operations Allocatedto Participating Securities
UndistributedEarningsFromDiscontinuedOperationsAllocatedtoParticipatingSecurities
0 USD
hls Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued Decreases Resulting From Prior Period Tax Positions
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestAccruedDecreasesResultingFromPriorPeriodTaxPositions
300000 USD
hls Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued Increases Resulting From Prior Period Tax Positions
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestAccruedIncreasesResultingFromPriorPeriodTaxPositions
100000 USD
hls Warrants Exercised Value
WarrantsExercisedValue
6300000 USD
dei Amendment Flag
AmendmentFlag
false
dei Current Fiscal Year End Date
CurrentFiscalYearEndDate
--12-31
dei Document Fiscal Period Focus
DocumentFiscalPeriodFocus
Q2
dei Document Fiscal Year Focus
DocumentFiscalYearFocus
2014
dei Document Period End Date
DocumentPeriodEndDate
2014-06-30
dei Document Type
DocumentType
10-Q
dei Entity Central Index Key
EntityCentralIndexKey
0000785161
CY2014Q3 dei Entity Common Stock Shares Outstanding
EntityCommonStockSharesOutstanding
87726340 shares
dei Entity Current Reporting Status
EntityCurrentReportingStatus
Yes
dei Entity Filer Category
EntityFilerCategory
Large Accelerated Filer
CY2013Q2 dei Entity Public Float
EntityPublicFloat
2500000000 USD
dei Entity Registrant Name
EntityRegistrantName
HEALTHSOUTH CORP
dei Entity Voluntary Filers
EntityVoluntaryFilers
No
dei Entity Well Known Seasoned Issuer
EntityWellKnownSeasonedIssuer
Yes

Files In Submission

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0000785161-14-000043-xbrl.zip Edgar Link pending
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