HealthSouth Corporation until recently was one of the largest providers of ambulatory surgery, rehabilitative health care, and diagnostic imaging services in the United States, with 1,003 facilities and approximately 34,000 employees as at September 30, 2005. The company was founded 1983 and is headquartered in Birmingham, Alabama.
HLS is the nation's largest provider of inpatient rehabilitation services with inpatient facilities located in 28 states, primarily Texas, Pennsylvania, Florida, Tennessee, and Alabama. HLS also has facilities in Puerto Rico and Australia. The company's inpatient segment operates inpatient rehabilitation facilities (IRFs), long-term acute care hospitals (LTCHs), home health, and skilled nursing units.
HealthSouth Corporation was incorporated in February 1984, and listed on the New York Stock Exchange in 1986 under the ticker symbol HRC. On March 25, 2003, the stock was de-listed, after an investigation of accounting fraud led to the dismissal of the then CEO Richard Scrushy and change of management team. The fraud investigation revealed that the company had overstated earnings by at least $1.4B since 1999. On March 10, 2006, HLS completed the last of a series of recapitalization, which enabled the company to substantially swap all prior indebtedness for approximately $3B of new long-term debt. On May 15, 2006 the company filed its 1Q06 financial result, the first 10-Q filing since its financial fraud problems commenced.
Historically and until recently, the company reported financial results by the five segments of: inpatient surgery centers outpatient diagnostic and, "corporate and other " which represented other revenue producing activities such as other patient care services and certain non-patient care services. However on August 14, 2006 HLS unveiled a restructuring plan which included the sale/spin-off of its surgery, outpatient, and diagnostic divisions along with a 1-for-5 reverse stock split to coincide with its re-listing on the New York Stock Exchange under the symbol HLS on October 26, 2006.
On May 1 2007, HLS announced the successful completion of the sale of its outpatient division to privately held Select Medical Corp for approximately $245M. During 1Q07, the company also entered into separate agreements with ASC Acquisition LLC, and The Gores Group, a private equity firm, to divest its surgery centers division and diagnostic division respectively. For the purpose of 1Q07 financial results HLS modified its reporting format to reflect restructuring of operations from five reportable segments down to one (inpatient rehabilitations services), and reclassifying the surgery centers, outpatient, and diagnostic divisions as discontinued operations. Pending the completion of the two remaining transactions, we have included the original overview of both the surgery and diagnostic divisions below.
The "surgery center" segment operates ambulatory surgery centers (ASCs) that provide facilities and medical support staff necessary for physicians to perform non-emergency surgical procedures in various specialties, such as orthopedic, GI, ophthalmology, plastic, and general surgery. A typical ASC is a freestanding facility, licensed by the state and certified as a provider under federal programs (including Medicare and Medicaid), with two to six fully equipped operating and procedure rooms and ancillary areas for reception, preparation, recovery, and administration. Surgery center locations are primarily concentrated in the states of California, Texas, Florida, and North Carolina.
The "diagnostic" segment operates diagnostic imaging centers, which provide outpatient diagnostic imaging services, such as MRI services, CT services, X-ray services, ultrasound services, mammography services, nuclear medicine services, and fluoroscopy. Freestanding diagnostic facilities are located in 27 states and the District of Columbia, with a concentration of centers in Texas, Georgia, Alabama, Florida, and the Washington, D.C. area. In addition to the locations that provide diagnostic scanning services, there are also five electro-shock wave lithotripter units that were folded into the diagnostic division in 2005.