Encompass Health (EHC) 8-K 28th Annual J.P. Morgan Healthcare Conference

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28th Annual J.P. Morgan
Healthcare Conference

January 11, 2010

Exhibit 99.1

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Table of Contents

Exhibit 99.1

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Note Regarding Forward-Looking Statements
The information contained in this presentation includes certain estimates, projections and other forward-looking information
that reflect our current views with respect to future events and financial performance. These estimates, projections and other
forward-looking information are based on assumptions that HealthSouth believes, as of the date hereof, are reasonable.
Inevitably, there will be differences between such estimates and actual results, and those differences may be material.

There can be no assurance that any estimates, projections or forward-looking information will be realized.All such
estimates, projections and forward-looking information speak only as of the date hereof. HealthSouth undertakes no duty to
publicly update or revise the information contained herein.

This presentation also includes estimates and projections published by the Centers for Medicare and Medicaid Services
(“CMS”). We are not able to verify those estimates or projections or the detailed calculations thereof by CMS which are not
made public. Any changes or errors in those calculations, among other uncertainties such as those referred to below and
changes in CMS’s own rules and policies, could cause actual results to differ materially from CMS’s projections.
Furthermore, we do not believe that CMS numbers are consistent with financial reporting results.CMS data and projections
should not be used as an indication of financial performance.

You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in this
presentation as they are based on current expectations and general assumptions and are subject to various risks,
uncertainties and other factors, including those set forth in our Form 10-K for the year ended December 31, 2008, the Form
10-Q for the quarters ended March 31, 2009, June 30, 2009, and September 30, 2009, and in other documents we
previously filed with the SEC, many of which are beyond our control, that may cause actual results to differ materially from
the views, beliefs and estimates expressed herein.

Note Regarding Presentation of Non-GAAP Financial Measures
The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities
Exchange Act of 1934. The Appendix at the end of this presentation includes reconciliations of the non-GAAP financial
measures found in the following presentation to the most directly comparable financial measures calculated and presented in
accordance with Generally Accepted Accounting Principles in the United States. Our Form 8-K, dated January 11, 2010, to
which the following presentation slides are attached, provides further explanation and disclosure regarding our use of non-
GAAP financial measures and should be read in conjunction with these presentation slides.

Cautionary Statements

Exhibit 99.1

4

IRH

LTCH

93 Rehabilitation Hospitals (1)

44Outpatient Rehabilitation Satellites

6Long-Term Acute Care Hospitals

25Hospital-Based Home
Health Agencies

Portfolio

Largest Provider of Inpatient Rehabilitative Healthcare Services in the U.S.

Sites under Construction

Exchange (Symbol):NYSE (HLS)

Employees:~ 22,000

Corporate Office:Birmingham, AL

(1) Assumes Baton Rouge divestiture closes as scheduled at the end of
January.

Exhibit 99.1

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“The Basics”:Our Rehabilitation Hospitals

Major Services:

•Physicians:manage and treat medical needs of patients

•Rehabilitation Nursing:oversees treatment program of patient

•Physical Therapy:addresses physical function, mobility, safety

•Occupational Therapy:promotes independence and re-integration

•Speech-Language Therapy:treats communication & swallowing disorders

•Case Managers:coordinates care plan with physician, caregivers, family

•Post-discharge services:outpatient therapy and home health

Note:IRF hospitals are not CAPEX intensive:

üNo Emergency Rooms, ORs, Cath Labs, etc.

Exhibit 99.1

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“The Basics”:Our Patients

94%

5%

1%

Referral Sources

Acute Care Hospitals

Physician Offices

Skilled Nursing Facilities

All patients are admitted by a physician:

Most Common Cases (YTD Q309)

1.Stroke17.7%

2.Neurological13.3%

3.Fractureofthelowerextremity11.7%

4.Debility11.4%

5.Otherorthopedicconditions9.4%

6.Knee/Hipreplacement9.3%

7.Braininjury7.4%

8.Cardiacconditions4.7%

9.Spinalcordinjury3.6%

10.Allother11.5%

üPhysicians and acute hospital case managers are key decision-makers.

üAll IRF patients must meet medical necessity criteria.

üAll IRF patients must be medically stable and have potential to tolerate
three hours of therapy per day (minimum).

Exhibit 99.1

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“The Basics”:Our Competitors

Competitors

•Freestanding IRFs

•Hospital IRF units

•Skilled nursing homes

Patients

Total Inpatient Rehabilitation Facilities (IRFs):1,181

Sources:FY 2010 CMS Rate Setting File and MedPAC March 2009 report; Internal HLS reports for HLS data; HLS includes Baton Rouge IRF

Exhibit 99.1

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Discharges

Consolidated Net Operating Revenues

($ Millions)

+4.1%

+5.5%

Dollar Amounts$700.8$709.2$339.4$346.9$70.3$66.5

EPOB (3)3.623.52

50 bps
Improvement

50 bps
Improvement

140 bps
Improvement

Expenses

(1)

(2)

Solid, Sustained Operating Results

(Thousands)

Exhibit 99.1

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Adjusted Income from Continuing

Operations per Diluted Share (1)

Adjusted Consolidated EBITDA

($ Millions)

+13.7%

+129.4%

(1) Reconciliation to GAAP provided on slides 34 through 37.

Key Drivers:

üStrong volume growth

üDisciplined expense management

üDebt reduction

9M 089M 09

Solid EBITDA and EPS Growth

Exhibit 99.1

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(2) Benefited by approximately $19 million for the seasonal effect on working capital related to the interest payment accrual.

Strong Cash Flow

Exhibit 99.1

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Amended and Extended Credit Agreement

•Converted $300 million of term loan from March 2013 maturity to September 2015
maturity, with 150 bp incremental interest expense.

•Amendment:

–Permits future extension of all, or a portion of all, term loans and revolvers.

–Permits issuance of senior notes secured on a pari passu basis with indebtedness incurred
under the credit agreement.

–Increases certain restricted covenant baskets:

üLifetime basket to buy back other senior debt increased by $150 million.

üAnnual cash acquisition cap increased by $150 million.

Repurchased Floating Rate Senior Notes due 2014

•$329.6 million outstanding

•Total consideration 103%,
plus accrued and unpaid interest

Issued $290 million Senior Notes due 2020

•Coupon 8.125%

•Price $98.327

•Coupon 7.22%

•Completed:December 15, 2009

•Due February 15, 2020

•Completed:December 1, 2009

Enhanced Capital Structure

Exhibit 99.1

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(1) Proforma represents completion of tender and redemption of the 2014 note and issuance of 2020 notes.

Continued Debt Reduction and Deleveraging

Exhibit 99.1

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Q409 Initial Observations

Volume:

ü4+% discharge growth.

•Reminder:10.6% discharge growth Q408 vs. Q407.

Pricing:

üReceived a 2.5% CMS market basket increase on October 1, 2009.

Expenses:

üContinued improvement in productivity.

•Reminder:An average 2.3% merit increase went into effect on
October 1, 2009 for non-management employees.

EPS:

üOn September 30, 2009, 5 million common shares were issued to satisfy our
obligation under the 2006 class action securities litigation settlement.

üBaton Rouge, LA hospital is expected to move to discontinued operations.

üWe will record an approximate $15 million charge for loss on early
extinguishment of debt in Q409.

Exhibit 99.1

Guidance:
AdjustedConsolidated EBITDA	Adjusted Earnings per Diluted Share
$375 to $380	$1.45 to $1.50
Million	Per Share

Year-End Initial Observations

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üThe Company has not yet closed its books for the fourth quarter and
year-end 2009.

üQ409 and YE09 results and 2010 guidance will be provided on earnings
conference call scheduled for 9:30 a.m. EST on February 23, 2010.

Exhibit 99.1

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Business Outlook

3.5x to 4.0x Debt to EBITDA (by YE 2011)

(Exclusive of any E&Y settlement)

Organic growth through capacity
expansion and de novos

IRF acquisitions/joint ventures

DELEVERAGING

GROWTH

2010201120122013

Acquisitions of other,
complementary post-acute services

REFORM

1.Market Basket
Update (1)

2.Segment
Regulation

3.Bundling

MB minus 25 bpMB minus 25 bp

Pilot/Demonstration
Projects

•LTCH = admission criteria; 25 Rule; short-stay payment
reductions

•Home Health = reimbursement/outliers

(1) Reflects market basket updates in the Senate’s healthcare reform bill.

MP minus (10 bp +

“Productivity Adjustments”)

Deleveraging, Growth and Healthcare Reform

Exhibit 99.1

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Organic Growth

Capacity expansions:

•Approximately 100 beds added in 2009; a similar amount will be added in
2010.

•Average investment per bed:

–Internal renovation = $15 - 45K

–New construction = $100 - 250K

De novos:

Cash pay-back:

5 - 6 years

Cash pay-back:
1 - 3 years

Goal:launch three new hospitals in 2010 and each year thereafter.

Exhibit 99.1

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Summary

üIndustry Leader:Largest provider in attractive healthcare segment.

üStrong Cash Flows:Directed toward debt reduction and growth.

üContinued Deleveraging:Reduce leverage to between 3.5x and 4.0x
no later than YE 2011.

üSolid Organic Growth:Volume growth + expense management.

üOpportunistic, Disciplined Expansion:Capacity expansion and new
hospitals coming online over next three years.

üWell Positioned:High-quality + cost-effective provider; proven track
record of adapting to regulatory changes.

Business Model:

•5-8+% annual Adjusted Consolidated EBITDA growth (1)

•15-20+% annual adjusted EPS growth (1) (2)

(1)For reconciliation to GAAP, see slides 34 through 37.These ranges are based on current assumptions of external drivers (e.g., healthcare
reform, interest rates) and are subject to change.

(2)Based on adjusted income from continuing operations per diluted share.

Value Proposition

Exhibit 99.1

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Appendix and Reconciliations

Exhibit 99.1

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% ∆ Discharges (1)

(1) Data provided by UDSMR, a data gathering and analysis organization for the rehabilitation industry; represents ~ 65-70% of industry, including 90 HealthSouth sites.

(2) Includes 90 consolidated HealthSouth inpatient rehab hospitals and six long-term acute-care hospitals.

(1)

(2)

Operational Excellence:Sustained Market Share Gains

HealthSouth vs. Industry

Quarterly Discharges

üHealthSouth’s volume growth
has outpaced competitors’

üTeamWorks = standardized
sales & marketing

üCapacity expansions will help
facilitate organic growth:

Ÿ~ 100 new beds 2009

Ÿ~ 100 new beds 2010

üProjected sustainable annual
discharge growth 4+%

Trailing 4 quarters

Industry Avg. is 1.6%

Exhibit 99.1

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FIM Gain

LOS Efficiency

LOS Efficiency= Functional gain
divided by length of stay

Source:UDSmr Database - On Demand
Reports 2008 Year End Report

FIM Gain= Change in Functional
Independent Measurement (based

on an 18 point assessment) from
Admission to Discharge

** Average = Expected, Risk-adjusted LOS Efficiency

Operational Excellence = “High-Quality” Care

* Average = Expected, Risk-adjusted FIM Change Average

Exhibit 99.1

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Operational Excellence = “Cost-Effective” Care

CMS Fiscal Year 2010 IRF Rate Setting File Analysis (1)

	Freestanding (2)	Units (2)	Total	HealthSouth
				Hospitals (2)
Number of IRFs	228	953	1,181	94
Average # of Discharges per IRF	649	237	316	822
Outlier Payments as % of Total Payments	1.32%	4.08%	3.00%	0.43%
Average Estimated Total Payment per Discharge for FY 2010	$16,452	$16,741	$16,626	$15,996
Average Estimated Cost per Discharge for FY 2010	$14,021	$17,207	$15,945	$12,633

Notes:

(1) All data provided was filtered and compiled from the Centers for Medicare and Medicaid Services (CMS) Fiscal Year 2010 IRF rate setting final
rule file found at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp#TopOfPage. The data presented was developed entirely by
CMS and is based on its definitions which are different in form and substance from the criteria HealthSouth uses for external reporting purposes.
Because CMS does not provide its detailed methodology, HealthSouth is not able to reconstruct the CMS projections or the calculation.

(2) The CMS file contains data for each of the 1,181 inpatient rehabilitation facilities used to estimate the policy updates for the FY 2010 Final IRF-
PPS Rule. Most of the data represents historical information from the CMS fiscal year 2008 period and does not reflect the same HealthSouth
hospitals in operation today. The data presented was separated into three categories: Freestanding, Units, and HealthSouth. HealthSouth is a
subset of Freestanding and the Total.

Exhibit 99.1

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Regulatory Uncertainty

Sources:Senate Reform Bill, CMS Regulatory published rules and MMSEA

Exhibit 99.1

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IRFs have Lower Readmission Rates

Note:Use of home health care and hospice is based on care that starts within three days of discharge.Other PAC care starts within one day of discharge.Home health use includes

episodes that overlap an inpatient stay.

Source:Medicare Payment Advisory Commission, “A Data Book:Healthcare spending and the Medicare program,” Chart 9-3 (June 2008)

Exhibit 99.1

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Revenues (Q3 2009 vs. Q3 2008)

•Inpatient revenue growth was driven by strong discharge volumes.

–Volume growth was driven by the sustained sales and marketing effort.

–Same store discharge growth was 5.3%.

–Pricing essentially flat for the quarter.Q3 2009 marks the end of the Medicare pricing
roll-back.

•Outpatient revenue declined as a result of 11 fewer outpatient satellites
quarter over quarter.

Exhibit 99.1

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Expenses (Q3 2009 vs. Q3 2008)

•Continued improvement on labor productivity demonstrated by lower EPOB.

•Hospital-related expenses:

–Despite increased volume, hospital expenses remained essentially flat producing strong
operating leverage.

–Increased provision for doubtful accounts to reflect aging of pending Medicare appeals.

Exhibit 99.1

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Revenue (9 Months)

Exhibit 99.1

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Expenses (9 Months)

Exhibit 99.1

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Operational and Labor Metrics

(1) Numbers have been reclassified to reflect current continuing operations.

(2) Represents discharges from HealthSouth’s 91 consolidated hospitals, which includes Mesa, Arizona starting in Q3 2009.

(3) Excludes approx. 400 full-time equivalents, who are considered part of corporate overhead with their salaries and benefits included in general
and administrative expenses in the Company’s condensed consolidated statements of operations. Full-time equivalents included in the above
table represent HealthSouth employees who participate in or support the operations of the Company’s hospitals.

(4) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of full-time equivalents, including an estimate of full-time
equivalents from the utilization of contract labor, by the number of occupied beds during each period. The number of occupied beds is
determined by multiplying the number of licensed beds by the Company’s occupancy percentage.

Exhibit 99.1

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Payment Sources

(1) Managed Medicare revenues represent ~ 8% of total revenues and are included in “Managed care and other discount plans.”

Exhibit 99.1

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As of September 30, 2009

Debt Maturities:No Near-Term Financing Needs

(Millions)

As of December 15, 2009

= Term Loan

= FRN

= 10.75% Fixed

= 8.125% Fixed

(1) Proforma represents completion of tender and redemption of the 2014 note and issuance of 2020 notes.

Exhibit 99.1

Interest Rate Swaps:as of September 30, 2009(Millions)

(1) In October 2009, the credit agreement was amended. The maturity for $300 million of the term-loan has been extended to 2015. The extended
portion
of the term loan will bear an interest rate of Libor plus 375.

(2) Cash settlements flow through investing activities.

(3) In June 2009, we entered into a receive-fixed rate swap as a mirror offset to $100.0 million of the $1,056 million interest rate swap.

(4) Forward-starting interest rate swaps (designated as cash flow hedges). Cash settlements flow through interest expense.

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Exhibit 99.1

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Non-Operating Cash/Tax Position

Cash Refunds as of Sept. 30, 2009

•Federal tax recoveries virtually complete.

–Approx. $43 million received.

•State tax refunds in progress.

–Approx. $17 million received.

–Approx. $9 million net receivable on the
balance sheet.

Future Cash Tax Payments

•Expect to pay about $5-7 million per year of
income tax.

–State income tax.

–Alternative Minimum Tax (AMT).

•With over $2.5 billion in NOLs and tax
deductions, we do not expect to pay significant
federal income taxes for approximately the next
10-12 years.

–At this time, we do not believe the use of
NOLs will be limited before they expire,
however, no assurances can be provided.

•HealthSouth is not currently subject to an
annual use limitation (AUL) under the Internal
Revenue Code section 382.

•If we experienced a “change of ownership” as
defined by the Internal Revenue Code section
382, we would be subject to an AUL, which is
equal to the value of the company at the time of
the “change of ownership” multiplied by the long
-term tax exempt rate.

GAAP Considerations

•HealthSouth’s balance sheet currently reflects
a valuation allowance for the potential value
of NOLs and future deductions. The valuation
allowance is approximately $1.0 billion.

•GAAP tax rate will net to small amount for
foreseeable future as there will be a reduction
in the valuation allowance when NOLs are
utilized.

Exhibit 99.1

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Outstanding Share Summary(Millions)

Notes:

(1) Completed an equity offering for 8.8 million shares on June 27, 2008.

(2) Does not include 2.0 million warrants issued in connection with a January 2004 loan repaid to Credit Suisse First Boston. In connection with this
transaction, we issued warrants to the lender to purchase two million shares of our common stock. Each warrant has a term of ten years from
the date of issuance and an exercise price of $32.50 per share. The warrants were not assumed exercised for dilutive shares outstanding
because they were antidilutive in the periods presented.

(3) The agreement to settle our class action securities litigation received final court approval in January 2007. These shares of common stock and
warrants were issued on September 30, 2009. The 5.0 million of common shares are now included in the outstanding shares.The warrants at a
strike price of $41.40 were not assumed exercised for the dilutive shares outstanding because they are anti-dilutive in the periods presented.

(4) The difference between the basic and diluted shares outstanding is primarily related to our convertible perpetual preferred stock.

Exhibit 99.1

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Three & Nine Months Reconciliation of Net Income to Adjusted Income from
Continuing Operations and Adjusted Consolidated EBITDA (1) (3)

(1) (2) (3) (4) Notes on page 37.

Exhibit 99.1

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Exhibit 99.1

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YTD Reconciliation of Adjusted Consolidated EBITDA (1) to Net Cash Provided
by Operating Activities

(1) Notes on page 37.

Exhibit 99.1

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Reconciliation Notes

1.Adjusted income from continuing operations and Adjusted Consolidated EBITDA are non
-GAAP financial measures. The Company’s leverage ratio (Total Consolidated Debt to
Adjusted Consolidated EBITDA for the trailing four quarters) is, likewise, a non-GAAP
financial measure. Management and some members of the investment community utilize
adjusted income from continuing operations as a financial measure and Adjusted
Consolidated EBITDA and leverage ratio as liquidity measures on an ongoing basis.
These measures are not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance or liquidity. In evaluating these
adjusted measures, the reader should be aware that in the future HealthSouth may incur
expenses similar to the adjustments set forth above.

2.Per share amounts for each period presented are based on basic weighted average
common shares outstanding for all amounts except adjusted income from continuing
operations per diluted share, which is based on diluted weighted average shares
outstanding. The difference in shares between the basic and diluted shares outstanding
is primarily related to our convertible perpetual preferred stock.

3.Adjusted income from continuing operations per diluted share and Adjusted
Consolidated EBITDA are two components of our guidance.

4.The Company’s Credit Agreement allows certain other items to be added to arrive at
Adjusted Consolidated EBITDA, and there may be certain other deductions required.

Exhibit 99.1