Encompass Health (EHC) 8-K Regulation FD Disclosure

1

Robert W. Baird

Growth Stock Conference

May 19, 2010

Exhibit 99.1

Exhibit 99.1

2

Note Regarding Forward-Looking StatementsThe 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, 2009, and our
Form 10-Q for the quarter ended March 31, 2010, 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 May 19, 2010,
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

3

Table of Contents

Exhibit 99.1

4

IRH

LTCH

93 Rehabilitation Hospitals (1)

38Outpatient Rehab Satellite Clinics

6Long-Term Acute Care Hospitals

25Hospital-Based Home Health
Agencies

22,000 Employees

Portfolio

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

Sites under construction

Sites being acquired

(1)Does not include Desert Canyon Rehabilitation Hospital under definitive agreement. The closing is expected late in second quarter 2010.

~ 8% of IRFs

~ 18% of Licensed Beds

~ 21% of Patients Served

HealthSouth Market Share

Exhibit 99.1

5

“The Basics”:Our Industry

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

üHighly fragmented industry

•~ 81% Units

��•~ 19% Free-standing

üIndustry mainly nonprofit

•~ 62% Nonprofit

•~ 14% Government

•~ 24% For-profit

üOn average, HLS hospitals
tend to be larger and treat
more patients

Exhibit 99.1

6

“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 (2009)

1.Stroke17.5%

2.Neurological13.3%

3.Fractureofthelowerextremity11.7%

4.Debility11.5%

5.Knee/Hipreplacement9.6%

6.Otherorthopedicconditions9.5%

7.Braininjury7.4%

8.Cardiacconditions4.7%

9.Spinalcordinjury3.6%

10.Allother11.2%

üPhysicians and acute care 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

7

“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:coordinate 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

8

FIM Gain

LOS Efficiency

LOS Efficiency= Functional gain
divided by length of stay

Source:UDSmr Database - On Demand
Reports:Q1 2010 Report

FIM Gain= Change in Functional
Independent Measurement (based

on an 18 point assessment) from
Admission to Discharge

** Average = Expected, Risk-adjusted LOS Efficiency

* Average = Expected, Risk-adjusted FIM Change Average

Performance Highlights

High-Quality Care

Exhibit 99.1

9

Discharges

Consolidated Net Operating Revenues

($ Millions)

+3.8%

+1.1%

Dollar Amounts$233.3$241.9$114.1$113.7$21.8$22.5

EPOB (3)3.473.41

Flat despite
wage increase

Flat

90 bps
Improvement

Expenses

(1)

(2)

Solid, Sustained Operating Results

Exhibit 99.1

10

Adjusted Income from Continuing

Operations per Diluted Share (1)

Adjusted Consolidated EBITDA (1)

($ Millions)

+12.3%

(1)Reconciliation to GAAP provided on slides 32 and 33.

Performance Highlights

Solid EBITDA and EPS Growth

+8.1%

+90.8%

+23.1%

Key Drivers:

ü2.5% Medicare market basket increase effective October 1, 2009

üDischarge growth of 1.1% quarter-over-quarter

üDisciplined expense management

üSolid labor productivity as reflected by EPOB

Exhibit 99.1

11

(1)Notes on page 33.

Performance Highlights: Strong Free Cash Flow

Exhibit 99.1

12

Performance Highlights: Strong Free Cash Flow

Exhibit 99.1

13

Debt to

EBITDA6.3x6.3x5.3x4.3x4.2x (1)

($ Billions)

Year-End2011Goal:3.5x to 4.0x

Liquidity

(1)Based on trailing four quarter Adjusted Consolidated EBITDA of $391.0 million; reconciliation to GAAP provided on slides 32 and 33.

Performance Highlights

Continued Debt Reduction and Deleveraging

Exhibit 99.1

14

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

($60+ million in 2010)

IRF acquisitions/joint ventures

Deleveraging

Growth

Acquisitions of other,
complementary post-acute services

Reform

1.Pricing

2.Bundling

Sector
Regulation

Pilot/Demonstration
Projects

•LTCH: admission criteria; 25% Rule; MMSEA extension

•Home Health: outliers; reimbursement methodology

Deleveraging, Growth, Reform and Sector Regulation

Market basket minus 25 bpsMarket basket minus 10 bps
and productivity adjustment

2010201120122013

Exhibit 99.1

15

Capacity Expansions:

•100+ beds 2010

De novos:

Acquisitions/Joint Ventures:

•Acquired the rehabilitation unit in Altoona, PA, through a
newly formed joint venture and relocated its operations to
one of our hospitals.(Q4 2009)

•Expanded joint venture with St. Vincent Health System in
Little Rock, AR, through the purchase of a 23-bed rehabilitation
unit.(Q1 2010)

•Entered into a definitive agreement to purchase Desert Canyon
Rehabilitation Hospital, a 50-bed inpatient rehabilitation hospital
located in southwest Las Vegas, NV.(close Q2 2010)

Growth

6 - 7 years (2)

2 - 4 years (1)

(1)Average investment per bed: $100K to $250K.

(2)Average investment per bed: ~ $450K.

6 - 7 years

Target Cash pay-back

Exhibit 99.1

16

Adjusted EPS (1)(2)

$1.60 to $1.70

+10% to +17%

2010 Guidance (1)

(1)Reconciliation to GAAP provided on slides 32 and 33.

(2)Adjusted income from continuing operations per diluted share.

Guidance Philosophy

Based on the results of the first quarter, the Company expects its 2010 full-year
performance will be at the high end of the guidance range.

Considerations:

üIT “pilot” investment

üIntegration of acquisitions

üStart-up costs at two new hospitals

üTeamWorks investment

Considerations:

ü$3 million of additional stock-based compensation expense

ü5 million more diluted shares (Securities Litigation Settlement)

ü3-month LIBOR

Adjusted Consolidated EBITDA
(1)

$397M to $407M

+4% to +6%

Exhibit 99.1

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Summary

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.

üGrowth:Above industry volume growth, enhanced by capacity
expansions and adding new hospitals in under served markets.

üOpportunistic, Disciplined Acquisitions:Complimentary IRF
acquisitions and JVs in a fragmented market.

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

Value Proposition

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 32 and 33.

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

Exhibit 99.1

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Appendix

Exhibit 99.1

19

(1)Data provided by UDSMR, a data gathering and analysis organization for the rehabilitation industry; represents ~ 65-70% of industry, including 89 HealthSouth sites.

(2)Includes 89 consolidated HealthSouth inpatient rehab hospitals and six long-term acute-care hospitals.

Discharge Growth - Historical

Quarterly Discharges

üHealthSouth’s volume
growth has outpaced
competitors’

üTeamWorks =
standardized sales &
marketing

üCapacity expansions will
help facilitate organic
growth:

–100+ beds will be added in
2010

Trailing 4 quarters

Industry Avg. is 1.0%

(1)

(2)

Exhibit 99.1

20

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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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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Future Regulatory Risk	IRF	SNF	LTCH	HH
1.Re-basing payment system	No	Yes; RUGS IV delayed until 10/01/11 (per PPACA)	No	Yes; would be required as partof PPACA starting in 2014
2.Major outlier payment adjustments	No	No	Yes; will occur when MMSEA relief expires (short stay outliers)	Yes; 10% cap per agency;2.5% taken out of outlier pool (per PPACA)
3.Upcoding adjustments	No	Yes; occurring in FY 2010	Yes; occurring in FY 2010 and proposed (-2.5%) for FY 2011	Yes; occurring in CYs2010 and 2011
4.Patient criteria	No; 60% Rule already in place	No	Study dictated as part of MMSEA	PPACA requires a “face-to-face” encounter between physicians(or clinicians working with them) and patients before HH services are prescribed
5.Healthcare Reform
–Market basket update reductions	–Known	–Known	–Known	–Known
–Productivity adjustments	–Begins 2012	–Begins 2012	–Begins 2012	–Begins 2015
–Bundling	–Pilot to be established by 2013	–Pilot to be established by 2013	–Pilot to be established by 2013	–Pilot to be established by 2013
–Independent Medicare Advisory Board	–FY 2019	–FY 2015	–FY 2019	–CY 2015
–New quality reporting requirements	–Begins 2014	–N/A	–Begins 2014	–N/A
–Value based purchasing	–Pilot begins 2016	–Post 2012	–Pilot begins 2016	–Post 2012
6.Other	N/A	N/A	25% Rule will be reinstituted when MMSEA moratorium expires	N/A

Regulatory Uncertainty

Sources:Healthcare Reform Bill (PPACA, HERA),CMS Regulatory published rules and MMSEA

Exhibit 99.1

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Exhibit 99.1

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Exhibit 99.1

25

Adjusted Consolidated EBITDA(1)(Q1 2010 vs. Q1 2009)

(1) Reconciliation to GAAP provided on slides 32 and 33.

In arriving at Adjusted Consolidated EBITDA, the following were excluded from line items:

(2) Restructuring charges associated with closed outpatient satellite clinics of $0.0, $0.0, and $0.3 million, respectively, which reduced occupancy costs.

(3) Stock-based compensation expense of $3.8, $3.7, and $13.4 million, respectively, which reduced general and administrative expenses.

(4) Impairments related to investments of $0.0, $0.7 and $1.4 million, respectively, which increased other income.

(5) Noncontrolling interests related to discontinued operations of $0.0, $0.3 and $0.6 million, respectively, which reduced noncontrolling interests expense.

Adjusted Consolidated EBITDA increased $8.0 million, or 8.1%, Q1 2010 vs. Q1 2009

(Millions)	Q1 2010	Q1 2009	2009
Net operating revenues	$491.0	$472.9	$ 1,911.1
Operating expenses:
Salaries and benefits	241.9	233.3	948.8
Hospital-related expenses:
Other operating expenses	66.9	66.9	271.4
Supplies	28.3	27.4	112.4
Occupancy costs (2)	11.6	12.0	47.3
Provision for doubtful accounts	6.9	7.8	33.1
	113.7	114.1	464.2
General and administrative expenses (3)	22.5	21.8	91.1
Equity in nonconsolidated affiliates	2.6	2.5	4.6
Other income (4)	0.7	0.5	4.8
Noncontrolling interests (5)	(9.8)	(8.3)	(33.4)
Adjusted Consolidated EBITDA	$106.4	$98.4	$383.0

Exhibit 99.1

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Payment Sources (Q1 2010 vs. Q1 2009)

(1)Managed Medicare revenues represent ~ 7%, 8% and 8% of total revenues for Q1 2010, Q1 2009 and 2009, respectively, and are included
in “Managed care and other discount plans.”

Exhibit 99.1

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Operational and Labor Metrics (1)

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

(2)Represents discharges from HealthSouth’s 90 consolidated hospitals and 6 LTCHs.

(3)Excludes approximately 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 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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Debt Profile

Debt Maturities

As of March 31, 2010

=Term Loan maturities

=10.75% Fixed

=8.125% Fixed

=Capital leases & term
loan amortization

(1)The Company had $116.8 million in cash and cash equivalents as of March 31, 2010.

(2)Based on trailing four quarter Adjusted Consolidated EBITDA of $391.0 million; reconciliation to GAAP provided on slides 32 and 33.

3 month

LIBOR

plus

225 bps

3 month

LIBOR

plus

375 bps

Call Schedule

DatePrice

June 15, 2011 105.375

June 15, 2012 103.583

June 15, 2013101.792

June 15, 2014 100.000

and thereafter

Exhibit 99.1

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Interest Rate Swaps(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)Forward-starting interest rate swaps (designated as cash flow hedges). Cash settlements will flow through operating activities as part of
interest expense.

Floating Rate Debt Balances	Mar. 31, 2010	Floating Interest Rate
Advances under $400 million revolving credit facility	$-	Libor plus 300
Term Loan facility due 2013	450.9	Libor plus 225
Term Loan facility due 2015 (1)	298.5	Libor plus 375 (1)
Total	$749.4
	Notional Amount	Cash payment if LIBOR = 0.30%
		2010				2011
Swap Settlement		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Does not Qualify for Hedge Accounting (2)
Net notional amount of interest rate swaps	$884.0	11.9	11.2	11.1	11.0	10.9	-	-	-
Receive 3 month Libor and pay 5.22% fixed
Does Qualify for Hedge Accounting (3)
Notional amount of the interest rate swap	$100.0		-	-	-		0.6	0.6	0.6
Receive 3 month Libor and pay 2.6% fixed
Notional amount of the interest rate swap	$100.0		-	-	-		0.7	0.7	0.7
Receive 3 month Libor and pay 2.9% fixed

Exhibit 99.1

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Non-Operating Cash/Tax Position

Cash Refunds as of Mar. 31, 2010

•Federal tax recoveries virtually complete.

•State tax refunds in progress.

–Approx. $6.5 million received in Q1
2010.

–Approx. $1.1 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).

•The Company does not expect to pay significant
federal income taxes for the next 10-12 years, due
to approximately $905 million in deferred tax assets
as of 12/31/09 outlined in the 2009 Form 10-K. The
majority of the deferred tax assets is related to
NOLs.

–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 $893 million.

•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

31

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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Exhibit 99.1

33

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.