Encompass Health 8K Regulation FD Disclosure | EHC 22 Aug 11

Exhibit 99.1

Post Q2 2011 Earnings Release - Last updated August 22, 2011

INVESTOR REFERENCE BOOK

(Reclassified for long-term acute care hospitals moving to discontinued operations)

Exhibit 99.1

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.

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 the Form 10-K for the year ended December 31, 2010, the Form 10-Q for the quarters ended
June 30, 2011, and March 31, 2011, 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. Schedules are attached that reconcile
the non-GAAP financial measures included 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 August 22, 2011, to which
the following supplemental slides are attached as Exhibit 99.1, provides further explanation and
disclosure regarding our use of non-GAAP financial measures and should be read in conjunction
with these supplemental slides.

Forward-Looking Statements

Exhibit 99.1

Table of Contents

Exhibit 99.1


	Inpatient Rehabilitation Hospitals (“IRFs”)
	Outpatient Rehabilitation Satellite Clinics
	Hospital-Based Home Health Agencies

	Employees
	Revenue in 2010
	Inpatient Discharges in 2010
	Outpatient Visits in 2010
26 + Puerto Rico	Number of States
	Exchange (Symbol)

Site under construction

Largest Owner and Operator of Inpatient Rehabilitation Hospitals in the U.S.

Our Company

Marketshare

~ 8% of IRFs
~ 19% of Licensed Beds
~ 22% of Patients Served

Drake acquisition in Cincinnati,
OH; expect to close Q4 2011

CON approved for Ocala, FL;
expect to be operational Q4
2012

Exhibit 99.1

Our Hospitals

Major Services

• Rehabilitation Physicians: manage and treat medical needs of patients

• Rehabilitation Nurses: oversee treatment programs of patients

• Physical Therapists: address physical function, mobility, safety

• Occupational Therapists: promote independence and re-integration

• Speech-Language Therapists: treat communication & swallowing disorders

• Case Managers: coordinate care plan with physician, caregivers and family

• Post-discharge services: outpatient therapy and home health

Exhibit 99.1

Our Patients

Most Common Conditions (Q2 2011)

1.Stroke 16.9%

2.Neurological 16.7%

3.Debility 11.4%

4.Fracture of the lower extremity 10.4%

5.Other orthopedic conditions 9.7%

6.Knee/Hip replacement 8.7%

7.Brain injury 7.5%

8.Cardiac conditions 4.4%

9.Spinal cord injury 3.7%

10.All other 10.6%

Referral Sources

94% Acute Care Hospitals

5% Physician Offices

1% Skilled Nursing Facilities

Admission to an IRF

• Physicians and acute care
hospital case managers are key
decision-makers.

• All IRF patients must meet
reasonable and necessary criteria
and must be admitted by a
physician.

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

• IRF patients receive 24-hour, 7
days a week nursing care.

• Average length of stay (ALOS) =
~14 days

Exhibit 99.1

Our Quality

FIM Gain

Change in
Functional
Independence
Measurement
(based on an 18
point assessment)
from admission to
discharge

(1) Average = Expected, Risk-adjusted for UDS database

• Inpatient rehabilitation hospitals evaluate all patients at admission and upon
discharge to determine their functional status.

− The Functional Independence Measurement (“FIM”) patient assessment
instrument is used for these evaluations.

• The difference between the FIM scores at admission and upon discharge is called
the “FIM Gain.”

− The greater the FIM Gain, the greater the patient’s level of independence, the
better the patient outcome.

Exhibit 99.1

(1) The 96 for HLS does not include HealthSouth Sugar Land Rehabilitation Hospital, purchased in September 2010; it was included in the 136 non-HLS
freestanding.

(2) In 2010, HealthSouth averaged 1,197 total Medicare and non-Medicare discharges per hospital in its 94 consolidated hospitals.

Sources: FY 2012 CMS Rate Setting File - see next page

Total Inpatient Rehabilitation Facilities (IRFs): 1,152 (1)

Our Cost-Effectiveness

HealthSouth
differentiates
itself by
providing
superior quality
care at a

lower cost.

Exhibit 99.1

CMS Fiscal Year 2012 IRF Rate Setting File Analysis

Notes:

(1) All data provided was filtered and compiled from the Centers for Medicare and
Medicaid Services (CMS) Fiscal Year 2012 IRF rate setting Final Rule file found at
http://www.cms.gov/InpatientRehabFacPPS/07_DataFiles.asp#. 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 1,152 inpatient rehabilitation facilities
used to estimate the policy updates for the FY 2012 IRF-PPS Final Rule. Most of the
data represents historical information from the CMS fiscal year 2010 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

Our Payors (Q2 2011)

Prospective Payment System (“PPS”)

• Payments based on Case Mix Groups
(“CMGs”)

– Diagnosis of patient’s illness

• Fixed payment per CMG adjusted for:

– Acuity/severity

– Regional wage differential

• Per diems for “short stays”

Per Diem or CMG

• Negotiated rate

• Some are “tiered” for acuity/severity

Variety of methodologies

Varies by state

Variety of methodologies

Medicare

Managed Care

• Includes managed
Medicare

Other Third-Party Payors

Medicaid

Workers’ Comp./
Patients/Other

Payment Methodology

Payor Source

72.0%

19.8%

2.0%

4.4%

1.8%

Exhibit 99.1

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

(2) Includes consolidated HealthSouth inpatient rehabilitation hospitals classified as same store during that time period.

• HealthSouth’s
volume growth has
outpaced
competitors’.

• TeamWorks =
standardized and
enhanced sales &
marketing

• Bed additions will
help facilitate
continued organic
growth.

4.7%

5.9%

5.8%

5.9%

2.7%

2.5%

1.3%

2008 vs. 2009 vs. 2010 vs. Q110 vs. Q210 vs. Q310 vs. Q410 vs. Q111 vs. Q211 vs.

2007 2008 2009 Q109 Q209 Q309 Q409 Q110 Q210

Exhibit 99.1

Our Track Record

($ in millions)

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

(2) 2010 and Trailing 4Qtrs both include a tax benefit of ~$825 million for the reversal of a substantial portion of the valuation allowance
against deferred tax assets.

Exhibit 99.1

Our Track Record

Leverage Ratio(1)

(billions)

(1) Reconciliation to GAAP provided on slides 49, 50, and 92 - 97.

Interest Expense

$229

$135

Exhibit 99.1

HealthSouth has successfully managed through
Medicare payment cuts and an economic recession…

Adjusted EBITDA ($million)

Discharges

Exhibit 99.1

3,154 Licensed Beds

in CON States

Our Assets
97 (1) Inpatient Rehabilitation Hospitals, 6,356 Licensed
Beds

3,202 Licensed Beds

in Non-CON States

24 Own Hospital Building Only

38 Own Building and Land

35 Lease Building and Land

A Certificate of Need (CON) is a legal document required in
many state and some federal jurisdictions before proposed
acquisitions, expansions, or creations of facilities are allowed.

(1) 3 of the 97 HealthSouth hospitals are non-consolidated. Of those 3, 2 are lease building and land, and 1 is own building and land.

Exhibit 99.1

Strong and Sustainable Business Fundamentals

Growth Opportunities

Financial Strengths

Industry Leading Position

Attractive Healthcare Sector

Cost-Effectiveness

Real Estate Portfolio

(1) Inclusive of non-consolidated entities

Exhibit 99.1

Industry Structure

Exhibit 99.1

Sources: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, MedPAC.
Data for the year ended December 31, 2009.

Overall Healthcare Spending

Hospital Care
Includes Inpatient Rehabilitation, Long-Term Care Hospitals

$759.1

$137.0

$674.9

$122.6

$68.3

$328.0

Nursing Care Facilities and
Continuing Care Retirement Communities

Professional Services

Other Health, Residential and Personal Care

Home Health Care

Retail of Medical Products

$29.8

Government Administration

$133.2

Net Cost of Health Insurance

$77.2

Government Public Health

$156.2

Investment

National Healthcare Spending: $2,486.3 billion

(billions)

Exhibit 99.1

Medicare 2010 Spending = $509.7 Billion (1)

(1) Percentages are based upon total Medicare spending of $520.3 billion, before $10.6 billion of recoveries for 2010 (CBO Medicare March 2011
Medicare Baseline).

(2) Inpatient Hospital includes spending for acute care hospitals along with, inpatient rehabilitation and long-term care hospital services; in 2009,
Medicare spent $6.4 and $5.1 billion, respectively, for these services (MedPAC Data Handbook, June 2011).

(3) Other Services reflects spending for hospice; in 2009, Medicare spent $12 billion for hospice services. (MedPAC Data Handbook, July 2011). Other
Services also reflects spending for various other outpatient services.

$ 27.1B Skilled Nursing

$ 138.0B Inpatient Hospital (2)

$ 63.4B Physician Payments

$ 27.1B Outpatient Hospital

$ 19.3B Home Health

$ 60.4B Other Services (3)

$ 59.3B Outpatient Rx

27%

23%

12%

$6.4B (1%)
Inpatient Rehabilitation Hospitals

Medicare Part B

Medicare Part C

Medicare Parts A&B

Medicare Part D

Medicare Part A

Exhibit 99.1

Preventive

Routine health
care that
includes
screenings,
check-ups, and
patient
counseling to
prevent illnesses,
disease, or other
health problems.

Acute

Medical
treatment of
diseases for
which a patient
is treated for a
brief but severe
episode of
illness.

Ambulatory

Medical care
delivered on an
outpatient basis.
E.G., blood tests,
X-rays,
endoscopy,
certain biopsies,
certain surgical
procedures.

Post-Acute

Medical care
provided after a
period of acute
care. E.G.,
inpatient
rehabilitation
hospitals, long-
term acute care,
hospice, skilled
nursing homes,
home health

Continuum of Healthcare Services

Exhibit 99.1

Note: These numbers are program spending only and do not include beneficiary copayments.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary (MedPAC June 2011 Data Book - Page 122), March 2011
Medicare Trustee s Report

Skilled nursing
facilities 18.1%

Home health
agencies 17.7%

Inpatient

rehabilitation

hospitals 8.4%

Long-term acute

care hospitals 5.7%

2009
Medicare
Margin

Post-Acute Settings

Inpatient rehabilitation
spending (% of total
Medicare spending)

Exhibit 99.1

Geographic Distribution of IRFs, 2009

Map source: MedPAC analysis of 2009 Provider of Service files from CMS

Report to the Congress: Medicare Payment Policy, March 2011, page 205, http://www.medpac.gov/chapters/Mar11_Ch09.pdf

Exhibit 99.1

Supply of IRFs remains stable in 2009

MedPAC analysis of 2009 Provider of Service files from CMS

Inpatient rehabilitation facility services: Assessing payment adequacy and updating payments, page 208, http://www.medpac.gov/chapters/Mar11_Ch09.pdf

Exhibit 99.1

(1) The 96 for HLS does not include HealthSouth Sugar Land Rehabilitation Hospital, purchased in September 2010; it was included in the 136 non-HLS
freestanding.

(2) In 2010, HealthSouth averaged 1,197 total Medicare and non-Medicare discharges per hospital in its 94 consolidated hospitals.

Sources: FY 2012 CMS Rate Setting File - see slide 9

Total Inpatient Rehabilitation Facilities (IRFs): 1,152 (1)

Inpatient Rehabilitation Sector

Exhibit 99.1

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

CMS: Inpatient Rehabilitation vs. Skilled Nursing

… MedPAC’s analysis of recent quality measure data related to
rehospitalizations suggests that quality of care within SNFs has not been
improving … Since 2000, one outcome measure (the risk-adjusted rate of
rehospitalization for any of five care-sensitive conditions) exhibited almost no
change …

… shifting IRF patients toward SNF care does not necessarily improve the
quality of care provided to the beneficiaries. A March 2005 report in the
Archives of Physical Medicine and Rehabilitation found that 81.1 percent of
IRF patients were discharged to home, compared to 45.5 percent of SNF
residents. Additionally, IRF patients appeared to have shorter lengths of stay,
averaging approximately a 13-day stay, compared to the average 36-day
stay for a SNF resident. Finally, when patients discharged from each setting
were reviewed 24 weeks after discharge, IRF patients had consistently better
outcomes and displayed a faster rate of recovery.

Given these findings, we do not agree with those commenters who
would assume that shifting patients from the IRF setting to a SNF setting is
necessarily more beneficial to the patient or the Medicare Trust Fund.

Source: http://www.gpo.gov/fdsys/pkg/FR-2011-08-08/pdf/2011-19544.pdf

Exhibit 99.1

Future Regulatory Risk	Inpatient Rehabilitation Facility	Skilled Nursing Facility	Long-Term Acute Care Hospital	Home Health	Hospice
1. Re-basing payment system	No	Yes; RUGS IV and MDS 3.0 parity adjustment for FY 2012 (-12.6%)	No	Yes; proposed re-weighting re- distributes payment from high therapy to low or no therapy; also would be required as part of PPACA starting in 2014	Yes: Required by PPACA beginning in 2013; Modified wage index system being phased in over 7-year period beginning in FY 2010
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)	No
3. Upcoding adjustments	No	No	Yes; occurring in FY 2011	Yes; occurring in CY 2011 (-3.79%), and proposed CY 2012 (-5.06%)	No
4. Patient criteria	No; 60% Rule admission criteria already in place	No	Congressional Bill introduced developing criteria	PPACA requires a patient - physician “face-to-face” encounter; new therapy documentation requirement	PPACA requires a patient - physician “face-to-face” encounter
5. Healthcare Reform
• Market basket update reductions	• Known	• Known	• Known	• Known	• Known

• Bundling pilot established	• By 2013	• By 2013	• By 2013	• By 2013	• N/A
• Independent Payment Advisory Board
• New quality reporting requirements	• Begins FY 2014	• N/A	• Begins FY 2014	• N/A	• Begins FY 2014


6. Other	N/A	New group therapy definition/requirements	25% Rule regulatory relief expires in 2012/2013; prohibition on new LTCHs through 2012; Medicare Advantage patients counted in the 25 day length of stay criteria Jan. 2012	Limits on transfer of ownership	MedPAC recommending overhaul of payment system methodology in FY 2013

Specific Post-Acute Regulatory Changes (1)

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

(1) Does not included potential changes associated with the Budget Control Act of 2011; see slide 28

Exhibit 99.1

Estimated Impact to HealthSouth

Scenario

Comments

Our assessment of potential Medicare reductions emanating from
the Budget Control Act

1) Special
Committee actions
mirror President’s
Fiscal Commission
(Simpson Bowles)

(million)

Net Operating Revenues ($4.0)

Adjusted EBITDA ($7.0)

• Impact is shown for 2012

• Areas impacted are provider tax
rebates and Medicare bad debt
recoveries

• Revision would be permanent

2) Special
Committee fails and
default mechanism
is triggered

(million)

Net Operating Revenues ($32.0)

Adjusted EBITDA ($32.0)

• Effective 10/1/12; impact is shown for 2013

• Assumes 2% sequestration (1) of Medicare
payments

• Beyond 2013:

− Medicare reimbursement would be subject
to market basket updates less healthcare
reform adjustments.

− Medicare revenues may continue to be
subject to sequestration (1)

Translates to an effective
price freeze for 2013

Above estimates assume no mitigating actions by HealthSouth

(1) In any year for which there is sequestration, the reduction would be made from whatever level of payment would otherwise be provided
under Medicare law and regulations. If hospital prospective payments were scheduled to increase by 4 percent, then a 2 percent
reduction (that is, payment of 98 percent of the normal payment amount) would permit some increase to remain. (Source: Conference
Committee Report on the Balanced Budget and Emergency Deficit Control Act of 1985 as Applicable to Medicare and Medicaid
Programs. Congressional Record (H 11706-11707) December 10, 1985)

Exhibit 99.1

Historical Perspective

Exhibit 99.1

Historical Perspective

2007

•Used proceeds plus tax refund to repay $1.4 billion of debt

•Reduced G&A to match residual business size

•Piloted TeamWorks sales and marketing

•75% rule frozen at 60% (MMSEA)

•Completed all settlement payments

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

Exhibit 99.1

Historical Perspective

2008

• Established 2008-2010 business model

• 4% discharge growth; 5-8% Adjusted EBITDA growth;15-20% adjusted EPS
growth

• Balanced delevering and growth/development strategies

• Completed TeamWorks sales and marketing roll-out

• Absorbed Medicare reimbursement rollback (Q2)

• Repaid $228 million of long-term debt (8.8 million share equity issuance and
prior period tax refunds)

• Financial market turmoil (Q3)

• HealthSouth suspended development and increased focus on delevering

2008 Adjusted
EBITDA (1) =
$322.6

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

(millions)

Exhibit 99.1

Historical Perspective

2009

•Continued focus on delevering (~ $151 million repaid)

•Focused on organic growth; TeamWorks sustainability module rolled out

•Issued 5 million shares for securities litigation settlement (Q3)

•Received first Medicare market basket update in 18 months (Q3)

•Reinvigorated development efforts (Q4)

2009 Adjusted
EBITDA (1) =
$363.7

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

(millions)

2008 Adjusted
EBITDA (1) =
$322.6

Exhibit 99.1

Historical Perspective

2010

•Healthcare reform passed; reduced future market basket updates

•Weak acute care referral volumes

•Adjusted annual volume growth target to 2.5-3.5%

•Development efforts pay off

• 2 de novos, 2 IRF acquisitions, 2 unit acquisitions

•Completed 7.25% and 7.75% senior note offering for 2018 and 2022

•Refinanced term loans and revolver (Q4)

• Repaid $151.2 million in debt

• Flexibility to repay or refinance the 10.75% notes callable in June 2011

2010 Adjusted
EBITDA (1) =
$409.6

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

(millions)

2009 Adjusted
EBITDA (1) =
$363.7

2008 Adjusted
EBITDA (1) =
$322.6

Exhibit 99.1

Historical Perspective

2011

•Acute care volumes still low

•Annual volume growth target remains 2.5-3.5%

•Completed public offering of $122 million by reopening 2018 and 2022 senior notes.

•Retired $335 million of 10.75% senior notes due 2016

•Plan to add a minimum of 4 de novos per year

•Will retire the remaining $164 million of 10.75% senior notes on September 1, 2011

•Budget Control Act of 2011 passed; potential 2% sequestration

2010 Adjusted
EBITDA (1) =
$409.6

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

(millions)

2009 Adjusted
EBITDA (1) =
$363.7

2008 Adjusted
EBITDA (1) =
$322.6

Exhibit 99.1

Revenues & Expenses

(1) 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

Adjusted EBITDA (1)

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

Exhibit 99.1

Notes:

(1) 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 (expire January 16, 2014) 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.

(2) 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 to
purchase approx. 8.2 million shares of common stock at a strike price of $41.40 (expire January 17, 2017) were not assumed exercised for the
dilutive shares outstanding because they are anti-dilutive in the periods presented.

(3) The difference between the basic and diluted shares outstanding is primarily related to our convertible perpetual preferred stock (13.1 million
shares). The preferred stock is convertible, at the option of the holder, at any time into shares of common stock at an initial conversion price of
$30.50 per share, which is equal to an initial conversion rate of approximately 32.7869 shares of common stock per share of preferred stock,
subject to a specified adjustment. On or after July 20, 2011, we may cause the shares of preferred stock to be automatically converted into
shares of our common stock at the conversion rate then in effect if the closing price of our common stock for 20 trading days within a period of
30 consecutive trading days ending on the trading day before the date we give the notice of forced conversion exceeds 150% of the
conversion price of the preferred stock.

Exhibit 99.1

Business Outlook
2011 to 2013
(as of August 22, 2011)

Exhibit 99.1

Business Model

• Adjusted EBITDA CAGR: 5-8% (1)

• Adjusted Free Cash Flow CAGR: 12-17% (1)

Strategy

2010

2011

2012

2013

Delevering (2)

Achieved 3.5x
debt to EBITDA

Longer-Term Goal: ~ 3.0x debt to EBITDA

Growth

Same-store growth (Includes capacity expansions and unit consolidations)

De novos (minimum of 4/year)

IRF acquisitions (~ 2-3/year)

Opportunistic, disciplined acquisitions
of complementary post-acute services

(1) Reconciliation to GAAP provided on slides 49, 50, and 92 - 97.

(2) Exclusive of any E&Y recovery.

De novos (~2-3/year)

• Clinical Information System (CIS)
Pilot and rollout

Key
Operational
Initiatives

•Beacon (Management Reporting Software) = Labor / outcomes / quality optimization

•TeamWorks = Care Management

•“CPR” (Comfort, Professionalism, Respect) Initiative

• CIS Implementation

Key Criteria:

•Achieving delevering goal

•Regulatory clarity

•Market conditions

•Purchase price and terms and conditions

Exhibit 99.1

Business Outlook: Revenue Assumptions

Revenue

Volume

•2.5% to 3.5% annual growth (excludes
acquisitions)

•Includes bed expansions, de novos
and unit consolidations

Medicare

Managed
Care

Other

(1) Not inclusive of the Budget Control Act of 2011, which could result in a reduction of up to 200 bps to Medicare payments for all
providers beginning in fiscal year 2013, unless certain deficit reduction actions are approved by Congress not later than
December 23, 2011. The reduction would be made from whatever level of payment would otherwise be provided under
Medicare law and regulation ; see slide 28.

(2) We believe based on the 2012 Medicare rule for IRFs, HealthSouth should realize an increase of approximately 1.6% in 2012.

(3) CMS proposed IRF Rule for FY 2012 and management estimates for FY 2013

Exhibit 99.1

Business Outlook: Expense Assumptions

Expense

Salaries & Benefits (1)

Hospital Expenses

•Other operating and supplies
tracking with inflation

4.5% of revenue

(excludes stock-based compensation)

Salaries

& Benefits

Hospital
Expenses

(1) Salaries, Wages and Benefits: 85% Salaries and Wages; 15% Benefits

(2) May be adjusted depending outcome of the Budget Control Act of 2011 or other Medicare reduction legislation

Exhibit 99.1

Guidance

Exhibit 99.1

2011 Guidance - Adjusted EBITDA(1) (as of August 22, 2011)

Original Guidance

Feb. 17, 2011

$440 million to $450 million
(Inclusive of 12 months LTCH
Adjusted EBITDA)

(1) Reconciliation to GAAP provided on slides 50 and 92 - 97.

Considerations:

ü Bad debt expense was 0.6% of revenue in second half of 2010; expect 2011
second half bad debt expense to be approximately 1.5% of revenue

ü Medicare pricing in Q4 2011 is expected to increase by approx. 2.0%.

ü SWB as a percent of revenue is expected to be comparable to second half of
2010 (impact of care management investment, seasonally higher for vacations
and holidays; October merit increases).

ü Discharge growth in the second half between 2.5% and 3.5%

Updated

July 27, 2011

$447 million to $453 million
(exclusive of any LTCH
Adjusted EBITDA)

Revised Guidance

May 18, 2011

$440 million to $450 million;
(The high end of, or greater than,
exclusive of any LTCH Adjusted
EBITDA)

Guidance essentially raised by the 2011
expected LTCH Adjusted EBITDA
($17.5 million EBITDA in 2010)

Reflects 9.1% to 10.6% growth over 2010

Exhibit 99.1

2011 Guidance - EPS (as of August 22, 2011)

Basic Earnings per Share from
Continuing Operations Attributable
to HealthSouth (1)

$1.17 to $1.22

Considerations:

ü Includes $26.1 million, or $0.28 per share, loss (pre-tax) on early extinguishment of debt related
to the Company’s repayment of $335 million of 10.75% senior notes on June 15, 2011.

ü Includes $0.27 per share benefit for Q1 2011 and assumes provision for income tax of 40% for
the remainder of 2011; cash taxes expected to be $5-$8 million.

ü          $10.6 million, or $0.11 per share, gain (pre-tax) in government, class action, and related
           settlements, and a $2.7 million, or $0.03 per share, expense (pre-tax) for higher professional fees
           primarily related to recoveries

ü The Adjusted EBITDA ($17.5 million in 2010) associated with the Company’s six LTCHs has been
reclassified to discontinued operations.

ü         The Company now expects interest expense to be approx. $52 million in the second half of
       2011 and expects to record an additional approx. $13 million for loss on early extinguishment of
       debt.

(1) Income from continuing operations attributable to HealthSouth

Diluted earnings per share on a GAAP
basis are the same as basic earnings per
share due to the antidilutive impact in
the period.

Exhibit 99.1

2011 Guidance - EPS (as of August 22, 2011)

(2) Income from continuing operations attributable to HealthSouth (reclassified for the 6 LTCHs moving to discontinued operations)

(3) Current period amounts in income tax provision; see slides 98 - 99.

(4) Total income tax provision for full-year 2010, including the reversal of a substantial portion of the Company's valuation allowance against deferred tax
assets.

(5) Includes a $0.27 per diluted share benefit related to the Company’s settlement with the IRS for tax years 2007 and 2008, and a reduction in unrecognized
tax benefits due to the lapse of the statute of limitations for certain federal and state claims.

Exhibit 99.1

Adjusted Free Cash Flow (1) Considerations

(1) Numbers in chart reflect reclassification of LTCHs to discontinued operations; reconciliation to GAAP provided on slide 49.

HealthSouth’s GAAP income statement will be affected by a
number of items that will not affect adjusted free cash flow:

•Normalized GAAP tax rate resulting from the valuation
allowance reversal in Q4 2010.

•Loss on early extinguishment of debt

Business Model Multi-Year Adjusted Free Cash Flow 12% to 17% CAGR (1)

Exhibit 99.1

Income Tax Considerations

GAAP Considerations:

•As of 6/30/11, the Company had an ending balance of approx. $1.4 billion in federal
NOLs and a remaining valuation allowance of approx. $106 million, primarily related to
state NOLs.

•Expect effective tax rate of approx. 40% going forward

Future Cash Tax Payments:

•The Company expects to pay approx. $5-$8 million per year of income tax.

•The Company does not expect to pay significant federal income taxes for up to 7
years.

•HealthSouth is not currently subject to an annual use limitation (“AUL”) under Internal
Revenue Code Section 382 (“Section 382”). A “change of ownership,” as defined by
Section 382, would subject us to an AUL, which is equal to the market capitalization of
the Company at the time of the “change of ownership” multiplied by the long-term
tax exempt rate.

Exhibit 99.1

Free Cash Flow

Exhibit 99.1

Adjusted Free Cash Flow

(1) Maintenance capital expenditures are expected to be $60 million in 2011 and $75 million in 2012.

(2) Final swap payment of $10.9 million was made in March 2011.

Exhibit 99.1

Net Cash Provided by Operating Activities

Exhibit 99.1

HealthSouth’s priorities for reinvesting free cash flow…

• Additional debt prepayment (revolver, term loan
and senior notes)

• Growth in core business

• Bed expansions

• De novo hospitals

• Hospital acquisitions

• Acute care IRF unit acquisition/consolidation

• Purchase properties under operating leases

• Lower capital cost

• Greater control of property, CON and/or license

• Share repurchase

• Offset shares underlying convertible preferred shares
(13.1 million shares)

• Offset shares issued in settlement of securities litigation
(5.0 million shares)

• Cash dividends (one time or regular)

Business Model: Adjusted free cash flow CAGR: 12-17% (1)

(1) Reconciliation to GAAP provided on slide 49.

Exhibit 99.1

Refinancing and Delevering

Exhibit 99.1

Debt Schedule as of June 30, 2011

(1) On September 1, 2011 we will call the remaining 10.75% senior notes.

(2) Based on 4-quarter trailing and 2010 Adjusted EBITDA of $440.8 million and $409.6 million, respectively; reconciliation to GAAP provided
on slides 50, 92, 93, and 97.

Exhibit 99.1

(1) Based on 2008 and trailing 4-quarter Adjusted EBITDA of $322.6 million and $440.8 million, respectively; reconciliation to GAAP provided
on slides 50 and 92 - 97.

Debt, Liquidity, and Swaps

Liquidity

Credit Ratings

Exhibit 99.1

(2) Does not include $387.4 million of convertible perpetual preferred stock and capital leases and other note payables.

HealthSouth is now positioned with a lower-cost, flexible capital
structure…

$500

Revolver

L+250

§Adequate undrawn capacity under the revolver

§The Company now expects interest expense(1) to be at a $24 million run rate in
Q4 2011.

§Additional debt pre-payment opportunities and flexible covenants

§No near-term maturities and well-spaced debt maturities

§Limited exposure to higher interest rates

June 30 , 2011 proforma for Sept. 1, 2011 Retirement of the 10.75% Senior Notes(2)

$254
Undrawn

2016

10% of the principal is callable
each year at $103

Exhibit 99.1

Use of Revolver

• Liquidity should be sufficient to address:

– The accelerated de novo plan

– Short-term disruptions to the financial system

– Short-term disruptions to our business

– Unforeseen cash requirements

• Liquidity target has both objective and subjective components

– The Company’s current target is ~$250 million.

• Liquidity target subject to change based on:

– Economic developments

– Conditions in the financial markets

– Continued balance sheet delevering

– Regulatory change

– Growth in our business

Refinancing capacity within the revolver is limited by liquidity
considerations.

Exhibit 99.1

Credit Agreement Key Covenant (1)

	Terms
Acquisitions	Limited by compliance with leverage and interest coverage covenants initially established at 5.0x and 2.5x, respectively
Restricted payments:
10.75% repurchase	Unlimited up to 4.5x leverage ratio (revolver draws available for repurchase)
Share repurchase (2)	$200 million (shared with other restricted payment basket)
Other debt repurchase (2)	$200 million (shared with other restricted payment basket)
Unsecured debt issuance	Unlimited up to 4.5x leverage ratio

(1) Full agreement filed November 23, 2010 and amended on May10, 2011

(2) The maximum amount limitations above are subject to increase by a “grower” basket equal to 50% of excess cash flow plus certain
other amounts including net cash proceeds from certain equity issuances.

Exhibit 99.1

Growth

Exhibit 99.1

Demographics

+ population growth and changes (weighted by age)

= Rehab CAGR

Growth goals for the market and/or hospital

Sales and Marketing Strategies

•Defining “upstream” opportunities

•Identifying CMS-13 discharges

•“Converting” CMS-13 patients to rehab

Market Dynamics

•Existing IRF beds

•Managed care penetration

•Competition

Organic Growth: A Strategic Framework

Bottoms-up approach
to HealthSouth’s
growth projections

Exhibit 99.1

Organic Growth: Compounded Annual Growth Rate (CAGR) (1)

(1) Numbers in map are for illustrative purposes only and do not represent actual results.

(2)“Weighted for Rehab Services” - methodology weights growth in rehab age groups higher.

% CAGR
Rehab by Zip Code

Weighted for Rehab Services (1) (2)

Organic Growth

•Demographic
changes

•Population
growth

% CAGR Weighted for Rehab Services

Treasure Coast Primary 2.64%

Treasure Coast SSA - Glades 1.47%

Treasure Coast SSA - Martin 2.92%

Okeechobee 2.34%

Treasure Coast Tertiary 2.24%

Combined 2.45%

State of Florida 2.72%

USA 2.31%

Exhibit 99.1

De Novo Market Selection Process

Active
Development
List

Corporate
Assessment

Strategic
Approach

•Build

•Buy

•JV

Regional President
Priority

Assessment

“Deep Dive”
Market
Assessments

Potential
Opportunity List

(160 opportunities
identified)

National
Market
Assessment

(3,141 counties in 48 states studied)

• Population and
Demographics

• IRF Conversion Rates

• Acute Care Referral
Sources

• Inpatient Rehab
Competition

• Other Competitors

• Payor Environment

• CON/Non-CON

Exhibit 99.1

CON
Approval

Site
Selection

Cost
Assessment

Pro forma
Financials

Execution

• Design

• Construction

De Novo Evaluation Process

Market
Selection

Exhibit 99.1

Illustrative De Novo Timeline

Day 1

CON Process

Construction

With CON

Design

Planning

& Zoning

Month 20

Groundbreaking

Month 32

Opening

Construction

Design

Planning

& Zoning

Month 11

Groundbreaking

Month 20

Opening

Day 1

Without CON

Exhibit 99.1

Illustrative De Novo Pro forma (40 bed)

Capital Cost	$ Range
(millions)	Low	High
Construction, design, permitting, etc.	$11.0	$14.5
Land	1.5	3.5
Equipment	2.5	3.0
	$15.0	$21.0



Pre-opening Expenses
(thousands)	Low	High
Operating	$200	$300
Salaries, wages and benefits	150	200
	$350	$500

Exhibit 99.1

(1) Hospital EBITDA = earnings before interest, taxes, depreciation and amortization directly attributable to the related hospital.

Occupancy

Exhibit 99.1

IRF Acquisition Performance

	Date Acquired	Acquired Census	Q2 2011 Census
Vineland	Q3 2008	26	35
Desert Canyon	Q2 2010	16	35
Sugar Land	Q3 2010	26	35
Ft. Smith	Q3 2010	15	34

Value added by HealthSouth

• TeamWorks approach to sales/marketing

• Labor management tools and “best practices”

• Clinical expertise

• Clinical technology and programming

• Supply chain efficiency

• Medical leadership and clinical advisory boards

Exhibit 99.1

Portfolio Growth

Cash Payback

(1) Assumes average investment per bed: ~ $450K.

• Target: Minimum of 4 de novos and 2 - 3 acquisitions/yr

• All projects have minimum IRR of 15%.

• Longer payback on de novos versus acquisitions is attributable to:

• 12-15 month construction period

• Initial ramp-up of operations on de novos

De novos (1)

Acquisitions

Exhibit 99.1

Acute Care
Hospital

Discharge

Hospice

Inpatient
Rehabilitation
Facility (1)

Skilled
Nursing
Facility

Home
Health (1)

(Highest Acuity)

(Lowest Acuity)

Future Growth: Complementary Post-Acute Care Services

Source: MedPac and CMS

(1) For information on HealthSouth’s hospital portfolio, see slide 4.

Exhibit 99.1

• Growth strategies will complement delevering priority.

- “Highest and best use” of FCF will determine where to invest.

• The Company continues to have excellent organic growth opportunities.

- Locations in above-average “Rehab CAGR” markets

- Non-discretionary nature of many conditions served

- Track record of consistent market share gains

• De novos and targeted IRF acquisitions will allow entry to, and growth in,
new markets.

- Disciplined evaluation process

- Proven track record of success

• Longer-term consideration of acquiring complementary post-acute
services predicated on:

- Achieving delevering objective

- Obtaining regulatory clarity

- Favorable market conditions

Growth: Summary

Exhibit 99.1

Operational Initiatives

Exhibit 99.1

Key Operational Initiatives: Summary

• Strong track record of providing high-quality, cost-effective care

– Functional gains exceed industry norms

– Consistent market share gains

– Disciplined expense management

• Targeted operational strategies to achieve excellence in:

– Clinical care (Care Management; reduced Acute Care Transfers)

– Operations (BEACON; staff scheduling; supply chain)

– Service (CPR; “customer training”)

• Implementation of a Clinical Information System

– Rehabilitation-specific (Cerner)

– Manageable, five-year rollout beginning in 2012

Exhibit 99.1

Operational Strategy

Excellence in …

• Care Management
TeamWorks project

• Identify trends and
establish “best
practices” for the
prevention of
acute care transfers

• Provide a robust
rehabilitation
specific clinical
education program
for nurses and
therapists

• BEACON
management
reporting system

• Roll out staff
scheduling systems

• Standardize
pharmacy and food
supplies purchasing

• Patient satisfaction
survey tool through
Press Ganey

• CPR (Comfort,
Professionalism,
Respect) patient
experience
campaign

• Customer training
videos for hospital
staff

Clinical Care

Operations

Service

Exhibit 99.1

TeamWorks: Care Management

Goals

•Improve overall operational,
patient care and satisfaction
outcomes

•Streamline delivery of care

•Engage interdisciplinary teams

•Reduce:

― Complication rate

― Cost per case

― Payor denials

•Increase:

― Patient outcomes

― Patient involvement in care
decisions

Design a HealthSouth Care Management Playbook to be
implemented across all hospitals

Referral Management

Pre-authorization / Pre-
certification

Patient Assessment

Care Delivery &
Documentation

Interdisciplinary Team
Process

Denials & Approvals

Outcomes Analysis

Effective & Efficient
Care Management

Exhibit 99.1

Pilot Process

Finalize Training
Modules

Implement

October - November 2010

Test the application of the
newly designed Playbook,
tools, processes and forms.
Gather feedback and
improve the process for the
2011 implementation.

December 2010

Review pilot findings and
finalize Playbook and
training.

January - August 2011

Begin training and
communicate company-wide
implementation strategy.
Implementation complete in 97
hospitals.

TeamWorks: Care Management Project Overview

Current State
Assessment

Future State Vision

Design Process

May - June 2010

KPMG visited 10 hospitals (2
within each region) to assess
and document the current
state of the case
management process. Site
visits included interviews,
observation, and
documentation review.

July 2010

KPMG facilitated an
Accelerated Solutions
Design (ASD) 30-day session
with 23 HealthSouth
employees. The team laid
the framework for the
desired future state of case
management.

August - September 2010

17 of the HealthSouth
employees involved in the ASD
returned for a 3-week design
session. The team developed or
updated tools and templates
to support the future state. Their
body of work was combined to
form the HealthSouth Care
Management Playbook.

Exhibit 99.1

CPR: Comfort, Professionalism, Respect

• All employees trained in the CPR campaign.

• Hospital-based trained facilitators will work directly with
employees.

• A series of short videos is used to depict common scenarios of
patient/staff situations.

• Facilitator training is highly interactive, encouraging discussions
among staff.

CPR is an in-house course designed to train all employees to
realize that even minor encounters between staff and
patients can have a memorable impact on the patient’s
entire experience.

Ultimate goal is to improve employee-to
-patient interactions, leading to:

•Improved patient satisfaction scores

•Reduced patient complaints

•More satisfied employees

Exhibit 99.1

BEACON: Hospital-Specific (1)

(1) Numbers in screen shot have been modified for presentation and do not represent actual results.

Exhibit 99.1

BEACON: Regional Roll-up (1)

(1) Numbers in screen shot have been modified for presentation and do not represent actual results.

Exhibit 99.1

Clinical Information Systems in Healthcare

• Clinical information systems (CIS) are a key component of
successful quality, safety and patient satisfaction initiatives in
healthcare.

• Hospitals that implemented Computerized Physician Order
Entry (CPOE) reported better quality of care and lower
mortality rates according to a recent study. (1)

• 2008 100 Most Wired Hospitals achieved significantly better
quality indicators than other hospitals via: (2)

– Mortality rate

– Patient safety index

– Core measures index

CIS adoption is not solely responsible for these results,
AND … adoption of CIS in healthcare is very slow!

(1) Source: Joint Commission Journal on Quality and Patient Safety, June 2008

(2) Source: The 100 Most Wired Hospitals and Health Systems 2008, Hospitals and Health Networks, July 2008

Exhibit 99.1

Source: HIMSS AnalyticsTM Database

Stage 2

Clinical Data Repository, Controlled Medical Vocabulary,

may have Document Imaging; Health Info Exchange capable

Stage 3

Digital Radiology

Stage 4

Computerized Physician Order Enter,

Clinical Decision Support (clinical protocols)

Stage 5

Closed loop medication administration, 5 rights with bar code

Stage 6

Physician documentation (structured templates), full Clinical

Decision Support (variance & compliance), full Digital Imaging

Stage 7

Complete EMR; standardized transactions to share data; Data

warehousing; Data continuity with Emergency Dept, ambulatory

Stage 1

Ancillaries - Lab, Radiology, Pharmacy - All Installed

Stage 0

All Three Ancillaries - Lab, Radiology, Pharmacy Not Installed

2005

0.0%

.001%

2.5%

10.0%

48.8%

19.6%

18.4%

0.7%

1.6%

3.8%

7.4%

50.9%

16.9%

7.2%

2009

Final

11.5%

2005-2009 Electronic Medical Record (EMR) Adoption
Model Trends
(5,235 non-federal acute care U.S. hospitals)

Exhibit 99.1

EMR Adoption Model

• Most U.S. hospitals are at Stage 3
(Foundation Stage) or below.

• Stages 0, 1 and 2 are slowing.

• Stage 3 is growing the fastest.

– 10% in 2005 - 50.9% in 2009

• Advanced Stages 3 through 7:

– Require only one service or unit
to be implemented

– Reduce medical errors and
improve clinical outcomes

• Stage 5 is the most difficult to achieve.

– Integration, technology and reengineering requirements

– Significant investment in capital, executive commitment and culture adoption

• Over 86% of U.S. Hospitals do NOT have CPOE (computerized physician
order entry) implemented.

Exhibit 99.1

HealthSouth Clinical Information Technology
Current State

Exhibit 99.1

Vendor Selection Process

2005

Request for
Proposal

2007

Project on
hold

2009

Cerner final
selection

July 2009

Core team
assembled

13 vendors
responded;
3 finalists

Due to
business unit
divestitures

Why Cerner?

• Inpatient
rehabilitation-specific
application

• Integrated solution
meeting all functional
requirements

• Enterprise capable
vendor with scalability

• Positive references

Exhibit 99.1

Key Features

Exhibit 99.1

Project Timeline

Project On Hold

(Divestitures)

2007

Clinical

Visioning

2005

Cerner

Selected

Feb 2009

Vendor

Evaluations

2006

Project Restart
& Vendor

Re-evaluations

2008

Pilot
Contract

Negotiation

Jun 2009

Pilot

“Go-Live”

Jun 2010

Pilot Project

Kickoff

Aug 2009

Benefits

Recognition

Study (“BRS”)

Jul - Dec 2010

Implementation:

Signed contract with
Cerner for Company-
wide implementation
starting in 2012 (1) .

Analyze

BRS

March 2011

Review

with Board

May 2011

Finalize Vendor
Selection

May 2011

(1) The installation cost will vary by hospital depending on items such as size and physical plan and are expected to be in a range
of $1 million to $1.5 million per hospital with approximately 70 - 75% of the initial spend being capital expense and the remainder
being expense.

Exhibit 99.1

Operational Metrics

Exhibit 99.1

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

(2) Includes consolidated HealthSouth inpatient rehabilitation hospitals classified as same store during that time period.

• HealthSouth’s
volume growth has
outpaced
competitors’.

• TeamWorks =
standardized and
enhanced sales &
marketing

• Bed additions will
help facilitate
continued organic
growth.

4.7%

5.9%

5.8%

5.9%

2.7%

2.5%

1.3%

2008 vs. 2009 vs. 2010 vs. Q110 vs. Q210 vs. Q310 vs. Q410 vs. Q111 vs. Q211 vs.

2007 2008 2009 Q109 Q209 Q309 Q409 Q110 Q210

Exhibit 99.1

Operational Metrics: Expense Efficiencies

(% of Net Operating Revenues)

2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011

(6 Months) (6 Months) (6 Months)

3.59 3.52 3.49 3.43

EPOB

• Salaries, Wages & Benefits reflects continued improvement from
productivity gains and growing revenue base.

• Hospital-related Expenses includes other operating, supplies,
occupancy, and bad debts expenses.

• General and Administrative excludes stock-based compensation.

• Employee per Occupied Bed “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

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

(2) Represents discharges from HealthSouth’s 94 consolidated hospitals in Q2 2011, Q1 2011, Q4 2010 and Q3 2010, 92 consolidated
hospitals in Q2 2010, and 90 consolidated hospitals in Q1 2010 and Q4 2009, 91 consolidated hospitals in Q3 2009, and 90
consolidated hospitals in Q2 2009 and Q1 2009.

(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

Payment Sources (Percent of Revenue)

(1) Managed Medicare revenues represent ~ 7%, 8%, 7%, 8% and 8% of total revenues for Q2 2011, Q2 2010, 6 Months 2011, 6 Months 2010
and Full Year 2010, respectively, and are included in “Managed care and other discount plans.”

Exhibit 99.1

Reconciliations to GAAP

Exhibit 99.1

Reconciliation of Net Income to Adjusted EBITDA (1)(3)

(1) (2) (3) - Notes on page 97.

Exhibit 99.1

Reconciliation of Net Income to Adjusted EBITDA (1)(3)

(1) (2) (3) - Notes on page 97.

Exhibit 99.1

Reconciliation of Net Income to Adjusted EBITDA (1) (3)

(1) (2) (3) - Notes on page 97.

Exhibit 99.1

Reconciliation of Net Income to Adjusted EBITDA (1) (3)

(1) (2) (3) - Notes on page 97.

Exhibit 99.1

Reconciliation of Net Income to Adjusted EBITDA (1) (3)

(1) (2) (3) - Notes on page 97.

Exhibit 99.1

Reconciliation Notes for Slides 92-96

1. Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total
consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non-
GAAP financial measure. Management and some members of the investment
community utilize Adjusted EBITDA as a financial measure and the leverage ratio as a
liquidity measure 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 Adjusted EBITDA, the reader should
be aware that in the future HealthSouth may incur expenses similar to the adjustments
set forth.

2. Per share amounts for each period presented are based on diluted weighted average
shares outstanding unless the amounts are antidilutive, in which case the per share
amount is calculated using the basic share count after subtracting the $6.5 million per
quarter dividend on the convertible perpetual preferred stock. The difference in shares
between the basic and diluted shares outstanding is primarily related to our
convertible perpetual preferred stock.

3. Adjusted EBITDA is a component of our guidance.

Exhibit 99.1

(1) (2) (3) (4) - Notes on page 99.

Exhibit 99.1

Reconciliation Notes for Slide 98

1. Adjusted income from continuing operations and Adjusted EBITDA are non-GAAP
financial measures. The Company’s leverage ratio (total consolidated debt to
Adjusted 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
EBITDA and the 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.

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 EBITDA
are two components of our historical guidance.

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

Encompass Health (EHC) 8-KRegulation FD Disclosure