Encompass Health (EHC) 8-K Healthsouth Announces Repositioning to Focus on Inpatient

Unlocking Value

Exhibit 99.2

2

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.

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-Q for the period ended June 30, 2006, the Form

10-K for the fiscal year ended December 31, 2005 and in other documents that 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.

3

Summary

•

HealthSouth’s

existing

divisions

compete

in

sectors

with

solid

growth

potential;

above-average

opportunities

exist

in

both

Inpatient

/

Post-Acute

and

Surgery

sectors

but

require

significant

additional

CAPEX

–

The Company is highly leveraged, which precludes raising new debt to fund

future growth

•

There are limited strategic and financial synergies in keeping all of

HealthSouth’s divisions together in one Company

–

In

some

instances,

the

strategic

interests

between

Inpatient

and

Surgery

are

at

cross-purposes

with

one

another

–

The

value

of

growing

the

Inpatient

/

Post-Acute

and

Surgery

segments

exceeds

the

value

of

the

limited

synergies

of

keeping

these

assets

together

•

A

divestiture

of

the

Surgery

and

Outpatient

Divisions

will

allow

the

Company

to

substantially

de-leverage.

HealthSouth

can

then

focus

on

and

pursue

growth

opportunities

in

the

Inpatient

/

Post-Acute

sector

–

ASCs enjoy high current market valuations and growth prospects

–

A spin-off or sale of the Surgery and Outpatient Divisions should be value

enhancing, especially given the Company’s tax attributes (i.e. significant

NOLs)

•

Separation

transactions

will

create

a

more

“pure-play”

investment

in

post-acute

care

4

Post-Acute Care Market Opportunity

The Post-Acute Market is Sizeable and Remains Highly Fragmented

No Post Acute Care

67%

LTAC, IPF, IRF

5%

Multiple

4%

Post-Acute Usage After Hospital Discharge

Post-Acute Market (2004A)

Home Health

11%

Skilled Nursing

13%

2004A Market Size: $126 bn

Home Health

37%

Skilled

Nursing

38%

IRF 7%

IPF 6%

Outpatient 5%

Hospice 4%

LTAC 3%

Post-Acute Growth Opportunity

Segment

Projected Growth

Inpatient Rehab Facilities (IRF)

4-6%

Home Health

5-9%

Hospice

12-15%

Long Term Acute Care (LTAC)               10-15%

Skilled Nursing

4-6%

•

Approximately 1/3 of all hospital patients go on

to use Post-Acute Care.

•

The overall Post-Acute market is expanding at

~5% annually.

•

Sector is highly fragmented, creating

consolidation opportunities across the Post-

Acute spectrum; top 3-5 players in each sector

hold the following market share:

–

<23% in IRFs

•

HLS = 14% of beds

–

<10% in Home Health

–

<20% in Hospice

–

~50% in LTAC

–

<20% in Skilled Nursing

•

Significant not-for-profit presence.

•

Home health and hospice enjoying healthy

growth rates.

•

LTAC recently hit with reimbursement rate

changes; will face admissions criteria in future.

Source: 2005 CMS, MedPAC and Wall Street research

5

Separation Rationale

Key Benefits

•

Focused management attention

–

Different referral patterns, payor contracting and technology platforms than

other segments

–

Limited synergies in existing structure

•

Alleviates existing partner / channel tension

–

Inpatient relies on alliances with acute care hospitals whereas Surgery

competes with them

•

Enhanced access to growth capital

–

Accelerated portfolio rationalization and new development opportunities

•

Potential re-branding opportunity for Surgery

6

The objectives of this reverse split are as follows:

The Company wants to bring the share price, along with the number of

outstanding shares, to a level comparable with other, similar-size healthcare

companies

A reverse split will broaden the pool of potential investors interested in investing

in HealthSouth (those who will not invest in stocks <$10/share)

Fewer shares outstanding provides greater transparency to changes in EPS

Commissions paid by shareholders based on number of shares bought or sold

will be reduced

Shareholder approval will be sought for a 1-for-5 reverse split; this reverse-split would

occur with the Company’s re-listing on NYSE.

Reverse Split