Rehabcare (RHB) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE
Tuesday, February 8, 2011

REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE MERGER AGREEMENT
TO BE ACQUIRED BY KINDRED HEALTHCARE

• Excluding transaction related expenses in the 2009 fourth quarter, net earnings per diluted share increase 86.5% year over year to $0.69

• Hospital division improves EBITDA margin to 15.2% in the fourth quarter from 12.9% in the third quarter

• Impacted by regulatory changes, Skilled Nursing Rehabilitation Services division reports 5.8% operating earnings margin in the quarter, consistent with expectations

• Hospital Rehabilitation Services division delivers near record operating earnings margin of 20.6%

• Cash flow from operations of $103.8 million in 2010 allows company to pay down debt by $65.7 million and lower debt to EBITDA ratio to 2.4

ST. LOUIS, MO, February 8, 2011—RehabCare Group, Inc. (NYSE:RHB) today reported the following unaudited financial results.

	Fourth			Third			Fourth			Year Ended
	Quarter			Quarter			Quarter			December 31,
Amounts in millions, except per share data	2010			2010			2009			2010			2009
										(unaudited)
Consolidated Operating Revenues	$	339.3		$	337.5		$	249.8		$	1,329.4		$	848.6
Consolidated Operating Earnings (a)		36.1			33.7			6.5			133.6			40.9
Consolidated Net Earnings from Continuing Operations		18.6			16.2			—			64.9			19.6
Gain from Discontinued Operations, Net of Tax (b)		0.7			0.6			0.3			1.2			1.4
Consolidated Net Earnings		19.3			16.8			0.3			66.1			21.0
Net (Earnings) Loss Attributable to Noncontrolling Interests		(2.2	)		(1.1	)		0.4			(3.6	)		2.0
Net Earnings Attributable to RehabCare		17.1			15.7			0.7			62.5			23.0
Diluted Earnings per Share Attributable to RehabCare:
Earnings from Continuing Operations, Net of Tax		0.66			0.61			0.02			2.48			1.14
Net Earnings		0.69			0.64			0.03			2.53			1.22
Hospital Operating Revenues		164.8			160.9			78.9			633.2			174.2
Hospital EBITDA (a)		25.1			20.7			(6.2	)		84.3			(18.5	)
Hospital Operating Earnings (Loss) (a)		19.2			14.8			(9.2	)		61.5			(26.1	)
SRS Operating Revenues		128.1			130.9			126.0			516.3			496.3
SRS EBITDA (a)		8.8			11.7			9.8			44.7			44.0
SRS Operating Earnings (a)		7.4			10.4			8.4			39.2			37.8
HRS Inpatient Operating Revenues		33.7			32.6			33.3			129.1			130.9
HRS Outpatient Operating Revenues		12.7			13.0			11.7			50.9			47.3
HRS Operating Revenues		46.4			45.6			45.0			180.0			178.2
HRS EBITDA (a)		10.2			9.1			7.9			35.1			31.9
HRS Operating Earnings (a)		9.6			8.5			7.3			32.9			29.5

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

(a)	The fourth quarter and year ended December 31, 2009, include certain transaction related pretax charges of $9.4 million, or $0.34 per diluted share (see table on page 10).
(b)	The years ended December 31, 2010 and 2009 include after-tax gains from the discontinued operations of an inpatient rehabilitation facility in Miami of $1.2 million and $2.2 million, respectively. The year ended December 31, 2009, also includes a $0.8 million after-tax loss related to the Company’s Phase 2 Consulting business.

Management Comments

          “2010 was a period of transformation for our Hospital division, which finished the year on a high note,” commented John H. Short, Ph.D., RehabCare President and Chief Executive Officer. “Stronger census in the Houston market, substantial improvement of underperforming hospitals and an emphasis on cost management combined for significant margin expansion in the fourth quarter.”

          Dr. Short continued, “As expected, our Skilled Nursing Rehabilitation Services division experienced the repercussions of major regulatory changes in the fourth quarter. While same store revenues improved, earnings were compressed by lower productivity, and thus higher labor costs, as we ramped up staffing to provide more individual therapy. Given our ability to respond quickly and effectively to market pressures, we expect a steady recovery during 2011.

          “The Hospital Rehabilitation Services division delivered an exceptional earnings performance, with inpatient rehabilitation facility (IRF) same store volume growth of 6.8% driven in part by our automated pre-admission screening process. We will continue to leverage technology to streamline operations as well as position us for more integrated care.”

Proposed Acquisition by Kindred Healthcare, Inc.

          In a separate release earlier today, the Company announced that its Board of Directors unanimously approved a definitive merger agreement to be acquired by Kindred Healthcare, Inc. (NYSE: KND), which was entered into February 7, 2011. It is expected that the pending transaction will be completed on or about June 30, 2011.

          “Our combination with Kindred creates the nation’s premier provider of services along the post-acute continuum,” stated Dr. Short. “In addition to delivering significant shareholder value, our blended organization will provide an unmatched depth of services, resources and experience for our patients, clients and clinical professionals across the country. We are pleased that the RehabCare brand, which has been synonymous with high-quality, innovative post-acute care for nearly 30 years, will represent the combined company’s contract rehabilitation services going forward.”

Financial Overview of Fourth Quarter

          Consolidated operating revenues for the fourth quarter of 2010 were $339.3 million, a 35.8% increase compared to $249.8 million in the 2009 fourth quarter. Excluding Triumph, which contributed revenues of $117.8 million in the 2010 fourth quarter and $39.7 million in the 2009 fourth quarter, consolidated operating revenues increased $11.4 million, or 5.4%.

          Consolidated net earnings attributable to RehabCare were $17.1 million, or $0.69 per diluted share, in the fourth quarter of 2010 compared to $0.7 million, or $0.03 per diluted share, in the prior year

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

quarter. Earnings in the fourth quarter of 2009 included $7.2 million, or $0.34 per diluted share, of certain after-tax charges, substantially all of which related to the Triumph merger (see table on page 10).

          The Company’s IRF in Miami has been classified as a discontinued operation as a result of an agreement with Select Medical Corporation, which closed on January 1, 2011, that involved the exchange of the IRF for Select’s 70-bed long-term acute care hospital (LTACH) in northwest Indiana. The Company generated income from this discontinued operation, net of tax, of $0.7 million, or $0.03 per diluted share, in the fourth quarter of 2010 and approximately $0.3 million, or $0.01 per diluted share, in the 2009 fourth quarter.

          Operating revenues in theHospitaldivision for the fourth quarter of 2010 increased $3.8 million, or 2.4%, sequentially to $164.8 million. Same store revenues increased $2.9 million, or 1.8% on a sequential basis. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved by $4.4 million sequentially to $25.1 million, or 15.2% of revenue.

          At year end, the Hospital division operated a total of 34 hospitals, including 29 LTACHs and five IRFs.

          Operating revenues in theSkilled Nursing Rehabilitation Services (SRS)division increased 1.7% from $126.0 million in the fourth quarter of 2009 to $128.1 million in the fourth quarter of 2010, driven by a 2.2% increase in the average number of contract therapy programs operated. Contract therapy same store revenues increased 3.2%. Operating earnings were $7.4 million, or 5.8% of revenue, compared to $8.4 million, or 6.6% of revenue, in the fourth quarter of 2009.

          On December 31, 2010, SRS operated in 1,112 locations compared to 1,131 locations at the end of the third quarter of 2010 and 1,118 locations at the end of the fourth quarter of 2009. Openings and closings in the quarter totaled 38 and 57, respectively, resulting in a net 19 fewer units. SRS had 39 signed but unopened contracts at the end of the fourth quarter.

          In December, the Medicare Part B physician fee schedule and therapy cap exceptions process were extended through December 31, 2011.

          TheHospital Rehabilitation Services (HRS)division’s 2010 fourth quarter operating revenues increased 3.3% to $46.4 million from $45.0 million in the fourth quarter of 2009. Inpatient operating revenues increased 1.2% and same store revenues improved 4.9% over the prior year quarter. The average number of inpatient programs declined 1.5% compared to the prior year quarter. Outpatient operating revenues increased 9.0% in the 2010 fourth quarter despite an 11.8% decline in the average number of outpatient programs. This was driven by a 23.7% improvement in average revenue per program including 10.5% same store growth in outpatient revenues. HRS operating earnings were $9.6 million, or 20.6% of revenue, compared to operating earnings of $7.3 million, or 16.3% of revenue, for the 2009 fourth quarter.

          At December 31, 2010, the division operated 105 IRF programs, down one both sequentially and from a year ago. The division had two IRF openings and three IRF closings, one outpatient opening and one outpatient closing during the fourth quarter. At year end, the number of signed but unopened contracts was six, including three IRFs.

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

Balance Sheet and Liquidity

          At December 31, 2010, the Company had $23.2 million in cash and cash equivalents and $398.5 million in outstanding debt excluding unamortized original issue discounts. The Company has paid down debt by $65.7 million during 2010. Days sales outstanding (DSO) remained flat sequentially at 61.9 days.

          For the year ended December 31, 2010, the Company generated cash from operations of $103.8 million and expended $30.6 million for capital expenditures, related to hospital start-ups, upgraded services at several hospitals, companywide information systems and hospital facility maintenance capital.

Outlook

              The Company does not provide consolidated revenue and earnings per share guidance, but provides the following outlook for 2011:

• The Hospital division expects total year revenue of $700 to $725 million and EBITDA margin of 14% to 15%, with sequentially improving margins throughout the year. This outlook reflects a net 1.0% lower Medicare reimbursement adjustment for the Company’s LTACHs in the current rate year.

• The Skilled Nursing Rehabilitation Services division expects total year revenue of $525 to $540 million and operating earnings margins to progressively improve from approximately 5.5% to 7% by year end. This reflects the impact of regulatory changes, including the Multiple Procedure Payment Reduction rule, new concurrent therapy rules and the rollout of information system technologies to be completed in April 2011.

• The Hospital Rehabilitation Services division expects full year revenue of $185 to $200 million and comparable quarterly operating earnings margins as achieved in 2010.

• The effective tax rate, after consideration of noncontrolling interests, is anticipated to be 38.25% for the year.

• Net income attributable to noncontrolling interests is expected to approximate $5 to $6 million for the full year.

• DSO is expected to be between 60 and 63 days.

• Capital expenditures are anticipated to be $25 million in 2011, consisting of $8 million of information systems investments, $7.5 million in expansion projects and $9.5 million related to maintenance.

Conference Call Information

          As noted in today’s separate acquisition announcement, Kindred and RehabCare management will host a conference call on February 8, 2011, beginning at 8:30 AM Eastern standard time. Listeners may access the call by dialing (913) 312-1305, or in a listen-only mode through Kindred’s website at www.kindredhealthcare.com.

          A replay of the call will be available beginning at approximately 11:30 AM Eastern on February 8 by dialing (719) 457-0820, access code 7191328. The replay will be available through February 16.

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

About RehabCare Group

     Established in 1982 and headquartered in St. Louis, MO, RehabCare (www.rehabcare.com) is a leading provider of post-acute care, owning and operating 34 long-term acute care and rehabilitation hospitals and providing program management services in partnership with over 1,250 hospitals and skilled nursing facilities in 42 states and Puerto Rico. RehabCare is included in the Russell 2000 and Standard and Poor’s Small Cap 600 Indices.

Additional Information About the Transaction Between RehabCare and Kindred Healthcare, Inc.

In connection with the proposed transaction between Kindred and RehabCare, Kindred will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Kindred and RehabCare that also constitutes a prospectus of Kindred. RehabCare and Kindred will mail the definitive proxy statement/prospectus to their respective stockholders.WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.You may obtain a free copy of the joint proxy statement/prospectus (when available) and other related documents filed by RehabCare and Kindred with the SEC at the SEC’s website at www.sec.gov. The joint proxy statement/prospectus (when available) and the other documents filed by RehabCare and Kindred with the SEC may also be obtained for free by accessing RehabCare’s website at www.rehabcare.com and clicking on the “Investor Information” link and then clicking on the link for “SEC Filings”, and Kindred’s website at www.kindredhealthcare.com and clicking on the “Investors” link and then clicking on the link for “SEC Filings”.

Participants in the Transaction

RehabCare, Kindred, and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from their respective stockholders in favor of the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of stockholders in connection with the proposed transaction will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about RehabCare’s executive officers and directors in its definitive proxy statement filed with the SEC on March 23, 2010. You can find information about Kindred’s executive officers and directors in Kindred’s definitive proxy statement filed with the SEC on April 1, 2010. You can obtain free copies of these documents from RehabCare or Kindred, respectively, from the RehabCare and Kindred websites using the contact information above.

Forward-Looking Statements

Information set forth in this document contains forward-looking statements, which involve a number of risks and uncertainties. RehabCare cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to, statements about the benefits of the business combination transaction involving RehabCare and Kindred, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain regulatory approvals of the transaction on the proposed terms and schedule; the failure of RehabCare and Kindred stockholders to approve the transaction; failure to obtain the necessary financing for the transaction; the failure to consummate or delay in consummating the proposed merger for other reasons; the outcome of pending or potential litigation or governmental investigations; the risk that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; uncertainty of the expected financial performance of Kindred following completion of the proposed transaction; Kindred’s ability to achieve the cost savings and synergies contemplated by the proposed transaction within the expected time frame; disruption from the proposed transaction making it more difficult to maintain relationships with customers, employees or suppliers; and general economic conditions that are less favorable than expected. Additional factors that may affect future results are contained in RehabCare’s and Kindred’s filings with the SEC, which are available at the SEC’s web site at www.sec.gov. Many of these factors are beyond the control of RehabCare or Kindred. RehabCare and Kindred disclaim any obligation to update and revise statements contained in these materials based on new information or otherwise.

     This press release contains non-GAAP financial measures as such term is defined in Regulation G under the rules of the Securities and Exchange Commission. While the Company believes these non-GAAP financial measures are useful in evaluating the Company, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from similarly titled measures presented by other companies. The Company has included reconciliations of these non-GAAP measures to the most directly comparable GAAP measure in the tables of this release.

CONTACT: RehabCare Group, Inc.
Financial: Jay W. Shreiner, Chief Financial Officer
(314) 659-2189
Press: Donna Lee, Office of the CEO
(314) 659-2287

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

I. Condensed Consolidated Statements of Earnings
(Unaudited; amounts in thousands, except per share data)

	Three Months Ended									Year Ended
	Dec. 31,			Sept. 30,			Dec. 31,			Dec. 31,			Dec. 31,
	2010			2010			2009			2010			2009
Operating revenues	$	339,344		$	337,481		$	249,807		$	1,329,443		$	848,612
Costs and expenses:
Operating		267,836			269,078			204,403			1,056,671			684,312
Selling, general and administrative		27,397			26,872			33,876			108,618			107,130
Depreciation and amortization		7,998			7,801			5,058			30,595			16,250
Total costs and expenses		303,231			303,751			243,337			1,195,884			807,692
Operating earnings		36,113			33,730			6,470			133,559			40,920
Interest income		20			32			79			98			98
Interest expense		(7,866	)		(8,250	)		(3,927	)		(33,167	)		(5,546	)
Other income (expense), net		312			5			8			319			12
Equity in net income of affiliates		199			114			105			640			431
Earnings from continuing operations before income taxes		28,778			25,631			2,735			101,449			35,915
Income tax expense		10,148			9,394			2,689			36,559			16,291
Earnings from continuing operations		18,630			16,237			46			64,890			19,624
Gain from discontinued operations		673			541			257			1,237			1,365
Net earnings		19,303			16,778			303			66,127			20,989
Net (earnings) loss attributable to noncontrolling interests		(2,250	)		(1,079	)		352			(3,677	)		1,966
Net earnings attributable to RehabCare	$	17,053		$	15,699		$	655		$	62,450		$	22,955
Amounts attributable to RehabCare:
Earnings from continuing operations	$	16,380		$	15,158		$	398		$	61,213		$	21,590
Gain from discontinued operations		673			541			257			1,237			1,365
Net earnings	$	17,053		$	15,699		$	655		$	62,450		$	22,955
Diluted EPS attributable to RehabCare:
Earnings from continuing operations	$	0.66		$	0.61		$	0.02		$	2.48		$	1.14
Gain from discontinued operations		0.03			0.03			0.01			0.05			0.08
Net earnings	$	0.69		$	0.64		$	0.03		$	2.53		$	1.22
Weighted average diluted shares		24,770			24,715			21,284			24,706			18,862

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

II. Condensed Consolidated Balance Sheets
(Amounts in thousands)

	Unaudited
	December 31,		December 31,
	2010		2009
Assets
Cash and cash equivalents	$	23,205	$	24,690
Accounts receivable, net		222,179		199,447
Deferred tax assets		21,034		21,249
Other current assets		14,559		19,530
Total current assets		280,977		264,916
Property and equipment, net		119,591		111,814
Goodwill		559,866		566,078
Intangible assets		127,227		135,406
Investment in unconsolidated affiliate		4,913		4,761
Assets held for sale		10,407		—
Other assets		23,588		27,005
	$	1,126,569	$	1,109,980
Liabilities & Equity
Current portion of long-term debt	$	9,116	$	7,507
Payables & accruals		154,248		144,113
Total current liabilities		163,364		151,620
Long-term debt, less current portion		381,772		447,760
Other non-current liabilities		60,450		50,980
Stockholders’ equity		500,098		437,338
Noncontrolling interests		20,885		22,282
	$	1,126,569	$	1,109,980

III. Condensed Consolidated Statements of Cash Flows
(Unaudited; amounts in thousands)

	Year Ended
	December 31,
	2010			2009
Net cash provided by operating activities	$	103,838		$	48,090
Net cash used in investing activities		(30,981	)		(557,851	)
Net cash provided by (used in) financing activities		(74,342	)		507,078
Net decrease in cash and cash equivalents		(1,485	)		(2,683	)
Cash and cash equivalents at beginning of period		24,690			27,373
Cash and cash equivalents at end of period	$	23,205		$	24,690
Supplemental information:
Additions to property and equipment	$	(30,579	)	$	(13,215	)

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

IV. Operating Statistics (Unaudited; dollars in thousands)

	Fourth			Third			Fourth			Year Ended
	Quarter			Quarter			Quarter			December 31,
	2010			2010			2009			2010			2009
Hospitals (a)
Operating revenues	$	164,778		$	160,937		$	78,876		$	633,156		$	174,194
Operating expenses		128,423			129,541			69,039			505,722			157,093
Selling, general and administrative		11,247			10,694			16,055			43,134	��		35,623
Depreciation and amortization		5,946			5,873			3,003			22,850			7,544
Operating earnings (loss)	$	19,162		$	14,829		$	(9,221	)	$	61,450		$	(26,066	)
Operating earnings margin		11.6	%		9.2	%		-11.7	%		9.7	%		-15.0	%
EBITDA	$	25,108		$	20,702		$	(6,218	)	$	84,300		$	(18,522	)
LTACHs
Number of hospitals — end of period		29			29			28			29			28
Available licensed beds — end of period		1,605			1,605			1,593			1,605			1,593
Admissions		3,680			3,754			1,767			14,519			3,604
Patient days		96,834			96,424			47,596			376,567			94,394
Average length of stay (Medicare days only)		25			25			27			26			26
Net inpatient revenue per patient day	$	1,545		$	1,513		$	1,342		$	1,523		$	1,267
Occupancy rate		66	%		65	%		67	%		64	%		63	%
Percent patient days — Medicare		74	%		74	%		72	%		73	%		72	%
IRFs (a)
Number of hospitals — end of period		5			5			5			5			5
Available licensed beds — end of period		183			183			183			183			183
Admissions		921			905			871			3,590			3,513
Discharges		935			894			891			3,587			3,477
Average length of stay (Medicare days only)		12			12			12			12			12
Net inpatient revenue per discharge	$	14,504		$	14,955		$	15,042		$	14,692		$	14,273
Occupancy rate		68	%		70	%		68	%		69	%		67	%
Percent patient days — Medicare		71	%		67	%		69	%		69	%		70	%

(a) Amounts in all periods exclude West Gables Rehabilitation Hospital, which was held for sale as of December 31, 2010, and accounted for as a discontinued operation.

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REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

IV. Operating Statistics Continued (Unaudited; dollars in thousands)

	Fourth			Third			Fourth			Year Ended
	Quarter			Quarter			Quarter			December 31,
	2010			2010			2009			2010			2009
Skilled Nursing Rehabilitation Services
Operating revenues	$	128,132		$	130,943		$	125,965		$	516,278		$	496,250
Operating expenses		107,344			107,067			103,698			423,399			402,461
Selling, general and administrative		11,950			12,138			12,448			48,172			49,753
Depreciation and amortization		1,466			1,385			1,463			5,523			6,283
Operating earnings	$	7,372		$	10,353		$	8,356		$	39,184		$	37,753
Operating earnings margin		5.8	%		7.9	%		6.6	%		7.6	%		7.6	%
EBITDA	$	8,838		$	11,738		$	9,819		$	44,707		$	44,036
Average number of contract therapy locations		1,146			1,136			1,121			1,135			1,088
End of period number of contract therapy locations		1,112			1,131			1,118			1,112			1,118
Patient visits (in thousands)		2,008			2,054			2,023			8,162			8,056
Hospital Rehabilitation Services
Operating revenues
Inpatient Rehabilitation Facility (IRF)	$	31,469		$	30,144		$	31,294		$	120,238		$	123,661
Subacute		2,217			2,454			1,981			8,890			7,202
Total Inpatient	$	33,686		$	32,598		$	33,275		$	129,128		$	130,863
Outpatient		12,748			13,003			11,691			50,881			47,305
Total HRS	$	46,434		$	45,601		$	44,966		$	180,009		$	178,168
Operating expenses		32,069			32,470			31,666			127,550			124,758
Selling, general and administrative		4,200			4,040			5,373			17,312			21,500
Depreciation and amortization		586			543			592			2,222			2,423
Operating earnings	$	9,579		$	8,548		$	7,335		$	32,925		$	29,487
Operating earnings margin		20.6	%		18.7	%		16.3	%		18.3	%		16.6	%
EBITDA	$	10,165		$	9,091		$	7,927		$	35,147		$	31,910
Average number of programs
IRF		106			106			110			105			112
Subacute		11			11			9			11			9
Total Inpatient		117			117			119			116			121
Outpatient		30			31			34			31			35
Total HRS		147			148			153			147			156
End of period number of programs
IRF		105			106			106			105			106
Subacute		11			11			9			11			9
Total Inpatient		116			117			115			116			115
Outpatient		30			30			30			30			30
Total HRS		146			147			145			146			145
IRF discharges		11,136			10,473			10,907			41,992			44,123
Outpatient visits (in thousands)		263			274			305			1,078			1,264

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Page 10

REHABCARE REPORTS FOURTH QUARTER,
FISCAL YEAR 2010 RESULTS AND 2011 OUTLOOK;
ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY KINDRED HEALTHCARE

V. Charges/Credits Included in Statement of Earnings

(Amounts in thousands, except per share data)

	Fourth Quarter 2009
	Pre-Tax Impact		After-Tax Impact		Diluted EPS
Transaction expenses1	$	7,070	$	4,313	$	0.20
Tax impact of non-deductible transaction expenses2		—		1,502		0.07
Severance expenses3		862		526		0.03
Long-term incentive plan expense resulting from transaction2		1,443		880		0.04
		—		—		—
	$	9,375	$	7,221	$	0.34
Breakdown by division
Hospitals	$	8,405
Skilled Nursing Rehabilitation Services		648
Hospital Rehabilitation Services		322
	$	9,375

1	$6,781 pretax related to the Triumph merger
2	Transaction expenses directly related to the Triumph merger
3	Severance expenses were primarily incurred in an effort to reduce corporate overhead and eliminate redundancies created by the Triumph merger

VI. Operating Earnings and EBITDA Reconciliation

	Fourth			Third			Fourth			Year Ended
	Quarter			Quarter			Quarter			December 31,
	2010			2010			2009			2010			2009
Net earnings	$	19,303		$	16,778		$	303		$	66,127		$	20,989
Income tax expense		10,148			9,394			2,689			36,559			16,291
Interest income		(20	)		(32	)		(79	)		(98	)		(98	)
Interest expense		7,866			8,250			3,927			33,167			5,546
Other (income) expense, net		(312	)		(5	)		(8	)		(319	)		(12	)
Equity in net income of affiliates		(199	)		(114	)		(105	)		(640	)		(431	)
Gain from discontinued operations		(673	)		(541	)		(257	)		(1,237	)		(1,365	)
Operating earnings		36,113			33,730			6,470			133,559			40,920
Depreciation and amortization		7,998			7,801			5,058			30,595			16,250
Consolidated EBITDA	$	44,111		$	41,531		$	11,528		$	164,154		$	57,170
Hospital operating earnings (loss)	$	19,162		$	14,829		$	(9,221	)	$	61,450		$	(26,066	)
Hospital depreciation and amortization		5,946			5,873			3,003			22,850			7,544
Hospital EBITDA	$	25,108		$	20,702		$	(6,218	)	$	84,300		$	(18,522	)
SRS operating earnings	$	7,372		$	10,353		$	8,356		$	39,184		$	37,753
SRS depreciation and amortization		1,466			1,385			1,463			5,523			6,283
SRS EBITDA	$	8,838		$	11,738		$	9,819		$	44,707		$	44,036
HRS operating earnings	$	9,579		$	8,548		$	7,335		$	32,925		$	29,487
HRS depreciation and amortization		586			543			592			2,222			2,423
HRS EBITDA	$	10,165		$	9,091		$	7,927		$	35,147		$	31,910

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