Rehabcare (RHB) 8-K Rehabcare Reports First Quarter 2011 Results

EXHIBIT 99.1

FOR IMMEDIATE RELEASE
Thursday, April 28, 2011

REHABCARE REPORTS FIRST QUARTER 2011 RESULTS

• Net earnings per diluted share from continuing operations increase 20.3% year over year to $0.71, including $4.8 million pretax, or $0.12 per diluted share after tax, of transaction related expenses in the 2011 first quarter

• Hospital division improves EBITDA margin to 17.6% in the 2011 first quarter from 12.9% in the prior year quarter

• Skilled Nursing Rehabilitation Services division reports operating earnings margin in line with expectations of 5.8%; increases unit count by a net 66 new units

• Hospital Rehabilitation Services division delivers operating earnings margin of 18.7%

• Cash flow from operations of $19.8 million in first quarter allows company to pay down debt by $18.3 million

ST. LOUIS, MO, April 28, 2011—RehabCare Group, Inc. (NYSE:RHB) today reported the following financial results:

	First			Fourth			First
	Quarter			Quarter			Quarter
Amounts in millions, except per share data	2011			2010			2010
Consolidated Operating Revenues	$	364.6		$	339.3		$	322.0
Consolidated Operating Earnings (a)		37.8			36.1			31.6
Consolidated Net Earnings from Continuing Operations		19.5			18.6			14.3
Gain from Discontinued Operations, Net of Tax (b)		2.9			0.7			0.5
Consolidated Net Earnings		22.4			19.3			14.8
Net (Earnings) Loss Attributable to Noncontrolling Interests		(1.6	)		(2.2	)		0.2
Net Earnings Attributable to RehabCare		20.8			17.1			15.0
Diluted Earnings per Share Attributable to RehabCare:
Earnings from Continuing Operations, Net of Tax		0.71			0.66			0.59
Net Earnings		0.83			0.69			0.61
Hospital Operating Revenues		181.4			164.8			152.4
Hospital EBITDA		32.0			25.1			19.7
Hospital Operating Earnings		25.9			19.2			14.3
SRS Operating Revenues		136.9			128.1			126.4
SRS EBITDA		9.6			8.8			11.7
SRS Operating Earnings		8.0			7.4			10.3
HRS Inpatient Operating Revenues		33.1			33.7			31.1
HRS Outpatient Operating Revenues		13.3			12.7			12.1
HRS Operating Revenues		46.4			46.4			43.2
HRS EBITDA		9.2			10.2			7.5
HRS Operating Earnings		8.7			9.6			6.9

REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 2

(a)	The first quarter of 2011 includes certain transaction expenses related to the pending merger with Kindred Healthcare, Inc. of $4.8 million on a pretax basis, or $3.0 million after tax (see table on page 9). These costs have not been allocated to the Hospital, Skilled Nursing or Hospital Rehabilitation Services divisions.
(b)	The after-tax gain from discontinued operations of approximately $3.0 million in the first quarter of 2011 includes a $3.1 million after-tax gain on the sale of an inpatient rehabilitation facility (IRF) in Miami and a $0.1 million after-tax loss from the Miami IRF’s discontinued operating activities.

Management Comments

     John H. Short, Ph.D., RehabCare President and Chief Executive Officer, commented, “We had a great first quarter with strong year-over-year earnings growth, primarily the result of significantly improved operations and volumes in our Hospital division. The anticipated benefits of our merger with Triumph HealthCare have come to fruition.”

Financial Overview of First Quarter

     Consolidated operating revenues for the first quarter of 2011 were $364.6 million, a 13.2% increase compared to $322.0 million in the 2010 first quarter.

     Consolidated net earnings attributable to RehabCare were $20.8 million, or $0.83 per diluted share, in the first quarter of 2011 compared to $15.0 million, or $0.61 per diluted share, in the prior year quarter. Earnings in the first quarter of 2011 included $3.0 million, or $0.12 per diluted share, of after-tax expenses for certain transaction costs related to the pending merger with Kindred (see table on page 9). Earnings in the first quarter of 2011 also included a $3.0 million after-tax gain from discontinued operations.

     Effective January 1, 2011, the Company sold its inpatient rehabilitation facility (IRF) in Miami to Select Medical Corporation in exchange for Select’s 70-bed long-term acute care hospital (LTACH) in Hammond, Indiana. The Company’s $3.0 million after-tax gain from discontinued operations in the first quarter of 2011 includes a $3.1 million gain on the sale of the Miami IRF and a $0.1 million after-tax loss from the IRF’s discontinued operating activities.

     Operating revenues in theHospitaldivision for the first quarter of 2011 increased 19.0% to $181.4 million from $152.4 million in the first quarter of 2010. Same store revenues increased $13.2 million, or 8.7% compared to the year ago quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved from $19.7 million, or 12.9% of revenue, in the first quarter of 2010 to $32.0 million, or 17.6% of revenue, in the first quarter of 2011.

     At quarter end, the Hospital division operated a total of 35 hospitals, including 30 LTACHs and five IRFs.

     Operating revenues in theSkilled Nursing Rehabilitation Services (SRS)division increased 8.3% from $126.4 million in the first quarter of 2010 to $136.9 million in the first quarter of 2011, driven by a 2.4% increase in the average number of contract therapy programs operated and a 9.9% increase in contract therapy same store revenues. Operating earnings were $8.0 million, or 5.8% of revenue, compared to $10.3 million, or 8.2% of revenue, in the first quarter of 2010.

     On March 31, 2011, SRS operated in 1,178 locations compared to 1,112 locations at the end of the fourth quarter of 2010 and 1,125 locations at the end of the first quarter of 2010. Openings and closings in

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 3

the quarter totaled 89 and 23, respectively, resulting in a net 66 new units. SRS had 12 signed but unopened contracts at the end of the first quarter.

     TheHospital Rehabilitation Services (HRS)division’s 2011 first quarter operating revenues increased 7.2% to $46.4 million from $43.2 million in the first quarter of 2010. Inpatient operating revenues increased 6.3% and same store acute revenues improved 5.4% over the prior year quarter. The average number of inpatient programs increased 0.9% compared to the prior year quarter. Outpatient operating revenues increased 9.5% in the 2011 first quarter despite a 3.6% decline in the average number of outpatient programs. This was driven by a 13.6% improvement in average revenue per program including 9.2% same store growth in outpatient revenues. HRS operating earnings were $8.7 million, or 18.7% of revenue, compared to operating earnings of $6.9 million, or 16.0% of revenue, for the 2010 first quarter.

     At December 31, 2010, the division operated 105 IRF programs, flat sequentially and up from 103 a year ago. The division had one IRF opening and one IRF closing, one subacute opening, one outpatient opening and two outpatient closings during the first quarter. At March 31, 2011, the division had one signed but unopened IRF.

Balance Sheet and Liquidity

     At March 31, 2011, the Company had $33.6 million in cash and cash equivalents and $380.2 million in outstanding debt excluding unamortized original issue discounts. The Company has paid down debt by $18.3 million since the beginning of the year. Days sales outstanding decreased sequentially from 61.9 days to 61.6 days.

     For the quarter ended March 31, 2011, the Company generated cash from operations of $19.8 million and expended $3.1 million for capital expenditures, principally related to companywide information systems and hospital facility maintenance capital.

Outlook

     In connection with its pending merger with Kindred Healthcare, the Company has suspended its 2011 outlook.

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 35 long-term acute care and rehabilitation hospitals and providing program management services in partnership with over 1,300 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.

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

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 4

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.

     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 FIRST QUARTER 2011 RESULTS Page 5

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

	Three Months Ended
	Mar. 31,			Dec. 31,			Mar. 31,
	2011			2010			2010
Operating revenues	$	364,599		$	339,344		$	321,954
Costs and expenses:
Operating		284,980			267,836			256,636
Selling, general and administrative		33,603			27,397			26,535
Depreciation and amortization		8,223			7,998			7,218
Total costs and expenses		326,806			303,231			290,389
Operating earnings		37,793			36,113			31,565
Interest income		12			20			18
Interest expense		(7,468	)		(7,866	)		(8,500	)
Other income (expense), net		(14	)		312			7
Equity in net income of affiliates		163			199			116
Earnings from continuing operations before income taxes		30,486			28,778			23,206
Income tax expense		11,024			10,148			8,941
Earnings from continuing operations		19,462			18,630			14,265
Gain from discontinued operations		2,968			673			564
Net earnings		22,430			19,303			14,829
Net (earnings) loss attributable to noncontrolling interests		(1,665	)		(2,250	)		164
Net earnings attributable to RehabCare	$	20,765		$	17,053		$	14,993
Amounts attributable to RehabCare:
Earnings from continuing operations	$	17,797		$	16,380		$	14,429
Gain from discontinued operations		2,968			673			564
Net earnings	$	20,765		$	17,053		$	14,993
Diluted EPS attributable to RehabCare:
Earnings from continuing operations	$	0.71		$	0.66		$	0.59
Gain from discontinued operations		0.12			0.03			0.02
Net earnings	$	0.83		$	0.69		$	0.61
Weighted average diluted shares		25,025			24,770			24,655

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 6

II. Condensed Consolidated Balance Sheets
(Amounts in thousands)

	Unaudited
	March 31,		December 31,
	2011		2010
Assets
Cash and cash equivalents	$	33,622	$	23,205
Accounts receivable, net		249,015		231,311
Deferred tax assets		24,094		21,034
Other current assets		11,221		14,559
Total current assets		317,952		290,109
Property and equipment, net		117,386		119,591
Goodwill		567,863		559,866
Intangible assets		129,576		127,227
Investment in unconsolidated affiliate		4,924		4,913
Assets held for sale		—		10,407
Other assets		22,639		23,588
	$	1,160,340	$	1,135,701
Liabilities & Equity
Current portion of long-term debt	$	7,791	$	9,116
Payables & accruals		169,292		163,380
Total current liabilities		177,083		172,496
Long-term debt, less current portion		365,138		381,772
Other non-current liabilities		62,050		60,450
Stockholders’ equity		534,942		500,098
Noncontrolling interests		21,127		20,885
	$	1,160,340	$	1,135,701

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

	Year Ended
	March 31,
	2011			2010
Net cash provided by operating activities	$	19,843		$	8,511
Net cash used in investing activities		(1,007	)		(5,151	)
Net cash provided by (used in) financing activities		(8,419	)		(699	)
Net increase in cash and cash equivalents		10,417			2,661
Cash and cash equivalents at beginning of period		23,205			24,690
Cash and cash equivalents at end of period	$	33,622		$	27,351
Supplemental information:
Additions to property and equipment	$	(3,140	)	$	(5,241	)

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 7

IV. Operating Statistics
(Unaudited; dollars in thousands)

	First			Fourth			First
	Quarter			Quarter			Quarter
	2011			2010			2010
Hospitals (a)
Operating revenues	$	181,374		$	164,778		$	152,362
Operating expenses		137,726			128,423			122,148
Selling, general and administrative		11,670			11,247			10,541
Depreciation and amortization		6,052			5,946			5,374
Operating earnings	$	25,926		$	19,162		$	14,299
Operating earnings margin		14.3	%		11.6	%		9.4	%
EBITDA	$	31,978		$	25,108		$	19,673
LTACHs
Number of hospitals — end of period		30			29			28
Available licensed beds — end of period		1,696			1,605			1,593
Admissions		3,982			3,680			3,563
Patient days		105,023			96,834			90,455
Average length of stay (Medicare days only)		27			25			27
Net inpatient revenue per patient day	$	1,586		$	1,545		$	1,519
Occupancy rate		69	%		66	%		63	%
Percent patient days — Medicare		75	%		74	%		73	%
IRFs (a)
Number of hospitals — end of period		5			5			5
Available licensed beds — end of period		183			183			183
Admissions		885			921			903
Discharges		872			935			868
Average length of stay (Medicare days only)		12			12			13
Net inpatient revenue per discharge	$	15,112		$	14,504		$	15,022
Occupancy rate		68	%		68	%		70	%
Percent patient days — Medicare		72	%		71	%		71	%

(a) Amounts in all periods exclude West Gables Rehabilitation Hospital, which was sold effective January 1, 2011, and accounted for as a discontinued operation.

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 8

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

	First			Fourth			First
	Quarter			Quarter			Quarter
	2011			2010			2010
Skilled Nursing Rehabilitation Services
Operating revenues	$	136,871		$	128,132		$	126,352
Operating expenses		114,500			107,344			103,333
Selling, general and administrative		12,781			11,950			11,367
Depreciation and amortization		1,595			1,466			1,307
Operating earnings	$	7,995		$	7,372		$	10,345
Operating earnings margin		5.8	%		5.8	%		8.2	%
EBITDA	$	9,590		$	8,838		$	11,652
Average number of contract therapy locations		1,158			1,146			1,131
End of period number of contract therapy locations		1,178			1,112			1,125
Patient visits (in thousands)		2,161			2,008			2,020
Hospital Rehabilitation Services
Operating revenues
Inpatient Rehabilitation Facility (IRF)	$	30,745		$	31,469		$	29,016
Subacute		2,326			2,217			2,094
Total Inpatient	$	33,071		$	33,686		$	31,110
Outpatient		13,283			12,748			12,130
Total HRS	$	46,354		$	46,434		$	43,240
Operating expenses		32,754			32,069			31,155
Selling, general and administrative		4,365			4,200			4,627
Depreciation and amortization		576			586			537
Operating earnings	$	8,659		$	9,579		$	6,921
Operating earnings margin		18.7	%		20.6	%		16.0	%
EBITDA	$	9,235		$	10,165		$	7,458
Average number of programs
IRF		104			106			104
Subacute		11			11			10
Total Inpatient		115			117			114
Outpatient		29			30			31
Total HRS		144			147			145
End of period number of programs
IRF		105			105			103
Subacute		12			11			10
Total Inpatient		117			116			113
Outpatient		29			30			31
Total HRS		146			146			144
IRF discharges		10,575			11,136			10,007
Outpatient visits (in thousands)		258			263			262

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REHABCARE REPORTS FIRST QUARTER 2011 RESULTS Page 9

V. Charges/Credits Included in Statement of Earnings
(Unaudited; amounts in thousands, except per share data)

	First Quarter 2011
	Pre-Tax Impact		After-Tax Impact		Diluted EPS
Transaction expenses (a)	$	4,787	$	2,956	$	0.12

(a) Charges for investment banking, legal and accounting services associated with the Kindred Healthcare transaction and related matters.

VI. Operating Earnings and EBITDA Reconciliation
(Unaudited; amounts in thousands)

	First			Fourth			First
	Quarter			Quarter			Quarter
	2011			2010			2010
Net earnings	$	22,430		$	19,303		$	14,829
Income tax expense		11,024			10,148			8,941
Interest income		(12	)		(20	)		(18	)
Interest expense		7,468			7,866			8,500
Other (income) expense, net		14			(312	)		(7	)
Equity in net income of affiliates		(163	)		(199	)		(116	)
Gain from discontinued operations		(2,968	)		(673	)		(564	)
Operating earnings (a)		37,793			36,113			31,565
Depreciation and amortization		8,223			7,998			7,218
Consolidated EBITDA (a)	$	46,016		$	44,111		$	38,783
Hospital operating earnings (a)	$	25,926		$	19,162		$	14,299
Hospital depreciation and amortization		6,052			5,946			5,374
Hospital EBITDA (a)	$	31,978		$	25,108		$	19,673
SRS operating earnings (a)	$	7,995		$	7,372		$	10,345
SRS depreciation and amortization		1,595			1,466			1,307
SRS EBITDA (a)	$	9,590		$	8,838		$	11,652
HRS operating earnings (a)	$	8,659		$	9,579		$	6,921
HRS depreciation and amortization		576			586			537
HRS EBITDA (a)	$	9,235		$	10,165		$	7,458

(a) Certain transaction expenses related to the pending merger with Kindred Healthcare of $4.8 million on a pretax basis in the first quarter of 2011 were not allocated to the Hospital, SRS or HRS divisions.

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