EXHIBIT 99
TEXT OF INVESTOR RELATIONS SLIDESHOW
IN USE BEGINNING MAY 1, 2001
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FORWARD-LOOKING STATEMENTS
Except for historical information discussed, the statements made today are
forward-looking statements that involve risks and uncertainties. Investors
are cautioned that such statements are only predictions and that actual
events or results may differ materially. These forward-looking statements
speak only as of this date. HEALTHSOUTH undertakes no obligation to publicly
release the results of any revisions to the forward-looking statements made
today to reflect events or circumstances after today or to reflect the
occurrence of unanticipated events. Please refer to our SEC filings for a
description of some of the factors that may affect the accuracy of such
forward-looking statements.
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HEALTHSOUTH OVERVIEW
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LEADING HEALTHCARE PROVIDER
o Over 1,900 Facilities in all 50 States and Every Major Metropolitan Market
o Largest Operator of
- inpatient and outpatient rehabilitation facilities
- freestanding outpatient surgery centers
- freestanding diagnostic centers
o Over $4 Billion in Annual Revenues with
$1.2 Billion EBITDA Run Rate
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LEADING HEALTHCARE PROVIDER
o Strong Growth Potential and Credit Profile
o Up to 100,000 Patients Treated per Day
o Approximately 85,000 Referring Physicians
o Excellent Relationships with National and Regional Payors
o Cutting-Edge Technological Innovations
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LEADING FRANCHISE
o No One Can Duplicate What We Have Built Over the Last 17 Years
o HRC Has "Virtual Patent" on Ambulatory Healthcare Delivery
o HRC Has "Virtual Patent" on Freestanding Inpatient Rehab Care
o HRC Leads the Industry in All Core Business Lines
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OUTPATIENT REHAB
COMPETITION LTM REVENUE
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Select Medical* $420MM
U.S. Physical Therapy $ 60MM
HRC $955MM
* Approximate Outpatient Rehab Revenue Only
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AMBULATORY SURGERY
COMPETITION LTM REVENUE
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AmSurg $143MM
United Surgical Partners 132MM
HRC $954MM
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DIAGNOSTIC IMAGING
COMPETITION LTM REVENUE
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Radiologix $241MM
MRII $200MM
Insight Health $146MM
HRC $304MM
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INPATIENT REHAB
COMPETITION LTM REVENUE
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RehabCare* $200MM
HRC $1,685MM
* Approximate Inpatient Rehab Revenue Only
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SIGNIFICANT PRESENCE IN EVERY MAJOR MARKET
[Graphic Omitted - Map]
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HRC'S COMPETITIVE ADVANTAGES
o Unique National Presence
o Strong Brand Equity and Relationships with Leading Professional and Amateur
Sports Organizations
[Graphic Omitted - Logos of Representative Organizations]
o Extensive Orthopaedic Expertise ("Best Practice" Techniques)
o Low-cost, Efficient Provider
o Superior Clinical Outcomes with Exceptional Patient Satisfaction
o Nationwide Credentialing Program
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SUBSTANTIAL AND DIVERSIFIED REVENUE BASE
LTM TOTAL REVENUE: $4,263 MILLION
[Graphic Omitted - Chart of Revenue Breakdown by Segment and Line of Business]
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OUR MISSION:
ENHANCE SHAREHOLDER VALUE THROUGH SUPERIOR PATIENT CARE
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ENHANCING SHAREHOLDER VALUE
KEY DRIVERS
o HRC: Healthcare Provider of Choice
o Strong Core Business
o Upside Opportunities
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HRC: PROVIDER OF CHOICE
o Demographics Favor Outpatient Services Over Traditional Acute-Care Offerings
o HRC is Clear Leader in Technological Advances
o Our Integrated Service Model Moves the Patient Through the System More
Efficiently
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HRC: PROVIDER OF CHOICE
o Strong Brand Name Reflects
- Service Excellence
- Superior Patient Outcomes
- Exceptional Patient Satisfaction
o Branding Efforts Encourage Repeat Business (Same Store Growth)
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HRC: PROVIDER OF CHOICE
o Strong Physician Relationships
- Approximately 85,000 Referring Physicians
- Superior Clinical Outcomes
- Convenience, Efficiency and State-of-the-Art Equipment
- Professional Websites and Web-Enabled Scheduling for Affiliated Physicians
o Strong Payor Relationships
- National Footprint
- Proven, Cost-Effective Outcomes
- Preferred Partner for National Electronic Claims Platform
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ENHANCING SHAREHOLDER VALUE
KEY DRIVERS
o HRC: Provider of Choice
o Strong Core Business
o Upside Opportunities
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CORE BUSINESS GENERATES 15% GROWTH
o Base Model
- Stable Pricing Across All Lines
- Modest Volume Growth (3% - 5%)
- Tight Expense Control
o NET RESULT: 15% EPS GROWTH
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GROWTH INITIATIVES
o Pricing Initiatives:
- Stopped Taking Price Cuts in 4Q99
- YTD 2001, 43% of Contracts had Pricing Increases
- Increase Orthopaedic and Plastics Mix in Surgery
- Multi-Modality Roll-Out in Diagnostics Complete
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GROWTH INITIATIVES
o Volume Initiatives:
- Enhance Cross-Referrals by Completing ISM Rollout
- Tap Into Excess Capacity
o Inpatient Rehabilitation - 80% Utilization
o Outpatient Rehabilitation - 75% Utilization
o Outpatient Surgery - 50% Utilization
o Diagnostic Imaging - 50% Utilization
- Actual Volume Growth of 3-4% in 1Q01
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EXPENSE CONTROL AND EFFICIENCY
MEDCENTERDIRECT
o Healthcare e-Procurement
o Provides:
- Increased Inventory Turns
- Enhanced Contract Compliance
- Usage and Cost Data
- Standardized Requisitions
o Rollout Complete by End of 2001
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EXPENSE CONTROL AND EFFICIENCY
SOURCE MEDICAL
o Wireless Clinical Documentation System
o Online Charting, Coding and Claims Administration
o Realizing $2-5 per Visit in Cost Savings / Net Revenue Enhancement
o Allows Clinician More Time With Patient
- Currently in Approximately 1,000 HRC Outpatient Rehabilitation Facilities
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EXPENSE CONTROL AND EFFICIENCY
REORGANIZATION AROUND LOCAL MARKETS
o Reorganized Operating Structure in 4Q99 into Outpatient and Inpatient
Divisions
o Empowered Local Management
- Physician Relationships
- Development
- Payor Contracting
o Streamlined Decision-Making Process
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SUBSTANTIAL FREE CASH FLOW
Prior Operating Strategy:
o Rapid Acquisition/Consolidation Focus
o Establish Nationwide Network
o Substantial Capex Required to Upgrade to HRC Standards
Current Operating Strategy:
o Increase Utilization of Existing Facilities (No Capex)
o Fuel Growth with De Novo Development in Select Markets
o Incorporate Technological Innovations/Partnerships to Drive Efficiencies
o Strict Return Requirements (20% ROE Hurdle Rate)
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SUBSTANTIAL FREE CASH FLOW
Change in Operating Strategy Leads to:
o High Internal Growth Rates
o Expanding Operating Margins
o Less Integration Risk
o Substantial Free Cash Flow
HRC MOVING FROM GROWTH BY ACQUISITION TO
STRONG, SUSTAINABLE GROWTH FROM OPERATIONS
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ENHANCING SHAREHOLDER VALUE
KEY DRIVERS
o HRC: Provider of Choice
o Strong Core Business
o Upside Opportunities
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UPSIDE OPPORTUNITIES
SURGERY SYNDICATIONS
o Opportunity to Bring in New Surgeons to Drive Case Volumes
o Goal of Adding 1,000 New Surgical Partners
o Operating at 50% Capacity Today; Incremental Volume is High Margin (40%+)
o Focus on Orthopaedics and Plastics
- Superior Pricing
- High Private Pay on Plastics
o Solidifies Physician Relationship; Enhances Cross-Referrals for Physical
Therapy and Diagnostic
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UPSIDE OPPORTUNITIES
SURGERY SYNDICATIONS - POTENTIAL IMPACT
o 1,000 New Surgical Partners
o Perform 1 Case Per Day
o Average Pricing of $1,100/Case
o 40% EBITDA Margin
o HRC Ownership Decreases From 67% to 60%
Result: Approx. $277 MM Incremental Revenue
Approx. $111 MM Incremental EBITDA
Approx. $66 MM Incremental Pre-Tax Earnings
POTENTIAL IMPACT: $.10 EPS
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UPSIDE OPPORTUNITIES
SURGERY SYNDICATIONS - UPDATE
o Added 282 New Physicians in 2000
- Majority Added in 4Q00
o Increased Physician Base 7% in 2000 Due to Syndication
o Added Approximately 100 New Physicians Year To Date 2001
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UPSIDE OPPORTUNITIES
INPATIENT REHABILITATION PPS
o HCFA's Proposed Rules/Rates Issued November 2000
o HCFA's Sample Database Reflects Overall Average PPS Rate of $11,509 per
Discharge
o HRC's Current Average Cost Is Below $9,600
o HRC Has Approximately 70,000 Medicare Discharges per Year
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UPSIDE OPPORTUNITIES INPATIENT REHABILITATION PPS
o Potential Impact of New PPS Rates at Full Implementation:
- $1,400 x 70,000 Discharges = $98 MM (Pre-tax Earnings)
o Additional Upside:
- 10% Utilization Increase = $50 MM (Pre-tax Earnings)
POTENTIAL IMPACT: $.22 EPS
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UPSIDE OPPORTUNITIES
INPATIENT REHABILITATION PPS
o Medicare Relief Package (BIPA) Contained Two Key Points Regarding Inpatient
PPS:
- Gives Provider Option to Select 100% PPS Rate vs. Multi-Year Phase-in
- 2% Cut Restored in 2002
o Implementation Date To Be Determined
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HEALTHSOUTH Digital Hospital
[Graphic Omitted]
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HEALTHSOUTH Digital Hospital
o Announced JV with Oracle to Build First "Digital" Hospital
o All Aspects of Hospital Will Operate on Revolutionary Oracle Software
o New Technology Will:
- Integrate Manufacturers/Suppliers onto a Single Technological Platform
- Reduce Medical Errors
- Enhance Efficiencies and Expand Margins
o Technology To Be Rolled Out to All HEALTHSOUTH Facilities
o HRC Will Benefit in Rollout to Other Healthcare Providers
o Appeals to Patients, Physicians and Payors
HRC CONTINUES TO "THINK OUTSIDE THE BOX" AND BE THE MODEL FOR HEALTHCARE
DELIVERY IN THE 21ST CENTURY
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UPSIDE OPPORTUNITIES
NEW TECHNOLOGY LAUNCHES
o Treatment and Surgical Devices
- Trivex Varicose Vein Procedure
- OssaTron
o New Diagnostic Applications
- New Technology Allows High-speed, High-resolution Organ Scans
- Expanding Coronary CT and Other Wellness Scan Capabilities
- Growing Demand from More Educated Consumer Population
RESULT: STRONGER PATIENT AND PHYSICIAN TIES WHICH GENERATE
NEW SOURCES OF REVENUE AND INCREASED VOLUMES
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FINANCIAL HIGHLIGHTS
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REVENUE TREND
[Graph omitted]
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EBITDA TREND
[Graph omitted]
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EBITDA MARGIN TREND
[Graph omitted]
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RECENT EVENTS
o 2/6/01: Announced Letter of Intent for Sale of Richmond, VA
Hospital
o 3/26/01: Announced Digital Hospital Initiative
o 4/25/01: Closed on Sale of Occupational Medicine Division
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SUMMARY
o Favorable Demographic Trends
o National Presence
o Superior Clinical Outcomes with Exceptional Patient Satisfaction
o Strong Core Business (15% Base Growth)
o Significant Growth Initiatives and Upside Opportunities