EXHIBIT 99
TEXT OF INVESTOR RELATIONS SLIDESHOW
IN USE BEGINNING OCTOBER 29, 2001
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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COMPANY 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 $4.0 Billion in Revenue with $1.2 Billion EBITDA Run Rate
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SIGNIFICANT PRESENCE IN EVERY MAJOR MARKET
[Graphic omitted]
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LEADING HEALTHCARE PROVIDER
o Strong Credit Profile due to High Cash Flow Margins and Conservative Balance
Sheet
o Up to 100,000 Patients Treated per Day
o Approximately 85,000 Referring Physicians
o Excellent Relationships with National and Regional Payors
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LEADING FRANCHISE
o No One Can Duplicate What HRC Has Built Over the Last 17 Years
o HRC Has "Virtual Patent" on Ambulatory Healthcare Delivery
o HRC Has "Virtual Patent" on Freestanding Inpatient Rehabilitation Care
o HRC Leads the Industry in All Core Business Lines
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PROVIDER OF CHOICE
o Demographics Favor Outpatient Services Over Traditional Acute-Care Offerings
o Our Integrated Service Model Moves the Patient Through the System More
Efficiently
o HRC Is a Leader in Technological Advances
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STRONG BRAND RECOGNITION
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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PARTNER 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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HRC'S COMPETITIVE ADVANTAGES
o Unique National Presence
o Strong Brand Equity and Relationships with Leading Professional and Amateur
Sports Organizations
[Graphic omitted]
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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BUSINESS OVERVIEW
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SUBSTANTIAL AND DIVERSIFIED REVENUE BASE
LTM TOTAL REVENUE: $4,342 MILLION
[Graphic omitted]
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OUTPATIENT REHABILITATION
Services provided include rehabilitation programs for orthopaedic, sports and
work-related injuries
o Market Size = $10 Billion
o Estimated Annual Industry Growth Rate of 5%
o Payor Mix = 10% Medicare; 90% Non-Medicare
o HEALTHSOUTH:
- #1 Market Share (10%)
- 1,435 Outpatient Rehabilitation Centers in All 50 States and the UK
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OUTPATIENT SURGERY
Provider of orthopaedic, plastic, ENT and other surgical procedures on an
outpatient basis
o Market Size = $6 Billion
o Estimated Annual Industry Growth Rate of 7-9%
o Payor Mix = 20% Medicare; 80% Non-Medicare
o HEALTHSOUTH:
- #1 Market Share (16%)
- 217 Outpatient Rehabilitation Centers in 38 States
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SURGERY CENTER INITIATIVES
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 Generates High EBITDA
Margin (40%+)
o Focus on Orthopaedics and Plastics
- Superior Pricing
- High Private Pay on Plastics
o Solidifies Physician Relationship
o Enhances Cross-Referrals for Physical Therapy and Diagnostic
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SURGERY CENTER INITIATIVES (CONT'D)
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: Approximately $111MM Incremental EBITDA
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SURGERY CENTERS INITIATIVES UPDATE
o Added Approximately 450 New Physicians To Date
o Increased Physician Base 11% Due to Syndication
o Syndication Efforts Paying Off: Same Store Growth of 4% in 3Q01
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DIAGNOSTIC IMAGING
Provider of imaging services, including magnetic resonance imaging (MRI),
computerized tomography (CT), X-rays, ultrasounds, mammography and fluoroscopy
o Market Size = $8 Billion
o Estimated Annual Industry Growth Rate of 8-10%
o Payor Mix = 15% Medicare; 85% Non-Medicare
o HEALTHSOUTH:
- #1 Market Share (4%)
- 137 Diagnostic Centers
- Ideal Strategic and Operation Fit with Other Business Lines
- Significant Cross-Referral Opportunities
- Completes Patient Care Cycle
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INPATIENT REHABILITATION
Provider of rehabilitation services for orthopaedic conditions, strokes, brain
and spinal cord injuries, neuromuscular disease and amputees
o Market Size = 35,000 beds and 450,00 Patients per Year
o Estimated Annual Industry Growth Rate of 4-5%
o Payor Mix = 70% Medicare; 30% Non-Medicare
o HEALTHSOUTH:
- #1 Market Share
- 60% of All Freestanding Inpatient Rehabilitation Facilities
- 22% of All Inpatient Rehabilitation Beds
- 122 Facilities with 7,755 beds
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INPATIENT REHABILITATION PPS UPDATE
o Final Rules & Rates Issued August 7, 2001
o Implementation Scheduled for January 1, 2002
o Final Rule Improvements:
- Base Rate (Before Adjustments) of $11,838 per Discharge - Up from $11,509
in Preliminary Rules
- HRC Expects Approximately $11,200 per Discharge
- Patient Assessment Changed to Industry Standard FIM Scores - Less Costly
than Preliminary Version
HIGHER REIMBURSEMENT, LOWER ADMINISTRATIVE COSTS
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INPATIENT REHABILITATION PPS
FAVORABLE COST TRENDS
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1997 1998 1999 Current
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Cost per Medicare
Discharge
$11,504 $10,754 $9,940 (approximately) $9,600
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Medicare Discharges 60,036 60,606 65,927 (approximately) 70,000
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POTENTIAL IMPACT OF INPATIENT REHABILITATION PPS
o Potential Impact of PPS at Full Implementation:
$1,600 x 70,000 Discharges = $112MM (Pre-tax)
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TECHNOLOGY INITIATIVES
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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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TECHNOLOGY INITIATIVES
o Source Medical
- Number One Solutions Provider for Outpatient Care Market
- Online Charting, Coding and Claims Administration
- Outpatient Rehab: 1,200 Installations
- Ambulatory Surgery: 600 Installations
- Diagnostic Roll-Out 1Q02: 140 Targeted Installations
o MedCenterDirect
o Healthcare e-Procurement that Provides:
o Increased Inventory Turns
o Enhanced Contract Compliance
o Usage and Cost Data
o Standardized Requisitions
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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/PHYSICIAN TIES WHICH GENERATE NEW SOURCES OF
REVENUE AND INCREASED VOLUMES
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FINANCIAL OVERVIEW
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PRIOR OPERATING STRATEGY
o Rapid Acquisition/Consolidation Focus
o Establish Nationwide Network
o Substantial CapEx Required to Upgrade to HRC Standards
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CURRENT OPERATING STRATEGY
o Increase Utilization of Existing Facilities (Minimal 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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RESULT: 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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THIRD QUARTER RESULTS
o $0.20 E.P.S. Met Consensus Estimate (Up 11% Over 3Q00)
o EBITDA Margin Improvement (27.7% vs. 27.0% in 3Q00)
o Continued Solid Pricing Trends
o Same Store Growth Across All Ambulatory Service Lines
o Successfully Issued $600MM of Senior Notes in Turbulent Market
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REVENUE TREND
Excluding Occupational Medicine And Richmond Medical Center
[Graphic omitted]
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EBITDA TREND
[Graphic omitted]
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EBITDA MARGIN TREND
[Graphic omitted]
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COMPANY GUIDANCE
o Early December 2001
- Release Updated Guidance to Account for Earnings Impact of PPS and FAS 142
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SUMMARY
o Leading Provider in Core Business Lines & One of the Largest Healthcare
Providers in the US
o Network of High-Quality, State-of-the-Art Facilities
o Strategy Focused on Maximizing the Financial Performance and Value of the
Core Franchise
o Strong Credit Profile due to High Cash Flow Margins & Conservative Balance
Sheet