8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 23, 2012

HealthSouth Corporation

(Exact name of Registrant as specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-10315	63-0860407
(Commission File Number)	(IRS Employer Identification No.)

3660 Grandview Parkway, Suite 200, Birmingham, Alabama 35243

(Address of Principal Executive Offices, Including Zip Code)

(205) 967-7116

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition.

The information contained herein is being furnished pursuant to Item 2.02 of Form 8‑K, “Results of Operations and Financial Condition,” and Item 7.01 of Form 8-K, “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On February 23, 2012, HealthSouth Corporation (the “Company”) issued a press release reporting the financial results of the Company for the three months and year ended December 31, 2011. A copy of the press release is attached to this report as Exhibit 99.1 and incorporated herein by reference.

ITEM 7.01. Regulation FD Disclosure.

See Item 2.02, “Results of Operations and Financial Condition,” above.

In addition, a copy of the supplemental slides which will be discussed during the Company's earnings call at 9:30 a.m. ET on Friday,February 24, 2012 is attached to this report as Exhibit 99.2 and incorporated herein by reference. This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Note Regarding Presentation of Non-GAAP Financial Measures

The financial data contained in the press release and supplemental slides include non-GAAP financial measures, including the Company's leverage ratio and Adjusted EBITDA. The leverage ratio referenced therein is defined as the ratio of consolidated total debt to Adjusted EBITDA for the trailing four quarters. The Company believes its leverage ratio and Adjusted EBITDA are measures of its ability to service its debt and its ability to make capital expenditures. Additionally, the leverage ratio is a standard measurement used by investors to gauge the creditworthiness of an institution. The Company's credit agreement also includes a maximum leverage ratio financial covenant which allows the Company to deduct up to $75 million of cash on hand from consolidated total debt.

The Company uses Adjusted EBITDA on a consolidated basis as a liquidity measure. The Company believes this financial measure on a consolidated basis is important in analyzing its liquidity because it is the key component of certain material covenants contained within the Company's credit agreement, which is discussed in more detail in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Liquidity and Capital Resources," and Note 8,Long-term Debt, to the consolidated financial statements included in its Annual Report on Form 10‑K for the year ended December 31, 2011 (the “2011 Form 10‑K”), when filed. These covenants are material terms of the credit agreement, and the credit agreement represents a substantial portion of the Company's liquidity. Non-compliance with these financial covenants under the credit agreement - its interest coverage ratio and its leverage ratio - could result in the Company's lenders requiring the Company to immediately repay all amounts borrowed. If the Company anticipated a potential covenant violation, it would seek relief from its lenders, which would have some cost to the Company, and such relief might not be on terms favorable to those in the Company's existing credit agreement. In addition, if the Company cannot satisfy these financial covenants, it would be prohibited under the credit agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA is critical to the Company's assessment of its liquidity.

In general terms, the credit agreement definition of Adjusted EBITDA, referred to as “Adjusted Consolidated EBITDA” there, allows the Company to add back to consolidated net income interest expense, income taxes, and depreciation and amortization and then add back to or subtract from consolidated net income unusual non-cash or non-recurring items. These items have included, but may not be limited to, (1) amounts associated with government, class action, and related settlements, (2) amounts related to discontinued operations and closed locations, (3) charges in respect of professional fees for reconstruction and restatement of financial statements, including fees paid to outside professional firms for matters related to internal controls and legal fees for continued litigation and support matters discussed in Note 21,Settlements, and Note 22,Contingencies and Other Commitments, to the consolidated financial statements included in the 2011 Form 10‑K, when filed, (4) stock-based compensation expense, (5) net investment and other income (including interest income), and (6) fees associated with the Company's divestiture activities.

In accordance with the credit agreement, the Company has been allowed to add certain other items to the calculation of Adjusted EBITDA, and there may also be certain other deductions required. This includes net income attributable to noncontrolling interests and interest income associated with income tax recoveries, as discussed in Note 19,Income Taxes, to

the consolidated financial statements included in the 2011 Form 10-K, when filed. In addition, the Company has been allowed to add non-recurring cash gains, such as the cash proceeds from the UBS Settlement (see Note 21,Settlements, to the consolidated financial statements included in the 2011 Form 10-K, when filed) to the calculation of Adjusted EBITDA. As these adjustments may not be indicative of the Company's ongoing performance, they have been excluded from Adjusted EBITDA presented herein and in the press release and supplemental slides attached as Exhibits 99.1 and 99.2, respectively.

However, Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America (“GAAP”), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted EBITDA should not be considered a substitute for net income or cash flows from operating, investing, or financing activities. The Company reconciles Adjusted EBITDA to net income, which reconciliation is set forth in the press release attached as Exhibit 99.1, and to net cash provided by operating activities, which reconciliation is set forth below. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Revenues and expenses are measured in accordance with the policies and procedures described in the 2011 Form 10‑K.

The Company also uses adjusted free cash flow as an analytical indicator to assess its performance. Management believes the presentation of adjusted free cash flow provides investors an efficient means by which they can evaluate the Company's capacity to reduce debt and pursue development activities. The calculation of adjusted free cash flow is included in the press release attached as Exhibit 99.1 and the supplemental slides attached as Exhibit 99.2. This measure is not a defined measure of financial performance under GAAP and should not be considered as an alternative to net cash provided by operating activities. Our definition of adjusted free cash flow is limited and does not represent residual cash flows available for discretionary spending. Because this measure is not determined in accordance with GAAP and is susceptible to varying calculations, it may not be comparable to other similarly titled measures presented by other companies. See the consolidated statements of cash flows included in the press release attached as Exhibit 99.1 for the GAAP measures of cash flows from operating, investing, and financing activities. A reconciliation of net cash provided by operating activities to adjusted free cash flow is included in the press release attached as Exhibit 99.1 and the supplemental slides attached as Exhibit 99.2.

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA

	For the Three Months Ended						For the Year Ended
	December 31,						December 31,
	2011			2010			2011			2010
	(In Millions)
Net cash provided by operating activities	$	129.6		$	67.1		$	342.7		$	331.0
Provision for doubtful accounts	(6.1		)	(1.6		)	(21.0		)	(16.4		)
Professional fees—accounting, tax,
and legal	4.8			3.4			21.0			17.2
Interest expense and amortization of debt
discounts and fees	23.1			34.2			119.4			125.6
Equity in net income of nonconsolidated
affiliates	3.2			2.6			12.0			10.1
Net income attributable to noncontrolling
interests in continuing operations	(12.5		)	(10.6		)	(47.0		)	(40.9		)
Amortization of debt discounts and fees	(0.9		)	(1.2		)	(4.2		)	(6.3		)
Distributions from nonconsolidated
affiliates	(3.3		)	(3.4		)	(13.0		)	(8.1		)
Current portion of income tax
expense	2.1			4.6			0.6			2.9
Change in assets and liabilities	(15.9		)	16.9			49.9			2.8
Change in government, class action, and
related settlements liability	(2.0		)	2.1			(8.5		)	2.9
Premium received on bond issuance	—			—			(4.1		)	—
Premium paid on bond redemption	—			—			26.9			—
Cash used in (provided by) operating
activities of discontinued operations	0.3			(2.8		)	(9.1		)	(13.2		)
Other	0.5			0.8			0.6			2.0
Adjusted EBITDA	$	122.9		$	112.1		$	466.2		$	409.6

Forward-Looking Statements

The information contained in the press release and supplemental slides includes certain estimates, projections, and other forward-looking information that reflect the Company's current outlook, views, or plans with respect to future events, financial performance, and business model. These estimates, projections, and other forward-looking information are based on assumptions the Company 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. The Company 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 the press release and supplemental slides 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 2011 Form 10-K, when filed, and in other documents the Company previously filed with the SEC, many of which are beyond the Company's control. These factors may cause actual results to differ materially from the views, beliefs, and estimates expressed herein.

ITEM 9.01. Financial Statements and Exhibits.

(d)    Exhibits.

Exhibit Number	Description
99.1	Press release of HealthSouth Corporation, dated February 23, 2012.
99.2	Supplemental slides provided in connection with the fourth quarter 2011 earnings call of HealthSouth Corporation.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

HEALTHSOUTH CORPORATION

By:	/S/   JOHN P. WHITTINGTON
	Name:    John P. Whittington
	Title:    Executive Vice President, General Counsel and Corporate Secretary

Dated: February 23, 2012

EX-99.1

Media ContactFebruary 23, 2012

Andy Brimmer, 205-410-2777For Immediate Release

Helen Todd, 205-969-5608

helen.todd@healthsouth.com

Investor Relations Contact

Mary Ann Arico, 205-969-6175

maryann.arico@healthsouth.com

HealthSouth Reports Strong Results for Fourth Quarter and Full Year 2011

Revenue Growth of 5.5% (Full Year of 8.0%)

Cash Provided by Operating Activities of $129.6 million (Full Year of $342.7 million)

Adjusted EBITDA of $122.9 million (Full Year of $466.2 million)

BIRMINGHAM, Ala. - HealthSouth Corporation (NYSE: HLS), the nation's largest owner and operator of inpatient rehabilitation hospitals, today reported its results of operations for the fourth quarter and year ended December 31, 2011.

"The fourth quarter was a solid finish to another excellent year for HealthSouth," said Jay Grinney, President and Chief Executive Officer of HealthSouth. "Our hospitals continued to provide superior quality, cost-effective care to an increasing number of patients which translated into exceptional operating and financial results. Discharges for the quarter were up 2.1%, while for the year discharges grew 5.2%. This strong volume growth and our efficient operating platform allowed us to generate $99.2 million of adjusted free cash flow in the quarter and brought our full-year adjusted free cash flow to $243.3 million, an increase of 34.1% compared to 2010."

Fourth Quarter Results

• Consolidated net operating revenues were $518.1 million for the fourth quarter of 2011 compared to $490.9 million for the fourth quarter of 2010, or an increase of 5.5%. This increase was attributable to a 2.1% increase in patient discharges and a 4.0% increase in net patient revenue per discharge. Same-store discharges were 1.7% higher in the fourth quarter of 2011 compared to the fourth quarter of 2010. Net patient revenue per discharge increased in the fourth quarter of 2011 compared to the same period of 2010 primarily due to pricing adjustments from Medicare and managed care payors, a higher percentage of Medicare patients, and a higher percentage of neurological cases which increased the average acuity for the patients we served.

• Income from continuing operations attributable to HealthSouth per diluted share for the fourth quarter of 2011 was $0.50 per share compared to $7.15 per share for the same period of 2010. Earnings per share in the fourth quarter of 2010 included an income tax benefit of $741.5 million, or $6.82 per share, primarily attributable to the release of a substantial portion of the valuation allowance in the fourth quarter of 2010, compared to income tax expense of $15.2 million, or $0.14 per share, in the fourth quarter of 2011.

• Cash flows provided by operating activities were $129.6 million for the three months ended December 31, 2011 compared to $67.1 million for the same period of 2010.

• Adjusted EBITDA (see attached supplemental information) for the three months ended December 31, 2011 was $122.9 million compared to $112.1 million for the three months ended December 31, 2010, or an increase of 9.6%. This improvement was driven by continued revenue growth and disciplined expense management.

1

• Adjusted free cash flow (see attached supplemental information) for the three months ended December 31, 2011 was $99.2 million compared to $29.3 million for the same period of 2010. The increase in adjusted free cash flow primarily resulted from higher Adjusted EBITDA, the absence of swap-related payments in the fourth quarter of 2011, the timing of certain interest payments, and lower interest expense.

Full Year Results

• Consolidated net operating revenues were $2,026.9 million for the year ended December 31, 2011 compared to $1,877.6 million for the year ended December 31, 2010, or an increase of 8.0%. This increase was attributable to a 5.2% increase in patient discharges and a 3.0% increase in net patient revenue per discharge. Same-store discharges were 3.3% higher year over year. Net patient revenue per discharge increased primarily due to pricing adjustments from Medicare and managed care payors, a higher percentage of Medicare patients, and a higher percentage of neurological cases which increased the average acuity for the patients we served.

• Income from continuing operations attributable to HealthSouth per diluted share for the year ended December 31, 2011 was $1.42 per share compared to $8.20 per share for the same period of 2010. Earnings per share in 2010 included an income tax benefit of $740.8 million, or $6.83 per share, primarily attributable to the release of a substantial portion of the valuation allowance in the fourth quarter of 2010, compared to income tax expense of $37.1 million, or $0.40 per share, in 2011. The Company's basic and diluted earnings per share were the same in 2011.

• Cash flows provided by operating activities were $342.7 million for the year ended December 31, 2011 compared to $331.0 million for the same period of 2010. Cash flows provided by operating activities in 2011 included $26.9 million related to the premium paid in conjunction with the redemption of our 10.75% Senior Notes and a $16.2 million decrease in the liability associated with refunds due patients and other third-party payors.

• Adjusted EBITDA (see attached supplemental information) for the year ended December 31, 2011 was $466.2 million compared to $409.6 million for the year ended December 31, 2010, or an increase of 13.8%. This improvement was driven by continued revenue growth and disciplined expense management.

• Adjusted free cash flow (see attached supplemental information) for the year ended December 31, 2011 was $243.3 million compared to $181.4 million for the same period of 2010, or an increase of 34.1%. The increase in adjusted free cash flow primarily resulted from higher Adjusted EBITDA and the expiration of the Company's interest rate swaps in March 2011. Growth in adjusted free cash flow for 2012 will be impacted by higher maintenance capital expenditures (related to the implementation of an electronic clinical information system and hospital refurbishment projects) and an expected increase in net working capital (related to continued denials of certain diagnosis codes by Medicare contractors based on medical necessity and payroll tax withholdings related to the vesting of a 2009 grant of restricted stock awards to employees).

As of December 31, 2011, total debt outstanding approximated $1.3 billion, and the Company's leverage ratio was 2.7x compared to 3.7x as of December 31, 2010.

"The continued generation of high levels of adjusted free cash flow allowed us to reduce our debt by an incremental $73 million in the fourth quarter, bringing total debt reduction for 2011 to approximately $257 million," said Doug Coltharp, Executive Vice President and Chief Financial Officer of HealthSouth. "The reduction in total debt and the complete retirement of our 10.75% Senior Notes are expected to result in more than $20 million in interest expense savings in 2012."

2012 Guidance

"We anticipate 2012 will be another solid year for HealthSouth — one that will continue to validate the strength of our focused business model," said Mr. Grinney. "Our initial 2012 guidance is predicated on projected discharge growth between 2.5% and 3.5%, which is consistent with our long-term discharge growth projections and assumes our hospitals will continue to gain market share."

2

Adjusted EBITDA in 2011 benefited from a number of items that are not expected to recur in 2012:

• a $3.8 million reduction in self-insured workers' compensation costs primarily due to revised actuarial estimates resulting from better-than-expected claims experience in prior years;

• a $2.4 million gain associated with franchise tax refunds; and

• a $1.5 million net benefit related to state provider taxes.

Adjusted EBITDA in 2012 will include two items that are incremental in comparison to 2011:

• approximately $6 million more in the provision for doubtful accounts resulting from the continuation of Medicare claims that are denied, disputed, and, if necessary, adjudicated before they are paid; and

• approximately $4 million in additional operating expenses associated with implementation of our electronic clinical information system in 12 hospitals.

Initial 2012 Adjusted EBITDA guidance: $475 million to $485 million

2011 earnings per share included an effective tax rate of approximately 19% (using pre-tax income from continuing operations attributable to HealthSouth). This effective tax rate was lower than the originally forecasted effective tax rate of 40% due to tax benefits in 2011 primarily related to a settlement of prior years' audits with the IRS, a decrease in the valuation allowance, and a reduction in unrecognized tax benefits due to the lapse of the statute of limitations.

2012 earnings per share guidance assumes an effective tax rate of 40% (using pre-tax income from continuing operations attributable to HealthSouth). Diluted earnings per share are expected to be the same as basic earnings per share due to the antidilutive impact in the year.

Initial 2012 earnings per share guidance: $1.32 to $1.39 per share

Earnings Conference Call and Webcast

The Company will host an investor conference call at 9:30 a.m. ET on Friday,February 24, 2012 to discuss its results for the fourth quarter of 2011. For reference during the call, the Company will post certain supplemental slides at http:// investor.healthsouth.com.

The conference call may be accessed by dialing 877-587-6761 and giving the pass code 35171796. International callers should dial 706-679-1635 and give the same pass code. Please call approximately ten minutes before the start of the call to ensure you are connected.The conference call will also be webcast live and will be available at http://investor.healthsouth.com by clicking on an available link.

A replay of the conference call will be available, beginning approximately two hours after the completion of the conference call, from February 24, 2012 until March 9, 2012. To access the replay, please dial 800-585-8367. International callers should dial 404-537-3406. The webcast will also be archived for replay purposes after the live broadcast at

http://investor.healthsouth.com.

About HealthSouth

HealthSouth is the nation's largest owner and operator of inpatient rehabilitation hospitals in terms of revenues, number of hospitals, and patients treated and discharged. Operating in 27 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, outpatient rehabilitation satellite clinics, and home health agencies. HealthSouth's hospitals provide a higher level of rehabilitative care to patients who are recovering from conditions such as stroke and other neurological disorders, orthopedic, cardiac and pulmonary conditions, brain and spinal cord injuries, and amputations. HealthSouth can be found on the Web at www.healthsouth.com.

Other Information

The Company's leverage ratio that is referenced in this release is defined as the ratio of consolidated total debt to Adjusted EBITDA for the trailing four quarters. Reconciliations of net income to Adjusted EBITDA can be found in the following schedules.

3

The information in this press release is summarized and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the “2011 Form 10-K”), when filed, as well as the Company's Current Report on Form 8-K filed on February 23, 2012. In addition, the Company will post supplemental slides today on its website at http://investor.healthsouth.com for reference during its February 24, 2012 earnings call.

When filed, the 2011 Form 10-K can be found on the Company's website at http://investor.healthsouth.com and the SEC's website at www.sec.gov.

4

HealthSouth Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2011			2010			2011			2010
	(In Millions)
Net operating revenues	$	518.1		$	490.9		$	2,026.9		$	1,877.6
Operating expenses:
Salaries and benefits	251.4			237.5			982.0			921.7
Other operating expenses	67.4			72.1			284.0			269.5
General and administrative expenses	29.8			28.3			110.5			106.2
Supplies	26.1			26.1			102.8			99.4
Depreciation and amortization	20.2			19.4			78.8			73.1
Occupancy costs	12.2			11.9			48.4			44.9
Provision for doubtful accounts	6.1			1.6			21.0			16.4
Loss on disposal of assets	0.4			0.9			4.3			1.4
Government, class action, and related settlements	(1.7		)	0.3			(12.3		)	1.1
Professional fees—accounting, tax, and legal	4.8			3.4			21.0			17.2
Total operating expenses	416.7			401.5			1,640.5			1,550.9
Loss on early extinguishment of debt	—			11.9			38.8			12.3
Interest expense and amortization of debt discounts and fees	23.1			34.2			119.4			125.6
Other income	(1.2		)	(1.5		)	(2.7		)	(4.3		)
Loss on interest rate swaps	—			0.3			—			13.3
Equity in net income of nonconsolidated affiliates	(3.2		)	(2.6		)	(12.0		)	(10.1		)
Income from continuing operations before income tax expense (benefit)	82.7			47.1			242.9			189.9
Provision for income tax expense (benefit)	15.2			(741.5		)	37.1			(740.8		)
Income from continuing operations	67.5			788.6			205.8			930.7
(Loss) income from discontinued operations, net of tax	(5.0		)	1.3			48.8			9.1
Net income	62.5			789.9			254.6			939.8
Less: Net income attributable to noncontrolling interests	(12.5		)	(10.7		)	(45.9		)	(40.8		)
Net income attributable to HealthSouth	50.0			779.2			208.7			899.0
Less: Convertible perpetual preferred stock dividends	(6.5		)	(6.5		)	(26.0		)	(26.0		)
Net income attributable to HealthSouth common shareholders	$	43.5		$	772.7		$	182.7		$	873.0

(Continued) 5

HealthSouth Corporation and Subsidiaries

Consolidated Statements of Operations (Continued)

(Unaudited)

	For the Three Months Ended December 31,					For the Year Ended December 31,
	2011			2010		2011		2010
	(In Millions, Except per Share Data)
Weighted average common shares outstanding:
Basic	93.3			92.8		93.3		92.8
Diluted	109.1			108.8		109.2		108.5
Earnings per common share:
Basic:
Income from continuing operations attributable to HealthSouth common shareholders	$	0.52		$	8.31	$	1.42	$	9.31
(Loss) income from discontinued operations, net of tax, attributable to HealthSouth common shareholders	(0.05		)	0.02		0.54		0.10
Net income attributable to HealthSouth common shareholders	$	0.47		$	8.33	$	1.96	$	9.41
Diluted:
Income from continuing operations attributable to HealthSouth common shareholders	$	0.50		$	7.15	$	1.42	$	8.20
(Loss) income from discontinued operations, net of tax, attributable to HealthSouth common shareholders	(0.04		)	0.01		0.54		0.08
Net income attributable to HealthSouth common shareholders	$	0.46		$	7.16	$	1.96	$	8.28
Amounts attributable to HealthSouth:
Income from continuing operations	$	55.0		$	778.0	$	158.8	$	889.8
(Loss) income from discontinued operations, net of tax	(5.0		)	1.2		49.9		9.2
Net income attributable to HealthSouth	$	50.0		$	779.2	$	208.7	$	899.0

6

HealthSouth Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	As of December 31,
	2011		2010
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	30.1	$	48.3
Restricted cash	35.3		36.5
Current portion of restricted marketable securities	15.0		18.2
Accounts receivable, net of allowance for doubtful accounts of $21.4 in 2011; $22.7 in 2010	222.8		206.7
Deferred income tax assets	26.6		28.1
Prepaid expenses and other current assets	61.2		68.4
Total current assets	391.0		406.2
Property and equipment, net	664.4		632.9
Goodwill	421.7		420.3
Intangible assets, net	57.7		58.5
Investments in and advances to nonconsolidated affiliates	29.0		30.7
Deferred income tax assets	608.1		679.3
Other long-term assets	99.3		144.2
Total assets	$	2,271.2	$	2,372.1
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Current portion of long-term debt	$	18.9	$	14.5
Accounts payable	45.4		44.6
Accrued payroll	85.0		77.0
Accrued interest payable	22.5		21.5
Refunds due patients and other third-party payors	7.3		48.3
Other current liabilities	134.1		153.4
Total current liabilities	313.2		359.3
Long-term debt, net of current portion	1,235.8		1,496.8
Self-insured risks	102.8		102.5
Other long-term liabilities	30.4		28.3
	1,682.2		1,986.9
Commitments and contingencies
Convertible perpetual preferred stock	387.4		387.4
Shareholders’ equity (deficit):
HealthSouth shareholders’ equity (deficit)	117.0		(85.2		)
Noncontrolling interests	84.6		83.0
Total shareholders' equity (deficit)	201.6		(2.2		)
Total liabilities and shareholders’ equity (deficit)	$	2,271.2	$	2,372.1

7

HealthSouth Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	For the Year Ended December 31,
	2011			2010
	(In Millions)
Cash flows from operating activities:
Net income	$	254.6		$	939.8
Income from discontinued operations, net of tax	(48.8		)	(9.1		)
Adjustments to reconcile net income to net cash provided by operating activities—
Provision for doubtful accounts	21.0			16.4
Provision for government, class action, and related settlements	(12.3		)	1.1
Depreciation and amortization	78.8			73.1
Amortization of debt issue costs, debt discounts, and fees	4.2			6.3
Loss on disposal of assets	4.3			1.4
Loss on early extinguishment of debt	38.8			12.3
Loss on interest rate swaps	—			13.3
Equity in net income of nonconsolidated affiliates	(12.0		)	(10.1		)
Distributions from nonconsolidated affiliates	13.0			8.1
Stock-based compensation	20.3			16.4
Deferred tax expense (benefit)	36.5			(743.7		)
Other	(0.6		)	(1.8		)
(Increase) decrease in assets—
Accounts receivable	(37.1		)	(21.5		)
Prepaid expenses and other assets	(12.5		)	(7.9		)
Income tax refund receivable	2.5			7.5
Increase (decrease) in liabilities—
Accounts payable	0.8			(0.8		)
Accrued payroll	3.7			0.1
Accrued interest	1.0			14.7
Refunds due patients and other third-party payors	(16.2		)	(3.4		)
Other liabilities	4.1			8.1
Premium received on bond issuance	4.1			—
Premium paid on redemption of bonds	(26.9		)	—
Termination of forward-starting interest rate swaps designated as cash flow hedges	—			(6.9		)
Self-insured risks	3.8			7.3
Government, class action, and related settlements	8.5			(2.9		)
Net cash provided by operating activities of discontinued operations	9.1			13.2
Total adjustments	136.9			(599.7		)
Net cash provided by operating activities	342.7			331.0

(Continued) 8

HealthSouth Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	For the Year Ended December 31,
	2011			2010
	(In Millions)
Cash flows from investing activities:
Purchases of property and equipment	(100.3		)	(62.8		)
Capitalized software costs	(8.8		)	(6.5		)
Acquisition of businesses, net of cash acquired	(4.9		)	(34.1		)
Proceeds from sale of restricted investments	1.2			10.4
Purchases of restricted investments	(8.4		)	(26.0		)
Net change in restricted cash	1.2			31.3
Net settlements on interest rate swaps not designated as hedges	(10.9		)	(44.7		)
Other	(0.9		)	(0.4		)
Net cash provided by (used in) investing activities of discontinued operations—
Proceeds from sale of LTCHs	107.9			—
Other investing activities of discontinued operations	(0.7		)	6.9
Net cash used in investing activities	(24.6		)	(125.9		)
Cash flows from financing activities:
Principal borrowings on term loan	100.0			—
Proceeds from bond issuance	120.0			525.0
Principal payments on debt, including pre-payments	(504.9		)	(751.3		)
Borrowings on revolving credit facility	338.0			100.0
Payments on revolving credit facility	(306.0		)	(22.0		)
Principal payments under capital lease obligations	(13.2		)	(14.9		)
Dividends paid on convertible perpetual preferred stock	(26.0		)	(26.0		)
Debt amendment and issuance costs	(4.4		)	(19.3		)
Distributions paid to noncontrolling interests of consolidated affiliates	(44.2		)	(34.4		)
Other	4.3			5.2
Net cash used in financing activities	(336.4		)	(237.7		)
Decrease in cash and cash equivalents	(18.3		)	(32.6		)
Cash and cash equivalents at beginning of year	48.3			80.7
Cash and cash equivalents of facilities in discontinued operations at beginning of year	0.1			0.3
Less: Cash and cash equivalents of facilities in discontinued operations at end of year	—			(0.1		)
Cash and cash equivalents at end of year	$	30.1		$	48.3

9

HealthSouth Corporation and Subsidiaries

Supplemental Information

Earnings Per Share

	QTD Prior EPS Measure (1)				QTD GAAP EPS Measure (2)
	Q4 2010				Q4 2010				Q4 2011
	(In Millions, Except Per Share Data)
Adjusted EBITDA	$	112.1			$	112.1			$	122.9
Interest expense and amortization of debt discounts and fees	(34.2		)		(34.2		)		(23.1		)
Depreciation and amortization	(19.4		)		(19.4		)		(20.2		)
Stock-based compensation expense	(5.2		)		(5.2		)		(5.9		)
Other, including non-cash loss on disposal of assets	(0.9		)		(0.9		)		(0.4		)
	52.4				52.4				73.3
Certain nonrecurring expenses:
Government, class action, and related settlements	—				(0.3		)		1.7
Professional fees—accounting, tax, and legal	—				(3.4		)		(4.8		)
Loss on interest rate swaps	—				(0.3		)		—
Loss on early extinguishment of debt	(11.9		)		(11.9		)		—
Pre-tax income	40.5				36.5				70.2
Income tax (expense) benefit	(3.6		)	(3)	741.5			(4)(5)	(15.2		)	(4)(6)
Income from continuing operations	$	36.9		(1)	$	778.0		(2)	$	55.0		(2)
Basic shares	92.8				92.8				93.3
Diluted shares	108.8				108.8				109.1
Basic earnings per share	$	0.40			$	8.31		(2)	$	0.52		(2)
Diluted earnings per share	$	0.34			$	7.15		(2)	$	0.50		(2)

⁽¹⁾  Adjusted income from continuing operations. This non-GAAP measure was part of our historical guidance. A reconciliation of adjusted income from continuing operations to the corresponding GAAP measure can be found on page 12. Amounts have been recast for the inclusion of the Company's long-term acute care hospitals in discontinued operations.

⁽²⁾  Income from continuing operations attributable to HealthSouth.

⁽³⁾  Current period amounts in income tax provision.

⁽⁴⁾  Actual tax provision recorded for the period.

⁽⁵⁾  During the fourth quarter of 2010, the Company released a substantial portion of the valuation allowance.

⁽⁶⁾  Cash income taxes for the quarter ended December 31, 2011 were $2.3 million.

10

HealthSouth Corporation and Subsidiaries

Supplemental Information

Earnings Per Share

	YTD Prior EPS Measure (1)				YTD GAAP EPS Measure (2)
	2010				2010				2011
	(In Millions, Except Per Share Data)
Adjusted EBITDA	$	409.6			$	409.6			$	466.2
Interest expense and amortization of debt discounts and fees	(125.6		)		(125.6		)		(119.4		)
Depreciation and amortization	(73.1		)		(73.1		)		(78.8		)
Stock-based compensation expense	(16.4		)		(16.4		)		(20.3		)
Other, including non-cash loss on disposal of assets	(1.6		)		(1.6		)		(4.3		)
	192.9				192.9				243.4
Certain nonrecurring expenses:
Government, class action, and related settlements	—				(1.1		)		12.3
Professional fees—accounting, tax, and legal	—				(17.2		)		(21.0		)
Loss on interest rate swaps	—				(13.3		)		—
Loss on early extinguishment of debt	(12.3		)		(12.3		)		(38.8		)
Pre-tax income	180.6				149.0				195.9
Income tax (expense) benefit	(8.0		)	(3)	740.8			(4)(5)	(37.1		)	(4)(6)
Income from continuing operations	$	172.6		(1)	$	889.8		(2)	$	158.8		(2)
Basic shares	92.8				92.8				93.3
Diluted shares	108.5				108.5				109.2
Basic earnings per share	$	1.86			$	9.31		(2)	$	1.42		(2)(7)
Diluted earnings per share	$	1.59			$	8.20		(2)	$	1.42		(2)(7)

⁽¹⁾  Adjusted income from continuing operations. This non-GAAP measure was part of our historical guidance. A reconciliation of adjusted income from continuing operations to the corresponding GAAP measure can be found on page 12. Amounts have been recast for the inclusion of the Company's long-term acute care hospitals in discontinued operations.

⁽²⁾  Income from continuing operations attributable to HealthSouth.

⁽³⁾  Current period amounts in income tax provision.

⁽⁴⁾  Actual tax provision recorded for the period.

⁽⁵⁾  During the fourth quarter of 2010, the Company released a substantial portion of the valuation allowance.

⁽⁶⁾  Includes a $0.49 per share benefit primarily related to the Company's settlement of federal income tax claims with the IRS for tax years 2007 and 2008, a decrease in the valuation allowance, and a reduction in unrecognized tax benefits due to the lapse of the statute of limitations for certain federal and state claims. Cash income taxes for the year ended December 31, 2011 were $9.1 million.

⁽⁷⁾  Adding back the dividends for the Company's convertible perpetual preferred stock to income from continuing operations causes a per share increase when calculating diluted earnings per share resulting in an antidilutive per share amount. Therefore, basic and diluted earnings per share are the same. A computation of basic and diluted earnings per share can be found in Note 20,Earnings per Common Share, to the consolidated financial statements accompanying the Company's Form 10-K for the year ended December 31, 2011, when filed.

11

HealthSouth Corporation and Subsidiaries

Supplemental Information

Reconciliation of Net Income to Adjusted EBITDA

	Three Months Ended December 31,						Year Ended December 31,
	2011			2010			2011			2010
	(In Millions)
Net income	$	62.5		$	789.9		$	254.6		$	939.8
Loss (income) from discontinued operations, net of tax, attributable to HealthSouth	5.0			(1.2		)	(49.9		)	(9.2		)
Provision for income tax expense (benefit)	15.2			(741.5		)	37.1			(740.8		)
Loss on interest rate swaps	—			0.3			—			13.3
Interest expense and amortization of debt discounts and fees	23.1			34.2			119.4			125.6
Loss on early extinguishment of debt	—			11.9			38.8			12.3
Professional fees—accounting, tax, and legal	4.8			3.4			21.0			17.2
Government, class action, and related settlements	(1.7		)	0.3			(12.3		)	1.1
Net noncash loss on disposal of assets	0.4			0.9			4.3			1.4
Depreciation and amortization	20.2			19.4			78.8			73.1
Stock-based compensation expense	5.9			5.2			20.3			16.4
Net income attributable to noncontrolling interests	(12.5		)	(10.7		)	(45.9		)	(40.8		)
Other	—			—			—			0.2
Adjusted EBITDA	$	122.9		$	112.1		$	466.2		$	409.6

Reconciliation of Net Income to Adjusted Income from Continuing Operations

	Three Months Ended December 31, 2010			Year Ended December 31, 2010
	(In Millions, Except Per Share Data)
Net income	$	789.9		$	939.8
Income from discontinued operations, net of tax,
attributable to HealthSouth	(1.2		)	(9.2		)
Net income attributable to noncontrolling interests	(10.7		)	(40.8		)
Income from continuing operations
attributable to HealthSouth	778.0			889.8
Government, class action, and related settlements	0.3			1.1
Professional fees—accounting, tax, and legal	3.4			17.2
Loss on interest rate swaps	0.3			13.3
Adjustment for prior period amounts in tax provision	(745.1		)	(748.8		)
Adjusted income from continuing operations	$	36.9		$	172.6
Adjusted income from continuing operations
per diluted share	$	0.34		$	1.59
Weighted average common shares outstanding:
Basic	92.8			92.8
Diluted	108.8			108.5

12

HealthSouth Corporation and Subsidiaries

Supplemental Information

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow

	For the Three Months Ended						For the Year Ended
	December 31,						December 31,
	2011			2010			2011			2010
	(In Millions)
Net cash provided by operating activities	$	129.6		$	67.1		$	342.7		$	331.0
Impact of discontinued operations	0.3			(2.8		)	(9.1		)	(13.2		)
Net cash provided by operating activities of continuing operations	129.9			64.3			333.6			317.8
Capital expenditures for maintenance	(15.7		)	(13.3		)	(50.8		)	(37.9		)
Net settlement on interest rate swaps	—			(11.0		)	(10.9		)	(44.7		)
Dividends paid on convertible perpetual preferred stock	(6.5		)	(6.5		)	(26.0		)	(26.0		)
Distributions paid to noncontrolling interests of consolidated affiliates	(10.3		)	(8.1		)	(44.2		)	(34.4		)
Nonrecurring items:
Income tax refunds related to prior periods	(1.0		)	(1.6		)	(7.9		)	(13.5		)
Premium received on bond issuance	—			—			(4.1		)	—
Premium paid on redemption of bonds	—			—			26.9			—
Cash paid for:
Professional fees—accounting, tax, and legal	4.8			3.4			21.0			17.2
Government, class action, and related settlements, including certain settlements related to unclaimed property	(2.0		)	2.1			5.7			2.9
Adjusted free cash flow	$	99.2		$	29.3		$	243.3		$	181.4

For the three months ended December 31, 2011, net cash used in investing activities was $57.3 million and resulted primarily from capital expenditures, the acquisition of a business, and the net change in restricted cash. Net cash used in financing activities during the three months ended December 31, 2011 was $89.8 million and resulted primarily from net debt payments, distributions paid to noncontrolling interests of consolidated affiliates, and dividends paid on the Company's convertible perpetual preferred stock.

For the three months ended December 31, 2010, net cash used in investing activities was $35.1 million and resulted primarily from capital expenditures and net settlement payments related to interest rate swaps. Net cash used in financing activities during the three months ended December 31, 2010 was $174.1 million and resulted primarily from net debt payments, debt amendment and issuance costs, distributions paid to noncontrolling interests of consolidated affiliates, and dividends paid on the Company's convertible perpetual preferred stock.

For the year ended December 31, 2011, net cash used in investing activities was $24.6 million and resulted primarily from capital expenditures, net settlement payments related to interest rate swaps, and purchases of restricted investments offset by proceeds from the sale of five long-term acute care hospitals in August 2011. Net cash used in financing activities during the year ended December 31, 2011 was $336.4 million and resulted primarily from net debt payments, including the optional redemption of the Company's 10.75% Senior Notes due 2016, distributions paid to noncontrolling interests of consolidated affiliates, and dividends paid on the Company's convertible perpetual preferred stock.

For the year ended December 31, 2010, net cash used in investing activities was $125.9 million and resulted primarily from capital expenditures, net settlement payments related to interest rate swaps, acquisitions of businesses, and net purchases of restricted investments offset by a decrease in restricted cash and proceeds from the sale of our hospital in Baton Rouge. Net cash used in financing activities during the year ended December 31, 2010 was $237.7 million and resulted primarily from net debt payments, distributions paid to noncontrolling interests of consolidated affiliates, dividends paid on the Company's convertible perpetual preferred stock, and debt amendment and issuance costs.

13

HealthSouth Corporation and Subsidiaries

Forward-Looking Statements

Statements contained in this press release which are not historical facts are forward-looking statements. In addition, HealthSouth, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. All such estimates, projections, and forward-looking information speak only as of the date hereof, and HealthSouth undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise. Such forward-looking statements are necessarily estimates based upon current information, involve a number of risks and uncertainties, and relate to, among other things, future events, HealthSouth's plan to repurchase shares of its common stock, effective income tax rates, HealthSouth's business strategy, its financial plans, its future financial performance, or its projected business results or model, or its projected capital expenditures. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by HealthSouth include, but are not limited to, any adverse outcome of various lawsuits, claims, and legal or regulatory proceedings involving the Company, including the Houston HHS-OIG investigation; significant changes in HealthSouth's management team; HealthSouth's ability to successfully complete and integrate de novo developments, acquisitions, investments, and joint ventures consistent with its growth strategy; changes, delays in (including in connection with resolution of Medicare payment reviews or appeals), or suspension of reimbursement for HealthSouth's services by governmental or private payors; changes in the regulation of the healthcare industry at either or both of the federal and state levels, including as part of national healthcare reform and deficit reduction; competitive pressures in the healthcare industry and HealthSouth's response thereto; HealthSouth's ability to obtain and retain favorable arrangements with third-party payors; HealthSouth's ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment with often severe staffing shortages and the impact on HealthSouth's labor expenses from potential union activity and staffing shortages; general conditions in the economy and capital markets; the increase in the costs of defending and insuring against alleged professional liability claims and our ability to predict the estimated costs related to such claims; and other factors which may be identified from time to time in HealthSouth's SEC filings and other public announcements, including HealthSouth's Form 10‑K for the year ended December 31, 2011, when filed.

14

EX-99.2

Fourth Quarter 2011 Earnings Call Supplemental Slides

The information contained in this presentation includes certain estimates, projections and other forward- looking information that reflect our current outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capital expenditures, development activities, dividend strategies, effective tax rates, financial performance, and business model. 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 events or 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-K for the year ended December 31, 2011, when filed, and in other documents we previously filed with the SEC, many of which are beyond our control, that may cause actual events or results to differ materially from the views, beliefs and estimates expressed herein. Note Regarding Presentation of Non-GAAP Financial Measures The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. Schedules are attached that reconcile the non-GAAP financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States. Our Form 8-K, dated February 23, 2012, to which the following supplemental slides are attached as Exhibit 99.2, provides further explanation and disclosure regarding our use of non-GAAP financial measures and should be read in conjunction with these supplemental slides. Forward-Looking Statements 2

Table of Contents 3 4-6 7 8 9 10 11-12 2012 Guidance - Adjusted EBITDA ……………………………………………………………………………………………………………………………………………………………13 2012 Guidance - EPS ……………………………………………………………………………………………………………………………………….14 Income Tax Considerations…………………………………………………………………………………………………………………………………………15 Adjusted Free Cash Flow Considerations…………………………………………………………………………………………………………………………………………16 17-19 20 Business Outlook: 2012 to 2014…………………………………………………………………………………………………………………….….21-23 24 25 26 27 28 29 30 31 Outstanding Share Summary and Warrant Information……………………………………………………………………………….32 Adjusted EBITDA History……………………………………………………………………………………………………………………………………………….33 34 Reconciliations to GAAP………………………………………………………………………………………………………………………………………………………..35-39 Adjusted Free Cash Flow ……………………………………………………………………………………………………………………………………… Appendix………………………………………………………………………………………………………………………………………… Historic Discharge Growth vs. Industry……………………………………………………………………………………………………………………………………… Priorities for Reinvesting Free Cash Flows………………………………………………………………………………………………………………………………………… Revenues & Expenses (Sequential)………………………………………………………………………………………………………………………………………… Payment Sources (Percent of Revenues) ……………………………………………………………………………………………………………………………………… Operational and Labor Metrics………………………………………………………………………………………………………………………………………… Debt Schedule……………………………………………………………………………………………………………………………………………………………. Revenues & Expenses (2011 vs. 2010)……………………………………………………………………………………………………………………………………………………………………………….. Our Track Record ……………………………………………………………………………………………………………………………………… Debt and Liquidity……………………………………………………………………………………………………………………………………………………………….. Adjusted Free Cash Flow ……………………………………………………………………………………………………………………………………… Q4 2011 Summary (Q4 2011 vs. Q4 2010)…………………………………………………………………………………………………………………………… Revenues (Q4 2011 vs. Q4 2010)…………………………………………………………………………………………………………………………………………. Expenses (Q4 2011 vs. Q4 2010)…………………………………………………………………………………………………………………………………………. Adjusted EBITDA……………………………………………………………………………………………………………………………………………………………….. Earnings per Share…………………………………………………………………………………………………………………………………………

Q4 2011 Summary (Q4 2011 vs. Q4 2010)  Revenue growth of 5.5% ― Inpatient revenue growth of 6.1%  Discharge growth of 2.1%; same-store discharge growth of 1.7%  Revenue per discharge increase of 4.0%  Improved operating leverage and labor productivity  Adjusted EBITDA(1) for the quarter of $122.9 million reflects growth of 9.6%.  Adjusted free cash flow(1) for the quarter of $99.2 million, benefited from: ― Higher Adjusted EBITDA ― The absence of swap-related payments ($17.9 million in Q4 2010) ― Approx. $16 million for timing of interest payments (paid in Q3 2011) ― Lower interest expense 4 (1) Reconciliation to GAAP provided on slides 34, 35, 36, 38, and 39. 0% 40% 80% Q4 2011 Q4 2010 General & Administrative Hospital-related Expenses Salaries, Wages & Benefits 74.7% 75.8% 3.46 3.50 3.20 3.60 Q4 2011 Q4 2010 Employees per Occupied Bed (EPOB)

Q4 2011 Summary (Q4 2011 vs. Q4 2010) (cont.)  Completed clinical information system (CIS) pilot ― Five-year, system wide roll-out beginning in 2012  Strengthened the balance sheet ― Reduced debt by approx. $73 million ― Exercised option to purchase the property associated with the lease on HealthSouth Mountain View Regional Rehabilitation Hospital in Morgantown, WV  Diluted earnings(2) per share of $0.50 reflect strong operational results and an effective tax rate of approx. 22%(3) for the quarter (see table on slide 10) (1) Based on 2011 Adjusted EBITDA of $466.2 million; reconciliation to GAAP provided on slides 35, 38, and 39. (2) Income from continuing operations attributable to HealthSouth. (3) Estimated effective tax rate using pre-tax income from continuing operations attributable to HealthSouth 5 Reduced leverage ratio to 2.7x (1)

33.7 29.1 15.0 20.0 25.0 30.0 35.0 3.01 2.54 1.5 2.0 2.5 3.0 3.5  HealthSouth Functional Outcomes Continue to Outpace Industry Average HealthSouth Average UDS Average* FIM Gain LOS Efficiency * Average = Expected, Risk-adjusted Source: UDSmr Database – On Demand Report: Q4 2011 Report Q4 2011 Summary (Q4 2011 vs. Q4 2010) (cont.) 6

Revenues (Q4 2011 vs. Q4 2010)  Revenue increase of 5.5% driven by inpatient revenue growth of 6.1% ― Discharge growth of 2.1%; same-store discharge growth of 1.7% ― Revenue per discharge increased 4.0%  Price adjustments (Medicare and managed care)  Higher percentage of Medicare patients  Higher percentage of neurological cases increased the average acuity (CMI) for the patients we served ― Outpatient revenue declined primarily as a result of six fewer outpatient rehabilitation satellite clinics in 2011 than 2010. Q4 Q4 Increase/ (Millions) 2011 2010 (Decrease) Inpatient 480.1$ 452.3$ 6.1% Outpatient and other 38.0 38.6 (1.6%) Consolidated net operating 518.1$ 490.9$ 5.5% (Actual Amounts) Discharges 30,066 29,462 2.1% Net patient revenue / discharge $15,968 $15,352 4.0% 7

Expenses (Q4 2011 vs. Q4 2010) Q4 Q4 Increase/ (Millions) 2011 2010 (Decrease) Salaries and benefits 251.4$ 237.5$ 5.9% Percent of net operating revenues 48.5% 48.4% 10 bps EPOB (employees per occupied bed) 3.46 3.50 (1.1%) Hospital-related expenses 111.8$ 111.7$ 0.1% (other operating, supplies, occupancy, bad debts) Percent of net operating revenues 21.6% 22.8% (120 bps) General and administrative 23.9$ 23.1$ 3.5% (excludes stock-based compensation) Percent of net operating revenues 4.6% 4.7% (10 bps)  Improved operating leverage and labor productivity ― Improved labor productivity as measured by EPOB ― SWB as a percent of revenue impacted by:  Ramp-up costs at two new hospitals (Cypress and Drake),  An extra half day of paid time off (PTO) for all of our employees  Higher group health and workers’ compensation insurance expense ― Hospital-related expenses impacted by:  Favorable general and professional liability insurance accruals and franchise tax refunds  Offset by higher bad debt expense 8

Adjusted EBITDA Change Q4 Full Year +$10.8M +$56.6M +9.6% +13.8% • Revenue growth driven by higher volumes and price • Improved operating leverage and labor productivity Adjusted EBITDA (1) 9 (Millions) 2011 2010 2011 2010 Net operating revenues 518.1$ 490.9$ 2,026.9$ 1,877.6$ Operating expenses: Salaries and benefits (2) (251.4) (237.5) (982.0) (921.5) Hospital-related expenses: Other operating expenses (67.4) (72.1) (284.0) (269.5) Supplies (26.1) (26.1) (102.8) (99.4) Occupancy costs (12.2) (11.9) (48.4) (44.9) Prov ision for doubtful accounts (6.1) (1.6) (21.0) (16.4) (111.8) (111.7) (456.2) (430.2) General and administrative expenses (3) (23.9) (23.1) (90.2) (89.8) Equity in nonconsolidated affiliates 3.2 2.6 12.0 10.1 Other income 1.2 1.5 2.7 4.3 Noncontrolling interests (4) (12.5) (10.6) (47.0) (40.9) Adjusted EBITDA 122.9$ 112.1$ 466.2$ 409.6$ (1) Reconciliation to GAAP provided on slides 35, 36, 38, and 39. 2011 2010 2011 2010 In arriving at Adjusted EBITDA, the following were excluded: (2) Retructuring charges - - - 0.2 (3) Stock-based compensation expense 5.9 5.2 20.3 16.4 (4) Noncontrolling interests related to discontinued operations - 0.1 (1.1) (0.1) Q4 Full Year Q4 Full Year

Earnings per Share from Continuing Operations (1) Q4 2011 reflects: • Higher Adjusted EBITDA • Decreased interest expense • Approx. 22%(6) effective tax rate Full-year 2011 reflects: • Higher Adjusted EBITDA • Decreased interest expense • Approx. 19%(6) effective tax rate Earnings per Share 10 (1) Income from continuing operations attributable to HealthSouth (2) Cash income taxes for the 3 and 12 months ended December 31, 2011 were $2.3 million and $9.1 million, respectively. (3) Includes an approx. $46 million, or $0.49 per share, benefit primarily related to the Company’s settlement with the IRS for tax years 2007 and 2008, a decrease in the valuation allowance, and a reduction in unrecognized tax benefits due to the lapse of the statute of limitations for certain federal and state claims (4) The $6.5 million and $26.0 million dividends related to our convertible perpetual preferred stock in the 3 and 12 months ended December 31, 2011 and 2010, respectively, must be subtracted from income from continuing operations when calculating basic earnings per share. (5) Diluted earnings per share on a GAAP basis are the same as basic earnings per share due to the antidilutive impact in the period. (6) Estimated effective tax rate using pre-tax income from continuing operations attributable to HealthSouth (In Millions, Except Per Share Data) 2011 2010 2011 2010 Adjusted EBITDA 122.9$ 112.1$ 466.2$ 409.6$ Interest expense and amortization of debt discounts and fees (23.1) (34.2) (119.4) (125.6) Depreciation and amortization (20.2) (19.4) (78.8) (73.1) Stock-based compensation expense (5.9) (5.2) (20.3) (16.4) Other, including non-cash loss on disposal of assets (0.4) (0.9) (4.3) (1.6) 73.3 52.4 243.4 192.9 Certain nonrecurring expenses: Government, class action, and related settlements 1.7 (0.3) 12.3 (1.1) Professional fees - accounting, tax, and legal (4.8) (3.4) (21.0) (17.2) Loss on interest rate swaps - (0.3) - (13.3) Loss on early extinguishment of debt - (11.9) (38.8) (12.3) Pre-tax income 70.2 36.5 195.9 149.0 Income tax (expense) benefit (15.2) (2) 741.5 (37.1) (2)(3) 740.8 Income from continuing operations (1) 55.0$ 778.0$ 158.8$ (3) 889.8$ Basic shares 93.3 92.8 93.3 92.8 Diluted shares 109.1 108.8 109.2 108.5 Basic earnings per share (4) 0.52$ 8.31$ 1.42$ 9.31$ Diluted earnings p r share 0.50$ 7.15$ 1.42$ (5) 8.20$ Q4 Full Year

Adjusted Free Cash Flow  Adjusted free cash flow for Q4 2011 benefited from: ― Higher Adjusted EBITDA ― The absence of swap-related payments ($17.9 million Q4 2010) ― Approx. $16 million for timing of interest payments (paid in Q3 2011) ― Lower interest expense 11 (Millions) 2011 2010 2011 2010 129.6$ 67.1$ 342.7$ 331.0$ 0.3 (2.8) (9.1) (13.2) Capital expenditures for maintenance (15.7) (13.3) (50.8) (37.9) Net settlements on interest rate swaps - (11.0) (10.9) (44.7) Dividends paid on convertible perpetual preferred stock (6.5) (6.5) (26.0) (26.0) Distributions paid to noncontrolling interests of consolidated affiliates Non-recurring items: Cash paid for professional fees - accounting, tax and legal 4.8 3.4 21.0 17.2 Net premium on bond issuance/repayment - - 22.8 - Cash (received) paid for government, class action and related settlements (2.0) 2.1 5.7 2.9 (1.0) (1.6) (7.9) (13.5) Adjusted free cash flow 99.2$ 29.3$ 243.3$ 181.4$ Income tax refunds related to prior periods Net cash provided by operating activities Net cash provided by operating activities of continuing operations Impact of discontinued operations (44.2) (34.4) (10.3) (8.1) Full Year 333.6 317.8 Q4 129.9 64.3

Adjusted Free Cash Flow(1) (cont.) $181.4 $56.6 $4.1 $40.7 ($12.9) Adjusted Free Cash Flow 2010 Adjusted EBITDA Cash Interest Expense Swap-Related Payments Maintenance Capital Working Capital & Other Adjusted Free Cash Flow 2011 $243.3 ($26.6) (Millions, except per share data) 2011 2010 $ % Adjusted free cash flow (1) Full Year Change 243.3$ 181.4$ 61.9$ 34.1% (1) Reconciliation to GAAP provided on slide 34. 12

2012 Guidance – Adjusted EBITDA (1) 2012 Adjusted EBITDA $475 million to $485 million (1) Reconciliation to GAAP provided on slides 35, 36, 38, and 39. Considerations:  Revenue growth of 3.8% to 5.2% ― Discharge growth between 2.5% and 3.5% ― Revenue per discharge growth between 2.0% and 2.5% ― Home health revenues subject to approx. $1.0 million reduction related to the 2012 Medicare Home Health rule  Higher bad debt expense of approx. 1.3% of revenues (approx. $6 million more than 2011)  Installation of new clinical information system in twelve existing hospitals expected to increase operating expenses by approx. $4 million in 2012  Higher workers’ compensation expense of approx. $5 million primarily as a result of favorable actuarial adjustments in 2011  Q1 2011 Adjusted EBITDA benefited by approx. $1.5 million for nonrecurring net state provider tax revenue  Q4 2011 Adjusted EBITDA benefited by $2.4 million for nonrecurring franchise tax recovery Reflects: • 1.9% to 4.0% growth over 2011 • 7.7% to 8.8% two year CAGR since 2010 13

2012 Guidance - EPS Earnings per Share from Continuing Operations Attributable to HealthSouth (1) $1.32 to $1.39 Considerations:  Assumes provision for income tax of approx. 40% in 2012 vs. approx. 19%(2) in 2011  Cash taxes expected to be $7 to $10 million  Basic share count of 94.5 million shares Diluted earnings per share on a GAAP basis are the same as basic earnings per share due to the antidilutive impact in the period. (1) Income from continuing operations attributable to HealthSouth (2) Estimated effective tax rate using pre-tax income from continuing operations attributable to HealthSouth (3) Includes an approx. $46 million, or $0.49 per share, benefit primarily related to the Company’s settlement with the IRS for tax years 2007 and 2008, a decrease in the valuation allowance, and a reduction in unrecognized tax benefits due to the lapse of the statute of limitations for certain federal and state claims (4) The $26.0 million dividends related to our convertible perpetual preferred stock in 2011 and 2012 must be subtracted from income from continuing operations when calculating basic earnings per share. 14 Actual Low High (In Millions, Except Per Share Data) 2011 Adjusted EBITDA 466.2$ 475$ 485$ Interest expense and amortization of debt discounts and fees (119.4) Depreciation and amortization (78.8) Stock-based compensation expense (20.3) Other, including non-cash loss on disposal of assets (4.3) 243.4 267 277 Certain Nonrecurring Expenses: Government, class action and related settlements 12.3 Professional fees - accounting, tax and legal (21.0) Loss on early extinguishment of debt (38.8) Pre-tax income 195.9 252 262 Income tax (assumes 40% in 2012) (37.1) (3) (101) (105) Income from continuing operations (1) 158.8$ 151$ 157$ Basic shares 93.3 94.5 94.5 Earnings per share (1)(4) 1.42$ 1.32$ 1.39$ - - (15) (7) EPS Guidance 2012 (96) (82) (23)

Income Tax Considerations GAAP Considerations: •As of 12/31/11, the Company had an ending balance of approx. $1.3 billion in federal NOLs and a remaining valuation allowance of approx. $50 million, primarily related to state NOLs. • 2011 effective tax rate was approx. 19%(1)(2) • Expect effective tax rate of approx. 40%(1) going forward Future Cash Tax Payments: • The Company expects to pay approx. $7 million to $10 million per year of income tax. •HealthSouth is not currently subject to an annual use limitation (“AUL”) under Internal Revenue Code Section 382 (“Section 382”). A “change of ownership,” as defined by Section 382, would subject the Company to an AUL, which is equal to the market capitalization of the Company at the time of the “change of ownership” multiplied by the long-term tax exempt rate. 15 (1) Estimated effective tax rate using pre-tax income from continuing operations attributable to HealthSouth (2) Includes an approx. $46 million, or $0.49 per share, benefit primarily related to the Company’s settlement with the IRS for tax years 2007 and 2008, a decrease in the valuation allowance, and a reduction in unrecognized tax benefits due to the lapse of the statute of limitations for certain federal and state claims

Adjusted Free Cash Flow (1) Considerations (1) Reconciliation to GAAP provided on slide 34. (2) Definition of adjusted free cash flow is net cash provided by operating activities of continuing operations minus capital expenditures for maintenance, net settlements on interest rate swaps, dividends paid on preferred stock, distributions to noncontrolling interests, and nonrecurring items. (3) Net of amortization of debt and discounts and fees 16 Certain Cash Flow Items (2) (millions) 2010 Actual 2011 Actual 2012 Assumptions  Cash interest expense(3) $119.3 $115.2 $92  Cash income taxes $10.0 $9.1 $7 to $10  Working capital ($16.7) $10.6 $30-$40  Maintenance CAPEX $37.9 $50.8 $75 to $85  Net cash swap-related settlements $51.6 $10.9 $0  Dividends paid on preferred stock $26 $26 $26 The increase in 2012 maintenance CAPEX is driven by the clinical information system roll-out, two major hospital renovations, and increased hospital refresh projects.  2012 adjusted free cash flow growth will be impacted by increased maintenance capital expenditures and working capital.  Multi-year adjusted free cash flow CAGR of 12% to 17%

Priorities for Reinvesting HealthSouth’s Free Cash Flows 17 Debt Reduction • Debt prepayment • Purchase leased properties (limited opportunity) •Growth in core business  Bed expansions  De novo hospitals  Acquisitions − Free standing IRFs − Hospital unit IRFs Growth Prioritie s Shareholder Distribution • Share repurchase ($125 million authorization) • Cash dividends (one time or regular) Alternate Opp o rtuni tie s

Priorities for Reinvesting HealthSouth’s Free Cash Flows (cont.) 18 •Growth in core business 2012 Assumptions (millions)  Bed expansions $20 to $25 (80-100 beds)  De novo hospitals $50 to $70 (complete Ocala; start 4 others)  Acquisitions (target 2/year) TBD − Free standing IRFs − Hospital unit $70 to $95, excluding acquisitions Growth Prioritie s Capital Allocation Considerations:  Financial leverage (subject to operating environment)  Relative risk/return characteristics (e.g. cash payback period, IRR, etc.)  Required cash outlay  Nature of opportunity (unique; time sensitive; otherwise limited; etc.)  External factors (regulatory, macro-economic)

Priorities for Reinvesting HealthSouth’s Free Cash Flows (cont.) 19 Debt Reduction • Debt prepayment • Purchase leased properties (limited opportunity) Shareholder Distribution • Share repurchase ($125 million authorization) • Cash dividends (one time or regular) Alternate Opp o rtuni tie s Capital Allocation Considerations:  Relative risk/return characteristics (e.g. cash payback period, IRR, etc.)  Financial leverage (subject to operating environment)  Depth of liquidity in the market  External factors (regulatory, macro-economic)

Appendix

Business Outlook: 2012 to 2014 Business Model • Adjusted EBITDA CAGR: 5-8% (1)(2) • Adjusted Free Cash Flow CAGR: 12-17% (1)(2) Strategy 2011 2012 2013 2014 Delevering (3) Achieved < 3.0x Debt to EBITDA < 3.0x Debt to EBITDA (subject to operating environment) Growth Same-store Growth (Includes bed expansions and unit consolidations) De novos (target of 4/year) IRF Acquisitions (target of 2/year) Opportunistic, disciplined acquisitions of complementary post-acute services (1) Reconciliation to GAAP provided on slides 34, 35, 38, and 39. (2) These are multi-year CAGRs; annual results may fall outside the range. (3) Exclusive of any E&Y recovery. 21 De novos 1- Cypress, TX • Clinical Information System (CIS) Pilot Key Operational Initiatives • Beacon (Management Reporting Software) = Labor / outcomes / quality optimization • TeamWorks = Care Management • “CPR” (Comfort, Professionalism, Respect) Initiative • CIS Company-wide Implementation Key Criteria: • Regulatory clarity • Market conditions • Purchase price and terms and conditions IRF Acquisitions 1- Drake, OH De novos 1- Ocala, FL

Business Outlook: Revenue Assumptions Revenue Volume • 2.5% to 3.5% annual growth (excludes acquisitions) • Includes bed expansions, de novos and unit consolidations Pricing 72% 8% 20% FY 2012 (1) FY 2013 FY 2014 Q4 11 - Q3 12 Q4 12 - Q3 13 Q4 13 - Q3 14 Mark t basket update (2) 2.9% 2.8% 2.9% Healthcare reform reduction 10 bps 10 bps 30 bps Productiv ity adjustment (2) 100 bps 120 bps ~ 110 bps Medicare Pricing 2012 2013 2014 3-5% 3-5% 3-5% Expected Price Increases Managed Care Medicare Managed Care Other (1) We believe based on the Medicare IRF-PPS Rule for FY 2012, HealthSouth should realize a net increase of approximately 1.6% in 2012. (2) Medicare IRF-PPS Rule for FY 2012 and management estimates for FY 2013 and FY 2014. (3) The Budget Control Act of 2011 includes a reduction of up to 2% to Medicare payments for all providers upon executive order of the President in January 2013. The reduction would be made from whatever level of payment would otherwise be provided under Medicare law and regulation. We currently estimate this automatic reduction, known as “sequestration,” will result in a net decrease to our net operating revenues of approx. $32 million in 2013. 22 2% Sequestration (3)

Business Outlook: Expense Assumptions Expense Salaries & Benefits (1) Hospital Expenses • Other operating expenses and supply costs tracking with inflation • Occupancy costs relatively constant as percent of revenue • Bad debt expense of approx. 1.3% to1.5% 2012 2013 2014 Merit increases (2) 2.25-2.5% 2.25-2.5% 2.25-2.5% Benefit costs in reases 5-8% 5-8% 5-8% General and Administrative ~4.5% of revenue (excludes stock-based compensation) Salaries & Benefits Hospital Expenses (1) Salaries, Wages and Benefits: ~ 90% Salaries and Wages; ~10% Benefits. (2) May be adjusted to offset the Budget Control Act of 2011 or other Medicare reduction legislation 23

HealthSouth’s volume growth has outpaced competitors’ (1) Data provided by UDSMR, a data gathering and analysis organization for the rehabilitation industry; represents ~ 65-70% of industry, including HealthSouth sites. (2) Includes consolidated HealthSouth inpatient rehabilitation hospitals classified as same store during that time period. Historic Discharge Growth vs. Industry - 40,000 80,000 120,000 2008 2009 2010 2011 Q4 Q3 Q2 Q1 4.7% 5.9% 5.9% 5.8% 5.9% 2.7% 2.5% 1.3% 24 -4.0% 0.5% -1.8% 1.5% -1.4% 0.6% 0.8% 3.4% 4.2% 5.0% 1.2% 3.5% 1.4% 4.0% -0.5% 1.7% Quarterly • TeamWorks = standardized and enhanced sales & marketing • Bed additions will help facilitate continued organic growth 2.1% 5.1% 6.1% 7.8% Yearly Discharge 6.9% 5.6% 3.1% 5.2% Growth Q110 vs. Q210 vs. Q310 vs. Q410 vs. Q111 vs. Q211 vs. Q311 vs. Q411 vs. Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Quarterly Discharge Growth Same Store HealthSouth vs. Industry UDS Industry Sites (1) HLS Same Store (2) 1.8% 6.5% 1.0% 5.0% 1.4% 1.9% 3.3% Yearly 2010 2011 2008 │ 2009 │ 2010 │ 2011 -1.4%

Our Track Record ($ in millions, except EPS) (1) Reconciliation to GAAP provided on slides 35 – 39. (2) 2010 income from continuing operations attributable to HealthSouth includes an income tax benefit of ~$741 million primarily due to the reversal of a substantial portion of the valuation allowance against deferred tax assets. $1,701 $1,785 $1,878 $2,027 2008 2009 2010 2011 Revenue 103,356 109,106 112,514 118,354 2008 2009 2010 2011 Discharge Growth $323 $364 $410 $466 2008 2009 2010 2011 Adjusted EBITDA (1) $2.28 $0.58 $8.20 $1.42 2008 2009 2010 2011 GAAP EPS (2) 25

($ Billions) Year-End 2010 Goal: 3.75x to 4.00x (1) Based on 2008 and 2011 Adjusted EBITDA of $322.6 million and $466.2 million, respectively; reconciliation to GAAP provided on slides 35 – 39. Debt and Liquidity Dec. 31, Dec. 31, 2011 2010 Cash Available 30.1$ 48.3$ Revolver Total Line 500.0$ 500.0$ Less: – Draws (110.0) (78.0) – Letters of credit (44.6) (45.6) 345.4$ 376.4$ Total Liquidity 375.5$ 424.7$ Available Liquidity 26 $1.81 $1.66 $1.51 $1.25 YE 2008 YE 2009 YE 2010 YE 2011 5.6x(1) 2.7x(1) Debt Outstanding Credit Ratings S&P Moodys Corporate Rating B+ Posit ive B1 Posit ive Revolver Rating BB Ba1 Senior Notes Rating B+ B2 (b ill io n s)

Debt Schedule (1) Based on 2011 and 2010 Adjusted EBITDA of $466.2 million and $409.6 million, respectively; reconciliation to GAAP provided on slides 35, 36, 38, and 39. 27 Change S&P Moody Dec. 31, Dec. 31, in Debt (Millions) Corporate B+ B1 2011 2010 vs. YE 2010 Advances under $500 million revolving credit facility, May 2016 - 3 Month LIBOR +225bps BB Ba1 110.0$ 78.0$ 32.0$ Term loan facility, May 2016 - 3 Month LIBOR +225bps BB Ba1 97.5 - 97.5 Bonds Payable: 10.75% Senior Notes due 2016 B+ B2 - 495.5 (495.5) 7.25% Senior Notes due 2018 B+ B2 336.7 275.0 61.7 8.125% Senior Notes due 2020 B+ B2 285.8 285.5 0.3 7.75% Senior Notes due 2022 B+ B2 312.0 250.0 62.0 Other bonds payable 1.5 1.8 (0.3) Other notes payable 35.3 36.4 (1.1) Capital lease obligations 75.9 89.1 (13.2) Long-term debt 1,254.7$ 1,511.3$ (256.6)$ Debt to Adjusted EBITDA (1) 2.7x 3.7x Credit Rating

Revenues & Expenses (2011 vs. 2010) Increase/ Revenues (millions) 2011 2010 (Decrease) Inpatient 1,866.4$ 1,722.7$ 8.3% Outpatient and other 160.5 154.9 3.6% Consolidated net operating 2,026.9$ 1,877.6$ 8.0% (Actual Amounts) Discharges 118,354 112,514 5.2% Net patient revenue / discharge 15,770$ 15,311$ 3.0% Expenses (millions) Salaries and benefits 982.0$ 921.7$ 6.5% Percent of net operating revenues 48.4% 49.1% (70 bps) EPOB (employees per occupied bed) 3.47 3.49 (0.6%) Hospital-related expenses 456.2$ 430.2$ 6.0% (other operating, supplies, occupancy, bad debts) Percent of net operating revenues 22.5% 22.9% (40 bps) General and administrative 90.2$ 89.8$ 0.4% (excludes stock-based compensation) Percent of net operating revenues 4.5% 4.8% (30 bps) Full Year 28

Revenues & Expenses (Sequential) Q4 Q3 Increase/ Revenues (millions) 2011 2011 (Decrease) Inpatient 480.1$ 458.8$ 4.6% Outpatient and other 38.0 38.9 (2.3%) Consolidated net operating 518.1$ 497.7$ 4.1% (Actual Amounts) Discharges 30,066 29,350 2.4% Net patient revenue / discharge 15,968$ 15,632$ 2.1% Expenses (millions) Salaries and benefits 251.4$ 245.0$ 2.6% Percent of net operating revenues 48.5% 49.2% (70 bps) EPOB (employees per occupied bed) 3.46 3.53 (2.0%) Hospital-related expenses 111.8$ 112.6$ (0.7%) (other operating, supplies, occupancy, bad debts) Percent of net operating revenues 21.6% 22.6% (100 bps) General and administrative 23.9$ 21.5$ 11.2% (excludes stock-based compensation) Percent of net operating revenues 4.6% 4.3% 30 bps 29

Payment Sources (Percent of Revenues) 2011 2010 2011 2010 Medicare 72.8% 71.6% 72.0% 70.5% Medicaid 1.4% 1.6% 1.6% 1.8% Workers' compensation 1.5% 1.5% 1.6% 1.6% Managed care and other discount plans (1) 19.5% 20.6% 19.8% 21.3% Other third-party payors 2.0% 2.2% 2.0% 2.3% Patients 1.2% 1.3% 1.2% 1.3% Other income 1.6% 1.2% 1.8% 1.2% Total 100.0% 100.0% 100.0% 100.0% Q4 Full Year (1) Managed Medicare revenues represent ~ 8%, 8%, 7%, and 8% of total revenues for Q4 2011, Q4 2010, full year 2011, and full year 2010, respectively, and are included in “Managed care and other discount plans.” 30

Operational and Labor Metrics (1) (1) All metrics have been reclassified to reflect current continuing operations. (2) Represents discharges from HealthSouth’s 96 consolidated hospitals in Q4 2011, 94 consolidated hospitals in Q3 2011, Q2 2011, Q1 2011, Q4 2010 and Q3 2010, 92 consolidated hospitals in Q2 2010, and 90 consolidated hospitals prior to Q2 2010. (3) Excludes approximately 400 full-time equivalents who are considered part of corporate overhead with their salaries and benefits included in general and administrative expenses in the Company’s consolidated statements of operations. Full-time equivalents included in the above table represent HealthSouth employees who participate in or support the operations of the Company’s hospitals. (4) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of full-time equivalents, including an estimate of full- time equivalents from the utilization of contract labor, by the number of occupied beds during each period. The number of occupied beds is determined by multiplying the number of licensed beds by the Company’s occupancy percentage. Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Full Year 2011 Full Year 2010 Net patient revenue-inpatient 480.1$ 458.8$ 465.4$ 462.1$ 452.3$ 422.6$ 427.6$ 420.2$ 1,866.4$ 1,722.7$ Net patient revenue-outpatient and other revenues 38.0 38.9 39.7 43.9 38.6 38.2 39.7 38.4 160.5 154.9 Net operating revenues 518.1$ 497.7$ 505.1$ 506.0$ 490.9$ 460.8$ 467.3$ 458.6$ 2,026.9$ 1,877.6$ Discharges (2) 30,066 29,350 29,811 29,127 29,462 27,931 28,098 27,023 118,354 112,514 Outpatient visits 225,062 236,969 244,647 236,761 244,719 253,837 260,374 250,467 943,439 1,009,397 Average length of stay 13.4 13.4 13.4 13.8 13.4 13.8 13.7 14.2 13.5 13.8 Occupancy % 67.7% 67.2% 69.0% 70.2% 67.8% 66.0% 67.8% 69.3% 67.7% 67.0% # of licensed beds 6,461 6,376 6,356 6,350 6,331 6,331 6,250 6,129 6,461 6,331 Occupied beds 4,374 4,285 4,386 4,458 4,292 4,178 4,238 4,247 4,374 4,242 Full-time equivalents (FTEs) (3) 15,079 15,081 15,150 15,044 14,958 14,785 14,628 14,450 15,089 14,705 Contract labor 56 60 76 89 84 71 84 74 70 79 Total FTE and contract labor 15,135 15,141 15,226 15,133 15,042 14,856 14,712 14,524 15,159 14,784 EPOB (4) 3.46 3.53 3.47 3.39 3.50 3.56 3.47 3.42 3.47 3.49 (In Millions) (Actual Amounts) 31

Outstanding Share Summary and Warrant Information (Millions) Q4 Q4 FY FY 2011 2010 2011 2010 Basic Shares outstanding (1) (2) 93.3 92.8 93.3 92.8 Diluted Shares outstanding (1) (2) (3) 109.1 108.8 109.2 108.5 Q4 Q4 FY FY 2011 2010 2011 2010 Basic Shares outstanding (1) (2) 93.3 92.8 93.3 92.8 Diluted Shares outstanding (1) (2) (3) 109.1 108.8 109.3 108.5 Weighted Average for the Period End of Period 32 Notes: (1) Does not include 2.0 million warrants issued in connection with a January 2004 loan repaid to Credit Suisse First Boston. In connection with this transaction, we issued warrants to the lender to purchase two million shares of our common stock. Each warrant has a term of ten years from the date of issuance (expire January 16, 2014) and an exercise price of $32.50 per share. The warrants were not assumed exercised for dilutive shares outstanding because they were antidilutive in the periods presented. (2) The agreement to settle our class action securities litigation received final court approval in January 2007. These shares of common stock and warrants were issued on September 30, 2009. The 5.0 million of common shares are now included in the outstanding shares. The warrants to purchase approx. 8.2 million shares of common stock at a strike price of $41.40 (expire January 17, 2017) were not assumed exercised for the dilutive shares outstanding because they are antidilutive in the periods presented. (3) The difference between the basic and diluted shares outstanding is primarily related to our convertible perpetual preferred stock (13.1 million common shares). The preferred stock is convertible, at the option of the holder, at any time into shares of common stock at an initial conversion price of $30.50 per share, which is equal to an initial conversion rate of approximately 32.7869 shares of common stock per share of preferred stock, subject to a specified adjustment. We may at any time cause the shares of preferred stock to be automatically converted into shares of our common stock at the conversion rate then in effect if the closing price of our common stock for 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date we give the notice of forced conversion exceeds 150% of the conversion price of the preferred stock.

Adjusted EBITDA (1) History 33 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (Millions) 2011 2011 2011 2011 2010 2010 2010 2010 2011 2010 Net operating revenues 518.1$ 497.7$ 505.1$ 506.0$ 490.9$ 460.8$ 467.3$ 458.6$ 2,026.9$ 1,877.6$ Operating expenses: Salaries and benefits (2) (251.4) (245.0) (241.6) (244.0) (237.5) (231.5) (226.2) (226.3) (982.0) (921.5) Hospital-related expenses: Other operating expenses (67.4) (70.3) (75.4) (70.9) (72.1) (65.4) (70.8) (61.2) (284.0) (269.5) Supplies (26.1) (24.7) (26.2) (25.8) (26.1) (24.1) (25.0) (24.2) (102.8) (99.4) Occupancy costs (12.2) (12.5) (12.1) (11.6) (11.9) (11.4) (10.7) (10.9) (48.4) (44.9) Prov ision for doubtful accounts (6.1) (5.1) (5.0) (4.8) (1.6) (3.7) (5.2) (5.9) (21.0) (16.4) (111.8) (112.6) (118.7) (113.1) (111.7) (104.6) (111.7) (102.2) (456.2) (430.2) General and administrative expenses (3) (23.9) (21.5) (22.1) (22.7) (23.1) (21.5) (22.7) (22.5) (90.2) (89.8) Equity in nonconsolidated affiliates 3.2 3.1 3.2 2.5 2.6 2.3 2.6 2.6 12.0 10.1 Other income 1.2 0.2 0.7 0.6 1.5 0.7 1.4 0.7 2.7 4.3 Noncontrolling interests (4) (12.5) (11.4) (11.3) (11.8) (10.6) (10.3) (10.3) (9.7) (47.0) (40.9) Adjusted EBITDA 122.9$ 110.5$ 115.3$ 117.5$ 112.1$ 95.9$ 100.4$ 101.2$ 466.2$ 409.6$ (1) Reconciliation to GAAP provided on slides 35, 36, 38, and 39. Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2011 2011 2011 2011 2010 2010 2010 2010 2011 2010 In arriv ing at Adjusted EBITDA, the following were excluded: (2) Restructuring charges -$ -$ -$ -$ -$ 0.2$ -$ -$ -$ 0.2$ (3) Stock-based compensation expense 5.9 4.9 5.3 4.2 5.2 3.4 4.0 3.8 20.3 16.4 (4) Noncontrolling interests related to discontinued operations - (0.1) (0.9) (0.1) 0.1 (0.2) (0.1) 0.1 (1.1) (0.1) Full Year Full Year

Adjusted Free Cash Flow Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Millions) 2011 2010 2011 2010 2009 2008 129.6$ 67.1$ 342.7$ 331.0$ 406.1$ 227.2$ 0.3 (2.8) (9.1) (13.2) (5.7) (32.5) Capital expenditures for maintenance (1) (15.7) (13.3) (50.8) (37.9) (33.2) (41.5) Net sett lements on interest rate swaps (2) - (11.0) (10.9) (44.7) (42.2) (20.7) Dividends paid on convert ible perpetual preferred stock Distribut ions paid to noncontrolling interests of consolidated affiliates Non-recurring items: UBS Sett lement proceeds, less fees to derivative plaint iffs' attorneys Net premium paid (received) on bond issuance/redemption - - 22.8 - - - Cash paid for professional fees - accounting, tax and legal Cash paid for government, class action and related sett lements (1.0) (1.6) (7.9) (13.5) (63.7) (89.4) Adjusted free cash flow 99.2$ 29.3$ 243.3$ 181.4$ 155.4$ 9.3$ - - 4.8 3.4 (2.0) 2.1 activities of continuing operations Net cash provided by operating Impact of discontinued operations - (73.8) Net cash provided by operating activities Q4 129.9 64.3 18.2 5.7 2.9 11.2 17.2 15.3 7.4 21.0 333.6 (26.0) 400.4 (34.4) 317.8 Income tax refunds related to prior periods (6.5) (6.5) (10.3) (8.1) - (44.2) (26.0) (26.0) Full Year 194.7 (26.0) (33.4) - (32.6) (1) Maintenance capital expenditures are expected to be $75 to $85 million in 2012. (2) Final swap payment of $10.9 million was made in March 2011. 34

Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) – Notes on page 38. (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Total Per Share Net income 91.5$ 32.3$ 68.3$ 62.5$ 254.6$ (Income) loss from disc ops, net of tax, attributable to HealthSouth (17.6) (2.5) (34.8) 5.0 (49.9) Net income attributable to noncontrolling interests (11.7) (10.4) (11.3) (12.5) (45.9) Income from continuing operations attributable to HealthSouth (2) 62.2 0.57$ 19.4 0.14$ 22.2 0.17$ 55.0 0.50$ 158.8 1.42$ Gov't, class action, and related settlements - (10.6) - (1.7) (12.3) Pro fees - acct, tax, and legal 3.8 8.4 4.0 4.8 21.0 Provision for income tax (benefit) expense (7.4) 11.2 18.1 15.2 37.1 Interest expense and amortization of debt discounts and fees 35.1 34.9 26.3 23.1 119.4 Depreciation and amortization 19.5 19.6 19.5 20.2 78.8 Loss on early extinguishment of debt - 26.1 12.7 - 38.8 Net noncash loss on disposal of assets 0.1 1.0 2.8 0.4 4.3 Stock-based compensation expense 4.2 5.3 4.9 5.9 20.3 Adjusted EBITDA (1)(3) 117.5$ 115.3$ 110.5$ 122.9$ 466.2$ Weighted average common shares outstanding: Basic 93.1 93.3 93.3 93.3 93.3 Diluted 109.0 109.5 109.2 109.1 109.2 2011 Q1 Q2 Full YearQ3 Q4 35

Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) – Notes on page 38. (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Total Per Share Net income 50.5$ 57.5$ 41.9$ 789.9$ 939.8$ Income from disc ops, net of tax, attributable to HealthSouth (1.2) (3.4) (3.4) (1.2) (9.2) Net income attributable to noncontrolling interests (9.8) (10.2) (10.1) (10.7) (40.8) Income from continuing operations attributable to HealthSouth (2) 39.5 0.36$ 43.9 0.40$ 28.4 0.24$ 778.0 7.15$ 889.8 8.20$ Gov't, class action, and related settlements - - 0.8 0.3 1.1 Pro fees - acct, tax, and legal 2.9 5.7 5.2 3.4 17.2 Loss (gain) on interest rate swaps 4.3 (0.3) 9.0 0.3 13.3 Provision for income tax expense (benefit) 2.4 (1.3) (0.4) (741.5) (740.8) Interest expense and amortization of debt discounts and fees 30.5 30.1 30.8 34.2 125.6 Depreciation and amortization 17.5 17.8 18.4 19.4 73.1 Net noncash loss on disposal of assets - 0.4 0.1 0.9 1.4 Loss on early extinguishment of debt 0.3 0.1 - 11.9 12.3 Stock-based compensation expense 3.8 4.0 3.4 5.2 16.4 Other - - 0.2 - 0.2 Adjusted EBITDA (1)(3) 101.2$ 100.4$ 95.9$ 112.1$ 409.6$ Weighted average common shares outstanding: Basic 92.7 92.8 92.8 92.8 92.8 Diluted 108.0 108.2 108.3 108.8 108.5 2010 Q1 Q2 Q3 Q4 Full Year 36

Reconciliation of Net Income to Adjusted EBITDA (1) (3) (in millions, except per share data) Total Per Share Total Per Share Net income 281.8$ 128.8$ Income from disc ops, net of tax, attributable to HealthSouth (32.5) (17.7) Net income attributable to noncontrolling interests (29.4) (34.0) Income from continuing operations attributable to HealthSouth (2) 219.9 2.28$ 77.1 0.58$ Gain on UBS Settlement (121.3) - Gov't, class action, and related settlements (67.2) 36.7 Pro fees - acct, tax, and legal 44.4 8.8 Loss on interest rate swaps 55.7 19.6 Provision for income tax benefit (69.1) (2.9) Interest expense and amortization of debt discounts and fees 159.3 125.7 Depreciation and amortization 78.9 67.6 Other adjustments per the Company's Credit Agreement: Impairment charges, including investments 2.4 1.4 Net noncash loss on disposal of assets 2.0 3.4 Loss on early extinguishment of debt 5.9 12.5 Stock-based compensation expense 11.7 13.4 Other - 0.4 Adjusted EBITDA (1)(3) 322.6$ 363.7$ Weighted average common shares outstanding: Basic 83.0 88.8 Diluted 96.4 103.3 Full Year 2008 2009 (1) (2) (3) – Notes on page 38. 37

Reconciliation Notes for Slides 35-37 1. Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non- GAAP financial measure. Management and some members of the investment community utilize Adjusted EBITDA as a financial measure and the leverage ratio as a liquidity measure on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance or liquidity. In evaluating Adjusted EBITDA, the reader should be aware that in the future HealthSouth may incur expenses similar to the adjustments set forth. 2. Per share amounts for each period presented are based on diluted weighted average shares outstanding unless the amounts are antidilutive, in which case the per share amount is calculated using the basic share count after subtracting the $6.5 million per quarter dividend on the convertible perpetual preferred stock. The difference in shares between the basic and diluted shares outstanding is primarily related to our convertible perpetual preferred stock. 3. Adjusted EBITDA is a component of our guidance. 38

(Millions) 2011 2010 2011 2010 2009 2008 Net cash provided by operating activities 129.6$ 67.1$ 342.7$ 331.0$ 406.1$ 227.2$ Provision for doubtful accounts (6.1) (1.6) (21.0) (16.4) (30.7) (23.0) Professional fees—accounting, tax, and legal 4.8 3.4 21.0 17.2 8.8 44.4 Interest expense and amortization of debt discounts and fees 23.1 34.2 119.4 125.6 125.7 159.3 UBS Settlement proceeds, gross - - - - (100.0) - Equity in net income of nonconsolidated affiliates 3.2 2.6 12.0 10.1 4.6 10.6 Net income attributable to noncontrolling interests in continuing operations (12.5) (10.6) (47.0) (40.9) (33.3) (29.8) Amortization of debt discounts and fees (0.9) (1.2) (4.2) (6.3) (6.6) (6.5) Distributions from nonconsolidated affiliates (3.3) (3.4) (13.0) (8.1) (8.6) (10.9) Current portion of income tax expense (benefit) 2.1 4.6 0.6 2.9 (7.0) (72.8) Change in assets and liabilit ies (15.9) 16.9 49.9 2.8 (2.1) 50.6 Net premium paid on bond issuance/redemption - - 22.8 - - - Change in government, class action and related settlements liability (2.0) 2.1 (8.5) 2.9 11.2 7.4 Cash (provided by) used in operating activ ities of discontinued operations 0.3 (2.8) (9.1) (13.2) (5.7) (32.5) Other 0.5 0.8 0.6 2.0 1.3 (1.4) Adjusted EBITDA 122.9$ 112.1$ 466.2$ 409.6$ 363.7$ 322.6$ Q4 Full Year Adjusted EBITDA Reconciled to Net Cash Provided by Operating Activities 39