Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2013

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” Each of the subsidiary guarantors is 100% owned by HealthSouth, and all guarantees are full and unconditional and joint and several, subject to certain customary conditions for release. HealthSouth’s investments in its consolidated subsidiaries, as well as guarantor subsidiaries’ investments in nonguarantor subsidiaries and nonguarantor subsidiaries’ investments in guarantor subsidiaries, are presented under the equity method of accounting with the related investment presented within the line items Intercompany receivable and Intercompany payable in the accompanying condensed consolidating balance sheets.

As described in Note 8, Long-term Debt, to the consolidated financial statements accompanying the 2012 Form 10-K, the terms of our credit agreement restrict us from declaring or paying cash dividends on our common stock unless: (1) we are not in default under our credit agreement and (2) the amount of the dividend, when added to the aggregate amount of certain other defined payments made during the same fiscal year, does not exceed certain maximum thresholds. However, as described in Note 11, Convertible Perpetual Preferred Stock, to the consolidated financial statements accompanying the 2012 Form 10-K, our preferred stock generally provides for the payment of cash dividends, subject to certain limitations.

During the third quarter of 2013, certain wholly owned subsidiaries of HealthSouth made a dividend or distribution of available cash, including intercompany receivable balances, to their parents. In addition, HealthSouth made contributions to certain wholly owned subsidiaries. These dividends, distributions, and contributions impacted the Intercompany receivable, Intercompany payable, and HealthSouth shareholders’ equity line items in the accompanying condensed consolidating balance sheet as of September 30, 2013 but had no impact on the consolidated financial statements of HealthSouth Corporation.

	Three Months Ended September 30, 2013
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	3.0		$	399.7		$	179.2		$	(17.9	)	$	564.0
Less: Provision for doubtful accounts	—			(5.6		)	(2.4		)	—			(8.0		)
Net operating revenues less provision for doubtful accounts	3.0			394.1			176.8			(17.9		)	556.0
Operating expenses:
Salaries and benefits	0.1			187.4			85.6			(3.6		)	269.5
Other operating expenses	3.2			59.6			27.9			(8.5		)	82.2
Occupancy costs	1.0			12.0			4.5			(5.8		)	11.7
Supplies	—			17.9			7.6			—			25.5
General and administrative expenses	28.8			—			—			—			28.8
Depreciation and amortization	2.2			16.7			5.4			—			24.3
Government, class action, and related settlements	(21.3		)	—			—			—			(21.3		)
Professional fees—accounting, tax, and legal	4.2			—			—			—			4.2
Total operating expenses	18.2			293.6			131.0			(17.9		)	424.9
Interest expense and amortization of debt discounts and fees	22.4			2.4			0.8			(0.3		)	25.3
Other income	(0.4		)	—			(0.5		)	0.3			(0.6		)
Equity in net income of nonconsolidated affiliates	(0.3		)	(1.7		)	—			—			(2.0		)
Equity in net income of consolidated affiliates	(59.7		)	(5.5		)	—			65.2			—
Management fees	(25.2		)	19.2			6.0			—			—
Income from continuing operations before income tax (benefit) expense	48.0			86.1			39.5			(65.2		)	108.4
Provision for income tax (benefit) expense	(10.3		)	34.9			10.6			—			35.2
Income from continuing operations	58.3			51.2			28.9			(65.2		)	73.2
Loss from discontinued operations, net of tax	(0.1		)	(0.4		)	(0.4		)	—			(0.9		)
Net Income	58.2			50.8			28.5			(65.2		)	72.3
Less: Net income attributable to noncontrolling interests	—			—			(14.1		)	—			(14.1		)
Net income attributable to HealthSouth	$	58.2		$	50.8		$	14.4		$	(65.2	)	$	58.2
Comprehensive income	$	58.3		$	50.8		$	28.5		$	(65.2	)	$	72.4
Comprehensive income attributable to HealthSouth	$	58.3		$	50.8		$	14.4		$	(65.2	)	$	58.3

	Three Months Ended September 30, 2012
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	2.8		$	385.1		$	164.6		$	(15.5	)	$	537.0
Less: Provision for doubtful accounts	—			(4.7		)	(2.3		)	—			(7.0		)
Net operating revenues less provision for doubtful accounts	2.8			380.4			162.3			(15.5		)	530.0
Operating expenses:
Salaries and benefits	6.3			181.0			78.4			(3.4		)	262.3
Other operating expenses	3.3			56.5			25.1			(7.9		)	77.0
Occupancy costs	1.0			11.1			3.9			(4.2		)	11.8
Supplies	—			17.0			6.8			—			23.8
General and administrative expenses	29.3			—			—			—			29.3
Depreciation and amortization	2.2			14.6			4.5			—			21.3
Government, class action, and related settlements	(3.5		)	—			—			—			(3.5		)
Professional fees—accounting, tax, and legal	4.1			—			—			—			4.1
Total operating expenses	42.7			280.2			118.7			(15.5		)	426.1
Loss on early extinguishment of debt	1.3			—			—			—			1.3
Interest expense and amortization of debt discounts and fees	21.2			1.9			0.7			(0.3		)	23.5
Other income	(0.7		)	(5.0		)	(0.7		)	0.3			(6.1		)
Equity in net income of nonconsolidated affiliates	(1.4		)	(1.9		)	—			—			(3.3		)
Equity in net income of consolidated affiliates	(68.1		)	(4.8		)	—			72.9			—
Management fees	(23.9		)	18.6			5.3			—			—
Income from continuing operations before income tax (benefit) expense	31.7			91.4			38.3			(72.9		)	88.5
Provision for income tax (benefit) expense	(15.5		)	34.2			9.4			—			28.1
Income from continuing operations	47.2			57.2			28.9			(72.9		)	60.4
(Loss) income from discontinued operations, net of tax	(0.1		)	0.2			(0.6		)	—			(0.5		)
Net Income	47.1			57.4			28.3			(72.9		)	59.9
Less: Net income attributable to noncontrolling interests	—			—			(12.8		)	—			(12.8		)
Net income attributable to HealthSouth	$	47.1		$	57.4		$	15.5		$	(72.9	)	$	47.1
Comprehensive income	$	48.2		$	57.4		$	28.3		$	(72.9	)	$	61.0
Comprehensive income attributable to HealthSouth	$	48.2		$	57.4		$	15.5		$	(72.9	)	$	48.2

	Nine Months Ended September 30, 2013
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	9.0		$	1,215.1		$	529.2		$	(52.2	)	$	1,701.1
Less: Provision for doubtful accounts	—			(15.6		)	(6.8		)	—			(22.4		)
Net operating revenues less provision for doubtful accounts	9.0			1,199.5			522.4			(52.2		)	1,678.7
Operating expenses:
Salaries and benefits	13.5			565.7			249.4			(10.9		)	817.7
Other operating expenses	9.1			177.4			79.8			(25.0		)	241.3
Occupancy costs	3.1			35.9			13.1			(16.3		)	35.8
Supplies	—			55.1			23.2			—			78.3
General and administrative expenses	88.5			—			—			—			88.5
Depreciation and amortization	6.5			47.8			15.2			—			69.5
Government, class action, and related settlements	(23.3		)	—			—			—			(23.3		)
Professional fees—accounting, tax, and legal	7.8			—			—			—			7.8
Total operating expenses	105.2			881.9			380.7			(52.2		)	1,315.6
Interest expense and amortization of debt discounts and fees	66.8			5.7			2.4			(1.0		)	73.9
Other income	(0.7		)	(0.8		)	(2.7		)	1.0			(3.2		)
Equity in net income of nonconsolidated affiliates	(2.5		)	(5.7		)	—			—			(8.2		)
Equity in net income of consolidated affiliates	(243.3		)	(22.3		)	—			265.6			—
Management fees	(76.6		)	58.7			17.9			—			—
Income from continuing operations before income tax (benefit) expense	160.1			282.0			124.1			(265.6		)	300.6
Provision for income tax (benefit) expense	(114.5		)	69.7			27.0			—			(17.8		)
Income from continuing operations	274.6			212.3			97.1			(265.6		)	318.4
Income (loss) from discontinued operations, net of tax	0.1			(0.1		)	(1.2		)	—			(1.2		)
Net Income	274.7			212.2			95.9			(265.6		)	317.2
Less: Net income attributable to noncontrolling interests	—			—			(42.5		)	—			(42.5		)
Net income attributable to HealthSouth	$	274.7		$	212.2		$	53.4		$	(265.6	)	$	274.7
Comprehensive income	$	273.1		$	212.2		$	95.9		$	(265.6	)	$	315.6
Comprehensive income attributable to HealthSouth	$	273.1		$	212.2		$	53.4		$	(265.6	)	$	273.1

	Nine Months Ended September 30, 2012
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	6.3		$	1,164.9		$	481.6		$	(43.8	)	$	1,609.0
Less: Provision for doubtful accounts	(0.2		)	(13.9		)	(5.7		)	—			(19.8		)
Net operating revenues less provision for doubtful accounts	6.1			1,151.0			475.9			(43.8		)	1,589.2
Operating expenses:
Salaries and benefits	18.7			544.4			227.8			(10.2		)	780.7
Other operating expenses	9.0			166.4			71.5			(21.1		)	225.8
Occupancy costs	3.1			33.4			12.6			(12.5		)	36.6
Supplies	—			54.7			21.5			—			76.2
General and administrative expenses	87.3			—			—			—			87.3
Depreciation and amortization	6.4			42.2			12.2			—			60.8
Government, class action, and related settlements	(3.5		)	—			—			—			(3.5		)
Professional fees—accounting, tax, and legal	13.2			—			—			—			13.2
Total operating expenses	134.2			841.1			345.6			(43.8		)	1,277.1
Loss on early extinguishment of debt	1.3			—			—			—			1.3
Interest expense and amortization of debt discounts and fees	63.1			5.7			1.9			(0.9		)	69.8
Other income	(1.1		)	(5.1		)	(2.1		)	0.9			(7.4		)
Equity in net income of nonconsolidated affiliates	(3.3		)	(6.4		)	—			—			(9.7		)
Equity in net income of consolidated affiliates	(206.2		)	(15.6		)	—			221.8			—
Management fees	(72.6		)	56.4			16.2			—			—
Income from continuing operations before income tax (benefit) expense	90.7			274.9			114.3			(221.8		)	258.1
Provision for income tax (benefit) expense	(46.7		)	103.0			27.8			—			84.1
Income from continuing operations	137.4			171.9			86.5			(221.8		)	174.0
Income from discontinued operations, net of tax	0.6			0.7			1.3			—			2.6
Net Income	138.0			172.6			87.8			(221.8		)	176.6
Less: Net income attributable to noncontrolling interests	—			—			(38.6		)	—			(38.6		)
Net income attributable to HealthSouth	$	138.0		$	172.6		$	49.2		$	(221.8	)	$	138.0
Comprehensive income	$	140.1		$	172.6		$	87.8		$	(221.8	)	$	178.7
Comprehensive income attributable to HealthSouth	$	140.1		$	172.6		$	49.2		$	(221.8	)	$	140.1

	As of September 30, 2013
	HealthSouth Corporation		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	61.6	$	1.9	$	1.5	$	—		$	65.0
Accounts receivable, net	—		178.2		75.2		—			253.4
Deferred income tax assets	106.6		19.7		11.2		—			137.5
Other current assets	48.9		13.8		92.3		(35.8		)	119.2
Total current assets	217.1		213.6		180.2		(35.8		)	575.1
Property and equipment, net	12.9		688.3		192.3		—			893.5
Goodwill	—		279.8		177.4		—			457.2
Intangible assets, net	18.4		48.5		20.4		—			87.3
Deferred income tax assets	311.7		33.5		67.4		—			412.6
Other long-term assets	67.0		19.0		44.8		—			130.8
Intercompany receivable	1,425.1		—		—		(1,425.1		)	—
Total assets	$	2,052.2	$	1,282.7	$	682.5	$	(1,460.9	)	$	2,556.5
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	9.4	$	32.9	$	11.9	$	—		$	54.2
Accrued expenses and other current liabilities	148.8		65.7		78.9		(35.8		)	257.6
Total current liabilities	158.2		98.6		90.8		(35.8		)	311.8
Long-term debt, net of current portion	1,180.6		89.2		36.4		—			1,306.2
Other long-term liabilities	50.1		11.6		78.7		—			140.4
Intercompany payable	—		381.8		239.3		(621.1		)	—
	1,388.9		581.2		445.2		(656.9		)	1,758.4
Commitments and contingencies
Convertible perpetual preferred stock	342.2		—		—		—			342.2
Redeemable noncontrolling interests	—		—		13.9		—			13.9
Shareholders’ equity:
HealthSouth shareholders’ equity	321.1		701.5		102.5		(804.0		)	321.1
Noncontrolling interests	—		—		120.9		—			120.9
Total shareholders’ equity	321.1		701.5		223.4		(804.0		)	442.0
Total liabilities and shareholders’ equity	$	2,052.2	$	1,282.7	$	682.5	$	(1,460.9	)	$	2,556.5

	As of December 31, 2012
	HealthSouth Corporation		Guarantor Subsidiaries		Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	131.3	$	0.3	$	1.2		$	—		$	132.8
Accounts receivable, net	0.2		178.8		70.3			—			249.3
Deferred income tax assets	106.5		19.7		11.3			—			137.5
Other current assets	30.5		15.2		89.0			(17.5		)	117.2
Total current assets	268.5		214.0		171.8			(17.5		)	636.8
Property and equipment, net	12.7		550.3		185.0			—			748.0
Goodwill	—		266.1		171.2			—			437.3
Intangible assets, net	18.1		41.5		13.6			—			73.2
Deferred income tax assets	340.7		0.9		51.9			—			393.5
Other long-term assets	69.9		21.3		44.2			—			135.4
Intercompany receivable	1,244.4		—		—			(1,244.4		)	—
Total assets	$	1,954.3	$	1,094.1	$	637.7		$	(1,261.9	)	$	2,424.2
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	7.4	$	28.3	$	9.6		$	—		$	45.3
Accrued expenses and other current liabilities	128.6		73.8		70.7			(17.5		)	255.6
Total current liabilities	136.0		102.1		80.3			(17.5		)	300.9
Long-term debt, net of current portion	1,147.3		64.2		28.4			—			1,239.9
Other long-term liabilities	37.8		11.2		81.5			—			130.5
Intercompany payable	—		515.6		1,021.4			(1,537.0		)	—
	1,321.1		693.1		1,211.6			(1,554.5		)	1,671.3
Commitments and contingencies
Convertible perpetual preferred stock	342.2		—		—			—			342.2
Redeemable noncontrolling interests	—		—		7.2			—			7.2
Shareholders’ equity (deficit):
HealthSouth shareholders’ equity (deficit)	291.0		401.0		(693.6		)	292.6			291.0
Noncontrolling interests	—		—		112.5			—			112.5
Total shareholders’ equity (deficit)	291.0		401.0		(581.1		)	292.6			403.5
Total liabilities and shareholders’ equity (deficit)	$	1,954.3	$	1,094.1	$	637.7		$	(1,261.9	)	$	2,424.2

	Nine Months Ended September 30, 2013
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries		HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	70.9		$	215.6		$	82.9		$	—	$	369.4
Cash flows from investing activities:
Purchases of property and equipment	(5.2		)	(142.3		)	(19.3		)	—		(166.8		)
Capitalized software costs	(4.8		)	(7.6		)	(3.2		)	—		(15.6		)
Acquisition of business, net of cash acquired	—			(28.9		)	—			—		(28.9		)
Proceeds from sale of restricted investments	—			—			16.9			—		16.9
Proceeds from sale of Digital Hospital	10.8			—			—			—		10.8
Purchase of restricted investments	—			—			(8.1		)	—		(8.1		)
Net change in restricted cash	(0.2		)	—			(3.7		)	—		(3.9		)
Other	—			(1.0		)	(0.6		)	—		(1.6		)
Net cash provided by (used in) investing activities	0.6			(179.8		)	(18.0		)	—		(197.2		)
Cash flows from financing activities:
Principal payments on debt, including pre-payments	(1.5		)	(1.0		)	—			—		(2.5		)
Principal borrowings on notes	—			—			15.2			—		15.2
Borrowings on revolving credit facility	147.0			—			—			—		147.0
Payments on revolving credit facility	(112.0		)	—			—			—		(112.0		)
Principal payments under capital lease obligations	(0.2		)	(5.7		)	(2.7		)	—		(8.6		)
Repurchase of common stock, including fees and expenses	(234.1		)	—			—			—		(234.1		)
Debt issue costs	(1.2		)	—			—			—		(1.2		)
Dividends paid on convertible perpetual preferred stock	(17.2		)	—			—			—		(17.2		)
Distributions paid to noncontrolling interests of consolidated affiliates	—			—			(34.1		)	—		(34.1		)
Proceeds from exercising stock options	7.5			—			—			—		7.5
Change in intercompany advances	70.5			(27.5		)	(43.0		)	—		—
Net cash used in financing activities	(141.2		)	(34.2		)	(64.6		)	—		(240.0		)
(Decrease) increase in cash and cash equivalents	(69.7		)	1.6			0.3			—		(67.8		)
Cash and cash equivalents at beginning of period	131.3			0.3			1.2			—		132.8
Cash and cash equivalents at end of period	$	61.6		$	1.9		$	1.5		$	—	$	65.0

	Nine Months Ended September 30, 2012
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	21.2		$	182.6		$	99.1		$	(0.7	)	$	302.2
Cash flows from investing activities:
Purchases of property and equipment	(3.3		)	(76.3		)	(32.9		)	—			(112.5		)
Capitalized software costs	(9.5		)	(3.2		)	(3.0		)	—			(15.7		)
Acquisition of business, net of cash acquired	—			(3.1		)	—			—			(3.1		)
Proceeds from sale of restricted investments	—			—			0.3			—			0.3
Purchase of restricted investments	—			—			(8.6		)	—			(8.6		)
Net change in restricted cash	(0.1		)	—			7.7			—			7.6
Other	(0.1		)	(0.1		)	0.2			—			—
Net cash provided by investing activities of discontinued operations	—			3.3			4.4			—			7.7
Net cash used in investing activities	(13.0		)	(79.4		)	(31.9		)	—			(124.3		)
Cash flows from financing activities:
Principal borrowings on notes	7.3			—			(7.3		)	—			—
Proceeds from bond issuance	275.0			—			—			—			275.0
Principal payments on debt, including pre-payments	(100.4		)	(0.9		)	—			—			(101.3		)
Borrowings on revolving credit facility	135.0			—			—			—			135.0
Payments on revolving credit facility	(245.0		)	—			—			—			(245.0		)
Principal payments under capital lease obligations	(0.2		)	(6.6		)	(2.1		)	—			(8.9		)
Repurchase of convertible perpetual preferred stock	(46.0		)	—			—			—			(46.0		)
Debt issue costs	(7.0		)	—			—			—			(7.0		)
Dividends paid on convertible perpetual preferred stock	(18.9		)	—			—			—			(18.9		)
Distributions paid to noncontrolling interests of consolidated affiliates	—			—			(37.6		)	—			(37.6		)
Contributions from consolidated affiliates	—			—			9.5			—			9.5
Proceeds from exercising stock options	0.4			—			—			—			0.4
Change in intercompany advances	124.7			(95.0		)	(30.4		)	0.7			—
Net cash provided by (used in) financing activities	124.9			(102.5		)	(67.9		)	0.7			(44.8		)
Increase (decrease) in cash and cash equivalents	133.1			0.7			(0.7		)	—			133.1
Cash and cash equivalents at beginning of period	26.0			1.3			2.8			—			30.1
Cash and cash equivalents at end of period	$	159.1		$	2.0		$	2.1		$	—		$	163.2