Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2017

Condensed Financial Information of Parent Company Only Disclosure [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 investments in consolidated affiliates and Intercompany payable in the accompanying condensed consolidating balance sheets.

The terms of our credit agreement allow us to declare and pay cash dividends on our common stock so long as: (1) we are not in default under our credit agreement and (2) our senior secured leverage ratio (as defined in our credit agreement) remains less than or equal to 2x. The terms of our senior note indenture allow us to declare and pay cash dividends on our common stock so long as (1) we are not in default, (2) the consolidated coverage ratio (as defined in the indenture) exceeds 2x or we are otherwise allowed under the indenture to incur debt, and (3) we have capacity under the indenture’s restricted payments covenant to declare and pay dividends. See Note 9, Long-term Debt, to the consolidated financial statements accompanying the 2016 Form 10-K.

Periodically, certain wholly owned subsidiaries of HealthSouth make dividends or distributions of available cash and/or intercompany receivable balances to their parents. In addition, HealthSouth makes contributions to certain wholly owned subsidiaries. When made, these dividends, distributions, and contributions impact the Intercompany receivable and investments in consolidated affiliates, Intercompany payable, and HealthSouth shareholders’ equity line items in the accompanying condensed consolidating balance sheet but have no impact on the consolidated financial statements of HealthSouth Corporation.

	Three Months Ended September 30, 2017
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	5.3		$	555.2		$	466.5		$	(31.4	)	$	995.6
Less: Provision for doubtful accounts	—			(7.7		)	(4.9		)	—			(12.6		)
Net operating revenues less provision for doubtful accounts	5.3			547.5			461.6			(31.4		)	983.0
Operating expenses:
Salaries and benefits	9.1			266.4			271.9			(5.3		)	542.1
Other operating expenses	8.0			83.6			58.2			(12.2		)	137.6
Occupancy costs	0.4			23.4			8.7			(13.9		)	18.6
Supplies	—			22.4			14.1			—			36.5
General and administrative expenses	35.6			—			4.1			—			39.7
Depreciation and amortization	2.0			25.8			18.4			—			46.2
Total operating expenses	55.1			421.6			375.4			(31.4		)	820.7
Loss on early extinguishment of debt	0.3			—			—			—			0.3
Interest expense and amortization of debt discounts and fees	30.8			5.3			6.3			(5.6		)	36.8
Other income	(5.7		)	(0.1		)	(0.8		)	5.6			(1.0		)
Equity in net income of nonconsolidated affiliates	—			(1.9		)	(0.2		)	—			(2.1		)
Equity in net income of consolidated affiliates	(85.0		)	(11.8		)	—			96.8			—
Management fees	(35.8		)	26.4			9.4			—			—
Income from continuing operations before income tax (benefit) expense	45.6			108.0			71.5			(96.8		)	128.3
Provision for income tax (benefit) expense	(20.4		)	43.1			20.4			—			43.1
Income from continuing operations	66.0			64.9			51.1			(96.8		)	85.2
Loss from discontinued operations, net of tax	(0.1		)	—			—			—			(0.1		)
Net income	65.9			64.9			51.1			(96.8		)	85.1
Less: Net income attributable to noncontrolling interests	—			—			(19.2		)	—			(19.2		)
Net income attributable to HealthSouth	$	65.9		$	64.9		$	31.9		$	(96.8	)	$	65.9
Comprehensive income	$	65.9		$	64.9		$	51.1		$	(96.8	)	$	85.1
Comprehensive income attributable to HealthSouth	$	65.9		$	64.9		$	31.9		$	(96.8	)	$	65.9

	Three Months Ended September 30, 2016
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	4.9		$	541.8		$	409.8		$	(29.7	)	$	926.8
Less: Provision for doubtful accounts	—			(10.0		)	(4.8		)	—			(14.8		)
Net operating revenues less provision for doubtful accounts	4.9			531.8			405.0			(29.7		)	912.0
Operating expenses:
Salaries and benefits	10.4			250.2			241.4			(4.6		)	497.4
Other operating expenses	6.4			79.4			52.3			(11.8		)	126.3
Occupancy costs	0.6			22.4			7.9			(13.3		)	17.6
Supplies	—			22.4			12.4			—			34.8
General and administrative expenses	30.4			—			(0.1		)	—			30.3
Depreciation and amortization	2.3			25.9			15.3			—			43.5
Total operating expenses	50.1			400.3			329.2			(29.7		)	749.9
Loss on early extinguishment of debt	2.6			—			—			—			2.6
Interest expense and amortization of debt discounts and fees	36.3			5.4			5.8			(5.0		)	42.5
Other income	(5.1		)	(0.1		)	(0.6		)	5.0			(0.8		)
Equity in net income of nonconsolidated affiliates	—			(2.3		)	(0.2		)	—			(2.5		)
Equity in net income of consolidated affiliates	(85.7		)	(9.8		)	—			95.5			—
Management fees	(33.9		)	25.8			8.1			—			—
Income from continuing operations before income tax (benefit) expense	40.6			112.5			62.7			(95.5		)	120.3
Provision for income tax (benefit) expense	(21.2		)	44.9			18.4			—			42.1
Income from continuing operations	61.8			67.6			44.3			(95.5		)	78.2
Loss from discontinued operations, net of tax	(0.1		)	—			—			—			(0.1		)
Net income	61.7			67.6			44.3			(95.5		)	78.1
Less: Net income attributable to noncontrolling interests	—			—			(16.4		)	—			(16.4		)
Net income attributable to HealthSouth	$	61.7		$	67.6		$	27.9		$	(95.5	)	$	61.7
Comprehensive income	$	61.6		$	67.6		$	44.3		$	(95.5	)	$	78.0
Comprehensive income attributable to HealthSouth	$	61.6		$	67.6		$	27.9		$	(95.5	)	$	61.6

	Nine Months Ended September 30, 2017
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	15.9		$	1,693.9		$	1,336.2		$	(94.3	)	$	2,951.7
Less: Provision for doubtful accounts	—			(27.3		)	(15.4		)	—			(42.7		)
Net operating revenues less provision for doubtful accounts	15.9			1,666.6			1,320.8			(94.3		)	2,909.0
Operating expenses:
Salaries and benefits	29.1			803.7			783.0			(15.8		)	1,600.0
Other operating expenses	23.8			239.5			170.2			(36.3		)	397.2
Occupancy costs	1.4			70.0			25.6			(42.2		)	54.8
Supplies	—			69.4			41.2			—			110.6
General and administrative expenses	104.7			—			23.9			—			128.6
Depreciation and amortization	6.7			77.3			53.2			—			137.2
Total operating expenses	165.7			1,259.9			1,097.1			(94.3		)	2,428.4
Loss on early extinguishment of debt	10.7			—			—			—			10.7
Interest expense and amortization of debt discounts and fees	100.5			15.9			18.1			(16.0		)	118.5
Other income	(16.5		)	(0.2		)	(2.2		)	16.0			(2.9		)
Equity in net income of nonconsolidated affiliates	—			(5.6		)	(0.6		)	—			(6.2		)
Equity in net income of consolidated affiliates	(256.4		)	(29.3		)	—			285.7			—
Management fees	(107.8		)	80.7			27.1			—			—
Income from continuing operations before income tax (benefit) expense	119.7			345.2			181.3			(285.7		)	360.5
Provision for income tax (benefit) expense	(76.2		)	137.7			49.9			—			111.4
Income from continuing operations	195.9			207.5			131.4			(285.7		)	249.1
Loss from discontinued operations, net of tax	(0.2		)	—			—			—			(0.2		)
Net income	195.7			207.5			131.4			(285.7		)	248.9
Less: Net income attributable to noncontrolling interests	—			—			(53.2		)	—			(53.2		)
Net income attributable to HealthSouth	$	195.7		$	207.5		$	78.2		$	(285.7	)	$	195.7
Comprehensive income	$	196.0		$	207.5		$	131.4		$	(285.7	)	$	249.2
Comprehensive income attributable to HealthSouth	$	196.0		$	207.5		$	78.2		$	(285.7	)	$	196.0

	Nine Months Ended September 30, 2016
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	14.9		$	1,621.2		$	1,209.2		$	(88.0	)	$	2,757.3
Less: Provision for doubtful accounts	—			(32.1		)	(14.6		)	—			(46.7		)
Net operating revenues less provision for doubtful accounts	14.9			1,589.1			1,194.6			(88.0		)	2,710.6
Operating expenses:
Salaries and benefits	32.7			746.4			704.2			(13.7		)	1,469.6
Other operating expenses	18.9			230.1			152.4			(34.4		)	367.0
Occupancy costs	2.4			67.2			23.8			(39.9		)	53.5
Supplies	—			67.1			37.1			—			104.2
General and administrative expenses	94.7			—			1.9			—			96.6
Depreciation and amortization	7.1			77.3			44.4			—			128.8
Professional fees—accounting, tax, and legal	1.9			—			—			—			1.9
Total operating expenses	157.7			1,188.1			963.8			(88.0		)	2,221.6
Loss on early extinguishment of debt	7.4			—			—			—			7.4
Interest expense and amortization of debt discounts and fees	111.7			16.3			17.2			(14.7		)	130.5
Other income	(14.6		)	(0.2		)	(2.0		)	14.7			(2.1		)
Equity in net income of nonconsolidated affiliates	—			(6.7		)	(0.6		)	—			(7.3		)
Equity in net income of consolidated affiliates	(259.7		)	(30.8		)	—			290.5			—
Management fees	(101.9		)	77.0			24.9			—			—
Income from continuing operations before income tax (benefit) expense	114.3			345.4			191.3			(290.5		)	360.5
Provision for income tax (benefit) expense	(68.3		)	137.8			54.7			—			124.2
Income from continuing operations	182.6			207.6			136.6			(290.5		)	236.3
Loss from discontinued operations, net of tax	(0.3		)	—			—			—			(0.3		)
Net income	182.3			207.6			136.6			(290.5		)	236.0
Less: Net income attributable to noncontrolling interests	—			—			(53.7		)	—			(53.7		)
Net income attributable to HealthSouth	$	182.3		$	207.6		$	82.9		$	(290.5	)	$	182.3
Comprehensive income	$	182.5		$	207.6		$	136.6		$	(290.5	)	$	236.2
Comprehensive income attributable to HealthSouth	$	182.5		$	207.6		$	82.9		$	(290.5	)	$	182.5

	As of September 30, 2017
	HealthSouth Corporation		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	46.4	$	3.3	$	17.9	$	—		$	67.6
Accounts receivable, net	—		266.4		175.2		—			441.6
Other current assets	66.0		22.1		130.6		(40.5		)	178.2
Total current assets	112.4		291.8		323.7		(40.5		)	687.4
Property and equipment, net	87.7		977.3		417.3		—			1,482.3
Goodwill	—		854.6		1,117.1		—			1,971.7
Intangible assets, net	11.6		107.5		286.0		—			405.1
Deferred income tax assets	106.5		57.7		—		(72.6		)	91.6
Other long-term assets	50.9		107.3		87.1		—			245.3
Intercompany notes receivable	503.4		—		—		(503.4		)	—
Intercompany receivable and investments in consolidated affiliates	2,821.6		221.1		—		(3,042.7		)	—
Total assets	$	3,694.1	$	2,617.3	$	2,231.2	$	(3,659.2	)	$	4,883.4
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	32.7	$	7.2	$	8.7	$	(17.5	)	$	31.1
Accounts payable	11.2		46.2		24.4		—			81.8
Accrued expenses and other current liabilities	180.7		84.9		155.7		(23.0		)	398.3
Total current liabilities	224.6		138.3		188.8		(40.5		)	511.2
Long-term debt, net of current portion	2,301.7		244.2		45.4		—			2,591.3
Intercompany notes payable	—		—		503.4		(503.4		)	—
Other long-term liabilities	31.4		17.0		210.4		(72.4		)	186.4
Intercompany payable	—		—		135.8		(135.8		)	—
	2,557.7		399.5		1,083.8		(752.1		)	3,288.9
Commitments and contingencies
Redeemable noncontrolling interests	—		—		221.3		—			221.3
Shareholders’ equity:
HealthSouth shareholders’ equity	1,136.4		2,217.8		689.3		(2,907.1		)	1,136.4
Noncontrolling interests	—		—		236.8		—			236.8
Total shareholders’ equity	1,136.4		2,217.8		926.1		(2,907.1		)	1,373.2
Total liabilities and shareholders’ equity	$	3,694.1	$	2,617.3	$	2,231.2	$	(3,659.2	)	$	4,883.4

	As of December 31, 2016
	HealthSouth Corporation		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	20.6	$	1.6	$	18.3	$	—		$	40.5
Accounts receivable, net	—		273.3		170.5		—			443.8
Other current assets	49.9		24.0		114.9		(18.6		)	170.2
Total current assets	70.5		298.9		303.7		(18.6		)	654.5
Property and equipment, net	41.6		979.7		370.5		—			1,391.8
Goodwill	—		858.4		1,068.8		—			1,927.2
Intangible assets, net	12.0		115.5		283.8		—			411.3
Deferred income tax assets	90.9		57.6		—		(72.7		)	75.8
Other long-term assets	49.0		95.1		77.2		—			221.3
Intercompany notes receivable	528.8		—		—		(528.8		)	—
Intercompany receivable and investments in consolidated affiliates	2,855.5		107.7		—		(2,963.2		)	—
Total assets	$	3,648.3	$	2,512.9	$	2,104.0	$	(3,583.3	)	$	4,681.9
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	40.0	$	6.4	$	8.2	$	(17.5	)	$	37.1
Accounts payable	7.0		37.2		24.1		—			68.3
Accrued expenses and other current liabilities	150.7		81.7		138.9		(1.1		)	370.2
Total current liabilities	197.7		125.3		171.2		(18.6		)	475.6
Long-term debt, net of current portion	2,679.2		248.9		51.2		—			2,979.3
Intercompany notes payable	—		—		528.8		(528.8		)	—
Other long-term liabilities	35.5		15.2		181.6		(72.3		)	160.0
Intercompany payable	—		—		167.6		(167.6		)	—
	2,912.4		389.4		1,100.4		(787.3		)	3,614.9
Commitments and contingencies
Redeemable noncontrolling interests	—		—		138.3		—			138.3
Shareholders’ equity:
HealthSouth shareholders’ equity	735.9		2,123.5		672.5		(2,796.0		)	735.9
Noncontrolling interests	—		—		192.8		—			192.8
Total shareholders’ equity	735.9		2,123.5		865.3		(2,796.0		)	928.7
Total liabilities and shareholders’ equity	$	3,648.3	$	2,512.9	$	2,104.0	$	(3,583.3	)	$	4,681.9

	Nine Months Ended September 30, 2017
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	47.0		$	261.5		$	197.3		$	—		$	505.8
Cash flows from investing activities:
Purchases of property and equipment	(23.5		)	(67.7		)	(64.5		)	—			(155.7		)
Additions to capitalized software costs	(12.1		)	(0.2		)	(2.3		)	—			(14.6		)
Acquisitions of businesses, net of cash acquired	(10.9		)	—			(25.7		)	—			(36.6		)
Net change in restricted cash	—			—			(9.9		)	—			(9.9		)
Proceeds from repayment of intercompany note receivable	33.0			—			—			(33.0		)	—
Other, net	(2.7		)	11.7			(1.4		)	—			7.6
Net cash used in investing activities	(16.2		)	(56.2		)	(103.8		)	(33.0		)	(209.2		)
Cash flows from financing activities:
Principal payments on debt, including pre-payments	(123.1		)	—			(2.3		)	—			(125.4		)
Principal payments on intercompany note payable	—			—			(33.0		)	33.0			—
Borrowings on revolving credit facility	241.3			—			—			—			241.3
Payments on revolving credit facility	(255.3		)	—			—			—			(255.3		)
Repurchases of common stock, including fees and expenses	(38.1		)	—			—			—			(38.1		)
Dividends paid on common stock	(67.0		)	—			—			—			(67.0		)
Proceeds from exercising stock warrants	26.6			—			—			—			26.6
Distributions paid to noncontrolling interests of consolidated affiliates	—			—			(38.3		)	—			(38.3		)
Taxes paid on behalf of employees for shares withheld	(19.5		)	—			(0.3		)	—			(19.8		)
Other, net	(1.5		)	(5.0		)	13.0			—			6.5
Change in intercompany advances	231.6			(198.6		)	(33.0		)	—			—
Net cash used in financing activities	(5.0		)	(203.6		)	(93.9		)	33.0			(269.5		)
Increase (decrease) in cash and cash equivalents	25.8			1.7			(0.4		)	—			27.1
Cash and cash equivalents at beginning of period	20.6			1.6			18.3			—			40.5
Cash and cash equivalents at end of period	$	46.4		$	3.3		$	17.9		$	—		$	67.6
Supplemental schedule of noncash financing activities:
Conversion of convertible debt	$	319.4		$	—		$	—		$	—		$	319.4

	Nine Months Ended September 30, 2016
	HealthSouth Corporation			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	88.6		$	260.2		$	150.6		$	—		$	499.4
Cash flows from investing activities:
Purchases of property and equipment	(9.2		)	(54.2		)	(50.5		)	—			(113.9		)
Additions to capitalized software costs	(15.9		)	(0.1		)	(1.5		)	—			(17.5		)
Acquisitions of businesses, net of cash acquired	—			—			(19.6		)	—			(19.6		)
Net change in restricted cash	—			—			(7.1		)	—			(7.1		)
Funding of intercompany note receivable	(11.5		)	—			—			11.5			—
Proceeds from repayment of intercompany note receivable	22.0			—			—			(22.0		)	—
Other, net	(3.3		)	0.5			4.6			—			1.8
Net cash used in investing activities	(17.9		)	(53.8		)	(74.1		)	(10.5		)	(156.3		)
Cash flows from financing activities:
Principal payments on debt, including pre-payments	(192.9		)	(1.3		)	(1.0		)	—			(195.2		)
Principal borrowings on intercompany note receivable	—			—			11.5			(11.5		)	—
Principal payments on intercompany note payable	—			—			(22.0		)	22.0			—
Borrowings on revolving credit facility	260.0			—			—			—			260.0
Payments on revolving credit facility	(240.0		)	—			—			—			(240.0		)
Repurchases of common stock, including fees and expenses	(24.1		)	—			—			—			(24.1		)
Dividends paid on common stock	(62.4		)	—			—			—			(62.4		)
Distributions paid to noncontrolling interests of consolidated affiliates	—			—			(49.5		)	—			(49.5		)
Taxes paid on behalf of employees for shares withheld	(9.9		)	—			—			—			(9.9		)
Other, net	3.3			(4.4		)	(6.1		)	—			(7.2		)
Change in intercompany advances	210.2			(201.6		)	(8.6		)	—			—
Net cash used in financing activities	(55.8		)	(207.3		)	(75.7		)	10.5			(328.3		)
Increase (decrease) in cash and cash equivalents	14.9			(0.9		)	0.8			—			14.8
Cash and cash equivalents at beginning of period	41.2			1.2			19.2			—			61.6
Cash and cash equivalents at end of period	$	56.1		$	0.3		$	20.0		$	—		$	76.4