HealthSouth to Acquire Operations of Reliant Hospital Partners

6/11/2015

BIRMINGHAM, Ala., -- HealthSouth Corporation (the "Company"), a leading provider of post-acute services, today announced it has entered into a definitive agreement to acquire the operations of Reliant Hospital Partners, LLC and affiliated entities ("Reliant") for a cash purchase price of $730 million. Reliant operates a portfolio of 11 inpatient rehabilitation hospitals in Texas, Massachusetts and Ohio, plus three inpatient satellite locations in Massachusetts for a total of 902 beds. Based on the structure of the transaction, HealthSouth expects to realize a tax benefit with an estimated net present value of approximately $125 million to $150 million. The transaction was approved by both companies' boards of directors and is expected to close in 2015. HealthSouth expects to fund the transaction with cash on hand and senior debt.

All of the Reliant hospitals are leased, and seven of the leases are treated as capital leases for accounting purposes. HealthSouth will assume the lease obligations of all the acquired hospitals. The amount of the capital lease obligation to be recognized on HealthSouth's balance sheet upon closing is subject to the final purchase price allocation and is preliminarily estimated at approximately $210 million. In 2014, Reliant's operations generated revenues of approximately $249 million and Adjusted EBITDA of approximately $82 million. The acquisition of the operations of Reliant is expected to be immediately accretive, excluding transaction costs, to HealthSouth's earnings per share following closing.

Operating entities for seven Reliant hospitals include minority limited partners. The interests held by limited partners represent less than 10% of the equity of the combined Reliant operating entities. The cash purchase price will be reduced for any remaining limited partner interests at closing.

"The acquisition of the operations of Reliant Hospital Partners furthers HealthSouth's position as a leading provider of post-acute services," said Jay Grinney, HealthSouth President and Chief Executive Officer. "Reliant's portfolio of high-quality inpatient rehabilitation hospitals complements our networks in the highly competitive Houston, Dallas-Fort Worth and Austin markets while providing entry into new markets in Abilene, Texas; Dayton, Ohio; and the greater Boston metropolitan area."

The closing of the transaction is subject to certain customary closing conditions and regulatory approvals, including expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to occur in 2015. HealthSouth will address the effects of this acquisition on its previously announced Adjusted EBITDA and earnings per share guidance ranges after the transaction closes.

Wells Fargo Securities LLC is acting as exclusive financial advisor to HealthSouth. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to HealthSouth.

About HealthSouth

HealthSouth is one of the nation's largest providers of post-acute healthcare services, offering both facility-based and home-based post-acute services in 33 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. HealthSouth can be found on the Web at www.healthsouth.com.

Source: HealthSouth Corporation