HealthSouth expecting to have nearly $100 million of excess cash flow for debt repayment, new hospitals

By Jennifer Lanning Drey

Portland, Ore. March 19 - HealthSouth Corp. expects to generate $90 million to $100 million of excess cash flow in 2008, which will be used to pay down debt or invest in new hospitals in additional areas, Jay Grinney, chief executive officer of HealthSouth, said Wednesday during a presentation at the Lehman Brothers 11th Annual Global Healthcare Conference in Miami.

"Over the last several years we were spending a lot of money cleaning the company up, and we were spending a lot of money paying for the sins of the past. But with the new HealthSouth, we have a company with some very compelling free cash flow characteristics," Grinney said.

HealthSouth is looking to grow volume by between 2% and 4% annually, as well as to expand geographically into new markets through hospital construction, acquisitions or consolidation.

The company has identified approximately 35 markets it believes have a need for additional in-patient rehabilitation-hospital bed space, and HealthSouth hopes to launch five new hospitals per year on an annual basis.

"Our goal is to exploit the opportunities that we believe exist in the in-patient rehabilitative space over the next several years," Grinney said.

In about three years, when the company believes its balance sheet will be in a stronger position, HealthSouth intends to begin branching into other complimentary post-acute services, such as long-term acute care, home health and hospice care.

HealthSouth is a Birmingham, Ala.-based provider of inpatient rehabilitation services.

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