HealthSouth Income Falls 32 Percent
Tuesday November 5, 2:40 pm ET
HealthSouth Third-Quarter Net Income Declines 32 Percent Amid Medicare Change
BIRMINGHAM, Ala. (AP) -- HealthSouth Corp. said Tuesday its third-quarter net income fell 32 percent amid sluggish revenue growth, hurt by a change in Medicare billing. The nation's largest operator of rehabilitation centers posted net income of $53.6 million, or 13 cents a share, compared with $79.1 million, or 20 cents a share, a year earlier.
Chief Executive William Owens said the company will make "meaningful" cost reductions
as it struggles to recover from its financial woes.
During a conference call, Owens did not reveal how much the cuts would total or where they would fall, except to say they would involve overhead and unit operations.
The latest results included a pretax gain of $25.1 million for the early retirement of debt and a tax benefit of about $9.7 million. Excluding these items, the company said its operating earnings came to $38.3 million, or 10 cents a share -- well below analysts' expectations of 21 cents a share, according to Thomson First Call.
Shares of HealthSouth fell 14.8 percent, or 72 cents, and were trading at $4.16 Tuesday afternoon on the New York Stock Exchange.
Revenue in the third quarter inched up 1.7 percent to $1.09 billion from $1.08 billion a year earlier.
In August, the health care company said a change in Medicare billing, issued May 17 and effective July 1, would reduce annual earnings by $175 million. A month later, the Securities and Exchange Commission began investigating the Birmingham, Ala., company over accounting and stock trading issues.
HealthSouth said last week that a review by an outside law firm cleared Chairman Richard M. Scrushy of allegations that he sold stock in the months before the profit warning based on knowledge the change in Medicare policy would negatively impact earnings. The firm concluded Scrushy did not know about the change or its impact when he sold company stock May 14 and July 31.
HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitation services, with revenue of $4.3 billion last year. It has about 1,900 locations in the United States, Britain, Australia and Canada.
Wanna guess where the "cost cutting measures" are going to be made?
If you start to feel sorry for HealthSouth losing profits, check out this websites where corporation fraud is being investigated. And remember they are saying the loss is due to medicare changes, but the facts support that their revenue loss is because of steep drops in their stock prices after the SEC began an investigation into securities fraud reminicent of Enron.