HealthSouth CFO touts flexibility of balance sheet, funding ability

By Lisa Kerner

Charlotte, N.C., May 30 - HealthSouth Corp. is in "the enviable position of being able to have our cake and eat it too," when it comes to its cash flow generation and capital structure, said executive vice president and chief financial officer Doug Coltharp.

"We can fund for the foreseeable future all of the high-quality growth opportunities that we believe we will be presented...and still have excess cash flow that can be utilized to enhance returns to our shareholders through various forms of distribution," Coltharp said during a fireside chat presentation at the Deutsche Bank 38th Annual dbAccess Healthcare Conference on Thursday in Boston. "All forms of those distributions are under consideration," Coltharp said, mentioning incremental share repurchases and periodic or regular dividend payments.

When asked about the company's recent tender offer, Coltharp said it was not intended to be a "once-and-done type transaction."

"I think the tender offer for us, which was very successful in our minds, marked a real turning point in how our company as a whole and specifically our board is looking at the allocation of excess free cash flow and also utilizing some of the excess capacity we have in the balance sheet."

In March the company announced it expected to purchase about 9.1 million shares at a price of $25.50 per share, for a total cost of $232.1 million, excluding fees and expenses, in its offer ended March 19.

Going forward, Coltharp said not to anticipate that HealthSouth "would go out and lever the balance sheet up significantly, even recognizing how advantageous the debt capital markets are right now, to make a large distribution."

"We like the flexibility we created in the balance sheet," he added.

HealthSouth is a Birmingham, Ala.-based owner and operator of inpatient rehabilitation hospitals.

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