HealthSouth on track to meet leverage ratio goal, hopes to further reduce ratio

By Jennifer Lanning Drey

Portland, Ore., May 19 - HealthSouth Corp. expects to meet or exceed its goal of achieving a leverage ratio of 3.5 times to 4.0 times by the end of 2011 and will ultimately look to continue to reduce its leverage ratio, Jay Grinney, chief executive officer of HealthSouth, said during a Wednesday presentation at the Robert W. Baird Growth Stock Conference in Chicago.

"We feel that a company of our size, given the regulated nature of our industry, we need to have that leverage closer to 3.0 times if we want to be in a position to take advantage of opportunistic growth and acquisition opportunities that might present themselves," he said.

With few opportunities to repay debt in a cost effective manner in 2010, HealthSouth has shifted its focus toward deleveraging through EBITDA growth this year, rather than through debt repayment, he said.

Regarding the company's 10¾% bonds that are callable in 2011, the CEO said right now the company does not believe it makes sense to take the debt out prior to the call date, given their current trading prices.

However, he added, "Rest assured that come June of 2011, we certainly will be back looking at the capital structure and looking at ways to take that debt down, call the bonds, pay down a portion of that and potentially refinance the balance."

In addition to looking to reduce debt, HealthSouth also plans to grow its existing platform of in-patient rehabilitation hospitals through capacity expansions.

The company plans to open at lease two new hospitals in 2010 and then begin construction on another two hospitals that will open in 2011.

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

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