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HealthSouth to Acquire CareSouth Home Health Agency Operations

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HealthSouth Corporation (“HealthSouth”), a leading provider of post-acute healthcare services, recently announced its Encompass Home Health operating unit (“Encompass”) has entered into a definitive agreement to acquire the home health agency operations of CareSouth Health System, Inc. (“CareSouth”) for a cash purchase price of $170 million. CareSouth operates a portfolio of 45 home health locations in 7 states and generated revenues of approximately $104 million in 2014. The transaction was approved by both companies’ boards of directors and is expected to close in the fourth quarter of 2015, subject to regulatory approval. HealthSouth expects to fund the transaction with cash on hand and borrowings under its senior secured credit facility.

The CareSouth acquisition enables HealthSouth to leverage the operating platform of Encompass across home health locations in the new markets of Alabama, Georgia, North Carolina, South Carolina, and Tennessee. CareSouth also improves Encompass’ market share position in the key states of Florida and Virginia. Upon completion of this transaction, Encompass will become the third largest home health provider in Virginia and the ninth largest home health provider in Florida. These new home health locations will overlap with fourteen of HealthSouth’s existing inpatient rehabilitation hospitals. The addition of these assets will allow HealthSouth to better serve the post-acute needs of patients in those markets by offering both facility-based and home-based post-acute services.

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. HealthSouth intends to address the effects of this acquisition on its Adjusted EBITDA and earnings per share after the transaction closes.

September 15, 2015