A Medical Device Daily
HealthSouth (Birmingham, Alabama) reported that it will explore what it called “a range of alternatives” to reposition the company's primary focus “on the post-acute care sector.”
HealthSouth said the alternatives include, but are not limited to, the spin-off, sale or other disposition of the company's surgery center and outpatient rehabilitation divisions, together with the company's previously announced determination related to its diagnostic division.
HealthSouth said it intends to use a substantial portion of the proceeds to “deleverage” the company.
HealthSouth reports that its Inpatient Division accounted for 57.9% of the company's consolidated net operating revenues and 86% of the company's operating earnings from its four operating divisions for the three months ended June 30.
For the same period, the Surgery Division accounted for 24.5% of consolidated net operating revenues and 18.1% of operating earnings, the Outpatient Division accounted for 11% of consolidated net operating revenues and 6.8% of operating earnings, and the Diagnostic Division accounted for 6.6% of consolidated net operating revenues and -10.9% of operating earnings.
Jay Grinney, president and CEO of HealthSouth, said, “With the aging of our nation's population and the highly fragmented nature of the $125 billion post-acute market, we recognize there are significant growth and consolidation opportunities in the post-acute sector. We intend to focus HealthSouth's resources on establishing a 'pure play,' post-acute company that builds on our core competencies, permits us to pursue these growth opportunities, and allows us to expand into complementary post-acute businesses.
“At the same time, we believe our Outpatient, Surgery and Diagnostic Divisions will be well-positioned to succeed under new owners who will place strategic priority on strengthening each individual business,”
These divisions compete in sectors with good growth potential. However, we have concluded there are very few strategic or financial synergies in operating these divisions as one company.”
He said that a “substantial portion” of the sale proceeds will be used to “deleverage the company, creating a balance sheet that will allow us to capitalize on growth opportunities in the post-acute segment.”
HealthSouth has engaged Goldman, Sachs & Co. to assist in evaluating the alternatives for the divisions to be divested, expected to take about 12 months to complete, the company said. It said it will not disclose developments concerning these explorations until something has been finalized by its board.
In addition, HealthSouth said it has been cleared to submit an application for the listing of its common stock on the New York Stock Exchange and anticipates that it will begin trading on the NYSE by the end of October under the ticker symbol HLS.
With the relisting, HealthSouth will seek stockholder approval for a 1-for-5 reverse stock split. It currently has around 398.24 million shares outstanding, and the reverse split will reduced these to about 80 million.
Grinney said the reverse split will affect all of the company's stockholders uniformly and will not change any of their proportionate interests.
Grinney said that the company will retain the HealthSouth name.
“The market research we conducted overwhelmingly indicated that the name HealthSouth is synonymous with high quality rehabilitative care. As we reposition HealthSouth as a pure-play, post-acute healthcare provider, this valuable brand equity is part of our heritage that we're holding onto,” he said.
Grinney said HealthSouth will maintain its headquarters in Birmingham.