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|   |
|--------|
|   | Inpatient Rehabilitation Hospitals (“IRF”) |
|   | Outpatient Rehabilitation Satellite Clinics |
|   | Long-Term Acute Care Hospitals (“LTCH”) |
|   | Hospital-Based Home Health Agencies |
|   |
|   | Employees |
|   | Revenue in 2010 |
|   | Inpatient Discharges in 2010 |
|   | Outpatient Visits in 2010 |
|   | Number of States |
|   | Exchange (Symbol) |
| Marketshare                                                |
|------------------------------------------------------------|
| ~ 8% of IRFs~ 19% of Licensed Beds~ 22% of Patients Served |

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| Future Regulatory Risk                               | InpatientRehabilitation Facility   | Skilled NursingFacility                                      | Long-Term Acute CareHospital                                                        | Home Health                                                                                                  |   Hospice                                                                                                      |
|------------------------------------------------------|------------------------------------|--------------------------------------------------------------|-------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|  1. Re-basing payment system               | No                                 | Yes; RUGS IV and MDS3.0 parity adjustmentproposed forFY 2012 | No                                                                                  | Yes; would be requiredas part of PPACA startingin 2014                                                       | Yes: Required by PPACAbeginning in 2013; Modifiedwage index system beingphased in over 7-year periodbeginning in FY 2010 |
|  2. Major outlier payment adjustments | No                                 | No                                                           |  Yes; will occur whenMMSEA relief expires(short stay outliers)                 | Yes; 10% cap per agency;2.5% taken out of outlierpool (per PPACA)                                            | No                                                                                                                       |
|  3. Upcoding adjustments                   | No                                 | No                                                           |  Yes; occurring in FY 2011                                                     |  Yes; occurring in CY 2011(-3.79%), andpotential further reductionCY 2012                               | No                                                                                                                       |
|  4. Patient criteria                       |  No; 60% Rulealready in place | No                                                           | Industry developingcriteria                                                         | PPACA requires a patient -physician “face-to-face”encounter; new therapydocumentationrequirement | PPACA requires a patient -physician “face-to-face”encounter                                                  |
|  5. Healthcare Reform                      |                               |                                                         |                                                                                |                                                                                                         |                                                                                                                     |
| • Market basket update reductions    | • Known                 | • Known                                           | • Known                                                                  | • Known                                                                                           | •  Known                                                                                                      |
| • Productivity adjustments                | • Begins FY 2012        | • Begins FY 2012                                  | • Begins FY 2012                                                         | • Begins 2015                                                                                     | •  Begins 2013                                                                                                |
| • Bundling pilot established         |   • By 2013        |   • By 2013                                  |   • By 2013                                                         |   • By 2013                                                                                  |   • N/A                                                                                                  |
| • Independent Payment Advisory Board | • CY 2019               | • FY 2015                                         | • CY 2019                                                                | • CY 2015                                                                                         | •  CY 2019                                                                                                    |
| • New quality reporting requirements | • Begins FY 2014        | • N/A                                             | • Begins FY 2014                                                         | • N/A                                                                                             | • Begins FY 2014                                                                                              |
| • Value based purchasing                  | •  Pilot begins 2016    | • Post 2012                                       | • Pilot begins 2016                                                      | • Post 2012                                                                                       | •  Pilot begins 2016                                                                                          |
| • Hospital Acquired Infections       |   • Post 2012           |   • Post 2012                                     | • Post 2012                                                              | • N/A                                                                                             |   •N/A                                                                                                        |
|  6. Other                                  | N/A                                | Proposed new grouptherapydocumentationrequirements           | 25% Rule regulatory reliefexpires in 2012/2013;prohibition on new LTCHsthrough 2012 | Limits on transferof ownership                                                                               | MedPAC recommendingoverhaul of payment systemmethodology in FY 2013                                                      |

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| GAAP Considerations:•As of 3/31/11, the Company had a remaining valuation allowance of approximately$106 million, primarily related to state NOLs.•Q1 2011 tax provision reflects a tax benefit of $0.27 per diluted share related to theCompany’s settlement with the IRS for tax years 2007 and 2008 and a reduction inunrecognized tax benefits due to the lapse of the statute of limitations for certainfederal and state claims. The settlement resulted in an increase to our federal NOLs,which had an ending balance of approx. $1.45 billion as of 3/31/11.•Expect effective tax rate of ~40% going forwardFuture Cash Tax Payments:•The Company expects to pay approximately $7-$10 million per year of income tax.•The Company does not expect to pay significant federal income taxes for up to 10years.•HealthSouth is not currently subject to an annual use limitation (“AUL”) under InternalRevenue Code Section 382 (“Section 382”). A “change of ownership,” as defined bySection 382, would subject us to an AUL, which is equal to the market capitalization ofthe Company at the time of the “change of ownership” multiplied by the long-termtax exempt rate. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                | S&P    | Moodys     |
|---------------------|------------|------------|
| Corporate Rating    | B+Positive | B1Positive |
| Revolver Rating     | BB         | Ba1        |
| Senior Notes Rating | B+         | B2         |

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|                      | Terms                                                                                                                  |
|---------------------------|------------------------------------------------------------------------------------------------------------------------|
| Acquisitions              | Limited by compliance with leverage and interest coveragecovenants initially established at 5.0x and 2.5x respectively |
| Restricted payments:      |                                                                                                                   |
| 10.75% repurchase         | Unlimited up to 4.5x leverage ratio (revolver draws available forrepurchase)                                           |
| Share repurchase (2)      | $200 million (shared with other restricted payment basket)                                                             |
| Other debt repurchase (2) | $200 million (shared with other restricted payment basket)                                                             |
| Unsecured debt issuance   | Unlimited up to 4.5x leverage ratio                                                                                    |

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| Capital Cost                           | $ Range |
|----------------------------------------|---------|
| (millions)                             | Low     | High |
| Construction, design, permitting, etc. | $11.0   | $14.5 |
| Land                                   | 1.5     | 3.5 |
| Equipment                              | 2.5     | 3.0 |
|                                   | $15.0   | $21.0 |
|                                   |    |   |
|                                   |    |   |
|                                   |    |   |
| Pre-opening Expenses                   |    |
| (thousands)                            | Low     | High |
| Operating                              | $200    | $300 |
| Salaries, wages and benefits           | 150     | 200 |
|                                   | $350    | $500 |
|                                   |    |   |
|                                   |    |   |

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|          | Date Acquired | Acquired Census | Q1 2011 Census |
|---------------|---------------|-----------------|----------------|
| Vineland      | Q3 2008       | 26              | 36             |
| Desert Canyon | Q2 2010       | 16              | 36             |
| Sugar Land    | Q3 2010       | 26              | 34             |
| Ft. Smith     | Q3 2010       | 15              | 36             |

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