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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~ 17% of Licensed Beds~ 22% of Patients Served |

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| Future Regulatory Risk                               | Inpatient RehabilitationFacility   | Skilled NursingFacility                           | Long-Term AcuteCare Hospital                                                       | Home Health                                                                                  |   Hospice                                                                                                      |
|------------------------------------------------------|------------------------------------|---------------------------------------------------|------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|  1. Re-basing payment system          | No                                 | Yes; RUGS IV andMDS 3.0implementedOctober 1, 2010 | 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 FY2011                                                     |  Yes; occurring in CY 2011 (-3.79%), andpotential further reduction2012            | No                                                                                                                       |
|  4. Patient criteria                       |  No; 60% Rulealready in place | No                                                | Study dictated aspart of MMSEA; Industrydeveloping criteria                        | PPACA requires a patient -physician “face-to-face”encounter; new therapycoverage | No                                                                                                                       |
|  5. Healthcare Reform                      |                               |                                              |                                                                               |                                                                                         |                                                                                                                     |
| • Market basket updatereductions          |                               |                                              |                                                                               |                                                                                         |                                                                                                                     |
| • Productivityadjustments                 | • 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 PaymentAdvisory Board       | • FY 2019               | • FY 2015                              | • FY 2019                                                               | • CY 2015                                                                         | •  FY 2019                                                                                                    |
| • New quality reportingrequirements       | • Begins FY 2014        | • N/A                                  | • Begins FY 2014                                                        | • N/A                                                                             | • Begins FY 2014                                                                                              |
| • Value basedpurchasing                   | •  Pilot begins 2016    | • Post 2012                            | • Pilot begins 2016                                                     | • Post 2012                                                                       | •  Pilot begins 2016                                                                                          |
| •Hospital AcquiredInfections                   |   • Post 2012           |   • Post 2012                          | • Post 2012                                                             | • N/A                                                                             |   •N/A                                                                                                        |
|  6. Other                                  | N/A                                | Forecast errorbeing implementedin FY 2011         | 25% Rule regulatoryrelief expires in2012/2013;prohibition on newLTCHs through 2012 | Limits on transferof ownership                                                               | MedPac recommendingoverhaul of payment systemmethodology in FY 2013                                                      |

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|--------|

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|   GAAP Considerations:•Valuation allowance reduced at YE 2010 by approximately $825 million resulting in a $736.6 million benefit to 2010 income tax provision.•As of 12/31/10, the Company had a remaining valuation allowance of approximately $113 million, primarily related to state NOLs.Future Cash Tax Payments:•Expects to pay approximately $6-8 million per year of income tax.•Does not expect to pay significant federal income taxes for up to 10 years.•HealthSouth is not currently subject to an annual use limitation (“AUL”) under Internal  Revenue Code Section 382 (“Section 382”). A “change of ownership,” as defined by  Section 382, would subject us to an AUL, which is equal to the market capitalization of  the Company at the time of the “change of ownership” multiplied by the long-term  tax exempt rate.  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|               | S&P | Moodys |
|--------------------|---------|--------|
| CorporateRating    | B+      | B1     |
| Revolver Rating    | BB      | Ba1    |
| Senior NotesRating | B+      | B2     |

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|                      | Old Agreement                                               | New Agreement                                                                                                         |
|---------------------------|-------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
| Acquisitions              | $300 million per annum                                      | Limited by compliance with leverage andinterest coverage covenants initiallyestablished at 5.0x and 2.5x respectively |
| Restricted payments:      |                                                        |                                                                                                                  |
| 10.75% repurchase         | No specific basket (see otherdebt repurchase)               | Unlimited up to 4.5x leverage ratio (revolverdraws available for repurchase)                                          |
| Share repurchase (2)      | $50 million per annum                                       | $200 million (shared with other debtrepurchase basket)                                                                |
| Other debt repurchase (2) | ~$200 million remaining from allrelevant repurchase baskets | $200 million (shared with other debtrepurchase basket)                                                                |
| Unsecured debt issuance   | $200 million                                                | Unlimited up to 4.5x leverage ratio                                                                                   |

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| Sources                                                                                                       | $ Million (1) | AssumedCall Price (3) | AnnualCashSavings |
|---------------------------------------------------------------------------------------------------------------|---------------|-----------------------|-------------------|
| Cash on hand                                                                                                  | $100.0        | 105.375               | $10.2             |
|                                                                                                          |          |                  |              |
| Revolving credit facility (LIBOR + 350 bps)(2)                                                                | $100.0        | 105.375               | $6.4              |
|                                                                                                          |          |                  |              |
| New senior notes (assumed yield of 7.00%)                                                                     | $100.0        | 105.375               | $3.2              |
| Accounting effect for early repayment/ refinancing :                                                          |
| “Loss on early extinguishment of debt” = ~$8 million per $100 million of the 10.75% senior notes. |
|                                                                                                          |

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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 | Q4 2010 Census |
|---------------|---------------|-----------------|----------------|
| Vineland      | Q3 2008       | 26              | 34             |
| Desert Canyon | Q2 2010       | 16              | 30             |
| Sugar Land    | Q3 2010       | 26              | 30             |
| Ft. Smith     | Q3 2010       | 15              | 37             |

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