----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

|                                                          |                                |
|---------------------------------------------------------------|-------------------------------------|
| Delaware                                                      | 63-0860407                          |
| (State or Other Jurisdiction ofIncorporation or Organization) | (I.R.S. EmployerIdentification No.) |
|                                                          |                                |
| 3660 Grandview Parkway, Suite 200Birmingham, Alabama          | 35243                               |
| (Address of Principal Executive Offices)                      | (Zip Code)                          |

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Table of Contents

TABLE OF CONTENTS

|          |                                                                                        | Page   |
|---------------|---------------------------------------------------------------------------------------------|--------|
| PART I   | Financial Information                                                                       |   |
|          |                                                                                        |   |
| Item 1.  | Financial Statements (Unaudited)                                                            | 1      |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29     |
| Item 4.  | Controls and Procedures                                                                     | 47     |
|          |                                                                                        |   |
| PART II  | Other Information                                                                           |   |
|          |                                                                                        |   |
| Item 1.  | Legal Proceedings                                                                           | 48     |
| Item 1A. | Risk Factors                                                                                | 48     |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 48     |
| Item 6.  | Exhibits                                                                                    | 49     |
|          |                                                                                        |   |

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Table of Contents

| •   | each of the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2009, as well as uncertainties and factors discussed elsewhere in this Form 10-Q, in our other filings from time to time with the United States Securities and Exchange Commission, or in materials incorporated therein by reference; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | changes in the regulations of the healthcare industry at either or both of the federal and state levels; |
|---------------------|----------------------------------------------------------------------------------------------------------|

| •   | changes or delays in, or suspension of, reimbursement for our services by governmental or private payors, including our ability to obtain and retain favorable arrangements with third-party payors; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | our ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment with often severe staffing shortages and the impact on our labor expenses from potential union activity and staffing shortages; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | competitive pressures in the healthcare industry and our response to those pressures; |
|---------------------|---------------------------------------------------------------------------------------|

| •   | our ability to successfully complete and integrate acquisitions, investments, and joint ventures consistent with our growth strategy; and |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| •   | general conditions in the economy and capital markets. |
|---------------------|--------------------------------------------------------|

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Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1.

|                                                         |   | Three Months Ended                   |   |   | Six Months Ended |   |
|--------------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------|--------|
|                                                         |   | June 30,                             |   |   | June 30,         |   |
|                                                         |   | 2010                                 |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                                         |   | (In Millions, Except Per Share Data) |   |
|                                                         |   |                                 |   |   |             |   |   |   |   |   |   |   |
| Net operating revenues                                       |   | $                                    | 496.9  |   |             | $      | 481.6 |   |   | $ | 987.9 |   |   | $ | 954.5 |   |
| Operating expenses:                                          |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                                        |   |                                 | 241.6  |   |             |   | 237.8 |   |   |   | 483.5 |   |   |   | 471.1 |   |
| Other operating expenses                                     |   |                                 | 76.6   |   |             |   | 67.0 |   |   |   | 143.5 |   |   |   | 133.9 |   |
| General and administrative expenses                          |   |                                 | 26.7   |   |             |   | 24.9 |   |   |   | 53.0 |   |   |   | 50.4 |   |
| Supplies                                                     |   |                                 | 28.8   |   |             |   | 28.6 |   |   |   | 57.1 |   |   |   | 56.0 |   |
| Depreciation and amortization                                |   |                                 | 18.7   |   |             |   | 17.6 |   |   |   | 37.0 |   |   |   | 35.0 |   |
| Occupancy costs                                              |   |                                 | 11.4   |   |             |   | 12.0 |   |   |   | 23.0 |   |   |   | 24.0 |   |
| Provision for doubtful accounts                              |   |                                 | 5.9    |   |             |   | 9.7 |   |   |   | 12.8 |   |   |   | 17.5 |   |
| Loss on disposal of assets                                   |   |                                 | 0.4    |   |             |   | 1.3 |   |   |   | 0.4 |   |   |   | 2.3 |   |
| Government, class action, and related settlements            |   |                                 | -      |   |             |   | 48.7 |   |   |   | - |   |   |   | 32.8 |   |
| Professional fees—accounting, tax, and legal           |   |                                 | 5.7    |   |             |   | (3.3 | ) |   |   | 8.6 |   |   |   | 1.5 |   |
| Total operating expenses                                     |   |                                 | 415.8  |   |             |   | 444.3 |   |   |   | 818.9 |   |   |   | 824.5 |   |
| Loss (gain) on early extinguishment of debt                  |   |                                 | 0.1    |   |             |   | (1.3 | ) |   |   | 0.4 |   |   |   | (3.1 | ) |
| Interest expense and amortization of debt discounts and fees |   |                                 | 30.1   |   |             |   | 31.1 |   |   |   | 60.6 |   |   |   | 65.5 |   |
| Other income                                                 |   |                                 | (1.4   | )      |             |   | (1.0 | ) |   |   | (2.1 | ) |   |   | (0.8 | ) |
| (Gain) loss on interest rate swaps                           |   |                                 | (0.3   | )      |             |   | 3.8 |   |   |   | 4.0 |   |   |   | 8.8 |   |
| Equity in net (income) loss of nonconsolidated affiliates    |   |                                 | (2.6   | )      |             |   | 2.7 |   |   |   | (5.2 | ) |   |   | 0.2 |   |
| Income from continuing operations before income tax          |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| (benefit) expense                                            |   |                                 | 55.2   |   |             |   | 2.0 |   |   |   | 111.3 |   |   |   | 59.4 |   |
| Provision for income tax (benefit) expense                   |   |                                 | (2.2   | )      |             |   | (0.3 | ) |   |   | 0.3 |   |   |   | 0.9 |   |
| Income from continuing operations                            |   |                                 | 57.4   |   |             |   | 2.3 |   |   |   | 111.0 |   |   |   | 58.5 |   |
| Income (loss) from discontinued operations, net of tax       |   |                                 | 0.1    |   |             |   | 1.3 |   |   |   | (3.0 | ) |   |   | (1.4 | ) |
| Net income                                                   |   |                                 | 57.5   |   |             |   | 3.6 |   |   |   | 108.0 |   |   |   | 57.1 |   |
| Less: Net income attributable to noncontrolling interests    |   |                                 | (10.2  | )      |             |   | (9.1 | ) |   |   | (20.0 | ) |   |   | (17.7 | ) |
| Net income (loss) attributable to HealthSouth                |   |                                 | 47.3   |   |             |   | (5.5 | ) |   |   | 88.0 |   |   |   | 39.4 |   |
| Less: Convertible perpetual preferred stock dividends        |   |                                 | (6.5   | )      |             |   | (6.5 | ) |   |   | (13.0 | ) |   |   | (13.0 | ) |
| Net income (loss) attributable to HealthSouth                |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| common shareholders                                          |   | $                                    | 40.8   |   |             | $      | (12.0 | ) |   | $ | 75.0 |   |   | $ | 26.4 |   |
| Weighted average common shares outstanding:                  |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   |                                 | 92.8   |   |             |   | 87.6 |   |   |   | 92.7 |   |   |   | 87.5 |   |
| Diluted                                                      |   |                                 | 108.2  |   |             |   | 101.5 |   |   |   | 108.2 |   |   |   | 101.2 |   |
| Basic and diluted earnings per common share:                 |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                     |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| attributable to HealthSouth common shareholders              |   | $                                    | 0.44   |   |             | $      | (0.15 | ) |   | $ | 0.84 |   |   | $ | 0.32 |   |
| Income (loss) from discontinued operations, net of tax,      |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| attributable to HealthSouth common shareholders              |   |                                 | 0.00   |   |             |   | 0.01 |   |   |   | (0.03 | ) |   |   | (0.02 | ) |
| Net income (loss) attributable to HealthSouth                |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| common shareholders                                          |   | $                                    | 0.44   |   |             | $      | (0.14 | ) |   | $ | 0.81 |   |   | $ | 0.30 |   |
| Amounts attributable to HealthSouth common shareholders:     |   |                                 |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                     |   | $                                    | 47.2   |   |             | $      | (6.6 | ) |   | $ | 91.0 |   |   | $ | 41.3 |   |
| Income (loss) from discontinued operations, net of tax       |   |                                 | 0.1    |   |             |   | 1.1 |   |   |   | (3.0 | ) |   |   | (1.9 | ) |
| Net income (loss) attributable to HealthSouth                |   | $                                    | 47.3   |   |             | $      | (5.5 | ) |   | $ | 88.0 |   |   | $ | 39.4 |   |

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|                                                                                   |   |   | June 30,2010                     |     |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------|--------|--------|----------------------------------|----------|--------|------------------|--------|
|                                                                                   |   |   | (In Millions, Except Share Data) |     |
| Assets                                                                                 |   |   |                             |     |   |             |   |
| Current assets:                                                                        |   |   |                             |     |   |             |   |
| Cash and cash equivalents                                                              |   |   | $                                | 172.6    |   |             | $      | 80.9 |   |
| Restricted cash                                                                        |   |   |                             | 49.7     |   |             |   | 67.8 |   |
| Accounts receivable, net of allowance for doubtful accounts of $32.0 in 2010;          |   |   |                             |     |   |             |   |   |   |
|              $33.1 in 2009 |   |   |                             | 224.8    |   |             |   | 219.7 |   |
| Other current assets                                                                   |   |   |                             | 56.8     |   |             |   | 57.6 |   |
| Total current assets                                                                   |   |   |                             | 503.9    |   |             |   | 426.0 |   |
| Property and equipment, net                                                            |   |   |                             | 664.5    |   |             |   | 664.8 |   |
| Goodwill                                                                               |   |   |                             | 423.7    |   |             |   | 416.4 |   |
| Intangible assets, net                                                                 |   |   |                             | 35.5     |   |             |   | 37.4 |   |
| Investments in and advances to nonconsolidated affiliates                              |   |   |                             | 31.0     |   |             |   | 29.3 |   |
| Other long-term assets                                                                 |   |   |                             | 97.5     |   |             |   | 107.6 |   |
| Total assets                                                                           |   |   | $                                | 1,756.1  |   |             | $      | 1,681.5 |   |
| Liabilities and Shareholders’ Deficit                                            |   |   |                             |     |   |             |   |   |   |
| Current liabilities:                                                                   |   |   |                             |     |   |             |   |   |   |
| Current portion of long-term debt                                                      |   |   | $                                | 21.5     |   |             | $      | 21.5 |   |
| Accounts payable                                                                       |   |   |                             | 47.3     |   |             |   | 50.2 |   |
| Accrued expenses and other current liabilities                                         |   |   |                             | 322.6    |   |             |   | 319.5 |   |
| Total current liabilities                                                              |   |   |                             | 391.4    |   |             |   | 391.2 |   |
| Long-term debt, net of current portion                                                 |   |   |                             | 1,633.0  |   |             |   | 1,641.0 |   |
| Other long-term liabilities                                                            |   |   |                             | 161.6    |   |             |   | 159.5 |   |
|                                                                                   |   |   |                             | 2,186.0  |   |             |   | 2,191.7 |   |
| Commitments and contingencies                                                          |   |   |                             |     |   |             |   |   |   |
| Convertible perpetual preferred stock, $.10 par value; 1,500,000 shares authorized;    |   |   |                             |     |   |             |   |   |   |
| 400,000 issued; liquidation preference of $1,000 per share                             |   |   |                             | 387.4    |   |             |   | 387.4 |   |
| Shareholders’ deficit:                                                           |   |   |                             |     |   |             |   |   |   |
| HealthSouth shareholders' deficit:                                                     |   |   |                             |     |   |             |   |   |   |
| Common stock, $.01 par value; 200,000,000 shares authorized;                           |   |   |                             |     |   |             |   |   |   |
| issued: 97,624,393 in 2010; 97,238,725 in 2009                                         |   |   |                             | 1.0      |   |             |   | 1.0 |   |
| Capital in excess of par value                                                         |   |   |                             | 2,877.6  |   |             |   | 2,879.9 |   |
| Accumulated deficit                                                                    |   |   |                             | (3,629.4 | )      |             |   | (3,717.4 | ) |
| Accumulated other comprehensive loss                                                   |   |   |                             | (4.0     | )      |             |   | - |   |
| Treasury stock, at cost (4,166,756 shares in 2010 and 3,957,047                        |   |   |                             |     |   |             |   |   |   |
| shares in 2009)                                                                        |   |   |                             | (141.5   | )      |             |   | (137.5 | ) |
| Total HealthSouth shareholders’ deficit                                          |   |   |                             | (896.3   | )      |             |   | (974.0 | ) |
| Noncontrolling interests                                                               |   |   |                             | 79.0     |   |             |   | 76.4 |   |
| Total shareholders' deficit                                                            |   |   |                             | (817.3   | )      |             |   | (897.6 | ) |
| Total liabilities and shareholders’ deficit                                      |   |   | $                                | 1,756.1  |   |             | $      | 1,681.5 |   |

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Table of Contents

|                                                                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                          |   | June 30,           |   |   | June 30,         |   |
|                                                                          |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                                                          |   | (In Millions)      |   |
| COMPREHENSIVE INCOME                                                          |   |               |   |   |             |   |   |   |   |   |   |   |
| Net income                                                                    |   | $                  | 57.5   |   |             | $      | 3.6 |   |   | $ | 108.0 |   |   | $ | 57.1 |   |
| Other comprehensive (loss) income, net of tax:                                |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net change in unrealized gain (loss) on available-for-sale securities:        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized net holding gain arising during the period                         |   |               | -      |   |             |   | 1.7 |   |   |   | 0.6 |   |   |   | 0.1 |   |
| Reclassifications to net income                                               |   |               | -      |   |             |   | - |   |   |   | (1.3 | ) |   |   | 1.6 |   |
| Net change in unrealized (loss) gain on forward-starting interest rate swaps: |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized net holding (loss) gain arising during the period                  |   |               | (2.6   | )      |             |   | 2.7 |   |   |   | (4.7 | ) |   |   | 2.0 |   |
| Other comprehensive (loss) income before income taxes                         |   |               | (2.6   | )      |             |   | 4.4 |   |   |   | (5.4 | ) |   |   | 3.7 |   |
| Provision for income tax benefit related to other comprehensive               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| (loss) income items                                                           |   |               | 1.4    |   |             |   | - |   |   |   | 1.4 |   |   |   | - |   |
| Other comprehensive (loss) income, net of tax                                 |   |               | (1.2   | )      |             |   | 4.4 |   |   |   | (4.0 | ) |   |   | 3.7 |   |
| Comprehensive income                                                          |   |               | 56.3   |   |             |   | 8.0 |   |   |   | 104.0 |   |   |   | 60.8 |   |
| Comprehensive income attributable to noncontrolling interests                 |   |               | (10.2  | )      |             |   | (9.1 | ) |   |   | (20.0 | ) |   |   | (17.7 | ) |
| Comprehensive income (loss) attributable to HealthSouth                       |   | $                  | 46.1   |   |             | $      | (1.1 | ) |   | $ | 84.0 |   |   | $ | 43.1 |   |

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Table of Contents

|                                 |   | Six Months Ended June 30, 2010      |   |
|--------------------------------------|--------|-------------------------------------|--------|
|                                 |   | (In Millions)                       |   |
|                                 |   | HealthSouth Common Shareholders     |   |   |   |   |   |   |   |   |   |   |
|                                 |   | Number of Common Shares Outstanding |   |   | Common Stock |   |   | Capital in Excess of Par Value |   |   | Accumulated Deficit |   |   | Accumulated Other Comprehensive Loss |   |   | Treasury Stock |   |   | Noncontrolling Interests |   |   | Total |   |   | Comprehensive Income |   |
| Balance at beginning of period       |   |                                | 93.3   |   |   | $ | 1.0 |   |   | $ | 2,879.9 |   |   | $ | (3,717.4 | ) |   | $ | - |   |   | $ | (137.5 | ) |   | $ | 76.4 |   |   | $ | (897.6 | ) |   |   |   |
| Comprehensive income:                |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                           |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | 88.0 |   |   |   | - |   |   |   | - |   |   |   | 20.0 |   |   |   | 108.0 |   |   | $ | 108.0 |   |
| Other comprehensive loss, net of tax |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4.0 | ) |   |   | - |   |   |   | - |   |   |   | (4.0 | ) |   |   | (4.0 | ) |
| Comprehensive income                 |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 104.0 |   |
| Forfeiture of restricted stock       |   |                                | (0.1   | ) |   |   | - |   |   |   | 2.5 |   |   |   | - |   |   |   | - |   |   |   | (2.5 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Receipt of treasury stock            |   |                                | (0.1   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1.5 | ) |   |   | - |   |   |   | (1.5 | ) |   |   |   |   |
| Dividends declared on convertible    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| perpetual preferred stock            |   |                                | -      |   |   |   | - |   |   |   | (13.0 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (13.0 | ) |   |   |   |   |
| Stock-based compensation             |   |                                | -      |   |   |   | - |   |   |   | 7.8 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7.8 |   |   |   |   |   |
| Distributions declared               |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17.0 | ) |   |   | (17.0 | ) |   |   |   |   |
| Other                                |   |                                | 0.4    |   |   |   | - |   |   |   | 0.4 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.4 | ) |   |   | - |   |   |   |   |   |
| Balance at end of period             |   |                                | 93.5   |   |   | $ | 1.0 |   |   | $ | 2,877.6 |   |   | $ | (3,629.4 | ) |   | $ | (4.0 | ) |   | $ | (141.5 | ) |   | $ | 79.0 |   |   | $ | (817.3 | ) |   |   |   |   |

|                                   |   | Six Months Ended June 30, 2009      |   |
|----------------------------------------|--------|-------------------------------------|--------|
|                                   |   | (In Millions)                       |   |
|                                   |   | HealthSouth Common Shareholders     |   |   |   |   |   |   |   |   |   |   |
|                                   |   | Number of Common Shares Outstanding |   |   | Common Stock |   |   | Capital in Excess of Par Value |   |   | Accumulated Deficit |   |   | Accumulated Other Comprehensive Loss |   |   | Treasury Stock |   |   | Noncontrolling Interests |   |   | Total |   |   | Comprehensive Income |   |
| Balance at beginning of period         |   |                                | 88.0   |   |   | $ | 1.0 |   |   | $ | 2,956.5 |   |   | $ | (3,812.2 | ) |   | $ | (3.2 | ) |   | $ | (311.5 | ) |   | $ | 82.2 |   |   | $ | (1,087.2 | ) |   |   |   |
| Comprehensive income:                  |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                             |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | 39.4 |   |   |   | - |   |   |   | - |   |   |   | 17.7 |   |   |   | 57.1 |   |   | $ | 57.1 |   |
| Other comprehensive income, net of tax |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3.7 |   |   |   | - |   |   |   | - |   |   |   | 3.7 |   |   |   | 3.7 |   |
| Comprehensive income                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 60.8 |   |
| Dividends declared on convertible      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| perpetual preferred stock              |   |                                | -      |   |   |   | - |   |   |   | (13.0 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (13.0 | ) |   |   |   |   |
| Stock-based compensation               |   |                                | -      |   |   |   | - |   |   |   | 6.6 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6.6 |   |   |   |   |   |
| Distributions declared                 |   |                                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (15.7 | ) |   |   | (15.7 | ) |   |   |   |   |
| Other                                  |   |                                | 0.3    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |   |   | (0.6 | ) |   |   | (1.3 | ) |   |   | (1.8 | ) |   |   |   |   |
| Balance at end of period               |   |                                | 88.3   |   |   | $ | 1.0 |   |   | $ | 2,950.2 |   |   | $ | (3,772.8 | ) |   | $ | 0.5 |   |   | $ | (312.1 | ) |   | $ | 82.9 |   |   | $ | (1,050.3 | ) |   |   |   |   |

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|                                                              |   | Six Months Ended June 30, |   |
|-------------------------------------------------------------------|--------|---------------------------|--------|
|                                                              |   | 2010                      |   |   | 2009 |   |
|                                                              |   | (In Millions)             |   |
| Cash flows from operating activities:                             |   |                      |   |   |   |   |
| Net income                                                        |   | $                         | 108.0  |   |   | $ | 57.1 |   |
| Loss from discontinued operations                                 |   |                      | 3.0    |   |   |   | 1.4 |   |
| Adjustments to reconcile net income to net cash provided by       |   |                      |   |   |   |   |   |   |
| operating activities—                                       |   |                      |   |   |   |   |   |   |
| Provision for doubtful accounts                                   |   |                      | 12.8   |   |   |   | 17.5 |   |
| Provision for government, class action, and related settlements   |   |                      | -      |   |   |   | 32.8 |   |
| UBS Settlement proceeds, gross                                    |   |                      | -      |   |   |   | 100.0 |   |
| Depreciation and amortization                                     |   |                      | 37.0   |   |   |   | 35.0 |   |
| Loss on interest rate swaps                                       |   |                      | 4.0    |   |   |   | 8.8 |   |
| Equity in net (income) loss of nonconsolidated affiliates         |   |                      | (5.2   | ) |   |   | 0.2 |   |
| Distributions from nonconsolidated affiliates                     |   |                      | 3.3    |   |   |   | 3.9 |   |
| Stock-based compensation                                          |   |                      | 7.8    |   |   |   | 6.6 |   |
| Deferred tax provision                                            |   |                      | 2.1    |   |   |   | 1.9 |   |
| Other                                                             |   |                      | 2.7    |   |   |   | 3.1 |   |
| (Increase) decrease in assets—                              |   |                      |   |   |   |   |   |   |
| Accounts receivable                                               |   |                      | (17.9  | ) |   |   | (25.8 | ) |
| Other assets                                                      |   |                      | (5.8   | ) |   |   | (0.7 | ) |
| Income tax refund receivable                                      |   |                      | 4.3    |   |   |   | 45.4 |   |
| (Decrease) increase in liabilities—                         |   |                      |   |   |   |   |   |   |
| Accounts payable                                                  |   |                      | (2.8   | ) |   |   | 2.2 |   |
| Accrued fees and expenses for derivative plaintiffs' attorneys in |   |                      |   |   |   |   |   |   |
| UBS Settlement                                                    |   |                      | -      |   |   |   | (26.2 | ) |
| Other liabilities                                                 |   |                      | 24.4   |   |   |   | (18.3 | ) |
| Government, class action, and related settlements                 |   |                      | (0.8   | ) |   |   | (8.7 | ) |
| Net cash used in operating activities of discontinued operations  |   |                      | (4.2   | ) |   |   | (7.0 | ) |
| Total adjustments                                                 |   |                      | 61.7   |   |   |   | 170.7 |   |
| Net cash provided by operating activities                         |   |                      | 172.7  |   |   |   | 229.2 |   |

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|                                                                 |   | Six Months Ended June 30, |   |
|----------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                 |   | 2010                      |   |   | 2009 |   |
|                                                                 |   | (In Millions)             |   |
| Cash flows from investing activities:                                |   |                      |   |   |   |   |
| Capital expenditures                                                 |   |                      | (29.9  | ) |   |   | (34.4 | ) |
| Acquisition of a business, net of cash acquired                      |   |                      | (9.9   | ) |   |   | - |   |
| Proceeds from sale of restricted investments                         |   |                      | 10.0   |   |   |   | 1.6 |   |
| Purchase of restricted investments                                   |   |                      | (13.3  | ) |   |   | (1.6 | ) |
| Net change in restricted cash                                        |   |                      | 18.1   |   |   |   | (15.7 | ) |
| Net settlements on interest rate swaps                               |   |                      | (23.1  | ) |   |   | (19.1 | ) |
| Net investment in interest rate swap                                 |   |                      | -      |   |   |   | (6.4 | ) |
| Other                                                                |   |                      | (0.1   | ) |   |   | (0.8 | ) |
| Net cash provided by (used in) investing activities of discontinued  |   |                      |   |   |   |   |   |   |
| operations                                                           |   |                      | 8.5    |   |   |   | (1.4 | ) |
| Net cash used in investing activities                                |   |                      | (39.7  | ) |   |   | (77.8 | ) |
|                                                                 |   |                      |   |   |   |   |   |   |
| Cash flows from financing activities:                                |   |                      |   |   |   |   |   |   |
| Principal payments on debt, including pre-payments                   |   |                      | (3.8   | ) |   |   | (60.9 | ) |
| Borrowings on revolving credit facility                              |   |                      | -      |   |   |   | 10.0 |   |
| Payments on revolving credit facility                                |   |                      | -      |   |   |   | (50.0 | ) |
| Principal payments under capital lease obligations                   |   |                      | (7.2   | ) |   |   | (6.6 | ) |
| Dividends paid on convertible perpetual preferred stock              |   |                      | (13.0  | ) |   |   | (13.0 | ) |
| Distributions paid to noncontrolling interests of                    |   |                      |   |   |   |   |   |   |
| consolidated affiliates                                              |   |                      | (18.3  | ) |   |   | (15.8 | ) |
| Other                                                                |   |                      | 0.9    |   |   |   | 0.7 |   |
| Net cash provided by financing activities of discontinued operations |   |                      | -      |   |   |   | 1.8 |   |
| Net cash used in financing activities                                |   |                      | (41.4  | ) |   |   | (133.8 | ) |
|                                                                 |   |                      |   |   |   |   |   |   |
| Increase in cash and cash equivalents                                |   |                      | 91.6   |   |   |   | 17.6 |   |
| Cash and cash equivalents at beginning of period                     |   |                      | 80.9   |   |   |   | 32.1 |   |
| Cash and cash equivalents of facilities held for sale                |   |                      |   |   |   |   |   |   |
| at beginning of period                                               |   |                      | 0.1    |   |   |   | 0.1 |   |
| Less: Cash and cash equivalents of facilities held for               |   |                      |   |   |   |   |   |   |
| sale at end of period                                                |   |                      | -      |   |   |   | - |   |
| Cash and cash equivalents at end of period                           |   | $                         | 172.6  |   |   | $ | 49.8 |   |

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| 1.   | Basis of Presentation: |
|----------------|------------------------|

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| 2. | Investments in and Advances to Nonconsolidated Affiliates: |
|----|------------------------------------------------------------|

|                                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                          |   | June 30,           |   |   | June 30,         |   |
|                                          |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Net operating revenues                        |   | $                  | 20.2   |   |             | $      | 18.1 |   |   | $ | 40.3 |   |   | $ | 35.5 |   |
| Operating expenses                            |   |               | (13.1  | )      |             |   | (11.7 | ) |   |   | (26.0 | ) |   |   | (23.4 | ) |
| Income from continuing operations, net of tax |   |               | 5.5    |   |             |   | 5.3 |   |   |   | 11.8 |   |   |   | 10.3 |   |
| Net income                                    |   |               | 5.5    |   |             |   | 5.3 |   |   |   | 11.8 |   |   |   | 10.3 |   |

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|                                |   |       |   |   | Fair Value Measurements at Reporting Date Using               |   |
|-------------------------------------|--------|------------|--------|--------|---------------------------------------------------------------|--------|
| June 30, 2010                       |   | Fair Value |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Valuation Technique (1) |   |
| Other current assets:               |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| Restricted marketable securities    |   | $          | 1.0    |   |                                                          | $      | - |   |   | $ | 1.0 |   |   | $ | - |   |   |   | M |   |
| June 2009 trading swap              |   |       | 3.4    |   |                                                          |   | - |   |   |   | 3.4 |   |   |   | - |   |   |   | I |   |
| Other long-term assets:             |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted marketable securities    |   |       | 24.0   |   |                                                          |   | - |   |   |   | 24.0 |   |   |   | - |   |   |   | M |   |
| Accrued expenses and other current  |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities:                        |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 2006 trading swap             |   |       | (33.5  | )      |                                                          |   | - |   |   |   | (33.5 | ) |   |   | - |   |   |   | I |   |
| December 2008 forward-starting swap |   |       | (2.2   | )      |                                                          |   | - |   |   |   | (2.2 | ) |   |   | - |   |   |   | I |   |
| March 2009 forward-starting swap    |   |       | (2.5   | )      |                                                          |   | - |   |   |   | (2.5 | ) |   |   | - |   |   |   | I |   |
|                                |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                   |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other current assets:               |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted marketable securities    |   | $          | 2.7    |   |                                                          | $      | 1.8 |   |   | $ | 0.9 |   |   | $ | - |   |   |   | M |   |
| June 2009 trading swap              |   |       | 4.7    |   |                                                          |   | - |   |   |   | 4.7 |   |   |   | - |   |   |   | I |   |
| Other long-term assets:             |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted marketable securities    |   |       | 18.3   |   |                                                          |   | - |   |   |   | 18.3 |   |   |   | - |   |   |   | M |   |
| December 2008 forward-starting swap |   |       | 0.4    |   |                                                          |   | - |   |   |   | 0.4 |   |   |   | - |   |   |   | I |   |
| June 2009 trading swap              |   |       | 0.9    |   |                                                          |   | - |   |   |   | 0.9 |   |   |   | - |   |   |   | I |   |
| Accrued expenses and other current  |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities:                        |   |       |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 2006 trading swap             |   |       | (54.8  | )      |                                                          |   | - |   |   |   | (54.8 | ) |   |   | - |   |   |   | I |   |
| March 2009 forward-starting swap    |   |       | (0.3   | )      |                                                          |   | - |   |   |   | (0.3 | ) |   |   | - |   |   |   | I |   |

| (1)   | The three valuation techniques are: market approach (M), cost approach (C), and income approach (I). |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

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|                    |   |                                       |   |   | Fair Value Measurements at Reporting                          |   |   |                                         |   |   |                                     |   |
|-------------------------|--------|--------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------------|--------|
|                    |   |                                       |   |   | Date Using                                                    |   |   | Total Losses                                 |   |
|                    |   | Net Carrying Value as of December 31, 2009 |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Three Months Ended June 30, 2009 |   |   | Six Months Ended June 30, 2009 |   |
| Other long-term assets: |   |                                       |   |   |                                                          |   |   |                                         |   |   |                                     |   |   |   |   |   |   |   |
| Assets held for sale    |   | $                                          | 14.2   |   |                                                          | $      | -      |                                         |   | $      | 14.2                                     |   |   | $ | - |   |   | $ | (0.5 | ) |   | $ | (0.5 | ) |

|                                |   | As of June 30, 2010 |   |   | As of December 31, 2009 |   |
|-------------------------------------|--------|---------------------|--------|--------|-------------------------|--------|
|                                |   | Carrying Amount     |   |   | Estimated Fair Value    |   |   | Carrying Amount |   |   | Estimated Fair Value |   |
| Interest rate swap agreements:      |   |                |   |   |                    |   |   |   |   |   |   |   |
| March 2006 trading swap             |   | $                   | (33.5  | )      |                    | $      | (33.5 | ) |   | $ | (54.8 | ) |   | $ | (54.8 | ) |
| December 2008 forward-starting swap |   |                | (2.2   | )      |                    |   | (2.2 | ) |   |   | 0.4 |   |   |   | 0.4 |   |
| March 2009 forward-starting swap    |   |                | (2.5   | )      |                    |   | (2.5 | ) |   |   | (0.3 | ) |   |   | (0.3 | ) |
| June 2009 trading swap              |   |                | 3.4    |   |                    |   | 3.4 |   |   |   | 5.6 |   |   |   | 5.6 |   |
| Long-term debt:                     |   |                |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Term Loan Facility                  |   |                | 747.5  |   |                    |   | 725.7 |   |   |   | 751.3 |   |   |   | 714.5 |   |
| 10.75% Senior Notes due 2016        |   |                | 495.2  |   |                    |   | 540.0 |   |   |   | 494.9 |   |   |   | 542.5 |   |
| 8.125% Senior Notes due 2020        |   |                | 285.3  |   |                    |   | 285.3 |   |   |   | 285.2 |   |   |   | 284.7 |   |
| Other bonds payable                 |   |                | 1.8    |   |                    |   | 1.8 |   |   |   | 1.8 |   |   |   | 1.8 |   |
| Other notes payable                 |   |                | 28.0   |   |                    |   | 28.0 |   |   |   | 28.0 |   |   |   | 28.0 |   |
| Financial commitments:              |   |                |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Letters of credit                   |   |                | -      |   |                    |   | 52.9 |   |   |   | - |   |   |   | 95.2 |   |

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|                                                     |   | Three Months Ended June 30, |   |    | Six Months Ended June 30, |   |
|----------------------------------------------------------|--------|-----------------------------|--------|---------|---------------------------|--------|
|                                                     |   | 2010                        |   |    | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Numerator:                                               |   |                        |   |    |                      |   |   |   |   |   |   |   |
| Income from continuing operations                        |   | $                           | 57.4   |    |                      | $      | 2.3 |   |   | $ | 111.0 |   |   | $ | 58.5 |   |
| Less: Net income attributable to noncontrolling          |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| interests included in continuing operations              |   |                        | (10.2  | )       |                      |   | (8.9 | ) |   |   | (20.0 | ) |   |   | (17.2 | ) |
| Less: Convertible perpetual preferred stock dividends    |   |                        | (6.5   | )  |                      |   | (6.5 | )  |   |   | (13.0 | )  |   |   | (13.0 | )  |
| Income (loss) from continuing operations attributable    |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| to HealthSouth common shareholders                       |   |                        | 40.7   |    |                      |   | (13.1 | ) |   |   | 78.0 |   |   |   | 28.3 |   |
| Income (loss) from discontinued operations, net of tax,  |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| attributable to HealthSouth common shareholders          |   |                        | 0.1    |    |                      |   | 1.1 |   |   |   | (3.0 | ) |   |   | (1.9 | ) |
| Net income (loss) attributable to HealthSouth            |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| common shareholders                                      |   | $                           | 40.8   |    |                      | $      | (12.0 | ) |   | $ | 75.0 |   |   | $ | 26.4 |   |
|                                                     |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                             |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic weighted average common shares outstanding         |   |                        | 92.8   |    |                      |   | 87.6 |   |   |   | 92.7 |   |   |   | 87.5 |   |
| Diluted weighted average common shares outstanding       |   |                        | 108.2  |    |                      |   | 101.5 |   |   |   | 108.2 |   |   |   | 101.2 |   |
|                                                     |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted earnings per common share:             |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations attributable to |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| HealthSouth common shareholders                          |   | $                           | 0.44   |    |                      | $      | (0.15 | ) |   | $ | 0.84 |   |   | $ | 0.32 |   |
| Income (loss) from discontinued operations, net of tax,  |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| attributable to HealthSouth common shareholders          |   |                        | 0.00   |    |                      |   | 0.01 |   |   |   | (0.03 | ) |   |   | (0.02 | ) |
| Net income (loss) attributable to                        |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| HealthSouth common shareholders                          |   | $                           | 0.44   |    |                      | $      | (0.14 | ) |   | $ | 0.81 |   |   | $ | 0.30 |   |
|                                                     |   |                        |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |

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|                                    |   | Three Months Ended June 30, 2010 |   |
|-----------------------------------------|--------|----------------------------------|--------|
|                                    |   | HealthSouth Corporation          |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                    |   | (In Millions)                    |   |
| Net operating revenues                  |   | $                                | 20.1   |   |   | $ | 346.9 |   |   | $ | 140.1 |   |   | $ | (10.2 | ) |   | $ | 496.9 |   |
| Operating expenses:                     |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                   |   |                             | 12.7   |   |   |   | 164.3 |   |   |   | 67.7 |   |   |   | (3.1 | ) |   |   | 241.6 |   |
| Other operating expenses                |   |                             | 4.5    |   |   |   | 49.8 |   |   |   | 26.7 |   |   |   | (4.4 | ) |   |   | 76.6 |   |
| General and administrative expenses     |   |                             | 26.7   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26.7 |   |
| Supplies                                |   |                             | 1.6    |   |   |   | 19.8 |   |   |   | 7.4 |   |   |   | - |   |   |   | 28.8 |   |
| Depreciation and amortization           |   |                             | 2.8    |   |   |   | 12.2 |   |   |   | 3.7 |   |   |   | - |   |   |   | 18.7 |   |
| Occupancy costs                         |   |                             | 0.8    |   |   |   | 8.7 |   |   |   | 4.5 |   |   |   | (2.6 | ) |   |   | 11.4 |   |
| Provision for doubtful accounts         |   |                             | 0.5    |   |   |   | 4.3 |   |   |   | 1.1 |   |   |   | - |   |   |   | 5.9 |   |
| Loss on disposal of assets              |   |                             | -      |   |   |   | 0.3 |   |   |   | 0.1 |   |   |   | - |   |   |   | 0.4 |   |
| Professional fees—accounting,     |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax, and legal                          |   |                             | 5.7    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5.7 |   |
| Total operating expenses                |   |                             | 55.3   |   |   |   | 259.4 |   |   |   | 111.2 |   |   |   | (10.1 | ) |   |   | 415.8 |   |
| Loss on early extinguishment of debt    |   |                             | 0.1    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.1 |   |
| Interest expense and amortization of    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discounts and fees                 |   |                             | 27.7   |   |   |   | 2.2 |   |   |   | 0.9 |   |   |   | (0.7 | ) |   |   | 30.1 |   |
| Other income                            |   |                             | (0.3   | ) |   |   | (0.1 | ) |   |   | (1.7 | ) |   |   | 0.7 |   |   |   | (1.4 | ) |
| Gain on interest rate swaps             |   |                             | (0.3   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.3 | ) |
| Equity in net income of nonconsolidated |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                              |   |                             | (0.5   | ) |   |   | (2.0 | ) |   |   | (0.1 | ) |   |   | - |   |   |   | (2.6 | ) |
| Equity in net income of consolidated    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                              |   |                             | (44.0  | ) |   |   | (2.4 | ) |   |   | (1.0 | ) |   |   | 47.4 |   |   |   | - |   |
| Management fees                         |   |                             | (22.5  | ) |   |   | 17.3 |   |   |   | 5.2 |   |   |   | - |   |   |   | - |   |
| Income from continuing                  |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations before income tax            |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (benefit) expense                       |   |                             | 4.6    |   |   |   | 72.5 |   |   |   | 25.6 |   |   |   | (47.5 | ) |   |   | 55.2 |   |
| Provision for income tax (benefit)      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                 |   |                             | (42.2  | ) |   |   | 33.1 |   |   |   | 6.9 |   |   |   | - |   |   |   | (2.2 | ) |
| Income from continuing                  |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                              |   |                             | 46.8   |   |   |   | 39.4 |   |   |   | 18.7 |   |   |   | (47.5 | ) |   |   | 57.4 |   |
| Income (loss) from discontinued         |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations, net of tax                  |   |                             | 0.5    |   |   |   | (0.2 | ) |   |   | (0.2 | ) |   |   | - |   |   |   | 0.1 |   |
| Net income                              |   |                             | 47.3   |   |   |   | 39.2 |   |   |   | 18.5 |   |   |   | (47.5 | ) |   |   | 57.5 |   |
| Less: Net income attributable to        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interests                |   |                             | -      |   |   |   | - |   |   |   | (10.2 | ) |   |   | - |   |   |   | (10.2 | ) |
| Net income attributable                 |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to HealthSouth                          |   | $                                | 47.3   |   |   | $ | 39.2 |   |   | $ | 8.3 |   |   | $ | (47.5 | ) |   | $ | 47.3 |   |

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Table of Contents

|                                 |   | Three Months Ended June 30, 2009 |   |
|--------------------------------------|--------|----------------------------------|--------|
|                                 |   | HealthSouth Corporation          |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                 |   | (In Millions)                    |   |
| Net operating revenues               |   | $                                | 19.8   |   |   | $ | 333.9 |   |   | $ | 137.1 |   |   | $ | (9.2 | ) |   | $ | 481.6 |   |
| Operating expenses:                  |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                |   |                             | 11.5   |   |   |   | 162.4 |   |   |   | 67.0 |   |   |   | (3.1 | ) |   |   | 237.8 |   |
| Other operating expenses             |   |                             | 4.6    |   |   |   | 45.0 |   |   |   | 21.2 |   |   |   | (3.8 | ) |   |   | 67.0 |   |
| General and administrative expenses  |   |                             | 24.9   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24.9 |   |
| Supplies                             |   |                             | 1.7    |   |   |   | 19.4 |   |   |   | 7.5 |   |   |   | - |   |   |   | 28.6 |   |
| Depreciation and amortization        |   |                             | 2.2    |   |   |   | 11.5 |   |   |   | 3.9 |   |   |   | - |   |   |   | 17.6 |   |
| Occupancy costs                      |   |                             | 1.0    |   |   |   | 8.9 |   |   |   | 4.4 |   |   |   | (2.3 | ) |   |   | 12.0 |   |
| Provision for doubtful accounts      |   |                             | 0.7    |   |   |   | 6.8 |   |   |   | 2.2 |   |   |   | - |   |   |   | 9.7 |   |
| Loss on disposal of assets           |   |                             | -      |   |   |   | 1.3 |   |   |   | - |   |   |   | - |   |   |   | 1.3 |   |
| Government, class action, and        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related settlements                  |   |                             | 48.7   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 48.7 |   |
| Professional fees—accounting,  |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax, and legal                       |   |                             | (3.3   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3.3 | ) |
| Total operating expenses             |   |                             | 92.0   |   |   |   | 255.3 |   |   |   | 106.2 |   |   |   | (9.2 | ) |   |   | 444.3 |   |
| Gain on early extinguishment of debt |   |                             | (1.3   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1.3 | ) |
| Interest expense and amortization of |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discounts and fees              |   |                             | 28.8   |   |   |   | 1.9 |   |   |   | 0.9 |   |   |   | (0.5 | ) |   |   | 31.1 |   |
| Other income                         |   |                             | (0.3   | ) |   |   | (0.1 | ) |   |   | (1.1 | ) |   |   | 0.5 |   |   |   | (1.0 | ) |
| Loss on interest rate swaps          |   |                             | 3.8    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3.8 |   |
| Equity in net (income) loss of       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| nonconsolidated affiliates           |   |                             | (0.3   | ) |   |   | 3.1 |   |   |   | (0.1 | ) |   |   | - |   |   |   | 2.7 |   |
| Equity in net income of consolidated |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  affiliates                     |   |                             | (39.7  | ) |   |   | (4.8 | ) |   |   | (1.0 | ) |   |   | 45.5 |   |   |   | - |   |
| Management fees                      |   |                             | (21.3  | ) |   |   | 16.6 |   |   |   | 4.7 |   |   |   | - |   |   |   | - |   |
| (Loss) income from continuing        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations before income tax         |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (benefit) expense                    |   |                             | (41.9  | ) |   |   | 61.9 |   |   |   | 27.5 |   |   |   | (45.5 | ) |   |   | 2.0 |   |
| Provision for income tax (benefit)   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                              |   |                             | (36.2  | ) |   |   | 28.5 |   |   |   | 7.4 |   |   |   | - |   |   |   | (0.3 | ) |
| (Loss) income from continuing        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                           |   |                             | (5.7   | ) |   |   | 33.4 |   |   |   | 20.1 |   |   |   | (45.5 | ) |   |   | 2.3 |   |
| Income (loss) from discontinued      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                           |   |                             | 0.2    |   |   |   | (0.4 | ) |   |   | 1.5 |   |   |   | - |   |   |   | 1.3 |   |
| Net (loss) income                    |   |                             | (5.5   | ) |   |   | 33.0 |   |   |   | 21.6 |   |   |   | (45.5 | ) |   |   | 3.6 |   |
| Less: Net income attributable to     |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interests             |   |                             | -      |   |   |   | (0.2 | ) |   |   | (8.9 | ) |   |   | - |   |   |   | (9.1 | ) |
| Net (loss) income                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| attributable to                      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HealthSouth                          |   | $                                | (5.5   | ) |   | $ | 32.8 |   |   | $ | 12.7 |   |   | $ | (45.5 | ) |   | $ | (5.5 | ) |

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Table of Contents

|                                    |   | Six Months Ended June 30, 2010 |   |
|-----------------------------------------|--------|--------------------------------|--------|
|                                    |   | HealthSouth Corporation        |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                    |   | (In Millions)                  |   |
| Net operating revenues                  |   | $                              | 40.9   |   |   | $ | 688.3 |   |   | $ | 278.9 |   |   | $ | (20.2 | ) |   | $ | 987.9 |   |
| Operating expenses:                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                   |   |                           | 26.0   |   |   |   | 328.4 |   |   |   | 135.3 |   |   |   | (6.2 | ) |   |   | 483.5 |   |
| Other operating expenses                |   |                           | 9.3    |   |   |   | 95.4 |   |   |   | 47.6 |   |   |   | (8.8 | ) |   |   | 143.5 |   |
| General and administrative expenses     |   |                           | 53.0   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 53.0 |   |
| Supplies                                |   |                           | 3.2    |   |   |   | 39.2 |   |   |   | 14.7 |   |   |   | - |   |   |   | 57.1 |   |
| Depreciation and amortization           |   |                           | 5.4    |   |   |   | 24.3 |   |   |   | 7.3 |   |   |   | - |   |   |   | 37.0 |   |
| Occupancy costs                         |   |                           | 1.9    |   |   |   | 17.3 |   |   |   | 8.9 |   |   |   | (5.1 | ) |   |   | 23.0 |   |
| Provision for doubtful accounts         |   |                           | 0.9    |   |   |   | 9.0 |   |   |   | 2.9 |   |   |   | - |   |   |   | 12.8 |   |
| Loss on disposal of assets              |   |                           | -      |   |   |   | 0.4 |   |   |   | - |   |   |   | - |   |   |   | 0.4 |   |
| Professional fees—accounting,     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax, and legal                          |   |                           | 8.6    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8.6 |   |
| Total operating expenses                |   |                           | 108.3  |   |   |   | 514.0 |   |   |   | 216.7 |   |   |   | (20.1 | ) |   |   | 818.9 |   |
| Loss on early extinguishment            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of debt                                 |   |                           | 0.4    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.4 |   |
| Interest expense and amortization of    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discounts and fees                 |   |                           | 55.8   |   |   |   | 4.4 |   |   |   | 1.6 |   |   |   | (1.2 | ) |   |   | 60.6 |   |
| Other income                            |   |                           | (0.5   | ) |   |   | (0.1 | ) |   |   | (2.7 | ) |   |   | 1.2 |   |   |   | (2.1 | ) |
| Loss on interest rate swaps             |   |                           | 4.0    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4.0 |   |
| Equity in net income of nonconsolidated |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                              |   |                           | (1.2   | ) |   |   | (3.9 | ) |   |   | (0.1 | ) |   |   | - |   |   |   | (5.2 | ) |
| Equity in net income of consolidated    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                              |   |                           | (91.4  | ) |   |   | (4.2 | ) |   |   | (1.8 | ) |   |   | 97.4 |   |   |   | - |   |
| Management fees                         |   |                           | (44.0  | ) |   |   | 34.1 |   |   |   | 9.9 |   |   |   | - |   |   |   | - |   |
| Income from continuing                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations before income tax            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (benefit) expense                       |   |                           | 9.5    |   |   |   | 144.0 |   |   |   | 55.3 |   |   |   | (97.5 | ) |   |   | 111.3 |   |
| Provision for income tax (benefit)      |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                 |   |                           | (80.0  | ) |   |   | 65.6 |   |   |   | 14.7 |   |   |   | - |   |   |   | 0.3 |   |
| Income from continuing operations       |   |                           | 89.5   |   |   |   | 78.4 |   |   |   | 40.6 |   |   |   | (97.5 | ) |   |   | 111.0 |   |
| Loss from discontinued                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations, net of tax                  |   |                           | (1.5   | ) |   |   | (0.8 | ) |   |   | (0.8 | ) |   |   | 0.1 |   |   |   | (3.0 | ) |
| Net income                              |   |                           | 88.0   |   |   |   | 77.6 |   |   |   | 39.8 |   |   |   | (97.4 | ) |   |   | 108.0 |   |
| Less: Net income attributable to        |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interests                |   |                           | -      |   |   |   | - |   |   |   | (20.0 | ) |   |   | - |   |   |   | (20.0 | ) |
| Net income attributable                 |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to HealthSouth                          |   | $                              | 88.0   |   |   | $ | 77.6 |   |   | $ | 19.8 |   |   | $ | (97.4 | ) |   | $ | 88.0 |   |

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Table of Contents

|                                           |   | Six Months Ended June 30, 2009 |   |
|------------------------------------------------|--------|--------------------------------|--------|
|                                           |   | HealthSouth Corporation        |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                           |   | (In Millions)                  |   |
| Net operating revenues                         |   | $                              | 38.8   |   |   | $ | 666.4 |   |   | $ | 267.6 |   |   | $ | (18.3 | ) |   | $ | 954.5 |   |
| Operating expenses:                            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                          |   |                           | 25.2   |   |   |   | 320.6 |   |   |   | 131.5 |   |   |   | (6.2 | ) |   |   | 471.1 |   |
| Other operating expenses                       |   |                           | 8.9    |   |   |   | 90.8 |   |   |   | 41.7 |   |   |   | (7.5 | ) |   |   | 133.9 |   |
| General and administrative expenses            |   |                           | 50.4   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50.4 |   |
| Supplies                                       |   |                           | 3.2    |   |   |   | 38.2 |   |   |   | 14.6 |   |   |   | - |   |   |   | 56.0 |   |
| Depreciation and amortization                  |   |                           | 4.3    |   |   |   | 23.0 |   |   |   | 7.7 |   |   |   | - |   |   |   | 35.0 |   |
| Occupancy costs                                |   |                           | 2.1    |   |   |   | 17.8 |   |   |   | 8.7 |   |   |   | (4.6 | ) |   |   | 24.0 |   |
| Provision for doubtful accounts                |   |                           | 1.3    |   |   |   | 11.8 |   |   |   | 4.4 |   |   |   | - |   |   |   | 17.5 |   |
| Loss on disposal of assets                     |   |                           | -      |   |   |   | 2.2 |   |   |   | 0.1 |   |   |   | - |   |   |   | 2.3 |   |
| Government, class action, and                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related settlements                            |   |                           | 32.8   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 32.8 |   |
| Professional fees—accounting,            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax, and legal                                 |   |                           | 1.5    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1.5 |   |
| Total operating expenses                       |   |                           | 129.7  |   |   |   | 504.4 |   |   |   | 208.7 |   |   |   | (18.3 | ) |   |   | 824.5 |   |
| Gain on early extinguishment of debt           |   |                           | (3.1   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3.1 | ) |
| Interest expense and amortization of           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discounts and fees                        |   |                           | 60.9   |   |   |   | 4.1 |   |   |   | 1.6 |   |   |   | (1.1 | ) |   |   | 65.5 |   |
| Other income                                   |   |                           | (0.3   | ) |   |   | (0.2 | ) |   |   | (1.4 | ) |   |   | 1.1 |   |   |   | (0.8 | ) |
| Loss on interest rate swaps                    |   |                           | 8.8    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8.8 |   |
| Equity in net (income) loss of nonconsolidated |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                                     |   |                           | (0.9   | ) |   |   | 1.3 |   |   |   | (0.2 | ) |   |   | - |   |   |   | 0.2 |   |
| Equity in net income of consolidated           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| affiliates                                     |   |                           | (83.8  | ) |   |   | (6.4 | ) |   |   | (1.8 | ) |   |   | 92.0 |   |   |   | - |   |
| Management fees                                |   |                           | (42.2  | ) |   |   | 32.9 |   |   |   | 9.3 |   |   |   | - |   |   |   | - |   |
| (Loss) income from continuing operations       |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| before income tax (benefit) expense            |   |                           | (30.3  | ) |   |   | 130.3 |   |   |   | 51.4 |   |   |   | (92.0 | ) |   |   | 59.4 |   |
| Provision for income tax (benefit)             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                        |   |                           | (72.2  | ) |   |   | 59.4 |   |   |   | 13.7 |   |   |   | - |   |   |   | 0.9 |   |
| Income from continuing                         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                                     |   |                           | 41.9   |   |   |   | 70.9 |   |   |   | 37.7 |   |   |   | (92.0 | ) |   |   | 58.5 |   |
| (Loss) income from discontinued                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations, net of tax                         |   |                           | (2.5   | ) |   |   | - |   |   |   | 1.1 |   |   |   | - |   |   |   | (1.4 | ) |
| Net income                                     |   |                           | 39.4   |   |   |   | 70.9 |   |   |   | 38.8 |   |   |   | (92.0 | ) |   |   | 57.1 |   |
| Less: Net income attributable to               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interests                       |   |                           | -      |   |   |   | (0.3 | ) |   |   | (17.4 | ) |   |   | - |   |   |   | (17.7 | ) |
| Net income attributable                        |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to HealthSouth                                 |   | $                              | 39.4   |   |   | $ | 70.6 |   |   | $ | 21.4 |   |   | $ | (92.0 | ) |   | $ | 39.4 |   |

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Table of Contents

|                                                 |   | As of June 30, 2010     |    |
|------------------------------------------------------|--------|-------------------------|---------|
|                                                 |   | HealthSouth Corporation |    |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                                 |   | (In Millions)           |    |
| Assets                                               |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                      |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                            |   | $                       | 170.4   |   |   | $ | - |   |   | $ | 2.2 |   |   | $ | - |   |   | $ | 172.6 |   |
| Restricted cash                                      |   |                    | 1.3     |   |   |   | - |   |   |   | 48.4 |   |   |   | - |   |   |   | 49.7 |   |
| Accounts receivable, net                             |   |                    | 9.8     |   |   |   | 155.3 |   |   |   | 59.7 |   |   |   | - |   |   |   | 224.8 |   |
| Other current assets                                 |   |                    | 49.2    |   |   |   | 62.2 |   |   |   | 63.4 |   |   |   | (118.0 | ) |   |   | 56.8 |   |
| Total current assets                                 |   |                    | 230.7   |   |   |   | 217.5 |   |   |   | 173.7 |   |   |   | (118.0 | ) |   |   | 503.9 |   |
| Property and equipment, net                          |   |                    | 38.2    |   |   |   | 474.8 |   |   |   | 151.5 |   |   |   | - |   |   |   | 664.5 |   |
| Goodwill                                             |   |                    | -       |   |   |   | 271.9 |   |   |   | 151.8 |   |   |   | - |   |   |   | 423.7 |   |
| Intangible assets, net                               |   |                    | 0.4     |   |   |   | 28.7 |   |   |   | 6.4 |   |   |   | - |   |   |   | 35.5 |   |
| Investments in and advances to                       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| nonconsolidated affiliates                           |   |                    | 2.5     |   |   |   | 24.7 |   |   |   | 3.8 |   |   |   | - |   |   |   | 31.0 |   |
| Other long-term assets                               |   |                    | 59.7    |   |   |   | 208.4 |   |   |   | 71.1 |   |   |   | (241.7 | ) |   |   | 97.5 |   |
| Intercompany receivable                              |   |                    | 1,022.6 |   |   |   | - |   |   |   | - |   |   |   | (1,022.6 | ) |   |   | - |   |
| Total assets                                         |   | $                       | 1,354.1 |   |   | $ | 1,226.0 |   |   | $ | 558.3 |   |   | $ | (1,382.3 | ) |   | $ | 1,756.1 |   |
| Liabilities and Shareholders’ (Deficit) Equity |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                 |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current portion of long-term debt                    |   | $                       | 9.5     |   |   | $ | 9.9 |   |   | $ | 2.1 |   |   | $ | - |   |   | $ | 21.5 |   |
| Accounts payable                                     |   |                    | 11.3    |   |   |   | 23.1 |   |   |   | 12.9 |   |   |   | - |   |   |   | 47.3 |   |
| Accrued expenses and other current                   |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                          |   |                    | 217.5   |   |   |   | 58.4 |   |   |   | 63.4 |   |   |   | (16.7 | ) |   |   | 322.6 |   |
| Total current liabilities                            |   |                    | 238.3   |   |   |   | 91.4 |   |   |   | 78.4 |   |   |   | (16.7 | ) |   |   | 391.4 |   |
| Long-term debt, net of current portion               |   |                    | 1,546.8 |   |   |   | 81.5 |   |   |   | 27.7 |   |   |   | (23.0 | ) |   |   | 1,633.0 |   |
| Other long-term liabilities                          |   |                    | 77.9    |   |   |   | 11.2 |   |   |   | 87.0 |   |   |   | (14.5 | ) |   |   | 161.6 |   |
| Intercompany payable                                 |   |                    | -       |   |   |   | 278.7 |   |   |   | 1,279.0 |   |   |   | (1,557.7 | ) |   |   | - |   |
|                                                 |   |                    | 1,863.0 |   |   |   | 462.8 |   |   |   | 1,472.1 |   |   |   | (1,611.9 | ) |   |   | 2,186.0 |   |
| Commitments and contingencies                        |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible perpetual preferred stock                |   |                    | 387.4   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 387.4 |   |
| Shareholders’ (deficit) equity                 |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HealthSouth shareholders' (deficit)                  |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity                                               |   |                    | (896.3  | ) |   |   | 763.2 |   |   |   | (992.8 | ) |   |   | 229.6 |   |   |   | (896.3 | ) |
| Noncontrolling interests                             |   |                    | -       |   |   |   | - |   |   |   | 79.0 |   |   |   | - |   |   |   | 79.0 |   |
| Total shareholders' (deficit) equity                 |   |                    | (896.3  | ) |   |   | 763.2 |   |   |   | (913.8 | ) |   |   | 229.6 |   |   |   | (817.3 | ) |
| Total liabilities and                                |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders’                                  |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (deficit) equity                                     |   | $                       | 1,354.1 |   |   | $ | 1,226.0 |   |   | $ | 558.3 |   |   | $ | (1,382.3 | ) |   | $ | 1,756.1 |   |

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Table of Contents

|                                                                                                                                                               |   |  As of December 31, 2009 |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------------|
|                                                                                                                                                               |   |  HealthSouthCorporation  |          |   |  GuarantorSubsidiaries |   |   |  Non GuarantorSubsidiaries |   |   |  EliminatingEntries |   |   |  HealthSouthConsolidated |   |
|                                                                                                                                                               |   |  (In Millions)           |          |
|  Assets                                                                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current asset:                                                                                                                                                     |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Cash and cash equivalents                                                                                               |   |  $                       |  76.2    |   |   |  $ |  1.8 |   |   |  $ |  2.9 |   |   |  $ |  - |   |   |  $ |  80.9 |   |
|         Restricted cash                                                                                                         |   |                          |  2.3     |   |   |   |  - |   |   |   |  65.5 |   |   |   |  - |   |   |   |  67.8 |   |
|         Accounts receivable, net                                                                                                |   |                          |  10.1    |   |   |   |  149.5 |   |   |   |  60.1 |   |   |   |  - |   |   |   |  219.7 |   |
|         Other current assets                                                                                                         |   |                          |  35.2    |   |   |   |  62.1 |   |   |   |  48.8 |   |   |   |  (88.5 | ) |   |   |  57.6 |   |
|                 Total current assets                                                    |   |                          |  123.8   |   |   |   |  213.4 |   |   |   |  177.3 |   |   |   |  (88.5 | ) |   |   |  426.0 |   |
| Property and equipment, net                                                                                                                                        |   |                          |  40.1    |   |   |   |  479.8 |   |   |   |  144.9 |   |   |   |  - |   |   |   |  664.8 |   |
| Goodwill                                                                                                                                                           |   |                          |  -       |   |   |   |  264.6 |   |   |   |  151.8 |   |   |   |  - |   |   |   |  416.4 |   |
| Intangible assets, net                                                                                                                                             |   |                          |  0.4     |   |   |   |  29.4 |   |   |   |  7.6 |   |   |   |  - |   |   |   |  37.4 |   |
| Investments in and advances to                                                                                                                                     |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     nonconsolidated affiliates                                                                                                                      |   |                          |  3.0     |   |   |   |  22.4 |   |   |   |  3.9 |   |   |   |  - |   |   |   |  29.3 |   |
| Other long-term assets                                                                                                                                             |   |                          |  65.4    |   |   |   |  209.0 |   |   |   |  79.5 |   |   |   |  (246.3 | ) |   |   |  107.6 |   |
| Intercompany receivable                                                                                                                                            |   |                          |  1,053.0 |   |   |   |  - |   |   |   |  - |   |   |   |  (1,053.0 | ) |   |   |  - |   |
|                 Total assets                                                            |   |  $                       |  1,285.7 |   |   |  $ |  1,218.6 |   |   |  $ |  565.0 |   |   |  $ |  (1,387.8 | ) |   |  $ |  1,681.5 |   |
| Liabilities and Shareholders' (Deficit) Equity                                                                                                                     |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                               |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Current portion of long-term debt                                                                                       |   |  $                       |  9.7     |   |   |  $ |  10.0 |   |   |  $ |  1.8 |   |   |  $ |  - |   |   |  $ |  21.5 |   |
|         Accounts payable                                                                                                        |   |                          |  12.5    |   |   |   |  28.1 |   |   |   |  9.6 |   |   |   |  - |   |   |   |  50.2 |   |
|         Accrued expenses and other current                                                                                      |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              liabilities                                                                               |   |                          |  213.8   |   |   |   |  48.5 |   |   |   |  57.2 |   |   |   |  - |   |   |   |  319.5 |   |
|                  Total current liabilities                                         |   |                          |  236.0   |   |   |   |  86.6 |   |   |   |  68.6 |   |   |   |  - |   |   |   |  391.2 |   |
| Long-term debt, net of current portion                                                                                                                             |   |                          |  1,552.9 |   |   |   |  86.1 |   |   |   |  27.0 |   |   |   |  (25.0 | ) |   |   |  1,641.0 |   |
| Other long-term liabilities                                                                                                                                        |   |                          |  83.4    |   |   |   |  11.3 |   |   |   |  69.5 |   |   |   |  (4.7 | ) |   |   |  159.5 |   |
| Intercompany payable                                                                                                                                               |   |                          |  -       |   |   |   |  372.0 |   |   |   |  1,448.0 |   |   |   |  (1,820.0 | ) |   |   |  - |   |
|                                                                                                                                                               |   |                          |  1,872.3 |   |   |   |  556.0 |   |   |   |  1,613.1 |   |   |   |  (1,849.7 | ) |   |   |  2,191.7 |   |
| Commitments and contingencies                                                                                                                                      |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible perpetual preferred stock                                                                                                                              |   |                          |  387.4   |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  387.4 |   |
| Shareholders' (deficit) equity                                                                                                                                     |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      HealthSouth shareholders' (deficit)                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          equity                                                                                                            |   |                          |  (974.0  | ) |   |   |  662.6 |   |   |   |  (1,124.5 | ) |   |   |  461.9 |   |   |   |  (974.0 | ) |
|      Noncontrolling interests                                                                                                             |   |                          |  -       |   |   |   |  - |   |   |   |  76.4 |   |   |   |  - |   |   |   |  76.4 |   |
|           Total shareholders' (deficit) equity                                                                        |   |                          |  (974.0  | ) |   |   |  662.6 |   |   |   |  (1,048.1 | ) |   |   |  461.9 |   |   |   |  (897.6 | ) |
|                    Total liabilities and                                 |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         shareholders' (deficit) |   |                          |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         equity                  |   |  $                       |  1,285.7 |   |   |  $ |  1,218.6 |   |   |  $ |  565.0 |   |   |  $ |  (1,387.8) |   |   |  $ |  1,681.5 |   |

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Table of Contents

|                                            |   | Six Months Ended June 30, 2010 |   |
|-------------------------------------------------|--------|--------------------------------|--------|
|                                            |   | HealthSouth Corporation        |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                            |   | (In Millions)                  |   |
| Net cash provided by operating                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities                                      |   | $                              | 65.8   |   |   | $ | 133.3 |   |   | $ | 72.7 |   |   | $ | (99.1 | ) |   | $ | 172.7 |   |
| Cash flows from investing activities:           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                            |   |                           | (3.5   | ) |   |   | (15.6 | ) |   |   | (10.8 | ) |   |   | - |   |   |   | (29.9 | ) |
| Acquisition of a business, net of cash acquired |   |                           | -      |   |   |   | (9.9 | ) |   |   | - |   |   |   | - |   |   |   | (9.9 | ) |
| Proceeds from sale of restricted                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investments                                     |   |                           | -      |   |   |   | - |   |   |   | 10.0 |   |   |   | - |   |   |   | 10.0 |   |
| Purchase of restricted investments              |   |                           | -      |   |   |   | - |   |   |   | (13.3 | ) |   |   | - |   |   |   | (13.3 | ) |
| Net change in restricted cash                   |   |                           | 1.0    |   |   |   | - |   |   |   | 17.1 |   |   |   | - |   |   |   | 18.1 |   |
| Net settlements on interest rate swaps          |   |                           | (23.1  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (23.1 | ) |
| Other                                           |   |                           | -      |   |   |   | (0.1 | ) |   |   | - |   |   |   | - |   |   |   | (0.1 | ) |
| Net cash provided by investing activities       |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of discontinued operations                      |   |                           | -      |   |   |   | - |   |   |   | 8.5 |   |   |   | - |   |   |   | 8.5 |   |
| Net cash (used in) provided by                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investing activities                            |   |                           | (25.6  | ) |   |   | (25.6 | ) |   |   | 11.5 |   |   |   | - |   |   |   | (39.7 | ) |
| Cash flows from financing activities:           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Principal payments on debt, including           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| pre-payments                                    |   |                           | (5.8   | ) |   |   | - |   |   |   | - |   |   |   | 2.0 |   |   |   | (3.8 | ) |
| Principal payments under capital lease          |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                                     |   |                           | (1.1   | ) |   |   | (5.1 | ) |   |   | (1.0 | ) |   |   | - |   |   |   | (7.2 | ) |
| Dividends paid on convertible perpetual         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| preferred stock                                 |   |                           | (13.0  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (13.0 | ) |
| Distributions paid to noncontrolling interests  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of consolidated affiliates                      |   |                           | -      |   |   |   | - |   |   |   | (18.3 | ) |   |   | - |   |   |   | (18.3 | ) |
| Other                                           |   |                           | 0.3    |   |   |   | - |   |   |   | 0.6 |   |   |   | - |   |   |   | 0.9 |   |
| Change in intercompany advances                 |   |                           | 73.6   |   |   |   | (104.4 | ) |   |   | (66.3 | ) |   |   | 97.1 |   |   |   | - |   |
| Net cash provided by (used in)                  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| financing activities                            |   |                           | 54.0   |   |   |   | (109.5 | ) |   |   | (85.0 | ) |   |   | 99.1 |   |   |   | (41.4 | ) |
| Increase (decrease) in cash and cash            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equivalents                                     |   |                           | 94.2   |   |   |   | (1.8 | ) |   |   | (0.8 | ) |   |   | - |   |   |   | 91.6 |   |
| Cash and cash equivalents at                    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| beginning of period                             |   |                           | 76.2   |   |   |   | 1.8 |   |   |   | 2.9 |   |   |   | - |   |   |   | 80.9 |   |
| Cash and cash equivalents of facilities         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| held for sale at beginning of period            |   |                           | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |   |   | 0.1 |   |
| Less: Cash and cash equivalents of              |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| facilities held for sale at end of              |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period                                          |   |                           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents at end of             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period                                          |   | $                              | 170.4  |   |   | $ | - |   |   | $ | 2.2 |   |   | $ | - |   |   | $ | 172.6 |   |

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Table of Contents

|                                           |   | Six Months Ended June 30, 2009 |   |
|------------------------------------------------|--------|--------------------------------|--------|
|                                           |   | HealthSouth Corporation        |   |   | Guarantor Subsidiaries |   |   | Non Guarantor Subsidiaries |   |   | Eliminating Entries |   |   | HealthSouth Consolidated |   |
|                                           |   | (In Millions)                  |   |
| Net cash provided by operating                 |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities                                     |   | $                              | 137.0  |   |   | $ | 130.4 |   |   | $ | 56.8 |   |   | $ | (95.0 | ) |   | $ | 229.2 |   |
| Cash flows from investing activities:          |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                           |   |                           | (4.5   | ) |   |   | (25.3 | ) |   |   | (4.6 | ) |   |   | - |   |   |   | (34.4 | ) |
| Proceeds from sale of restricted               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investments                                    |   |                           | -      |   |   |   | - |   |   |   | 1.6 |   |   |   | - |   |   |   | 1.6 |   |
| Purchase of restricted investments             |   |                           | -      |   |   |   | - |   |   |   | (1.6 | ) |   |   | - |   |   |   | (1.6 | ) |
| Net change in restricted cash                  |   |                           | (0.5   | ) |   |   | - |   |   |   | (15.2 | ) |   |   | - |   |   |   | (15.7 | ) |
| Net settlements on interest rate swaps         |   |                           | (19.1  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (19.1 | ) |
| Net investment in interest rate swap           |   |                           | (6.4   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6.4 | ) |
| Other                                          |   |                           | -      |   |   |   | 0.8 |   |   |   | (1.6 | ) |   |   | - |   |   |   | (0.8 | ) |
| Net cash provided by (used in) investing       |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities of discontinued operations          |   |                           | 0.1    |   |   |   | - |   |   |   | (1.5 | ) |   |   | - |   |   |   | (1.4 | ) |
| Net cash used in investing                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   activities                         |   |                           | (30.4  | ) |   |   | (24.5 | ) |   |   | (22.9 | ) |   |   | - |   |   |   | (77.8 | ) |
| Cash flows from financing activities:          |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Principal payments on debt, including          |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| pre-payments                                   |   |                           | (62.7  | ) |   |   | (0.2 | ) |   |   | - |   |   |   | 2.0 |   |   |   | (60.9 | ) |
| Borrowings on revolving credit facility        |   |                           | 10.0   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10.0 |   |
| Payments on revolving credit facility          |   |                           | (50.0  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (50.0 | ) |
| Principal payments under capital lease         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                                    |   |                           | (0.1   | ) |   |   | (4.8 | ) |   |   | (1.7 | ) |   |   | - |   |   |   | (6.6 | ) |
| Dividends paid on convertible perpetual        |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| preferred stock                                |   |                           | (13.0  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (13.0 | ) |
| Distributions paid to noncontrolling interests |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of consolidated affiliates                     |   |                           | -      |   |   |   | - |   |   |   | (15.8 | ) |   |   | - |   |   |   | (15.8 | ) |
| Other                                          |   |                           | (0.1   | ) |   |   | - |   |   |   | 0.8 |   |   |   | - |   |   |   | 0.7 |   |
| Change in intercompany advances                |   |                           | 32.9   |   |   |   | (100.9 | ) |   |   | (25.0 | ) |   |   | 93.0 |   |   |   | - |   |
| Net cash (used in) provided by financing       |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| activities of discontinued operations          |   |                           | (0.5   | ) |   |   | 0.1 |   |   |   | 2.2 |   |   |   | - |   |   |   | 1.8 |   |
| Net cash used in financing                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  activities                               |   |                           | (83.5  | ) |   |   | (105.8 | ) |   |   | (39.5 | ) |   |   | 95.0 |   |   |   | (133.8 | ) |
| Increase (decrease) in cash and cash           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equivalents                                    |   |                           | 23.1   |   |   |   | 0.1 |   |   |   | (5.6 | ) |   |   | - |   |   |   | 17.6 |   |
| Cash and cash equivalents at                   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| beginning of period                            |   |                           | 23.1   |   |   |   | 0.8 |   |   |   | 8.2 |   |   |   | - |   |   |   | 32.1 |   |
| Cash and cash equivalents of facilities        |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| held for sale at beginning of period           |   |                           | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |   |   | 0.1 |   |
| Less:  Cash and cash equivalents of  |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| facilities held for sale at end of period      |   |                           | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents at end of            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period                                         |   | $                              | 46.2   |   |   | $ | 0.9 |   |   | $ | 2.7 |   |   | $ | - |   |   | $ | 49.8 |   |

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Item 2.    

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| •   | Leverage. Further deleveraging and strengthening of our capital structure is a strategic focus. One measure we use to assess our financial leverage is the ratio of consolidated total debt to Adjusted Consolidated EBITDA. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Highly Regulated Industry. We are required to comply with extensive and complex laws and regulations at the federal, state, and local government levels. These rules and regulations have affected, or could in the future affect, our business activities by controlling the reimbursement we receive for services provided, requiring licensure or certification of our hospitals, regulating our relationships with physicians and other referral sources, regulating the use of our properties, and controlling our growth. Ensuring continuous compliance with these laws and regulations is an operating requirement for all healthcare providers. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | Healthcare Reform. Many issues within the context of healthcare reform are addressed within the 2010 Healthcare Reform Laws and could have an impact on our business, including: (1) reducing annual market basket updates to providers, (2) the possible combining, or “bundling,” of acute care hospital and post-acute Medicare reimbursement at some point in the future, and (3) creating an Independent Payment Advisory Board. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | Staffing. Our operations are dependent on the efforts, abilities, and experience of our medical personnel, such as physical therapists, occupational therapists, speech pathologists, nurses, and other healthcare professionals. In some markets, the lack of availability of medical personnel is an operating issue facing all healthcare providers, although the weak economy has mitigated this issue to some degree. We have refined our comprehensive benefits package to remain competitive in this challenging staffing environment while also being consistent with our goal of being a high-quality, cost-effective provider of inpatient rehabilitative services. As a result of our efforts, we are experiencing improved retention rates and reduced turnover. Going forward, recruiting and retaining qualified personnel for our hospitals will remain a high priority for us. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                  | Three Months Ended |   | Six Months Ended |
|---------------------------------------|--------------------|--------|------------------|
|                                  | June 30,           |   | June 30,         |
|                                  | 2010               |   | 2009             |   | 2010 |   | 2009 |
| Medicare                              |  69.6%        |   |  67.2%      |   |  70.0% |   |  67.5% |
| Medicaid                              |  1.8%         |   |  2.2%       |   |  1.8% |   |  2.2% |
| Workers’ compensation           |  1.7%         |   |  1.5%       |   |  1.6% |   |  1.6% |
| Managed care and other discount plans |  21.9%        |   |  23.8%      |   |  21.8% |   |  23.1% |
| Other third-party payors              |  2.4%         |   |  2.7%       |   |  2.3% |   |  3.0% |
| Patients                              |  1.3%         |   |  1.1%       |   |  1.2% |   |  1.1% |
| Other income                          |  1.3%         |   |  1.5%       |   |  1.3% |   |  1.5% |
| Total                                 |  100.0%       |   |  100.0%     |   | 100.0% |   |  100.0% |

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|                                        |   | Three Months EndedJune 30, |   |   | Percentage Change |   |   | Six Months EndedJune 30, |   |   | Percentage Change |   |
|---------------------------------------------|--------|----------------------------|--------|--------|-------------------|--------|--------|--------------------------|--------|--------|-------------------|--------|
|                                        |   | 2010                       |   |   | 2009              |   |   | 2010 vs. 2009            |   |   | 2010              |   |   | 2009 |   |   | 2010 vs. 2009 |   |
|                                        |   | (In Millions)              |   |   |              |   |   | (In Millions)            |   |   |              |   |
| Net operating revenues                      |   | $                          | 496.9  |   |              | $      | 481.6  |                     |   |   | 3.2               | %      |   | $ | 987.9 |   |   | $ | 954.5 |   |   |   | 3.5 | % |
| Operating expenses:                         |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                       |   |                       | 241.6  |   |              |   | 237.8  |                     |   |   | 1.6               | %      |   |   | 483.5 |   |   |   | 471.1 |   |   |   | 2.6 | % |
| Other operating expenses                    |   |                       | 76.6   |   |              |   | 67.0   |                     |   |   | 14.3              | %      |   |   | 143.5 |   |   |   | 133.9 |   |   |   | 7.2 | % |
| General and administrative expenses         |   |                       | 26.7   |   |              |   | 24.9   |                     |   |   | 7.2               | %      |   |   | 53.0 |   |   |   | 50.4 |   |   |   | 5.2 | % |
| Supplies                                    |   |                       | 28.8   |   |              |   | 28.6   |                     |   |   | 0.7               | %      |   |   | 57.1 |   |   |   | 56.0 |   |   |   | 2.0 | % |
| Depreciation and amortization               |   |                       | 18.7   |   |              |   | 17.6   |                     |   |   | 6.3               | %      |   |   | 37.0 |   |   |   | 35.0 |   |   |   | 5.7 | % |
| Occupancy costs                             |   |                       | 11.4   |   |              |   | 12.0   |                     |   |   | (5.0              | %)     |   |   | 23.0 |   |   |   | 24.0 |   |   |   | (4.2 | %) |
| Provision for doubtful accounts             |   |                       | 5.9    |   |              |   | 9.7    |                     |   |   | (39.2             | %)     |   |   | 12.8 |   |   |   | 17.5 |   |   |   | (26.9 | %) |
| Loss on disposal of assets                  |   |                       | 0.4    |   |              |   | 1.3    |                     |   |   | (69.2             | %)     |   |   | 0.4 |   |   |   | 2.3 |   |   |   | (82.6 | %) |
| Government, class action, and               |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related settlements                         |   |                       | -      |   |              |   | 48.7   |                     |   |   | (100.0            | %)     |   |   | - |   |   |   | 32.8 |   |   |   | (100.0 | %) |
| Professional fees—accounting,         |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax, and legal                              |   |                       | 5.7    |   |              |   | (3.3   | )                        |   |   | (272.7            | %)     |   |   | 8.6 |   |   |   | 1.5 |   |   |   | 473.3 | % |
| Total operating expenses                    |   |                       | 415.8  |   |              |   | 444.3  |                     |   |   | (6.4              | %)     |   |   | 818.9 |   |   |   | 824.5 |   |   |   | (0.7 | %) |
| Loss (gain) on early extinguishment         |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of debt                                     |   |                       | 0.1    |   |              |   | (1.3   | )                        |   |   | (107.7            | %)     |   |   | 0.4 |   |   |   | (3.1 | ) |   |   | (112.9 | %) |
| Interest expense and amortization of        |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discounts and fees                     |   |                       | 30.1   |   |              |   | 31.1   |                     |   |   | (3.2              | %)     |   |   | 60.6 |   |   |   | 65.5 |   |   |   | (7.5 | %) |
| Other income                                |   |                       | (1.4   | )      |              |   | (1.0   | )                        |   |   | 40.0              | %      |   |   | (2.1 | ) |   |   | (0.8 | ) |   |   | 162.5 | % |
| (Gain) loss on interest rate swaps          |   |                       | (0.3   | )      |              |   | 3.8    |                     |   |   | (107.9            | %)     |   |   | 4.0 |   |   |   | 8.8 |   |   |   | (54.5 | %) |
| Equity in net (income) loss of              |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| nonconsolidated affiliates                  |   |                       | (2.6   | )      |              |   | 2.7    |                     |   |   | (196.3            | %)     |   |   | (5.2 | ) |   |   | 0.2 |   |   |   | (2,700.0 | %) |
| Income from continuing operations           |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| before income tax (benefit) expense         |   |                       | 55.2   |   |              |   | 2.0    |                     |   |   | 2,660.0           | %      |   |   | 111.3 |   |   |   | 59.4 |   |   |   | 87.4 | % |
| Provision for income tax (benefit) expense  |   |                       | (2.2   | )      |              |   | (0.3   | )                        |   |   | 633.3             | %      |   |   | 0.3 |   |   |   | 0.9 |   |   |   | (66.7 | %) |
| Income from continuing                      |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                                  |   |                       | 57.4   |   |              |   | 2.3    |                     |   |   | 2,395.7           | %      |   |   | 111.0 |   |   |   | 58.5 |   |   |   | 89.7 | % |
| Income (loss) from discontinued             |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations, net of tax                      |   |                       | 0.1    |   |              |   | 1.3    |                     |   |   | (92.3             | %)     |   |   | (3.0 | ) |   |   | (1.4 | ) |   |   | 114.3 | % |
| Net income                                  |   |                       | 57.5   |   |              |   | 3.6    |                     |   |   | 1,497.2           | %      |   |   | 108.0 |   |   |   | 57.1 |   |   |   | 89.1 | % |
| Less:  Net income attributable to |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interests                    |   |                       | (10.2  | )      |              |   | (9.1   | )                        |   |   | 12.1              | %      |   |   | (20.0 | ) |   |   | (17.7 | ) |   |   | 13.0 | % |
| Net income (loss) attributable              |   |                       |   |   |              |   |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |
| to HealthSouth                              |   | $                          | 47.3   |   |              | $      | (5.5   | )                        |   |   | (960.0            | %)     |   | $ | 88.0 |   |   | $ | 39.4 |   |   |   | 123.4 | % |

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|                                         |   | Three Months Ended June 30, |   | Six Months Ended June 30, |
|----------------------------------------------|--------|-----------------------------|--------|---------------------------|
|                                         |   | 2010                        |   | 2009                      |   | 2010 |   | 2009 |
| Salaries and benefits                        |   |  48.6%                 |   |  49.4%               |   |  48.9% |   |  49.4% |
| Other operating expenses                     |   |  15.4%                 |   |  13.9%               |   |  14.5% |   |  14.0% |
| General and administrative expenses          |   |  5.4%                  |   |  5.2%                |   |  5.4% |   |  5.3% |
| Supplies                                     |   |  5.8%                  |   |  5.9%                |   |  5.8% |   |  5.9% |
| Depreciation and amortization                |   |  3.8%                  |   |  3.7%                |   |  3.7% |   |  3.7% |
| Occupancy costs                              |   |  2.3%                  |   |  2.5%                |   |  2.3% |   |  2.5% |
| Provision for doubtful accounts              |   |  1.2%                  |   |  2.0%                |   |  1.3% |   |  1.8% |
| Loss on disposal of assets                   |   |  0.1%                  |   |  0.3%                |   |  0.0% |   |  0.2% |
| Government, class action, and related        |   |                        |   |                      |   |   |   |   |
| settlements                                  |   |  0.0%                  |   |  10.1%               |   |  0.0% |   |  3.4% |
| Professional fees—accounting, tax, and |   |                        |   |                      |   |   |   |
| legal                                        |   |  1.1%                  |   |  (0.7%)              |   |  0.9% |   |  0.2% |
| Total                                        |   |  83.7%                 |   |  92.3%               |   |  82.9% |   |  86.4% |

|                                     |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
|                                     |   | 2010                        |    |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                                     |   | (In Millions)               |    |
| Net patient revenue—inpatient      |   | $                           | 456.2   |   |                      | $      | 437.2 |   |   | $ | 908.1 |   |   | $ | 868.5 |   |
| Net patient revenue—outpatient and |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| other revenues                           |   |                        | 40.7    |   |                      |   | 44.4 |   |   |   | 79.8 |   |   |   | 86.0 |   |
| Net operating revenues                   |   | $                           | 496.9   |   |                      | $      | 481.6 |   |   | $ | 987.9 |   |   | $ | 954.5 |   |
|                                     |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   | (Actual Amounts)            |    |
| Discharges                               |   |                        | 29,016  |   |                      |   | 28,379 |   |   |   | 57,014 |   |   |   | 56,078 |   |
| Outpatient visits                        |   |                        | 265,628 |   |                      |   | 291,944 |   |   |   | 521,073 |   |   |   | 575,565 |   |
| Average length of stay                   |   | 14.1 days                   |    |   | 14.4 days                 |   |   | 14.4 days |   |   | 14.5 days |   |
| Occupancy %                              |   |                        | 67.4    | %      |                      |   | 69.4 | % |   |   | 67.6 | % |   |   | 69.6 | % |
| # of licensed beds at June 30            |   |                        | 6,684   |   |                      |   | 6,454 |   |   |   | 6,684 |   |   |   | 6,454 |   |
| Full-time equivalents*                   |   |                        | 15,600  |   |                      |   | 15,590 |   |   |   | 15,508 |   |   |   | 15,529 |   |

|   | * | Excludes 395 and 388 full-time equivalents for the three months ended June 30, 2010 and 2009, respectively, and 395 and 392 full-time equivalents for the six months ended June 30, 2010 and 2009, respectively, who are considered part of corporate overhead with their salaries and benefits included in General and administrative expenses in our condensed consolidated statements of operations. Full-time equivalents included in the above table represent HealthSouth employees who participate in or support the operations of our hospitals and exclude an estimate of full-time equivalents related to contract labor. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                         |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|--------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                         |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
| HealthSouth Corporation:                                     |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Net operating revenues                                       |   | $                          | 0.2    |   |                     | $      | 2.2 |   |   | $ | 0.9 |   |   | $ | 5.1 |   |
| Costs and expenses                                           |   |                       | 0.6    |   |                     |   | 3.1 |   |   |   | 1.8 |   |   |   | 7.6 |   |
| Impairments                                                  |   |                       | -      |   |                     |   | - |   |   |   | 0.6 |   |   |   | - |   |
| Loss from discontinued operations                            |   |                       | (0.4   | )      |                     |   | (0.9 | ) |   |   | (1.5 | ) |   |   | (2.5 | ) |
| Loss on disposal of assets of discontinued operations        |   |                       | -      |   |                     |   | (0.3 | ) |   |   | (0.9 | ) |   |   | (0.4 | ) |
| Income tax benefit                                           |   |                       | -      |   |                     |   | - |   |   |   | 0.2 |   |   |   | 0.1 |   |
| Loss from discontinued operations, net of tax                |   | $                          | (0.4   | )      |                     | $      | (1.2 | ) |   | $ | (2.2 | ) |   | $ | (2.8 | ) |
| Other:                                                       |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net operating revenues                                       |   | $                          | 0.4    |   |                     | $      | 2.5 |   |   | $ | 0.6 |   |   | $ | 5.0 |   |
| Costs and expenses                                           |   |                       | (0.4   | )      |                     |   | - |   |   |   | 1.1 |   |   |   | 3.6 |   |
| Impairments                                                  |   |                       | -      |   |                     |   | - |   |   |   | - |   |   |   | - |   |
| Income (loss) from discontinued operations                   |   |                       | 0.8    |   |                     |   | 2.5 |   |   |   | (0.5 | ) |   |   | 1.4 |   |
| (Loss) gain on disposal of assets of discontinued operations |   |                       | (0.3   | )      |                     |   | 0.1 |   |   |   | (0.3 | ) |   |   | 0.1 |   |
| Income tax expense                                           |   |                       | -      |   |                     |   | (0.1 | ) |   |   | - |   |   |   | (0.1 | ) |
| Income (loss) from discontinued operations, net of tax       |   | $                          | 0.5    |   |                     | $      | 2.5 |   |   | $ | (0.8 | ) |   | $ | 1.4 |   |
| Total:                                                       |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net operating revenues                                       |   | $                          | 0.6    |   |                     | $      | 4.7 |   |   | $ | 1.5 |   |   | $ | 10.1 |   |
| Costs and expenses                                           |   |                       | 0.2    |   |                     |   | 3.1 |   |   |   | 2.9 |   |   |   | 11.2 |   |
| Impairments                                                  |   |                       | -      |   |                     |   | - |   |   |   | 0.6 |   |   |   | - |   |
| Income (loss) from discontinued operations                   |   |                       | 0.4    |   |                     |   | 1.6 |   |   |   | (2.0 | ) |   |   | (1.1 | ) |
| Loss on disposal of assets of discontinued operations        |   |                       | (0.3   | )      |                     |   | (0.2 | ) |   |   | (1.2 | ) |   |   | (0.3 | ) |
| Income tax (expense) benefit                                 |   |                       | -      |   |                     |   | (0.1 | ) |   |   | 0.2 |   |   |   | - |   |
| Income (loss) from discontinued operations, net of tax       |   | $                          | 0.1    |   |                     | $      | 1.3 |   |   | $ | (3.0 | ) |   | $ | (1.4 | ) |

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|                                      |   | Six Months Ended June 30, |   |
|-------------------------------------------|--------|---------------------------|--------|
|                                      |   | 2010                      |   |   | 2009 |   |
| Net cash provided by operating activities |   | $                         | 172.7  |   |   | $ | 229.2 |   |
| Net cash used in investing activities     |   |                      | (39.7  | ) |   |   | (77.8 | ) |
| Net cash used in financing activities     |   |                      | (41.4  | ) |   |   | (133.8 | ) |
| Increase in cash and cash equivalents     |   | $                         | 91.6   |   |   | $ | 17.6 |   |

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|                                                |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                |   | June 30,           |   |   | June 30,         |   |
|                                                |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Net income                                          |   | $                  | 57.5   |   |             | $      | 3.6 |   |   | $ | 108.0 |   |   | $ | 57.1 |   |
| (Income) loss from discontinued operations, net of  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| tax, attributable to HealthSouth                    |   |               | (0.1   | )      |             |   | (1.1 | ) |   |   | 3.0 |   |   |   | 1.9 |   |
| Provision for income tax (benefit) expense          |   |               | (2.2   | )      |             |   | (0.3 | ) |   |   | 0.3 |   |   |   | 0.9 |   |
| (Gain) loss on interest rate swaps                  |   |               | (0.3   | )      |             |   | 3.8 |   |   |   | 4.0 |   |   |   | 8.8 |   |
| Interest expense and amortization of debt discounts |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| and fees                                            |   |               | 30.1   |   |             |   | 31.1 |   |   |   | 60.6 |   |   |   | 65.5 |   |
| Loss (gain) on early extinguishment of debt         |   |               | 0.1    |   |             |   | (1.3 | ) |   |   | 0.4 |   |   |   | (3.1 | ) |
| Professional fees—accounting, tax, and legal  |   |               | 5.7    |   |             |   | (3.3 | ) |   |   | 8.6 |   |   |   | 1.5 |   |
| Government, class action, and related settlements   |   |               | -      |   |             |   | 48.7 |   |   |   | - |   |   |   | 32.8 |   |
| Net noncash loss on disposal of assets              |   |               | 0.4    |   |             |   | 1.3 |   |   |   | 0.4 |   |   |   | 2.3 |   |
| Depreciation and amortization                       |   |               | 18.7   |   |             |   | 17.6 |   |   |   | 37.0 |   |   |   | 35.0 |   |
| Impairment charges, including investments           |   |               | -      |   |             |   | 0.1 |   |   |   | - |   |   |   | 0.8 |   |
| Stock-based compensation expense                    |   |               | 4.0    |   |             |   | 2.9 |   |   |   | 7.8 |   |   |   | 6.6 |   |
| Net income attributable to noncontrolling interests |   |               | (10.2  | )      |             |   | (9.1 | ) |   |   | (20.0 | ) |   |   | (17.7 | ) |
| Adjusted Consolidated EBITDA                        |   | $                  | 103.7  |   |             | $      | 94.0 |   |   | $ | 210.1 |   |   | $ | 192.4 |   |

|                                                         |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------|--------|---------------------------|--------|
|                                                         |   | 2010                      |   |   | 2009 |   |
| Adjusted Consolidated EBITDA                                 |   | $                         | 210.1  |   |   | $ | 192.4 |   |
| Provision for doubtful accounts                              |   |                      | 12.8   |   |   |   | 17.5 |   |
| Professional fees—accounting, tax, and legal           |   |                      | (8.6   | ) |   |   | (1.5 | ) |
| Interest expense and amortization of debt discounts and fees |   |                      | (60.6  | ) |   |   | (65.5 | ) |
| UBS Settlement proceeds, gross                               |   |                      | -      |   |   |   | 100.0 |   |
| Equity in net (income) loss of nonconsolidated affiliates    |   |                      | (5.2   | ) |   |   | 0.2 |   |
| Net income attributable to noncontrolling interests in       |   |                      |   |   |   |   |   |   |
| continuing operations                                        |   |                      | 20.0   |   |   |   | 17.2 |   |
| Amortization of debt discounts and fees                      |   |                      | 3.4    |   |   |   | 3.2 |   |
| Distributions from nonconsolidated affiliates                |   |                      | 3.3    |   |   |   | 3.9 |   |
| Current portion of income tax benefit                        |   |                      | 1.8    |   |   |   | 1.0 |   |
| Change in assets and liabilities                             |   |                      | 2.2    |   |   |   | (23.4 | ) |
| Change in government, class action, and related settlements  |   |                      | (0.8   | ) |   |   | (8.7 | ) |
| Other operating cash used in discontinued operations         |   |                      | (4.2   | ) |   |   | (7.0 | ) |
| Other                                                        |   |                      | (1.5   | ) |   |   | (0.1 | ) |
| Net cash provided by operating activities                    |   | $                         | 172.7  |   |   | $ | 229.2 |   |

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Table of Contents

Item 4. 

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Table of Contents

PART II. OTHER INFORMATION

Item 1.

Item 1A.

Item 2.    

| Period                                                 |   | Total Number of Shares (or Units) Purchased (1) |      |   | Average PricePaid per Share(or Unit) ($) |   |   | Total Number of Shares (or Units) Purchased as part of Publicly Announced Plans or Programs |   |   |  Maximum Number ofShares (or Units)That May yet BePurchased Under thePlans or Program |   |   |
|--------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------|--------|--------|
| April 1 throughApril 30, 2010                          |   |                                            | -         |   |                                     | $      | -      |                                                                                        |   |   | -                                                                                          |   |   |   |  - |   |   |
| May 1 throughMay 31, 2010                              |   |                                            | 978       |   |                                     |   | 19.48  |                                                                                        |   |   | -                                                                                          |   |   |   |  - |   |   |
| June 1 throughJune 30, 2010                            |   |                                            | -         |   |                                     |   | -      |                                                                                        |   |   | -                                                                                          |   |   |   |  - |   |   |
|          Total |   |                                            | 978  |   |                                     |   | 19.48  |                                                                                        |   |   | -                                                                                     |   |   |   | -  |   |   |

| (1) | Shares in this column were tendered by employees as payment of tax liability incident to the vesting of previously awarded shares of restricted stock. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

Item 6. 

| No.    |   |    Description                                                                                                                                                                                                                                                                                                               |                                                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.1    |   | Restated Certificate of Incorporation of HealthSouth Corporation, as filed in the Office of the Secretary of State of the State of Delaware on May 21, 1998 (incorporated by reference to HealthSouth’s Annual Report on Form 10-K filed with the SEC on June 27, 2005).                                               |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.2    |   | Certificate of Amendment to the Restated Certificate of Incorporation of HealthSouth Corporation, as filed in the Office of the Secretary of State of the State of Delaware on October 25, 2006 (incorporated by reference to Exhibit 3.1 to HealthSouth’s Current Report on Form 8-K filed on October 31, 2006). |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.3    |   | Amended and Restated Bylaws of HealthSouth Corporation, effective as of October 30, 2009, (incorporated by reference to Exhibit 3.3 to HealthSouth’s Quarterly Report on Form 10-Q filed on November 4, 2009).                                                                                                              |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.4    |   | Certificate of Designations of 6.50% Series A Convertible Perpetual Preferred Stock, as filed with the Secretary of State of the State of Delaware on March 7, 2006 (incorporated by reference to Exhibit 3.1 to HealthSouth’s Current Report on Form 8-K filed on March 9, 2006).                                |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 31.1   |   | Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 31.2   |   | Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 32.1   |   | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                             |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 32.2   |   | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                             |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 101    |   | Sections of the HealthSouth Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, formatted in XBRL (eXtensible Business Reporting Language), submitted in the following files:                                                                                                                               |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
|   |   | 101.INS                                                                                                                                                                                                                                                                                                                                | XBRL Instance Document                                 |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.SCH                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Schema Document                |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.CAL                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Calculation Linkbase Document  |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.DEF                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Definition Linkbase Document   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.LAB                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Label Linkbase Document        |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.PRE                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Presentation Linkbase Document |   |

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Table of Contents

|   | HEALTHSOUTH Corporation |                                                                          |
|--------|-------------------------|-------------------------------------------------------------------------------|
|   |                    |                                                                          |   |
|   | By:                     | /s/        DOUGLAS E. COLTHARP             |   |
|   |                    | Name:  Douglas E. Coltharp                                               |   |
|   |                    | Title:    Executive Vice President and Chief Financial Officer |   |
|   |                    |                                                                          |   |

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Table of Contents

| No.    |   |    Description                                                                                                                                                                                                                                                                                                               |                                                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.1    |   | Restated Certificate of Incorporation of HealthSouth Corporation, as filed in the Office of the Secretary of State of the State of Delaware on May 21, 1998 (incorporated by reference to HealthSouth’s Annual Report on Form 10-K filed with the SEC on June 27, 2005).                                               |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.2    |   | Certificate of Amendment to the Restated Certificate of Incorporation of HealthSouth Corporation, as filed in the Office of the Secretary of State of the State of Delaware on October 25, 2006 (incorporated by reference to Exhibit 3.1 to HealthSouth’s Current Report on Form 8-K filed on October 31, 2006). |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.3    |   | Amended and Restated Bylaws of HealthSouth Corporation, effective as of October 30, 2009, (incorporated by reference to Exhibit 3.3 to HealthSouth’s Quarterly Report on Form 10-Q filed on November 4, 2009).                                                                                                              |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 3.4    |   | Certificate of Designations of 6.50% Series A Convertible Perpetual Preferred Stock, as filed with the Secretary of State of the State of Delaware on March 7, 2006 (incorporated by reference to Exhibit 3.1 to HealthSouth’s Current Report on Form 8-K filed on March 9, 2006).                                |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 31.1   |   | Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 31.2   |   | Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 32.1   |   | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                             |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 32.2   |   | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                             |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
| 101    |   | Sections of the HealthSouth Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, formatted in XBRL (eXtensible Business Reporting Language), submitted in the following files:                                                                                                                               |                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |
|   |   | 101.INS                                                                                                                                                                                                                                                                                                                                | XBRL Instance Document                                 |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.SCH                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Schema Document                |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.CAL                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Calculation Linkbase Document  |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.DEF                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Definition Linkbase Document   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.LAB                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Label Linkbase Document        |   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |                                                   |   |
|   |   | 101.PRE                                                                                                                                                                                                                                                                                                                                | XBRL Taxonomy Extension Presentation Linkbase Document |   |