Second Quarter 2017 Earnings Call
 August 1, 2017
 Supplemental Information
 2
 The information contained in this presentation includes certain estimates, projections and other forward-looking
 information that reflect HealthSouth’s current outlook, views and plans with respect to future events, including legislative
 and regulatory developments, strategy, capital expenditures, acquisition and other development activities, cyber
 security, dividend strategies, repurchases of securities, effective tax rates, financial performance, financial assumptions,
 business model, balance sheet and cash flow plans, and shareholder value-enhancing transactions. These estimates,
 projections and other forward-looking information are based on assumptions HealthSouth believes, as of the date
 hereof, are reasonable. Inevitably, there will be differences between such estimates and actual events or results, and
 those differences may be material.
 There can be no assurance any estimates, projections or forward-looking information will be realized. 
All such estimates, projections and forward-looking information speak only as of the date hereof. HealthSouth
 undertakes no duty to publicly update or revise the information contained herein.
 You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in
 this presentation as they are based on current expectations and general assumptions and are subject to various risks,
 uncertainties and other factors, including those set forth in the Form 10-K for the year ended December 31, 2016, the
 form 10-Q for the quarters ended March 31, 2017 and June  30, 2017, when filed, and in other documents HealthSouth
 previously filed with the SEC, many of which are beyond HealthSouth’s control, that may cause actual events or results
 to differ materially from the views, beliefs and estimates expressed herein.
 Note Regarding Presentation of Non-GAAP Financial Measures
 The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the
 Securities Exchange Act of 1934, including Adjusted EBITDA, leverage ratios, adjusted earnings per share, and
 adjusted free cash flow. Schedules are attached that reconcile the non-GAAP financial measures included in the
 following presentation to the most directly comparable financial measures calculated and presented in accordance with
 Generally Accepted Accounting Principles in the United States. HealthSouth’s Form 8-K, dated July 31, 2017, to which
 the following supplemental information is attached as Exhibit 99.2, provides further explanation and disclosure
 regarding HealthSouth’s use of non-GAAP financial measures and should be read in conjunction with this supplemental
 information.
 Forward-Looking Statements
 3
 Table of Contents
 Q2 2017 Summary................................................................................................................................................. 4-5
 Rebranding and Name Change Initiative ............................................................................................................... 6
 IRF-Home Health Clinical Collaboration ................................................................................................................ 7
 Inpatient Rehabilitation Segment ........................................................................................................................... 8-9
 Home Health & Hospice Segment ......................................................................................................................... 10-11
 Consolidated Adjusted EBITDA ............................................................................................................................. 12
 Earnings per Share ................................................................................................................................................ 13-14
 Adjusted Free Cash Flow....................................................................................................................................... 15
 Guidance................................................................................................................................................................ 16-17
 Adjusted Free Cash Flow and Tax Assumptions.................................................................................................... 18
 Free Cash Flow Priorities....................................................................................................................................... 19
 Appendix
 Map of Locations.................................................................................................................................................... 21
 Pre-Payment Claims Denials - Inpatient Rehabilitation Segment.......................................................................... 22
 Expansion Activity .................................................................................................................................................. 23
 Business Outlook ................................................................................................................................................... 24-28
 Debt Schedule and Maturity Profile ....................................................................................................................... 29-30
 New-Store/Same-Store IRF Growth ...................................................................................................................... 31
 Payment Sources (Percent of Revenues).............................................................................................................. 32
 Inpatient Rehabilitation Operational and Labor Metrics ......................................................................................... 33
 Home Health & Hospice Operational Metrics ........................................................................................................ 34
 Share Information .................................................................................................................................................. 35
 Segment Operating Results................................................................................................................................... 36-38
 Reconciliations to GAAP........................................................................................................................................ 39-47
 End Notes .............................................................................................................................................................. 48-50
 4
 Q2 2017 Summary
 Q2 Growth
 (In Millions) Q2 2017 Q2 2016 Dollars Percent
 HealthSouth Consolidated
 Net operating revenues $ 981.3 $ 920.7 $ 60.6 6.6%
 Adjusted EBITDA $ 209.5 $ 204.3 $ 5.2 2.5%
 Inpatient Rehabilitation Segment
 Net operating revenues $ 790.0 $ 752.6 $ 37.4 5.0%
 Adjusted EBITDA $ 208.4 $ 204.1 $ 4.3 2.1%
 Home Health and Hospice Segment
 Net operating revenues $ 191.3 $ 168.1 $ 23.2 13.8%
 Adjusted EBITDA $ 32.8 $ 26.0 $ 6.8 26.2%
 Major takeaways:
 u Strong revenue growth in both segments
  IRF growth driven by volume and pricing
 ü Discharge growth of 3.5%; same store = 1.6%
 ü Net revenue per discharge increase of 2.2%
  Home health and hospice growth driven by volume
 ü Admissions growth of 19.7%; same store = 13.3%
 ü Revenue per episode decrease of 1.5%
 u Consolidated Adjusted EBITDA of $209.5 million, an increase of 2.5%
 u Adjusted EPS of $0.71 per diluted share, an increase of 2.9% - see pages 13 and 14.
 u YTD Adjusted free cash flow of $254.0 million was essentially flat in spite of increased cash taxes and maintenancecapital expenditures - see page 15.
 Reconciliations to GAAP provided on pages 39-47
 5
 Q2 2017 Summary (cont.) 
u Balance Sheet
  Leverage ratio of 3.3x at end of second quarter
  Exercised early redemption option on all $320 million of 2.0% Convertible Senior Subordinated Notes due
 2043
 ü Issued 8.9 million shares to holders who converted $319.4 million in principal of notes
 § 8.6 million shares included in diluted share count as of March 31, 2017
 § Remaining 0.3 million shares include shares issued under the notes’ make-whole provision
 ü Redeemed $0.6 million of principal at par in cash
 ü ~$278 million reduction to debt
 ü $10.4 million loss on early extinguishment of debt
 ü ~$3 million of cash interest savings in 2017 (offset by ~$4 million increase in cash dividends in 2017)
 u Expansion Activity (see page 23)
  Began operating an existing 33-bed inpatient rehabilitation hospital unit in Gulfport, MS in joint venture with
 Memorial Hospital at Gulfport
  Began operating a de novo 60-bed joint venture inpatient rehabilitation hospital with Mount Carmel Health
 System in Westerville, OH
  Continued development of seven previously announced IRF projects (three are joint ventures)*
  Expanded existing hospitals by 20 beds
  Acquired two home health locations and opened two hospice locations in Texas
 u Shareholder Distributions
  Paid quarterly cash dividend of $0.24 per share in April 2017
  Declared a $0.24 per share quarterly cash dividend in May 2017 (paid in July 2017)
  Declared a $0.25 per share quarterly cash dividend in July 2017 (to be paid in October 2017)
 * One of the seven IRF development projects that were underway as of June 30, 2017 began operations in July 2017 -
 Jackson, TN
 6
 Rebranding and Name Change Initiative
 u Both business segments — inpatient rehabilitation and home health and hospice — will transition to
 the Encompass Health branding by the end of 2019.
  Rebranding and name change reinforce the Company’s existing strategy and position as an integrated
 provider of inpatient and home-based care.
  Effective as of January 1, 2018, HealthSouth Corporation will change its name to Encompass Health
 Corporation, with a corresponding ticker symbol change from “HLS” to “EHC.”
  Rollout will be deliberately sequenced across the Company’s hospitals and agencies; overlap markets*
 will be prioritized.
  Total rebranding investment estimated to be ~$25 million to $30 million, to be incurred between 2017 and
 2019.
 ü ~$7 million to $10 million expected to be incurred in 2017
 § ~$6 million to $8 million expected to be operating expenses (included in corporate general and
 administrative expenses line item)
 § ~$1 million to $2 million expected to be capital expenditures
 * Overlap markets are defined as a HealthSouth IRF located within a 30-mile radius of an Encompass location.
 7
 IRF-Home Health Clinical Collaboration (All Payors)
 Q2 2016 Q2 2017
 10,307 10,770
 3,191
 4,305
 23.6%
 Collaboration Rate
 28.6%
 Collaboration Rate
 HealthSouth IRF Discharges to Non-Encompass Home Health
 HealthSouth IRF Discharges to Encompass Home Health
 u As of June 30, 2017, 60% of HealthSouth’s
 IRFs were located within overlap markets.*
 u The clinical collaboration rate with
 HealthSouth’s IRFs increased by 500 basis
 points in Q2 2017 compared to Q2 2016.
 u The Company’s clinical collaboration rate
 goal for overlap markets is 35% to 40%
 within the next three years.
 u TeamWorks clinical collaboration initiative
 is a process to identify and standardize
 best practices for integrated patient care.
  Initiative launched in February 2017
  Began piloting redesigned clinical
 collaboration process in July 2017
  Full implementation targeted by end of
 2017
 Overlap Markets*
 * Overlap markets are defined as a HealthSouth IRF located within a 30-mile radius of an Encompass location.
 8
 Inpatient Rehabilitation Segment - Revenue
 Q2 Q2 Favorable/
 ($millions) 2017 2016 (Unfavorable)
 Net operating revenues:
 Inpatient $ 762.9 $ 721.2 5.8%
 Outpatient and other 27.1 31.4 (13.7%)
 Total segment revenue $ 790.0 $ 752.6 5.0%
 (Actual Amounts)
 Discharges 42,805 41,365 3.5%
 Same-store discharge growth 1.6%
 Net patient revenue / discharge $ 17,823 $ 17,435 2.2%
 u Revenue growth was driven by volume and pricing growth.
 u New-store discharge growth resulted from joint ventures in Bryan, TX (August 2016), Broken Arrow,
 OK (August 2016), Gulfport, MS (April 2017), and Westerville, OH (April 2017) and a wholly owned
 hospital in Modesto, CA (October 2016).
 u Growth in revenue per discharge primarily resulted from patient mix (higher percentage of stroke
 and neurological patients) offset by the:
  negative impact of a reduction of ~$3 million in prior period cost report adjustments.
  effect of a negative retroactive SSI(1) adjustment of ~$2 million in Q2 2017 (no SSI adjustment in
 Q2 2016).
 u Outpatient and other revenue decrease primarily was due to the closure of six outpatient programs
 in the latter half of 2016 and a $1.4 million provider tax recovery in Q2 2016.
 Refer to pages 48-50  for end notes.
 9
 Inpatient Rehabilitation Segment -
 Adjusted EBITDA 
Q2 % of
 Revenue
 Q2 % of
 Revenue($millions) 2017 2016
 Net operating revenues $ 790.0 $ 752.6
  Less: Provision for doubtful accounts (12.4) 1.6% (14.5) 1.9%
 Net operating revenues less
 provision for doubtful accounts 777.6 738.1
 Operating expenses:
     Salaries and benefits (394.3) 49.9% (366.1) 48.6%
 Other operating expenses(a) (112.9) 14.3% (106.8) 14.2%
 Supplies (33.8) 4.3% (31.8) 4.2%
 Occupancy costs (15.5) 2.0% (15.4) 2.0%
 Hospital operating expenses (162.2) 20.5% (154.0) 20.5%
 Other income 0.9 0.7
 Equity in nonconsolidated affiliates 1.8 2.2
 Noncontrolling interests (15.4) (16.8)
 Segment Adjusted EBITDA $ 208.4 $ 204.1
 Percent change 2.1%
 In arriving at Adjusted EBITDA, the following was
 excluded:
 (a) Loss on disposal of assets $ 0.8 $ 0.2
 Segment Adjusted
 EBITDA for the quarter
 of $208.4 million 
- Salaries and benefits as a percent of
 revenue were further impacted by the
 ramping up of new stores and staffing
 increases at the former Reliant hospitals. 
Reconciliations to GAAP provided on pages 39-47
 Refer to pages 48-50 for end notes.
 - Bad debt expense as a percent of revenue decreased
 primarily due to the resolution of the administrative payment
 delays that impacted 2016 collections and a reduction in new
 pre-payment claims denials (see page 22).
 - Q2 2017 expense ratios
 compared to Q2 2016 were
 negatively impacted by the
 previously mentioned $5 million
 associated with prior period cost
 report and SSI(1) adjustments and
 the $1.4 million provider tax
 recovery in Q2 2016.
 10
 Home Health and Hospice Segment - Revenue
 Q2 Q2 Favorable/
 ($millions) 2017 2016 (Unfavorable)
 Net operating revenues:
    Home health revenue $ 172.9 $ 157.1 10.1 %
    Hospice revenue 18.4 11.0 67.3 %
    Total segment revenue $ 191.3 $ 168.1 13.8 %
 (Actual Amounts)
 Admissions 30,823 25,753 19.7 %
 Same-store admissions growth 13.3 %
 Episodes 52,101 45,774 13.8 %
 Same-store episode growth 9.2 %
 Revenue per episode $ 2,989 $ 3,033 (1.5)%
 u Revenue growth was driven by strong same-store and new-store volume growth.
  Approximately 160 basis points of same-store admissions growth resulted from clinical
 collaboration with HealthSouth’s IRFs.
  Hospice revenue increase primarily was due to acquisitions in 2016.
 u Decrease in revenue per episode resulted from Medicare reimbursement rate cuts partially offset
 by changes in patient mix.
 11
 Q2
 % of
 Revenue
 Q2
 % of
 Revenue($millions) 2017 2016
 Net operating revenues $ 191.3 $ 168.1
  Less: Provision for doubtful accounts (1.3) 0.7% (0.9) 0.5%
 Net operating revenues less provision for
 doubtful accounts 190.0 167.2
 Operating expenses:
   Cost of services (88.7) 46.4% (81.6) 48.5%
   Support and overhead costs (67.7) 35.4% (58.0) 34.5%
 (156.4) 81.8% (139.6) 83.0%
 Equity in net income of nonconsolidated
 affiliates 0.2 0.2
 Noncontrolling interests (1.0) (1.8)
 Segment Adjusted EBITDA $ 32.8 $ 26.0
 Percent change 26.2%
 Home Health and Hospice Segment -
 Adjusted EBITDA
 Segment  Adjusted
 EBITDA for the
 quarter of  $32.8
 million.
 - Cost of services as a
 percent of revenue
 decreased primarily due to
 staffing productivity gains.              
* Reconciliation to GAAP provided on pages 29-31
 Reconciliations to GAAP provided on pages 39-47
 - Support and overhead costs
 increased as a percent of revenue
 primarily due to continued
 investments in additional sales and
 marketing employees.
 12
 Consolidated Adjusted EBITDA
 ($millions)
 Q2
 2017
 % of 
Consolidated
 Revenue
 Q2
 2016
 % of 
Consolidated
 Revenue
 Inpatient rehabilitation segment Adjusted EBITDA $ 208.4 $ 204.1
 Home health and hospice segment Adjusted EBITDA 32.8 26.0
 General and administrative expenses* (31.7) 3.2% (25.8) 2.8%
 Consolidated Adjusted EBITDA $ 209.5 $ 204.3
 Percentage change 2.5%
 Consolidated
 Adjusted  EBITDA
 for the quarter of
 $209.5 million.
 - General and administrative
 expenses increased as a
 percent of consolidated
 revenue primarily due to
 expenses associated with
 the rebranding and name
 change and the TeamWorks
 clinical collaboration
 initiatives.              
General and Administrative Expenses Associated with Rebranding
 and TeamWorks
 ($millions)
 Q1
 2017
 Q2
 2017
 YTD
 2017
 Rebranding and name change $ 0.5 $ 1.7 $ 2.2
 TeamWorks clinical collaboration(2) — 1.7 1.7
 * General and administrative expenses in the above table exclude stock compensation of $20.7 million and $8.6 million for the second
 quarter of 2017 and 2016, respectively.
 . Reconciliations to GAAP provided on pages 39-47; Refer to pages 48-50 for end notes.
 13
 Earnings per Share - As Reported
 Q2 6 Months
 (In Millions, Except Per Share Data) 2017 2016 2017 2016
 Consolidated Adjusted EBITDA 209.5 204.3 410.3 396.4
 Interest expense and amortization of debt
 discounts and fees (40.4) (43.4) (81.7) (88.0)
 Depreciation and amortization (45.8) (42.9) (91.0) (85.3)
 Stock-based compensation expense (20.7) (8.6) (28.7) (13.1)
 Noncash loss on disposal of assets (0.8) (0.2) (0.3) (0.4)
 101.8 109.2 208.6 209.6
 Certain items non-indicative of ongoing
 operations:
 Loss on early extinguishment of debt (10.4) (2.4) (10.4) (4.8)
 Professional fees — accounting, tax, and legal — (1.7) — (1.9)
 Pre-tax income 91.4 105.1 198.2 202.9
 Income tax expense(3) (28.6) (42.4) (68.3) (82.1)
 Income from continuing operations* $ 62.8 $ 62.7 $ 129.9 $ 120.8
 Income allocated to participating securities(4) (0.2) (0.2) (0.4) (0.4)
 Interest and amortization on 2.0% Convertible Senior
 Subordinated Notes (net of tax)(4) 2.1 2.4 4.6 4.8
 Loss on extinguishment of 2.0% Convertible Senior
 Subordinated Notes (net of tax)(4) 6.2 — 6.2 —
 Basic shares 90.3 89.3 89.5 89.4
 Diluted shares (see page 35) 98.9 99.4 99.0 99.4
 Basic earnings per share*(4) $ 0.70 $ 0.70 $ 1.45 $ 1.34
 Diluted earnings per share*(4) $ 0.70 $ 0.65 $ 1.42 $ 1.26
 uEPS for the second quarter of 2017
 and first half of 2017 were impacted
 by:
  Lower interest expense due to the
 redemptions of the 7.75% Senior Notes
 due 2022 in 2016
  Higher depreciation and amortization
 resulting from capital investments
  Higher stock-based compensation
 expense primarily due to the mark-to-
 market adjustment for stock
 appreciation rights(5)
  Loss on early extinguishment of debt
 due to the Company’s exercise of its
 early redemption option on its 2.0%
 Convertible Senior Subordinated Notes
 in Q2 2017
  Lower effective income tax rate
 resulting from windfall tax benefits(6)
  Lower share count resulting from stock
 repurchases in 2016 and the first
 quarter of 2017
 u EPS for Q2 2016 and first half of 2016
 was impacted by the loss on early
 extinguishment of debt associated
 with the redemptions of the 7.75%
 Senior Notes due 2022.
 * Earnings per share are determined using income from continuing operations attributable to HealthSouth.
 Refer to pages 48-50 for end notes.
 Diluted earnings per share in Q2 2017 are the same as basic earnings per share due to antidilution primarily
 created by the add back of the loss on extinguishment of debt in the quarter.(4)
 14
 Q2 6 Months
 2017 2016 2017 2016
 Earnings per share, as reported $ 0.70 $ 0.65 $ 1.42 $ 1.26
 Adjustments, net of tax:
 Professional fees — accounting, tax, and legal — 0.01 — 0.01
 Mark-to-market adjustment for stock appreciation rights(5) 0.07 0.02 0.09 —
 Income tax adjustments(6) (0.07) — (0.10) —
 Loss on early extinguishment of debt(4) — 0.01 — 0.03
 Sale of hospital — (0.01) — (0.01)
 Adjusted earnings per share* $ 0.71 $ 0.69 $ 1.41 $ 1.30
 Adjusted Earnings per Share(7)
 * Adjusted EPS may not sum due to rounding. See complete calculations of adjusted earnings per share on pages 44-47
 Refer to pages 48-50 for end notes.
 Adjusted earnings per share removes from the GAAP earnings per share
 calculation the impact of items the Company believes are non-indicative of its
 ongoing operating performance.
 15
 Adjusted Free Cash
 Flow 6 Mos. 2016 (8)
 Adjusted
 EBITDA
 Working Capital
 and Other
 Cash Interest
 Expense
 Cash Tax
 Payments,
 Net of Refunds
 Maintenance
 Capital Expenditures
 Adjusted Free Cash
 Flow 6 Mos. 2017
 $254.7
 $13.9
 $24.3 $6.2
 ($31.2) ($13.9)
 $254.0
 2017 Adjusted Free Cash Flow(8) 
Reconciliations to GAAP provided on pages 39-47
 Refer to pages 48-50 for end notes.
 u Adjusted free cash flow in year-to-date 2017 was essentially flat in spite of increased cash
 payments for taxes and increased maintenance capital expenditures.
  Cash payments for taxes increased due to exhaustion of federal NOL in Q1 2017.
  Increased maintenance capital expenditures resulted from growth in the IRF segment, an
 enhanced hospital maintenance program, and refurbishments at certain larger hospitals.
  Working capital decreased due primarily to improved collection of accounts receivable offset by
 the timing of payroll-related liabilities.
 16 Refer to pages 48-50 for end notes.
 Updated Guidance
 Adjusted EBITDA(9) 
Adjusted Earnings per Share
 from Continuing Operations
 Attributable to HealthSouth(7)
 Net Operating Revenues
 Previous Full-Year
 Guidance
 (Last Reiterated on May 16, 2017)
 Updated 2017 Full-Year
 Guidance
 (As of July 31, 2017)                          
Net Operating Revenues
 $3,875 million to $3,950 million
 Adjusted EBITDA(9) 
$805 million to $820 million
 Adjusted Earnings per Share
 from Continuing Operations
 Attributable to HealthSouth(7)
 $2.64 to $2.73
 $3,850 million to $3,950 million
 $800 million to $820 million
 $2.61 to $2.73
 17
 Guidance Considerations
 Inpatient Rehabilitation
 u Estimated 1.9% increase in Medicare
 pricing for Q1 through Q3; ~0.8% for Q4
 u Salary increase of ~3.0%
 u Q3 2016 included the benefit of a
 retroactive indirect medical education
 (“IME”) adjustment of ~$4 million at the
 former Reliant hospital in Woburn, MA.
 u Bad debt expense of 1.8% to 2.0% of net
 operating revenues
 Home Health and Hospice
 u Estimated 1.5% to 2.0%, or ~$5 million to
 $7 million, net Medicare pricing reduction
 for second half of 2017
 u Salary increase of ~3.0%
 u Estimated incremental cost of $0.6
 million to $1.0 million for the pre-claim
 review demonstration (implementation of
 continued rollout delayed)
 u Inclusive of home health and hospice
 acquisitions in 2017
 u Sale of pediatric home health assets in
 Q4 2016; Pediatrics generated ~$2 million
 of Adjusted EBITDA in 2016
 Consolidated
 u Includes approximately $6 million to $8 million of operating expenses (included in
 corporate general and administrative expenses) associated with the rebranding and
 name change initiative ($2.2 million of which was expensed in the first half of 2017)
 u Diluted share count of ~100 million shares
 u Tax rate of approximately 40%
 18
 Adjusted Free Cash Flow(8) and Tax Assumptions
 Certain Cash Flow Items
 (millions)
 6 Months
 2017
 Actual
 2017
 Assumptions
 2016
 Actual
 • Cash interest expense
 (net of amortization of debt discounts and fees) $75.0 $145 to $155 $158.4
 • Cash payments for taxes, net
 of refunds $38.9 $95 to $115 $31.9
 • Working Capital and Other $(12.1) $50 to $70 $24.6
 • Maintenance CAPEX $54.5 $130 to $150 $104.2
 • Adjusted Free Cash Flow $254.0 $315 to $400 $474.5
 Reconciliations to GAAP provided on pages 39-47
 Refer to pages 48-50 for end notes.
 u Increased maintenance capital
 expenditures due to growth in the
 Company, enhanced hospital
 maintenance program, and leasehold
 improvements and furnishings
 associated with the build-out of the
 Company’s new home office location
 (building will be leased)
 u Increased cash payments for taxes due
 to exhaustion of federal NOL in Q1
 2017
 u Working capital assumption for 2017
 assumes accounts receivable
 collections and pre-claims denial
 activity return to recent historic levels in
 the second half of 2017.
 Quarterly free cash flow for the remainder of 2017 will be impacted
 by the timing of income tax payments and maintenance capital
 expenditures, as well as changes in working capital.
 u 2017 assumption for cash interest
 expense was revised from a range of
 $150 to $160 million to a range of $145
 to $155 million due to the Company’s
 exercise of its early redemption option
 on its Convertible Senior Subordinated
 Notes
 19
 *Net redemptions in 2017 exclude ~$276 million associated with the non-cash conversion of the Convertible Senior Subordinated Notes.
 See the debt schedule on page 29. Refer to pages 48-50 for end notes.
 Free Cash Flow Priorities
 (In Millions)
 6 Months 2017 2017 2016
 Actuals Assumptions Actuals
 IRF bed expansions $8.0 $30 to $40 $19.1
 New IRF’s
     - De novos 44.0 85 to 105 72.6
     - Acquisitions 10.9 TBD —
     - Replacement hospitals and other 3.2 10 to 20 11.1
 New home health and hospice acquisitions 10.0 50 to 100 48.1
 $76.1
 $175 to $265,
 excluding IRF
 acquisitions $150.9
 6 Months 2017 2017 2016
 Actuals Assumptions Actuals
 Debt (borrowings) redemptions, net* $77.3 $TBD $155.1
 Cash dividends on common stock(10) 43.5 ~$87 83.8
 Common stock repurchases 18.1 TBD 65.6
 $138.9 $TBD $304.5
 Shareholder
 Distributions
 Growth
 in Core 
Business
 Debt 
Reduction
 Highest Priorit
 y
 The Company has ~$39 million of
 contractual debt repayment obligations in
 2017, including ~$15 million of capital lease
 payments and ~$1 million of other notes
 payable.
 ~$78 million authorization remaining
 as of June 30, 2017
 Quarterly cash dividend currently set at
 $0.25 per common share
 Appendix
 21
 HealthSouth: A Leading Provider of Post-Acute Care
 ~60% of HealthSouth's IRFs are
 located within a 30-mile radius
 of an Encompass location.
 Inpatient Rehabilitation
 Portfolio - As of June 30, 2017
 125
 Inpatient Rehabilitation Hospitals
 • 39 operate as joint ventures with
 acute care hospitals
 31 Number of States (plus Puerto Rico)
 ~ 29,100 Employees
 Key Statistics - Trailing 4 Quarters
 ~ $3.1 Billion Revenue
 167,906 Inpatient Discharges
 619,161 Outpatient Visits
 Note: One of the 125 IRFs and two of the 193 adult home health locations are nonconsolidated.
           These locations are accounted for using the equity method of accounting.
 Encompass 
Home Health and Hospice
 Portfolio – As of June 30, 2017
 193 Home Health Locations
 37 Hospice Locations
 25 Number of States
 ~ 8,100 Employees
 Key Statistics - Trailing 4 Quarters
 ~ $731 million Revenue
 197,480 Home Health Episodes
 4,070 Hospice Admissions
 IRF Market Share
 Largest owner & operator of IRFs
 21% of Licensed Beds
 28% of Medicare Patients Served
 Home Health and
 Hospice Market Share
 4th largest provider of
 Medicare-certified skilled
 home health services
 22
 Pre-Payment Claims Denials - Inpatient Rehabilitation Segment
 Impact to Income Statement
 Period New Denials
 Collections of
 Previously
 Denied
 Claims
 Bad Debt
 Expense for
 New Denials
 Update of
 Reserve
 for Prior
 Denials
 (In Millions)
 Q2 2017 $16.5 $(7.7) $4.9 $—
 Q1 2017 19.0 (5.9) 5.7 —
 Q4 2016 17.8 (4.4) 5.4 0.5
 Q3 2016 15.7 (8.5) 4.6 —
 Q2 2016 18.7 (4.9) 4.6 —
 Q1 2016 22.7 (8.4) 6.0 —
 Q4 2015 22.5 (4.1) 5.6 (1.3)
 Q3 2015 22.0 (4.1) 5.9 (1.1)
 Q2 2015 18.2 (3.8) 4.9 —
 Q1 2015 16.3 (3.0) 4.2 —
 Impact to Balance Sheet
 June 30,
 2017
 Dec. 31,
 2016
 Dec. 31,
 2015
 (In Millions)
 Pre-payment claims denials $ 174.3 $ 159.7 $ 114.8
 Recorded reserves (52.5) (47.9) (31.2)
 Net accounts receivable from
 pre-payment claims denials $ 121.8 $ 111.8 $ 83.6
 Background
  For several years, under programs designated as “widespread
 probes,” certain Medicare Administrative Contractors (“MACs”)
 have conducted pre-payment claim reviews and denied
 payment for certain diagnosis codes.
 – Pre-payment claim denials increased for IRFs during 2014
 and 2015 due to a widespread review of neurological billing
 codes and expansion of ongoing lower extremity code
 denials.
  HealthSouth appeals most denials. On claims it takes to an
 administrative law judge (“ALJ”), HealthSouth historically has
 experienced an approximate 70% success rate.
 – MACs identify medical documentation issues as a leading
 basis for denials.
 – HealthSouth's investment in clinical information systems and
 its medical services department has further improved its
 documentation and reduced technical denials.
 – However, MACs and other HHS contractors continue to
 issue denials without regulatory basis.
  By statute, ALJ decisions are due within 90 days of a request
 for hearing, but appeals are taking years. HHS has proposed
 rule changes to address the backlog of appeals, but their effect
 is uncertain.
  Last year, a federal court ordered HHS to eliminate the backlog
 by the end of calendar year 2020. HHS has appealed the order.
  All Medicare providers continue to experience delays. The
 backlog is growing because the ALJs receive one year's worth
 of appeals every four to six weeks, according to HHS.
 – Currently, ALJs are hearing HealthSouth appeals from
 claims denied up to seven years ago.
 HealthSouth reserves for pre-payment claim denials via the provision for
 doubtful accounts upon notice from a MAC that a claim is under review.
 23
 Expansion Activity
 Inpatient Rehabilitation Facilities
 # of New Beds
 2017 2018 2019
 De Novo:
     Pearland, TX 40 — —
     Shelby County, AL — 34 —
 Hilton Head, SC — 38 —
 Murrieta, CA — — 50
 Joint Ventures:
 Gulfport, MS   (April) 33 — —
     Westerville, OH (April) 60 — —
     Jackson, TN* 48 — —
     Murrells Inlet, SC — 29 —
 Winston-Salem, NC — 68 —
 Bed Expansions, net** 156 ~100 ~100
 337 ~269 ~150
 *
 **
 Became operational in July 2017; existing wholly owned, 40-bed IRF in Martin, TN became JV in conjunction with this opening
 Net bed expansions in each year may change due to the timing of certain regulatory approvals and/or construction delays.
 Q2 2017 acquisition highlights:
 u Acquired two home health locations in Texas
 u Opened two hospice locations in Texas
 u Merged one home health location in Texas and one
 home health location in Kansas with other existing
 locations
 Q2 2017 expansion activity highlights:
 uBegan operating an existing 33-bed inpatient
 rehabilitation hospital unit in Gulfport, MS in joint
 venture with Memorial Hospital at Gulfport
 uBegan operating a de novo 60-bed joint venture
 inpatient rehabilitation hospital with Mount Carmel
 Health System in Westerville, OH
 uExpanded existing hospitals by 20 beds
 2
 3
 4
 5
 6
 7 Previously Announced
 IRF Development
 Projects Underway
 2 New States
 Home Health and Hospice
 # of locations
 December 31, 2016 223
 Acquisitions 6
 Opening of new locations 3
 Merging of locations (2)
 June 30, 2017 230
 1
 7 Winston-Salem, NC
 Gulfport, MS
 24
 • Same-store IRF growth
 • New-store IRF growth (de novos and acquisitions)
 • Same-store home health and hospice growth
 • New-store home health and hospice growth (acquisitions)
 Core
 Growth
 Strong
 Balance Sheet
 Key 
Operational
 Initiatives
 Shareholder
 Distributions
 Opportunistic
 Growth
 Business Outlook 2017 to 2019*
 2017 2018 2019
 Business Model
 • Adjusted EBITDA CAGR: 5% - 9%** 
• Strong free cash flow generation
 • Quarterly cash dividends
 • Opportunistic repurchases
 -  (~$78 million authorization remaining as of June 30, 2017)
 • Implement rebranding and name change initiative
 • Develop and implement risk sharing strategies
 • Enhance clinical collaboration between IRFs and home health locations
 • Refine and expand clinical data analytics utilization to further improve patient outcomes
 • Leverage clinical expertise to increase stroke admissions
 • Complete installation of EMR and enhance utilization via continuous in-service upgrades
 • Leverage of 3.5x or less, subject to opportunities for creating shareholder value
 Strategy Componen
 t
 • Consider acquisitions of other complementary businesses
 * If legislation affecting Medicare is passed, or if significant changes are made to the home health payment system as suggested in the
 2018 proposed home health rule, HealthSouth will evaluate its effect on its business model.
 ** This is a multi-year CAGR; annual results may fall outside the range.
 25
 CMS proposes to:
 • Remove All-Cause Unplanned Readmission Measure for 30 Days Post-
 Discharge from IRF;
 • Remove and replace the Percent of Residents or Patients with Pressure
 Ulcers That Are New or Worsened (Short Stay) (NQF #0678) measure with a
 modified version entitled Changes in Skin Integrity Post-Acute Care:
 Pressure Ulcer/Injury beginning with the FY 2020 IRF QRP;
 • Add six quality measures to those publicly reported on IRF Compare; and
 • Increase the data elements collected on the IRF-PAI in order to standardize
 the collection of quality metrics across all four PAC settings.
 IRF-PPS Fiscal Year 2018 Proposed Rule: Key Provisions
 New Quality Reporting
 Update to Payment Rates
 Company Observations
 Pricing: 
• Net pricing impact to HealthSouth
 expected to be an increase of
 approx. 0.8% for FY 2018 
(see page 27)
 • Because of its efficient cost
 structure, HealthSouth receives
 very few outlier payments despite
 higher acuity patients. 
Quality:
 • HealthSouth will supplement
 existing quality reporting systems
 to meet the new requirements.
 The proposed rule would:
 • Implement a net 1.0% market basket increase as established by the Medicare
 Access and CHIP Reauthorization Act (MACRA) of 2015;
 • Update Case-Mix Group Relative Weights and Average Length of Stay Values;
 • Update the outlier threshold; and
 • Update wage index values.
 Source: https://www.federalregister.gov/documents/2017/05/03/2017-08428/medicare-program-inpatient-
 rehabilitation-facility-prospective-payment-system-for-federal-fiscal
 60% Rule - Update to Presumptive Methodology Code List
 • CMS proposes to make changes to the list of codes it uses to presumptively
 test compliance with the 60% Rule.
 – The proposed rule adds and removes certain ICD-10-CM diagnosis
 codes based on a comprehensive coding analysis performed by CMS
 clinicians and input from industry stakeholders.
 – Code changes would become effective beginning on or after 
October 1, 2017.
 26
 2018 Pricing: 
• While we continue to review the details of
 the 2018 proposed rule, we do not currently
 expect the net pricing impact to Encompass
 to be substantially different from the
 estimated 0.4% decrease to the industry.
     Quality:
 • Encompass will supplement existing
 processes and systems to meet the new
 requirements.
 HH-PPS Calendar Year 2018 Proposed Rule: Key Provisions
 Proposed New Quality Reporting Measures
 Proposed Update to 2018 Payment Rates Company Observations
 The proposed rule would:
 • Implement a net 1.0% market basket increase as established by the
 Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 and
 • Implement year three of a three-year nominal case-mix coding intensity
 reduction adjustment of (0.9%).
 Proposal assumes the expiration of the rural add-on, which Congress could
 elect to extend.
 CMS proposed to adopt, for the CY 2020 payment determination, three
 measures to meet the requirements of the IMPACT Act:
 • Changes in skin integrity post-acute care pressure ulcer/injury;
 • Application of % of residents experiencing one or more falls with major
 injury; and
 • Application of % of long-term care hospital patients with an admit and
 discharge functional assessment and care plan that addresses function.
 Proposed measures would be calculated from the OASIS forms.
 Sources: https://www.federalregister.gov/documents/2017/07/28/2017-15825/medicare-and-medicaid-programs-home-health-
 prospective-payment-system-rate-update-etc;  http://www.homehealth4america.org/media-center/390
  
 Proposed Change to Payment System in 2019
 CMS proposed to:
 • Use 30-day periods rather than 60-day episodes and
 • Shift to the Home Health Groupings Model.
  – Relies more heavily on clinical characteristics and
  – Eliminates therapy service use thresholds currently used in case-
 mix adjustments
 Proposed changes are not budget neutral and may be phased in across
 multiple years (two or more).
     Payment System:
 • Will continue to work with the Partnership
 for Quality Home Healthcare to analyze
 the proposal and provide comments and
 recommendations to CMS and Congress
 • Proposal represents a total overhaul of
 the payment system that would
 significantly redistribute Medicare
 payments and likely create access to care
 issues in many markets across the
 country
 • Question whether CMS has the authority
 to make a non-budget neutral change
 without legislative action
 27
 • 10% to15% annual episode
 growth
 • Includes $35-$40 million per 
annum in agency acquisitions
 Volume
 (Includes New Stores)
 Inpatient Rehabilitation Home Health & Hospice
 Medicare Pricing
 Approx. 73% of Revenue Approx. 85% of Revenue
 FY 2017
 Q416-Q317
 FY 2018
 Q417-Q318(11)
 FY 2019
 Q418-Q319
 Mgmt. Estimate
 CY 2017
 Q117-Q417
 CY 2018
 Q118-Q418(11)
 CY 2019*
 Q119-Q419
 Market basket update 2.7% 1.0% 3.3% 2.8% 1.0%
 Healthcare reform reduction (75) bps - (75) bps - -
 Healthcare reform rebasing
 adjustment - - - (2.3%) -
 Coding intensity reduction - - - (0.9%) (0.9%)
 Expiration of rural add-on - - - - (0.5%)
 Healthcare reform productivity
 adjustment  (30) bps - (100) bps  (30) bps -
 Net impact - all providers 1.65% 1.0% 1.55% (0.7%) (0.4%)
 Outlier fixed dollar loss adjustment - - - (0.1%) -
 Impact from case mix re-weighting - - - (0.9%) -
 Impact from change in outlier
 calculation - - - (1.9%) -
 Impact of patient mix changes and
 outlier mitigation - - - 1.6 - 2.1% -
 Estimated impact to HealthSouth(12) 1.9% 0.8% (1.5%) - (2.0%)
 Medicare Advantage 
& Managed Care Pricing Approx. 20% of Revenue Approx. 14% of Revenue
 Expected Increases 2-4% 2-4% 2-4% 0-2% 0-2% 0-2%
 Business Outlook 2017 to 2019: Revenue Assumptions
 • 3+% annual discharge growth • 10+% annual episode growth
 *CMS has proposed a new home health reimbursement model for 2019; at this time, mgmt. is unable to predict its impact, if
 implemented as proposed. Refer to pages 48-50 for end notes.
 28
 Inpatient Rehabilitation Home Health and Hospice
 Business Outlook 2017 to 2019: Labor and Other Expense Assumptions
 Salaries 
& Benefits
 ~70%
 Hospital
 Expenses
 ~30%
 Salaries and Benefits 2017 2018 2019
 Salary increases 2.75-3.25% 2.75-3.25% 2.75-3.25%
 Benefit costs increases 5-10% 5-10% 5-10%
 Hospital Expenses
 • Other operating expenses and supply
 costs tracking with inflation
 Salaries 
& Benefits
 ~85%
 Other
 Expenses
 ~15%
 Home Health Expenses
 • Other operating expenses and supply
 costs tracking with inflation
 Percent of Salaries & Benefits
 Salaries ~ 90%
 Benefits ~10%
 29
 Debt Schedule
 Change in
 June 30, Dec. 31,  Debt vs.
 ($millions) 2017 2016 YE 2016
 Advances under $600 million revolving credit facility,
     July 2020 - LIBOR +200bps $ 70.0 $ 152.0 $ (82.0)
 Term loan facility, July 2020 - LIBOR +200bps 410.2 421.2 (11.0)
 Bonds Payable:
 5.125% Senior Notes due 2023 295.6 295.3 0.3
 5.75% Senior Notes due 2024 1,193.6 1,193.2 0.4
 5.75% Senior Notes due 2025 344.2 343.9 0.3
 2.0% Convertible Senior Subordinated Notes due 2043 — 275.7 (275.7)
 Other notes payable 74.1 55.8 18.3
 Capital lease obligations 275.7 279.3 (3.6)
 Long-term debt $ 2,663.4 $ 3,016.4 $ (353.0)
 Debt to Adjusted EBITDA 3.3x 3.8x
 Reconciliations to GAAP provided on pages 39-47
 30
 2017 2019 2020 2020 2021 2022 2023 2024 2025
 $350 Senior
 Notes
 5.75%
 $1,200
 Senior
 Notes
 5.75%
 $300 Senior
 Notes
 5.125%
 $70 Drawn
 + $34
 reserved
 for LC’s 
As of June 30, 2017*
 Debt Maturity Profile - Face Value
 ($ in millions)
 $496
 Available
 Callable beginning
 November 2017
 HealthSouth is positioned with a cost-efficient, flexible capital structure.
 Revolver
 Revolver
 Capacity $410
 Term
 Loans
 Callable beginning
 September 2020
 * This chart does not include ~$276 million of capital lease obligations or ~$74 million of other notes payable.
 See the debt schedule on page 29.
 No significant debt
 maturities prior to 2020
 Callable beginning
 March 2018
 31
 25.0
 20.0
 15.0
 10.0
 5.0
 0.0
 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
 New-Store/Same-Store IRF Growth
 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
 Fairlawn(13) 1.9% 1.9% 2.0% 1.1%
 New Store —% 0.6% 1.8% 4.4% 5.7% 15.6% 14.2% 11.7% 10.7% 1.3% 1.2% 1.9%
 Same Store* 1.9% 2.2% 2.9% 2.8% 3.9% 3.0% 2.8% 1.9% 1.9% 0.1% 1.6% 1.6%
 Total by Qtr. 3.8% 4.7% 6.7% 8.3% 9.6% 18.6% 17.0% 13.6% 12.6% 1.4% 2.8% 3.5%
 Total by Year 3.5% 10.9% 10.8%
 Same-Store
 Year* 1.3% 3.2% 1.7%
 Same-Store
 Year UDS( 14) (0.2)% 1.3% (0.6)%
 Altamonte Springs, FL (50 beds)
 Johnson City, TN (26 beds)
 Newnan, GA (50 beds)
 Middletown, DE (34 beds) 
Reliant (857 beds)
 Franklin, TN (40 beds)
 Lexington, KY (158 beds)
 Savannah, GA (50 beds)
 Bryan, TX (49 beds)
 Broken Arrow, OK (22 beds)
 * Includes consolidated HealthSouth inpatient rehabilitation hospitals classified as same store during each period
 Refer to pages 48-50 for end notes.
 Modesto, CA
 (50 beds)
 Hot Springs, AR (27 beds)
 Gulfport, MS (33 beds)
 Westerville, OH (60 beds)
 32
 Payment Sources (Percent of Revenues)
 Inpatient
 Rehabilitation
 Segment
 Home Health
 and Hospice
 Segment
 Consolidated
 Q2 Q2 Q2 6 Months Full Year
 2017 2016 2017 2016 2017 2016 2017 2016 2016
 Medicare 72.8% 73.1% 84.9% 82.3% 75.3% 74.7% 75.1% 75.1% 75.2%
 Medicare Advantage 8.7% 7.8% 10.1% 9.0% 8.9% 8.1% 8.9% 7.9% 7.9%
 Managed care 11.1% 11.5% 3.5% 3.7% 9.6% 10.0% 9.8% 9.8% 9.8%
 Medicaid 3.2% 2.9% 1.3% * 4.8% 2.8% 3.2% 2.7% 3.3% 3.2%
 Other third-party payors 1.6% 1.7% —% —% 1.3% 1.4% 1.3% 1.4% 1.4%
 Workers’ compensation 0.8% 0.8% —% —% 0.7% 0.7% 0.7% 0.8% 0.8%
 Patients 0.5% 0.6% 0.1% 0.1% 0.4% 0.5% 0.5% 0.5% 0.5%
 Other income 1.3% 1.6% 0.1% 0.1% 1.0% 1.4% 1.0% 1.2% 1.2%
 Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
 * In Q4 2016, the home health and hospice segment sold its pediatric home health assets. As a result, the
 segment’s percentage of Medicaid has declined.
 33
 Inpatient Rehabilitation Operational and Labor Metrics
 Q2 Q1 Q4 Q3 Q2 Q1 Full Year
 2017 2017 2016 2016 2016 2016 2016
 (In Millions)
 Net patient revenue-inpatient $ 762.9 $ 766.2 $ 740.9 $ 724.1 $ 721.2 $ 719.4 $ 2,905.5
 Net patient revenue-outpatient and other revenues 27.1 26.3 26.7 27.6 31.4 29.8 115.6
 Net operating revenues $ 790.0 $ 792.5 $ 767.6 $ 751.7 $ 752.6 $ 749.2 $ 3,021.1
 (Actual Amounts)
 Discharges(15) 42,805 42,259 41,474 41,368 41,365 41,098 165,305
 Net patient revenue per discharge $ 17,823 $ 18,131 $ 17,864 $ 17,504 $ 17,435 $ 17,505 $ 17,577
 Outpatient visits 153,415 152,454 154,311 158,981 164,761 162,649 640,702
 Average length of stay 12.7 12.9 12.8 12.7 12.6 12.9 12.8
 Occupancy % 69.3% 71.0% 67.8% 67.8% 68.2% 68.9% 67.8%
 # of licensed beds* 8,641 8,528 8,504 8,441 8,430 8,481 8,504
 Occupied beds 5,988 6,055 5,766 5,723 5,749 5,843 5,766
 Full-time equivalents (FTEs)(16) 20,474 20,254 19,930 19,663 19,503 19,352 19,612
 Contract labor 251 260 245 241 205 194 221
 Total FTE and contract labor 20,725 20,514 20,175 19,904 19,708 19,546 19,833
 EPOB(17) 3.46 3.39 3.50 3.48 3.43 3.35 3.44
 * The decrease in licensed beds from Q1 2016 to Q2 2016 was due to the sale of the hospital in Beaumont, TX (61 beds).
 Refer to pages 48-50 for end notes.
 34
 Home Health and Hospice Operational Metrics
 Q2 Q1 Q4 Q3 Q2 Q1 Full Year
 2017 2017 2016 2016 2016 2016 2016
 (In Millions)
 Net home health revenue $ 172.9 $ 165.3 $ 165.2 $ 162.0 $ 157.1 $ 150.9 $ 635.2
 Net hospice and other revenue 18.4 17.0 17.1 13.1 11.0 9.7 50.9
 Net operating revenues $ 191.3 $ 182.3 $ 182.3 $ 175.1 $ 168.1 $ 160.6 $ 686.1
 Home Health: (Actual Amounts)
 Admissions(18) 30,823 30,810 27,957 27,239 25,753 25,763 106,712
 Recertifications 22,568 20,546 21,422 20,888 20,432 19,453 82,195
 Episodes 52,101 49,260 49,253 46,866 45,774 43,844 185,737
 Average revenue per episode $ 2,989 $ 2,991 $ 3,023 $ 3,032 $ 3,033 $ 3,035 $ 3,031
 Episodic visits per episode 18.1 18.7 18.4 19.0 18.9 19.1 18.8
 Total visits 1,095,225 1,070,356 1,033,502 1,001,021 967,968 937,804 3,940,295
 Cost per visit $ 73 $ 75 $ 76 $ 75 $ 73 $ 73 $ 74
 Hospice:
 Admissions(19) 1,114 1,128 996 832 785 724 3,337
 Patient days 113,028 108,717 104,183 83,628 71,277 63,431 322,519
 Revenue per day $ 162 $ 157 $ 164 $ 157 $ 154 $ 153 $ 158
 Refer to pages 48-50 for end notes.
 35
 Share Information
 Weighted Average for the Period
 Q2 6 Months Full Year
 (Millions) 2017 2016 2017 2016 2016 2015 2014
 Basic shares outstanding(20)(21) 90.3 89.3 89.5 89.4 89.1 89.4 86.8
 Convertible perpetual preferred stock(20) — — — — — 1.0 3.2
 Convertible senior subordinated notes(21) 7.5 8.5 8.1 8.5 8.5 8.3 8.2
 Restricted stock awards, dilutive stock options,
 restricted stock units, and common stock
 warrants(22) 1.1 1.6 1.4 1.5 1.9 2.3 2.5
 Diluted shares outstanding 98.9 99.4 99.0 99.4 99.5 101.0 100.7
 End of Period
 Q2 6 Months Full Year
 (Millions) 2017 2016 2017 2016 2016 2015 2014
 Basic shares outstanding(20)(21) 98.0 89.1 98.0 89.1 88.3 89.3 86.6
 Refer to pages 48-50 for end notes.
 36
 Segment Operating Results
 Q2 2017 Q2 2016
 IRF
 Home
 Health and
 Hospice Reclasses
 HealthSouth
 Consolidated IRF
 Home
 Health and
 Hospice Reclasses
 HealthSouth
 Consolidated
 Net operating revenues $ 790.0 $ 191.3 $ — $ 981.3 $ 752.6 $ 168.1 $ — $ 920.7
 Less: Provision for doubtful accounts (12.4) (1.3) — (13.7) (14.5) (0.9) — (15.4)
 777.6 190.0 — 967.6 738.1 167.2 — 905.3
 Operating Expenses:
 Inpatient Rehabilitation:
 Salaries and benefits (394.3) — (133.5) (527.8) (366.1) — (120.0) (486.1)
 Other operating expenses(a) (112.9) — (16.8) (129.7) (106.8) — (14.5) (121.3)
 Supplies (33.8) — (3.3) (37.1) (31.8) — (2.6) (34.4)
 Occupancy (15.5) — (2.8) (18.3) (15.4) — (2.5) (17.9)
 Home Health and Hospice:
 Cost of services sold (excluding
 depreciation and amortization) — (88.7) 88.7 — — (81.6) 81.6 —
 Support and overhead costs — (67.7) 67.7 — — (58.0) 58.0 —
 (556.5) (156.4) — (712.9) (520.1) (139.6) — (659.7)
 Other income 0.9 — — 0.9 0.7 — — 0.7
 Equity in net income of nonconsolidated
 affiliates 1.8 0.2 — 2.0 2.2 0.2 — 2.4
 Noncontrolling interest (15.4) (1.0) — (16.4) (16.8) (1.8) — (18.6)
 Segment Adjusted EBITDA $ 208.4 $ 32.8 $ — 241.2 $ 204.1 $ 26.0 $ — 230.1
 General and administrative expenses(b) (31.7) (25.8)
 Adjusted EBITDA $ 209.5 $ 204.3
 In arriving at Adjusted EBITDA, the following were excluded:
 (a) Loss on disposal or impairment of
 assets
 $ 0.8 $ — $ — $ 0.8 $ 0.2 $ — $ — $ 0.2
 (b) Stock-based compensation — — — 20.7 — — — 8.6
 Reconciliations to GAAP provided on pages 39-47
 37
 Segment Operating Results
 Six Months Ended June 30, 2017 Six Months Ended June 30, 2016
 Inpatient
 Home
 Health and
 Hospice Reclasses
 HLS
 Consolidated Inpatient
 Home
 Health and
 Hospice Reclasses
 HLS
 Consolidated
 Net operating revenues $ 1,582.5 $ 373.6 $ — $ 1,956.1 $ 1,501.8 $ 328.7 $ — $ 1,830.5
 Less: Provision for doubtful accounts (27.1) (3.0) — (30.1) (30.1) (1.8) — (31.9)
 1,555.4 370.6 — 1,926.0 1,471.7 326.9 — 1,798.6
 Operating Expenses:
 Inpatient Rehabilitation:
 Salaries and benefits (792.5) — (265.4) (1,057.9) (736.0) — (236.2) (972.2)
 Other operating expenses(a) (224.7) — (34.6) (259.3) (211.6) — (28.7) (240.3)
 Supplies (67.5) — (6.6) (74.1) (64.2) — (5.2) (69.4)
 Occupancy (30.6) — (5.6) (36.2) (31.0) — (4.9) (35.9)
 Home Health and Hospice:
 Cost of services sold (excluding
 depreciation and amortization) — (177.7) 177.7 — — (160.0) 160.0 —
 Support and overhead costs — (134.5) 134.5 — — (115.0) 115.0 —
 (1,115.3) (312.2) — (1,427.5) (1,042.8) (275.0) — (1,317.8)
 Other income 1.9 — — 1.9 1.3 — — 1.3
 Equity in net income of nonconsolidated
 affiliates 3.7 0.4 — 4.1 4.4 0.4 — 4.8
 Noncontrolling interest (31.9) (2.1) — (34.0) (33.6) (3.7) — (37.3)
 Segment Adjusted EBITDA $ 413.8 $ 56.7 $ — 470.5 $ 401.0 $ 48.6 $ — 449.6
 General and administrative expenses(b) (60.2) (53.2)
 Adjusted EBITDA $ 410.3 $ 396.4
 In arriving at Adjusted EBITDA, the following were excluded:
 (a) Loss (gain) on disposal or
 impairment of assets
 $ 0.4 $ — $ — $ 0.3 $ 0.7 $ (0.3) $ — $ 0.4
 (b) Stock-based compensation — — — 28.7 — — — 13.1
 Reconciliations to GAAP provided on pages 39-47
 38
 Segment Operating Results
 Year Ended December 31, 2016
 IRF
 Home Health
 and Hospice Reclasses
 HealthSouth
 Consolidated
 Net operating revenues $ 3,021.1 $ 686.1 $ — $ 3,707.2
 Less: Provision for doubtful accounts (57.0) (4.2) — (61.2)
 2,964.1 681.9 — 3,646.0
 Operating Expenses:
 Inpatient Rehabilitation:
 Salaries and benefits (1,493.4) — (492.5) (1,985.9)
 Other operating expenses(a) (431.5) — (59.9) (491.4)
 Supplies (128.8) — (11.2) (140.0)
 Occupancy (61.2) — (10.1) (71.3)
 Home Health and Hospice:
 Cost of services sold (excluding depreciation and amortization) — (336.5) 336.5 —
 Support and overhead costs — (237.2) 237.2 —
 (2,114.9) (573.7) — (2,688.6)
 Other income 2.9 — — 2.9
 Equity in net income of nonconsolidated affiliates 9.1 0.7 — 9.8
 Noncontrolling interest (64.0) (6.5) — (70.5)
 Segment Adjusted EBITDA $ 797.2 $ 102.4 $ — 899.6
 General and administrative expenses(b) (106.0)
 Adjusted EBITDA $ 793.6
 In arriving at Adjusted EBITDA, the following were excluded:
 (a) Loss (gain) on disposal or impairment of assets $ 4.3 $ (3.6) $ — $ 0.7
 (b) Stock-based compensation expense — — — 27.4
 Reconciliations to GAAP provided on pages 39-47
 39
 Reconciliation of Net Income to Adjusted EBITDA(9)
 2017
 Q1 Q2 6 Months
 (in millions, except per share data) Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share
 Net Income $ 84.4 $ 79.4 $ 163.8
 Loss (income) from disc ops, net of tax, attributable to HealthSouth 0.3 (0.2) 0.1
 Net income attributable to noncontrolling interests (17.6) (16.4) (34.0)
 Income from continuing operations attributable to HealthSouth* 67.1 $ 0.70 62.8 $ 0.66 129.9 $ 1.42
 Provision for income tax expense 39.7 28.6 68.3
 Interest expense and amortization of debt discounts and fees 41.3 40.4 81.7
 Depreciation and amortization 45.2 45.8 91.0
 Loss on early extinguishment of debt — 10.4 10.4
 Net noncash (gain) loss on disposal or impairment of assets (0.5) 0.8 0.3
 Stock-based compensation expense 8.0 20.7 28.7
 Adjusted EBITDA $ 200.8 $ 209.5 $ 410.3
 Weighted average common shares outstanding:
 Basic 88.8 90.3 89.5
 Diluted 99.0 98.9 99.0
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 48-50 for end notes.
 40
 Reconciliation of Net Income to Adjusted EBITDA(9)
 2016
 Q1 Q2 Q3 Q4 Full Year
 (in millions, except per share data) Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share
 Net Income $ 76.7 $ 81.2 $ 78.1 $ 82.1 $ 318.1
 Loss (income) from disc ops, net of tax,
 attributable to HealthSouth 0.1 0.1 0.1 (0.3) —
 Net income attributable to noncontrolling
 interests (18.7) (18.6) (16.4) (16.8) (70.5)
 Income from continuing operations
 attributable to HealthSouth* 58.1 $ 0.61 62.7 $ 0.65 61.8 $ 0.64 65.0 $ 0.68 247.6 $ 2.59
 Professional fees — acct, tax, and legal 0.2 1.7 — — 1.9
 Provision for income tax expense 39.7 42.4 42.1 39.7 163.9
 Interest expense and amortization of
 debt discounts and fees 44.6 43.4 42.5 41.6 172.1
 Depreciation and amortization 42.4 42.9 43.5 43.8 172.6
 Loss on early extinguishment of debt 2.4 2.4 2.6 — 7.4
 Net noncash gain (loss) on disposal or
 impairment of assets 0.2 0.2 1.6 (1.3) 0.7
 Stock-based compensation expense 4.5 8.6 4.3 10.0 27.4
 Adjusted EBITDA $ 192.1 $ 204.3 $ 198.4 $ 198.8 $ 793.6
 Weighted average common shares
 outstanding:
 Basic 89.5 89.3 89.1 88.6 89.1
 Diluted 99.4 99.4 99.4 99.2 99.5
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 48-50 for end notes.
 41
 Net Cash Provided by Operating Activities Reconciled
 to Adjusted EBITDA
 Q2 6 Months Full Year
 (In Millions) 2017 2016 2017 2016 2016
 Net cash provided by operating activities $ 151.2 $ 152.2 $ 332.0 $ 321.8 $ 634.4
 Provision for doubtful accounts (13.7) (15.4) (30.1) (31.9) (61.2)
 Professional fees — accounting, tax, and legal — 1.7 — 1.9 1.9
 Interest expense and amortization of debt discounts and
 fees 40.4 43.4 81.7 88.0 172.1
 Equity in net income of nonconsolidated affiliates 2.0 2.4 4.1 4.8 9.8
 Net income attributable to noncontrolling interests in
 continuing operations (16.4) (18.6) (34.0) (37.3) (70.5)
 Amortization of debt-related items (3.2) (3.4) (6.7) (6.8) (13.8)
 Distributions from nonconsolidated affiliates (2.3) (1.3) (4.4) (3.0) (8.5)
 Current portion of income tax expense 33.4 4.0 24.1 9.0 31.0
 Change in assets and liabilities 17.8 36.9 42.4 45.3 91.3
 Net premium paid on bond transactions — 2.0 — 3.9 5.8
 Cash used in operating activities of discontinued
 operations 0.2 0.3 0.6 0.5 0.7
 Other 0.1 0.1 0.6 0.2 0.6
 Adjusted EBITDA $ 209.5 $ 204.3 $ 410.3 $ 396.4 $ 793.6
 42
 Reconciliation of Segment Adjusted EBITDA to Income
 from Continuing Operations Before Income Tax Expense
 Three Months Ended Six Months Ended Year Ended
 June 30, June 30, December 31,
 2017 2016 2017 2016 2016
 (In Millions)
 Total segment Adjusted EBITDA $ 241.2 $ 230.1 $ 470.5 $ 449.6 $ 899.6
 General and administrative expenses (52.4) (34.4) (88.9) (66.3) (133.4)
 Depreciation and amortization (45.8) (42.9) (91.0) (85.3) (172.6)
 Loss on disposal or impairment of assets (0.8) (0.2) (0.3) (0.4) (0.7)
 Professional fees — accounting, tax, and legal — (1.7) — (1.9) (1.9)
 Loss on early extinguishment of debt (10.4) (2.4) (10.4) (4.8) (7.4)
 Interest expense and amortization of debt discounts and fees (40.4) (43.4) (81.7) (88.0) (172.1)
 Net income attributable to noncontrolling interests 16.4 18.6 34.0 37.3 70.5
    Income from continuing operations before income tax expense $ 107.8 $ 123.7 $ 232.2 $ 240.2 $ 482.0
 43
 Reconciliation of Net Cash Provided by Operating
 Activities to Adjusted Free Cash Flow(8) 
Q2 6 Months Full-Year
 (In Millions) 2017 2016 2017 2016 2016
 Net cash provided by operating activities $ 151.2 $ 152.2 $ 332.0 $ 321.8 $ 634.4
 Impact of discontinued operations 0.2 0.3 0.6 0.5 0.7
 Net cash provided by operating activities of continuing operations 151.4 152.5 332.6 322.3 635.1
 Capital expenditures for maintenance (32.3) (22.9) (54.5) (40.6) (104.2)
 Distributions paid to noncontrolling interests of consolidated affiliates (12.6) (18.0) (24.1) (33.6) (64.9)
 Items non-indicative of ongoing operations:
 Cash paid for professional fees — accounting, tax, and legal — 1.7 — 1.9 1.9
 Transaction costs and related assumed liabilities — — — 0.8 0.8
 Net premium on bond issuance/repayment — 2.0 — 3.9 5.8
 Adjusted free cash flow $ 106.5 $ 115.3 $ 254.0 $ 254.7 $ 474.5
 Cash dividends on common stock $ 21.3 $ 20.6 $ 43.5 $ 41.9 $ 83.8
 Refer to pages 48-50 for end notes.
 44
 For the Three Months Ended June 30, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights
 Income Tax
 Adjustments(6) As Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 209.5 $ — $ — $ 209.5
 Depreciation and amortization (45.8) — — (45.8)
 Loss on early extinguishment of debt(4) (10.4) — — (10.4)
 Interest expense and amortization of debt discounts and fees (40.4) — — (40.4)
 Stock-based compensation (20.7) 11.6 — (9.1)
 Loss on disposal or impairment of assets (0.8) — — (0.8)
 Income from continuing operations before income tax
 expense 91.4 11.6 — 103.0
 Provision for income tax expense (28.6) (4.6) (7.4) (40.6)
 Income from continuing operations attributable to
 HealthSouth $ 62.8 $ 7.0 $ (7.4) $ 62.4
 Add: Interest, amortization, and loss on extinguishment of
 convertible debt, net of tax 8.3 8.3
 Numerator for diluted earnings per share $ 71.1 $ 70.7
 Diluted earnings per share from continuing operations $ 0.72
 Impact of antidilution $ (0.02)
 Diluted earnings per share from continuing operations, as
 reported* $ 0.70 $ 0.07 $ (0.07) $ 0.71
 Diluted shares used in calculation 98.9
 Adjusted EPS(7) - Q2 2017
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 45
 For the Three Months Ended June 30, 2016
 Adjustments
 As
 Reported
 Professional
 Fees —
 Accounting,
 Tax, & Legal
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights
 Loss on Early
 Extinguishment
 of Debt
 Sale of
 Hospital
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 204.3 $ — $ — $ — $ — $ 204.3
 Depreciation and amortization (42.9) — — — — (42.9)
 Professional fees — accounting, tax, and legal (1.7) 1.7 — — — —
 Loss on early extinguishment of debt (2.4) — — 2.4 — —
 Interest expense and amortization of debt discounts
 and fees (43.4) — — — — (43.4)
 Stock-based compensation (8.6) — 2.8 — — (5.8)
 Loss on disposal or impairment of assets (0.2) — — — (0.9) (1.1)
 Income from continuing operations before
 income tax expense 105.1 1.7 2.8 2.4 (0.9) 111.1
 Provision for income tax expense (42.4) (0.7) (1.1) (1.0) 0.4 (44.8)
 Income from continuing operations attributable
 to HealthSouth $ 62.7 $ 1.0 $ 1.7 $ 1.4 $ (0.5) $ 66.3
 Add: Interest on convertible debt, net of tax 2.4 2.4
 Numerator for diluted earnings per share $ 65.1 $ 68.7
 Diluted earnings per share from continuing
 operations* $ 0.65 $ 0.01 $ 0.02 $ 0.01 $ (0.01) $ 0.69
 Diluted shares used in calculation 99.4
 Adjusted EPS(7) - Q2 2016
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 46
 Adjusted EPS(7) - YTD 2017
 For the Six Months Ended June 30, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights
 Income Tax
 Adjustments(6)
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 410.3 $ — $ — $ 410.3
 Depreciation and amortization (91.0) — — (91.0)
 Loss on early extinguishment of debt(4) (10.4) — — (10.4)
 Interest expense and amortization of debt discounts and fees (81.7) — — (81.7)
 Stock-based compensation (28.7) 14.9 — (13.8)
 Loss on disposal or impairment of assets (0.3) — — (0.3)
 Income from continuing operations before income tax expense 198.2 14.9 — 213.1
 Provision for income tax expense (68.3) (6.0) (10.0) (84.3)
 Income from continuing operations attributable to HealthSouth $ 129.9 $ 8.9 $ (10.0) $ 128.8
 Add: Interest, amortization, and loss on extinguishment of
 convertible debt, net of tax 10.8 10.8
 Numerator for diluted earnings per share $ 140.7 $ 139.6
 Diluted earnings per share from continuing operations, as
 reported* $ 1.42 $ 0.09 $ (0.10) $ 1.41
 Diluted shares used in calculation 99.0
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 47
 Adjusted EPS(7) - YTD 2016
 For the Six Months Ended June 30, 2016
 Adjustments
 As
 Reported
 Professional
 Fees —
 Accounting,
 Tax, & Legal
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights
 Loss on Early
 Extinguishment
 of Debt
 Sale of
 Hospital
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 396.4 $ — $ — $ — $ — $ 396.4
 Depreciation and amortization (85.3) — — — — (85.3)
 Professional fees — accounting, tax, and legal (1.9) 1.9 — — — —
 Loss on early extinguishment of debt (4.8) — — 4.8 — —
 Interest expense and amortization of debt discounts
 and fees (88.0) — — — — (88.0)
 Stock-based compensation (13.1) — 0.5 — — (12.6)
 Loss on disposal or impairment of assets (0.4) — — — (0.9) (1.3)
 Income from continuing operations before
 income tax expense 202.9 1.9 0.5 4.8 (0.9) 209.2
 Provision for income tax expense (82.1) (0.8) (0.2) (1.9) 0.4 (84.6)
 Income from continuing operations attributable
 to HealthSouth $ 120.8 $ 1.1 $ 0.3 $ 2.9 $ (0.5) $ 124.6
 Add: Interest on convertible debt, net of tax 4.8 4.8
 Numerator for diluted earnings per share $ 125.6 $ 129.4
 Diluted earnings per share from continuing
 operations* $ 1.26 $ 0.01 $ — $ 0.03 $ (0.01) $ 1.30
 Diluted shares used in calculation 99.4
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 48
 End Notes
 (1) CMS periodically retroactively updates Supplemental Security Income (“SSI”) ratios that are used to determine the adjustments to Medicare payment rates for low-
 income patients. In June 2017, CMS updated ratios for October 2014 through June 2017. As a result, our net operating revenues were negatively impacted by
 approximately $2 million.
 (2) In the first quarter of 2017, approximately $1 million associated with the TeamWorks clinical collaboration initiative was included in operating expenses within the
 inpatient rehabilitation segment. Total estimated costs to the Company in 2017 for the TeamWorks clinical collaboration initiative is ~$3.5 million.
 (3) Current income tax expense was $33.4 million and $24.1 million for the three and six months ended June 30, 2017 and $4.0 million and $9.0 million for the three
 and six months ended June 30, 2016, respectively.
 (4) The income allocated to participating securities need to be subtracted from income from continuing operations to calculate basic earnings per share.The interest and
 amortization and the loss on early extinguishment of debt related to the convertible senior subordinated notes must be added to income from continuing operations
 when calculating diluted earnings per share because the debt was assumed to have been converted at the beginning of the period, and the applicable shares were
 included in the diluted share count.
 (5) In connection with the Encompass acquisition, the Company granted stock appreciation rights based on the common stock of HealthSouth Home Health Holdings,
 Inc. to certain members of Encompass management. The fair value of Holdings’ common stock is determined using the product of the trailing 12-month specified
 performance measure for Holdings and a specified median market EBITDA multiple based on a basket of public home health companies. The fair value of these
 stock appreciation rights will vary from period to period based on Encompass’ performance and the change in the multiple of the basket of public home health
 companies.
 (6) New guidance in ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” requires entities to record all of the tax effects related to share-
 based payments at settlement (or expiration) through the income statement. Historically, HealthSouth recorded such tax effects to equity.
 (7) HealthSouth is providing adjusted earnings per share from continuing operations attributable to HealthSouth (“adjusted earnings per share”), which is a non-GAAP
 measure. The Company believes the presentation of adjusted earnings per share provides useful additional information to investors because it provides better
 comparability of ongoing operating performance to prior periods given that it excludes the impact of government, class action, and related settlements,
 professional fees - accounting, tax, and legal, mark-to-market adjustments for stock appreciation rights, gains or losses related to hedging instruments, loss on
 early extinguishment of debt, adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims), items
 related to corporate and facility restructurings, and certain other items deemed to be non-indicative of ongoing operating performance. It is reasonable to expect
 that one or more of these excluded items will occur in future periods, but the amounts recognized can vary significantly from period to period and may not directly
 relate to the Company's ongoing operating performance. Accordingly, they can complicate comparisons of the Company's results of operations across periods and
 comparisons of the Company's results to those of other healthcare companies. Adjusted earnings per share should not be considered as a measure of financial
 performance under generally accepted accounting principles in the United States as the items excluded from it are significant components in understanding and
 assessing financial performance. Because adjusted earnings per share is not a measurement determined in accordance with GAAP and is thus susceptible to
 varying calculations, it may not be comparable as presented to other similarly titled measures of other companies.*
 * Reconciliations to GAAP provided on pages 39-47
 49
 End Notes, con’t.
 (8) Definition of adjusted free cash flow, which is a non-GAAP measure, is net cash provided by operating activities of continuing operations minus capital expenditures
 for maintenance, dividends paid on preferred stock, distributions to noncontrolling interests, and certain other items deemed to be non-indicative of ongoing
 operating performance. Common stock dividends are not included in the calculation of adjusted free cash flow. Because this measure is not determined in
 accordance with GAAP and is susceptible to varying calculations, it may not be comparable to other similarly titled measures presented by other companies.
 Note:  Adjusted free cash flow for prior periods has been recast to conform to the new guidance in ASU 2016-09, “Improvements to Employee Share-Based
 Payment Accounting.” HealthSouth’s stock-based compensation plans permit shares to be withheld to pay the employee’s tax withholding obligations incurred in
 connection with the vesting of a stock award. HealthSouth then remits the value of those withheld shares in cash to the applicable tax authority on the employee’s
 behalf. Under the new guidance, all cash payments made to taxing authorities on employees’ behalf for shares withheld should be presented as a financing activity
 in the statement of cash flows. Historically, HealthSouth presented such payments as an operating activity. 
(9) Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is,
 likewise, a non-GAAP measure. Management and some members of the investment community utilize Adjusted EBITDA as a financial measure and the leverage
 ratio as a liquidity measure on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to
 GAAP measures of performance or liquidity. In evaluating Adjusted EBITDA, the reader should be aware that in the future HealthSouth may incur expenses similar
 to the adjustments set forth.
 (10) On July 21, 2016, the board of directors approved a $0.01 per share, or 4.3%, increase to the quarterly cash dividend on the Company’s common stock, bringing
 the quarterly cash dividend to $0.24 per common share. On July 20, 2017, the board of directors approved a $0.01 per share, or 4.2%, increase to the quarterly
 cash dividend on the Company’s common stock, bringing the quarterly cash dividend to $0.25 per common share.
 (11) The Medicare Access and CHIP Reauthorization Act of 2015 mandated a market basket update of +1.0% in 2018 for post-acute providers including rehabilitation
 hospitals as well as home health and hospice agencies.
 (12) The Company estimates the expected impact of each rule utilizing, among other things, the acuity of its patients over the 8-month (home health segment) to 12-
 month (inpatient rehabilitation segment) period prior to each rule’s release and incorporates other adjustments included in each rule. These estimates are prior to
 the impact of sequestration.
 (13) HealthSouth acquired an additional 30% equity interest in Fairlawn Rehabilitation Hospital in Worcester, MA from its joint venture partner. This transaction
 increased HealthSouth’s ownership interest from 50% to 80% and resulted in a change in accounting for this hospital from the equity method to a consolidated
 entity effective June 1, 2014.
 (14) Data provided by Uniform Data System for Medical Rehabilitation, a division of UB Foundation Activities, Inc., a data gathering and analysis organization for the
 rehabilitation industry; represents ~70% of industry, including HealthSouth sites
 Adjusted Free Cash Flow
 As Previously 
Reported
 Payroll Taxes Paid
 Reclassified to
 Financing Activities
 As Currently 
Reported
 Q1 2016 $ 129.5 $ 9.9 $ 139.4
 Q2 2016 115.3 — 115.3
 Q3 2016 139.8 — 139.8
 Q4 2016 78.3 1.7 80.0
 FY 2016 $ 462.9 $ 11.6 $ 474.5
 FY 2015 $ 389.0 $ 17.2 $ 406.2
 50
 End Notes, con’t.
 (15) Represents discharges from 124 consolidated hospitals in Q2 2017; 122 consolidated hospitals in Q1 2017 and Q4 2016; 121 consolidated hospitals in Q3 2016;
 120 consolidated hospitals in Q2 2016; and 121 consolidated hospitals in Q1 2016
 (16) Excludes approximately 430 full-time equivalents in the 2017 periods and approximately 420 full-time equivalents in the 2016 periods presented who are
 considered part of corporate overhead with their salaries and benefits included in general and administrative expenses in the Company’s consolidated statements
 of operations. Full-time equivalents included in the table represent HealthSouth employees who participate in or support the operations of the Company’s hospitals.
 (17) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of full-time equivalents, including an estimate of full-time equivalents from the
 utilization of contract labor, by the number of occupied beds during each period. The number of occupied beds is determined by multiplying the number of licensed
 beds by the Company’s occupancy percentage.
 (18) Represents home health admissions from 191 consolidated locations in Q2 2017; 191 consolidated locations in Q1 2017; 186 consolidated locations in Q4 2016;
 188 consolidated locations in Q3 2016; 187 consolidated locations in Q2 2016; and 184 consolidated locations in Q1 2016
 (19) Represents hospice admissions from 37 locations in Q2 2017; 35 locations in Q1 2017 and Q4 2016; 33 locations in Q3 2016; 29 locations in Q2 2016; and 27
 locations in Q1 2016 
(20) In March 2006, the Company completed the sale of 400,000 shares of its 6.5% Series A Convertible Perpetual Preferred Stock. In Q4 2013, the Company
 exchanged $320 million of newly issued 2.0% Convertible Senior Subordinated Notes due 2043 for 257,110 shares of its outstanding preferred stock. In April 2015,
 the Company exercised its rights to force conversion of all outstanding shares of its preferred stock. On the conversion date, each outstanding share of preferred
 stock was converted into 33.9905 shares of common stock, resulting in the issuance of 3,271,415 shares of common stock.
 (21) In November 2013, the Company closed separate, privately negotiated exchanges in which it issued $320 million of 2.0% Convertible Senior Subordinated Notes
 due 2043 in exchange for 257,110 shares of its 6.5% Series A Convertible Perpetual Preferred Stock. The Company recorded ~$249 million as debt and ~$71
 million as equity. In May 2017, the Company provided notice of its intent to redeem all $320 million of outstanding convertible notes. In lieu of receiving the
 redemption price, the holders had the right to convert their notes into shares of the Company’s common stock at a conversion rate of 27.2221 shares per $1,000
 principal amount of Notes, which rate was increased by a make-whole premium. In the aggregate, holders of $319.4 million in principal elected to convert, which
 resulted in the Company issuing 8,895,483 shares of common stock (approximately 8.6 million shares were previously included in the diluted share count). The
 remaining $0.6 million of principal was redeemed by cash payment.
 (22) The agreement to settle the Company’s class action securities litigation received final court approval in January 2007. The 5.0 million shares of common stock and
 warrants to purchase ~8.2 million shares of common stock at a strike price of $41.40 (expired January 17, 2017) related to this settlement were issued on
 September 30, 2009. The 5.0 million common shares are included in the basic outstanding shares. The warrants were not included in the diluted share count prior
 to 2015 because the strike price had historically been above the market price. In full-year 2016 and full-year 2014, zero shares related to the warrants were
 included in the diluted share count due to antidilution based on the stock price. In full-year 2015, 80,814 shares related to the warrants were included in the diluted
 share count using the treasury stock method.