|   | Delaware                 |   | 51-0265872                           |
|--------|--------------------------|--------|--------------------------------------|
|   | (State of Incorporation) |   | (I.R.S. Employer Identification No.) |

| Securities registered pursuant to Section 12(b) of the Act: |   | Name of exchange on which registered: |
|-------------------------------------------------------------|--------|---------------------------------------|
| Common Stock, par value $.01 per share                      |   | New York Stock Exchange               |

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| PART I   |                                                                                                              |
|----------|-------------------------------------------------------------------------------------------------------------------|
| Item 1.  | Business                                                                                                          |
| Item 1A. | Risk Factors                                                                                                      |
| Item 1B. | Unresolved Staff Comments                                                                                         |
| Item 2.  | Properties                                                                                                        |
| Item 3.  | Legal Proceedings                                                                                                 |
| Item 4.  | Submission of Matters to a Vote of Security Holders                                                               |
|     |                                                                                                              |
| PART II  |                                                                                                              |
| Item 5.  | Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities |
| Item 6.  | Selected Financial Data                                                                                           |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                       |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                        |
| Item 8.  | Financial Statements and Supplementary Data                                                                       |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              |
| Item 9A. | Controls and Procedures                                                                                           |
| Item 9B. | Other Information                                                                                                 |
|     |                                                                                                              |
| PART III |                                                                                                              |
| Item 10. | Directors, Executive Officers and Corporate Governance                                                            |
| Item 11. | Executive Compensation                                                                                            |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                    |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                         |
| Item 14. | Principal Accounting Fees and Services                                                                            |
|     |                                                                                                              |
| PART IV  |                                                                                                              |
| Item 15. | Exhibits and Financial Statement Schedules                                                                        |

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|  ITEM 1.  |  BUSINESS |
|---------------------|----------------|

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| Business Segments                                                                                         | Description of Service                                                                                                                                                                                                                                                                    | Benefits to Client                                                                                                                                                                                                                                         |
|-----------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                      |                                                                                                                                                                                                                                                                                      |
| Program Management Services:                                                                              |                                                                                                                                                                                                                                                                                      |
| Hospital Rehabilitation Services:                                                                         |                                                                                                                                                                                                                                                                                      |
| InpatientInpatient Rehabilitation Facilities:  Skilled Nursing Units (Subacute Rehabilitation): |  High acuity rehabilitation for conditions such as stroke, orthopedic conditions and head injuries. Lower intensity rehabilitation for medically complex patients with pulmonary conditions, stroke, cancer, heart failure, burns and wounds and other similar diagnoses.  |  Affords the client opportunities to retain and expand market share in the post-acute market by offering specialized clinical rehabilitation services to patients who might otherwise be discharged to a setting outside the client’s facility. |
| Outpatient                                                                                                | Outpatient therapy programs for hospital-based and satellite programs (primarily sports and work-related injuries).                                                                                                                                                                       | Helps bring patients into the client’s facility by providing specialized clinical programs and helps the client compete with freestanding clinics.                                                                                                   |
|                                                                                                      |                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                       |
| Skilled Nursing Rehabilitation Services:                                                                  |                                                                                                                                                                                                                                                                                      |
| Contract Therapy                                                                                          | Rehabilitation services in freestanding skilled nursing, long-term care and assisted living facilities for neurological, orthopedic and other medical conditions.                                                                                                                    | Affords the client the ability to fulfill the continuing need for therapists on a full-time or part-time basis. Offers the client a better opportunity to improve the quality of their programs.                                                      |
| Other                                                                                                     | Resident-centered consulting services and therapist and nurse staffing services for healthcare providers.                                                                                                                                                                                 | Provides management advisory services and solutions to healthcare providers.                                                                                                                                                                               |
| Hospitals:                                                                                                |                                                                                                                                                                                                                                                                                      |
| Long-Term Acute Care Hospitals (LTACHs)   Rehabilitation Hospitals                         | Provide high-level therapeutic and clinical care to patients with medically complex diagnoses generally with an average length of stay of 25 days or more. Provide intense interdisciplinary rehabilitation services to patients on an inpatient and outpatient basis.          |                                                                                                                                                                                                                                                       |
|                                                                                                      |

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|                 |   | Program Management Services |   |       |
|----------------------|--------|-----------------------------|--------|------------|
|                 |   | Inpatient                   |   |       |   |   |   |   |
|                 |   | Rehabilitation/             |   | Outpatient |   | Contract |   |   |
|                 |   | Skilled Nursing             |   | Therapy    |   | Therapy |   |   |
| Geographic Region    |   | Units                       |   | Programs   |   | Programs |   | Hospitals |
| Mountain Region      |   | 1/1                         |   | 1          |   | 52 |   | 1 |
| North Central Region |   | 37/1                        |   | 9          |   | 341 |   | 7 |
| Northeast Region     |   | 14/2                        |   | 5          |   | 143 |   | 2 |
| South Central Region |   | 30/0                        |   | 6          |   | 378 |   | 23 |
| Southeast Region     |   | 13/2                        |   | 9          |   | 147 |   | 1 |
| Western Region       |   | 9/5                         |   | 0          |   | 51 |   | 0 |
| Puerto Rico          |   | 1/0                         |   | 0          |   | 0 |   | 0 |
| Total                |   | 105/11                      |   | 30         |   | 1,112 |   | 34 |

|   | ·   | Improve Clinical Quality. Program managers focused on rehabilitation are able to develop and employ best practices, which benefit client facilities and their patients. |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase Volumes. Through the addition of specialty services such as IRFs within acute-care hospitals, patients who were being discharged to other venues for treatment can now remain in the hospital setting. This allows hospitals to capture revenues that would otherwise be realized by another provider. Upon discharge, patients can return for outpatient care, creating added revenues for the provider. New services also help hospitals attract new patients. The addition of a managed rehabilitation program helps skilled nursing facilities attract residents by broadening their scope of services. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Optimize Utilization of Space. Inpatient services help hospitals optimize physical plant space to treat patients who have specific diagnoses within the particular hospital’s targeted service lines. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase Cost Control. Because of their extensive experience in the service line, contract management companies can offer pricing structures that effectively control a healthcare provider’s financial risk related to the service provided. For hospitals and other providers that utilize program managers, the result is often lower average cost than that of self-managed programs. As a result, the facility is able to increase its revenues without having to increase administrative staff or incur other fixed costs. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Establish Agreements with Managed Care Organizations. Program managers often have the ability to improve clinical care by capturing and analyzing patient information from a large number of inpatient rehabilitation and skilled nursing units, which an individual hospital could not do on its own without a substantial investment in specialized systems. Becoming part of a managed care network helps the hospital attract physicians, and in turn, attract more patients to the hospital. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide Access to Capital.  Contract management companies, particularly those which have access to public markets, can in certain circumstances make capital available to their clients for adding programs and services like physical rehabilitative services or expanding existing programs when community needs dictate. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Obtain Reimbursement Advice. Contract management companies, like RehabCare, employ reimbursement specialists who are available to assist client facilities in interpreting complicated regulations within a given specialty — a highly valued service in the changing healthcare environment. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Obtain Clinical Resources and Expertise. Rehabilitation service providers have the ability to develop and implement clinical training and development programs that can provide best practices for clients. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Ensure Appropriate Levels of Staffing for Rehabilitation Professionals. Therapy staffing in both hospitals and skilled nursing settings presents unique challenges that can be better managed by a provider with a national recruiting presence. Program managers have the ability to more sharply focus on staffing levels in order to address the fluctuating clinical needs of the host facility. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1)   | Extension of the Medicare Part B therapy cap exceptions process. |
|----------------|------------------------------------------------------------------|

| 2)   | Extension of the LTACH provisions found in MMSEA (defined below). |
|----------------|-------------------------------------------------------------------|

| 3)   | Limitation on new physician owned hospitals and expansions. |
|----------------|-------------------------------------------------------------|

| 4)   | Incremental annual rate reductions for IRFs & LTACHs. |
|----------------|-----------------------------------------------------------|

| 5)   | Productivity adjustments for IRFs, LTACHs & skilled nursing facilities (“SNFs”). |
|----------------|--------------------------------------------------------------------------------------------------|

| 6)   | Pilot project on post-acute bundling & acute care re-admissions. |
|----------------|----------------------------------------------------------------------|

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|   | 2010 | 2011 | 2012-2013 | 2014 | 2015-2016 | 2017-2019 |
|--------|------|------|-----------|------|-----------|-----------|
| IRF    | 0.25 | 0.25 | 0.10      | 0.30 | 0.20      | 0.75      |
| LTACH  | 0.25 | 0.50 | 0.10      | 0.30 | 0.20      | 0.75      |
| SNF    | -    | -    | -         | -    | -         | -         |

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|  ITEM 1A.    |  RISK FACTORS |
|----------------------------------|--------------------|

| ·   | the attention of our management may be directed to transaction-related considerations and may be diverted from the day-to-day operations of our business and pursuit of our strategic initiatives; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our employees may experience uncertainty about their future roles with us, which might adversely affect our ability to retain and hire key managers and other employees; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | customers and suppliers may experience uncertainty about our future and seek alternative business relationships with third parties or seek to alter their business relationships with us. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | the current price of our common stock may reflect a market assumption that the Merger will occur, meaning that a failure to complete the Merger could result in a decline in the price of our common stock; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we may be required to pay a termination fee of $26 million if the Merger Agreement is terminated under certain circumstances, which would negatively affect our liquidity; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we expect to incur substantial transaction costs in connection with the Merger, whether or not it is completed; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | we would not realize any of the anticipated benefits of having completed the Merger. |
|--------------------|--------------------------------------------------------------------------------------|

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| ·   | facility and professional licensure; |
|--------------------|--------------------------------------|

| ·   | conduct of operations; |
|--------------------|------------------------|

| ·   | certain clinical procedures; |
|--------------------|------------------------------|

| ·   | addition of facilities and services, including certificates of need; |
|--------------------|----------------------------------------------------------------------|

| ·   | coding and billing for services; and |
|--------------------|--------------------------------------|

| ·   | payment for services. |
|--------------------|-----------------------|

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| ·   | difficulties integrating acquired personnel and distinct cultures into our business; |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | disagreements with our joint ownership partners; |
|--------------------|--------------------------------------------------|

| ·   | incomplete due diligence or misunderstanding as to the target company’s future prospects; |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | diversion of management attention and capital resources from existing operations; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | short-term (or longer lasting) dilution in the value of our shares; |
|--------------------|---------------------------------------------------------------------|

| ·   | over-paying for an acquired company or joint ownership entity due to incorrect analysis or because of competition from other companies for the same target; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | inability to achieve forecasted revenues, cost savings or other synergies; |
|--------------------|----------------------------------------------------------------------------|

| ·   | potential loss of key employees, customers or relationships; and |
|--------------------|------------------------------------------------------------------|

| ·   | assumption of liabilities and exposure to unforeseen liabilities of acquired or joint ownership companies, including liabilities for failure to comply with healthcare regulations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | result in our inability to comply with the financial and other restrictive covenants in our credit facilities; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | increase our vulnerability to adverse industry and general economic conditions; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | require us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, thereby reducing the availability of our cash flow for working capital, capital investments and other business activities; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limit our ability to obtain additional financing to fund future working capital, capital investments and other business activities; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limit our ability to refinance our indebtedness on terms that are commercially reasonable, or at all; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | expose us to the risk of interest rate fluctuations to the extent we pay interest at variable rates on the debt; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | limit our flexibility to plan for, and react to, changes in our business and our industry; and |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | place us at a competitive disadvantage relative to our less leveraged competitors. |
|--------------------|------------------------------------------------------------------------------------|

| ·   | incur or guarantee additional debt or issue certain preferred stock; |
|--------------------|----------------------------------------------------------------------|

| ·   | pay dividends or make distributions on our capital stock or certain subordinated debt or redeem, repurchase or retire our capital stock or certain subordinated debt; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | make certain investments; |
|--------------------|---------------------------|

| ·   | create liens on our or our subsidiaries’ assets; |
|--------------------|--------------------------------------------------------|

| ·   | make distributions from our joint ventures; |
|--------------------|---------------------------------------------|

| ·   | enter into transactions with affiliates; |
|--------------------|------------------------------------------|

| ·   | merge or consolidate with another person or sell or otherwise dispose of all or substantially all of our assets; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | enter into sales leaseback transactions; |
|--------------------|------------------------------------------|

| ·   | sell assets, including capital stock of our subsidiaries; |
|--------------------|-----------------------------------------------------------|

| ·   | alter the business that we conduct; and |
|--------------------|-----------------------------------------|

| ·   | change our fiscal year. |
|--------------------|-------------------------|

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|  ITEM 1B. |  UNRESOLVED STAFF COMMENTS |
|----------------|---------------------------------|

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|  ITEM 2. |  PROPERTIES |
|---------------|------------------|

|  ITEM 3.  |  LEGAL PROCEEDINGS |
|---------------------|-------------------------|

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|  ITEM 4. |  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
|---------------|-----------------------------------------------------------|

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|   | ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

|                  | 1/1/2006 |   | 12/31/2006 |   | 12/31/2007 |   | 12/31/2008 |   | 12/31/2009 |   | 12/31/2010 |
|-----------------------|----------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|
| RehabCare Group       | $100.00  |   | $73.51     |   | $111.68    |   | $75.05     |   | $150.64    |   | $117.33    |
| NYSE Market Index     | $100.00  |   | $120.47    |   | $131.15    |   | $79.67     |   | $102.20    |   | $115.88    |
| Health Care Providers | $100.00  |   | $98.43     |   | $117.33    |   | $63.74     |   | $86.58     |   | $95.51     |

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| Calendar Quarter | 1st  | 2nd     | 3rd   | 4th     |
|------------------|------|---------|-------|---------|
| 2010             | High | $  | 34.19 | $  | 31.52 | $  | 22.21 | $  | 23.77 |
|             | Low  |    | 25.10 |    | 21.78 |   | 16.25 |   | 18.89 |
| 2009             | High | $  | 18.75 | $  | 23.93 | $  | 25.65 | $  | 31.29 |
|             | Low  |    | 12.45 |    | 16.04 |   | 20.63 |   | 18.75 |

|  ITEM 6. |  SELECTED FINANCIAL DATA |
|---------------|-------------------------------|

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| SIX-YEAR FINANCIAL SUMMARY                  |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
|---------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| Dollars in thousands, except per share data |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| (Year ended December 31,)                   |   | 2010      |   |   |   | 2009      |   |   |   | 2008    |   |   |   | 2007    |   |   |   | 2006    |   |   |   | 2005     |   |
| Consolidated statement of earnings data:    |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Operating revenues                          | $      | 1,329,443 |   |   | $      | 848,612   |   |   | $      | 714,030 |   |   | $      | 675,600 |   |   | $      | 585,923 |   |   | $      | 438,048  |   |
| Operating earnings                          |   | 133,559   |   |   |   | 40,920    |   |   |   | 28,299  |   |   |   | 24,861  |   |   |   | 19,758  |   |   |   | 32,489   |   |
| Amounts attributable to RehabCare: (2)      |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Earnings (loss) from continuing operations  | $      | 61,213    |   |   | $      | 21,590    |   |   | $      | 16,711  |   |   | $      | 11,402  |   |   | $      | 6,500   |   |   | $      | (17,447) |   |
| Basic EPS from continuing operations        | $      | 2.53      |   |   | $      | 1.17      |   |   | $      | 0.95    |   |   | $      | 0.66    |   |   | $      | 0.38    |   |   | $      | (1.04)   |   |
| Diluted EPS from continuing operations      | $      | 2.48      |   |   | $      | 1.14      |   |   | $      | 0.94    |   |   | $      | 0.65    |   |   | $      | 0.38    |   |   | $      | (1.04)   |   |
| Weighted average shares outstanding (000s): |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Basic                                       |   | 24,231    |   |   |   | 18,481    |   |   |   | 17,583  |   |   |   | 17,226  |   |   |   | 17,008  |   |   |   | 16,751   |   |
| Diluted                                     |   | 24,706    |   |   |   | 18,862    |   |   |   | 17,798  |   |   |   | 17,459  |   |   |   | 17,243  |   |   |   | 16,751   |   |
|                                        |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Consolidated balance sheet data:            |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Working capital                             | $      | 117,613   |   |   | $      | 110,882   |   |   | $      | 97,284  |   |   | $      | 80,285  |   |   | $      | 85,982  |   |   | $      | 60,664   |   |
| Total assets                                |   | 1,126,569 |   |   |   | 1,109,980 |   |   |   | 438,406 |   |   |   | 408,560 |   |   |   | 428,296 |   |   |   | 272,925  |   |
| Total liabilities                           |   | 605,586   |   |   |   | 650,360   |   |   |   | 160,606 |   |   |   | 163,271 |   |   |   | 217,431 |   |   |   | 74,677   |   |
| Total equity                                |   | 520,983   |   |   |   | 459,620   |   |   |   | 277,800 |   |   |   | 245,289 |   |   |   | 210,865 |   |   |   | 198,248  |   |
|                                        |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Financial statistics:                       |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Operating margin                            |   | 10.0%     |   |   |   | 4.8%      |   |   |   | 4.0%    |   |   |   | 3.7%    |   |   |   | 3.4%    |   |   |   | 7.4%     |   |
| Net margin (2)                              |   | 4.6%      |   |   |   | 2.5%      |   |   |   | 2.3%    |   |   |   | 1.7%    |   |   |   | 1.1%    |   |   |   | (4.0)%   |   |
| Current ratio                               |   | 1.7:1     |   |   |   | 1.7:1     |   |   |   | 2.1:1   |   |   |   | 1.9:1   |   |   |   | 1.9:1   |   |   |   | 1.9:1    |   |
| Diluted EPS growth rate (2)                 |   | 117.5%    |   |   |   | 21.3%     |   |   |   | 44.6%   |   |   |   | 71.1%   |   |   |   | 136.5%  |   |   |   | (176.5)% |   |
| Return on equity (1) (2)                    |   | 12.5%     |   |   |   | 5.9%      |   |   |   | 6.4%    |   |   |   | 5.0%    |   |   |   | 3.2%    |   |   |   | (8.6)%   |   |
|                                        |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Operating statistics:                       |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Hospitals:                                  |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Number of hospitals at end of year (3)      |   | 34        |   |   |   | 33        |   |   |   | 10      |   |   |   | 7       |   |   |   | 6       |   |   |   | 4        |   |
| Number of patient discharges (3)            |   | 17,984    |   |   |   | 7,054     |   |   |   | 4,620   |   |   |   | 3,946   |   |   |   | 2,640   |   |   |   | 732      |   |
| Program management:                         |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Inpatient units:                            |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Average number of programs                  |   | 116       |   |   |   | 121       |   |   |   | 122     |   |   |   | 127     |   |   |   | 137     |   |   |   | 145      |   |
| Average admissions per program              |   | 396       |   |   |   | 393       |   |   |   | 377     |   |   |   | 363     |   |   |   | 360     |   |   |   | 372      |   |
| Outpatient programs:                        |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Average number of locations                 |   | 31        |   |   |   | 35        |   |   |   | 33      |   |   |   | 35      |   |   |   | 41      |   |   |   | 42       |   |
| Patient visits (000s)                       |   | 1,078     |   |   |   | 1,264     |   |   |   | 983     |   |   |   | 1,006   |   |   |   | 1,130   |   |   |   | 1,146    |   |
| Contract therapy:                           |   |      |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |     |   |
| Average number of locations (4)             |   | 1,135     |   |   |   | 1,088     |   |   |   | 1,066   |   |   |   | 1,125   |   |   |   | 1,018   |   |   |   | 749      |   |

| (1) | Based on average of beginning and ending equity. |
|-----|--------------------------------------------------|

| (2) | The results for 2005 include after tax losses on our equity investment in InteliStaf Holdings, Inc. of $36.5 million or $2.18 per diluted share. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | We entered the freestanding hospitals business on August 1, 2005 with the acquisition of substantially all of the operating assets of MeadowBrook Healthcare, Inc.  Effective November 24, 2009, we acquired Triumph HealthCare Holdings, Inc., which added 20 long-term acute care hospitals to our portfolio of hospitals. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Effective July 1, 2006, we acquired Symphony Health Services, LLC and its RehabWorks business, which added 470 contract therapy locations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

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| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

|                                    | Year Ended December 31, |
|-----------------------------------------|------------------------------|
|                                    |                         | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                    | (in thousands)               |
| Revenues:                               |                         |   |   |   |   |   |   |   |   |
| Program management:                     |                         |   |   |   |   |   |   |   |   |
| Skilled nursing rehabilitation services | $                            | 516,278 |   | $ | 496,250 |   | $ | 457,229 |   |
| Hospital rehabilitation services        |                         | 180,009 |   |   | 178,168 |   |   | 165,658 |   |
| Program management total                |                         | 696,287 |   |   | 674,418 |   |   | 622,887 |   |
| Hospitals                               |                         | 633,156 |   |   | 174,194 |   |   | 91,143 |   |
| Total                                   | $                            | 1,329,443 |   | $ | 848,612 |   | $ | 714,030 |   |
|                                    |                         |   |   |   |   |   |   |   |   |
| Operating Earnings (Loss):              |                         |   |   |   |   |   |   |   |   |
| Program management:                     |                         |   |   |   |   |   |   |   |   |
| Skilled nursing rehabilitation services | $                            | 39,184 |   | $ | 37,753 |   | $ | 25,544 |   |
| Hospital rehabilitation services        |                         | 32,925 |   |   | 29,487 |   |   | 21,997 |   |
| Program management total                |                         | 72,109 |   |   | 67,240 |   |   | 47,541 |   |
| Hospitals (1)                           |                         | 61,450 |   |   | (26,066 | ) |   | (18,511 | ) |
| Unallocated corporate expenses (2)      |                         | — |   |   | (254 | ) |   | (731 | ) |
| Total                                   | $                            | 133,559 |   | $ | 40,920 |   | $ | 28,299 |   |

|   | (1) | The 2009 operating earnings of hospitals include $7.2 million of acquisition-related expenses for costs directly related to the acquisition of Triumph including fees for legal, accounting, advisory and other outside services. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Represents general corporate overhead costs associated with Phase 2 Consulting, Inc., which was sold on June 1, 2009. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------|

----

|                      | Year Ended December 31, |
|---------------------------|------------------------------|
|                      | 2010                         |   | 2009 |   | 2008 |
| Medicare                  |                         | 69.5 | % |   | 69.1 | % |   | 75.9 | % |
| Medicaid                  |                         | 1.2 |   |   | 2.1 |   |   | 0.7 |   |
| Other third party payors  |                         | 28.8 |   |   | 27.9 |   |   | 22.3 |   |
| Self-pay                  |                         | 0.1 |   |   | 0.1 |   |   | 0.5 |   |
| Total net patient revenue |                         | 99.6 |   |   | 99.2 |   |   | 99.4 |   |
| Other revenue             |                         | 0.4 |   |   | 0.8 |   |   | 0.6 |   |
|                      |                         | 100.0 | % |   | 100.0 | % |   | 100.0 | % |

----

|                                                       | Year Ended December 31, |
|------------------------------------------------------------|------------------------------|
|                                                       | 2010                         |   | 2009 |   | 2008 |
| Operating revenues                                         |                         | 100.0 | % |   | 100.0 | % |   | 100.0 | % |
| Cost and expenses:                                         |                         |   |   |   |   |   |   |   |   |
| Operating                                                  |                         | 79.5 |   |   | 80.7 |   |   | 81.1 |   |
| Selling, general and administrative                        |                         | 8.2 |   |   | 12.6 |   |   | 12.9 |   |
| Depreciation and amortization                              |                         | 2.3 |   |   | 1.9 |   |   | 2.0 |   |
| Operating earnings                                         |                         | 10.0 |   |   | 4.8 |   |   | 4.0 |   |
| Interest expense                                           |                         | (2.5 | ) |   | (0.7 | ) |   | (0.6 | ) |
| Equity in net income of affiliate                          |                         | 0.1 |   |   | 0.1 |   |   | 0.1 |   |
| Earnings from continuing operations before income taxes    |                         | 7.6 |   |   | 4.2 |   |   | 3.5 |   |
| Income taxes                                               |                         | 2.7 |   |   | 1.9 |   |   | 1.4 |   |
| Earnings from continuing operations, net of tax            |                         | 4.9 |   |   | 2.3 |   |   | 2.1 |   |
| Gain from discontinued operations, net of tax              |                         | 0.1 |   |   | 0.2 |   |   | 0.2 |   |
| Net earnings                                               |                         | 5.0 |   |   | 2.5 |   |   | 2.3 |   |
| Net (income) loss attributable to noncontrolling interests |                         | (0.3 | ) |   | 0.2 |   |   | 0.3 |   |
| Net earnings attributable to RehabCare                     |                         | 4.7 | % |   | 2.7 | % |   | 2.6 | % |

| Revenues                                |   |                   |   |   |     |   |   |   |
|-----------------------------------------|--------|------------------------|--------|--------|----------|--------|--------|--------|
|                                    | 2010   |                   | 2009   |   | % Change |
|                                    |   | (dollars in thousands) |
|                                    |   |                   |   |   |     |   |   |   |
| Skilled nursing rehabilitation services | $      | 516,278                |   | $      | 496,250  |   | 4.0    | %      |
| Hospital rehabilitation services        |   | 180,009                |   |   | 178,168  |   | 1.0    |   |
| Hospitals                               |   | 633,156                |   |   | 174,194  |   | 263.5  |   |
| Consolidated revenues                   | $      | 1,329,443              |   | $      | 848,612  |   | 56.7   | %      |

----

| Cost and Expenses                   |                   |      |   |    |   |   |   |   |    |    |   |   |   |   |
|-------------------------------------|------------------------|-----------|--------|---------|--------|--------|--------|--------|---------|---------|--------|--------|--------|--------|
|                                |                   |      |   |    | % of   |   |   |   |    |    |   |   | % of   |   |
|                                |                   | 2010      |   | Revenue |   |   | 2009   |   |    | Revenue |
|                                | (dollars in thousands) |
| Consolidated costs and expenses:    |                   |      |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                  | $                      | 1,056,671 |   |    | 79.5   | %      |   | $      | 684,312 |    |   |   | 80.7   | %      |
| Selling, general and administrative |                   | 108,618   |   |    | 8.2    |   |   |   | 107,130 |    |   |   | 12.6   |   |
| Depreciation and amortization       |                   | 30,595    |   |    | 2.3    |   |   |   | 16,250  |    |   |   | 1.9    |   |
| Total costs and expenses            | $                      | 1,195,884 |   |    | 90.0   | %      |   | $      | 807,692 |    |   |   | 95.2   | %      |

----

|                                     |                   |    |   |    | % of   |   |   |   |    |    |   |   | % of   |   |
|------------------------------------------|------------------------|---------|--------|---------|--------|--------|--------|--------|---------|---------|--------|--------|--------|--------|
|                                     |                   |    |   | Unit    |   |   |   |   |    | Unit    |
|                                     |                   | 2010    |   | Revenue |   |   | 2009   |   |    | Revenue |
|                                     | (dollars in thousands) |
| Skilled Nursing Rehabilitation Services: |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 423,399 |   |    | 82.0   | %      |   | $      | 402,461 |    |   |   | 81.1   | %      |
| Selling, general and administrative      |                   | 48,172  |   |    | 9.3    |   |   |   | 49,753  |    |   |   | 10.0   |   |
| Depreciation and amortization            |                   | 5,523   |   |    | 1.1    |   |   |   | 6,283   |    |   |   | 1.3    |   |
| Total costs and expenses                 | $                      | 477,094 |   |    | 92.4   | %      |   | $      | 458,497 |    |   |   | 92.4   | %      |
| Hospital Rehabilitation Services:        |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 127,550 |   |    | 70.9   | %      |   | $      | 124,758 |    |   |   | 70.0   | %      |
| Selling, general and administrative      |                   | 17,312  |   |    | 9.6    |   |   |   | 21,500  |    |   |   | 12.1   |   |
| Depreciation and amortization            |                   | 2,222   |   |    | 1.2    |   |   |   | 2,423   |    |   |   | 1.3    |   |
| Total costs and expenses                 | $                      | 147,084 |   |    | 81.7   | %      |   | $      | 148,681 |    |   |   | 83.4   | %      |
| Hospitals:                               |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 505,722 |   |    | 79.9   | %      |   | $      | 157,093 |    |   |   | 90.2   | %      |
| Selling, general and administrative      |                   | 43,134  |   |    | 6.8    |   |   |   | 35,623  |    |   |   | 20.5   |   |
| Depreciation and amortization            |                   | 22,850  |   |    | 3.6    |   |   |   | 7,544   |    |   |   | 4.3    |   |
| Total costs and expenses                 | $                      | 571,706 |   |    | 90.3   | %      |   | $      | 200,260 |    |   |   | 115.0  | %      |
|                                     |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |

----

----

| Revenues                                |   |                   |   |   |     |   |   |   |   |
|-----------------------------------------|--------|------------------------|--------|--------|----------|--------|--------|--------|--------|
|                                    | 2009   |                   | 2008   |   | % Change |
|                                    |   | (dollars in thousands) |   |
|                                    |   |                   |   |   |     |   |   |   |   |
| Skilled nursing rehabilitation services | $      | 496,250                |   | $      | 457,229  |   | 8.5    | %      |   |
| Hospital rehabilitation services        |   | 178,168                |   |   | 165,658  |   | 7.6    |   |   |
| Hospitals                               |   | 174,194                |   |   | 91,143   |   | 91.1   |   |   |
| Consolidated revenues                   | $      | 848,612                |   | $      | 714,030  |   | 18.8   | %      |   |

| Cost and Expenses                   |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
|-------------------------------------|------------------------|---------|--------|---------|--------|--------|--------|--------|---------|---------|--------|--------|--------|--------|
|                                |                   |    |   |    | % of   |   |   |   |    |    |   |   | % of   |   |
|                                |                   | 2009    |   | Revenue |   |   | 2008   |   |    | Revenue |
|                                | (dollars in thousands) |
| Consolidated costs and expenses:    |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                  | $                      | 684,312 |   |    | 80.7   | %      |   | $      | 579,179 |    |   |   | 81.1   | %      |
| Selling, general and administrative |                   | 107,130 |   |    | 12.6   |   |   |   | 92,177  |    |   |   | 12.9   |   |
| Depreciation and amortization       |                   | 16,250  |   |    | 1.9    |   |   |   | 14,375  |    |   |   | 2.0    |   |
| Total costs and expenses            | $                      | 807,692 |   |    | 95.2   | %      |   | $      | 685,731 |    |   |   | 96.0   | %      |

----

|                                     |                   |    |   |    | % of   |   |   |   |    |    |   |   | % of   |   |
|------------------------------------------|------------------------|---------|--------|---------|--------|--------|--------|--------|---------|---------|--------|--------|--------|--------|
|                                     |                   |    |   | Unit    |   |   |   |   |    | Unit    |
|                                     |                   | 2009    |   | Revenue |   |   | 2008   |   |    | Revenue |
|                                     | (dollars in thousands) |
| Skilled Nursing Rehabilitation Services: |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 402,461 |   |    | 81.1   | %      |   | $      | 373,939 |    |   |   | 81.8   | %      |
| Selling, general and administrative      |                   | 49,753  |   |    | 10.0   |   |   |   | 50,911  |    |   |   | 11.1   |   |
| Depreciation and amortization            |                   | 6,283   |   |    | 1.3    |   |   |   | 6,835   |    |   |   | 1.5    |   |
| Total costs and expenses                 | $                      | 458,497 |   |    | 92.4   | %      |   | $      | 431,685 |    |   |   | 94.4   | %      |
| Hospital Rehabilitation Services:        |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 124,758 |   |    | 70.0   | %      |   | $      | 118,291 |    |   |   | 71.4   | %      |
| Selling, general and administrative      |                   | 21,500  |   |    | 12.1   |   |   |   | 22,729  |    |   |   | 13.7   |   |
| Depreciation and amortization            |                   | 2,423   |   |    | 1.3    |   |   |   | 2,641   |    |   |   | 1.6    |   |
| Total costs and expenses                 | $                      | 148,681 |   |    | 83.4   | %      |   | $      | 143,661 |    |   |   | 86.7   | %      |
| Hospitals:                               |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |
| Operating expenses                       | $                      | 157,093 |   |    | 90.2   | %      |   | $      | 86,949  |    |   |   | 95.4   | %      |
| Selling, general and administrative      |                   | 35,623  |   |    | 20.5   |   |   |   | 17,806  |    |   |   | 19.5   |   |
| Depreciation and amortization            |                   | 7,544   |   |    | 4.3    |   |   |   | 4,899   |    |   |   | 5.4    |   |
| Total costs and expenses                 | $                      | 200,260 |   |    | 115.0  | %      |   | $      | 109,654 |    |   |   | 120.3  | %      |
|                                     |                   |    |   |    |   |   |   |   |    |    |   |   |   |   |

----

----

----

----

|                                                   |   |   |      |   | Less than |    | 2-3    |   | 4-5     |    | More than |    |   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|-----------|---------|--------|--------|---------|---------|-----------|---------|--------|--------|
|                                                   |   | Total  |      | 1 year |      | years   |   | years  |    | 5 years |      | Other   |
| Operating leases (1)                                   |   | $      | 483,600   |   | $         | 32,154  |   | $      | 73,601  |    | $         | 73,469  |   | $      | 304,376 |   | $ | — |
| Purchase obligations (2)                               |   |   | 3,620     |   |      | 1,158   |   |   | 2,462   |    |      | — |   |   | — |   |   | — |
| Long-term debt including capital lease obligations (3) |   |   | 398,479   |   |      | 9,116   |   |   | 13,405  |    |      | 375,958 |   |   | — |   |   | — |
| Interest on long-term debt (4)                         |   |   | 111,690   |   |      | 23,737  |   |   | 45,787  |    |      | 42,166  |   |   | — |   |   | — |
| Unrecognized tax benefits (5)                          |   |   | 1,532     |   |      | — |   |   | — |    |      | — |   |   | — |   |   | 1,532 |
| Other long-term liabilities (6)                        |   |   | 3,958     |   |      | — |   |   | — |    |      | — |   |   | — |   |   | 3,958 |
| Total                                                  |   | $      | 1,002,879 |   | $         | 66,165  |   | $      | 135,255 |    | $         | 491,593 |   | $      | 304,376 |   | $ | 5,490 |

| (1) | We lease many of our facilities under non-cancelable operating leases in the normal course of business.  Some lease agreements provide us with the option to renew the lease. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease agreements. For more information, see Note 13 to our accompanying consolidated financial statements. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. Purchase obligations exclude agreements that are cancelable without penalty. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The amount of long-term debt reported on our consolidated balance sheet at December 31, 2010 includes unamortized original issue discounts of approximately $7,591,000. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Interest on our variable rate debt is estimated using the rate in effect as of December 31, 2010.  This line also includes interest related to capital lease obligations, but excludes the amortization of original issue discounts and the amortization of deferred loan fees. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Represents our total liability for unrecognized tax benefits based on the guidance in the Financial Accounting Standards Board’s Accounting Standards Codification Topic 740, “Income Taxes.”  There is a high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities, which involve various taxing authorities.  As a result, we are unable to predict the timing of payments against this obligation. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | We maintain a nonqualified deferred compensation plan for certain employees. Under the plan, participants may defer up to 70% of their salary and cash incentive compensation. The amounts are held in trust in investments designated by participants but remain our property until distribution. Because most distributions of funds are tied to the termination of employment or retirement of participants, we are not able to predict the timing of payments against this obligation.  At December 31, 2010, we owned trust assets with a value approximately equal to the total amount of this obligation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|  ITEM 7A.  |  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------------------|------------------------------------------------------------------|

----

----

|  ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------------|---------------------------------------------|

|                                                          |   |
|---------------------------------------------------------------|--------|
| Report of Independent Registered Public Accounting Firm       | 50     |
|                                                          |   |
| Consolidated Balance Sheets as of December 31, 2010 and 2009  | 52     |
|                                                          |   |
| Consolidated Statements of Earnings for the years             |   |
| ended December 31, 2010, 2009 and 2008                        | 53     |
|                                                          |   |
| Consolidated Statements of Comprehensive Income for the years |   |
| ended December 31, 2010, 2009 and 2008                        | 54     |
|                                                          |   |
| Consolidated Statements of Changes in Equity for the years    |   |
| ended December 31, 2010, 2009 and 2008                        | 55     |
|                                                          |   |
| Consolidated Statements of Cash Flows for the years           |   |
| ended December 31, 2010, 2009 and 2008                        | 56     |
|                                                          |   |
| Notes to the Consolidated Financial Statements                | 57     |

----

----

----

|                                                                                                                                                      |   | December 31, |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|
| Assets                                                                                                                                                    |   | 2010         |      | 2009 |   |
| Current assets:                                                                                                                                           |   |         |      |   |   |   |   |
| Cash and cash equivalents                                                                                                                                 |   | $            | 23,205    |   | $ | 24,690 |   |
| Accounts receivable, net of allowance for doubtful accounts of $24,273 and $24,729, respectively                                                          |   |         | 222,179   |   |   | 199,447 |   |
| Deferred tax assets                                                                                                                                       |   |         | 21,034    |   |   | 21,249 |   |
| Other current assets                                                                                                                                      |   |         | 14,559    |   |   | 17,116 |   |
| Total current assets                                                                                                                                      |   |         | 280,977   |   |   | 262,502 |   |
| Marketable securities, trading                                                                                                                            |   |         | 3,965     |   |   | 3,314 |   |
| Property and equipment, net                                                                                                                               |   |         | 119,591   |   |   | 111,814 |   |
| Goodwill                                                                                                                                                  |   |         | 559,866   |   |   | 568,492 |   |
| Intangible assets, net                                                                                                                                    |   |         | 127,227   |   |   | 135,406 |   |
| Assets held for sale                                                                                                                                      |   |         | 10,407    |   |   | — |   |
| Investment in unconsolidated affiliate                                                                                                                    |   |         | 4,913     |   |   | 4,761 |   |
| Other                                                                                                                                                     |   |         | 19,623    |   |   | 23,691 |   |
| Total assets                                                                                                                                              |   | $            | 1,126,569 |   | $ | 1,109,980 |   |
|                                                                                                                                                      |   |         |      |   |   |   |   |
| Liabilities and Equity                                                                                                                                    |   |         |      |   |   |   |   |
| Current liabilities:                                                                                                                                      |   |         |      |   |   |   |   |
| Current portion of long-term debt                                                                                                                         |   | $            | 9,116     |   | $ | 7,507 |   |
| Accounts payable                                                                                                                                          |   |         | 16,440    |   |   | 14,615 |   |
| Accrued salaries and wages                                                                                                                                |   |         | 78,863    |   |   | 80,138 |   |
| Income taxes payable                                                                                                                                      |   |         | 2,906     |   |   | 97 |   |
| Accrued expenses                                                                                                                                          |   |         | 56,039    |   |   | 49,263 |   |
| Total current liabilities                                                                                                                                 |   |         | 163,364   |   |   | 151,620 |   |
| Long-term debt, less current portion                                                                                                                      |   |         | 381,772   |   |   | 447,760 |   |
| Deferred compensation                                                                                                                                     |   |         | 3,958     |   |   | 3,352 |   |
| Deferred tax liabilities                                                                                                                                  |   |         | 54,755    |   |   | 45,605 |   |
| Other                                                                                                                                                     |   |         | 1,737     |   |   | 2,023 |   |
| Total liabilities                                                                                                                                         |   |         | 605,586   |   |   | 650,360 |   |
|                                                                                                                                                      |   |         |      |   |   |   |   |
| Stockholders’ equity:                                                                                                                               |   |         |      |   |   |   |   |
| Preferred stock, $.10 par value; authorized 10,000,000 shares, none issued and outstanding                                                                |   |         | —   |   |   | — |   |
| Common stock, $.01 par value; authorized 60,000,000 shares, issued 28,304,789 shares and 28,036,014 shares as of December 31, 2010 and 2009, respectively |   |         | 283       |   |   | 280 |   |
| Additional paid-in capital                                                                                                                                |   |         | 292,078   |   |   | 291,771 |   |
| Retained earnings                                                                                                                                         |   |         | 262,441   |   |   | 199,991 |   |
| Less common stock held in treasury at cost; 4,002,898 shares as of December 31, 2010 and 2009                                                             |   |         | (54,704   | ) |   | (54,704 | ) |
| Total stockholders’ equity                                                                                                                          |   |         | 500,098   |   |   | 437,338 |   |
| Noncontrolling interests                                                                                                                                  |   |         | 20,885    |   |   | 22,282 |   |
| Total equity                                                                                                                                              |   |         | 520,983   |   |   | 459,620 |   |
| Total liabilities and equity                                                                                                                              |   | $            | 1,126,569 |   | $ | 1,109,980 |   |

----

|                                                         |   |   | Year Ended December 31, |   |
|--------------------------------------------------------------|--------|--------|-------------------------|--------|
|                                                         |   |   | 2010                    |   |   |   | 2009 |   |   |   | 2008 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Operating revenues                                           |   | $      | 1,329,443               |   |   | $ | 848,612 |   |   | $ | 714,030 |   |
| Costs and expenses:                                          |   |   |                    |   |   |   |   |   |   |   |   |   |
| Operating                                                    |   |   | 1,056,671               |   |   |   | 684,312 |   |   |   | 579,179 |   |
| Selling, general and administrative                          |   |   | 108,618                 |   |   |   | 107,130 |   |   |   | 92,177 |   |
| Depreciation and amortization                                |   |   | 30,595                  |   |   |   | 16,250 |   |   |   | 14,375 |   |
| Total costs and expenses                                     |   |   | 1,195,884               |   |   |   | 807,692 |   |   |   | 685,731 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Operating earnings                                           |   |   | 133,559                 |   |   |   | 40,920 |   |   |   | 28,299 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Interest income                                              |   |   | 98                      |   |   |   | 98 |   |   |   | 143 |   |
| Interest expense                                             |   |   | (33,167                 | )      |   |   | (5,546 | ) |   |   | (3,897 | ) |
| Other income                                                 |   |   | 319                     |   |   |   | 12 |   |   |   | 21 |   |
| Equity in net income of affiliate                            |   |   | 640                     |   |   |   | 431 |   |   |   | 471 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations before income taxes      |   |   | 101,449                 |   |   |   | 35,915 |   |   |   | 25,037 |   |
| Income taxes                                                 |   |   | 36,559                  |   |   |   | 16,291 |   |   |   | 10,312 |   |
| Earnings from continuing operations, net of tax              |   |   | 64,890                  |   |   |   | 19,624 |   |   |   | 14,725 |   |
| Gain from discontinued operations, net of tax                |   |   | 1,237                   |   |   |   | 1,365 |   |   |   | 1,994 |   |
| Net earnings                                                 |   |   | 66,127                  |   |   |   | 20,989 |   |   |   | 16,719 |   |
| Net (earnings) loss attributable to noncontrolling interests |   |   | (3,677                  | )      |   |   | 1,966 |   |   |   | 1,986 |   |
| Net earnings attributable to RehabCare                       |   | $      | 62,450                  |   |   | $ | 22,955 |   |   | $ | 18,705 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Amounts attributable to RehabCare stockholders:              |   |   |                    |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax              |   | $      | 61,213                  |   |   | $ | 21,590 |   |   | $ | 16,711 |   |
| Gain from discontinued operations, net of tax                |   |   | 1,237                   |   |   |   | 1,365 |   |   |   | 1,994 |   |
| Net earnings                                                 |   | $      | 62,450                  |   |   | $ | 22,955 |   |   | $ | 18,705 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Basic earnings per share attributable to RehabCare:          |   |   |                    |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax              |   | $      | 2.53                    |   |   | $ | 1.17 |   |   | $ | 0.95 |   |
| Gain from discontinued operations, net of tax                |   |   | 0.05                    |   |   |   | 0.07 |   |   |   | 0.11 |   |
| Net earnings                                                 |   | $      | 2.58                    |   |   | $ | 1.24 |   |   | $ | 1.06 |   |
|                                                         |   |   |                    |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share attributable to RehabCare:        |   |   |                    |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax              |   | $      | 2.48                    |   |   | $ | 1.14 |   |   | $ | 0.94 |   |
| Gain from discontinued operations, net of tax                |   |   | 0.05                    |   |   |   | 0.08 |   |   |   | 0.11 |   |
| Net earnings                                                 |   | $      | 2.53                    |   |   | $ | 1.22 |   |   | $ | 1.05 |   |

----

|                                                                                                                                              |   |   | Year Ended December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------|--------|
|                                                                                                                                              |   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Net earnings                                                                                                                                      |   | $      | 66,127                  |   | $ | 20,989 |   | $ | 16,719 |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                                                                                                    |   |   |                    |   |   |   |   |   |   |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Changes in the fair value of derivative designated as a cash flow hedge, net of income tax expense (benefit) of $0, $267 and $(226), respectively |   |   | —                 |   |   | 424 |   |   | (358 | ) |
| Total other comprehensive income (loss), net of tax                                                                                               |   |   | —                 |   |   | 424 |   |   | (358 | ) |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Comprehensive income                                                                                                                              |   |   | 66,127                  |   |   | 21,413 |   |   | 16,361 |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Comprehensive (income) loss attributable to noncontrolling interests                                                                              |   |   | (3,677                  | )      |   | 1,966 |   |   | 1,986 |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |
| Comprehensive income attributable to RehabCare                                                                                                    |   | $      | 62,450                  |   | $ | 23,379 |   | $ | 18,347 |   |
|                                                                                                                                              |   |   |                    |   |   |   |   |   |   |   |

----

|                                                            | Amounts Attributable to RehabCare Stockholders |    |       |   |     |   |
|-----------------------------------------------------------------|------------------------------------------------|---------|------------|--------|----------|--------|
|                                                            |                                           |    |       |   |     |   |   |   | Accumulated |   |   |   |   |   |
|                                                            |                                           |    | Additional |   |     |   |   |   | other |   | Non- |   |   |   |
|                                                            | Common                                         |    | paid-in    |   | Retained |   | Treasury |   | comprehensive |   | controlling |   | Total |   |
|                                                            | stock                                          |    | capital    |   | earnings |   | stock |   | earnings (loss) |   | interests |   | equity |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2007                                      | $                                              | 215     |       | $      | 140,246  |   | $ | 158,331 |   | $ | (54,704 | ) | $ | (66 | ) | $ | 1,267 |   | $ | 245,289 |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                             |                                           | — |       |   | —  |   |   | 18,705 |   |   | — |   |   | — |   |   | (1,986 | ) |   | 16,719 |   |
| Changes in the fair value of derivative, net of tax             |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | (358 | ) |   | — |   |   | (358 | ) |
| Stock-based compensation                                        |                                           | — |       |   | 3,195    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 3,195 |   |
| Activity under stock plans                                      |                                           | 2       |       |   | 2,206    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 2,208 |   |
| Contributions made by noncontrolling interests                  |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | 10,747 |   |   | 10,747 |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                      |                                           | 217     |       |   | 145,647  |   |   | 177,036 |   |   | (54,704 | ) |   | (424 | ) |   | 10,028 |   |   | 277,800 |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                             |                                           | — |       |   | —  |   |   | 22,955 |   |   | — |   |   | — |   |   | (1,966 | ) |   | 20,989 |   |
| Changes in the fair value of derivative, net of tax             |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | 424 |   |   | — |   |   | 424 |   |
| Sale of common stock                                            |                                           | 62      |       |   | 140,187  |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 140,249 |   |
| Stock-based compensation                                        |                                           | — |       |   | 4,662    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 4,662 |   |
| Activity under stock plans                                      |                                           | 1       |       |   | 1,275    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 1,276 |   |
| Business combinations                                           |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | 11,591 |   |   | 11,591 |   |
| Contributions made by noncontrolling interests                  |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | 4,423 |   |   | 4,423 |   |
| Distributions to noncontrolling interests                       |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | (1,794 | ) |   | (1,794 | ) |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                      |                                           | 280     |       |   | 291,771  |   |   | 199,991 |   |   | (54,704 | ) |   | — |   |   | 22,282 |   |   | 459,620 |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings                                                    |                                           | — |       |   | —  |   |   | 62,450 |   |   | — |   |   | — |   |   | 3,677 |   |   | 66,127 |   |
| Stock-based compensation                                        |                                           | — |       |   | 3,940    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 3,940 |   |
| Activity under stock plans                                      |                                           | 3       |       |   | 3,698    |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 3,701 |   |
| Contributions made by noncontrolling interests                  |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | 2,354 |   |   | 2,354 |   |
| Distributions to noncontrolling interests                       |                                           | — |       |   | —  |   |   | — |   |   | — |   |   | — |   |   | (2,728 | ) |   | (2,728 | ) |
| Purchase of  noncontrolling interests in subsidiaries |                                           | — |       |   | (7,331   | )      |   | — |   |   | — |   |   | — |   |   | (4,700 | ) |   | (12,031 | ) |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                      | $                                              | 283     |       | $      | 292,078  |   | $ | 262,441 |   | $ | (54,704 | ) | $ | — |   | $ | 20,885 |   | $ | 520,983 |   |
|                                                            |                                           |    |       |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                         |   |   | Year Ended December 31, |   |   |
|--------------------------------------------------------------|--------|--------|-------------------------|--------|--------|
|                                                         |   |   | 2010                    |   |   |   | 2009 |   |   |   | 2008 |   |   |
| Cash flows from operating activities:                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Net earnings                                                 |   | $      | 66,127                  |   |   | $ | 20,989 |   |   | $ | 16,719 |   |   |
| Reconciliation to net cash provided by operating activities: |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                |   |   | 30,808                  |   |   |   | 16,522 |   |   |   | 14,886 |   |   |
| Provision for doubtful accounts                              |   |   | 10,209                  |   |   |   | 7,794 |   |   |   | 10,178 |   |   |
| Equity in net income of affiliate                            |   |   | (640                    | )      |   |   | (431 | ) |   |   | (471 | ) |   |
| Stock-based compensation                                     |   |   | 3,940                   |   |   |   | 4,662 |   |   |   | 3,195 |   |   |
| Income tax benefit related to stock options exercised        |   |   | 1,890                   |   |   |   | 916 |   |   |   | 812 |   |   |
| Excess tax benefit related to stock options exercised        |   |   | (962                    | )      |   |   | (405 | ) |   |   | (564 | ) |   |
| Loss (gain) on disposal of discontinued operation            |   |   | —                 |   |   |   | 1,188 |   |   |   | (321 | ) |   |
| Gain on disposal of property and equipment                   |   |   | (319                    | )      |   |   | (12 | ) |   |   | (21 | ) |   |
| Changes in assets and liabilities:                           |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable, net                                     |   |   | (32,941                 | )      |   |   | (5,837 | ) |   |   | (11,318 | ) |   |
| Other current assets                                         |   |   | 2,413                   |   |   |   | (6,821 | ) |   |   | 846 |   |   |
| Accounts payable                                             |   |   | 1,825                   |   |   |   | (3,478 | ) |   |   | 2,328 |   |   |
| Accrued salaries and wages                                   |   |   | (1,070                  | )      |   |   | 5,715 |   |   |   | 4,952 |   |   |
| Income taxes payable and deferred taxes                      |   |   | 10,643                  |   |   |   | 477 |   |   |   | 4,456 |   |   |
| Accrued expenses                                             |   |   | 6,776                   |   |   |   | 6,212 |   |   |   | 2,629 |   |   |
| Other assets and other liabilities                           |   |   | 5,139                   |   |   |   | 599 |   |   |   | 352 |   |   |
| Net cash provided by operating activities                    |   |   | 103,838                 |   |   |   | 48,090 |   |   |   | 48,658 |   |   |
| Cash flows from investing activities:                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Additions to property and equipment                          |   |   | (30,579                 | )      |   |   | (13,215 | ) |   |   | (18,502 | ) |   |
| Purchase of marketable securities                            |   |   | (783                    | )      |   |   | (476 | ) |   |   | (509 | ) |   |
| Proceeds from sale/maturities of marketable securities       |   |   | 506                     |   |   |   | 607 |   |   |   | 546 |   |   |
| Proceeds from disposition of business                        |   |   | —                 |   |   |   | 5,043 |   |   |   | 7,193 |   |   |
| Purchase of businesses, net of cash acquired                 |   |   | —                 |   |   |   | (549,783 | ) |   |   | (8,408 | ) |   |
| Other, net                                                   |   |   | (125                    | )      |   |   | (27 | ) |   |   | (406 | ) |   |
| Net cash used in investing activities                        |   |   | (30,981                 | )      |   |   | (557,851 | ) |   |   | (20,086 | ) |   |
| Cash flows from financing activities:                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Net change in revolving credit facility                      |   |   | 1,400                   |   |   |   | (57,000 | ) |   |   | (11,500 | ) |   |
| Proceeds from the issuance of long-term debt                 |   |   | —                 |   |   |   | 450,000 |   |   |   | — |   |   |
| Debt issuance costs                                          |   |   | —                 |   |   |   | (28,448 | ) |   |   | — |   |   |
| Principal payments on long-term debt                         |   |   | (67,080                 | )      |   |   | (1,749 | ) |   |   | (6,000 | ) |   |
| Net proceeds from the sale of common stock                   |   |   | —                 |   |   |   | 140,249 |   |   |   | — |   |   |
| Cash contributed by noncontrolling interests                 |   |   | 2,354                   |   |   |   | 4,423 |   |   |   | 3,663 |   |   |
| Cash distributed to noncontrolling interests                 |   |   | (2,728                  | )      |   |   | (1,794 | ) |   |   | — |   |   |
| Purchase of noncontrolling interests in subsidiaries         |   |   | (12,031                 | )      |   |   | — |   |   |   | — |   |   |
| Activity under stock plans                                   |   |   | 2,781                   |   |   |   | 992 |   |   |   | 1,809 |   |   |
| Excess tax benefit related to stock options exercised        |   |   | 962                     |   |   |   | 405 |   |   |   | 564 |   |   |
| Net cash provided by (used in) financing activities          |   |   | (74,342                 | )      |   |   | 507,078 |   |   |   | (11,464 | ) |   |
| Net (decrease) increase in cash and cash equivalents         |   |   | (1,485                  | )      |   |   | (2,683 | ) |   |   | 17,108 |   |   |
| Cash and cash equivalents at beginning of year               |   |   | 24,690                  |   |   |   | 27,373 |   |   |   | 10,265 |   |   |
| Cash and cash equivalents at end of year                     |   | $      | 23,205                  |   |   | $ | 24,690 |   |   | $ | 27,373 |   |   |

----

|  (1) | Overview of Company and Summary of Significant Accounting Policies |
|-----------|--------------------------------------------------------------------|

----

|                                  | As of December 31, |
|---------------------------------------|--------------------|
| Hospital segment                      | 2010               |   | 2009 |
| Medicare                              |               | 62.9 | % |   | 58.7 | % |
| Medicaid                              |               | 2.3 |   |   | 2.8 |   |
| Other third party payors              |               | 32.4 |   |   | 36.8 |   |
| Self-pay                              |               | 2.4 |   |   | 1.6 |   |
| Total net patient accounts receivable |               | 100.0 |   |   | 99.9 |   |
| Other receivables                     |               | — |   |   | 0.1 |   |
| Total net accounts receivable         |               | 100.0 | % |   | 100.0 | % |

----

----

----

----

|  (2) | Stock-Based Compensation |
|-----------|--------------------------|

|                             |   | Year Ended December 31, |   |
|----------------------------------|--------|-------------------------|--------|
|                             |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                             |   |                    |   |   |   |   |   |   |   |
| Share-based compensation expense | $      | 3,940                   |   | $ | 4,662 |   | $ | 3,195 |   |
| Income tax benefit               |   | 1,483                   |   |   | 1,802 |   |   | 1,235 |   |

----

|                             |     |   |   | Weighted- |   | Weighted-Average |   | Aggregate  |
|----------------------------------|----------|--------|--------|-----------|--------|------------------|--------|------------|
|                             |     |   |   | Average   |   | Remaining        |   | Intrinsic  |
|                             |     |   |   | Exercise  |   | Contractual      |   | Value      |
| Stock Options                    | Shares   |   |   | Price     |   | Life (yrs)       |   | (millions) |
|                             |     |   |   |      |   |             |   |       |
| Outstanding at January 1, 2010   | 870,829  |   |   | $25.11    |   |             |   |       |
| Granted                          | —  |   |   | —   |   |             |   |       |
| Exercised                        | (161,162 | )      |   | 22.68     |   |             |   |       |
| Forfeited or expired             | (104,799 | )      |   | 33.28     |   |             |   |       |
| Outstanding at December 31, 2010 | 604,868  |   |   | $24.33    |   | 3.1              |   | $1.2       |
| Exercisable at December 31, 2010 | 604,868  |   |   | $24.33    |   | 3.1              |   | $1.2       |

|                           |    |   |   | Weighted-  |   |
|--------------------------------|---------|--------|--------|------------|--------|
|                           |    |   |   | Average    |   |
|                           |    |   |   | Grant-Date |   |
| Nonvested Stock Options        | Shares  |   |   | Fair Value |   |
|                           |    |   |   |       |   |
| Nonvested at January 1, 2010   | 7,500   |   |   | $7.78      |   |
| Granted                        | — |   |   | —    |   |
| Vested                         | (7,500  | )      |   | 7.78       |   |
| Forfeited                      | — |   |   | —    |   |
| Nonvested at December 31, 2010 | — |   |   | $ —  |   |

----

|                              |     |   |   | Weighted-  |   |
|-----------------------------------|----------|--------|--------|------------|--------|
|                              |     |   |   | Average    |   |
|                              |     |   |   | Grant-Date |   |
| Nonvested Restricted Stock Awards | Shares   |   |   | Fair Value |   |
|                              |     |   |   |       |   |
| Nonvested at January 1, 2010      | 629,733  |   |   | $16.81     |   |
| Granted                           | 200,383  |   |   | 27.51      |   |
| Vested                            | (142,259 | )      |   | 16.68      |   |
| Forfeited                         | (72,440  | )      |   | 18.67      |   |
| Nonvested at December 31, 2010    | 615,417  |   |   | $20.11     |   |
|                              |     |   |   |       |   |

|  (3) | Marketable Securities |
|-----------|-----------------------|

|  (4) | Allowance for Doubtful Accounts |
|-----------|---------------------------------|

----

|                                    |   | Year Ended December 31, |   |
|-----------------------------------------|--------|-------------------------|--------|
|                                    |   | 2010                    |   |   | 2009 |   |   |   | 2008 |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |
| Balance at beginning of year            | $      | 24,729                  |   | $ | 19,480 |   |   | $ | 16,266 |   |
| Provisions for doubtful accounts        |   | 10,209                  |   |   | 7,794 |   |   |   | 9,643 |   |
| Acquisitions                            |   | —                 |   |   | 8,201 |   |   |   | 17 |   |
| Disposition                             |   | —                 |   |   | (41 | ) |   |   | — |   |
| Accounts written off, net of recoveries |   | (10,665                 | )      |   | (10,705 | ) |   |   | (6,446 | ) |
| Balance at end of year                  | $      | 24,273                  |   | $ | 24,729 |   |   | $ | 19,480 |   |
|                                    |   |                    |   |   |   |   |   |   |   |   |

|  (5) | Property and Equipment |
|-----------|------------------------|

|                                                    |   | December 31, |    |
|---------------------------------------------------------|--------|--------------|---------|
|                                                    |   |         | 2010    |   |   | 2009 |   |
|                                                    |   |         |    |   |   |   |   |
| Equipment                                               |   | $            | 105,539 |   | $ | 88,808 |   |
| Land                                                    |   |         | 6,043   |   |   | 6,043 |   |
| Buildings and leasehold improvements                    |   |         | 68,404  |   |   | 60,328 |   |
| Buildings and equipment under capital lease obligations |   |         | 11,243  |   |   | 11,243 |   |
|                                                    |   |         | 191,229 |   |   | 166,422 |   |
| Less accumulated depreciation                           |   |         | 71,638  |   |   | 54,608 |   |
|                                                    |   | $            | 119,591 |   | $ | 111,814 |   |

|  (6)  | Business Combinations |
|-----------------|-----------------------|

----

|                                                                            |   | Year ended        |    | Year ended        |   |
|---------------------------------------------------------------------------------|--------|-------------------|---------|-------------------|--------|
|                                                                            |   | December 31, 2009 |    | December 31, 2008 |   |
|                                                                            |   | As Reported       |    | Pro Forma         |   | As Reported |   | Pro Forma |   |
|                                                                            |   |              |    |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                              |   | $                 | 848,612 |              |   | $ | 1,239,960 |   |   | $ | 714,030 |   |   | $ | 1,137,756 |   |   |
| Net earnings from continuing operations attributable to RehabCare               |   | $                 | 21,590  |              |   | $ | 43,520 |   |   | $ | 16,711 |   |   | $ | 32,287 |   |   |
| Diluted earnings per share from continuing operations attributable to RehabCare |   | $                 | 1.14    |              |   | $ | 1.79 |   |   | $ | 0.94 |   |   | $ | 1.34 |   |   |
|                                                                            |   |              |    |              |   |   |   |   |   |   |   |   |   |   |   |   |   |

|  (7) | Goodwill and Other Intangible Assets |
|-----------|--------------------------------------|

----

|                                 |   | December 31, 2010 |   | December 31, 2009 |   |
|--------------------------------------|--------|-------------------|--------|-------------------|--------|
|                                 |   | Gross             |   |              |   | Gross |   |   |   |
|                                 |   | Carrying          |   | Accumulated       |   | Carrying |   | Accumulated |   |
|                                 |   | Amount            |   | Amortization      |   | Amount |   | Amortization |   |
| Amortizing Intangible Assets:        |   |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncompete agreements                |   | $                 | 4,710  |              |   | $ | (3,078 | ) |   | $ | 4,710 |   |   | $ | (1,566 | ) |   |
| Customer contracts and relationships |   |              | 23,096 |              |   |   | (14,848 | ) |   |   | 23,096 |   |   |   | (12,577 | ) |   |
| Trade names                          |   |              | 40,083 |              |   |   | (5,529 | ) |   |   | 40,083 |   |   |   | (2,792 | ) |   |
| Medicare exemption                   |   |              | 454    |              |   |   | (454 | ) |   |   | 454 |   |   |   | (340 | ) |   |
| Market access assets                 |   |              | 5,720  |              |   |   | (596 | ) |   |   | 5,720 |   |   |   | (310 | ) |   |
| Certificates of need                 |   |              | 9,442  |              |   |   | (1,130 | ) |   |   | 9,442 |   |   |   | (152 | ) |   |
| Lease arrangements                   |   |              | 1,305  |              |   |   | (578 | ) |   |   | 1,305 |   |   |   | (297 | ) |   |
| Total                                |   | $                 | 84,810 |              |   | $ | (26,213 | ) |   | $ | 84,810 |   |   | $ | (18,034 | ) |   |
|                                 |   |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-amortizing Intangible Assets:    |   |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade names                          |   | $                 | 410    |              |   |   |   |   |   | $ | 410 |   |   |   |   |   |   |
| Medicare provider numbers            |   |              | 68,220 |              |   |   |   |   |   |   | 68,220 |   |   |   |   |   |   |
|                                 |   | $                 | 68,630 |              |   |   |   |   |   | $ | 68,630 |   |   |   |   |   |   |

----

|                         |     |    |   |    |     |      |   | Healthcare Management |     |    |   |
|------------------------------|----------|---------|--------|---------|----------|-----------|--------|-----------------------|----------|---------|--------|
|                         | SRS (a)  |    |   | HRS (b) |     | Hospitals |   | Consulting (c)        |     | Total   |   |
| Balance at December 31, 2008 |   $ | 79,419  |   |    |   $ | 39,715    |   |                  |   $ | 48,087  |   |   |  $ | 4,144 |   |   | $ | 171,365 |   |
| Acquisitions                 |     | — |   |    |     | —   |   |                  |     | 401,271 |   |   |   | — |   |   |   | 401,271 |   |
| Dispositions                 |     | — |   |    |     | —   |   |                  |     | — |   |   |   | (4,144 | ) |   |   | (4,144 | ) |
| Balance at December 31, 2009 |     | 79,419  |   |    |     | 39,715    |   |                  |     | 449,358 |   |   |   | — |   |   |   | 568,492 |   |
| Assets held for sale         |     | — |   |    |     | —   |   |                  |     | (8,626  | )      |   |   | — |   |   |   | (8,626 | ) |
| Balance at December 31, 2010 | $        | 79,419  |   |    | $        | 39,715    |   |                  | $        | 440,732 |   |   | $ | — |   |   | $ | 559,866 |   |

|   | (a) | Skilled Nursing Rehabilitation Services (SRS). |
|--------|-----|------------------------------------------------|

|   | (b) | Hospital Rehabilitation Services (HRS). |
|--------|-----|-----------------------------------------|

|   | (c) | The healthcare management consulting segment consists of Phase 2 Consulting, Inc., which was sold effective June 1, 2009. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

|  (8) | Assets Held for Sale and Discontinued Operations |
|-----------|--------------------------------------------------|

| Assets:                         |   |   |   |   |
|---------------------------------|--------|--------|--------|--------|
| Current deferred tax assets     |   | $      | 43     |   |
| Other current assets            |   |   | 144    |   |
| Property and equipment, net     |   |   | 1,165  |   |
| Goodwill                        |   |   | 8,626  |   |
| Other assets                    |   |   | 429    |   |
| Total assets held for sale      |   | $      | 10,407 |   |
|                            |   |   |   |   |
| Liabilities:                    |   |   |   |   |
| Accrued vacation                |   | $      | 205    |   |
| Total liabilities held for sale |   | $      | 205    |   |
|                            |   |   |   |   |

----

|                                        |   | 2010   |   | 2009   |   | 2008   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                          |   | $      | 19,627 |   |   | $      | 20,815 |   |   | $ | 21,382 |   |   |
| Costs and expenses                          |   |   | 17,632 |   |   |   | 17,261 |   |   |   | 16,774 |   |   |
| Operating gain from discontinued operations |   |   | 1,995  |   |   |   | 3,554  |   |   |   | 4,608 |   |   |
| Income tax expense                          |   |   | (758   | )      |   |   | (1,350 | ) |   |   | (1,751 | ) |   |
| Gain from discontinued operations           |   | $      | 1,237  |   |   | $      | 2,204  |   |   | $ | 2,857 |   |   |

|                                                  |   | 2010   |    | 2009   |   | 2008   |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|
|                                                  |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                    |   | $      | — |   |   | $      | 2,833  |   |   | $ | 9,563 |   |   |
| Costs and expenses                                    |   |   | — |   |   |   | 3,064  |   |   |   | 9,789 |   |   |
| Operating loss from discontinued operations           |   |   | — |   |   |   | (231   | ) |   |   | (226 | ) |   |
| Loss on disposal of assets of discontinued operations |   |   | — |   |   |   | (1,188 | ) |   |   | — |   |   |
| Income tax benefit                                    |   |   | — |   |   |   | 553    |   |   |   | 88 |   |   |
| Loss from discontinued operations                     |   | $      | — |   |   | $      | (866   | ) |   | $ | (138 | ) |   |

|                                                  |   | 2010   |    | 2009   |   | 2008   |    |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|
|                                                  |   |   |    |   |   |   |    |   |   |   |   |   |   |
| Operating revenues                                    |   | $      | — |   |   | $      | — |   |   | $ | 3,962 |   |   |
| Costs and expenses                                    |   |   | — |   |   |   | (44     | ) |   |   | 5,471 |   |   |
| Operating gain (loss) from discontinued operations    |   |   | — |   |   |   | 44      |   |   |   | (1,509 | ) |   |
| Gain on disposal of assets of discontinued operations |   |   | — |   |   |   | — |   |   |   | 321 |   |   |
| Income tax (expense) benefit                          |   |   | — |   |   |   | (17     | ) |   |   | 463 |   |   |
| Gain (loss) from discontinued operations              |   | $      | — |   |   | $      | 27      |   |   | $ | (725 | ) |   |

----

|  (9) | Long-Term Debt |
|-----------|----------------|

----

|                                                                                                                                                                                                                         |   | December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                                                                                                                                                         |   |         | 2010    |   |   | 2009 |   |
|                                                                                                                                                                                                                         |   |         |    |   |   |   |   |
| Borrowings under $125 million revolving credit facility; maturity date of November 24, 2014                                                                                                                                  |   | $            | 1,400   |   | $ | — |   |
|                                                                                                                                                                                                                         |   |         |    |   |   |   |   |
| Term loan facility; payable in quarterly installments of $1,125 with remaining balance due on November 24, 2015; net of unamortized original issue discount of $7,591 and $8,892 at December 31, 2010 and 2009, respectively |   |         | 377,909 |   |   | 441,108 |   |
|                                                                                                                                                                                                                         |   |         |    |   |   |   |   |
| Note payable to bank; bearing interest at LIBOR plus 4%; payable in monthly installments through November 2015 and $3.5 million due in December 2015                                                                         |   |         | 4,650   |   |   | — |   |
|                                                                                                                                                                                                                         |   |         |    |   |   |   |   |
| Note payable to bank; bearing interest at prime plus 1%, but not less than 5% nor greater than 7.5%; refinanced in December 2010                                                                                             |   |         | — |   |   | 4,528 |   |
|                                                                                                                                                                                                                         |   |         |    |   |   |   |   |
| Capital lease obligations                                                                                                                                                                                                    |   |         | 6,929   |   |   | 9,631 |   |
|                                                                                                                                                                                                                         |   |         | 390,888 |   |   | 455,267 |   |
| Less:  current portion                                                                                                                                                                                             |   |         | (9,116  | ) |   | (7,507 | ) |
|                                                                                                                                                                                                                         |   | $            | 381,772 |   | $ | 447,760 |   |

----

|   | 2011       | $      | 9,116   |   |
|--------|------------|--------|---------|--------|
|   | 2012       |   | 8,024   |   |
|   | 2013       |   | 5,381   |   |
|   | 2014       |   | 4,738   |   |
|   | 2015       |   | 371,220 |   |
|   | Thereafter |   | — |   |
|   | Total      | $      | 398,479 |   |

|  (10) | Stockholders’ Equity |
|------------|----------------------------|

|  (11)  | Earnings per Share |
|------------------|--------------------|

----

|                                               | Year Ended December 31, |   |
|----------------------------------------------------|-------------------------|--------|
|                                               |                    | 2010   |   |   |   | 2009 |   |   |   | 2008 |   |   |
| Numerator:                                         |                    |   |   |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax    | $                       | 61,213 |   |   | $ | 21,590 |   |   | $ | 16,711 |   |   |
| Gain from discontinued operations, net of tax      |                    | 1,237  |   |   |   | 1,365 |   |   |   | 1,994 |   |   |
| Net earnings                                       | $                       | 62,450 |   |   | $ | 22,955 |   |   | $ | 18,705 |   |   |
|                                               |                    |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                       |                    |   |   |   |   |   |   |   |   |   |   |   |
| Basic weighted average common shares outstanding   |                    | 24,231 |   |   |   | 18,481 |   |   |   | 17,583 |   |   |
| Effect of dilutive securities:                     |                    |   |   |   |   |   |   |   |   |   |   |   |
| stock options and restricted stock awards          |                    | 475    |   |   |   | 381 |   |   |   | 215 |   |   |
| Diluted weighted average common shares outstanding |                    | 24,706 |   |   |   | 18,862 |   |   |   | 17,798 |   |   |
|                                               |                    |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per common share:                   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax    | $                       | 2.53   |   |   | $ | 1.17 |   |   | $ | 0.95 |   |   |
| Gain from discontinued operations, net of tax      |                    | 0.05   |   |   |   | 0.07 |   |   |   | 0.11 |   |   |
| Net earnings                                       | $                       | 2.58   |   |   | $ | 1.24 |   |   | $ | 1.06 |   |   |
|                                               |                    |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per common share:                 |                    |   |   |   |   |   |   |   |   |   |   |   |
| Earnings from continuing operations, net of tax    | $                       | 2.48   |   |   | $ | 1.14 |   |   | $ | 0.94 |   |   |
| Gain from discontinued operations, net of tax      |                    | 0.05   |   |   |   | 0.08 |   |   |   | 0.11 |   |   |
| Net earnings                                       | $                       | 2.53   |   |   | $ | 1.22 |   |   | $ | 1.05 |   |   |
|                                               |                    |   |   |   |   |   |   |   |   |   |   |   |

|  (12) | Employee Benefits |
|------------|-------------------|

----

|  (13) | Commitments |
|------------|-------------|

|   | 2011       | $      | 32,154  |   |
|--------|------------|--------|---------|--------|
|   | 2012       |   | 36,092  |   |
|   | 2013       |   | 37,509  |   |
|   | 2014       |   | 37,932  |   |
|   | 2015       |   | 35,537  |   |
|   | Thereafter |   | 304,376 |   |
|   | Total      | $      | 483,600 |   |

----

|   | 2011                                   | $      | 3,533   |   |
|--------|----------------------------------------|--------|---------|--------|
|   | 2012                                   |   | 3,533   |   |
|   | 2013                                   |   | 658     |   |
|   | 2014                                   |   | 5       |   |
|   | 2015                                   |   | — |   |
|   | Thereafter                             |   | — |   |
|   | Total minimum lease payments           |   | 7,729   |   |
|   | Less: interest portion                 |   | (800    | )      |
|   | Total obligations under capital leases | $      | 6,929   |   |
|   |                                   |   |    |   |

|  (14) | Income Taxes |
|------------|--------------|

|   |                     |   | Year Ended December 31, |   |
|--------|--------------------------|--------|-------------------------|--------|
|   |                     |   | 2010                    |   |   | 2009 |   |   |   | 2008 |   |
|   | Federal – current  | $      | 25,032                  |   | $ | 12,123 |   |   | $ | 6,112 |   |
|   | Federal – deferred |   | 7,699                   |   |   | 1,914 |   |   |   | 2,867 |   |
|   | State                    |   | 3,828                   |   |   | 2,254 |   |   |   | 1,333 |   |
|   |                     | $      | 36,559                  |   | $ | 16,291 |   |   | $ | 10,312 |   |

|                                                                                                             |   |   | Year Ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------|--------|
|                                                                                                             |   |   | 2010                    |   |   | 2009 |   |   |   | 2008 |   |
| Expected income taxes                                                                                            |   | $      | 35,507                  |   | $ | 12,570 |   |   | $ | 8,763 |   |
| State income taxes, net of federal income tax benefit                                                            |   |   | 2,644                   |   |   | 1,527 |   |   |   | 844 |   |
| Tax effect of (earnings)/losses attributable to noncontrolling interests not (taxable)/deductible by the Company |   |   | (1,287                  | )      |   | 688 |   |   |   | 695 |   |
| Tax effect of nondeductible acquisition-related expenses                                                         |   |   | —                 |   |   | 1,347 |   |   |   | — |   |
| Other, net                                                                                                       |   |   | (305                    | )      |   | 159 |   |   |   | 10 |   |
|                                                                                                             |   | $      | 36,559                  |   | $ | 16,291 |   |   | $ | 10,312 |   |

----

|                                                         |   | December 31, |    |
|--------------------------------------------------------------|--------|--------------|---------|
|                                                         |   | 2010         |    | 2009 |   |
| Deferred tax assets:                                         |   |         |    |   |   |   |   |
| Allowance for doubtful accounts                              |   | $            | 6,922   |   | $ | 7,588 |   |
| Accrued insurance, vacation, bonus and deferred compensation |   |         | 17,234  |   |   | 12,563 |   |
| Net operating loss carryforward/capital loss carryforward    |   |         | 1,477   |   |   | 1,697 |   |
| Stock based compensation                                     |   |         | 3,595   |   |   | 3,081 |   |
| Accrued expenses                                             |   |         | 4,146   |   |   | 4,081 |   |
| Other                                                        |   |         | 2,486   |   |   | 2,435 |   |
| Total gross deferred tax assets                              |   |         | 35,860  |   |   | 31,445 |   |
| Valuation allowance                                          |   |         | (106    | ) |   | (74 | ) |
| Net deferred tax assets                                      |   |         | 35,754  |   |   | 31,371 |   |
|                                                         |   |         |    |   |   |   |   |
| Deferred tax liabilities:                                    |   |         |    |   |   |   |   |
| Acquired goodwill and intangibles                            |   |         | 52,023  |   |   | 47,402 |   |
| Depreciation and amortization                                |   |         | 10,047  |   |   | 5,229 |   |
| 481(a) adjustment for accrued bonus                          |   |         | 3,690   |   |   | — |   |
| Prepaid expenses                                             |   |         | 2,270   |   |   | 2,438 |   |
| Other                                                        |   |         | 1,445   |   |   | 658 |   |
| Total deferred tax liabilities                               |   |         | 69,475  |   |   | 55,727 |   |
|                                                         |   | $            | (33,721 | ) | $ | (24,356 | ) |

----

|                                                                           |   |   | 2010    |   |   |   | 2009    |   |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Balance at beginning of year                                                   |   | $      | 1,647   |   |   | $      | 448     |   |
| Liability assumed in acquisition of Triumph                                    |   |   | — |   |   |   | 133     |   |
| Increase as a result of tax positions taken in prior years, including interest |   |   | 71      |   |   |   | 510     |   |
| Increase as a result of tax positions taken in the current year                |   |   | 298     |   |   |   | 710     |   |
| Decrease due to IRS approval of accounting method change                       |   |   | (484    | )      |   |   | — |   |
| Lapse of applicable statute of limitations                                     |   |   | — |   |   |   | (154    | )      |
| Balance at end of year                                                         |   | $      | 1,532   |   |   | $      | 1,647   |   |

|  (15) | Investment in Unconsolidated Affiliate |
|------------|----------------------------------------|

|  (16) | Severance Costs |
|------------|-----------------|

----

|   | Balance, January 1, 2009    |   | $      | — |   |
|--------|-----------------------------|--------|--------|---------|--------|
|   | Accrual for severance costs |   |   | 862     |   |
|   | Payments                    |   |   | (105    | )      |
|   | Balance, December 31, 2009  |   | $      | 757     |   |
|   | Payments                    |   |   | (757    | )      |
|   | Balance, December 31, 2010  |   | $      | — |   |
|   |                        |   |   |    |   |

|  (17) | Related Party Transactions |
|------------|----------------------------|

|  (18) | Fair Value Measurements |
|------------|-------------------------|

|               | December 31, 2010 |   |
|--------------------|-------------------|--------|
|               | Carrying          |   |   | Fair Value Measurements |   |
|               | Value             |   |   |  Level 1 |   |  Level 2 |   | Level 3 |   |
|               |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trading securities | $                 | 3,965  |   |   | $ | 3,965 |   |   | $ | — |   |   | $ | — |   |   |
|               |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|               | December 31, 2009 |   |
|--------------------|-------------------|--------|
|               | Carrying          |   |   | Fair Value Measurements |   |
|               | Value             |   |   |  Level 1 |   |  Level 2 |   | Level 3 |   |
|               |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trading securities | $                 | 3,314  |   |   | $ | 3,314 |   |   | $ | — |   |   | $ | — |   |   |
|               |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|  (19) | Noncontrolling Interests |
|------------|--------------------------|

|   | Decrease in Company’s additional paid-in capital for purchase of noncontrolling interests in subsidiaries |   | $      | 7,331  |   |
|--------|-----------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|   | Decrease in carrying value of noncontrolling interests for purchase of noncontrolling interests in subsidiaries |   |   | 4,700  |   |
|   | Total cash consideration paid in exchange for purchase of noncontrolling interests                              |   | $      | 12,031 |   |
|   |                                                                                                            |   |   |   |   |

|  (20) | Industry Segment Information |
|------------|------------------------------|

----

|                                    |   | Operating Revenues |   |   |    | Operating Earnings (Loss) |   |
|-----------------------------------------|--------|--------------------|--------|--------|---------|---------------------------|--------|
|                                    |   | 2010               |   |   | 2009    |                      |   | 2008 |   |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Program management:                     |   |               |   |   |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Skilled nursing rehabilitation services | $      | 516,278            |   | $      | 496,250 |                      | $      | 457,229 |   |   | $ | 39,184 |   | $ | 37,753 |   | $ | 25,544 |   |
| Hospital rehabilitation services        |   | 180,009            |   |   | 178,168 |                      |   | 165,658 |   |   |   | 32,925 |   |   | 29,487 |   |   | 21,997 |   |
| Program management total                |   | 696,287            |   |   | 674,418 |                      |   | 622,887 |   |   |   | 72,109 |   |   | 67,240 |   |   | 47,541 |   |
| Hospitals                               |   | 633,156            |   |   | 174,194 |                      |   | 91,143 |   |   |   | 61,450 |   |   | (26,066 | ) |   | (18,511 | ) |
| Unallocated corporate expenses (1)      |   | N/A                |   |   | N/A     |                      |   | N/A |   |   |   | — |   |   | (254 | ) |   | (731 | ) |
| Total                                   | $      | 1,329,443          |   | $      | 848,612 |                      | $      | 714,030 |   |   | $ | 133,559 |   | $ | 40,920 |   | $ | 28,299 |   |

|                                    |   | Depreciation and Amortization |   |   |   | Capital Expenditures |   |
|-----------------------------------------|--------|-------------------------------|--------|--------|--------|----------------------|--------|
|                                    |   | 2010                          |   |   | 2009   |                 |   | 2008 |   |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Program management:                     |   |                          |   |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Skilled nursing rehabilitation services | $      | 5,523                         |   | $      | 6,283  |                 | $      | 6,835 |   |   | $ | 6,446 |   | $ | 2,422 |   | $ | 3,824 |   |
| Hospital rehabilitation services        |   | 2,222                         |   |   | 2,423  |                 |   | 2,641 |   |   |   | 894 |   |   | 1,328 |   |   | 1,032 |   |
| Program management total                |   | 7,745                         |   |   | 8,706  |                 |   | 9,476 |   |   |   | 7,340 |   |   | 3,750 |   |   | 4,856 |   |
| Hospitals                               |   | 22,850                        |   |   | 7,544  |                 |   | 4,899 |   |   |   | 23,239 |   |   | 9,465 |   |   | 13,604 |   |
| Healthcare management consulting (2)    |   | N/A                           |   |   | N/A    |                 |   | N/A |   |   |   | — |   |   | — |   |   | 42 |   |
| Total                                   | $      | 30,595                        |   | $      | 16,250 |                 | $      | 14,375 |   |   | $ | 30,579 |   | $ | 13,215 |   | $ | 18,502 |   |

|                                    |   | Total Assets       |   |   |      |
|-----------------------------------------|--------|--------------------|--------|--------|-----------|
|                                    |   | as of December 31, |   |   |      |
|                                    |   | 2010               |   |   | 2009      |   |   | 2008 |   |   |   |
| Program management:                     |   |               |   |   |      |   |   |   |   |   |   |
| Skilled nursing rehabilitation services | $      | 196,264            |   | $      | 187,744   |   | $ | 198,236 |   |   |   |
| Hospital rehabilitation services        |   | 117,548            |   |   | 127,212   |   |   | 115,044 |   |   |   |
| Program management total                |   | 313,812            |   |   | 314,956   |   |   | 313,280 |   |   |   |
| Hospitals (3)                           |   | 812,757            |   |   | 795,024   |   |   | 118,267 |   |   |   |
| Healthcare management consulting        |   | —            |   |   | —   |   |   | 6,859 |   |   |   |
| Total                                   | $      | 1,126,569          |   | $      | 1,109,980 |   | $ | 438,406 |   |   |   |

|   | (1) | Represents general corporate overhead expenses associated with Phase 2 Consulting, Inc., which was sold effective June 1, 2009.  All other costs and expenses associated with Phase 2 have been reported in discontinued operations. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (2) | The healthcare management consulting segment consists of Phase 2 Consulting, Inc., which was sold effective June 1, 2009.  Depreciation and amortization expense associated with Phase 2 has been reported in discontinued operations. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Hospitals segment total assets include the carrying value of the Company’s investment in HRSC. |
|--------|-----|------------------------------------------------------------------------------------------------------|

|  (21) | Quarterly Financial Information (Unaudited) |
|------------|---------------------------------------------|

|                                                 |   | Quarter Ended |                                  |
|------------------------------------------------------|--------|---------------|---------------------------------------|
| 2010                                                 |   | December 31   |                                  | September 30 |   | June 30 |   | March 31 |
|                                                 |   |          | (in thousands, except per share data) |   |
|                                                 |   |          |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                   |   | $             | 339,344                               |   |   | $ | 337,481 |   |   | $ | 330,664 |   |   | $ | 321,954 |   |
| Operating earnings                                   |   |          | 36,113                                |   |   |   | 33,730 |   |   |   | 32,151 |   |   |   | 31,565 |   |
| Earnings from continuing operations, net of tax      |   |          | 18,630                                |   |   |   | 16,237 |   |   |   | 15,758 |   |   |   | 14,265 |   |
| Gain (loss) from discontinued operations, net of tax |   |          | 673                                   |   |   |   | 541 |   |   |   | (541 | ) |   |   | 564 |   |
| Net earnings                                         |   |          | 19,303                                |   |   |   | 16,778 |   |   |   | 15,217 |   |   |   | 14,829 |   |
| Net earnings attributable to RehabCare               |   |          | 17,053                                |   |   |   | 15,699 |   |   |   | 14,705 |   |   |   | 14,993 |   |
| Net earnings per share attributable to RehabCare:    |   |          |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                |   |          | 0.70                                  |   |   |   | 0.65 |   |   |   | 0.61 |   |   |   | 0.62 |   |
| Diluted                                              |   |          | 0.69                                  |   |   |   | 0.64 |   |   |   | 0.59 |   |   |   | 0.61 |   |

|                                                 |   | Quarter Ended |                                  |
|------------------------------------------------------|--------|---------------|---------------------------------------|
| 2009                                                 |   | December 31   |                                  | September 30 |   | June 30 |   | March 31 |
|                                                 |   |          | (in thousands, except per share data) |   |
|                                                 |   |          |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                   |   | $             | 249,807                               |   |   | $ | 203,264 |   |   | $ | 199,596 |   |   | $ | 195,945 |   |
| Operating earnings (1)                               |   |          | 6,470                                 |   |   |   | 10,087 |   |   |   | 11,597 |   |   |   | 12,766 |   |
| Earnings from continuing operations, net of tax      |   |          | 46                                    |   |   |   | 5,462 |   |   |   | 6,664 |   |   |   | 7,452 |   |
| Gain (loss) from discontinued operations, net of tax |   |          | 257                                   |   |   |   | 228 |   |   |   | (116 | ) |   |   | 996 |   |
| Net earnings                                         |   |          | 303                                   |   |   |   | 5,690 |   |   |   | 6,548 |   |   |   | 8,448 |   |
| Net earnings attributable to RehabCare               |   |          | 655                                   |   |   |   | 6,757 |   |   |   | 6,883 |   |   |   | 8,660 |   |
| Net earnings per share attributable to RehabCare:    |   |          |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                |   |          | 0.03                                  |   |   |   | 0.38 |   |   |   | 0.39 |   |   |   | 0.49 |   |
| Diluted                                              |   |          | 0.03                                  |   |   |   | 0.37 |   |   |   | 0.38 |   |   |   | 0.48 |   |

----

|   | (1) | Operating earnings for the quarter ended December 31, 2009 include $7.2 million of acquisition-related expenses for costs directly related to the acquisition of Triumph including fees for legal, accounting, advisory and other outside services. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (22) | Contingencies |
|------------|---------------|

|  (23)  | Subsequent Events |
|------------------|-------------------|

----

----

|  ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS |
|---------------|-----------------------------------------------|

|   | ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|--------|----------------------------------------|

|  ITEM 9A. | CONTROLS AND PROCEDURES |
|----------------|-------------------------|

|  ITEM 9B. | OTHER  INFORMATION |
|----------------|------------------------------|

----

|  ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------------|--------------------------------------------------------|

|   | · | Information regarding directors of the Company. |
|--------|--------|-------------------------------------------------|

|   | · | Information regarding the Company’s audit committee and designated "audit committee financial experts." |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | Information regarding Section 16(a) beneficial ownership reporting compliance. |
|--------|--------|--------------------------------------------------------------------------------|

| Name                 |   | Age |   | Position                                             |
|----------------------|--------|-----|--------|------------------------------------------------------|
| John H. Short, Ph.D. |   | 66  |   | President and Chief Executive Officer                |
| Jay W. Shreiner      |   | 60  |   | Executive Vice President, Chief Financial Officer    |
| Patricia S. Williams |   | 43  |   | Senior Vice President, General Counsel and Secretary |
| Patricia M. Henry    |   | 58  |   | Executive Vice President, Operations                 |
| Mary Pat Welc        |   | 56  |   | Senior Vice President, Operations                    |
| Brock Hardaway       |   | 44  |   | Executive Vice President, Operations                 |
| James F. Martin      |   | 60  |   | Senior Vice President, Chief Human Resources Officer |
| Jeff A. Zadoks       |   | 45  |   | Senior Vice President, Chief Accounting Officer      |
| Samuel W. Duggan II  |   | 47  |   | Vice President, Treasurer                            |

----

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

|  ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND |
|----------------|-----------------------------------------------------|

|   | MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|--------|--------------------------------------------|

----

| Plan category                                              | Number ofsecurities tobe issueduponexercise ofoutstandingoptions,warrants andrights(a) | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights (b) | Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in column (a))  (c) |
|------------------------------------------------------------|----------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity compensation plans approved by security holders     | 604,868                                                                                | $24.33                                                                           | 2,181,606                                                                                                                                            | (1) |
| Equity compensation plans not approved by security holders | -                                                                                      | -                                                                                | -                                                                                                                                                    |   |
| Total                                                      | 604,868                                                                                | $24.33                                                                           | 2,181,606                                                                                                                                            |   |

|   | (1) | Represents the number of shares of common stock available for future issuance under the Company’s 2006 Equity Incentive Plan.  Permissible awards under the Company’s plan include stock options, stock appreciation rights, restricted stock, stock units and other equity-based awards. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
|----------|---------------------------------------------------------------------------|

|  ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------------|----------------------------------------|

----

| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
|----------|--------------------------------------------|

| (a)    | The following documents are filed as part of this Annual Report on Form 10-K: |
|--------|-------------------------------------------------------------------------------|
|   |                                                                          |   |
|   | (1)                                                                           | Financial Statements: |
|   |                                                                          |   |   |
|   |                                                                          |   | Report of Independent Registered Public Accounting Firm |
|   |                                                                          |   | Consolidated Balance Sheets as of December 31, 2010 and 2009 |
|   |                                                                          |   | Consolidated Statements of Earnings for the years ended December 31, 2010, 2009 and 2008 |
|   |                                                                          |   | Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008 |
|   |                                                                          |   | Consolidated Statements of Changes in Equity for the years ended December 31, 2010, 2009 and 2008 |
|   |                                                                          |   | Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008 |
|   |                                                                          |   | Notes to Consolidated Financial Statements |
|   |                                                                          |   |
|   | (2)                                                                           | Financial Statement Schedules: |
|   |                                                                          |   |   |
|   |                                                                          |   | None |
|   |                                                                          |   |   |
|   | (3)                                                                           | Exhibits: |
|   |                                                                          |   |   |
|   |                                                                          |   | See Exhibit Index on page 90 of this Annual Report on Form 10-K. |

----

|   | SIGNATURES |
|--------|------------|

|                  | REHABCARE GROUP, INC.                 |   |
|-----------------------|---------------------------------------|--------|
|                  | (Registrant)                          |   |
|                  |                                  |   |
| By:    | /s/ John H. Short                     |   |
|                  | John H. Short                         |   |
|                  | President and Chief Executive Officer |   |

| Signature                      |   | Title                        |   | Dated             |
|--------------------------------|--------|------------------------------|--------|-------------------|
|                           |   |                         |   |              |
| /s/ John H. Short              |   | President, Chief Executive   |   | February 28, 2011 |
| John H. Short                  |   | Officer and Director         |   |              |
| (Principal Executive Officer)  |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Jay W. Shreiner            |   | Executive Vice President and |   | February 28, 2011 |
| Jay W. Shreiner                |   | Chief Financial Officer      |   |              |
| (Principal Financial Officer)  |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Jeff A. Zadoks             |   | Senior Vice President and    |   | February 28, 2011 |
| Jeff A. Zadoks                 |   | Chief Accounting Officer     |   |              |
| (Principal Accounting Officer) |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Colleen Conway-Welch       |   | Director                     |   | February 28, 2011 |
| Colleen Conway-Welch           |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Christopher T. Hjelm       |   | Director                     |   | February 28, 2011 |
| Christopher T. Hjelm           |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Anthony S. Piszel          |   | Director                     |   | February 28, 2011 |
| Anthony S. Piszel              |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Suzan L. Rayner            |   | Director                     |   | February 28, 2011 |
| Suzan L. Rayner                |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Harry E. Rich              |   | Director                     |   | February 28, 2011 |
| Harry E. Rich                  |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Larry Warren               |   | Director                     |   | February 28, 2011 |
| Larry Warren                   |   |                         |   |              |
|                           |   |                         |   |              |
| /s/ Theodore M. Wight          |   | Director                     |   | February 28, 2011 |
| Theodore M. Wight              |   |                         |   |              |

----

| 2.1 | Agreement and Plan of Merger, dated November 3, 2009, between the Registrant, RehabCare Group East, Inc., RehabCare Hospital Holdings, L.L.C., RehabCare Merger Sub Corporation, Triumph HealthCare Holdings, Inc. and TA Associates, Inc. (filed as Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated November 3, 2009 and incorporated herein by reference) |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | Agreement and Plan of Merger, dated February 7, 2011, between the Registrant and Kindred Healthcare, Inc. and Kindred Healthcare Development, Inc. (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated February 8, 2011 and incorporated herein by reference) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1 | Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, dated May 9, 1991 [Registration No. 33-40467], and incorporated herein by reference) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended May 31, 1995 and incorporated herein by reference) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Amended and Restated Bylaws, dated October 30, 2007 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated October 31, 2007 and incorporated herein by reference) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | 1987 Incentive Stock Option and 1987 Nonstatutory Stock Option Plans (filed as Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1, dated May 9, 1991 [Registration No. 33-40467] and incorporated herein by reference) * |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Form of Stock Option Agreement for 1987 Incentive Stock Option and 1987 Nonstatutory Stock Option Plans (filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1, dated May 9, 1991 [Registration No. 33-40467] and incorporated herein by reference) * |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Termination Compensation Agreement, dated December 11, 2007 by and between RehabCare Group, Inc. and John H. Short, Ph.D. (filed as Exhibit 10.1 to Registrant’s Annual Report on Form 8-K dated December 12, 2007 and incorporated herein by reference) * |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Amendment to Termination Compensation Agreement, dated December 11, 2007 by and between RehabCare Group, Inc. and John H. Short, Ph.D. (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Letter agreement, dated February 7, 2011, by and between RehabCare Group, Inc. and John H. Short, Ph.D. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated February 8, 2011 and incorporated herein by reference)* |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Termination Compensation Agreement dated December 8, 2008 by and between RehabCare Group, Inc. and Jay W. Shreiner (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.7 | Termination Compensation Agreement dated December 8, 2008 by and between RehabCare Group, Inc. and Patricia M. Henry (filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | Form of Change in Control Termination Agreement dated December 8, 2008 by and between RehabCare Group, Inc. and Mary Patricia Welc (filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Change in Control Termination Agreement dated November 12, 2007 by and between RehabCare Group, Inc. and Patricia S. Williams (filed as Exhibit 10.6 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007 and incorporated herein by reference) * |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | Termination Compensation Agreement dated November 3, 2009 by and between RehabCare Group, Inc. and William “Brock” Hardaway (filed herewith) * |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11 | Form of Termination Compensation Agreement dated March 10, 2006 by and between RehabCare Group, Inc. and other executive officers who are not named executive officers (filed as Exhibit 10.5 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference) * |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | RehabCare Severance Plan for Company Senior Vice Presidents effective January 1, 2009 (filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | RehabCare Severance Plan for Company Vice Presidents effective January 1, 2009 (filed as Exhibit 10.6 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | RehabCare Executive Deferred Compensation Plan (filed as Exhibit 10.12 to the Registrant’s Report on Form 10-K, dated May 27, 1994 and incorporated herein by reference) * |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | RehabCare Executive Deferred Compensation Plan as amended and restated effective January 1, 2009 (filed as Exhibit 10.7 to Registrant’s Current Report on Form 8-K dated December 12, 2008 and incorporated herein by reference) * |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | RehabCare Directors’ Stock Option Plan (filed as Appendix A to Registrant’s definitive Proxy Statement for the 1994 Annual Meeting of Stockholders and incorporated herein by reference) * |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | Second Amended and Restated 1996 Long-Term Performance Plan (filed as Appendix B to Registrant’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders and incorporated herein by reference) * |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.18 | Form of Stock Option Agreement for the Second Amended and Restated 1996 Long-Term Performance Plan (filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference) * |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Form of Restricted Stock Agreement for the Second Amended and Restated 1996 Long-Term Performance Plan (filed as Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference) * |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | RehabCare Group, Inc. 2006 Equity Incentive Plan (filed as Appendix A to the Registrant’s Definitive Proxy Statement for the 2006 Annual Meeting of Shareholders and incorporated herein by reference) * |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | RehabCare Group, Inc. 2006 Equity Incentive Plan, as amended and restated effective May 4, 2010 (filed as Appendix A to the Registrant’s Definitive Proxy Statement for the 2010 Annual Meeting of Shareholders and incorporated herein by reference)* |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | Amended and Restated Credit Agreement, dated November 24, 2009, by and among RehabCare Group, Inc., as borrower, certain subsidiaries and affiliates of the borrower, as guarantors, and Bank of America, N.A., as administrative agent and collateral agent, and Banc of America Securities LLC, RBC Capital Markets and BNP Paribas Securities Corp., as joint lead arrangers (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated November 24, 2009 and incorporated herein by reference) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Pledge Agreement, dated as of November 24, 2009, by and among RehabCare Group, Inc. and subsidiaries, as pledgors, and Bank of America, N.A., as collateral agent (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated November 24, 2009 and incorporated herein by reference) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Security Agreement, dated as of November 24, 2009, by and among RehabCare Group, Inc. and subsidiaries, as grantors, and Bank of America, N.A., as collateral agent (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated November 24, 2009 and incorporated herein by reference) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | Non-Continuous Aircraft Dry Lease Agreement by and between 55JS Limited, Co. and RehabCare Group, Inc. (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated September 7, 2006 and incorporated herein by reference) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26 | Asset Purchase Agreement dated June 8, 2005 by and among RehabCare Group East, Inc., a wholly owned subsidiary of Registrant, MeadowBrook HealthCare, Inc., MeadowBrook Specialty Hospital of Tulsa LLC, Lafayette Rehab Associate Limited Partnership, Clear Lake Rehabilitation Hospital, Inc. and South Dade Rehab Associates Limited Partnership (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated August 4, 2005 and incorporated herein by reference) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | Purchase and Sale Agreement, dated May 3, 2006, by and among LUK-Symphony Management, LLC, Symphony Health Services, LLC and RehabCare Group, Inc. (filed as exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated May 8, 2006 and incorporated herein by reference) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 21.1 | Subsidiaries of the Registrant (filed herewith) |
|------|-------------------------------------------------|

| 23.1 | Consent of KPMG LLP (filed herewith) |
|------|--------------------------------------|

| 31.1 | Certification by Chief Executive Officer in accordance with Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification by Chief Financial Officer in accordance with Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification by Chief Executive Officer in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification by Chief Financial Officer in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|