According to its financial results released today, HealthSouth is reporting strong results for the second quarter ending June 30, 2008. Net cash provided by operating activities was $67.0 million for the first six months of 2008. The results showed income from continuing operations of $47.2 million for the second quarter of 2008 versus $4.7 million for the second quarter of 2007. This increase was driven primarily by increased discharges and revenues quarter over quarter. Compared to the second quarter of 2007, discharges increased by 5.6% and net operating revenues increased by 5.2%.

As a result of this performance and based on the improved outlook for the remainder of the year, the Company has increased its guidance for 2008.

Consolidated net operating revenues for the second quarter of 2008 were $461.4 million, which represents a $22.7 million, or 5.2%, increase over the same quarter of 2007.

Outpatient and other revenues for the second quarter of 2008 were down $2.6 million, or 5.2%, compared to the same quarter of 2007. Outpatient visits declined 7.7% in the second quarter of 2008 compared to the second quarter of 2007 due primarily to the closing of 20 underperforming satellites throughout 2007 and the net closure of one satellite during the second quarter of 2008.

Operating earnings were $65.3 million for the second quarter of 2008 compared to $51.8 million for the second quarter of 2007, representing a 26.1% increase quarter over quarter.

HealthSouth reported pre-tax income from continuing operations of $47.9 million for the second quarter of 2008 compared to a pre-tax loss from continuing operations of $5.6 million for the second quarter of 2007. Pre-tax income from continuing operations for the second quarter of 2008 included a net gain of $8.6 million recorded as government, class action, and related settlements and a $28.5 million gain on our interest rate swap.

Net income available to common shareholders was $37.6 million, or $0.47 per share (basic and diluted), for the second quarter of 2008 compared to net income available to common shareholders of $461.8 million, or $5.87 per share (basic and diluted), for the second quarter of 2007.

Net cash provided by operating activities was $67.0 million for the six months ended June 30, 2008.

On June 27, 2008, HealthSouth finalized the issuance and sale of 8.8 million shares of common stock to J.P. Morgan Securities Inc. for net proceeds of approximately $150 million. HealthSouth used the net proceeds of the offering primarily for redemption and repayment of short-term and long-term borrowings, which in turn will lower their interest expense.

HealthSouth is the nation’s largest provider of inpatient rehabilitation services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves more than 250,000 patients annually through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellites, and home health agencies. HealthSouth strives to be the nation’s preeminent provider of inpatient rehabilitation services and can be found on the Web at www.healthsouth.com.

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