Subsequent to its earnings release for the first quarter of 2017,
HealthSouth Corporation (the Company or HealthSouth) assembled an
Investor Reference Book, a copy of which is attached to this
Current Report on Form 8K as Exhibit 99.1 and incorporated herein
by reference (the Investor Reference Book). The Investor Reference
Book addresses, among other things, an overview of the Company and
its industry, its business outlook, its financial and operational
metrics and initiatives, and its value proposition. The Investor
Reference Book is available at
http://investor.healthsouth.com>by clicking on an available
link.

The Company will participate in the UBS Global Healthcare
Conference in New York City, on May 22-24, 2017. HealthSouth
Executive President and Chief Executive Officer, Mark Tarr, will
present at 8:00 a.m. ET on Tuesday, May 23, 2017 and reference
selected slides included in the Investor Reference Book. The
presentation will be webcast live and will be available at
http://investor.healthsouth.com>by clicking on an available
link.

Volume growth in the second quarter of 2017 continues to be in line
with the Company’s expectations for its inpatient rehabilitation
segment and home health and hospice segment. The Company reiterates
as of the date hereof its guidance previously reported in the
Current Report on Form 8-K, dated April 27, 2017, and during the
Company’s earnings conference call held on April 28, 2017.
Accordingly, the Company continues to expect the following
full-year 2017 ranges:

Adjusted EBITDA of $800 million to $820 million; and

Adjusted earnings per share from continuing operations attributable
to HealthSouth of $2.61 to $2.73.

The Company uses same-store comparisons to explain the changes in
certain performance metrics and line items within its financial
statements. Same-store comparisons are calculated based on
hospitals and agencies open throughout both the full current and
prior periods presented. These comparisons include the financial
results of market consolidation transactions in existing markets,
as it is difficult to determine, with precision, the incremental
impact of these transactions on the Company’s results of
operations.

The information contained herein is being furnished to Item 7.01 of
Form 8-K, Regulation FD Disclosure. This information shall not be
deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act), or incorporated by
reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing. The furnishing of
this information will not be deemed an admission as to the
materiality of any information contained herein.

Note Regarding Presentation of Non-GAAP Financial Measures

The financial data contained in the Investor Reference Book
attached hereto as Exhibit 99.1 includes non-GAAP financial
measures, including the Companys adjusted earnings per share,
leverage ratio, Adjusted EBITDA, and adjusted free cash flow.

Excluding net operating revenues, the Company does not provide
guidance on a GAAP basis because it is unable to predict, with
reasonable certainty, the future impact of items that are deemed to
be outside the control of the Company or otherwise non-indicative
of its ongoing operations. Such items include government, class
action, and related settlements; professional feesaccounting, tax,
and legal; mark-to-market adjustments for stock appreciation
rights; gains or losses related to hedging instruments; loss on
early extinguishment of debt; adjustments to its income tax
provision (such as valuation allowance adjustments and settlements
of income tax claims); items related to corporate and facility
restructurings; and certain other items the Company believes to be
non-indicative of its ongoing operations. These items cannot be
reasonably predicted and will depend on several factors, including
industry and market conditions, and could be material to the
Company’s results computed in accordance with GAAP.

However, the following reasonably estimable GAAP measures for 2017
would be included in the reconciliation for Adjusted EBITDA if the
other reconciling GAAP measures could be reasonably predicted:

The Company is providing adjusted earnings per share from
continuing operations attributable to HealthSouth (adjusted
earnings per share). The Company believes the presentation of
adjusted earnings per share provides useful additional information
to investors because it provides better comparability of ongoing
performance to prior periods given that it excludes the impact of
government, class action, and related settlements; professional
feesaccounting, tax, and legal; mark-to-market adjustments for
stock appreciation rights; gains or losses related to hedging
instruments; loss on early extinguishment of debt; adjustments to
its income tax provision (such as valuation allowance adjustments
and settlements of income tax claims); items related to corporate
and facility restructurings; and certain other items the Company
believes to be non-indicative of its ongoing operations. It is
reasonable to expect that one or more of these excluded items will
occur in future periods, but the amounts recognized can vary
significantly from period to period and may not directly relate to
the Companys ongoing operations. Accordingly, they can complicate
comparisons of the Companys results of operations across periods
and comparisons of the Companys results to those of other
healthcare companies. Adjusted earnings per share should not be
considered as a measure of financial performance under generally
accepted accounting principles in the United States (GAAP) as the
items excluded from it are significant components in understanding
and assessing financial performance. Because adjusted earnings per
share is not a measurement determined in accordance with GAAP and
is thus susceptible to varying calculations, it may not be
comparable as presented to other similarly titled measures of other
companies. The Company reconciles adjusted earnings per share to
earnings per share in the Investor Reference Book attached hereto
as Exhibit 99.1.

The leverage ratio referenced therein is defined as the ratio of
consolidated total debt to Adjusted EBITDA for the trailing four
quarters. The Company believes its leverage ratio and Adjusted
EBITDA are measures of its ability to service its debt and its
ability to make capital expenditures. Additionally, the leverage
ratio is a standard measurement used by investors to gauge the
creditworthiness of an institution. The Companys credit agreement
also includes a maximum leverage ratio financial covenant which
allows the Company to deduct up to $75 million of cash on hand from
consolidated total debt. The Company reconciles Adjusted EBITDA to
net income and to net cash provided by operating activities in the
Investor Reference Book attached hereto as Exhibit 99.1. Adjusted
EBITDA for the Companys reportable segments is reconciled to net
income from continuing operations before income tax expense in the
Investor Reference Book attached hereto as Exhibit 99.1.

The Company uses Adjusted EBITDA on a consolidated basis as a
liquidity measure. The Company believes this financial measure on a
consolidated basis is important in analyzing its liquidity because
it is the key component of certain material covenants contained
within the Companys credit agreement, which is discussed in more
detail in Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations, Liquidity and Capital
Resources, and Note 9, Long-term Debt, to the consolidated
financial statements included in its Annual Report on Form 10K for
the year ended December 31, 2016 (the 2016 Form 10K). These
covenants are material terms of the credit agreement. Noncompliance
with these financial covenants under the credit agreementits
interest coverage ratio and its leverage ratiocould result in the
Companys lenders requiring the Company to immediately repay all
amounts borrowed. If the Company anticipated a potential covenant
violation, it would seek relief from its lenders, which would have
some cost to the Company, and such relief might be on terms less
favorable to those in the Companys existing credit agreement. In
addition, if the Company cannot satisfy these financial covenants,
it would be prohibited under the credit agreement from engaging in
certain activities, such as incurring additional indebtedness,
paying common stock dividends, making certain payments, and
acquiring and disposing of assets. Consequently, Adjusted EBITDA is
critical to the Companys assessment of its liquidity.

In general terms, the credit agreement definition of Adjusted
EBITDA, therein referred to as Adjusted Consolidated EBITDA, allows
the Company to add back to consolidated net income interest
expense, income taxes, and depreciation and amortization and then
add back to consolidated net income (1) all unusual or nonrecurring
items reducing consolidated net income (of which only up to $10
million in a year may be cash expenditures), (2) any losses from
discontinued operations and closed locations, (3) costs and
expenses, including legal fees and expert witness fees, incurred
with respect to litigation associated with stockholder derivative
litigation, and (4) share-based compensation expense. The Company
also subtracts from consolidated net income all unusual or
nonrecurring items to the extent they increase consolidated net
income.

The calculation of Adjusted EBITDA under the credit agreement does
not require us to deduct net income attributable to noncontrolling
interests or gains on disposal of assets and development
activities. It also does not allow us to add back professional fees
unrelated to the stockholder derivative litigation, losses on
disposal of assets, unusual or nonrecurring cash expenditures in
excess of $10 million, and charges resulting from debt transactions
and development activities. These items and amounts, in addition to
the items falling within the credit agreements unusual or
nonrecurring classification, may occur in future periods, but can
vary significantly from period to period and may not directly
relate to our ongoing operations. Accordingly, these items may not
be indicative of our ongoing performance, so the Adjusted EBITDA
calculation presented here includes adjustments for them.

Adjusted EBITDA is not a measure of financial performance under
GAAP, and the items excluded from Adjusted EBITDA are significant
components in understanding and assessing financial performance.
Therefore, Adjusted EBITDA should not be considered a substitute
for net income or cash flows from operating, investing, or
financing activities. Because Adjusted EBITDA is not a measurement
determined in accordance with GAAP and is thus susceptible to
varying calculations, Adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures of other companies.
Revenues and expenses are measured in accordance with the policies
and procedures described in Note 1, Summary of Significant
Accounting Policies, to the consolidated financial statements
accompanying the 2016 Form 10K.

The Company also uses adjusted free cash flow as an analytical
indicator to assess its performance. Management believes the
presentation of adjusted free cash flow provides investors an
efficient means by which they can evaluate the Companys capacity to
reduce debt, pursue development activities, and return capital to
its common stockholders. The calculation of adjusted free cash flow
and a reconciliation of net cash provided by operating activities
to adjusted free cash flow are included in the Investor Reference
Book attached hereto as Exhibit 99.1. This measure is not a defined
measure of financial performance under GAAP and should not be
considered as an alternative to net cash provided by operating
activities. The Companys definition of adjusted free cash flow is
limited and does not represent residual cash flows available for
discretionary spending. Because this measure is not determined in
accordance with GAAP and is susceptible to varying calculations, it
may not be comparable to other similarly titled measures presented
by other companies. See the consolidated statements of cash flows
included in the 2016 Form 10-K and the condensed consolidated
statements of cash flows included in the Company’s quarterly
report on Form 10-Q for the quarterly period ended March 31, 2017
for the GAAP measures of cash flows from operating, investing, and
financing activities.

Forward-Looking Statements

Statements contained in this document and the Investor Reference
Book attached hereto as Exhibit 99.1, which are not historical
facts, such as those relating to the financial performance,
guidance and assumptions, anticipated acquisitions, dispositions
and other development activities, business strategy, legislative
and regulatory developments and their related impacts on
HealthSouth, capital expenditures, cyber security, dividend
strategies, repurchases of securities, effective tax rates,
business model, and the positioning of services for the system of
healthcare delivery in the future are forward-looking statements.
In addition, HealthSouth, through its senior management, may from
time to time make forward-looking public statements concerning the
matters described herein. All such estimates, projections, and
forward-looking information speak only as of the date hereof, and
HealthSouth undertakes no duty to publicly update or revise such
forward-looking information, whether as a result of new
information, future events, or otherwise. Such forward-looking
statements are necessarily estimates based upon current
information, involve a number of risks and uncertainties, and
relate to, among other things, future events, HealthSouths plan to
repurchase its debt or equity securities, HealthSouths financial
plans, its future financial performance, its projected business
results or model, its ability to return value to shareholders, its
projected leverage ratio, its acquisition opportunities, and the
impact of legislation or regulation. Actual events or results may
differ materially from those anticipated in these forward-looking
statements as a result of a variety of factors. While it is
impossible to identify all such factors, factors which could cause
actual events or results to differ materially from those estimated
by HealthSouth include, but are not limited to, HealthSouths
ability to comply with extensive, complex, and ever-changing
regulations in the healthcare industry; the price of HealthSouths
common stock as it affects the Companys willingness and ability to
repurchase shares and the financial and accounting effects of any
repurchases; any adverse outcome of various lawsuits, claims, and
legal or regulatory proceedings involving HealthSouth, including
its pending DOJ and HHS-OIG investigations and any matters related
to yet undiscovered issues, if any, at acquired companies; any
adverse effects on operating performance of HealthSouths stock
price resulting from the integration of those acquisitions;
potential disruptions, breaches, or other incidents affecting the
proper operation, availability, or security of HealthSouths
information systems, including unauthorized access to or theft of
patient, business associate, or other sensitive information or
inability to provide patient care because of system unavailability
as well as unforeseen issues, if any, related to integration of
systems of any acquired companies; the ability to successfully
integrate acquired companies, including realization of anticipated
tax benefits, revenues, and cost savings, minimizing the negative
impact on margins arising from the changes in staffing and other
operating practices, and avoidance of unforeseen exposure to
liabilities; significant changes in HealthSouths management team;
HealthSouths ability to successfully complete and integrate de novo
developments, acquisitions, investments, and joint ventures
consistent with its growth strategy; changes, delays in (including
in connection with resolution of Medicare payment reviews or
appeals), or suspension of reimbursement for HealthSouths services
by governmental or private payors; changes in the regulation of the
healthcare industry at either or both of the federal and state
levels, including as part of national healthcare reform and deficit
reduction; competitive pressures in the healthcare industry and
HealthSouths response thereto; HealthSouths ability to obtain and
retain favorable arrangements with third-party payors;
HealthSouth’s ability to control costs, particularly labor and
employee benefit costs, including group medical expenses; adverse
effects resulting from coverage determinations made by Medicare
Administrative Contractors regarding its Medicare reimbursement
claims and lengthening delays in HealthSouth’s ability to recover
improperly denied claims through the administrative appeals process
on a timely basis; HealthSouth’s ability to adapt to changes in
the healthcare

delivery system, including involvement in coordinated care
initiatives or programs that may arise with its referral sources
and related impacts on volume or pricing and any significant
changes that may result from the change in the executive branch of
the U.S. government; HealthSouths ability to attract and retain
nurses, therapists, and other healthcare professionals in a highly
competitive environment with often severe staffing shortages and
the impact on HealthSouths labor expenses from potential union
activity and staffing shortages; general conditions in the economy
and capital markets, including any crisis resulting from
uncertainty in the sovereign debt market; the increase in the costs
of defending and insuring against alleged professional liability
claims and HealthSouths ability to predict the estimated costs
related to such claims; and other factors which may be identified
from time to time in HealthSouths SEC filings and other public
announcements, including HealthSouths Form 10K for the year ended
December 31, 2016 and Form 10-Q for the quarter ended March 31,
2017.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits