HealthSouth Corporation (NYSE:HLS) Files An 8-K Unregistered Sales of Equity Securities

As disclosed in the Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 19, 2013 (the
November 19 Form 8-K), HealthSouth Corporation (the Company)
previously issued $320 million in aggregate principal amount of
2.00% Convertible Senior Subordinated Notes due 2043 (the
Convertible Notes) to holders of, and in exchange for, 257,110
shares of the Companys 6.50% Series A Convertible Perpetual
Preferred Stock, par value $0.10 per share and liquidation
preference $1,000 per share. The Convertible Notes are governed
by the Indenture (the Indenture), dated November 18, 2013, by and
between the Company and Wells Fargo Bank, National Association,
as trustee, paying agent, conversion agent and registrar.

On May 26, 2017, the Company provided the notice of the
redemption of all of the outstanding principal amount of the
Convertible Notes, which will occur on June 26, 2017 (the
Redemption Date). to the Indenture, the holders of the
Convertible Notes may elect to convert those notes to shares of
the Companys common stock, par value $.01 per share (the Common
Stock), prior to the Redemption Date. The Company may elect to
settle any conversion, in whole or in part, by delivering cash in
lieu of shares. In connection with any conversion, the Company
will pay a make-whole premium to the electing holder by
increasing the conversion rate on such Convertible Notes.

As of the date of this Current Report on Form 8-K, conversion
elections delivered by noteholders to the Company have resulted,
or are expected to result, in the following issuances of shares
of Common Stock:

The shares of Common Stock delivered in connection with these
conversions have been issued in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended (the Securities Act).

This Current Report on Form 8-K does not constitute an offer to
sell or a solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities law of any such state or jurisdiction. The Convertible
Notes and the shares of Common Stock issuable upon the conversion
of the Convertible Notes have not been and will not be registered
under the Securities Act or the securities laws of any other
jurisdiction and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.

The foregoing descriptions of the Convertible Notes and the
Indenture do not purport to be complete and are qualified in
their entirety by reference to the Indenture. A copy of the
Indenture, including the form of Global Note for the Convertible
Notes, was attached as Exhibit 4.1 to the November 19 Form 8-K.

Forward-Looking Statements

Statements contained in this Current Report on Form 8-K, which
are not historical facts, such as the redemption or the
conversion of the Notes, the expected conversion settlement dates
and consideration are forward-looking statements. In addition,
the Company, 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
the Company 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 and involve a number of risks and uncertainties.
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 the Company include,
but are not limited to, the Companys ability to comply with
extensive, complex, and ever-changing regulations in the
healthcare industry; the price of the Companys common stock as it
affects the tax and accounting impacts resulting from conversions
of

the Notes; the price of the Companys common stock as it affects
the Companys willingness and ability to settle conversions in
shares of common stock; potential disruptions, breaches, or other
incidents affecting the proper operation, availability, or
security of the Companys information systems, including
unauthorized access to or theft of patient, business associate,
or other sensitive information; general conditions in the economy
and capital markets, including any crisis resulting from
uncertainty in the sovereign debt market; and other factors which
may be identified from time to time in the Companys SEC filings
and other public announcements, including its Form 10K for the
year ended December 31, 2016 and Form 10-Q for the quarter ended
March 31, 2017.