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HealthSouth Expects Profit To Miss Wall Street Forecast


HealthSouth Corp. expects earnings and revenue to fall short of Wall Street expectations next year as it takes into account current Medicare reimbursement policies for outpatient physical-therapy services.

The nation's largest operator of rehabilitation centers, which is currently the focus of a Securities and Exchange Commission probe, said Monday that it expects 2003 earnings excluding charges or other items of between 55 cents and 57 cents a share, on revenue of $4.23 billion to $4.32 billion.

Analysts' latest forecasts put earnings at about 61 cents a share for 2003, with revenue of around $4.57 billion, according to a survey by Thomson First Call. In 2001, HealthSouth posted earnings excluding items of $326.1 million, or 82 cents a share, on revenue of $4.38 billion.

The company said it expects earnings before interest, taxes, depreciation and amortization, or Ebitda, of $1.05 billion to $1.09 billion next year, while capital expenditures should range from $375 million to $425 million.

In late August, the company said a change in Medicare billing, issued May 17 and effective July 1, would reduce annual Ebitda by $175 million. The change lowered Medicare reimbursements for outpatient services. A few weeks later, the SEC began investigating HealthSouth's accounting issues and stock trading related to announcements that had sent the company's stock sharply lower.

On a quarterly basis, HealthSouth said it expects earnings of about 13 cents a share for the 2003 first quarter, 14 cents to 15 cents a share for the second quarter, 14 cents a share for the third period and about 14 cents to 15 cents a share for the fourth.

Analysts expect earnings of about 13 cents a share for the first quarter, 15 cents a share for the second and third quarters and 16 cents a share for the fourth quarter, according to First Call.

Last month, HealthSouth said it would cut up to 2% of its work force, or about 1,000 of its roughly 51,000 employees, to reduce costs. The company has said that the job cuts are in response to a change in Medicare policies.

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