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HealthSouth Announces Definitive Agreement to Acquire CareSouth Home Health Agency Operations

Adds New Geographic Markets to Home Health and Hospice Segment. Provides Additional Clinical Collaboration Opportunities with Inpatient Rehabilitation Segment

BIRMINGHAM, Ala., – HealthSouth Corporation (NYSE: HLS) (“HealthSouth”), a leading provider of post-acute healthcare services, today announced its Encompass Home Health operating unit (“Encompass”) has entered into a definitive agreement to acquire the home health agency operations of CareSouth Health System, Inc. (“CareSouth”) for a cash purchase price of $170 million. CareSouth operates a portfolio of 45 home health locations in 7 states and generated revenues of approximately $104 million in 2014. The transaction was approved by both companies’ boards of directors and is expected to close in the fourth quarter of 2015, subject to regulatory approval. HealthSouth expects to fund the transaction with cash on hand and borrowings under its senior secured credit facility.

The CareSouth acquisition enables HealthSouth to leverage the operating platform of Encompass across home health locations in the new markets of Alabama, Georgia, North Carolina, South Carolina, and Tennessee. CareSouth also improves Encompass’ market share position in the key states of Florida and Virginia. Upon completion of this transaction, Encompass will become the third largest home health provider in Virginia and the ninth largest home health provider in Florida. These new home health locations will overlap with fourteen of HealthSouth’s existing inpatient rehabilitation hospitals. The addition of these assets will allow HealthSouth to better serve the post-acute needs of patients in those markets by offering both facility-based and home-based post-acute services.

“We are very pleased to be joining forces with a great organization like CareSouth. By combining the CareSouth and Encompass teams, we will further our mission of providing a better way to care,” said April Anthony, Chief Executive Officer of Encompass. “We have respected the CareSouth management team for some time and are confident our cultures and philosophies will align well.”

The closing of the transaction is subject to certain customary closing conditions and regulatory approvals, including expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. HealthSouth intends to address the effects of this acquisition on its Adjusted EBITDA and earnings per share after the transaction closes.

About HealthSouth
HealthSouth is one of the nation’s largest providers of post-acute healthcare services, offering both facility-based and home-based post-acute services in 33 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. HealthSouth can be found on the Web at www.healthsouth.com.

About CareSouth
CareSouth is a provider of home health, hospice, and private duty services with 45 locations across the mid-atlantic and southeast region. CareSouth’s senior living service division and its Health at Home joint venture will not be included in this acquisition and will continue following the acquisition to operate under the name Careity. CareSouth can be found on the Web at www.caresouth.com.