AP News

HealthSouth takes 4Q loss on senior note swap


NEW YORK (AP) — Hospital operator HealthSouth said Wednesday it took a loss in the fourth quarter after it swapped $320 million in convertible debt for preferred stock.

During the quarter HealthSouth exchanged about 257,000 preferred shares for $320 million in convertible senior notes that come due in 2043. The Birmingham, Ala., company will make interest payments on the debt instead of paying preferred dividends, and said it will save about $10 million a year before taxes.

The company reported $71.6 million, or 83 cents per share, in costs related to the transaction. HealthSouth said it lost $26.5 million, or 31 cents per share, after paying preferred dividends. A year earlier it earned $41.2 million, or 43 cents per share. Net operating revenue rose 3.5 percent, to $572.1 million from $552.9 million, as discharges of patients increased.

Analysts expected income of 44 cents per share and $578.8 million in revenue, according to FactSet.

HealthSouth runs inpatient hospitals and outpatient facilities in 28 states and Puerto Rico. The company said it earned $2.58 per share in 2013, and its annual revenue grew 5.1 percent to $2.27 billion.

HealthSouth is forecasting net income of $1.86 to $1.91 per share in 2014. That compares with the average analyst estimate of $1.97 per share.

Shares of HealthSouth Corp. lost 54 cents to $32.78 on Wednesday and declined another 7 cents to $32.71 in after-hours trading.


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