HealthSouth shows more healthy numbers

While it's a bit soon to declare the ghost of Richard Scrushy banished, HealthSouth Corp's most recent quarterly earnings seem to be moving in the right direction. The hospital operator reported $287.6 million in net income for the third quarter ending Sept. 30, compared with a $76.1 million lost during the same period last year. This follows a positive net income report of $468 million for the second quarter, during which the company generated nearly $1 billion from the sale of its diagnostic and outpatient divisions. This is the first time the company has had two consecutive quarters with positive income since the Scrushy era.

Now, it's definitely worth noting that the third-quarter profits were helped by a $440 million federal income tax rebate, in which the feds gave back taxes the firm overpaid due to inflated earnings reports during Scrushy's rule. HealthSouth used $405 million of the refund to pay down its debt, which since December 31, 2006 has fallen to $2.52 billion from $3.36 billion. More promisingly, however, third-quarter numbers include a 5.1 percent increase in operating revenue from inpatient hospitals, up to 4383.5 million from $364.9 million during the same quarter in 2006.

All told, it looks like HealthSouth management is doing nicely with its post-Scrushy restructuring. Now, the question is whether HealthSouth's new focus on "post-acute" care (e.g. inpatient rehab) will work over the longer term.

To learn more about HealthSouth's progress:
- read this Birmingham Business Journal piece

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