HealthSouth Shares Surge 9% As Results Top View, Boosts 2014 Outlook

(RTTNews) - Shares of HealthSouth Corp. (HLS) surged nearly nine percent in extended trading on Monday after the hospitals operator reported results for the second quarter that topped analysts' expectations. The company also raised earnings forecast for the full-year 2014.

However, the company reported a profit for the quarter that nearly halved from last year, despite revenue growth, hurt by provisions for income taxes.

"The second quarter was another excellent quarter for HealthSouth. We achieved revenue growth of 7.1%, increased our Adjusted EBITDA by 13.5%, and saw our adjusted free cash flow grow to $97.9 million from $72.5 million when compared to the second quarter of 2013," President and CEO Jay Grinney said in a statement.

The Birmingham, Alabama-based inpatient rehabilitation hospitals operator reported net income of $83.1 million or $0.85 per share for the second quarter, sharply lower than $165.2 million or $1.66 per share in the prior-year quarter.

Income from continuing operations for the quarter plunged to $79.3 million or $0.81 per share from $165.1 million or $1.66 per share in the year-ago quarter.

The company said its earnings for the latest quarter include strong operating results and the $27.2 million or $0.27 per share nontaxable gain related to the increase in ownership and consolidation of Fairlawn Rehabilitation Hospital.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated net operating revenues grew 7.1 percent to $604.4 million from $564.5 million in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $589.78 million.

The company said the revenue growth was attributable to a 3.0 percent rise in patient discharges and a 4.9 percent increase in net patient revenue per discharge. Discharge growth included a 1.4 percent improvement in same-store discharges.

Provision for income tax expense for the quarter was $36.5 million, compared to a benefit of $86.5 million last year.

Looking ahead to fiscal 2014, the company raised its guidance for income from continuing operations to a range of $2.25 to $2.31 per share from the prior forecast in the range of $1.86 to $1.91 per share. Street is currently looking for full-year 2014 earnings of $1.91 per share.

"We also continued to invest in the future growth of the company with the ongoing development of three new hospitals that are scheduled to open in the fourth quarter of this year, the execution of a joint venture agreement with Mountain States Health Alliance to own and operate Quillen Rehabilitation Hospital in Johnson City, Tennessee, and the execution of an agreement with Memorial Health to form a joint venture to own and operate an inpatient rehabilitation hospital in Savannah, Georgia," Grinney added.

HLS closed Monday's regular trading session at $37.64, up $0.45 or 1.21% on a volume of 0.51 per share. The stock surged a further $3.36 or 8.93% in after-hours trading.