HealthSouth Corp., Birmingham, Ala., suffered a staggering fourth-quarter loss from about $640 million of pretax charges, including $255.5 million for closing or selling 220 rehabilitation centers. HealthSouth's net loss was $405.8 million, or $1.03 per share, for the quarter ended Dec. 31, compared with net income of $67.9 million, or 17 cents per share, in the year-ago quarter. Revenue fell about 17.5% to $923.5 million. Restructuring charges totaled $445 million before taxes, including costs for closing or selling facilities, asset impairment and goodwill amortization. In addition, the company took $194.8 million in other charges for a change in accounting for bad debt, open cost report settlements and unfunded retirement benefits. For the year, HealthSouth lost $270 million, or 47 cents per share, on revenue of $4.3 billion. Total revenue declined about 10% from 2001.
In a written statement, Chairman and CEO Richard Scrushy called the fourth quarter "a bottom from which we expect to see growth in 2003." In January, Scrushy announced plans to shed underperforming facilities, improve marketing and reduce expenses. While outpatient revenue was down in the company's rehabilitation business, inpatient revenue was up 12% from the fourth quarter of 2001, and surgery center revenue had increased 5%, Scrushy said. The Securities and Exchange Commission is examining stock trades by HealthSouth insiders, including Scrushy, that took place shortly before the company reduced its projected 2003 profit by $175 million, citing Medicare reimbursement policy on group vs. individual therapy. The company said it still is dealing with the effects of the policy. HealthSouth's earnings release is available on its Web site, www.hrcnews.com -- by Julie Piotrowski