As Richard Scrushy faces his 85-count indictment, the management team that replaced him tries to resurrect his life's work, HealthSouth Corp.
Eight months after the HealthSouth accounting scandal became public, the rehabilitation giant has managed to avoid what seemed inevitable in March-bankruptcy. While the company was late on interest payments to banks and bondholders for about five months, it said it's caught up.
HealthSouth said last week that it has made a debt-restructuring offer to its bondholders. The company also said some bondholders have sent HealthSouth notice that it is in technical default on some of its bonds. The notice triggers a review that could later force the company to accelerate repayment of the bonds.
In a news release, interim Chairman Joel Gordon accused these bondholders of trying "to extract greater value at the expense of our other stakeholders."
The management team that succeeded Scrushy-Gordon, interim Chief Executive Officer Robert May and interim Chief Restructuring Officer Bryan Marsal-has moved HealthSouth beyond survival mode to looking for new growth opportunities, company spokeswoman Laura Smith said.
Shedding the aircraft fleet, cutting jobs at headquarters and selling HealthSouth Doctors' Hospital, Coral Gables, Fla., to Baptist Health South Florida, Coral Gables, all have helped the company develop what Smith called "a good cash position."
HealthSouth is opening a rehabilitation hospital and two long-term acute-care hospitals this quarter and plans to open five new long-term acute-care hospitals by the end of March, Smith said. Six ambulatory surgery centers are slated to open in the coming months, she said.
A key question is what to do with HealthSouth's 127 diagnostic imaging centers. During an investor presentation in July, Marsal said the company would consider selling the centers if margins didn't improve. Smith said the centers margins fall short of what the bulk of HealthSouth's businesses earn. The company has not made any plans to sell, Smith said.