HealthSouth officials told stockholders, creditors and hundreds of nervous physician owner/partners at 196 ambulatory surgery centers that despite a number of legal rocks that remain in the road and up to $4.6 billion in estimated fraudulent accounting, the company remains profitable and is projecting continued profitability through 2004.
"I would like to remind everyone that HealthSouth is still a solid business," acting Chairman Joel Gordon said at the outset of a stockholders' meeting today in New York. "I'm pleased to report that each of these four businesses remains solid and profitable."
Officials of the Birmingham, Ala.-based company project that net revenues though 2004 will reach $3.95 billion with earnings before interest, taxes, depreciation and amortization of $650 million for 2004.
All four main business divisions, inpatient rehabilitation services, surgery center joint ventures with physicians, outpatient rehab clinics and diagnostic centers all were budgeted for profitability, officials said.
Outpatient surgery centers, in which the average percent of physician ownership per facility is 39%, are expected to be the most profitable, generating an estimated $888 million and EBITDA of $155 million.
Inpatient division revenues were projected at $2.06 billion and EBITDA at $511 million. Outpatient division revenues were estimated at $538 million and EBITDA at $68 million. Diagnostic centers are expected to produce $260 million in revenues and $38 million in EBITDA.
"We want to believe that we can grow this company," Gordon said. "We have stable and improving operations. While we still face rocky roads, we believe that they are manageable."
Among those roads are pending federal investigations by the Department of Justice, CMS and the Securities and Exchange Commission, plus private class action and qui tam lawsuits.
A forensic audit is under way, and final audited financial statements are not expected to be released until the first quarter of 2005.
Officials say they have identified $2.5 billion in fraudulent entries on HealthSouth's books, another $500 million in improper accounting for acquisitions and goodwill, and between $800 million and $1.6 billion in accounting that doesn't meet generally accepted accounting principles.
HealthSouth founder Richard Scrushy is awaiting trial on federal fraud charges, and 15 former HealthSouth executives have pleaded guilty to criminal fraud charges since FBI agents raided the company last March.