<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 33-64935
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission on only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HEALTHSOUTH Corporation
________________________________________________
(Name of Registrant as Specified In Its Charter)
HEALTHSOUTH Corporation and Surgical Care Affiliates Inc.
________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value .01 per share, of HEALTHSOUTH Corporation
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
53,503,431
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
Pursuant to Rule 457(f)(l), the maximum aggregate offering price is the
product of (a) $33.1875, representing the average of the high and low
sales prices of the Common Stock of Surgical Care Affiliates, Inc.
("SCA") as reported on the New York Stock Exchange Composite
Transactions Tape on December 5, 1995, and (b) 39,868,429, the maximum
number of shares of SCA Common Stock to be acquired by the Registrant
in connection with the acquisition of SCA.
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$1,323,133,487
-----------------------------------------------------------------------
(5) Total fee paid:
$456,253
-----------------------------------------------------------------------
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
$456,253
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
$262,243.67 was paid in connection with the filing of preliminary proxy
materials on Schedule 14A and the remaining $194,009.33 was paid in
connection with the filing of a Registration Statement on Form S-4,
Registration No. 33-64935.
_______________________________________________________________________
(3) Filing Party:
HEALTHSOUTH Corporation
_______________________________________________________________________
(4) Date Filed:
December 12, 1995
_______________________________________________________________________
<PAGE>
[HEALTHSOUTH Corporation Logo] [Surgical Care Affiliates, Inc. Logo]
January 8, 1996
Dear Stockholder:
The purpose of this correspondence is to provide you with information
regarding a recent development involving HEALTHSOUTH Corporation
("HEALTHSOUTH"). This information amends and supplements the original
Prospectus-Joint Proxy Statement, dated December 15, 1995, relating to the
Special Meetings of Stockholders of HEALTHSOUTH and Surgical Care Affiliates,
Inc. ("SCA") to be held on January 17, 1996, for the purpose of approving and
adopting an Amended and Restated Plan and Agreement of Merger, pursuant to which
HEALTHSOUTH will acquire SCA, and with respect to the HEALTHSOUTH Special
Meeting, for the purpose of approving an amendment to the Certificate of
Incorporation of HEALTHSOUTH. Stockholders may obtain an additional copy of the
original Prospectus-Joint Proxy Statement free of charge by calling Morrow & Co.
at (212) 754-8000.
On December 16, 1995, HEALTHSOUTH entered into an Agreement and Plan of
Merger with Advantage Health Corporation ("Advantage Health"), pursuant to which
HEALTHSOUTH, through a wholly-owned subsidiary, will acquire Advantage Health.
The attached supplement to the original Prospectus-Joint Proxy Statement more
fully sets forth the terms of the transaction and provides certain updated
financial information relating to the proposed Advantage Health transaction.
A new proxy card has been enclosed in the event that you have already
returned a proxy, but now wish to change your vote. By completing, signing and
dating this new proxy form and returning it in the enclosed envelope, your prior
proxy will automatically be revoked and your vote on the new proxy form will be
counted. In addition, proxies sent via facsimile transmission will be accepted
if received not later than 15 minutes prior to the scheduled commencement of the
relevant Special Meeting. Such proxies may be sent via facsimile to Morrow &
Co., proxy solicitors for HEALTHSOUTH and SCA, at (212) 754-8300. There is no
need to return an additional proxy card if you have already sent in your proxy
and do not wish to change your vote. If you are able to attend the Special
Meeting, you may revoke your Proxy and vote in person if you wish. Stockholders
may call 1-800-433-3868 beginning at 5:00 p.m., Eastern Time, on January 15,
1996, for information concerning the Exchange Ratio as finally determined.
RICHARD M. SCRUSHY JOEL C. GORDON
Chairman of the Board Chairman of the Board
and Chief Executive Officer, and Chief Executive Officer,
HEALTHSOUTH Corporation Surgical Care Affiliates, Inc.
<PAGE>
JOINT PROXY STATEMENT
(SUPPLEMENT)
OF
HEALTHSOUTH SURGICAL CARE
Corporation AFFILIATES, INC.
for the Special Meeting of for the Special Meeting of
Stockholders to be held on Stockholders to be held on
January 17, 1996 January 17, 1996
-------------------------
PROSPECTUS
(Supplement)
OF
HEALTHSOUTH Corporation
This Supplement provides information regarding a recent development involving
HEALTHSOUTH Corporation ("HEALTHSOUTH"). This information amends and supplements
the original Prospectus-Joint Proxy Statement, dated December 15, 1995 (the
"Original Prospectus-Joint Proxy Statement"), relating to the Special Meetings
of Stockholders of HEALTHSOUTH and Surgical Care Affiliates, Inc. ("SCA") to be
held on January 17, 1996, for the purpose of approving and adopting an Amended
and Restated Plan and Agreement of Merger, pursuant to which HEALTHSOUTH will
acquire SCA, and with respect to the HEALTHSOUTH Special Meeting, for the
purpose of approving an amendment to the Certificate of Incorporation of
HEALTHSOUTH. Stockholders may obtain an additional copy of the Original
Prospectus-Joint Proxy Statement free of charge by calling Morrow & Co. at (212)
754-8000.
This Supplement is being furnished to the stockholders of each of HEALTHSOUTH
and SCA in connection with the solicitation of proxies to be used at the
respective Special Meetings of HEALTHSOUTH and SCA to be held for the purposes
described in the Original Prospectus-Joint Proxy Statement.
All information contained herein concerning HEALTHSOUTH was supplied by
HEALTHSOUTH, and all information contained herein concerning SCA was supplied by
SCA. This Supplement and the accompanying form of proxy are first being mailed
to stockholders of HEALTHSOUTH and SCA on January 8, 1996. Capitalized terms
used but not defined herein shall have the meanings set forth in the Original
Prospectus-Joint Proxy Statement.
-------------------------
The date of this Supplement is January 8, 1996.
<PAGE>
The purpose of this Supplement to the Original Prospectus-Joint Proxy
Statement of HEALTHSOUTH Corporation ("HEALTHSOUTH") and Surgical Care
Affiliates, Inc. ("SCA"), dated December 15, 1995, is to provide stockholders of
both companies with information regarding a recent development involving
HEALTHSOUTH.
The subsection designated "Recent Developments" in the "Summary of
Prospectus-Joint Proxy Statement" found on page 7 of the Original
Prospectus-Joint Proxy Statement, and the section designated "Business of
HEALTHSOUTH" found on pages 57 through 72 of the Original Prospectus-Joint Proxy
Statement is hereby supplemented to include the following information: On
December 16, 1995, HEALTHSOUTH entered into an Agreement and Plan of Merger with
Advantage Health Corporation, a Delaware corporation ("Advantage Health"),
pursuant to which a wholly-owned subsidiary of HEALTHSOUTH will be merged into
Advantage Health. Advantage Health stockholders will be entitled to receive
shares of HEALTHSOUTH Common Stock with a value of $47.50 for each share of
Advantage Health Common Stock held by them, provided that Advantage Health
stockholders will not receive less than 1.3768 shares of HEALTHSOUTH Common
Stock, nor more than 1.6667 shares of HEALTHSOUTH Common Stock per Advantage
Health share. The estimated value of the transaction, which will be accounted
for as a tax-free pooling of interests, is approximately $325,000,000. As a
result of the acquisition of Advantage Health, HEALTHSOUTH will acquire
approximately 150 rehabilitation facilities currently owned or managed by
Advantage Health. The consummation of the Advantage Health merger is subject to
the approval of the stockholders of Advantage Health, the termination or
expiration of the waiting period required under the Hart-Scott-Rodino Antitrust
Improvements Act, and certain other regulatory approvals. Subject to such
approvals, the transaction is expected to close in the first quarter of 1996, or
as soon as practicable after receipt of such approvals.
The "Pro Forma Condensed Financial Information" found on page 18 and on pages
47 through 56 of the Original Prospectus-Joint Proxy Statement is hereby
supplemented by the Pro Forma Condensed Financial Information set forth on pages
P-1 through P-11 hereof, which gives effect to the contemplated merger of a
wholly owned subsidiary of HEALTHSOUTH with and into Advantage Health.
The subsections designated "The Merger" and "Market and Market Price" in the
"Summary of Prospectus-Joint Proxy Statement" found on pages 9 through 14 and
pages 15 and 16, respectively, of the Original Prospectus-Joint Proxy Statement,
and the section designated "The Merger" found on pages 23 through 44 of the
Original Prospectus-Joint Proxy Statement are hereby supplemented to include the
following information: HEALTHSOUTH has received approval for listing the shares
of HEALTHSOUTH Common Stock to be issued in the transaction with SCA on the New
York Stock Exchange (the "NYSE") upon official notice of issuance. Assuming
stockholder approval is obtained, each of HEALTHSOUTH and SCA believes that all
other conditions to the Merger have been satisfied or will be satisfied on or
before January 17, 1996. On January 5, 1996, the closing price of HEALTHSOUTH
Common Stock, as reported on the NYSE Composite Transactions Tape, was $28.875
and the closing price of SCA Common Stock, as reported on the NYSE Composite
Transactions Tape, was $33.75. Stockholders are advised to obtain current market
quotations for HEALTHSOUTH Common Stock and SCA Common Stock.
Stockholders may call 1-800-433-3868 beginning at 5:00 p.m., Eastern Time, on
January 15, 1996, for information concerning the Exchange Ratio as finally
determined. A new proxy card has been enclosed in the event that you have
already returned a proxy, but now wish to change your vote. By completing,
signing and dating this new proxy form and returning it in the enclosed
envelope, your prior proxy will automatically be revoked and your vote on the
new proxy form will be counted. In addition, proxies sent via facsimile
transmission will be accepted if received not later than 15 minutes prior to the
scheduled commencement of the relevant Special Meeting. Such proxies may be sent
via facsimile to Morrow & Co., proxy solicitors for HEALTHSOUTH and SCA, at
(212) 754-8300. There is no need to return an additional proxy card if you have
already sent in your proxy and do not wish to change your vote. If you are able
to attend the Special Meeting, you may revoke your Proxy and vote in person if
you wish.
HEALTHSOUTH's Current Report on Form 8-K, which describes the acquisition of
Advantage Health, filed with the Securities and Exchange Commission (the "SEC")
on January 3, 1996, may be inspected at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. and should be available for inspection and copying at the
regional offices of the SEC located at Seven World Trade Center, New York, New
York and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois. Copies of the report can be obtained at prescribed rates by writing to
the SEC, Public Reference Section, 450 Fifth Street, Washington, D.C. 20549. In
addition, copies of Advantage Health's consolidated financial statements for the
years ended August 31, 1995 and 1994 may be obtained by calling Morrow & Co. at
(212) 754-8000. Those financial statements were incorporated by reference in
HEALTHSOUTH's Current Report on Form 8-K filed January 3, 1996, and accordingly
are incorporated by reference in the registration statement on Form S-4
underlying this Supplement to the Original Prospectus-Joint Proxy Statement.
<PAGE>
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following pro forma condensed financial information and explanatory notes
are presented to reflect the effect of the following transactions for all
periods presented:
(i) the merger of a wholly-owned subsidiary of HEALTHSOUTH with Sutter
Surgery Centers, Inc. ("SSCI") in a transaction to be accounted for as a
pooling of interests, which merger was consummated in October 1995;
(ii) the merger of a wholly-owned subsidiary of HEALTHSOUTH with SCA in
a transaction to be accounted for as a pooling of interests, which merger is
expected to be consummated in January 1996; and
(iii) the merger of a wholly-owned subsidiary of HEALTHSOUTH with
Advantage Health in a transaction to be accounted for as a pooling of
interests, which merger is expected to be consummated in the first quarter
of 1996 (collectively, the "Mergers").
The HEALTHSOUTH historical amounts reflect the combination of HEALTHSOUTH,
ReLife, Inc. ("ReLife") and Surgical Health Corporation ("SHC") for all periods
presented, as HEALTHSOUTH acquired Relife in December 1994 and SHC in June 1995
in transactions accounted for as poolings of interests.
In addition, the pro forma condensed financial information reflects the
impact of HEALTHSOUTH's acquisition, effective April 1, 1995, from NovaCare,
Inc. ("NovaCare") of 11 rehabilitation hospitals, 12 other facilities and two
Certificates of Need (the "NovaCare Rehabilitation Hospitals Acquisition") on
the results of operations for the year ended December 31, 1994 and the nine
months ended September 30, 1995.
The pro forma condensed balance sheet assumes that each of the Mergers was
consummated on September 30, 1995, and the pro forma condensed income statements
assume that each of the Mergers was consummated on January 1, 1992. The
assumptions are described in the accompanying Notes to Pro Forma Condensed
Financial Information.
All HEALTHSOUTH shares outstanding and per share amounts have been adjusted
to reflect a two-for-one stock split effected in the form of a 100 percent stock
dividend on April 17, 1995.
The pro forma information should be read in conjunction with the historical
financial statements of HEALTHSOUTH and each of the other combining companies.
Certain balance sheet and income statement amounts from the SSCI, SCA and
Advantage Health historical financial statements have been reclassified in order
to conform to the HEALTHSOUTH method of presentation. The pro forma financial
information is presented for informational purposes only and is not necessarily
indicative of the results of operations or combined financial position that
would have resulted had the Mergers been consummated at the date indicated, nor
is it necessarily indicative of the results of operations of future periods or
future combined financial position.
P-1
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA ADVANTAGE PRO FORMA PRO FORMA
HEALTHSOUTH SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
------------- ---------- ------------ ----------- ------------ --------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $ 86,952 $ 5,024 $ 0 $ 39,047 $ 0 $ 7,668 $ 0 $ 138,691
Other marketable securities ....... 6,217 0 0 295 0 0 0 6,512
Accounts receivable................ 298,178 4,047 0 30,764 0 33,621 0 366,610
Inventories, prepaid expenses and
other current assets............... 102,906 2,714 0 16,283 0 7,005 0 128,908
------------- ---------- ---------- ---------- ------ ----------- --------- ----------
Total current assets............... 494,253 11,785 0 86,389 0 48,294 0 640,721
Other assets....................... 58,127 0 0 2,262 0 8,510 0 68,899
Deferred income taxes ............. 7,559 0 0 0 0 0 (7,559)(3) 0
Property, plant and equipment, net 1,049,375 14,630 0 158,501 0 32,449 0 1,254,955
Intangible assets, net............. 541,366 15,230 0 124,270 0 42,401 0 723,267
------------- ---------- ---------- ---------- ------ ----------- --------- ----------
Total assets....................... $2,150,680 $41,645 $ 0 $371,422 $ 0 $131,654 $(7,559) $2,687,842
============= ========== ============= ========== ======= =========== ======= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................... $ 83,246 $ 1,391 $3,000 (1) $ 4,441 $15,000 (1) $ 10,036 $10,000 (1) $ 127,114
Salaries and wages payable......... 44,668 947 0 963 0 7,615 0 54,193
Accrued interest payable and other
liabilities........................ 49,462 361 (1,170)(1) 30,690 (5,850)(1) 419 (3,900)(1) 70,012
Current portion of long-term debt . 17,720 2,799 0 729 0 5,797 0 27,045
------------- ---------- ---------- --------- -------- --------- ---------- ---------
Total current liabilities.......... 195,096 5,498 1,830 36,823 9,150 23,867 6,100 278,364
Long-term debt..................... 1,386,450 14,955 0 65,119 0 39,802 0 1,506,326
Deferred income taxes.............. 0 509 0 3,846 0 8,018 (7,559)(3) 4,814
Other long-term liabilities........ 5,470 0 0 0 0 2,713 0 8,183
Deferred revenue................... 7,137 0 0 0 0 0 0 7,137
Minority interests................. 8,980 5,375 0 36,404 0 0 0 50,759
Stockholders' equity: .............
Preferred Stock, $.10 par value.... 0 0 0 0 0 0 0 $ 0
Common Stock, $.01 par value ...... 954 196 (178)(2) 9,867 (9,385)(2) 61 31 (2) 1,546
Additional paid-in capital......... 719,296 18,905 178 (2) 96,126 9,385 (2) 41,296 (31)(2) 885,155
Retained earnings.................. 178,929 1,481 (1,830)(1) 129,288 (9,150)(1) 25,524 (6,100)(1) 318,142
Common stock subscription receivable (335,423) 0 0 0 0 0 0 (335,423)
Treasury stock..................... (323) 0 0 (6,051) 0 (9,627) 0 (16,001)
Receivable from Employee Stock
Ownership Plan..................... (15,886) 0 0 0 0 0 0 (15,886)
Notes receivable from stockholders . 0 (5,274) 0 0 0 0 0 (5,274)
------------- ---------- ---------- -------- -------- -------- -------- ----------
Total stockholders' equity.......... 547,547 15,308 (1,830) 229,230 (9,150) 57,254 (6,100) 832,259
------------- ---------- ----------- --------- -------- -------- -------- ----------
Total liabilities and stockholders'
equity.............................. $2,150,680 $41,645 $ 0 $371,422 $ 0 $131,654 $(7,559) $2,687,842
============= ========== =========== ========= ======== ======== ======== ==========
</TABLE>
See accompanying notes.
P-2
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
ACQUISITION
--------------------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA ADVANTAGE PRO FORMA PRO FORMA
HEALTHSOUTH NOVACARE ADJUSTMENTS COMBINED SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
----------- -------- ----------- -------- ---- ----------- --- ---------- ------ --------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $1,236,190 $142,548 $ 8,058 (5) $1,386,796 $38,175 $ 0 $239,272 $ 0 $135,562 $ 0 $1,799,805
Operating expenses:
Operating units.... 906,712 128,233 (12,406)(2) 1,022,539 24,133 0 129,037 0 105,384 0 1,281,093
Corporate general and
administrative.... 45,895 0 0 45,895 2,711 0 5,464 0 7,570 0 61,640
Provision for doubtful
accounts............. 23,739 1,269 0 25,008 3,907 0 3,061 0 2,197 0 34,173
Depreciation and
amortization ..... 86,678 7,041 (1,918)(1) 99,327 2,627 0 17,392 0 3,772 0 123,118
7,526 (3)
Interest expense.... 65,286 11,096 10,100 (4) 86,482 1,588 0 5,144 0 1,626 0 94,840
Interest income..... (4,308) 0 0 (4,308) (258) 0 (1,632) 0 (189) 0 (6,387)
Merger expenses..... 6,520 0 0 6,520 0 0 0 0 0 0 6,520
Gain on sale of MCA Stock 0 0 0 0 0 0 (7,727) 0 0 0 (7,727)
Loss on impairment of
assets ........... 10,500 0 0 10,500 0 0 0 0 0 0 10,500
Loss on abandonment of
computer project.. 4,500 0 0 4,500 0 0 0 0 0 0 4,500
Loss on disposal of
Surgery Centers... 0 0 0 0 0 0 13,197 0 0 0 13,197
----------- -------- -------- --------- ------- ------ -------- ------ ------ ----- -------
1,145,522 147,639 3,302 1,296,463 34,708 0 163,936 0 120,360 0 1,615,467
----------- -------- -------- --------- ------- ------ -------- ------ ------- ----- ---------
Income before income
taxes and minority
interests............. 90,668 (5,091) 4,756 90,333 3,467 0 75,336 0 15,202 0 184,338
Provision for income
taxes .............. 34,305 (1,084) 780 (6) 34,001 473 0 23,636 0 6,707 0 64,817
----------- -------- -------- --------- ------ ------ -------- ------ ------- ----- --------
56,363 (4,007) 3,976 56,332 2,994 0 51,700 0 8,495 0 119,521
Minority interests.... 6,402 445 0 6,847 2,462 0 22,420 0 185 0 31,914
----------- ------- --------- ------ ------ -------- ------ ------- ----- ----- --------
Net income............$ 49,961 $ (4,452)$ 3,976 $ 49,485 $ 532 $ 0 $ 29,280 $ 0 $ 8,310 $ 0 $ 87,607
=========== ======== ========== ========== ====== ====== ======== ====== ======= ===== ========
Weighted average common
and common equivalent
shares outstanding... 84,687 N/A N/A 84,687 19,612 (17,837)(2) 38,892 8,556(2) 6,073 3,084(2) 143,067
=========== ======== ========== ========== ====== ======== ======= ======== ======= ====== =======
Net income per common and
common equivalent
share............. $ 0.59 N/A N/A $ 0.58 $ 0.03 N/A $ 0.75 N/A $ 1.37 N/A $ 0.61
=========== ======== ========== ========== ======= ====== ======= ======== ====== ====== ========
Net income per common
share -- assuming full
dilution.......... $ 0.59 N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 0.61
=========== ======== ========== ========== ======== ======= ======= ======== ====== ====== ========
</TABLE>
See accompanying notes.
P-3
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA ADVANTAGE PRO FORMA PRO FORMA
HEALTHSOUTH SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
---------- ----- ----------- -------- ----------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $656,329 $22,096 $ 0 $199,270 $ 0 $101,511 $ 0 $979,206
Operating expenses: ..............
Operating units................... 471,778 14,768 0 103,825 0 77,830 0 668,201
Corporate general and administra-
tive ........................... 24,329 2,264 0 3,880 0 6,570 - 37,043
Provision for doubtful accounts... 16,181 1,766 0 1,068 0 1,011 0 20,026
Depreciation and amortization..... 46,224 1,603 0 12,626 0 3,119 0 63,572
Interest expense.................. 18,495 612 0 3,600 0 1,493 0 24,200
Interest income................... (3,924) (428) 0 (1,219) 0 (332) 0 (5,903)
Merger expense.................... 333 0 0 0 0 0 0 333
NME Selected Hospitals Acquisition
related expense................... 49,742 0 0 0 0 0 0 49,742
Gain on sale of partnership
interest ....................... (1,400) 0 0 0 0 0 0 (1,400)
--------- ------- --------- -------- ------ ------- ------- --------
621,758 20,585 0 123,780 0 89,691 0 855,814
--------- ------- --------- -------- ------ ------- ------- --------
Income before income taxes and
minority interests................ 34,571 1,511 0 75,490 0 11,820 0 123,392
Provision for income taxes......... 11,930 132 0 20,650 0 5,281 0 37,993
--------- ------- --------- -------- ------ ------- ------- --------
22,641 1,379 0 54,840 0 6,539 0 85,399
Minority interests................. 5,444 1,240 0 22,624 0 69 0 29,377
--------- ------- --------- -------- ------ ------- ------- --------
Net income from continuing
operations ...................... 17,197 139 0 32,216 0 6,470 0 56,022
Net income from discontinued
operations......................... 0 0 0 4,452 0 0 0 4,452
--------- ------- --------- -------- ------ ------- ------- --------
Net income......................... $ 17,197 $ 139 $ 0 $ 36,668 $ 0 $ 6,470 0 $ 60,474
========= ======= ========= ======== ====== ======= ======= ========
Weighted average common and common
equivalent shares outstanding...... 77,709 19,608 (17,833)(2) 38,117 8,386 (2) 6,028 3,062 (2) 135,077
========= ======= ========= ======== ====== ======= ======= ========
Net income per common and common
equivalent share.................. $ 0.22 $ 0.01 N/A $ 0.96 N/A $ 1.07 N/A $ 0.45
========= ======= ========= ======== ====== ======== ======= ========
</TABLE>
See accompanying notes.
P-4
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA ADVANTAGE PRO FORMA PRO FORMA
HEALTHSOUTH SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
--------- ------ ---------- ----- ----------- --------- ------------ --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues ............................... $501,046 $ 2,611 $ 0 $162,179 $ 0 $84,298 $ 0 $750,134
Operating expenses: ....................
Operating units ........................ 372,169 1,815 0 83,871 0 63,764 0 521,619
Corporate general and administrative .. 16,878 476 0 3,804 0 4,509 0 25,667
Provision for doubtful accounts ....... 13,254 177 0 1,442 0 1,680 0 16,553
Depreciation and amortization .......... 29,834 185 0 9,695 0 2,393 0 42,107
Interest expense ....................... 12,623 44 0 3,410 0 2,160 0 18,237
Interest income ........................ (5,415) (19) 0 (2,743) 0 (418) 0 (8,595)
Terminated merger expense .............. 3,665 0 0 0 0 0 0 3,665
Loss on extinguishment of debt ......... 0 0 0 0 0 883 0 883
-------- ------- ------ -------- ------ ------ ----- -------
443,008 2,678 0 99,479 0 74,971 0 620,136
-------- ------- ------ -------- ------ ------ ----- -------
Income before income taxes and minority
interests .............................. 58,038 (67) 0 62,700 0 9,327 0 129,998
Provision for income taxes ............. 18,864 (22) 0 15,663 0 4,045 0 38,550
-------- ------- ------ -------- ------ ------ ----- -------
39,174 (45) 0 47,037 0 5,282 0 91,448
Minority interests ..................... 4,245 185 0 21,481 0 32 0 25,943
-------- ------- ------ -------- ------ ------ ----- -------
Net income from continuing operations . 34,929 (230) 0 25,556 0 5,250 0 65,505
Net income from discontinued operations 0 0 0 3,283 0 0 0 3,283
-------- ------- ------ -------- ------ ------ ----- -------
Net income ............................. $ 34,929 $ (230) $ 0 $ 28,839 $ 0 $ 5,250 $ 0 $ 68,788
======== ======= ====== ======== ====== ====== ===== =======
Weighted average common and common
equivalent shares outstanding .......... 74,214 19,608 (17,833)(2) 37,191 8,182(2) 5,483 2,785(2) 129,630
======== ======= ======= ======== ====== ====== ===== =======
Net income per common and common
equivalent share ....................... $ 0.47 $ (0.01) N/A $ 0.78 N/A $ 0.96 N/A $ 0.53
======== ======= ======= ======== ====== ====== ===== =======
</TABLE>
See accompanying notes.
P-5
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ACQUISITION
---------------------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA ADVNTAGE PRO FORMA PRO FORMA
HEALTHSOUTH NOVACARE ADJUSTMENTS COMBINED SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
----------- -------- ----------- -------- ---- ----------- --- ----------- ------ ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $1,109,689 $37,942 $1,860 (5) $1,149,491 $29,868 $ 0 $197,413 $ 0 $133,079 $ 0 $1,509,851
Operating expenses:
Operating units...... 788,593 33,065 (910)(2) 820,748 17,661 0 102,383 0 105,665 0 1,046,457
Corporate general
and administrative... 28,463 0 0 28,463 1,820 0 4,236 0 5,960 0 40,479
Provision for doubtful
accounts............. 20,520 322 0 20,842 3,125 0 2,381 0 2,146 0 28,494
Depreciation and
amortization ...... 86,767 1,996 (999)(1) 89,646 2,026 0 12,640 0 3,441 0 107,753
1,882 (3)
Interest expense..... 68,697 2,595 2,684 (4) 73,976 1,258 0 3,413 0 1,667 0 80,314
Interest income...... (4,529) 0 0 (4,529) (274) 0 (1,257) 0 (184) 0 (6,244)
Merger cost.......... 29,194 0 0 29,194 0 0 0 0 0 0 29,194
Loss on impairment of
assets ............ 11,192 0 0 11,192 0 0 0 0 0 0 11,192
-------- ------ ----- ------ ----- ---- ------ ---- ------ ----- ---------
1,028,897 37,978 2,657 1,069,532 25,616 0 123,796 0 118,695 0 1,337,639
-------- ------ ----- ------ ----- ---- ------ ---- ------ ----- ---------
Income before income taxes
and minority interests. 80,792 (36) (797) 79,959 4,252 0 73,617 0 14,384 0 172,212
Provision for income
taxes............. 27,525 (101) (259)(6) 27,165 848 0 21,397 0 6,014 0 55,424
-------- ------ ----- ------ ----- ---- ------ ---- ------ ----- ---------
53,267 65 (538) 52,794 3,404 0 52,220 0 8,370 0 116,788
Minority interests... 8,357 89 0 8,446 2,364 0 19,217 0 828 0 30,855
-------- ------ ----- ------ ----- ---- ------ ---- ------ ----- ---------
Net income........... $ 44,910 $ (24) $ (538) $ 44,348 $ 1,040 $ 0 $ 33,003 $ 0 7,542 $ 0 $ 85,933
======== ====== ====== ======= ====== ==== ====== ==== ====== ===== =========
Weighted average common and
common equivalent shares
outstanding........... 87,773 N/A N/A 87,773 19,615 (17,840)(2) 39,189 8,622(2) 6,108 3,102(2) 146,569
======== ====== ====== ======= ====== ==== ====== ==== ====== ===== =========
Net income per common and
common equivalent
share............... $ 0.51 N/A N/A $ 0.51 $ 0.05 N/A $ 0.84 N/A $ 1.23 N/A $ 0.59
======== ====== ====== ======= ====== ==== ====== ==== ====== ===== =========
Net income per common
share -- assuming full
dilution $ 0.51 N/A N/A $ 0.51 N/A N/A N/A N/A N/A N/A $ 0.59
======== ====== ====== ======= ====== ==== ====== ==== ====== ===== =========
</TABLE>
See accompanying notes.
P-6
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA ADVANTAGE PRO FORMA PRO FORMA
HEALTHSOUTH SSCI ADJUSTMENTS SCA ADJUSTMENTS HEALTH ADJUSTMENTS COMBINED
------------- ------- ------------ ----- ---------- --------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues......................... $902,268 $28,357 $ 0 $171,441 $ 0 $96,436 $ 0 $1,198,502
Operating expenses: .............
Operating units.................. 670,607 17,637 0 94,452 0 74,525 0 857,221
Corporate general and administra-
tive .......................... 29,831 2,132 0 4,061 0 5,673 0 41,697
Provision for doubtful accounts.. 16,691 2,950 0 2,079 0 1,569 0 23,289
Depreciation and amortization.... 59,142 1,911 0 12,506 0 2,735 0 76,294
Interest expense................. 45,632 1,146 0 3,875 0 1,139 0 51,792
Interest income.................. (3,256) (359) 0 (1,231) 0 (190) 0 (5,036)
Merger costs..................... 3,571 0 0 0 0 0 0 3,571
Gain on sale of MCA stock........ 0 0 0 (6,882) 0 0 0 (6,882)
-------- ------- ------- ------- ------ ---------- ------ ---------
822,218 25,417 0 108,860 0 85,451 0 1,041,946
-------- ------- ------- ------- ------ --------- ------ ---------
Income before income taxes and
minority interests............... 80,050 2,940 0 62,581 0 10,985 0 156,556
Provision for income taxes....... 30,418 540 0 20,681 0 4,860 0 56,499
-------- ------- ------- ------ ------ --------- ------ ---------
49,632 2,400 0 41,900 0 6,125 0 100,057
Minority interests............... 4,276 1,887 0 15,144 0 73 0 21,380
-------- ------- ------- ------ ------ --------- ------ ---------
Net income....................... $ 45,356 $ 513 $ 0 $ 26,756 $ 0 $ 6,052 $ 0 $ 78,677
======== ======= ======= ====== ====== ========= ====== =========
Weighted average common and common
equivalent shares outstanding..... 84,509 19,610 (17,835)(2) 38,859 8,549(2) 6,042 3,069(2) 142,803
======== ======= ======= ====== ====== ========= ====== =========
Net income per common and common
equivalent share.................. $ 0.54 $ 0.03 N/A $ 0.69 N/A $ 1.00 N/A $ 0.55
======== ======= ======= ====== ====== ========= ====== =========
</TABLE>
See accompanying notes.
P-7
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
A. THE NOVACARE REHABILITATION HOSPITALS ACQUISITION
Effective April 1, 1995 HEALTHSOUTH completed the acquisition of the
rehabilitation hospitals division of NovaCare, Inc. ("NovaCare"), consisting of
11 rehabilitation hospitals, 12 other facilities, and certificates of need to
build two additional facilities (the "NovaCare Rehabilitation Hospitals
Acquisition"). The purchase price was approximately $234,807,000. The
transaction was accounted for as a purchase and, accordingly, the results of the
acquired NovaCare facilities are included in HEALTHSOUTH's historical financial
statements from the effective date of the acquisition. HEALTHSOUTH financed the
cost of the NovaCare Rehabilitation Hospitals Acquisition through additional
borrowings under its existing credit facilities, as amended.
The accompanying pro forma income statements for the year ended December 31,
1994 and the nine months ended September 30, 1995 assume that the transaction
was consummated at the beginning of each of the periods presented.
Certain assets and liabilities of Rehab Systems Company (a wholly owned
subsidiary of NovaCare, Inc.) were excluded from the NovaCare Rehabilitation
Hospitals Acquisition. The excluded assets and liabilities are as follows (in
thousands):
Cash and cash equivalents............................ $ 4,973
Accounts receivable ................................. 259
Other current assets ................................ 42
Equipment, net ...................................... 4,719
Intangible assets, net .............................. 56,321
Other assets (primarily investments in subsidiaries) 40,637
Accounts payable .................................... (454)
Other current liabilities ........................... (275)
Current portion of long term debt ................... (146)
Long term debt....................................... (38,620)
Payable to affiliates................................ (92,377)
-----------
Net excluded asset (liability) ...................... $(24,921)
===========
The following pro forma adjustments are necessary for the NovaCare
Rehabilitation Hospitals Acquisition:
1. To exclude historical depreciation and amortization expense related to the
excluded assets described above. The total expense excluded amounts to
$1,918,000 for the year ended December 31, 1994 and $999,000 for the nine months
ended September 30, 1995.
2. To eliminate intercompany management fees and royalty fees totaling
$12,406,000 for the year ended December 31, 1994 and $910,000 for the nine
months ended September 30, 1995 of the acquired NovaCare facilities.
P-8
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Condensed Financial Information - (Continued)
3. To adjust depreciation and amortization expense to reflect the allocation
of the excess purchase price over the net tangible asset value as follows (in
thousands):
PURCHASE PRICE
ALLOCATION USEFUL ANNUAL QUARTERLY
ADJUSTMENT LIFE AMORTIZATION AMORTIZATION
--------------- ----------- --------------- ---------------
Leasehold value.......... $128,333 20 years $6,417 $1,605
Goodwill................. 44,365 40 years 1,109 277
------- ------
$7,526 $1,882
======= ======
No additional adjustments to NovaCare's historical depreciation and
amortization are necessary. The remaining net assets acquired approximate their
fair value.
Because NovaCare's results of operations before intercompany items (described
in Note 2 above) are profitable, both on a historical and pro forma basis, the
40-year amortization period for goodwill is appropriate and consistent with
HEALTHSOUTH policy. Leasehold value is being amortized over the weighted average
remaining terms of the leases, which is 20 years.
4. To increase interest expense by $19,559,000 for the year ended December
31, 1994 and $4,889,000 for the nine months ended September 30, 1995 to reflect
pro forma borrowings of $234,807,000, described above, at a 8.33% variable
interest rate, which represents HEALTHSOUTH's weighted average cost of debt, as
if they were outstanding for the entire period, and to decrease interest expense
by $9,459,000 for the year ended December 31, 1994 and $2,205,000 for the nine
months ended September 30, 1995, which represents interest on NovaCare debt not
assumed by HEALTHSOUTH. A .125% variance in the assumed interest rate would
change annual pro forma interest expense by approximately $294,000.
5. To adjust estimated Medicare reimbursement for the changes in reimbursable
expenses described in items 1,2, 3 and 4 above. These changes are as follows (in
thousands):
YEAR ENDED
DECEMBER 31, NINE MONTHS ENDED
1994 SEPTEMBER 30, 1995
----------------- -------------------
Depreciation and amortization (Note 1)...... $(1,918) $ (999)
Intercompany management fees (Note 2)....... (4,196) (910)
Depreciation and amortization (Note 3)...... 7,526 1,882
Interest expense (Note 4)................... 10,100 2,684
------- -------
11,512 2,657
Assumed Medicare utilization................ 70% 70%
------- -------
Increased reimbursement .................... $ 8,058 $1,860
======= =======
The Medicare utilization rate of 70% assumes a slight improvement in
NovaCare's historical Medicare percentage of 78% as a result of bringing these
facilities into the HEALTHSOUTH network.
6. To adjust the NovaCare provision for income taxes to an effective rate
of 39% (net of minority interests).
B. THE SSCI MERGER
The SSCI Merger was completed in October 1995 and will be accounted for as a
pooling of interests. The pro forma condensed income statements assume that the
SSCI Merger was consummated on January 1, 1992. The pro forma condensed balance
sheet assumes that the SSCI Merger was consummated on September 30, 1995.
P-9
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Condensed Financial Information - (Continued)
The pro forma condensed financial information contains no adjustments to
conform the accounting policies of the two companies because any such
adjustments have been determined to be immaterial by the management of
HEALTHSOUTH.
The following pro forma adjustments are necessary for the SSCI Merger:
1. The pro forma condensed income statements do not reflect non-recurring
costs resulting directly from the SSCI Merger. The management of HEALTHSOUTH
estimates that these costs will approximate $3,000,000 and will be charged to
operations in the quarter the SSCI Merger is consummated. The amount includes
costs to merge the two companies and professional fees. However, this estimated
expense, net of taxes of $1,170,000, has been charged to retained earnings in
the accompanying pro forma balance sheet.
2. To adjust pro forma share amounts based on historical share amounts,
converting each outstanding SSCI Share into .0905 shares of HEALTHSOUTH Common
Stock.
C. THE SCA MERGER
The proposed SCA Merger is intended to be accounted for as a pooling of
interests. The pro forma condensed income statements assume that the SCA Merger
was consummated on January 1, 1992. The pro forma condensed balance sheet
assumes that the SCA Merger was consummated on September 30, 1995.
The pro forma condensed financial information contains no adjustments to
conform the accounting policies of the two companies because any such
adjustments have been determined to be immaterial by the management of
HEALTHSOUTH.
The following pro forma adjustments are necessary for the SCA Merger:
1. The pro forma income statements do not reflect non-recurring costs
resulting directly from the SCA Merger. The management of HEALTHSOUTH estimates
that these costs will approximate $15,000,000 and will be charged to operations
in the quarter the SCA Merger is consummated. The amount includes costs to merge
the two companies and professional fees. However, this estimated expense, net of
taxes of $5,850,000, has been charged to retained earnings in the accompanying
pro forma balance sheet.
2. To adjust pro forma share amounts based on historical share amounts,
converting each outstanding SCA Share, par value $.25 per share, into 1.22
shares of HEALTHSOUTH Common Stock, par value $.01 per share. The conversion
ratio is based upon an assumed Base Period Trading Price for HEALTHSOUTH's
Common Stock ranging from $22 to $28 per share.
D. THE ADVANTAGE HEALTH MERGER
The proposed Advantage Health Merger is intended to be accounted for as a
pooling of interests. The pro forma condensed income statements assume that the
Advantage Health Merger was consummated on January 1, 1992. The pro forma
condensed balance sheet assumes that the Advantage Health Merger was consummated
on September 30, 1995.
Advantage Health has historically reported on a fiscal year ending on August
31. The historical results of operations for Advantage Health have been recast
to a November 30 fiscal year end in the accompanying pro forma income statements
to more closely conform to HEALTHSOUTH's fiscal year, which ends on December 31.
Likewise, the accompanying September 30, 1995 pro forma balance sheet includes
Advantage Health's historical August 31, 1995 balance sheet.
The pro forma condensed financial information contains no adjustments to
conform the accounting policies of the two companies because any such
adjustments have been determined to be immaterial by the management of
HEALTHSOUTH.
P-10
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Condensed Financial Information - (Continued)
The following pro forma adjustments are necessary for the Advantage Health
Merger:
1. The pro forma income statements do not reflect non-recurring costs
resulting directly from the Advantage Health Merger. The management of
HEALTHSOUTH estimates that these costs will approximate $10,000,000 and will be
charged to operations in the quarter the Advantage Health Merger is consummated.
The amount includes costs to merge the two companies and professional fees.
However, this estimated expense, net of taxes of $3,900,000, has been charged to
retained earnings in the accompanying pro forma balance sheet.
2. To adjust pro forma share amounts based on historical share amounts,
converting each outstanding Advantage Health Share into 1.5079 shares of
HEALTHSOUTH Common Stock. The conversion ratio is based upon an assumed Base
Period Trading Price for HEALTHSOUTH's Common Stock of $31.50, the midpoint of
the range within which the exchange ratio floats.
3. To net HEALTHSOUTH's noncurrent deferred income tax asset against the
noncurrent deferred income tax liabilities of the acquired companies.
P-11
<PAGE>
PROXY
Surgical Care Affiliates, Inc.
SPECIAL MEETING OF STOCKHOLDERS -- January 17, 1996
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Joel C. Gordon, William J. Hamburg or Tarpley
B. Jones, and each of them, with several powers of substitution, proxies to vote
the shares of Common Stock, par value $0.25 per share of Surgical Care
Affiliates, Inc. ("SCA") which the undersigned could vote if personally present
at the Special Meeting of Stockholders of SCA to be held at SCA's offices at
Suite 610, 102 Woodmont Boulevard, Nashville, Tennessee, on January 17, 1996, at
10:00 a.m., C.S.T., and any adjournment thereof:
(Continued and to be signed on other side)
<PAGE>
- --------------------
Common
1. Approval and adoption of an Amended and Restated Plan and Agreement of
Merger, dated October 9, 1995, attached as Annex A to the Prospectus-Joint Proxy
Statement that has been transmitted in connection with the Special Meeting,
pursuant to which SCA Acquisition Corporation, a wholly-owned subsidiary of
HEALTHSOUTH Corporation ("HEALTHSOUTH"), will merge with and into SCA, and
stockholders of SCA will receive a specified number of shares of HEALTHSOUTH
Common Stock for each share of SCA Common Stock surrendered for exchange, all as
described in said Prospectus-Joint Proxy Statement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion to act upon any matters incidental to the foregoing
and such other business as may properly come before the Special Meeting or any
adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR Item 1. Any stockholder who wishes to withhold the discretionary
authority referred to in Item 2 above should mark a line through the entire
Item.
Dated:
---------------------------------
- ---------------------------------------
Signature(s)
- ---------------------------------------
(Please sign exactly and as fully as your name appears on your stock
certificate. If shares are held jointly, each stockholder should sign.)
<PAGE>
PROXY
HEALTHSOUTH Corporation
SPECIAL MEETING OF STOCKHOLDERS -- January 17, 1996
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints RICHARD M. SCRUSHY and AARON BEAM, JR. or
_________________________________________, and each of them, with several powers
of substitution, proxies to vote the shares of Common Stock, par value $.01 per
share, of HEALTHSOUTH Corporation (the "Company") which the undersigned could
vote if personally present at the Special Meeting of Stockholders of the Company
to be held at Two Perimeter Park South, Birmingham, Alabama 35243, on Wednesday,
January 17, 1996, at 11:00 a.m., C.S.T., and any adjournment thereof:
(Continued and to be signed on other side)
<PAGE>
[ ] Please mark
your vote
as the
---------------
Common
1. Approval and adoption of an Amended and Restated Plan and Agreement of
Merger, dated October 9, 1995, attached as Annex A to the Prospectus-Joint
Proxy Statement that has been transmitted in connection with the Special
Meeting, pursuant to which SCA Acquisition Corporation, a wholly-owned
subsidiary of the Company, will merge with and into Surgical Care Affiliates,
Inc. ("SCA"), and stockholders of SCA will receive a specified number of
shares of HEALTHSOUTH Common Stock for each share of SCA Common Stock
surrendered for exchange, all as described in said Prospectus-Joint Proxy
Statement.
FOR AGAINST ABSTAIN
| ] | ] | ]
2. Adoption and approval of an Amendment to the Restated Certificate of
Incorporation of the Company to increase the authorized Common Stock of the
Company to 250,000,000 shares of Common Stock, par value $.01 per share.
FOR AGAINST ABSTAIN
| ] [ ] | ]
3. In their discretion, to act upon any matters incidental to the foregoing and
such other business as may properly come before the Special Meeting or any
adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR Item 1 and 2 above. Any stockholder who wishes to withhold the
discretionary authority referred to in Item 3 above should mark a line through
the entire Item.
Dated:
---------------------------------
- ---------------------------------------
Signature(s)
- ---------------------------------------
(Please sign exactly and as fully as your name appears on your stock
certificate. If shares are held jointly, each stockholder should sign.)
Please mark, sign, date and return promptly, using the enclosed Envelope. No
postage is required
<PAGE>
