HealthSouth Suspends Spinoff Plan
10/16/2002 18:59:08 EST
BIRMINGHAM, Ala. (AP) - HealthSouth Corp., which suffered a collapse in its stock price after sharply lowering its earnings outlook, is suspending plans to spin off its surgery center division into a separate, publicly traded company.
The split does not make economic sense based on conditions in the debt and equity markets, HealthSouth said.
"We believe the enhanced focus we have brought to our surgery center operations during this process will help us to improve those operations while they continue as part of our national network," chief executive William T. Owens said in a news release.
Birmingham-based HealthSouth, which operates the largest network of outpatient surgery facilities in the country, announced the plan to spin off the surgery center division in a conference call with investors and analysts on Aug. 27.
In that same call, HealthSouth officials revealed that a clarification of Medicare billing policy would reduce the company's profit from its rehabilitative care divisions by up to $175 million.
HealthSouth shares, which closed at $11.97 a share on Aug. 26, plummeted on the news, dropping 47 percent in the two days after the announcement. The stock closed Wednesday at $3.61, down 35 cents on the New York Stock Exchange.
HealthSouth founder and chairman Richard M. Scrushy had been tapped to serve as chairman of both HealthSouth and the new company, Surgical Care Affiliates, which would have operated 209 outpatient surgery centers in 37 states.
Scrushy, who stepped down as CEO in August, is under investigation by the Securities and Exchange Commission and a defendant in several class-action lawsuits filed by investors. The suits question his sale of HealthSouth stock before the Aug. 27 announcement that triggered the stock price plunge.
HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitation services with about 1,900 locations in the U.S., Britain, Australia, Puerto Rico and Canada. The company had $4.3 billion in revenue last year. |
