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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;border-bottom:double 2.25pt;padding-bottom:1;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;'><B><font SIZE=5>UNITED STATES </font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=5>SECURITIES AND EXCHANGE COMMISSION </font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>WASHINGTON, DC 20549 </font></B></p>

<p style=' margin-bottom:0pt; margin-top:9pt; margin-left:3in;text-align:center;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;'><B><font SIZE=5>FORM 8-K </font></B></p>

<p style=' margin-bottom:0pt; margin-top:6pt;text-align:center;'><B><font SIZE=2>CURRENT REPORT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:6pt;text-align:center;'><b><font size=2>Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>Date of Report (date of earliest event reported): August 8, 2007</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;'><u><b><font size=2>HealthSouth Corporation</font></b></u></p>

<p style=' margin-bottom:0pt; margin-top:1.5pt;text-align:center;'><font size=2>(Exact name of Registrant as specified in its Charter)</font></p>

<p style=' margin-bottom:0pt; margin-top:1.5pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:1.5pt;text-align:center;'><u><b><font size=2>Delaware</font></b></u></p>

<p style=' margin-bottom:0pt; margin-top:1.5pt;text-align:center;'><font size=2>(State or Other Jurisdiction of Incorporation)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>001-10315</font></b></u><u></u></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>63-0860407</font></b></u><u></u></p> </td> </tr>
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            <p align=center style='margin-top:0in;margin-right:0in;margin-bottom:.75pt; margin-left:0in;text-align:center'><font size=2>(Commission File Number)</font></p> </td>
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            <p align=center style='margin-top:0in;margin-right:0in;margin-bottom:.75pt; margin-left:0in;text-align:center'><font size=2>(IRS Employer Identification No.)</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;'><u><b><font size=2>One HealthSouth Parkway, Birmingham, Alabama 35243</font></b></u></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Address of Principal Executive Offices, Including Zip Code)</font></p>

<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;'><u><b><font size=2>(205)</font></b><font size=2>&nbsp;</font><b><font size=2>967-7116 </font></b></u><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Registrant&#146;s Telephone Number, Including Area Code)</font></p>

<p style=' margin-bottom:0pt; margin-top:9pt;text-align:left;'><font size=2>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:9pt;text-align:center;border-top:double 2.25pt;padding-top:1;'><font size=1>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:10pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>ITEM 2.02.  </font></B><i><font size=2>Results of Operations and Financial Condition. </font></i></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>On August 8, 2007, HealthSouth Corporation (the &#147;Company&#148;) issued a press release, a copy of which is attached as Exhibit 99, announcing that it had filed its quarterly report on Form 10-Q for the period ended June 30, 2007 (the "June 30 Form 10-Q"), and that it will hold a conference call, which will also be webcast live, to review its June 30 Form 10-Q.  The release also provides an overview of certain information contained in the June 30 Form 10-Q, including certain financial results for the three and six months ended June 30, 2007.</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Note Regarding Presentation of Non-GAAP Financial Measures </font></b></i></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>The financial data contained in the press release includes non-GAAP financial measures, including "Adjusted Consolidated EBITDA." The Company continues to believe Adjusted Consolidated EBITDA under its Credit Agreement is a measure of operating performance, leverage capacity, its ability to service its debt, and its ability to make capital expenditures. However, as the Company continues to deleverage its balance sheet and the large, non-ordinary course charges related to the &#147;sins of the past&#148; are behind the Company, this measure will become less significant.</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>The Company uses Adjusted Consolidated EBITDA on a consolidated basis as a liquidity measure. The Company believes this financial measure on a consolidated basis is important in analyzing its liquidity because it is the key component of certain material covenants contained within the Company's Credit Agreement, which is discussed in more detail in Note 9, </font><i><font size=2>Long-term Debt</font></i><font size=2>, to the consolidated financial statements included in its Current Report on Form 8-K filed on March 30, 2007 (the &#147;March 2007 Form 8-K&#148;). These covenants are material terms of the Credit Agreement, and the Credit Agreement represents a substantial portion of the Company's capitalization. Non-compliance with these financial covenants under the Credit Agreement &#150; its interest coverage ratio and its leverage ratio &#150; could result in the Company's lenders
requiring the Company to immediately repay all amounts borrowed. In addition, if the Company cannot satisfy these financial covenants, it would be prohibited under the Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted Consolidated EBITDA is critical to the Company&#146;s assessment of its liquidity.</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>The Company also uses Adjusted Consolidated EBITDA to assess its operating performance. The Company believes it is meaningful because it provides investors with a measure used by its internal decision makers for evaluating its business. The Company's internal decision makers believe Adjusted Consolidated EBITDA is a meaningful measure because it represents a view of the Company's recurring operating performance and allows the Company&#146;s management to readily view operating trends and perform analytical comparisons. Additionally, the Company's management believes the inclusion of professional fees associated with litigation, financial restructuring, government investigations, forensic accounting, creditor advisors, accounting reconstruction, audit and tax work associated with the reconstruction process, and non-ordinary course charges incurred after March 19, 2003 (the date the United
States Securities and Exchange Commission filed a lawsuit against the Company and its former chairman and chief executive officer alleging that it historically overstated earnings) and related to its overall corporate restructuring (including matters related to internal controls) distort, within EBITDA, their ability to efficiently assess and view the core operating trends.</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>In general terms, the definition of Adjusted Consolidated EBITDA, per the Credit Agreement, allows the Company to add back to Adjusted Consolidated EBITDA all unusual non-cash items or non-recurring items. These items include, but may not be limited to, (1)&nbsp;expenses associated with government, class action, and related settlements, (2)&nbsp;fees, costs, and expenses related to the Company's recapitalization transactions, (3)&nbsp;any losses from discontinued operations and closed locations, (4)&nbsp;charges in respect of professional fees for reconstruction and restatement of financial statements, including fees paid to outside professional firms for matters related to internal controls and legal fees for continued litigation defense and support matters discussed in Note 25, </font><i><font size=2>Contingencies and Other Commitments</font></i><font size=2>, to the consolidated
financial statements included in our March 2007 Form 8-K, (5)&nbsp;compensation expenses recorded in accordance with Financial Accounting Standards Board Statement No.&nbsp;123(R), </font><i><font size=2>Share-Based Payment</font></i><font size=2>, (6) investment income, and (7) fees associated with our divestiture activities.</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>However, Adjusted Consolidated EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America ("GAAP"), and the items excluded from </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:10pt; margin-top:0pt;text-align:left;'><font size=2>Adjusted Consolidated EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted Consolidated EBITDA should not be considered a substitute for </font><i><font size=2>Net income (loss)</font></i><font size=2> or cash flows from operating, investing, or financing activities. The Company reconciles Adjusted Consolidated EBITDA to </font><i><font size=2>Net income (loss)</font></i><font size=2>, which reconciliation is set forth in the press release attached as Exhibit 99, and to </font><i><font size=2>Net cash used in operating activities</font></i><font size=2>, which reconciliation is set forth below. Because Adjusted Consolidated EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted Consolidated EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.
Revenues and expenses are measured in accordance with the policies and procedures described in the March 2007 Form 8-K.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><b><font size=2>Reconciliation of Adjusted Consolidated EBITDA to Net Cash Used in Operating Activities</font></b></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Six Months Ended</font></b></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="3" valign=bottom style=' border-bottom:solid black 1.0pt; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>June 30,</font></b></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='border-bottom: solid black 1.0pt;padding: 0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>2007</font></b></p> </td>
        <td width="17" valign=bottom style='border-top:solid black 1.0pt; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>2006</font></b></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="3" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>(In Millions)</font></b></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Adjusted Consolidated EBITDA</font></b></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;146.1</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;183.9</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Compensation expense under FASB Statement No. 123(R)</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(6.3)</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(8.1)</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Sarbanes-Oxley related costs</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(0.3)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(3.4)</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Provision for doubtful accounts</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>21.3</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>15.2</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Professional fees&#151;accounting, tax, and legal</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(35.1)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(76.3)</font></p> </td> </tr>
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        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Interest expense and amortization of debt discounts and fees</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:19.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(117.7)</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:19.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(119.0)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Equity in net income of nonconsolidated affiliates</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(5.1)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(4.4)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Minority interests in earnings of consolidated affiliates</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>16.1</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>16.3</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Amortization of debt discounts and fees</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>4.4</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>14.3</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Distributions from nonconsolidated affiliates</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>2.6</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>3.5</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Stock-based compensation</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>4.4</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>5.8</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Current portion of income tax benefit (expense)</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:31.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>8.7</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(9.4)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Change in assets and liabilities</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(63.3)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(47.4)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Change in government, class action, and related settlements liability</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(82.5)</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:24.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(56.2)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Other operating cash (used in) provided by discontinued operations</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(0.9)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:27.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>28.2</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Other</font></p> </td>
        <td width="75" valign=bottom style='border-bottom: solid black 1.0pt; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(3.4)</font></p> </td>
        <td width="17" valign=bottom style='padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='border-bottom: solid black 1.0pt; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:28.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(1.2)</font></p> </td> </tr>
    <tr >
        <td width="420" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:18.05pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><b><font size=2>Net Cash Used in Operating Activities</font></b></p> </td>
        <td width="75" valign=bottom style='border-bottom: double black 2.25pt;background: #99CCFF;padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(111.0)</font></p> </td>
        <td width="17" valign=bottom style='background:#99CCFF; padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="75" valign=bottom style='border-bottom: double black 2.25pt;background: #99CCFF;padding:0in 5.75pt 0in 5.75pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(58.2)</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>We also use operating earnings as an analytical indicator to assess our performance. We define operating earnings as income before (1) loss on early extinguishment of debt, (2) interest expense and amortization of debt discounts and fees, (3) other income, (4) gain on interest rate swap, and (5) income tax expense. The calculation of operating earnings for the three and six months ended June 30, 2007 and 2006 is included in the press release attached as Exhibit 99. Operating earnings is not a defined measure of financial performance under GAAP and should not be considered as an alternative to </font><i><font size=2>Net income (loss)</font></i><font size=2> as an operating performance measure. Because operating earnings is not a measure determined in accordance with GAAP and is susceptible to varying calculations, operating earnings, as presented, may not be comparable to other similarly
titled measures presented by other companies. </font></p>

<p style=' margin-bottom:10pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>ITEM 9.01.  </font></B><i><font size=2>Financial Statements and Exhibits.</font></i></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="116" style='border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top style='padding:0in 0in 10.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(d)</font></p> </td>
        <td width="68" nowrap valign=top style='padding:0in 0in 10.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Exhibits.</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>See Exhibit Index.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:10pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SIGNATURES</font></B></p>

<p style=' margin-bottom:10pt; margin-top:0pt; text-indent:0.5in;text-align:left;'><font size=2>Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:2in; text-indent:0.5in;text-align:left;'><font SIZE=2>HEALTHSOUTH CORPORATION</font></p>


<div align=right>

<table border="0" cellspacing=0 cellpadding=0 width="312" style='margin-left:0pt;border-collapse:collapse'>
    <tr style='height:12.0pt'>
        <td width="23" style='height:12.0pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="288" style='height:12.0pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="23" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td width="288" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>/</font><font SIZE=1>S</font><font size=2>/&nbsp;&nbsp; J</font><font SIZE=1>OHN</font><font size=2> P. W</font><font SIZE=1>HITTINGTON</font></p> </td> </tr>
    <tr >
        <td width="23" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="288" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Name:&nbsp;&nbsp;&nbsp;&nbsp;John P. Whittington</font></p> </td> </tr>
    <tr >
        <td width="23" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="288" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Title:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive Vice President, General Counsel</font></p>
<p style='margin-left:0pt;text-indent:.5in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>and Corporate Secretary</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Dated: August 8, 2007</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:-1in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<B><font SIZE=2>EXHIBIT INDEX</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="327" style='border-collapse:collapse'>
    <tr >
        <td width="20" nowrap valign=top ><p><font size=1>&nbsp;</font></p></td>

        <td width="224" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Exhibit Number  </font></u></p> </td>
        <td width="83" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Description</font></u></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="604" style='border-collapse:collapse; '>
    <tr >
        <td width="61" nowrap valign=top ><p><font size=1>&nbsp;</font></p></td>

        <td width="179" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>99</font></p> </td>
        <td width="364" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Press release of HealthSouth Corporation, dated August 8, 2007.</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:2.5in; text-indent:-2.5in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:2.5in; text-indent:-2.5in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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</HTML>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 8, 2007
HealthSouth Corporation
(Exact name of Registrant as specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
001-10315
63-0860407
(Commission File Number)
(IRS Employer Identification No.)
One HealthSouth Parkway, Birmingham, Alabama 35243
(Address of Principal Executive Offices, Including Zip Code)
(205)
967-7116
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02.
Results of Operations and Financial Condition.
On August 8, 2007, HealthSouth Corporation (the "Company") issued a press release, a copy of which is attached as Exhibit 99, announcing that it had filed its quarterly report on Form 10-Q for the period ended June 30, 2007 (the "June 30 Form 10-Q"), and that it will hold a conference call, which will also be webcast live, to review its June 30 Form 10-Q.  The release also provides an overview of certain information contained in the June 30 Form 10-Q, including certain financial results for the three and six months ended June 30, 2007.
Note Regarding Presentation of Non-GAAP Financial Measures
The financial data contained in the press release includes non-GAAP financial measures, including "Adjusted Consolidated EBITDA." The Company continues to believe Adjusted Consolidated EBITDA under its Credit Agreement is a measure of operating performance, leverage capacity, its ability to service its debt, and its ability to make capital expenditures. However, as the Company continues to deleverage its balance sheet and the large, non-ordinary course charges related to the "sins of the past" are behind the Company, this measure will become less significant.
The Company uses Adjusted Consolidated EBITDA on a consolidated basis as a liquidity measure. The Company believes this financial measure on a consolidated basis is important in analyzing its liquidity because it is the key component of certain material covenants contained within the Company's Credit Agreement, which is discussed in more detail in Note 9,
Long-term Debt
, to the consolidated financial statements included in its Current Report on Form 8-K filed on March 30, 2007 (the "March 2007 Form 8-K"). These covenants are material terms of the Credit Agreement, and the Credit Agreement represents a substantial portion of the Company's capitalization. Non-compliance with these financial covenants under the Credit Agreement – its interest coverage ratio and its leverage ratio – could result in the Company's lenders
requiring the Company to immediately repay all amounts borrowed. In addition, if the Company cannot satisfy these financial covenants, it would be prohibited under the Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted Consolidated EBITDA is critical to the Company's assessment of its liquidity.
The Company also uses Adjusted Consolidated EBITDA to assess its operating performance. The Company believes it is meaningful because it provides investors with a measure used by its internal decision makers for evaluating its business. The Company's internal decision makers believe Adjusted Consolidated EBITDA is a meaningful measure because it represents a view of the Company's recurring operating performance and allows the Company's management to readily view operating trends and perform analytical comparisons. Additionally, the Company's management believes the inclusion of professional fees associated with litigation, financial restructuring, government investigations, forensic accounting, creditor advisors, accounting reconstruction, audit and tax work associated with the reconstruction process, and non-ordinary course charges incurred after March 19, 2003 (the date the United
States Securities and Exchange Commission filed a lawsuit against the Company and its former chairman and chief executive officer alleging that it historically overstated earnings) and related to its overall corporate restructuring (including matters related to internal controls) distort, within EBITDA, their ability to efficiently assess and view the core operating trends.
In general terms, the definition of Adjusted Consolidated EBITDA, per the Credit Agreement, allows the Company to add back to Adjusted Consolidated EBITDA all unusual non-cash items or non-recurring items. These items include, but may not be limited to, (1) expenses associated with government, class action, and related settlements, (2) fees, costs, and expenses related to the Company's recapitalization transactions, (3) any losses from discontinued operations and closed locations, (4) charges in respect of professional fees for reconstruction and restatement of financial statements, including fees paid to outside professional firms for matters related to internal controls and legal fees for continued litigation defense and support matters discussed in Note 25,
Contingencies and Other Commitments
, to the consolidated
financial statements included in our March 2007 Form 8-K, (5) compensation expenses recorded in accordance with Financial Accounting Standards Board Statement No. 123(R),
Share-Based Payment
, (6) investment income, and (7) fees associated with our divestiture activities.
However, Adjusted Consolidated EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America ("GAAP"), and the items excluded from
Adjusted Consolidated EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted Consolidated EBITDA should not be considered a substitute for
Net income (loss)
or cash flows from operating, investing, or financing activities. The Company reconciles Adjusted Consolidated EBITDA to
Net income (loss)
, which reconciliation is set forth in the press release attached as Exhibit 99, and to
Net cash used in operating activities
, which reconciliation is set forth below. Because Adjusted Consolidated EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted Consolidated EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.
Revenues and expenses are measured in accordance with the policies and procedures described in the March 2007 Form 8-K.
Reconciliation of Adjusted Consolidated EBITDA to Net Cash Used in Operating Activities
Six Months Ended
June 30,
2007
2006
(In Millions)
Adjusted Consolidated EBITDA
$        146.1
$        183.9
Compensation expense under FASB Statement No. 123(R)
(6.3)
(8.1)
Sarbanes-Oxley related costs
(0.3)
(3.4)
Provision for doubtful accounts
21.3
15.2
Professional fees—accounting, tax, and legal
(35.1)
(76.3)
Interest expense and amortization of debt discounts and fees
(117.7)
(119.0)
Equity in net income of nonconsolidated affiliates
(5.1)
(4.4)
Minority interests in earnings of consolidated affiliates
16.1
16.3
Amortization of debt discounts and fees
4.4
14.3
Distributions from nonconsolidated affiliates
2.6
3.5
Stock-based compensation
4.4
5.8
Current portion of income tax benefit (expense)
8.7
(9.4)
Change in assets and liabilities
(63.3)
(47.4)
Change in government, class action, and related settlements liability
(82.5)
(56.2)
Other operating cash (used in) provided by discontinued operations
(0.9)
28.2
Other
(3.4)
(1.2)
Net Cash Used in Operating Activities
$      (111.0)
$        (58.2)
We also use operating earnings as an analytical indicator to assess our performance. We define operating earnings as income before (1) loss on early extinguishment of debt, (2) interest expense and amortization of debt discounts and fees, (3) other income, (4) gain on interest rate swap, and (5) income tax expense. The calculation of operating earnings for the three and six months ended June 30, 2007 and 2006 is included in the press release attached as Exhibit 99. Operating earnings is not a defined measure of financial performance under GAAP and should not be considered as an alternative to
Net income (loss)
as an operating performance measure. Because operating earnings is not a measure determined in accordance with GAAP and is susceptible to varying calculations, operating earnings, as presented, may not be comparable to other similarly
titled measures presented by other companies.
ITEM 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.
See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
HEALTHSOUTH CORPORATION
By:
/
S
/   J
OHN
P. W
HITTINGTON
Name:    John P. Whittington
Title:     Executive Vice President, General Counsel
and Corporate Secretary
Dated: August 8, 2007
EXHIBIT INDEX
Exhibit Number
Description
99
Press release of HealthSouth Corporation, dated August 8, 2007.