HealthSouth to Sell Unit for $945 Million MOVERS MARKETPLACE By Bloomberg:

By Duncan Moore

HealthSouth, the chain of rehabilitation hospitals emerging from a $2.7 billion accounting fraud, said Monday that it had agreed to sell its surgery division to the buyout firm Texas Pacific Group.

The $945 million price consists of $920 million in cash and equity valued at $25 million in the new company to be formed from the transaction, HealthSouth said. The company, based in Birmingham, Alabama, said it would use the proceeds to pay down debt.

The transaction is part of HealthSouth’s strategy of peeling off three of its four operating divisions to focus on inpatient rehabilitation. In January the company said it would sell its outpatient clinics to Select Medical of Mechanicsburg, Pennsylvania. That sale is expected to be completed by April 30. A diagnostic business is also on the market.

“It’s not a secret they’ve been looking for a buyer” for the surgery-center business, said David Peknay, a credit analyst with Standard & Poor’s in New York. “The company is restructuring itself into more of a pure-play inpatient rehabilitation business.”

HealthSouth shares fell 28 cents, or 1.22 percent, to close at $22.59 in New York. The stock had already fallen 6 percent in the 12 months through March 23.

The surgery division has 139 outpatient centers and three hospitals. Some HealthSouth executives, including Michael Snow, the chief operating officer, and Joseph Clark, the president of surgery centers, will join the new company, which is likely to be based in Birmingham.

“What they’re trying to do is get back to what their fundamental strength is,” Peknay said. “At the same time they want to monetize investments that have some good value, to reduce debt in the company.”

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