The Encompass Health Corporation (formerly HealthSouth Corporation), based in Birmingham, Alabama, is one of the largest post-acute healthcare providers in the United States, offering home-based acute and home- home services in 36 states and Puerto Rico through a network of hospitalized rehabilitation hospitals, home health agencies, and home care agents. Effective January 2, 2018, the organization changed its name to Encompass Health Corporation and ticker symbol of New York Stock Exchange (NYSE) from HLS to EHC.
HealthSouth is involved in a corporate accounting scandal where its founder, chairman, and chief executive officer, Richard M. Scrushy, are accused of directing company employees to wrongly report excessive corporate earnings to meet shareholder expectations.
At the height of the company in 2003, it recorded nearly $ 4.5 billion in revenue, dominating the rehabilitation market, operating and diagnostic services and employing over 60,000 people at 2,000 facilities in each US state along with facilities in the UK, Canada, Australia, Puerto Rico, and Saudi Arabia. The company is the largest public health care company in the United States, based on the number of locations, and the third by revenue.
In the mid to late 2006, HealthSouth, which never filed for Chapter 11 Bankruptcy Protection, completed its recovery and returned its shares on the New York Stock Exchange under the HLS symbol. Currently the company operates one division: rehabilitation of inpatient. The company previously operated an outpatient rehabilitation, operations center and diagnostic division. The company also previously owned and operated several acute care hospitals specializing in orthopedics, but sold all such hospitals in 2006. The previous outpatient division also operated an occupational drug division until 2001, when it was sold. HealthSouth also sold its long-term acute care facility in May 2011. Long-term hospitals accounted for about $ 200 million in revenue.
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Company start
HealthSouth was founded in Birmingham, Alabama as a Delaware company on February 22, 1984 as Amcare, Inc. by its founder, Richard M. Scrushy. The company opened its first facility in Little Rock, Arkansas and one in Birmingham later that year. In 1985 the company changed its name to HealthSouth Rehabilitation Corporation . In 1986 the company went public with an IPO on the NASDAQ Securities Exchange under the ticker symbol of HSRC. At the end of the company's final corporate roadshow presentation in New York City before the IPO, Scrushy received a standing ovation from the investment bankers in attendance, an extreme shortage. In September 1988, the company moved to the New York Stock Exchange and registered under the HRC symbol. In 1990 the company has grown to 50 facilities across the US. HealthSouth spent the year 1992 with $ 400 million in annual revenue. In 1993 the company made the first major acquisition when it bought 28 hospitals and 45 outpatient rehabilitation facilities from the National Medical Enterprise for approximately $ 300 million in cash. This acquisition doubles the company's annual revenue to $ 1 billion and also makes HealthSouth the country's largest rehabilitation care provider. In 1994, HealthSouth evolved when it announced it would buy ReLife-based Birmingham for $ 180 million in stock.
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Growth
Throughout the mid-1990s, HealthSouth thrived through mergers and acquisitions. In 1995 the company changed its name to HealthSouth Corporation to better reflect its diverse interests in health care. On August 31, 1995, HealthSouth CEO Richard Scrushy announced that HealthSouth would build a new headquarters on US Highway 280 in Birmingham. The new corporate campus will be built on an 85 acre (340,000 m 2 ) land that the company bought from Southern Company earlier in the year. The company's campus plan includes a five-story headquarters building with a connecting conference center and a parking deck.
In January 1995, the company entered the operating center business with the acquisition of a $ 155 million Surgical Health Company. One month later, the company acquired Novacare throughout the $ 215 million rehab hospital business in cash. In 1996 the company expanded to diagnosis with the purchase of Image Health Inc. In early 1996 the company adopted the slogan " The Healthcare Company of the 21st Century ". Less than a year later the company adopted the "H" logo as its corporate identity. HealthSouth made its biggest acquisition when it bought Horizon/CMS for $ 1.8 billion in 1997. A few months later after the acquisition, HealthSouth sold Horizon/CMS long-term care assets unnecessary for $ 1.15 billion of Integrated Health Services. HealthSouth along with many Health publications call this "deal this century". Also in February 1997, the company eventually moved to its new headquarters. The headquarters building itself contains a corporate store and museum. HealthSouth resumed its release until 1999 by purchasing the majority of the Columbia/HCA surgical division.
In 2001 the company announced it would, together with Oracle Corporation, build the world's first digital hospital on its corporate campus. The 13 story structure is intended as a substitute for the aging HealthSouth Medical Center in downtown Birmingham. Construction begins soon after at the new HealthSouth Health Center.
Accounting scandal
The first HealthSouth accounting problem came in late 2002 after CEO Richard M. Scrushy sold $ 75 million in stock days before the company posted huge losses. HealthSouth is accused by the US Securities and Exchange Commission (SEC) of an accounting scandal in which fake corporate earnings increased $ 1.4 billion. In 1996, Scrushy allegedly instructed senior officers and corporate accountants to falsify corporate earnings reports to meet investor expectations and control the company's stock price. Fraud continues for seven years. In certain fiscal years, corporate earnings are exaggerated by 4700%. $ 1.4 billion represents more than 10% of the company's total assets. At one point, corporate taxes - based on their fraudulent revenue - were higher than actual revenues.
In 1998, HealthSouth was accused of violating the Securities Exchange Act by not revealing a negative trend and misrepresenting the company's financial information.
In March 2003, HealthSouth CEO Richard M. Scrushy was charged with accounting fraud and the SEC announced it was investigating whether Scrushy's share sale was linked to a big loss HealthSouth posting. HealthSouth hired an outside law firm to review the sale of Scrushy's shares, with the company concluding that sales and profit losses were unrelated, although this did not take the company out of the SEC radar. On the afternoon of March 18, 2003, FBI agents executed a search warrant at the company headquarters after Chief Financial Officer William Owens agreed to use the wire in a failed attempt to get Scrushy to talk about fraud.
In June 2005, Scrushy was released on all 36 of the number of accounting frauds against him, especially one count in violation of Sarbanes-Oxley Law. However, four years later, he was sued for fraud by HealthSouth investors and ordered to pay back his company $ 2.8 billion.
Recovery and new HealthSouth
After the raids at the company headquarters, the board of directors holds an emergency meeting to discuss what action needs to be taken. One of the first actions was the termination of Richard Scrushy as Chairman and CEO, and Bill Owens as CFO. Robert P. May was elected interim CEO and Joel C. Gordon as Chairman. Another issue immediately addressed by the board is how to get cash for senior bond interest payments and principal payments due on convertible bonds worth $ 344 million. The board agrees that the company's cash flow issue is too big to handle on its own. On the advice of JPMorgan Chase lender, the company hired the restructuring company Alvarez and Marsal to bring its finances in order and immediately appointed Chief Restructuring Officer Bryan Marsal. By the end of 2003, the company had rearranged most of its finances and was able to avoid Chapter 11 bankruptcy.
Attempts were made at corporate headquarters to root out all signs of Scrushy's earlier presence within the company. The Council removed Scrushy's name from the conference center, closed the corporate and museum stores and opened a fifth-floor executive office for all employees, who, during Scrushy's term, had been kept away. The board also sells all but a few of the eleven jet companies, which include Gulfstream V helicopters and Sikorsky S-76 C. In an effort to save money, the company stopped the construction of the Digital Hospital, whose construction cost doubled, to $ 400 million. On May 10, 2004, Jay Grinney was elected by the board as the company's permanent CEO. Immediately after Grinney's appointment, the company moved forward with the aim of re-becoming the current filer with the SEC. Accordingly, the company restated earnings from 2000 to 2003. The company also sold or closed many poor performing facilities, including its medical center division, in an attempt to return to profitability.
On May 15, 2006, the company completed its objective once again to become the current filer with the SEC when proposing the first quarter financial results of 2006. This is the first time the company has submitted a 10-Q since its accounting scandal began. On August 14, 2006 the company announced a restructuring plan that included sales, spinoffs or other dispositions of operations, ambulatory and diagnostic divisions, together with a 1-to-5 reverse stock split, to coincide with its relisting on the New York Stock Exchange below HLS symbol. Reversal of the reverse stock was approved by shareholders at a special meeting at the company's headquarters on October 18, 2006. The final step in HealthSouth's recovery from the accounting scandal occurred on October 26, 2006 when it was back again at the New York Stock Exchange.
On January 29, 2007 the company announced it would sell more than 600 outpatient centers to Select Medical Corporation for $ 245 million in cash. The transaction was completed on May 1, 2007.
On March 26, 2007, HealthSouth announced it would sell its division of operations for TPG Capital's private investment partnership of $ 920 million in cash and equity interest in newly formed companies worth between $ 25 and $ 30 million. The surgical center division consists of 139 outpatient surgery centers and three surgical hospitals. It was also announced that the new operating center company will remain headquartered in Birmingham. The transaction was completed on June 30, 2007 with the creation of Affiliate Treatment Surgery.
On April 29, 2007, HealthSouth announced a definitive agreement to sell its diagnostic division to Gores Group for $ 47.5 million. It was also announced that the newly formed company would remain in Birmingham. The transaction was completed on July 31, 2007 with Diagnostic Health Corporation being formed.
In July 2010, HealthSouth gave the American Cancer Society of Alabama the BMW V-12 2000 750iL black, bulletproof sedan that HealthSouth bought for security reasons under former CEO Richard Scrushy. Scrushy bought a car from HealthSouth in 2003 after an accounting scandal broke out. Scrushy also has a maroon 2000 bullet-proof V-12 BMW 750iL which was sold in 2009 by HealthSouth as part of a civil ruling against Scrushy. In 2009, HealthSouth has acquired 800 BMW ownership of Black 750 Scrushy.
Affiliated company
Offspring Company
- MedPartners, Inc. - a pharmaceutical practice management company founded by HealthSouth and Scrushy, today the company is known as CVS Caremark, a unit of CVS Health.
- Capstone Capital Corporation - a trust of real estate investments founded by HealthSouth
- Diagnostic Health Corporation - a former diagnostic imaging division
- SourceMedical Solutions - Health Technology System established by HealthSouth
- Affiliate Treatment Surgery - former division of operations center
Previously affiliated company
- 21st Century Health Ventures (Birmingham, Alabama) - founded by Scrushy and former HealthSouth CEO Michael Martin.
- GG Enterprises (Hoover, Alabama) - founded by Scrushy's mother and brother.
- Do it! Roadshow - the children's health education tour and the HealthSouth-sponsored television series
- MedCenterDirect.com (Atlanta, Georgia) - HealthSouth purchased 6.4 million shares from the hospital's equipment company.
- HealthTronics Surgical Services Inc. (Marietta, Georgia) - Michael Martin is the interim director of CFO at HealthSouth.
- Total Nonstop Action Wrestling LLC. (Nashville, Tennessee) - Healthsouth was a major financial contributor but refused support for the company in October 2002 amid an accounting scandal.
- Integrated Health Services Inc. (Sparks, Maryland) - a nursing home and corporate rehabilitation center that Scrushy was director in the 1990s.
References
External links
- Official website
- Release litigation SEC - SEC Charges HealthSouth Corp, CEO Richard Scrushy With $ 1.4 Billion Fraud Accounting
- Birmingham News Special Report on HealthSouth Scandal
Source of the article : Wikipedia
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