Bank of America Gives Color to HealthSouth Outlook

Bank of America has published a report on HealthSouth HLS reiterating the position on the healthcare service provider. In the report, Bank of America wrote, "Adjusted EPS of $0.32 was $0.04 above our est/$0.05 above consensus on lower taxes. Meanwhile, adjusted EBITDA of $115m was only $1m above our estimate driven by lower than expected bad debt (a $3m benefit in the quarter), pointing to a low quality quarter. HLS basically reaffirmed its 2011 guidance provided in May (adjusted EBITDA of $447-$453m) even though it lowered its bad debt assumption again. HLS delivered another strong volume quarter, but we remain Neutral and see more upside elsewhere as we get closer to experiencing less than inflationary updates from Medicare in 2012 with no clear offsets. With essentially an in-line quarter, we are maintaining our estimates." Bank of America rated HealthSouth a Neutral with a price target of $30.00. Health South closed Thursday at $24.52.