Good morning, everyone, and welcome to the HealthSouth Fourth Quarter 2014 Earnings Conference Call. At this time, I would like to inform all participants that their lines will be in a listen-only mode. After the speakers' remarks, there will be a question-and-answer period. You'll be limited to one question and one follow-up question. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Mary Ann Arico, Chief Investor Relations Officer.

Thank you, Laurie, and good morning, everyone. Thank you for joining us today for the HealthSouth fourth quarter 2014 earnings call. With me on the call in Birmingham today are Jay Grinney, President and Chief Executive Officer; Doug Coltharp, Executive Vice President and Chief Financial Officer; Mark Tarr, Executive Vice President and Chief Operating Officer; John Whittington, Executive Vice President, General Counsel and Corporate Secretary; Andy Price, Chief Accounting Officer; Ed Fay, Treasurer; and Julie Duck, Senior Vice President, Financial Operations. Before we begin, if you do not already have a copy, the press release, financial statements, the related 8-K filings with the SEC and the supplemental slides are available on our website at www.healthsouth.com. Moving to slide 2, the Safe Harbor, which is also set forth in greater detail on the first page of the earnings release. During the call, we will make forward-looking statements which are subject to risks and uncertainties, many of which are beyond our control. Certain risks, uncertainties and other factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations are discussed in the company's SEC filings, including the Form 10-K for 2013, the Form 10-Q for first, second and third quarter 2014, and the Form 10-K when filed with SEC. We encourage you to read them. You are cautioned not to place undue reliance on the estimates, projections, guidance and other forward-looking information presented. Statements made throughout this presentation are based on current estimates of future events and speak only as of today. The company does not undertake a duty to update or correct these forward-looking statements. Our slide presentation and discussion on the call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available at the end of…

Your first question comes from the line of A. J. Rice of UBS.

Hi, everybody. Maybe just to pursue a little further what you are doing to try to address the issue of the audits and the delays with the administrative law judge. How quick will you have the new program in place in your facilities? And anyway to quantify what that might mean in terms of being able to get these claims not flagged by this one intermediary? Jay F. Grinney - President, Chief Executive Officer & Director: I think we've already begun the process, A.J. We should have it fully up and operational by midyear, certainly end of the third quarter. It is hard to quantify the impact, quite frankly. We hope to continue to work with Cahaba to see if we can't get these issues resolved sooner. Technically, they should be reviewing claims and denying them based on medical necessity, but they are indeed denying them based on inadequate documentation. So, that's an issue that we're continuing to try to resolve with them. We'll be looking for ways to do that both here in Birmingham and, if necessary, in Washington. But the ability to get the backlog cleared up is frankly going to be significantly down the road. As you know, there's a huge backlog. The acute care hospitals were able to get a settlement. We have made some inquiries as to whether or not there may be an opportunity to have a similar settlement for inpatient rehabilitation facilities. We don't know if that's yet possible, but we're kind of working this problem from a lot of different avenues.

Okay. And maybe just a quick follow-up. The new clinical information system, I think you now have it in 58 hospitals. Can you sort of tell us if you compare the performance of those facilities versus the ones that are still yet to do, what are the big things that happened when you put the new clinical information system in? Mark J. Tarr - Chief Operating Officer & Executive Vice President: Hey, A. J., this is Mark Tarr. We actually have it up and running in 61 of our hospitals now. It's still a little early to compare hospitals that are still in the paper system versus our electronic system, although we're starting to see some indication that our documentation overall by our therapists, nurses and in some cases, physicians, is starting to be more complete. It certainly gives us access to information in the future from which to pull data from for us to do some best practices and use it to be an indicator of such things as fall, risk or likelihood to be transferred back to the acute. So we think in the future there'll be a great benefit to the information that we'll have access to and be able to draw from electronically.

Okay. Great. Thanks a lot.

Your next question comes from the line of Chris Rigg of Susquehanna Financial.

Hi. This is Josh Harakal on for Chris. Just a quick question. You had start-up costs of $6 million in the fourth quarter. How much did you have for full-year 2014? And then how much do you assume for 2015 in your guidance? Thanks. Jay F. Grinney - President, Chief Executive Officer & Director: It's about – most of that start-up cost occurred in the fourth quarter, the vast majority of it did. So I guess all-in it was, what? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: $7.6 million for the full year. Jay F. Grinney - President, Chief Executive Officer & Director: Yeah. So you can see $6 million of that was in Q4. Right now, the start-up costs that are in the guidance are fairly modest. There's one hospital that we are building today that is scheduled to open in Q4 of 2015 up in Franklin, Tennessee. And the start-up costs range anywhere from $500,000 to $1 million. Clearly, as I've indicated in my remarks, we have not included Cardinal Hill nor have we included the Memorial joint venture in our guidance. There may be some early costs – not so much ramp-up, but some early costs associated with those transactions that would not be in the budget at this point.

Thank you.

Your next question comes from the line of Gary Lieberman of Wells Fargo.

Good morning. Thanks for taking my question. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning.

Can you talk a little bit about the ACO opportunity? You mentioned you're pursuing it under the Model 3. Just how are you thinking about it? And maybe as you get out there, what's your hope for how large it could be? Mark J. Tarr - Chief Operating Officer & Executive Vice President: Yeah. Hey, Gary, this is Mark. It's actually the bundling Model 3 opportunity we have. We've applied for – well, back in the fall, we applied all of our hospitals to at least start the process of the application of which we were able to receive all the information that was being sent out from CMS, which is very helpful because it shows over a longer period of time cost information on patients that extend beyond the time of discharge from our hospitals, so that gave us great insight. We've carried five hospitals on to the next level of the application process. Our entire goal on this is to get some experience, see what it's like to be able to manage it, see what we would have to do as a company in terms of establishing resources both here and the corporate office and at the hospital level. So we anticipate having five that would go live on April 1. There's another opportunity in May to apply and have more of our hospitals involved. We'll evaluate that opportunity here in the future. Jay F. Grinney - President, Chief Executive Officer & Director: I think it's fair to say, Gary, that the foray, as I mentioned, into bundling is really putting our toe in the water and trying to learn where the opportunities might be. I mean, this is very new for us. I think it's very new for many in the industry. So I think it's premature to say exactly what we hope to get out of that other than get some knowledge and look for where the opportunities might present themselves. I think that the partnership with Encompass certainly creates some interesting opportunities to bundle and to have hospitals in markets where we have an Encompass present to take that risk and to have a much higher degree of confidence in the clinical outcomes and the patient satisfaction of the patients in the bundle pilot. So, right now, it's learning and trying to assess where those opportunities may be in the future.

Great. And then maybe for a follow-up on Encompass, is there anything additional you can share what you learned in the first quarter? How's the integration of the HealthSouth facilities and Encompass going? Jay F. Grinney - President, Chief Executive Officer & Director: Well, we're very, very pleased with the partnership with Encompass. I had the pleasure of attending a leadership conference, I guess it was earlier this week. Time flies. And I was just so impressed by the entire leadership team of that organization and, more importantly, with the culture of that organization. April Anthony and her senior management team have created just a truly best-in-class Home Health and Hospice operator. The initial integration I think is going along quite well. We have not yet transitioned our existing Home Health agencies over to Encompass, but we are very close to being able to do that, and I'm very confident that the partnership between our two organizations is going to be very, very successful. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: And Gary, this is Doug. Just a clarification on that. We're not going to flip a switch and transition all 25 of our agencies on one day. There is an integration process that needs to take place as those agencies transfer over to Encompass and that will be staggered. My guess is that we'll start some of those prior to the end of the first quarter, but that activity will probably extend through Q3.

Great. Thanks very much.

Your next question comes from the line of John Ransom of Raymond James. John W. Ransom - Raymond James & Associates, Inc.: Hi. Good morning. Two quick ones. First of all, I assume we're just going to move straight to segment reporting. So, is there any reason to think that proceeding the integration of the HealthSouth agencies that you'll just be a Home Health division with the Encompass revenue and approximately $72 million of EBITDA? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: John, you're right. We will move to segment reporting beginning with Q1 and actually, even though the operational integration will not have occurred beginning with Q1, the revenues from our existing Home Health agencies will be part of the Home Health segment which is going to be predominantly Encompass' numbers. John W. Ransom - Raymond James & Associates, Inc.: What does that add to the EBITDA of the unit once it gets fully put in, in revenue? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: I don't have a revenue number for you off the top of my head. I think it's probably between $25 million and $30 million. The EBITDA contribution would be somewhere in, call it, the $4 million to $5 million range. John W. Ransom - Raymond James & Associates, Inc.: Okay. And, Jay, this is a hard question to answer, I know, but what is the latest on the Hill with respect to post acute care's contribution or no contribution to the doc fix? Jay F. Grinney - President, Chief Executive Officer & Director: That is a hard one. We're up there, I guess, two weeks ago. We had over 100 meetings with various members, and it was very hard to glean much from those meetings. I…

Our next question comes from the line of Josh Raskin of Barclays.

Hi. Thanks. Good morning. Just a follow-up on two of the items that you guys mentioned in the guidance, the first, the $3 million difference on Encompass. I think you said that had to do with management roles. So just curious what happened from time of the announcement until today. And then the second item, the $10 million of what you guys are calling incremental investments, I'm just curious if there's some level of that type of investment on certain projects that we saw in 2014, and whether any of these costs will continue into 2016 and beyond as well? Jay F. Grinney - President, Chief Executive Officer & Director: I'll take the second one first. There was modest cost in 2014, but very, very modest. We did not add anybody – we didn't add a lot of people in the hospitals. The department here in the corporate office was not started. We had some modest bundling costs and, of course, the Cerner contract had not been increased. So it was very, very modest in 2014. Virtually all of those costs are going to continue going forward. We made the decision going into 2015, especially with the additional EBITDA contribution from our Encompass partnership, that we were in a position to be able to make an investment in the operating platform that would bring long-term value to the company and long-term value to the shareholders. So it is a cost – those are costs that we will continue to incur going forward. In terms of the equity roll, I'm going to ask Doug to respond to that. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: Sure, Josh. So we announced the transaction back in late November, and that was based on the signing of a definitive agreement. In the definitive agreement, we had agreed with April Anthony and the Encompass management team about a minimum amount of equity roll that was required for the deal to close. The management team was not required to make a decision on how much they were going to roll until the closing, which occurred at year-end. Based on the very attractive incentive structure that we created within the equity participation, and I think based on the very positive discussions that we had both proceeding the announcement and following the announcement regarding the opportunities that our two businesses would have in a combined entity, April and her management team chose to roll a number that was far in excess of the minimum required. That determination was made in the closing process at year-end, and it led to an increase in the minority interest.

Okay. Got you. So it's just $3 million of minority interest coming out of there? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: That was strictly – the equity roll again was about three times the minimum required. It was a very positive sign. Jay F. Grinney - President, Chief Executive Officer & Director: Yeah, and I was going to say the same thing. I mean, we see this as a very, very positive sign. As I mentioned earlier, April and her team are just truly exceptional. And having them commit their own dollars into this partnership really underscores how much confidence they have, and certainly reinforces the confidence that we have that this partnership is going to bring significant long-term value to our shareholders.

Got it. Does that have any impact on the purchase price or cash payments by HealthSouth? Jay F. Grinney - President, Chief Executive Officer & Director: No, not the percent roll. It was something that we were including in the negotiations. We would not have done the deal had there not been an equity roll. I would tell you that. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: It did reduce our required cash outlay. Jay F. Grinney - President, Chief Executive Officer & Director: But it didn't impact the purchase price, but it did have a positive impact on the cash we had to put out for the transaction.

Right. Okay. Perfect. Thanks.

Your next question comes from the line of Dana Nentin of Deutsche Bank.

Hi. Good morning. Thanks for taking the question. Just to follow-up on the bundled payment topic, I was wondering if you could give more color on your thinking around the base case and expected impact on your business from these initiatives, maybe, if you could give a percentage range of your discharges in those hospitals that might be impacted and then also how you plan to structure it? Jay F. Grinney - President, Chief Executive Officer & Director: Well, in terms of the number of discharges, it's going to be fairly small. As you know, the way the Model 3 is structured, first of all, we're going to be putting five hospitals in, that those hospitals would begin in April. And then the way the Model 3 is structured, we can choose from a list of diagnoses that we would want to bundle, and we are doing four different diagnoses. So, as you can see – as I mentioned before, this is really for us to gain some knowledge. I don't think anyone should be modeling any significant benefit in 2015 to the bundling initiative. It's really designed to give us some knowledge that we don't have right now. And so, you've got five hospitals, and in those five hospitals you've got four different diagnoses. I don't know exactly what that number is, but it's pretty small. So, I don't know if that helps, but it's really designed to just give us that initial baseline understanding of how this bundled system would work. And more importantly, how would we be able to influence some of those downstream decisions with respect to discharge status of our patients once they leave our facilities and to what extent can we influence those downstream providers to enhance the overall outcomes of those patients.

Got it. Thanks. And then just as it relates to the claims denials issue, is there an opportunity to move to a different MAC? And if so, what would be the process to do so? Jay F. Grinney - President, Chief Executive Officer & Director: That is a great question and we have wanted to do that forever. This particular MAC has been the most difficult to deal with. We don't know why we have worked non-stop, it seems like, trying to influence the process over there. It's an exception. The fact is we can't do it. It's just a – the barriers are such that we don't have any options. So, we've explored that. We've looked to try to move; we can't. So we're kind of acknowledging that reality and saying, okay, we're going to have to spend some money and we're going to have to do what we need to do to try to deal with this particular MAC. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: There was a time when CMS had expressed some willingness to consider providing the option for companies providers such as us to change the MAC designation from predominantly based on the location of the headquarters facility to the jurisdiction in which the hospital resides. But I think they quickly realized that was going to create an administrative burden on them so they removed that option. Whether or not it could arise again in the future is unknown, but we're certainly not counting on it. Jay F. Grinney - President, Chief Executive Officer & Director: Yeah, and when that option was offered, we formally declared that we wanted to go down that path of having the individual hospitals be administered by the MAC with responsibility for that jurisdiction. So we were actually – two, three years ago, we were hoping we would not be in this position, but it is what it is.

Got it. Thank you.

Your next question comes from the line of Whit Mayo of Robert Baird. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hey. Jay F. Grinney - President, Chief Executive Officer & Director: Hey, Whit. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hey. Just back on the bundled payment pilot program just for a second, why is 5 the right number? Why not 10 and how did you select those specific facilities? Is there any common denominator with the patients to the programs or the services? And why Model 3 versus 2 and is there any specific DRG you're most interested in? Mark J. Tarr - Chief Operating Officer & Executive Vice President: Hey, Whit, this is Mark. So there is nothing magical about 5. We wanted to choose a representation of enough hospitals to give us some accessed information and some experience. We did look at it by diagnostic category, by hospital, by our own performance against what we had estimated as being the target prices that were out there. So there was a lot of thought that went into it. Obviously, we want to minimize our financial risk, which would be very little, but we also wanted to make sure that we had an opportunity to work with our hospitals that showed the best promise within these categories. So, we've chosen, as Jay said, the four diagnostic categories – one is stroke, one is simple pneumonia, one is sepsis, and one is double joint – so we have two hospitals that have stroke. So – and just a reminder, the Model 3 is what applies to post-acute; Model 2 is for acute only. Jay F. Grinney - President, Chief Executive Officer & Director: And, Whit, the general answer to your question is this is…

Our next question comes from the line of Chad Vanacore of Stifel. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Hey, good morning. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Of the three de novos that opened up in the quarter, how many of those have actually met the criteria for Medicare certification by now? Jay F. Grinney - President, Chief Executive Officer & Director: All of them have. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Okay. Good. And then... Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: They all had by the end of 2014. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Okay. And then, when you start rolling up your – or start reporting your Home Health and Hospice business, are you going to put the outpatient business in there as well? Jay F. Grinney - President, Chief Executive Officer & Director: We will not. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Okay. Are you going to continue reporting that separately, or is that going to get rolled into inpatient? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: It's going to stay as part of inpatient. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Okay. And then, you mentioned that you've got some debt refi opportunity. If you were going to issue 10-year debt today, where do you think it will come out? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: I think it probably wouldn't be too far from what you saw us do in January of this year. My guess is, if I were to put a broad range out there, it would be somewhere between, on the very low end, say 5.375%, and on the high end maybe 5.625%. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: All right. Thanks a lot. Jay F. Grinney - President, Chief Executive Officer & Director: You bet.

Your next question comes from the line of Kevin Fischbeck of Bank of America Merrill Lynch.

All right. Great. Thanks. Just wanted to go into your guidance, I guess it includes acquisitions on the Home Health side, which I think was a spending target. I mean, how do we think of that in terms of revenue acquired? And when you do make acquisitions there, what are you buying? Are you buying licenses that you just plan to grow? Or are you buying turnarounds or are you buying well-run agencies that you just want to tuck in? Jay F. Grinney - President, Chief Executive Officer & Director: All of the above in terms of acquisition opportunities. And what was the first part of your question?

Well, I think you have an acquisition number in your slides around Home Health, but I wasn't sure how much revenue that kind of – I think that was a dollar amount spent, not a revenue target. How much are you thinking about as far as revenue? Jay F. Grinney - President, Chief Executive Officer & Director: Yeah. What we don't do is breakdown revenue and EBITDA contributions from every single acquisition. I would say that, in 2015, the overall contribution from the acquisitions is fairly modest. I mean, a lot of the growth year-over-year is a function of maturing the acquisitions made in 2014, particularly the larger one that was done in the fourth quarter down in Florida. So, what we aren't going to be doing is breaking out the revenue and EBITDA contributions of each acquisition, in part because some of these acquisitions are fairly small and they're relatively small cash outlays. And we just think that it makes more sense to just put the focus on the guidance number. It does include some acquisitions. And the good news is Encompass is very successful at acquiring. As I mentioned, the development pipeline is very robust and they have some that are already in the LOI stages and very close to being completed. So we're pretty confident that the amount of contribution from acquisitions in 2015 is a very achievable number.

Okay. And then, I guess in your slide, you have 2016 as being the time when you might look at other adjacencies. Can you talk a little bit about what you're thinking there and how important is it to offer a continuum of services in your markets versus just focusing on one or two business lines? Jay F. Grinney - President, Chief Executive Officer & Director: Yeah. The 2016 timeframe was only to underscore that in 2015, we are really going to be focusing on integrating the home health partnership. I think that the platform that we're creating frankly gives us the continuum that we need in this evolving delivery system. A delivery system that is characterized by coordinated care and coordinated payments. In that coordinated payments environment, we believe that many of the arbitrary silos that have been created by Medicare that have been created exclusively to determine how providers get paid, SNFs, ERF, LPACs on the facility side and then of course home health and hospice on the homecare side. That at least the facility silos will go away. I mean, if you think about it in a bundled payment environment or in an ACO payment environment, now there's a single check. And whether or not the patient is in a SNF, or an ERF or an LPAC, becomes immaterial. And so, our view of that new world order is that, to provide a continuum or post-acute care, you really only need facility-based post-acute capabilities and home-based post-acute capabilities. And so we believe that we have the facilities that we need and within those facilities, over time, subject to the regulatory relief that we're going to be seeking to be able to offer a full range of facility-based post-acute services. So, we think we're providing and building the foundation for that continuum as we speak. In terms of looking at other post-acute services, that's really going to be opportunistic. And whether or not it's in 2016, 2017 or beyond, I think that's just – it's way too early to tell. Obviously, we have talked in the past that the other post-acute service that makes sense for us as providers, we've certainly seen the benefit is long-term acute care. But as everyone knows, that segment is undergoing a tremendous change with the new patient criteria, and there's a pretty wide range of views on what the impact is going to be for LPACs in that new patient criteria environment. And we're certainly going to be watching that with interest, but we're going to be very, very, very cautious about moving into that space prematurely.

Okay. Great. Thanks.

At this time, there are no further questions. I'll now return the call to Mary Ann Arico for any additional or closing remarks.

Thank you, Laurie. As a reminder, we will be attending the Raymond James Conference next week. If you have additional questions, I will be available later today. Please call me at 205-969-6175. Thank you.

Thank you for participating in HealthSouth fourth quarter 2014 earnings conference call. You may now disconnect.