Good morning everyone and welcome to HealthSouth's Third Quarter 2015 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 will 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 would now like to turn the call over to Crissy Carlisle, HealthSouth Chief Investor Relations Officer. Ma'am?

Thank you, operator, and good morning everyone. Thank you for joining HealthSouth third quarter 2015 earnings call. With me on the call in Birmingham today are Jay Grinney, President and Chief Executive Officer; Doug Coltharp, Chief Financial Officer; Mark Tarr, Chief Operating Officer, John Whittington, General Counsel and Corporate Secretary; Andy Price, Chief Accounting Officer; Ed Fay, Treasurer; Julie Duck, Senior Vice President of Financial Operations; and Ross Comeaux within the Investor Relations Department. Before we begin, if you do not already have a copy, the third quarter earnings release, supplemental slides and related Form 8-K filing with the SEC are available on our website at www.healthsouth.com. On page two of the supplemental slides, you will find the Safe Harbor statement which are also set forth in greater detail on the last page of the earnings release. During the call, we will make forward-looking statements which are subject to risk and uncertainties, many of which are beyond our control. Certain risks and 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 earnings release and related Form 8-K, Form 10-K for the year ended December 31, 2014, and the Form 10-Q for the third quarter of 2015 when filed. 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 this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measures are…

Thank you. [Operating Instruction] Our first question comes from Whit Mayo of Robert Baird. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hi, thanks. Good morning. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Whit. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hi. Appreciate all the details. My hands are tired from taking notes. I just wanted, Jay, maybe to first start on the group insurance; you mentioned that there are some changes that you are looking at. I'm just trying to figure out like how you think you can really influence that trend next year. Jay F. Grinney - President, Chief Executive Officer & Director: Part of that change is going to occur as Doug mentioned just by virtue of us believing, because there is no evidence to the contrary that we are, as he said, going to regress to the mean that we are going to fall in line and be – see our claims history be more in line and more reflective of what other large healthcare companies experience. And again, there is nothing that would suggest that – the makeup of our employee population is any different than other large healthcare companies. So that I think is going to be the single biggest factor that will help mitigate the impact of this going into 2016 although as Doug mentioned that base expense is still going to be there. It's not like it's going away. But we don't expect that we're going to see a continued unusual amount of activities. The second thing we are doing is we are frankly increasing co-pays and deductibles. We're introducing a – for our employee population, we are shifting more of that cost to our employees. We have in the past on…

Our next question comes from the line of Sheryl Skolnick of Mizuho. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Sheryl.

Good morning, gentlemen. It's nice to be back, so – even though it's not best quarter in the world. Yes, well, it happens. Jay F. Grinney - President, Chief Executive Officer & Director: Yes.

And unfortunately, it happens to everybody. A couple of questions on your case mix if we would, because I am really – I'm concerned about what's happening now and also what could happen changing case mix in the future with different benefit structures out there, different payment incentives at the acute level potentially even at the physician level. So, can you talk a little bit about what's happening – I get it. Yes, we've got Medicaid coverage. We've got exchange coverage. We've got moving down the spectrum on pricing. But what I'm really trying to get at is why are these patients coming in to HealthSouth at lower acuity with shorter length of stay? What can – and at the same time, you are correctly investing in the clinical capabilities of your facilities by going after nurses with higher levels of training and specialization. So that sets you up for a squeeze, no matter what. So, talk to me about where these kinds of patients are coming from. Are you seeing more single joint? Are you seeing more cases that are in some way shape or form, indicative of a change – with this change in the total addressable market, a permanent change in margins for the company? Jay F. Grinney - President, Chief Executive Officer & Director: I think to answer the last part of the question, yes, I do think that there is going to be a change in the margin profile of the company. The thing is as you know, we have said, for the last x number of years that ours is not going to be a margin expansion story. Ours will be an EBITDA growth story. And so there will be, I think, a change in our margin profile. But going back to the case…

Okay. And that's helpful and part of the reason why this is so timely is because you now also have Medicare this morning releasing new proposed rules about discharge planning and involving patient choice. So, the world above you and the upstream is changing so significantly at a time when your cost structure is being changed by your own initiative as well as things being imposed on you. It's good that you are expanding your addressable market. I guess where I'm coming from is that – follow up question being, as you see differences in discharge planning, as you see moves toward bundle payments albeit not just hips and knees, which you barely treat, but this whole big move, are you yet able to grab that volume in a more formal way, given that you have made progress with managed care, that you are still well regarded, extremely well-regarded for your outcomes? Or are you just not yet seeing that where you could literally exchange volumes for a little bit of mitigation of price in margin? Jay F. Grinney - President, Chief Executive Officer & Director: Yes, not yet. We have not seen that yet. But we do believe that over the long haul, the partnership with Encompass is going to give us a unique opportunity in the post-acute space to look at the patient's episode of care both in the facility and at home. And we are – as I mentioned in the comments and Doug did as well, we are already starting that process of establishing formal clinical collaboration establishing best practices from a post-acute standpoint. Not just an IRF standpoint or from a home health standpoint.

Our next question comes from the line of Frank Morgan of RBC Capital Markets. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Frank.

Good morning. Couple of questions; first, kind of going back to the labor issue again – in the instances, where you saw some, I think you said in some markets, you call it an issue about turnover. Where are those people going? I mean is it competition from other care sides or any color on that? Mark J. Tarr - Chief Operating Officer & Executive Vice President: Frank, this is Mark. The one market I referred to specifically happened to be in Vegas. And as you know that entire marketplace has come back to growth stage versus where it was a few years back, and there is a lot of growth in the hospitals out there. So, we just found pressure on – particularly our hospital in Henderson, relative to staffing needs of nurses and the acute cares, and everybody is fighting after the same group of nurses in that marketplace. So – but that's – I think that's an outlier as we look at our marketplaces and have not seen nearly as severe impact in other markets.

Got you. I think the last question sort of touched around the BPCI and some of those initiatives. But I was just curious any more color you might have on BPCI and also in your MA book today, you do any sort of episodic-based care and reimbursement programs? Thanks. Mark J. Tarr - Chief Operating Officer & Executive Vice President: Yes. Frank, it's Mark again. So, we remain participating in – eight of our hospitals are participating the model three bundling initiative. We – across these eight hospitals, we have five different episodes. The volume has been fairly modest. But we continue to pull away some insight as to how to manage this process and what we would need to do as a company as a whole in terms of providing resources to our hospitals, should the bundling initiatives as a whole, gain traction and take up a greater portion of the patient population.

And then on – any episodic payment in your MA book today? Jay F. Grinney - President, Chief Executive Officer & Director: Any what? I'm sorry, Frank.

Any kind of bundle-like payments or episodic-based reimbursement today with your Medicare Advantage payers? We hear about in the – some of the other post-acute settings that they're actually doing some of that already with Medicare Advantage. So do you actually have any kind of episodic or somewhat at-risk payment models for your care today? Jay F. Grinney - President, Chief Executive Officer & Director: We don't at this point, Frank. But we would anticipate in the future that may be where it goes.

Okay. Thanks.

Our next question comes from the line of Chad Vanacore of Stifel. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Chad. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: Hey, good morning; all right. Just shifting back to the labor cost, why do you feel that now was the right time to increase your paid license clinical professionals? Jay F. Grinney - President, Chief Executive Officer & Director: Well, we did that over time. We've been doing that since – it wasn't like all of a sudden in the third quarter we made that decision. That really is reflective of what we've been doing really pretty dramatically and pretty constantly over the last several years. Now we did see a pretty big increase year-over-year, third quarter last year or third quarter this year. But it's really our effort as we said to enhance the quality of the patient care that's offered. The patients are coming in especially on the Medicare side. And they've got a lot of comorbidities. They are not the kind of patients that we treated 10 years ago. And so we want to make sure we have the kind of staff in our hospitals that can treat those patients. Mark J. Tarr - Chief Operating Officer & Executive Vice President: The other aspect of that too is as we increase the complement of individual versus group therapy in our hospitals and in order to do that, we had to bring on more licensed therapists as Jay mentioned particularly with occupational therapists. Chad C. Vanacore - Stifel, Nicolaus & Co., Inc.: All right, thanks. And then- Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: That would have been a phenomenon that was new to this year. The CRRN program has…

Our next question comes from the line of A.J. Rice of UBS. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, A.J.

Hello everybody. Just a couple things, to your last point, Jay, I understand there is a lot of movement. I'm sure Reliant is impacting this, so your pricing in the IRF segment was up about 1.2% year-to-year, it looks like. Is that sort of with the impact of Reliant and everything, what we should look for or do you think the pricing will be materially different going forward? Jay F. Grinney - President, Chief Executive Officer & Director: Reliant was not in that number.

Okay. Jay F. Grinney - President, Chief Executive Officer & Director: And yes – so there we started operating them on October 1.

Right. Jay F. Grinney - President, Chief Executive Officer & Director: So you will see that in Q4 numbers. And obviously that will have an impact on the year-over-year. We will have to adjust for that. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: Yes, I would not anticipate A.J., that Reliant specifically will have a significant increase on our pricing for Q4. It's going to be very hard to make any real significant changes in the course of one quarter in their patient mix. I do think the fact that we're going to try to move them more up in the acuity spectrum over time, to resemble our other hospitals, create some upside to the pricing as we move into 2016. But as Jay said, it's going to take us a little while to implement those changes.

Okay. Jay F. Grinney - President, Chief Executive Officer & Director: We do expect though that it wouldn't be out of the realm of possibilities that in Q4, that net revenue per discharge may go down, if we've got Reliant in that at the lower acuity, more ortho level in the fourth quarter of 2015. And in the fourth quarter of 2014, we didn't have them in there. So, that's some of that noise that we may see, but we'll explain that as we transition into full operations with them.

That's what I thought; it might actually depress the pricing number somehow. One more broad question: I guess now you guys have three years of – you're saying the backlog – the administrative law judge level, has there been any discussion about, a potential settlement of any of these claims? Sort of what we saw with the racks in the hospitals? Has that come back? And then I also would ask you in a similar vein, I know last quarter you mentioned you guys were sitting down with the MAC try to develop an educational process for your people that would help. Is there anything that's happened along those lines, that's resulting in any improvement? Jay F. Grinney - President, Chief Executive Officer & Director: Yes, I'll take the last one first. There was an educational forum that the MAC had in August for all inpatient rehabilitative providers. And we attended that as you would expect. Couple takeaways; one, misery loves company. So, the other rehabilitation providers who were in attendance were experiencing the same issues with this MAC that we were. So, I guess we took away from that that we were not being singled out. And that this was just an interpretation by that MAC of what the rules were and what they can and cannot do. It actually was helpful because it put in black-and-white some of these rules of thumb and some of these across the board sweeping comments that were made that were not based in coverage requirements and not based in the law. And actually it enabled us to go to CMS, which we did subsequent to that August meeting to sit down and review with some of the senior officials at CMS our concerns and to point out what – the conflicting direction…

Okay, all right. Thanks a lot. That's great. Jay F. Grinney - President, Chief Executive Officer & Director: Yes.

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

Good morning. Thanks for taking the- Jay F. Grinney - President, Chief Executive Officer & Director: Hi, Gary.

Good morning. Thanks for taking the question. Just wanted to get your thoughts as the LTCHs start to deal with more restrictive patient criteria, some of the hospitals beginning October 1, do you think that's having any impact on your case mix index? Or do you have any concerns that might have a negative impact on your case mix index? Jay F. Grinney - President, Chief Executive Officer & Director: No, not anything that would be affected to the LTCH criteria. I mean really, the mix change or the acuity level change as we said in the Medicare book of business that fluctuates from a quarter-to-quarter and we are not seeing anything that is just atypical there. There was, as we said, more of the managed and Medicaid at a lower acuity level than what we've seen historically. But that was driven more by the fact that we are just treating more of those patients. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: I think if you look back to, Gary, some of our historical reports, we had a steady march up in our Medicare patient acuity that really kind of reached its peak level about mid-year last year. And I think we recalled in the second and third quarter of last year, Mark even responding to a question said from this level you're not going to be able to take it consistently higher, and we're going to see it bounce around a little quarter-to-quarter. It's creating a little bit of volatility in the Medicare pricing on a quarterly basis. But again, we are at a very high CMI for our Medicare patients.

Okay. And then maybe just going back to some of the issues with the MAC, you mentioned you had the meeting in Baltimore. Do you have any – did you get any indication from CMS when they might communicate that to the MAC or when you would expect it to flow through and a change of behavior from the MAC. And then maybe if you don't see that, are there any next steps for you to pursue to try to rectify the issue? Jay F. Grinney - President, Chief Executive Officer & Director: We've been told that the communication has already occurred. We have not seen any impact yet. But it's too early. I mean, it just – that communication is relatively recent. And as I mentioned in my remarks, it takes anywhere from three to four weeks before we get the denial. So it's probably too early to tell. We certainly will know and have an indication by the next call.

Okay, great. Thanks very much. Jay F. Grinney - President, Chief Executive Officer & Director: You bet.

Our next question comes from line of Chris Rigg of Susquehanna. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Chris.

Good morning. And I got in a little late here. Good morning, Jay. I think you just answered my question. But when we look at the claims denial for $22.5 million in Q3 that would mostly be in quarter submission, correct? Jay F. Grinney - President, Chief Executive Officer & Director: That's all in quarter.

Okay. And then just on the reserve methodology, I'm just trying to make sure I understand, it seems like you are reverting to the mean you got 70%-ish of the $98 million booked as the receivable. But when you look back to the end of 2013, it was a much lower number. Can you just give us a sense for how you are thinking about that? Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: Yes. The game has changed a little bit just in terms of the nature of the denials and ultimately how we prevail through the full adjudication process. We previously had used a kind of a five-year rolling average on recoveries to estimate our initial reserve percentage. And that recovery rate had been around 68%. Because the game has changed, we felt it was appropriate to shorten the look back period to something more akin to two years. That's more representative of the type of activity that's taking place right now. When we look back over the last two years, the recovery rate is 73%. And so, we've factored that into our initial reserve methodology and again, that change was made during the quarter and had a 20 basis point positive effect on the bad debt. Stated differently and this is an important point, we posted a 1.6% bad debt number for Q3. Absent that change in the reserve methodology that number would have been 1.8%. When you see the top end of our range and the guidance that has been updated is 1.8% for Q4.

Great. And then just on the medical claims, do you guys have a stop loss mechanism? Are you guys on the hook for 100%? Thanks a lot. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: We do not have a stop loss program in place. We are spending some time evaluating it although our initial feel as we've looked is it's not something that makes since economically for us, again, not off the table, but not something that we are necessarily positively inclined towards right now.

Great. Thanks a lot.

Our next question comes from the line of Miles Highsmith of RBC.

Hi. Good morning, guys. Jay F. Grinney - President, Chief Executive Officer & Director: Good morning, Miles.

Hi Jay. I think, Doug, you mentioned the CMI of 1.35. I was assuming that was Medicare. But I was just curious if you could tell us what the industry average is. And then a follow-up question just curious on the 7.75%, why $50 million and any thoughts on the balance of that charge? Thanks. Douglas E. Coltharp - Chief Financial Officer & Executive Vice President: Sure. So, I don't have the industry average right in front of me. Our recollection is that it's about 1.32. With regard to the $50 million, first of all there's a great opportunity for us to create an interest rate arbitrage by simply moving it out of the 7.75% even with the call premium under the revolver. And then it's – the cost to carry there is significantly lower, and we can prepay that debt with cash flow as we generated in the fourth quarter and beyond. Why not do more right now? There are couple of things happening that we want to just make sure we get our arms around from a cash flow perspective that we think is going to be short-term in nature. One of them is the fact that as everybody knows, we made the conversion to ICD-10 on October 1st. Historically, we have seen those types of changes create a little bit of backlog in the processing of claims. Again, it's typically resolved in the course of a quarter. But it can create some intermittent cash flow needs. So we just want to keep an eye on that. The second is that as we bring the 11 Reliant hospitals on board, we'll have some licensure transfer issues. And again, sometimes those can lead to short-term disruptions in the processing of claims. We want to digest both of those before we put any additional utilization on to the revolving credit facility. So that was the primary reason for targeting the $50 millions. It's a manageable number. It's not to suggest that that's the full extent of the intent to which we use, intend to use that type of refinancing.

Great. Thank you very much. Jay F. Grinney - President, Chief Executive Officer & Director: Okay.

I'm showing no further questions at this time. I would now like to turn the call over to Crissy Carlisle for any additional or closing remarks.

Thank you. If anyone has any additional questions, I will be available later today and tomorrow. Please call me at 205-970-5860. Thank you again for joining today's call.

Thank you, ladies and gentlemen for participating in today's conference call. You may now disconnect and have a wonderful day.