RehabCare to Close Its Midland, Texas Hospital

RehabCare Group, Inc. (NYSE: RHB) announced today it has reached an agreement with HealthSouth (NYSE: HLS) to sell the operations of RehabCare Rehabilitation Hospital-Permian Basin (Midland, Texas) to the national physical rehabilitation provider. Financial terms of the agreement were not disclosed.

Operations at the 38-bed freestanding rehabilitation hospital are scheduled to end on or about August 29, 2008. Remaining patients at close will be transferred to HealthSouth Rehabilitation Hospital of Midland-Odessa to complete their course of treatment.

John H. Short, Ph.D., RehabCare President and Chief Executive Officer, said, “The need for two rehabilitation hospitals in this area has been questioned for some time. In order to rationalize the market going forward, we need to remove unnecessary duplication of services. Likewise, when we look at the long-term potential of our total Hospital portfolio, this divestiture makes strategic sense for us.”

RehabCare Rehabilitation Hospital-Permian Basin, formerly Memorial Rehabilitation Hospital, and HealthSouth have been providing similar rehabilitation services to the Midland-Odessa community for 15 years. HealthSouth Rehabilitation Hospital of Midland-Odessa, a 60-bed rehabilitation hospital, opened in 1993. Memorial Rehabilitation Hospital opened in 1988 under contract management by RehabCare. In 2006, RehabCare acquired the assets of the hospital from Midland Memorial Hospital and subsequently renamed it.

“This hospital has built a first-rate reputation in its 20 years, and our decision in no way reflects the level or quality of patient care provided by an excellent group of healthcare professionals,” said Dr. Short.

Dr. Short said the more than 50 hospital staff members will have opportunity to explore open positions at HealthSouth or elsewhere within the RehabCare network of programs and hospitals, which includes over 150 locations in Texas, five in the Midland-Odessa area.

With more than 25 years experience, RehabCare (www.rehabcare.com), a St. Louis-based company, is a leading national provider of physical rehabilitation services in conjunction with 1,200 hospitals and skilled nursing facilities (SNFs) in 42 states. The company also owns and/or operates freestanding rehabilitation and long-term acute care hospitals.