CHICAGO (Reuters) - HealthSouth Corp. HLS.N said on Monday it sold its outpatient rehabilitation division to privately held Select Medical Corp. for about $245 million in cash to focus on its core inpatient business.
Investors cheered the sale of the division, which some analysts said fetched about 20 percent more than expected. Shares of HealthSouth, the biggest U.S. operator of rehabilitation facilities, rose about 4 percent in late afternoon trade.
Birmingham, Alabama-based HealthSouth had said it intended to sell or spin off of the business, along with its surgical and diagnostics units. The divestitures are aimed at focusing the company on inpatient rehabilitation and paying down about $3.3 billion in debt.
HealthSouth is still turning itself around after a multibillion accounting fraud that led to the ouster of its chief executive and to the restatement of several years of financial results.
Deals for the remaining two divisions are expected to be announced some time during the first quarter, CEO Jay Grinney said in an interview.
Grinney expects about $1.5 billion in its debt to be paid off over the next several years, aided by the sales.
The company is expected to post fourth-quarter results in the middle of February.
In the third quarter, HealthSouth reported a wider year-over-year quarterly loss, driven by a drop inpatient admissions.
Grinney said the company is on track to post a year-over-year increase in inpatient admissions growth in 2007. The company will give a forecast when it posts results.
The Select Medical deal is expected to close within 60 to 90 days.
Shares rose 84 cents to $22.54 on the New York Stock Exchange.
Additional reporting by Kyle Peterson