Exhibit 99.2

REHABCARE CONFERENCE CALL SCRIPT

May 3, 2007

INTRODUCTION BY CONFERENCE OPERATOR

INTRODUCTION OF MANAGEMENT BY FINANCIAL DYNAMICS

This conference call contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include but are not limited to, our ability to consummate acquisitions and other partnering relationships at reasonable valuations; our ability to integrate acquisitions and partnering relationships within the expected timeframes and to achieve the revenue, cost savings and earnings levels from such acquisitions and relationships at or above the levels projected; our ability to comply with the terms of our borrowing agreements; changes in governmental reimbursement rates and other regulations or policies affecting reimbursement for the services provided by us to clients and/or patients; the operational, administrative and financial effect of our compliance with other governmental regulations and applicable licensing and certification requirements; our ability to attract new client relationships or to retain and grow existing client relationships through expansion of our service offerings and the development of alternative product offerings; the future financial results of any unconsolidated affiliates; the adequacy and effectiveness of our operating and administrative systems; our ability to attract and the additional costs of attracting and retaining administrative, operational and professional employees; shortages of qualified therapists and other healthcare personnel;

significant increases in health, workers compensation and professional and general liability costs; litigation risks of our past and future business, including our ability to predict the ultimate costs and liabilities or the disruption of our operations; competitive and regulatory effects on pricing and margins; our ability to effectively respond to fluctuations in our census levels and number of patient visits; the proper functioning of our information systems; natural disasters and other unexpected events which could severely damage or interrupt our systems and operations; changes in federal and state income tax laws and regulations, the effectiveness of our tax planning strategies and the sustainability of our tax positions; and general and economic conditions, including efforts by governmental reimbursement programs, insurers, healthcare providers and others to contain healthcare costs.

JOHN SHORT

INTRODUCTION AND WELCOME

Good morning and thank you for joining us today. I’m John Short, President and CEO of the Company. With me from management are: Tom Davis, Executive Vice President and Chief Development Officer; Pat Henry, Executive Vice President; Mary Pat Welc, Senior Vice President; Jay Shreiner, Chief Financial Officer; Don Adam, Senior Vice President, Acquisitions; David Groce, Senior Vice President and General Counsel; Michael Garcia, Senior Vice President of Human Resources; Jeff Zadoks, Corporate Controller; and Betty Cammarata, Director of Investor Relations. All of us will be available during the question and answer period following our formal remarks.

During the first quarter we continued our emphasis on

operations integrating our major acquisition of last year, leveraging general and administrative costs and paying down debt. We saw what we think is an inflection point in the performance of our Contract Therapy business, and the annualized net cost savings in the first quarter associated with our Symphony acquisition were $12.3 million, which is within the range of our original estimate and ahead of schedule. In addition, we remain pleased with the performance of our Freestanding Hospital division.

In a quarter that historically has not produced strong cash from operations, we generated almost $9 million, driven by a five day reduction in DSOs. Most of this was used to pay down debt and enhance our financial position.

HRS revenues were down sequentially as a result of fewer units and we experienced lower than expected productivity and higher labor costs which negatively impacted our margins in the quarter, primarily in our outpatient business.

I’ll give you some highlights of the quarter as they pertain to our operating segments.

Contract Therapy

As expected, Contract Therapy continues to experience integration related inefficiencies as we complete our roll out of point-of-service technology in our acquired Symphony units. We had a decline in our performance in January at the height of our integration activity. However, we started to see a recovery in February, which continued to improve throughout March, with significant increases in productivity and profitability in both our legacy and RehabWorks sites. Based on this experience, we believe that we have passed the

period of greatest disruption to the business and expect the division will return to its historical levels of 5 to 6 percent operating profitability in 2008 as we previously announced.

We remain focused on initiatives to improve our CT margins in 2007 as outlined in our last conference call.

•

First, we are driving to complete the rollout of the RehabCare point-of-service technology platform into all RehabWorks sites by the end of the second quarter. At April 1, 301 facilities, covering about 80 percent of RehabWorks revenues, have been converted to our point-of-service technology, so we’re confident in achieving this goal.

The remaining facilities will continue to be negatively impacted during this period, but the increased productivity improvements expected from the already converted sites should offset these declines. At the end of the quarter, the RehabWorks sites working with the point-of-service technology achieved contribution margins of six percentage points higher than the RehabWorks sites not yet converted, which gives tangible evidence of the positive impact our initiatives are making.

•

Second, we are continuing to review low margin contracts with the objective of improving productivity, raising rates and exiting unprofitable business.

We exited 80 programs during the first quarter that demonstrated significantly below average margins. 59 of these programs were legacy CT sites and 21 were RehabWorks sites. There has been a two percentage point increase in productivity throughout the quarter in the legacy business. RehabWorks facilities that converted to our point-of-service technology have shown an increase in productivity of between 5 and 10 percentage points within six months of conversion. In addition, we continue to secure rate increases as a result of unit profitability reviews.

•

Third, we are revising the division’s sales criteria for new contracts and are focusing sales efforts on the division’s 87 strategic continuum markets. This may reduce the division’s backlog and openings in 2007, but will be a key element to returning to our targeted level of profitability.

Backlog in this division was 15 at the end of the quarter compared to 20 at the beginning of the quarter. Of the 15, 11 were located in, or near, strategic continuum markets where we generally achieve higher margins.

Hospital Rehabilitation Services

The results for this division have been impacted by the loss of eight units and two transfers to a joint venture during the quarter. Four of the eight closures were due to termination of interim agreements where joint ventures failed to materialize. As a result, we have re-focused our business development efforts on traditional ARU sales. These activities generated two openings in the first quarter (one of which was an ARU), and five ARU signings, all of which will open during 2007. In addition, we signed a significant bed expansion agreement for one of our ARUs.

We continue to successfully implement mitigation strategies to limit the negative impact of the 75% Rule on ARU admissions. For the first quarter of 2007, our same-store 75% Rule qualifying admissions increased by 3.7 percent compared to the fourth quarter of 2006, while our total same store ARU admissions increased 4.5 percent sequentially. On average,

our units are currently operating at a 63% compliance level with the 65% compliance level scheduled to begin July 1 for forty-four of our units. Based on our demonstrated success in attracting qualified admissions, we expect to be fully compliant in all of our ARUs by the end of their respective cost reporting years.

Our initiatives to improve HRS margins include:

•

The reorganization of management of the division to provide more oversight and training to field operations.

The reorganization has aligned the management with product specific expertise, narrowed the span of control and enhanced coordination with business development.

•

We are also redirecting our focus to the performance of the hospital-based outpatient segment.

A detailed review of low margin locations has resulted in same store units of service increasing 4.1 percent sequentially. We will continue to focus on labor cost control and market development activities.

Freestanding Hospital Division

Our Freestanding Hospitals continue to validate our investment in the continuum market strategy. We experienced strong same-store growth and are benefiting from the resulting operating leverage. For the first quarter, the group of hospitals that we have operated for more than one year achieved targeted EBITDA margin before corporate overhead of between 17 and 19 percent.

The division continues to experience impressive growth in revenue and profitability, with five joint venture projects currently in active development, which should maintain the momentum.

Construction of Central Texas Rehab Hospital, our joint venture with the Seton family of hospitals in Austin, Texas, is well underway with an expected opening in late third quarter of this year. Future plans for this joint venture include development of a long-term acute care hospital after the rehab hospital is opened.

A new LTACH hospital in North Kansas City is under construction in cooperation with North Kansas City Hospital and Liberty Hospital. This facility is expected to open in the first quarter of 2008.

Sometime this summer, we expect a decision on the Certificate Of Need application for our proposed 50-bed LTACH in Peoria, Illinois, which we will develop in partnership with Methodist Medical Center.

In St. Louis, construction related governmental approvals are currently being sought for our 35-bed rehab hospital being developed with St. Luke’s Hospital. Our fifth is our ongoing joint venture with Howard Regional Hospital in Kokomo, Indiana.

We have several letters of intent and additional opportunities under review, some of which involve acquisitions of existing facilities.

Legislative and Regulatory Update

Our legislative and regulatory agenda continues to focus on the next phase of the 75% Rule and the Part B therapy caps exception process. I’ll provide some legislative and regulatory updates.

With regard to the 75% Rule and Inpatient Rehabilitation Facility Reimbursement:

•

Both the Senate and House introduced legislation that would permanently freeze the 75% Rule at 60%. Support by members within both houses of Congress continues to grow.

•

Also on May 2, CMS issued proposed payment changes for inpatient rehabilitation facilities for FY 08. They include a 3.3 percent market basket increase and a willingness to reconsider the comorbidity exception to the 75% Rule which is set to expire after July 1, 2008.

Regarding Diagnostic Related Group Classifications:

•

On April 13, 2007, CMS released proposed rules to update the hospital inpatient prospective payment system and the Company is studying the rule to assess any impact on its three long-term acute care hospitals (LTACHs).

Regarding the LTACH 25% Rule:

•

On May 1, 2007, CMS released a final rule that revises the reimbursement policy for LTACHs. CMS has revised the allowable amounts reimbursable to LTACHs for reporting year 2008. The release also provides for extending the 25% rule to all LTACHs, including those LTACHs that have previously operated under a statutory exemption. The rule limits the number of PPS-exempt patients admitted from any hospital to 25%. The rule will be implemented over a three year period beginning with the cost reporting year that starts on July 1, 2007. The effect of this rule on the Company’s 2007 operations is not expected to be significant. For 2008, the Company estimates a one percentage point reduction in EBITDA before corporate overhead in the Freestanding Hospital

division. However, the Company has identified mitigation strategies which it believes will offset this negative impact.

•

In June 2006, the Company acquired an LTACH in New Orleans, Louisiana that has been statutorily exempt from the 25% rule. At the time of the acquisition, the Company allocated $5.4 million of the purchase price to an intangible asset to reflect the value of the statutory exemption. Based on the Company’s interpretation of the final rule, this asset has been impaired and the Company expects to write down the value of the asset between $4.5 and $5.0 million in the second quarter of 2007. The remaining value of the asset will be amortized over the next eleven quarters ending December 31, 2009.

Turning to Skilled Nursing Facility Reimbursement:

•

On May 1, CMS issued proposed payment changes for skilled nursing facilities which included a 3.3 percent market basket adjustment.

•

As a result of legislation passed last December, the exception process for Part B therapy caps was extended through December 31, 2007. New legislation would need to be enacted by this date in order to avoid returning to an arbitrary therapy cap. We are working with Congressional leaders to introduce new legislation that would extend the exception process while making provisions for a permanent, long-term solution.

I’ll now turn the call over to Jay Shreiner, who will review our financial results for the quarter.

Thank you, John,

Consolidated net revenues for the first quarter of 2007 of $184.0 million increased 1.0 percent compared to $182.2 million in the fourth quarter of 2006.

Consolidated net earnings in the first quarter were $2.0 million or $0.12 per share on a fully diluted basis. Sequentially, consolidated net earnings declined $0.1 million. However, fourth quarter consolidated net earnings of $0.12 per share included an after tax impairment charge of approximately $1.5 million or $0.09 per fully diluted share for the write-off of an information systems project. The effective tax rate for the first quarter returned to a more normal 40 percent as compared to 9.8 percent in the preceding quarter.

Net revenues for the Contract Therapy division were $102.8 million, a decrease of $0.6 million or 0.6 percent, sequentially. This decline was driven by a 5.5 percent reduction in the average number of locations operated during the quarter, but it was nearly offset by 5.3 percent growth in average revenue per location.

The division’s operating loss of $2.2 million in the first quarter of 2007 compares to an operating loss of $1.3 million, sequentially. The loss in the quarter was heavily impacted by continuing integration activities as previously described.

The division had a net reduction of 51 locations during the quarter. 29 new locations were added and 80 locations were closed. Of the 80 closures, 69 percent were for pricing, payment reasons or because they were unprofitable. As John said earlier, the division’s backlog stood at 15 at the end of the quarter, down from 20 at the end of the prior quarter.

First quarter HRS revenues were $43.3 million, a decline of 1.3 percent on a sequential basis, primarily resulting from fewer net operating units.

Operating earnings for the division were $5.2 million, a decline of $2.1 million or 29.1 percent from the $7.3 million of operating earnings in the fourth quarter. First quarter 2007 operating earnings suffered from increased labor and benefit costs as a percent of revenues. Operating performance in the fourth quarter benefited from a $700,000 adjustment for recovery in bad debts and lower SG&A expenses.

The division finished the quarter with 164 programs. ARUs at quarter-end totaled 112, a net decline of three units during the quarter. The division’s backlog was five at the end of the quarter, all of which are ARU’s. There was one ARU and one subacute unit opening and closings of three ARU’s, two subacute units, and three outpatient units. Two of the ARU’s chose to self-operate, both of which were related to terminated joint venture interim agreements and we closed one for payment reasons. We closed one subacute unit for payment reasons and one hospital closed its subacute unit. Of the three outpatient closures, all chose to self-operate, two of which were related to a terminated joint venture interim agreement. We also transferred one ARU and one outpatient unit to a joint venture during the quarter.

Freestanding Hospitals reported net revenues of $26.0 million, a 9.9 percent sequential improvement from fourth quarter 2006 net revenues of $23.7 million. On a same facility basis, net revenues increased 4.0 percent sequentially.

Operating earnings for the first quarter were $1.9 million,

compared to break-even in the previous quarter. Start-up costs in the quarter were minimal while start-up costs in the prior quarter amounted to $0.9 million.

Days sales outstanding declined sequentially to 72.9 days from 77.9 days resulting from improved collections. This improvement significantly contributed to the cash flows from operations for the quarter of $8.8 million. Capital expenditures were approximately $1.3 million for information technology including the rollout of point-of-service technology to RehabWorks locations.

The Company had approximately $9.3 million in cash and cash equivalents at March 31. The Company had $107.0 million of borrowings against its revolving credit facility and $6.5 million in subordinated long-term debt. During the first quarter, we paid down approximately $7.1 million in borrowings.

At March 31, our weighted average interest rate for borrowings against our credit facility was approximately 7.5 percent, which included a 200 basis point spread above LIBOR. We anticipate our interest rate spread will be 175 basis points above LIBOR during the second quarter.

Now I will turn the call back over to John.

JOHN SHORT

Thank you, Jay.

Closing Remarks

Overall, we are pleased by the recovery we are achieving in

our Contract Therapy operations and the continued robust performance of our Freestanding Hospitals division. These results further validate our focus on a strategic market approach and in creating operational efficiencies to improve profitability.

With much of the disruption from our Symphony acquisition behind us, we move forward with a continued focus on improving margins, completing our integration of former RehabWorks sites, developing our freestanding operations and reducing our debt.

As we celebrate our 25^th year of operation, let me thank everyone who has helped us reach this important milestone, especially our more than 16,500 colleagues. Thank you for your support and we look forward to sharing our future successes with you.

With that, I would like to have our operator open the call for questions.

To be read following Questions and Answers –

As a reminder, this conference call is being webcast live on our web site, www.rehabcare.com and will be available for replay beginning at 1:00 PM Eastern time today.

Exhibit 99.1

	CONTACT: RehabCare Group, Inc.
		Jay W. Shreiner
		Chief Financial Officer
		Betty Cammarata, Dir-Investor Relations
		Press: David Totaro, Senior Vice
		President, Corporate Marketing &
		Communications
		(314) 863-7422 or
		Financial Dynamics
		Gordon McCoun/Theresa Kelleher
		Press: Sean Leous (212) 850-5600

FOR IMMEDIATE RELEASE

Thursday, May 3, 2007

REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

•

Cautious optimism about recovery of Contract Therapy Business

•

Early achievement of promised Symphony acquisition cost savings

•

Mature Freestanding Hospitals achieve combined earnings and revenue targets

•

Continued challenges in Hospital Rehabilitation Services

ST. LOUIS, MO, May 3, 2007--RehabCare Group, Inc. (NYSE:RHB) today reported financial results for the quarter ended March 31, 2007. Comparative results for the quarter follow.

	Quarter Ended
Amounts in millions, except per share data	March 31,
		2007			2006
Consolidated Operating Revenues	$	184.0		$	121.7
Consolidated Operating Earnings		5.5			3.9
Consolidated Net Earnings (Loss) (a)		2.0			(0.6	)
Consolidated Diluted Earnings (Loss) per Share		0.12			(0.03	)

Contract Therapy Operating Revenues		102.8			57.4
Contract Therapy Operating Earnings (Loss)		(2.2	)		(1.3	)

HRS Inpatient Operating Revenues		32.1			33.6
HRS Outpatient Operating Revenues		11.2			12.9
HRS Operating Revenues		43.3			46.5
HRS Operating Earnings		5.2			5.5

Freestanding Hospitals Operating Revenues		26.0			15.2
Freestanding Hospitals Operating Earnings (Loss)		1.9			(0.3	)

Other Healthcare Services Operating Revenues		12.1			2.7
Other Healthcare Services Operating Earnings		0.7			—

Equity in Net Income (Loss) of Affiliates (a)		—			(2.8	)

(a)

Includes an after tax loss on RehabCare’s equity investment in InteliStaf of $2.8 million in the quarter ended March 31, 2006.

REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

Page 2

John H. Short, Ph.D., president and chief executive officer, commented, “During the first quarter, we continued our emphasis on operations, integrating our major acquisition of last year, leveraging general and administrative costs and paying down debt. For our Contract Therapy division, we had a decline in our performance in January at the height of our integration activity. We started to see recovery in February, and the recovery further strengthened in March. Our Freestanding Hospital division is performing well and meeting our expectations. Furthermore, we leveraged corporate expenses well and, in a quarter that historically does not produce strong cash from operations, we generated almost $9 million, driven by a five day reduction in DSOs. With the additional cash, we were able to pay down debt and enhance our financial position.”

Dr. Short continued, “As we anticipated, our Contract Therapy division is still experiencing the inefficiencies and reduced productivity related to integration, as we continue to roll out our point of service technology in our RehabWorks units. However, we believe that we have passed the period of greatest disruption in that division. I am also pleased to report that in the quarter we realized annualized net cost savings of $12.3 million from Symphony integration activities, which is within the range of our original estimate and ahead of our timetable. Hospital Rehabilitation Services division revenues were down year-over-year as a result of fewer units under management. We also experienced lower than expected productivity and higher labor costs in our outpatient segment which negatively impacted our margins in the quarter. These costs were partially offset by improved leverage in selling, general and administrative expenses for the division.”

Dr. Short added, “The performance of our Freestanding Hospitals division continues to validate our investment in our continuum market strategy. We experienced robust same store growth in that division and are benefiting from the resulting operating leverage. Without material start-up costs in the quarter, we began to see a level of profitability from this segment that we believe is more indicative of what we can achieve. For the quarter, the group of hospitals that we have operated more than one year achieved targeted EBITDA margin before corporate overhead of between 17 and 19 percent.”

Financial Overview of First Quarter

Net revenues for the first quarter 2007 were $184.0 million compared to $121.7 million from the year-ago quarter, an increase of $62.3 million or 51.2 percent. Acquisitions accounted for $55.5 million of the year-over-year increase in revenue.

Consolidated net earnings were $2.0 million in the first quarter 2007 compared to a net loss of $0.6 million in the first quarter 2006. Earnings (loss) per share on a fully diluted basis for the first quarter 2007 were $0.12 compared to $(0.03) for the same period last year.

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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Consolidated net earnings for the first quarter of 2007 include $2.3 million pre-tax interest expense related to the Company’s acquisitions and joint ventures. Consolidated net losses for the first quarter of 2006 include an after-tax charge of $2.8 million, or $0.17 per diluted share, related to the Company’s abandonment of its equity investment in InteliStaf.

The Contract Therapy (CT) division’s net revenues for the first quarter of 2007 increased 79.0 percent to $102.8 million, compared to $57.4 million in the year ago quarter. The division’s operating loss for the quarter was $2.2 million compared to an operating loss in the prior year quarter of $1.3 million. As of March 31, 2007, the division operated 1,146 locations compared to 764 locations at March 31, 2006. The acquisition of Symphony’s RehabWorks’ operations, which added $40.5 million of revenue to the division for the quarter, was the primary reason for the year-over-year first quarter increase in revenues and number of locations. Same store revenues in the first quarter of 2007 for the legacy CT business grew at a rate of 7.8 percent in part because revenues were negatively impacted by the Part B therapy caps in the first quarter of 2006.

Despite the substantial revenue growth, operating earnings for the division declined year-over-year. This decline is attributable to effects of our integration activities and elevated bad debt expense due to increased collection risks with larger chain accounts.

The Hospital Rehabilitation Services (HRS) division’s first quarter net revenues decreased 6.9 percent to $43.3 million, compared to $46.5 million in the year ago quarter. As of March 31, 2007, HRS operated 164 programs compared to 177 at March 31, 2006. During the same time period, acute rehab units (ARUs) decreased from 118 to 112. The division had five ARU signings in the first quarter, all of which will open this year.

Inpatient operating revenues declined 4.6 percent year-over-year as a result of a 5.0 percent decline in average units operated. Same store 75% Rule qualifying admissions increased by 2.4 percent compared to the first quarter of 2006. Outpatient operating revenues declined 12.8 percent, primarily attributable to a 13.6 percent year-over-year decline in average units operated.

Operating earnings for the division declined by $0.3 million to $5.2 million. Operating earnings were negatively impacted by fewer units in operation and higher labor costs per unit of service.

The Freestanding Hospital division’s net revenues for the first quarter of 2007 increased 71.7 percent to $26.0 million, compared to $15.2 million in the year ago quarter. Operating earnings for the quarter were $1.9 million compared to an operating loss in the prior year quarter of $0.3 million, which was negatively impacted by start-up costs of $0.5 million. The division experienced a 9.0 percent increase in year-over-year same store revenue. Rehab hospitals within the division, which the Company managed to an

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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average compliance level of 59 percent, are expected to be fully compliant at the end of their respective compliance periods. Year-over-year same store compliant discharges increased 18.8 percent.

Balance Sheet

At March 31, 2007, the Company had approximately $9.3 million in cash and cash equivalents, $107.0 million in outstanding debt under its revolving credit facility and $6.5 million in subordinated long-term debt related to acquisitions. During the first quarter of 2007, the Company paid down approximately $7.1 million in long-term debt. Due to improved collections, days sales outstanding decreased sequentially from 77.9 days at December 31, 2006 to 72.9 days at March 31, 2007. For the three months ended March 31, 2007, the Company generated cash from operations of $8.8 million and expended approximately $1.3 million for capital expenditures, principally for information systems.

Legislative and Regulatory Update

75% Rule and Inpatient Rehabilitation Facility Reimbursement

•

Both the Senate and House introduced legislation that would permanently freeze the 75% Rule at 60%. Support by members within both houses of Congress continues to grow.

•

On May 2, CMS issued proposed payment changes for inpatient rehabilitation facilities for FY 08. They include a 3.3 percent market basket increase and a willingness to reconsider the comorbidity exception to the 75% Rule which is set to expire after July 1, 2008.

Diagnostic Related Group Classification

•

LTACH 25% Rule

•

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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effect of this rule on the Company’s 2007 operations is not expected to be significant. For 2008, the Company estimates a one percentage point reduction in EBITDA before corporate overhead in the Freestanding Hospital division. However, the Company has identified mitigation strategies which it believes will offset this negative impact.

•

Skilled Nursing Facility Reimbursement

•

On May 1, CMS issued proposed payment changes for skilled nursing facilities which included a 3.3 percent market basket adjustment.

2007 Outlook

The Company will not be providing annual revenue and earnings per share guidance for the rest of 2007, but believes:

•

The Contract Therapy division will return to its historical 5-6 percent operating margins in 2008;

•

The Hospital Rehabilitation Services division is expected to experience modest same store growth in discharges in 2007; and

•

The mature facilities in the Freestanding Hospital division are anticipated to perform at a 17-19 percent EBITDA margin before corporate overhead.

Conclusion

Dr. Short concluded, “We are making headway with the initiatives we outlined earlier in the year to improve our operating results, as evidenced by the recovery in our Contract Therapy operations in the latter part of the quarter. Our focus for 2007 continues to center on improving margins in all business segments, completing our integration of Symphony Health Services, further developing our freestanding operations and reducing our debt. As we celebrate our 25^th year of operation, we’re taking the necessary steps to improve our performance throughout the remainder of the year.”

About RehabCare Group

Established in 1982 and headquartered in St. Louis, MO, RehabCare (www.rehabcare.com) is a leading provider of rehabilitation program

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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management services in partnership with over 1,300 hospitals and skilled nursing facilities in 43 states, the District of Columbia and Puerto Rico. The company also operates freestanding rehabilitation hospitals and long-term acute care hospitals across the country. RehabCare is pleased to be included in the Russell 2000 and Standard and Poor’s Small Cap 600 Indices.

A listen-only simulcast of RehabCare’s first quarter conference call will be available on the Company’s web site at www.rehabcare.com, under For Our Investors, Webcasts, and online at www.earnings.com, beginning at 10:00 Eastern time today. An online replay will be available until May 24, 2007. A telephonic replay of the call will be available beginning at approximately 1:00 P.M. Eastern time today and ending at midnight on May 24, 2007. The dial-in number for the replay is (630) 652-3041 and the access code is 17645369.

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties may include but are not limited to, our ability to consummate acquisitions and other partnering relationships at reasonable valuations; our ability to integrate acquisitions and partnering relationships within the expected timeframes and to achieve the revenue, cost savings and earnings levels from such acquisitions and relationships at or above the levels projected; our ability to comply with the terms of our borrowing agreements; changes in governmental reimbursement rates and other regulations or policies affecting reimbursement for the services provided by us to clients and/or patients; the operational, administrative and financial effect of our compliance with other governmental regulations and applicable licensing and certification requirements; our ability to attract new client relationships or to retain and grow existing client relationships through expansion of our service offerings and the development of alternative product offerings; the future financial results of any unconsolidated affiliates; the adequacy and effectiveness of our operating and administrative systems; our ability to attract and the additional costs of attracting and retaining administrative, operational and professional employees; shortages of qualified therapists and other healthcare personnel; significant increases in health, workers compensation and professional and general liability costs; litigation risks of our past and future business, including our ability to predict the ultimate costs and liabilities or the disruption of our operations; competitive and regulatory effects on pricing and margins; our ability to effectively respond to fluctuations in our census levels and number of

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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patient visits; the proper functioning of our information systems; natural disasters and other unexpected events which could severely damage or interrupt our systems and operations; changes in federal and state income tax laws and regulations, the effectiveness of our tax planning strategies and the sustainability of our tax positions; and general and economic conditions, including efforts by governmental reimbursement programs, insurers, healthcare providers and others to contain healthcare costs.

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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I. Condensed Consolidated Statements of Earnings
(Unaudited; amounts in thousands, except per share data)

	Three Months Ended
	March 31,
		2007			2006
Operating revenues	$	184,010		$	121,718
Costs & expenses
Operating		152,222			97,240
Selling, general & administrative:
Divisions		11,665			9,156
Corporate		10,277			8,549
Depreciation & amortization		4,312			2,904
Total costs & expenses		178,476			117,849

Operating earnings, net		5,534			3,869

Other income (expense), net		2			(39	)

Interest expense, net		(2,290	)		(68	)
Earnings before income taxes, equity in net loss of affiliates and minority interests		3,246			3,762

Income taxes		(1,298	)		(1,486	)
Equity in net income (loss) of affiliates		37			(2,841	)
Minority interests		12			—

Net earnings (loss)	$	1,997		$	(565	)

Diluted earnings (loss) per share	$	0.12		$	(0.03	)
Weighted average diluted shares outstanding		17,332			16,837

II. Condensed Consolidated Balance Sheets
(Amounts in thousands)
	Unaudited
	March 31,		December 31,
	2007		2006
Assets
Cash and cash equivalents	$	9,265	$	9,430
Accounts receivable, net		149,807		153,688
Deferred tax assets		20,518		6,065
Other current assets		8,684		8,932
Total current assets		188,274		178,115

Property and equipment, net		29,958		31,833
Excess of cost over net assets acquired, net		167,547		167,440
Intangible assets		35,906		36,950
Investment in unconsolidated affiliate		4,451		3,295
Other assets		8,969		10,663
	$	435,105	$	428,296
Liabilities & Stockholders’ Equity
Current portion of long-term debt	$	4,000	$	5,559
Payables & accruals		83,608		86,574
Total current liabilities		87,608		92,133

Long-term debt, less current portion		109,500		115,000
Other non-current liabilities		10,112		10,298
Minority interest		74		86
Stockholders’ equity		227,811		210,779
	$	435,105	$	428,296

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REHABCARE REPORTS FIRST QUARTER 2007 RESULTS

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III. Operating Statistics
(Unaudited; dollars in thousands)
	Three Months Ended
	March 31,
		2007			2006
Contract Therapy
Operating revenues	$	102,835		$	57,438
Operating expenses		90,000			49,349
Division SG&A		6,141			4,202
Corporate SG&A (a)		6,793			4,094
Depreciation and amortization		2,126			1,127
Operating earnings (loss)	$	(2,225	)	$	(1,334	)
Operating earnings margin		-2.2	%		-2.3	%

Average revenue per location	$	87,003		$	76,638
Average number of locations		1,182			749
End of period number of locations		1,146			764

Hospital Rehabilitation Services (HRS)
Operating revenues
Acute	$	29,474		$	31,105
Subacute		2,575			2,502
Total Inpatient	$	32,049		$	33,607
Outpatient		11,205			12,844
Total HRS	$	43,254		$	46,451
Operating expenses		31,207			32,716
Division SG&A		3,689			3,715
Corporate SG&A (a)		1,998			3,300
Depreciation and amortization		1,181			1,195
Operating earnings	$	5,179		$	5,525
Operating earnings margin		12.0	%		11.9	%

Average number of programs
Acute		114			120
Subacute		17			18
Total Inpatient		131			138
Outpatient		36			42
Total HRS		167			180

End of period number of programs
Acute		112			118
Subacute		17			17
Total Inpatient		129			135
Outpatient		35			42
Total HRS		164			177

Acute patient days		136,504			142,880
Subacute patient days		32,799			38,398
Total patient days		169,303			181,278

Acute discharges		11,093			11,671
Subacute discharges		842			843
Total discharges		11,935			12,514

Outpatient visits		265,667			299,003

Freestanding Hospitals
Operating revenues	$	26,019		$	15,153
Operating expenses		21,711			13,191
Division SG&A		454			662
Corporate SG&A (a)		1,085			1,050
Depreciation and amortization		881			572
Operating earnings (loss)	$	1,888		$	(322	)
Operating earnings margin		7.3	%		-2.1	%

End of period number of facilities		8			5
Patient days		23,069			13,179
Discharges		1,375			725

(a) The Company incurred stock-based compensation expense of $446 and $549 in the quarters ended March 31, 2007 and 2006, respectively. These costs have been allocated to the divisions as part of corporate SG&A.

-END-

Delaware	0-19294	51-0265872
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer
of incorporation)		Identification No.)

	7733 Forsyth Boulevard
	Suite 2300
	St. Louis, Missouri	63105
	(Address of principal executive offices)	(Zip Code)

				Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
o			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02		Results of Operations and Financial Condition

		The information in Exhibit 99.1 is incorporated herein by reference.

Item 7.01		Regulation FD Disclosure

		The information in Exhibit 99.2 is incorporated herein by reference.

Item 9.01		Financial Statements and Exhibits

(d)		Exhibits

		The following exhibits are furnished pursuant to Item 2.02 and 7.01 hereof and should not be deemed to be “filed” under the Securities Exchange Act of 1934:

	99.1	Press release dated May 3, 2007, announcing our first quarter revenues and results of operations.

	99.2	The script for a conference call held by the registrant on May 3, 2007

Exhibit No.		Description
99.1		Press release dated May 3, 2007, announcing our first quarter revenues and results of operations.

99.2		The script for a conference call held by the registrant on May 3, 2007

	By: /s/	Jay W. Shreiner
		Jay W. Shreiner
		Senior Vice President and
		Chief Financial Officer