Segment Information

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Segment Information

Segment Information

6. Segment Information

        The Company's reportable segments consist of (i) specialty hospitals and (ii) outpatient rehabilitation. Other activities include the Company's corporate services and certain other non-consolidating joint ventures and minority investments in other healthcare related businesses. The outpatient rehabilitation reportable segment has two operating segments: outpatient rehabilitation clinics and contract therapy. These operating segments are aggregated for reporting purposes as they have common economic characteristics and provide a similar service to a similar patient base. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance of the segments based on Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries and other income (expense).

        The following tables summarize selected financial data for the Company's reportable segments.

	Three Months Ended June 30, 2012
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(in thousands)
Net operating revenues	$	557,130	$	193,050	$	13		$	750,193
Adjusted EBITDA		102,166		25,837		(17,724	)		110,279
Total assets		2,184,743		437,591		156,080			2,778,414
Capital expenditures		12,631		2,922		630			16,183

	Three Months Ended June 30, 2013
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(in thousands)
Net operating revenues	$	559,386	$	197,080	$	207		$	756,673
Adjusted EBITDA		96,393		26,054		(16,489	)		105,958
Total assets		2,229,458		445,411		170,186			2,845,055
Capital expenditures		10,203		2,999		761			13,963

	Six Months Ended June 30, 2012
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(in thousands)
Net operating revenues	$	1,110,168	$	383,949	$	97		$	1,494,214
Adjusted EBITDA		202,120		48,315		(31,092	)		219,343
Total assets		2,184,743		437,591		156,080			2,778,414
Capital expenditures		19,682		6,713		1,539			27,934

	Six Months Ended June 30, 2013
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(in thousands)
Net operating revenues	$	1,117,137	$	389,181	$	310		$	1,506,628
Adjusted EBITDA		189,740		48,887		(32,588	)		206,039
Total assets		2,229,458		445,411		170,186			2,845,055
Capital expenditures		21,100		5,844		1,018			27,962

        A reconciliation of Adjusted EBITDA to income before income taxes is as follows:

	Three Months Ended June 30, 2012
	Specialty Hospitals			Outpatient Rehabilitation			Other			Total
	(in thousands)
Adjusted EBITDA	$	102,166		$	25,837		$	(17,724	)
Depreciation and amortization		(11,479	)		(3,232	)		(717	)
Stock compensation expense		—			—			(1,338	)
Income (loss) from operations	$	90,687		$	22,605		$	(19,779	)	$	93,513
Equity in earnings of unconsolidated subsidiaries											2,752
Interest expense											(20,957	)
Income before income taxes										$	75,308

	Three Months Ended June 30, 2013
	Specialty Hospitals			Outpatient Rehabilitation			Other			Total
	(in thousands)
Adjusted EBITDA	$	96,393		$	26,054		$	(16,489	)
Depreciation and amortization		(11,932	)		(3,001	)		(974	)
Stock compensation expense		—			—			(1,788	)
Income (loss) from operations	$	84,461		$	23,053		$	(19,251	)	$	88,263
Equity in earnings of unconsolidated subsidiaries											568
Loss on early retirement of debt											(17,280	)
Interest expense											(21,904	)
Income before income taxes										$	49,647

	Six Months Ended June 30, 2012
	Specialty Hospitals			Outpatient Rehabilitation			Other			Total
	(in thousands)
Adjusted EBITDA	$	202,120		$	48,315		$	(31,092	)
Depreciation and amortization		(23,322	)		(6,882	)		(1,423	)
Stock compensation expense		—			—			(2,599	)
Income (loss) from operations	$	178,798		$	41,433		$	(35,114	)	$	185,117
Equity in earnings of unconsolidated subsidiaries											5,217
Interest expense											(42,207	)
Income before income taxes										$	148,127

	Six Months Ended June 30, 2013
	Specialty Hospitals			Outpatient Rehabilitation			Other			Total
	(in thousands)
Adjusted EBITDA	$	189,740		$	48,887		$	(32,588	)
Depreciation and amortization		(23,794	)		(5,970	)		(1,945	)
Stock compensation expense		—			—			(3,537	)
Income (loss) from operations	$	165,946		$	42,917		$	(38,070	)	$	170,793
Equity in earnings of unconsolidated subsidiaries											1,626
Loss on early retirement of debt											(17,788	)
Interest expense											(42,952	)
Income before income taxes										$	111,679

10. Segment Information

        The Company's reportable segments consist of (i) specialty hospitals and (ii) outpatient rehabilitation. Other activities include our corporate services and certain other non-consolidating joint ventures and minority investments in other healthcare related businesses. The outpatient rehabilitation reportable segment has two operating segments: outpatient rehabilitation clinics and contract therapy. These operating segments are aggregated for reporting purposes as they have common economic characteristics and provide a similar service to a similar patient base. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance of the segments based on Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries and other income (expense).

        The following table summarizes selected financial data for the Company's reportable segments:

	Year Ended December 31, 2010
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(In thousands)
Net operating revenues	$	1,702,165	$	688,017	$	108		$	2,390,290
Adjusted EBITDA		284,558		83,772		(61,251	)		307,079
Total assets(1)		2,162,726		481,828		75,018			2,719,572
Capital expenditures		39,237		9,449		3,075			51,761

	Year Ended December 31, 2011
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(In thousands)
Net operating revenues	$	2,095,519	$	708,867	$	121		$	2,804,507
Adjusted EBITDA		362,334		83,864		(60,237	)		385,961
Total assets(1)		2,187,767		429,503		153,468			2,770,738
Capital expenditures		30,464		12,135		3,417			46,016

	Year Ended December 31, 2012
	Specialty Hospitals		Outpatient Rehabilitation		Other			Total
	(In thousands)
Net operating revenues	$	2,197,529	$	751,317	$	123		$	2,948,969
Adjusted EBITDA		381,354		87,024		(62,531	)		405,847
Total assets(1)		2,143,906		434,834		181,573			2,760,313
Capital expenditures		50,005		13,209		4,971			68,185

(1)

The specialty hospital segment includes $11.3 million, $2.7 million and $2.7 million in real estate assets held for sale on December 31, 2010, 2011 and 2012, respectively.

        A reconciliation of Adjusted EBITDA to income before income taxes is as follows:

	Year Ended December 31, 2010
	(In thousands)
	Specialty Hospitals			Outpatient Rehabilitation			Other
Adjusted EBITDA	$	284,558		$	83,772		$	(61,251	)
Depreciation and amortization		(45,116	)		(20,444	)		(3,146	)
Stock compensation expense		—			—			(2,236	)
Income (loss) from operations	$	239,442		$	63,328		$	(66,633	)	$	236,137
Equity in losses of unconsolidated subsidiaries											(440	)
Other income											632
Interest expense, net											(84,472	)
Income before income taxes										$	151,857

	Year Ended December 31, 2011
	(In thousands)
	Specialty Hospitals			Outpatient Rehabilitation			Other
Adjusted EBITDA	$	362,334		$	83,864		$	(60,237	)
Depreciation and amortization		(50,629	)		(16,487	)		(4,401	)
Stock compensation expense		—			—			(3,725	)
Income (loss) from operations	$	311,705		$	67,377		$	(68,363	)	$	310,719
Loss on early retirement of debt											(20,385	)
Equity in earnings of unconsolidated subsidiaries											2,923
Interest expense, net											(80,910	)
Income before income taxes										$	212,347

	Year Ended December 31, 2012
	(In thousands)
	Specialty Hospitals			Outpatient Rehabilitation			Other
Adjusted EBITDA	$	381,354		$	87,024		$	(62,531	)
Depreciation and amortization		(46,836	)		(13,208	)		(3,267	)
Stock compensation expense		—			—			(5,677	)
Income (loss) from operations	$	334,518		$	73,816		$	(71,475	)	$	336,859
Loss on early retirement of debt											(6,064	)
Equity in earnings of unconsolidated subsidiaries											7,705
Interest expense, net											(83,759	)
Income before income taxes										$	254,741