HealthSouth Reports 32% Drop in Profit

HealthSouth Corp.’s third-quarter profit dropped 32% as costs rose and the government reduced Medicare payments to the biggest U.S. operator of rehabilitation hospitals.

Chairman Richard Scrushy told investors he would cut expenses to make up for less income from Medicare for outpatient therapy. Scrushy is facing Securities and Exchange Commission probes into share sales and whether the firm waited too long to tell investors about payment changes, which have triggered a 66% decline in the stock.

Net income fell to $53.6 million, or 13 cents a share. Revenue rose 1.7% to $1.09 billion.

HealthSouth shares fell 81 cents to $4.07 on the New York Stock Exchange.