HealthSouth Corp. shares lost 97% of their value Tuesday as they resumed trading over the counter after the New York Stock Exchange sought to delist the company because of accounting fraud allegations.
HealthSouth, a leading provider of physical therapy, outpatient surgery and diagnostic imaging, traded at 11 cents a share on the OTC Pink Sheets under the symbol HLSH.
About 228 million shares of HealthSouth were traded Tuesday.
Shares of the former component of the Standard & Poor's 500 index last traded March 18, closing at $3.91 on the NYSE. The next day, the Securities and Exchange Commission imposed a trading halt as it accused the company and Richard Scrushy, its founder, chairman and chief executive, of inflating earnings by $1.4 billion since 1999 and overstating assets by $800 million.
HealthSouth said market makers Monday independently established a market for the stock.
The NYSE said it decided to delist the company because of investigations into the company by the SEC and the Justice Department and because of the company's announcement Monday that it could not stand by its previous financial statements.
Analysts have speculated the Birmingham, Ala., company could enter bankruptcy proceedings because its $1.25-billion credit line is frozen and it faces an April 1 maturity of about $350 million of debt.
Scrushy and Chief Financial Officer William Owens were placed on leave last week.
Scrushy, who has been criticized by investors for his lavish lifestyle, sold more than $247 million in company stock during a 15-year period in which he allegedly helped inflate share prices, records of his stock sales show.
The proceeds of those transactions, including a $10-million mansion in Palm Beach, Fla., and a 20-room house in Birmingham, are among the assets the U.S. Securities and Exchange Commission wants frozen as it pursues fraud charges against Scrushy and HealthSouth.
Scrushy's $6.5-million bonus in 2001 and his $5.3 million in salary from 1999 through 2001 were awarded for achieving inflated earnings targets, the SEC alleged.
John Mark White and William N. Clark, attorneys for Scrushy, did not return calls seeking comment.