LifeCare Holdings, Inc. Announces Third Quart...(dule 1 Condensed Consolidated Stateme...),Health

Condensed Consolidated Statements of Operations

For the Three Months Ended September 30, 2006 and 2007

(In thousands)

(Unaudited)

%

2006 2007 Change

Net patient service revenue $77,437 $77,553 0.1%

Expenses:

Salaries, wages and benefits 36,224 40,389 11.5%

Supplies 8,027 8,191 2.0%

Rent 4,714 5,712 21.2%

Other operating expense 19,297 21,180 9.8%

Provision for doubtful accounts 1,326 1,404 5.9%

Depreciation and amortization 2,948 2,952 0.1%

Goodwill impairment charges - 3,834 NM

72,536 83,662 15.3%

Operating income (loss) 4,901 (6,109) -224.6%

Interest expense, net 8,502 8,967 5.5%

Equity in loss of joint venture - (106) NM

Loss before income taxes (3,601) (15,182) 321.6%

Provision for income taxes (215) (1,953) 808.4%

Net loss $(3,386) $(13,229) 290.7%

Reconciliation to Credit Agreement EBITDA:

Operating income (loss) - per above $4,901 $(6,109)

Adjusted for:

Depreciation and amortization 2,948 2,952

Goodwill impairment charges - 3,834

Stock compensation expense 287 194

Severance - 2,468

Cost saving initiatives 153 195

South Texas closure/relocatio
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