LifeCare Holdings, Inc. Announces Year-E...(.6 million and $35.0 million respectivel...),Health

Excluding the impairment charges and the gain on early extinguishment of indebtedness, expenses increased by $10.7 million to $93.1 million for the 2008 period as compared to $82.4 million for the 2007 period. Salaries, wages and benefits increased by $4.1 million to $42.6 million during the 2008 period as compared to $38.5 million in the 2007 period. This increase was the result of inflationary increases, increases in bed capacity, the treatment of higher acuity patients, and increased benefit expenses. The provision for doubtful accounts increased by $2.2 million during the 2008 period as compared to the 2007 period. During the three months ended December 31, 2007 the provision for doubtful accounts included a benefit of $1.0 million attributable to favorable collection trends experienced during the quarter. The remaining increase in the provision for doubtful accounts in the 2008 period was primarily attributable to an increase in accounts receivable related to the $2.0 million favorable adjustment to net patient service revenue as discussed herein. Rent expense increased by $0.6 million during the 2008 period in connection with a 6.9% increase in average licensed bed capacity.

The remaining unfavorable variance of $3.9 million was related mainly to increases in supplies and other operating expenses incurred as the result of inflationary increases, the treatment of higher acuity patients, and the increases in bed capacity.

Credit Agreement EBITDA

For the quarter ended December 31, 2008, adjusted EBITDA as defined in the credit agreement for our senior secured credit facility, which we refer to as Credit Agreement EBITDA, was $13.6 million, which is an inc
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