Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 23, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-10315 | |
Entity Registrant Name | Encompass Health Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 63-0860407 | |
Entity Address, Address Line One | 9001 Liberty Parkway | |
Entity Address, City or Town | Birmingham | |
Entity Address, State or Province | AL | |
Entity Address, Postal Zip Code | 35242 | |
City Area Code | 205 | |
Local Phone Number | 967-7116 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | EHC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 100,240,796 | |
Entity Central Index Key | 0000785161 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement Of Comprehensive Income And Income Statement [Abstract] | ||||
Net operating revenues | $ 1,206.9 | $ 1,089.5 | $ 3,554.4 | $ 3,211.3 |
Operating expenses: | ||||
Salaries and benefits | 658.6 | 605.6 | 1,923.8 | 1,778.9 |
Other operating expenses | 183.7 | 172 | 534.3 | 500.3 |
Occupancy costs | 14.2 | 12.4 | 42.3 | 41.6 |
Supplies | 53.9 | 51.1 | 159.7 | 148.2 |
General and administrative expenses | 49.8 | 37.9 | 148.6 | 111.5 |
Depreciation and amortization | 67.3 | 62.1 | 203.8 | 180.3 |
Total operating expenses | 1,027.5 | 941.1 | 3,012.5 | 2,760.8 |
Loss on early extinguishment of debt | 0 | 0 | 0 | 1.4 |
Interest expense and amortization of debt discounts and fees | 35.9 | 38.2 | 108.6 | 138.2 |
Other (income) expense | (0.5) | 3.6 | (6.8) | 13.6 |
Equity in net income of nonconsolidated affiliates | (1) | (0.7) | (2.3) | (2.6) |
Income from continuing operations before income tax expense | 145 | 107.3 | 442.4 | 299.9 |
Provision for income tax expense | 30.3 | 21.8 | 95 | 68.2 |
Income from continuing operations | 114.7 | 85.5 | 347.4 | 231.7 |
(Loss) income from discontinued operations, net of tax | (1.3) | (18.5) | (3.5) | 16.7 |
Net and comprehensive income | 113.4 | 67 | 343.9 | 248.4 |
Net and comprehensive income | 113.4 | 67 | 343.9 | 248.4 |
Less: Net income attributable to noncontrolling interests included in continuing operations | (28.1) | (21.6) | (79.5) | (65.5) |
Less: Net income attributable to noncontrolling interests included in discontinued operations | 0 | 0 | 0 | (1.3) |
Less: Net and comprehensive income attributable to noncontrolling interests | (28.1) | (21.6) | (79.5) | (66.8) |
Less: Net and comprehensive income attributable to noncontrolling interests | (28.1) | (21.6) | (79.5) | (66.8) |
Net and comprehensive income attributable to Encompass Health | 85.3 | 45.4 | 264.4 | 181.6 |
Net and comprehensive income attributable to Encompass Health | $ 85.3 | $ 45.4 | $ 264.4 | $ 181.6 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 99.5 | 99.2 | 99.5 | 99.2 |
Diluted (in shares) | 101.4 | 100.5 | 101.1 | 100.3 |
Basic earnings per share attributable to Encompass Health common shareholders: | ||||
Continuing operations (in dollars per share) | $ 0.86 | $ 0.64 | $ 2.68 | $ 1.67 |
Discontinued operations (in dollars per share) | (0.01) | (0.19) | (0.04) | 0.15 |
Net income (in dollars per share) | 0.85 | 0.45 | 2.64 | 1.82 |
Diluted earnings per share attributable to Encompass Health common shareholders: | ||||
Continuing operations (in dollars per share) | 0.85 | 0.63 | 2.65 | 1.66 |
Discontinued operations (in dollars per share) | (0.01) | (0.18) | (0.03) | 0.15 |
Net income (in dollars per share) | $ 0.84 | $ 0.45 | $ 2.62 | $ 1.81 |
Amounts attributable to Encompass Health common shareholders: | ||||
Income from continuing operations | $ 86.6 | $ 63.9 | $ 267.9 | $ 166.2 |
(Loss) income from discontinued operations, net of tax | (1.3) | (18.5) | (3.5) | 15.4 |
Net and comprehensive income attributable to Encompass Health | $ 85.3 | $ 45.4 | $ 264.4 | $ 181.6 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 99.7 | $ 21.8 | |
Restricted cash | 41.5 | 31.6 | |
Accounts receivable | 535.9 | 536.8 | |
Other current assets | 136.6 | 127 | |
Total current assets | 813.7 | 717.2 | |
Property and equipment, net | 3,186.3 | 2,939.2 | |
Operating lease right-of-use assets | 196.8 | 212.5 | |
Goodwill | 1,281.3 | 1,263.2 | |
Intangible assets, net | 276.4 | 282.3 | |
Other long-term assets | 209.8 | 222.1 | |
Total assets | [1] | 5,964.3 | 5,636.5 |
Current liabilities: | |||
Current portion of long-term debt | 23.9 | 25.2 | |
Current operating lease liabilities | 24.9 | 25.6 | |
Accounts payable | 165.4 | 132.9 | |
Accrued expenses and other current liabilities | 425 | 392.2 | |
Total current liabilities | 639.2 | 575.9 | |
Long-term debt, net of current portion | 2,692.7 | 2,741.8 | |
Long-term operating lease liabilities | 183.9 | 199.7 | |
Deferred income tax liabilities | 80.4 | 83 | |
Other long-term liabilities | 178.9 | 174.2 | |
Total liabilities | 3,775.1 | 3,774.6 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 41.5 | 35.6 | |
Shareholders’ equity: | |||
Encompass Health shareholders’ equity | 1,560.4 | 1,310.3 | |
Noncontrolling interests | 587.3 | 516 | |
Total shareholders’ equity | 2,147.7 | 1,826.3 | |
Total liabilities and shareholders' equity | [1] | $ 5,964.3 | $ 5,636.5 |
[1] Our consolidated assets as of September 30, 2023 and December 31, 2022 include total assets of variable interest entities of $204.2 million and $207.8 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of September 30, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $41.7 million and $47.9 million, respectively. See Note 4, Variable Interest Entities. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | |
Assets | [1] | $ 5,964.3 | $ 5,636.5 |
Liabilities | 3,775.1 | 3,774.6 | |
VIE | |||
Assets | 204.2 | 207.8 | |
Liabilities | $ 41.7 | $ 47.9 | |
[1] Our consolidated assets as of September 30, 2023 and December 31, 2022 include total assets of variable interest entities of $204.2 million and $207.8 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of September 30, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $41.7 million and $47.9 million, respectively. See Note 4, Variable Interest Entities. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Accumulated Income | Treasury Stock | Noncontrolling Interests |
Balance at beginning of period (shares) at Dec. 31, 2021 | 99.5 | |||||
Balance at beginning of period at Dec. 31, 2021 | $ 2,357 | $ 1.1 | $ 2,289.6 | $ 141.8 | $ (521.2) | $ 445.7 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 243.4 | 181.6 | 61.8 | |||
Receipt of treasury stock (shares) | (0.1) | |||||
Receipt of treasury stock | (7.7) | (7.7) | ||||
Dividends declared | (71.2) | (11.2) | (60) | |||
Stock-based compensation | 23.6 | 23.6 | ||||
Distributions declared | (72.8) | (72.8) | ||||
Capital contributions from consolidated affiliates | 74.6 | 74.6 | ||||
Other (shares) | 0.4 | |||||
Spin off of Enhabit, Inc. | (852.4) | (602.1) | (221.9) | (28.4) | ||
Other | 15.5 | 10.6 | 0.1 | (7.3) | 12.1 | |
Balance at end of period (shares) at Sep. 30, 2022 | 99.8 | |||||
Balance at end of period at Sep. 30, 2022 | 1,710 | $ 1.1 | 1,710.5 | 41.6 | (536.2) | 493 |
Balance at beginning of period (shares) at Jun. 30, 2022 | 99.8 | |||||
Balance at beginning of period at Jun. 30, 2022 | 2,501.3 | $ 1.1 | 2,310.8 | 221.9 | (530.8) | 498.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 65.4 | 45.4 | 20 | |||
Dividends declared | (15.1) | (11.2) | (3.9) | |||
Stock-based compensation | 7.3 | 7.3 | ||||
Distributions declared | (27.4) | (27.4) | ||||
Capital contributions from consolidated affiliates | 30.4 | 30.4 | ||||
Spin off of Enhabit, Inc. | (852.4) | (602.1) | (221.9) | (28.4) | ||
Other | 0.5 | 5.7 | 0.1 | (5.4) | 0.1 | |
Balance at end of period (shares) at Sep. 30, 2022 | 99.8 | |||||
Balance at end of period at Sep. 30, 2022 | 1,710 | $ 1.1 | 1,710.5 | 41.6 | (536.2) | 493 |
Balance at beginning of period (shares) at Dec. 31, 2022 | 99.8 | |||||
Balance at beginning of period at Dec. 31, 2022 | 1,826.3 | $ 1.1 | 1,730.2 | 115.7 | (536.7) | 516 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 337.7 | 264.4 | 73.3 | |||
Receipt of treasury stock (shares) | (0.1) | |||||
Receipt of treasury stock | (8.1) | (8.1) | ||||
Dividends declared | (45.4) | 0.4 | (45.8) | |||
Stock-based compensation | 37.2 | 37.2 | ||||
Distributions declared | (87.5) | (87.5) | ||||
Capital contributions from consolidated affiliates | 87 | 87 | ||||
Other (shares) | 0.5 | |||||
Other | 0.5 | $ 0.1 | 3.8 | (1.9) | (1.5) | |
Balance at end of period (shares) at Sep. 30, 2023 | 100.2 | |||||
Balance at end of period at Sep. 30, 2023 | 2,147.7 | $ 1.2 | 1,771.6 | 334.3 | (546.7) | 587.3 |
Balance at beginning of period (shares) at Jun. 30, 2023 | 100.2 | |||||
Balance at beginning of period at Jun. 30, 2023 | 2,017.7 | $ 1.2 | 1,755 | 264.6 | (545.5) | 542.4 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 111.5 | 85.3 | 26.2 | |||
Receipt of treasury stock | (0.4) | (0.4) | ||||
Dividends declared | (15.2) | 0.4 | (15.6) | |||
Stock-based compensation | 13.7 | 13.7 | ||||
Distributions declared | (28.8) | (28.8) | ||||
Capital contributions from consolidated affiliates | 49 | 49 | ||||
Other | 0.2 | 2.5 | (0.8) | (1.5) | ||
Balance at end of period (shares) at Sep. 30, 2023 | 100.2 | |||||
Balance at end of period at Sep. 30, 2023 | $ 2,147.7 | $ 1.2 | $ 1,771.6 | $ 334.3 | $ (546.7) | $ 587.3 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared on common stock (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.45 | $ 0.71 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 343.9 | $ 248.4 |
Loss (income) from discontinued operations, net of tax | 3.5 | (16.7) |
Adjustments to reconcile net income to net cash provided by operating activities— | ||
Depreciation and amortization | 203.8 | 180.3 |
Loss on early extinguishment of debt | 0 | 1.4 |
Equity in net income of nonconsolidated affiliates | (2.3) | (2.6) |
Distributions from nonconsolidated affiliates | 0.6 | 3.7 |
Stock-based compensation | 37.2 | 21.1 |
Deferred tax benefit | (2.9) | (7.7) |
Realized loss on sale of investments | 0.9 | 16.5 |
Other, net | 10.8 | 9.7 |
Change in assets and liabilities, net of acquisitions— | ||
Accounts receivable | 20.7 | 22.4 |
Other assets | (4.1) | 5 |
Accounts payable | (0.2) | (0.3) |
Accrued payroll | 24.1 | (9.3) |
Accrued interest payable | (19.1) | (20.7) |
Other liabilities | 37.5 | 26.4 |
Net cash (used in) provided by operating activities of discontinued operations | (4.6) | 56 |
Total adjustments | 302.4 | 301.9 |
Net cash provided by operating activities | 649.8 | 533.6 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (360.5) | (374.9) |
Purchase of restricted investments | (21.1) | (25.1) |
Other, net | (13.1) | (17) |
Net cash used in investing activities of discontinued operations | 0 | (3.6) |
Net cash used in investing activities | (394.7) | (420.6) |
Cash flows from financing activities: | ||
Principal borrowings on notes | 20 | 0 |
Principal payments on debt, including pre-payments | (6.3) | (345.3) |
Borrowings on revolving credit facility | 60 | 180 |
Payments on revolving credit facility | (115) | (340) |
Principal payments under finance lease obligations | (35.9) | (14.3) |
Debt amendment costs | (0.1) | (21.6) |
Taxes paid on behalf of employees for shares withheld | (8.1) | (7.2) |
Contributions from noncontrolling interests of consolidated affiliates | 54.7 | 55.1 |
Dividends paid on common stock | (45.5) | (84.1) |
Distributions paid to noncontrolling interests of consolidated affiliates | (91.9) | (68.2) |
Other, net | 0.8 | 0.3 |
Net cash provided by financing activities of discontinued operations | 0 | 516.1 |
Net cash used in financing activities | (167.3) | (129.2) |
Increase (decrease) in cash, cash equivalents, and restricted cash | 87.8 | (16.2) |
Cash, cash equivalents, and restricted cash at beginning of period | 53.4 | 120.3 |
Cash, cash equivalents, and restricted cash at end of period | 141.2 | 104.1 |
Reconciliation of Cash, Cash Equivalents, and Restricted Cash | ||
Cash and cash equivalents at beginning of period | 21.8 | 49.4 |
Restricted cash at beginning of period | 31.6 | 62.5 |
Restricted cash included in other long-term assets at beginning of period | 0 | 0.4 |
Cash, cash equivalents, and restricted cash in discontinued operations at beginning of period | 0 | 8 |
Cash, cash equivalents, and restricted cash at beginning of period | 53.4 | 120.3 |
Cash and cash equivalents at end of period | 99.7 | 59.8 |
Restricted cash at end of period | 41.5 | 44.3 |
Cash, cash equivalents, and restricted cash at end of period | 141.2 | 104.1 |
Supplemental schedule of noncash operating, investing, and financing activities: | ||
Property and equipment additions through finance leases | 21.4 | 0 |
Accrued purchases of property and equipment | 32.2 | (1.2) |
Operating lease additions and adjustments | 7.9 | 23.1 |
Joint venture contributions | $ 32.2 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Encompass Health Corporation (the “Company” or “Encompass Health”), incorporated in Delaware in 1984, including its subsidiaries, is a provider of inpatient rehabilitation services. Our national network of inpatient rehabilitation hospitals stretches across 37 states and Puerto Rico, with concentrations of hospitals in the eastern half of the United States and Texas. As of September 30, 2023, we operate 159 inpatient rehabilitation hospitals. We are the sole owner of 96 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 63 jointly owned hospitals. The accompanying unaudited condensed consolidated financial statements of Encompass Health Corporation and Subsidiaries should be read in conjunction with the consolidated financial statements and accompanying notes contained in Encompass Health’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on February 27, 2023 (the “2022 Form 10‑K”). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim financial information. Certain information and note disclosures included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted in these interim statements, as allowed by such SEC rules and regulations. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements, but it does not include all disclosures required by GAAP. However, we believe the disclosures are adequate to make the information presented not misleading. The unaudited results of operations for the interim periods shown in these financial statements are not necessarily indicative of operating results for the entire year. In our opinion, the accompanying condensed consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state the financial position, results of operations, and cash flows for each interim period presented. Net Operating Revenues — Our Net operating revenues disaggregated by payor source are as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Medicare $ 786.5 $ 711.2 $ 2,306.1 $ 2,091.7 Medicare Advantage 191.7 163.6 576.6 480.3 Managed care 135.4 126.1 396.4 381.0 Medicaid 49.2 47.7 145.6 137.0 Other third-party payors 10.6 9.5 32.2 29.0 Workers’ compensation 6.6 6.9 19.6 18.9 Patients 3.8 3.5 10.4 12.8 Other income 23.1 21.0 67.5 60.6 Total $ 1,206.9 $ 1,089.5 $ 3,554.4 $ 3,211.3 See Note 1, Summary of Significant Accounting Policies , to the consolidated financial statements accompanying the 2022 Form 10-K for our policy related to Net operating revenues . Noncontrolling Interests in Consolidated Affiliates — On July 1, 2023, we entered into a joint venture agreement with the University of Maryland Rehabilitation Institute of Southern Maryland, LLC (“UM Rehab”) to operate our previously wholly owned 60-bed hospital in Bowie, Maryland. As a condition of the joint venture agreement, UM Rehab paid $26.3 million on June 30, 2023 for a 50% ownership interest in the hospital which became effective on July 1, 2023. This payment is included in Contributions from noncontrolling interests of consolidated affiliates on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023. Recently Adopted Accounting Pronouncements — We do not believe any recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows. |
Spin Off of Home Health and Hos
Spin Off of Home Health and Hospice Business | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Spin Off of Home Health and Hospice Business | Spin Off of Home Health and Hospice Business On July 1, 2022, we completed the previously announced separation of our home health and hospice business through the distribution (the “Spin Off”) of all of the outstanding shares of common stock, par value $0.01 per share, of Enhabit, Inc. (“Enhabit”) to the stockholders of record of Encompass Health as of the close of business on June 24, 2022 (the “Record Date”). The Spin Off was effective at 12:01 a.m., Eastern Time, on July 1, 2022. The Spin Off was structured as a pro rata distribution of one share of Enhabit common stock for every two shares of Encompass Health common stock held of record as of the Record Date. No fractional shares were distributed. A cash payment was made in lieu of any fractional shares. As a result of the Spin Off, Enhabit is now an independent public company and its common stock is listed under the symbol “EHAB” on the New York Stock Exchange. In accordance with applicable accounting guidance, the historical results of Enhabit have been presented as discontinued operations and, as such, have been excluded from continuing operations for the three and nine months ended September 30, 2022. Our presentation of discontinued operations excludes any allocation of general corporate and overhead costs as well as interest expense. Prior to July 1, 2022, we operated under two reporting segments. We now operate under a single reporting segment. In anticipation of the Spin Off, Enhabit transferred the “Encompass” trade name (net book value of $104.2 million) to us during the second quarter of 2022. In connection with the Spin Off, on June 30, 2022, we entered into several agreements with Enhabit that govern the relationship of the parties following the Spin Off, including a Separation and Distribution Agreement, a Transition Services Agreement, a Tax Matters Agreement and an Employee Matters Agreement. We will provide transition services to Enhabit predominately consisting of certain finance, information technology, human resources, employee benefits and other administrative services for a period of up to two years after the Spin Off. For the three and nine months ended September 30, 2023, income related to these transition services was $0.7 million and $2.6 million, respectively. For the three and nine months ended September 30, 2022, income related to these transition services was $1.1 million. These amounts were reflected as reductions to General and administrative expenses in our condensed consolidated statements of comprehensive income. The following table presents the results of operations of Enhabit as discontinued operations (in millions): Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net operating revenue $ — $ 542.3 Operating expenses: Salaries and benefits — 376.4 Other operating expenses — 47.6 Occupancy costs — 11.0 Supplies — 11.7 General and administrative expenses 19.8 54.8 Depreciation and amortization — 16.7 Total operating expenses 19.8 518.2 Interest expense and amortization of debt discounts and fees — 0.1 (Loss) income from discontinued operations before income taxes (19.8) 24.0 Provision for income tax (benefit) expense (1.3) 7.3 (Loss) income from discontinued operations, net of tax (18.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — (1.3) Net (loss) income attributable to Encompass Health included in discontinued operations $ (18.5) $ 15.4 Transaction costs of $19.8 million and $52.3 million incurred during the three and nine months ended September 30, 2022, respectively, are included in general and administrative expenses in the table above and in (Loss) income from discontinued operations, net of tax , in the condensed consolidated statements of comprehensive income. These charges primarily relate to third-party advisory, consulting, legal and professional services, that are associated with the Spin Off. See Note 2, Spin Off of Home Health and Hospice Business , to the consolidated financial statements accompanying the 2022 Form 10‑K for additional information. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Business Combinations During the nine months ended September 30, 2023, we completed the following acquisitions, none of which were individually material to our financial position, results of operations, or cash flows. Each acquisition was made to enhance our position and ability to provide inpatient rehabilitation services to patients in the applicable geographic areas. • In March 2023, we acquired 50% of the operations of a 24-bed inpatient rehabilitation unit in Eau Claire, Wisconsin when Hospital Sisters Health System contributed those operations to our existing joint venture. • In March 2023, we acquired 50% of the operations of a 48-bed inpatient rehabilitation unit in Knoxville, Tennessee when Covenant Health contributed those operations to our existing joint venture. • In September 2023, we acquired 50% of the operations of a 29-bed inpatient rehabilitation unit in Columbus, Georgia when Piedmont Healthcare, Inc. contributed those operations to our existing joint venture. We accounted for these transactions under the acquisition method of accounting and reported the results of operations of the acquired hospitals from the respective dates of acquisition. Assets acquired were recorded at their estimated fair values as of the acquisition date. Estimated fair values were based on various valuation methodologies including: an income approach using discounted cash flow techniques for the noncompete intangible assets; an income approach utilizing the relief from royalty method for the trade name intangible assets; and an income approach utilizing the excess earnings method for the certificates of need intangible assets. The aforementioned income methods utilize management’s estimates of future operating results and cash flows discounted using a weighted-average cost of capital. The excess of the fair value of the consideration conveyed over the fair value of the assets acquired was recorded as goodwill. The goodwill reflects our expectations of our ability to gain access to and penetrate the acquired hospitals’ historical patient base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive demographic trends in these markets. The goodwill recorded as a result of these transactions that is deductible for federal income tax purposes is $7.4 million. The fair values recorded were based upon a preliminary valuation. Estimates and assumptions used in such valuation are subject to change, which could be significant, within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary valuation that are not yet finalized relate to the fair value of amounts for intangible assets and the final amount of residual goodwill. We expect to continue to obtain information to assist us in determining the fair value of the net assets acquired at the acquisition date during the measurement period. The fair value of the assets acquired at the acquisition dates were as follows (in millions): Property and equipment, net $ 0.1 Identifiable intangible assets: Noncompete agreements (useful lives of 3 years) 0.5 Trade names (useful lives of 20 years) 1.8 Certificates of need (useful lives of 20 years) 10.6 Goodwill 18.1 Total assets acquired $ 31.1 Information regarding the net cash paid for the acquisitions during each period presented is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Fair value of assets acquired $ 3.6 $ 0.3 $ 13.0 $ 0.3 Goodwill 10.6 10.4 18.1 10.4 Fair value of noncontrolling interest owned by joint venture partner (14.2) (10.7) (31.1) (10.7) Net cash paid for acquisitions $ — $ — $ — $ — Pro Forma Results of Operations The following table summarizes the results of operations of the above mentioned acquisitions from the dates of acquisitions included in our consolidated results of operations and the unaudited pro forma results of operations of the combined entity had the dates of the acquisitions been January 1, 2022 (in millions): Net Operating Revenues Net Income Attributable to Encompass Health Acquired entities only: Actual from acquisition date to September 30, 2023 $ — $ — Combined entity: Supplemental pro forma from 07/01/23-09/30/23 1,209.0 85.7 Combined entity: Supplemental pro forma from 07/01/22-09/30/22 1,097.2 46.3 Combined entity: Supplemental pro forma from 01/01/23-09/30/23 3,566.0 266.3 Combined entity: Supplemental pro forma from 01/01/22-09/30/22 3,234.4 184.3 The information presented above is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisitions had occurred as of the beginning of our 2022 reporting period. See Note 3, Business Combinations , to the consolidated financial statements accompanying the 2022 Form 10‑K for information regarding acquisitions completed in 2022. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities As of September 30, 2023 and December 31, 2022, we consolidated eight limited partnership-like entities that are variable interest entities (“VIEs”) and of which we are the primary beneficiary. Our ownership percentages in these entities range from 50.0% to 75.0% as of September 30, 2023. Through partnership and management agreements with or governing each of these entities, we manage all of these entities and handle all day-to-day operating decisions. Accordingly, we have the decision making power over the activities that most significantly impact the economic performance of our VIEs and an obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. These decisions and significant activities include, but are not limited to, marketing efforts, oversight of patient admissions, medical training, nurse and therapist scheduling, provision of healthcare services, billing, collections, and creation and maintenance of medical records. The terms of the agreements governing each of our VIEs prohibit us from using the assets of each VIE to satisfy the obligations of other entities. The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our condensed consolidated balance sheets, are as follows (in millions): September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 0.8 $ 0.2 Accounts receivable 32.6 34.0 Other current assets 7.5 6.7 Total current assets 40.9 40.9 Property and equipment, net 126.3 129.0 Operating lease right-of-use assets 1.3 1.7 Goodwill 15.9 15.9 Intangible assets, net 1.2 1.5 Other long-term assets 18.6 18.8 Total assets $ 204.2 $ 207.8 Liabilities Current liabilities: Current portion of long-term debt $ 0.9 $ 0.8 Current operating lease liabilities — 0.4 Accounts payable 7.5 7.0 Accrued expenses and other current liabilities 18.2 23.9 Total current liabilities 26.6 32.1 Long-term debt, net of current portion 13.8 14.5 Long-term operating lease liabilities 1.3 1.3 Total liabilities $ 41.7 $ 47.9 |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Our long-term debt outstanding consists of the following (in millions): September 30, 2023 December 31, 2022 Credit Agreement— Advances under revolving credit facility $ — $ 55.0 Bonds payable— 5.75% Senior Notes due 2025 348.3 347.7 4.50% Senior Notes due 2028 784.2 781.8 4.75% Senior Notes due 2030 780.9 779.0 4.625% Senior Notes due 2031 391.3 390.6 Other notes payable 66.6 53.1 Finance lease obligations 345.3 359.8 2,716.6 2,767.0 Less: Current portion (23.9) (25.2) Long-term debt, net of current portion $ 2,692.7 $ 2,741.8 The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions): Face Amount Net Amount October 1 through December 31, 2023 $ 5.5 $ 5.5 2024 40.4 40.4 2025 382.3 380.6 2026 29.2 29.2 2027 43.2 43.2 2028 831.7 815.9 Thereafter 1,429.8 1,401.8 Total $ 2,762.1 $ 2,716.6 In September 2023, we purchased our Treasure Coast hospital real estate in Vero Beach, Florida from Ocean Health Associates, LTD. (“Ocean Health”) for $21.4 million. Prior to the purchase, we leased the real estate from Ocean Health. As a result of our determination in the third quarter of 2023, the lease classification was changed from an operating lease to a financing lease. The $21.4 million payment is included in Principal payments under finance lease obligations on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023. On December 9, 2021, we announced the commencement of a consent solicitation of holders of our 5.75% Senior Notes due 2025, 4.50% Senior Notes due 2028 (the “2028 Notes”), 4.75% Senior Notes due 2030 (the “2030 Notes”), and 4.625% Senior Notes due 2031 (the “2031 Notes” and collectively the “Senior Notes”) for the adoption of certain amendments to an indenture (the “Base Indenture”) dated as of December 1, 2009, as supplemented by each Senior Notes’ respective supplemental indenture (together with the Base Indenture, the “Indenture”), which provided us with greater flexibility in effecting the Spin Off discussed in Note 2, Spin Off of Home Health and Hospice Business . Each Indenture contains restrictive covenants that, among other things, limit our ability and the ability of certain of our subsidiaries to make certain asset dispositions, investments, and distributions to holders of our capital stock. The amendments to the Indentures permitted us, subject to the leverage ratio condition set forth below, to distribute to our equity holders in one or more transactions (a “Distribution”) some or all of the common stock of a subsidiary that holds substantially all of the assets of our home health and hospice business. We were permitted to make any such distribution so long as the Leverage Ratio (as defined in each Indenture) was no more than 3.5 to 1.0 on a pro forma basis after giving effect thereto. The amendments also reduced the capacity under our restricted payments builder basket under each existing Indenture for the 2028 Notes, 2030 Notes, and 2031 Notes by $200 million and amended the definition of “Consolidated Net Income” to allow us to exclude from Consolidated Net Income (a component of the Leverage Ratio) any fees, expenses or charges related to any Distribution and the solicitation of consents from the holders of the Senior Notes. In December 2021 and January 2022, we received the requisite consents for the adoption of these amendments. Under the terms of the amendments, we agreed to pay the holders of the Senior Notes a total of $40.5 million, excluding fees. We paid $20.0 million and $20.5 million in January and June 2022, respectively. In March 2022, we redeemed the remaining $100 million in outstanding principal amount of the 5.125% Senior Notes due 2023 (the “2023 Notes”) using capacity under our revolving credit facility. Pursuant to the terms of the 2023 Notes, this optional redemption was made at a price of par. As a result of this redemption, we recorded a $0.3 million Loss on early extinguishment of debt during the three months ended March 31, 2022. In June 2022, Enhabit distributed $566.6 million to Encompass Health who used it to fully repay both the $250 million outstanding balance of the Encompass Health revolving credit facility and approximately $236 million of the Encompass Health term loan. As a result of this repayment, we recorded a $1.1 million Loss on early extinguishment of debt during the three months ended June 30, 2022. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests The following is a summary of the activity related to our Redeemable noncontrolling interests (in millions): Nine Months Ended September 30, 2023 2022 Balance at beginning of period $ 35.6 $ 42.2 Net income attributable to noncontrolling interests 6.2 5.0 Distributions declared (0.3) (4.3) Spin off of Enhabit, Inc. — (5.1) Balance at end of period $ 41.5 $ 37.8 The following table reconciles the net income attributable to nonredeemable Noncontrolling interests , as recorded in the shareholders’ equity section of the condensed consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests , as recorded in the mezzanine section of the condensed consolidated balance sheets, to the Net and comprehensive income attributable to noncontrolling interests presented in the condensed consolidated statements of comprehensive income (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to nonredeemable noncontrolling interests $ 26.2 $ 20.0 $ 73.3 $ 61.8 Net income attributable to redeemable noncontrolling interests 1.9 1.6 6.2 5.0 Net income attributable to noncontrolling interests $ 28.1 $ 21.6 $ 79.5 $ 66.8 See also Note 7, Fair Value Measurements . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Our financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in millions): Fair Value Measurements at Reporting Date Using As of September 30, 2023 Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Valuation Technique (1) Equity securities (2) $ 122.0 $ 3.7 $ 118.3 $ — M Redeemable noncontrolling interests 41.5 — — 41.5 I As of December 31, 2022 Equity securities (2) $ 110.0 $ 3.7 $ 106.3 $ — M Redeemable noncontrolling interests 35.6 — — 35.6 I (1) The three valuation techniques are: market approach (M), cost approach (C), and income approach (I). (2) As of September 30, 2023, $37.2 million are included in Other current assets and $84.8 million are included in Other long-term assets in the condensed consolidated balance sheet. As of December 31, 2022, $30.9 million are included in Other current assets and $79.1 million are included in Other long-term assets in the condensed consolidated balance sheet. There are assets and liabilities that are not required to be measured at fair value on a recurring basis. However, these assets may be recorded at fair value as a result of impairment charges or other adjustments made to the carrying value of the applicable assets. During the three and nine months ended September 30, 2023 and 2022, we did not record any material gains or losses related to these assets. As discussed in Note 1, Summary of Significant Accounting Policies , “Fair Value Measurements,” to the consolidated financial statements accompanying the 2022 Form 10‑K, the carrying value equals fair value for our financial instruments that are not included in the table below and are classified as current in our condensed consolidated balance sheets. The carrying amounts and estimated fair values for all of our other financial instruments are presented in the following table (in millions): As of September 30, 2023 As of December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Long-term debt: Advances under revolving credit facility $ — $ — $ 55.0 $ 55.0 5.75% Senior Notes due 2025 348.3 343.7 347.7 347.7 4.50% Senior Notes due 2028 784.2 731.1 781.8 726.7 4.75% Senior Notes due 2030 780.9 708.7 779.0 703.7 4.625% Senior Notes due 2031 391.3 339.2 390.6 342.2 Other notes payable 66.6 66.6 53.1 53.1 Financial commitments: Letters of credit — 33.7 — 32.7 Fair values for our long-term debt and financial commitments are determined using inputs, including quoted prices in nonactive markets, that are observable either directly or indirectly, or Level 2 inputs within the fair value hierarchy. See Note 1, Summary of Significant Accounting Policies , “Fair Value Measurements,” to the consolidated financial statements accompanying the 2022 Form 10‑K. |
Share-Based Payments
Share-Based Payments | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Payments | Share-Based Payments During the nine months ended September 30, 2023, we issued a total of 0.6 million restricted stock awards to members of our management team and our board of directors. Of the restricted stock awards issued to members of our management team, 0.3 million contain only a service condition, while the remainder contain a service and/or performance condition as well as a market condition for certain members of management. For the awards that include a performance and market condition, the number of shares that will ultimately be granted to employees may vary based on the Company’s performance during the applicable two year performance measurement period and the applicable three year market condition measurement period. Additionally, we granted 0.1 million stock options to members of our management team. The fair value of these awards and options was determined using the policies described in Note 1, Summary of Significant Accounting Policies , and Note 14, Share-Based Payments , to the consolidated financial statements accompanying the 2022 Form 10‑K. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our Provision for income tax expense of $30.3 million and $95.0 million for the three and nine months ended September 30, 2023, respectively, primarily resulted from the application of our estimated effective blended federal and state income tax rate. Our Provision for income tax expense of $21.8 million for the three months ended September 30, 2022 primarily resulted from the application of our estimated effective blended federal and state income tax rate as well as state rate and apportionment changes offset by the release of a portion of an uncertain tax position related to the Spin Off. Our Provision for income tax expense of $68.2 million for the nine months ended September 30, 2022 primarily resulted from the application of our estimated effective blended federal and state income tax rate as well as the establishment of an uncertain tax position related to the Spin Off. |
Earnings per Common Share
Earnings per Common Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Earnings per Common Share The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic: Numerator: Income from continuing operations $ 114.7 $ 85.5 $ 347.4 $ 231.7 Less: Net income attributable to noncontrolling interests included in continuing operations (28.1) (21.6) (79.5) (65.5) Less: Income from continuing operations allocated to participating securities (0.6) (0.3) (1.8) (0.6) Income from continuing operations attributable to Encompass Health common shareholders 86.0 63.6 266.1 165.6 (Loss) income from discontinued operations, net of tax (1.3) (18.5) (3.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — — — (1.3) Less: Income from discontinued operations allocated to participating securities — — — (0.1) (Loss) income from discontinued operations attributable to Encompass Health common shareholders (1.3) (18.5) (3.5) 15.3 Net income attributable to Encompass Health common shareholders $ 84.7 $ 45.1 $ 262.6 $ 180.9 Denominator: Basic weighted average common shares outstanding 99.5 99.2 99.5 99.2 Basic earnings per share attributable to Encompass Health common shareholders: Continuing operations $ 0.86 $ 0.64 $ 2.68 $ 1.67 Discontinued operations (0.01) (0.19) (0.04) 0.15 Net income $ 0.85 $ 0.45 $ 2.64 $ 1.82 Diluted: Numerator: Income from continuing operations $ 114.7 $ 85.5 $ 347.4 $ 231.7 Less: Net income attributable to noncontrolling interests included in continuing operations (28.1) (21.6) (79.5) (65.5) Income from continuing operations attributable to Encompass Health common shareholders 86.6 63.9 267.9 166.2 (Loss) income from discontinued operations, net of tax (1.3) (18.5) (3.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — — — (1.3) (Loss) income from discontinued operations attributable to Encompass Health common shareholders (1.3) (18.5) (3.5) 15.4 Net income attributable to Encompass Health common shareholders $ 85.3 $ 45.4 $ 264.4 $ 181.6 Denominator: Diluted weighted average common shares outstanding 101.4 100.5 101.1 100.3 Diluted earnings per share attributable to Encompass Health common shareholders: Continuing operations $ 0.85 $ 0.63 $ 2.65 $ 1.66 Discontinued operations (0.01) (0.18) (0.03) 0.15 Net income $ 0.84 $ 0.45 $ 2.62 $ 1.81 The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic weighted average common shares outstanding 99.5 99.2 99.5 99.2 Restricted stock awards, dilutive stock options, and restricted stock units 1.9 1.3 1.6 1.1 Diluted weighted average common shares outstanding 101.4 100.5 101.1 100.3 See Note 17, Earnings per Common Share , to the consolidated financial statements accompanying the 2022 Form 10‑K for additional information related to our common stock. |
Contingencies and Other Commitm
Contingencies and Other Commitments | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Other Commitments | Contingencies and Other Commitments We provide services in the highly regulated healthcare industry. Furthermore, operating inpatient rehabilitation hospitals requires significant staffing and involves intensive therapy for individuals suffering from significant physical or cognitive disabilities or injuries. As a result, various lawsuits, claims, and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of any such lawsuits, claims, or legal and regulatory proceedings could materially and adversely affect our financial position, results of operations, and cash flows in a given period. Other Matters— The False Claims Act allows private citizens, called “relators,” to institute civil proceedings on behalf of the United States alleging violations of the False Claims Act. These lawsuits, also known as “whistleblower” or “ qui tam ” actions, can involve significant monetary damages, fines, attorneys’ fees and the award of bounties to the relators who successfully prosecute or bring these suits to the government. Qui tam cases are sealed at the time of filing, which means knowledge of the information contained in the complaint typically is limited to the relator, the federal government, and the presiding court. The defendant in a qui tam action may remain unaware of the existence of a sealed complaint or its specific claims for years. While the complaint is under seal, the government reviews the merits of the case and may conduct a broad investigation and seek discovery from the defendant and other parties before deciding whether to intervene in the case and take the lead on litigating the claims. The court lifts the seal when the government makes its decision on whether to intervene. If the government decides not to intervene, the relator may elect to continue to pursue the lawsuit individually on behalf of the government. It is possible that qui tam lawsuits have been filed against us, which suits remain under seal, or that we are unaware of such filings or precluded by existing law or court order from discussing or disclosing the filing of such suits. We may be subject to liability under one or more undisclosed qui tam cases brought pursuant to the False Claims Act. It is our obligation as a participant in Medicare and other federal healthcare programs to routinely conduct audits and reviews of the accuracy of our billing systems and other regulatory compliance matters. As a result of these reviews, we have made, and will continue to make, disclosures to the United States Department of Health and Human Services Office of Inspector General and the Centers for Medicare & Medicaid Services relating to amounts we suspect represent over-payments from these programs, whether due to inaccurate billing or otherwise. Some of these disclosures have resulted in, and may in the future result in, Encompass Health refunding amounts to Medicare or other federal healthcare programs. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 85.3 | $ 45.4 | $ 264.4 | $ 181.6 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements — We do not believe any recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Concentration of Net Operating Revenues by Payor | Our Net operating revenues disaggregated by payor source are as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Medicare $ 786.5 $ 711.2 $ 2,306.1 $ 2,091.7 Medicare Advantage 191.7 163.6 576.6 480.3 Managed care 135.4 126.1 396.4 381.0 Medicaid 49.2 47.7 145.6 137.0 Other third-party payors 10.6 9.5 32.2 29.0 Workers’ compensation 6.6 6.9 19.6 18.9 Patients 3.8 3.5 10.4 12.8 Other income 23.1 21.0 67.5 60.6 Total $ 1,206.9 $ 1,089.5 $ 3,554.4 $ 3,211.3 |
Spin Off of Home Health and H_2
Spin Off of Home Health and Hospice Business (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Financial Information Related to Discontinued Operations | The following table presents the results of operations of Enhabit as discontinued operations (in millions): Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net operating revenue $ — $ 542.3 Operating expenses: Salaries and benefits — 376.4 Other operating expenses — 47.6 Occupancy costs — 11.0 Supplies — 11.7 General and administrative expenses 19.8 54.8 Depreciation and amortization — 16.7 Total operating expenses 19.8 518.2 Interest expense and amortization of debt discounts and fees — 0.1 (Loss) income from discontinued operations before income taxes (19.8) 24.0 Provision for income tax (benefit) expense (1.3) 7.3 (Loss) income from discontinued operations, net of tax (18.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — (1.3) Net (loss) income attributable to Encompass Health included in discontinued operations $ (18.5) $ 15.4 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed at the Acquisition Date | The fair value of the assets acquired at the acquisition dates were as follows (in millions): Property and equipment, net $ 0.1 Identifiable intangible assets: Noncompete agreements (useful lives of 3 years) 0.5 Trade names (useful lives of 20 years) 1.8 Certificates of need (useful lives of 20 years) 10.6 Goodwill 18.1 Total assets acquired $ 31.1 |
Schedule of Business Acquisitions, by Acquisition | Information regarding the net cash paid for the acquisitions during each period presented is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Fair value of assets acquired $ 3.6 $ 0.3 $ 13.0 $ 0.3 Goodwill 10.6 10.4 18.1 10.4 Fair value of noncontrolling interest owned by joint venture partner (14.2) (10.7) (31.1) (10.7) Net cash paid for acquisitions $ — $ — $ — $ — |
Schedule of Actual and Pro Forma Results of Operations for Acquisitions | The following table summarizes the results of operations of the above mentioned acquisitions from the dates of acquisitions included in our consolidated results of operations and the unaudited pro forma results of operations of the combined entity had the dates of the acquisitions been January 1, 2022 (in millions): Net Operating Revenues Net Income Attributable to Encompass Health Acquired entities only: Actual from acquisition date to September 30, 2023 $ — $ — Combined entity: Supplemental pro forma from 07/01/23-09/30/23 1,209.0 85.7 Combined entity: Supplemental pro forma from 07/01/22-09/30/22 1,097.2 46.3 Combined entity: Supplemental pro forma from 01/01/23-09/30/23 3,566.0 266.3 Combined entity: Supplemental pro forma from 01/01/22-09/30/22 3,234.4 184.3 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Amounts and Classifications of VIE's Assets and Liabilities | The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our condensed consolidated balance sheets, are as follows (in millions): September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 0.8 $ 0.2 Accounts receivable 32.6 34.0 Other current assets 7.5 6.7 Total current assets 40.9 40.9 Property and equipment, net 126.3 129.0 Operating lease right-of-use assets 1.3 1.7 Goodwill 15.9 15.9 Intangible assets, net 1.2 1.5 Other long-term assets 18.6 18.8 Total assets $ 204.2 $ 207.8 Liabilities Current liabilities: Current portion of long-term debt $ 0.9 $ 0.8 Current operating lease liabilities — 0.4 Accounts payable 7.5 7.0 Accrued expenses and other current liabilities 18.2 23.9 Total current liabilities 26.6 32.1 Long-term debt, net of current portion 13.8 14.5 Long-term operating lease liabilities 1.3 1.3 Total liabilities $ 41.7 $ 47.9 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Long-term Debt | Our long-term debt outstanding consists of the following (in millions): September 30, 2023 December 31, 2022 Credit Agreement— Advances under revolving credit facility $ — $ 55.0 Bonds payable— 5.75% Senior Notes due 2025 348.3 347.7 4.50% Senior Notes due 2028 784.2 781.8 4.75% Senior Notes due 2030 780.9 779.0 4.625% Senior Notes due 2031 391.3 390.6 Other notes payable 66.6 53.1 Finance lease obligations 345.3 359.8 2,716.6 2,767.0 Less: Current portion (23.9) (25.2) Long-term debt, net of current portion $ 2,692.7 $ 2,741.8 |
Schedule of Debt Maturities | The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions): Face Amount Net Amount October 1 through December 31, 2023 $ 5.5 $ 5.5 2024 40.4 40.4 2025 382.3 380.6 2026 29.2 29.2 2027 43.2 43.2 2028 831.7 815.9 Thereafter 1,429.8 1,401.8 Total $ 2,762.1 $ 2,716.6 |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Schedule of Redeemable Noncontrolling Interests Activity | The following is a summary of the activity related to our Redeemable noncontrolling interests (in millions): Nine Months Ended September 30, 2023 2022 Balance at beginning of period $ 35.6 $ 42.2 Net income attributable to noncontrolling interests 6.2 5.0 Distributions declared (0.3) (4.3) Spin off of Enhabit, Inc. — (5.1) Balance at end of period $ 41.5 $ 37.8 |
Schedule of Reconciliation of Noncontrolling Interests | The following table reconciles the net income attributable to nonredeemable Noncontrolling interests , as recorded in the shareholders’ equity section of the condensed consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests , as recorded in the mezzanine section of the condensed consolidated balance sheets, to the Net and comprehensive income attributable to noncontrolling interests presented in the condensed consolidated statements of comprehensive income (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to nonredeemable noncontrolling interests $ 26.2 $ 20.0 $ 73.3 $ 61.8 Net income attributable to redeemable noncontrolling interests 1.9 1.6 6.2 5.0 Net income attributable to noncontrolling interests $ 28.1 $ 21.6 $ 79.5 $ 66.8 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on a Recurring Basis | Our financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in millions): Fair Value Measurements at Reporting Date Using As of September 30, 2023 Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Valuation Technique (1) Equity securities (2) $ 122.0 $ 3.7 $ 118.3 $ — M Redeemable noncontrolling interests 41.5 — — 41.5 I As of December 31, 2022 Equity securities (2) $ 110.0 $ 3.7 $ 106.3 $ — M Redeemable noncontrolling interests 35.6 — — 35.6 I (1) The three valuation techniques are: market approach (M), cost approach (C), and income approach (I). (2) As of September 30, 2023, $37.2 million are included in Other current assets and $84.8 million are included in Other long-term assets in the condensed consolidated balance sheet. As of December 31, 2022, $30.9 million are included in Other current assets and $79.1 million are included in Other long-term assets in the condensed consolidated balance sheet. |
Schedule of Carrying Amounts and Estimated Fair Values, Financial Instruments | The carrying amounts and estimated fair values for all of our other financial instruments are presented in the following table (in millions): As of September 30, 2023 As of December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Long-term debt: Advances under revolving credit facility $ — $ — $ 55.0 $ 55.0 5.75% Senior Notes due 2025 348.3 343.7 347.7 347.7 4.50% Senior Notes due 2028 784.2 731.1 781.8 726.7 4.75% Senior Notes due 2030 780.9 708.7 779.0 703.7 4.625% Senior Notes due 2031 391.3 339.2 390.6 342.2 Other notes payable 66.6 66.6 53.1 53.1 Financial commitments: Letters of credit — 33.7 — 32.7 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic: Numerator: Income from continuing operations $ 114.7 $ 85.5 $ 347.4 $ 231.7 Less: Net income attributable to noncontrolling interests included in continuing operations (28.1) (21.6) (79.5) (65.5) Less: Income from continuing operations allocated to participating securities (0.6) (0.3) (1.8) (0.6) Income from continuing operations attributable to Encompass Health common shareholders 86.0 63.6 266.1 165.6 (Loss) income from discontinued operations, net of tax (1.3) (18.5) (3.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — — — (1.3) Less: Income from discontinued operations allocated to participating securities — — — (0.1) (Loss) income from discontinued operations attributable to Encompass Health common shareholders (1.3) (18.5) (3.5) 15.3 Net income attributable to Encompass Health common shareholders $ 84.7 $ 45.1 $ 262.6 $ 180.9 Denominator: Basic weighted average common shares outstanding 99.5 99.2 99.5 99.2 Basic earnings per share attributable to Encompass Health common shareholders: Continuing operations $ 0.86 $ 0.64 $ 2.68 $ 1.67 Discontinued operations (0.01) (0.19) (0.04) 0.15 Net income $ 0.85 $ 0.45 $ 2.64 $ 1.82 Diluted: Numerator: Income from continuing operations $ 114.7 $ 85.5 $ 347.4 $ 231.7 Less: Net income attributable to noncontrolling interests included in continuing operations (28.1) (21.6) (79.5) (65.5) Income from continuing operations attributable to Encompass Health common shareholders 86.6 63.9 267.9 166.2 (Loss) income from discontinued operations, net of tax (1.3) (18.5) (3.5) 16.7 Less: Net income attributable to noncontrolling interests included in discontinued operations — — — (1.3) (Loss) income from discontinued operations attributable to Encompass Health common shareholders (1.3) (18.5) (3.5) 15.4 Net income attributable to Encompass Health common shareholders $ 85.3 $ 45.4 $ 264.4 $ 181.6 Denominator: Diluted weighted average common shares outstanding 101.4 100.5 101.1 100.3 Diluted earnings per share attributable to Encompass Health common shareholders: Continuing operations $ 0.85 $ 0.63 $ 2.65 $ 1.66 Discontinued operations (0.01) (0.18) (0.03) 0.15 Net income $ 0.84 $ 0.45 $ 2.62 $ 1.81 |
Schedule of Reconciliation of Weighted Average Number of Shares Outstanding | The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic weighted average common shares outstanding 99.5 99.2 99.5 99.2 Restricted stock awards, dilutive stock options, and restricted stock units 1.9 1.3 1.6 1.1 Diluted weighted average common shares outstanding 101.4 100.5 101.1 100.3 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) $ in Millions | 9 Months Ended | |||
Jun. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) hospital state | Sep. 30, 2022 USD ($) | Jul. 01, 2023 bed | |
Class of Stock [Line Items] | ||||
Number of states in which entity operates | state | 37 | |||
Number of inpatient rehabilitation hospitals operated | 159 | |||
Number of solely owned inpatient rehabilitation hospitals | 96 | |||
Number of jointly owned inpatient rehabilitation hospitals | 63 | |||
Contributions from noncontrolling interests of consolidated affiliates | $ | $ 54.7 | $ 55.1 | ||
Hospital in Bowie, Maryland | Corporate Joint Venture | ||||
Class of Stock [Line Items] | ||||
Number of beds | bed | 60 | |||
Contributions from noncontrolling interests of consolidated affiliates | $ | $ 26.3 | |||
Remaining noncontrolling interest | 50% | |||
Minimum | ||||
Class of Stock [Line Items] | ||||
Joint venture ownership percentage | 50% | |||
Maximum | ||||
Class of Stock [Line Items] | ||||
Joint venture ownership percentage | 97.50% |
Basis of Presentation - Net Ope
Basis of Presentation - Net Operating Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | $ 1,206.9 | $ 1,089.5 | $ 3,554.4 | $ 3,211.3 |
Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 786.5 | 711.2 | 2,306.1 | 2,091.7 |
Medicare Advantage | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 191.7 | 163.6 | 576.6 | 480.3 |
Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 135.4 | 126.1 | 396.4 | 381 |
Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 49.2 | 47.7 | 145.6 | 137 |
Other third-party payors | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 10.6 | 9.5 | 32.2 | 29 |
Workers’ compensation | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 6.6 | 6.9 | 19.6 | 18.9 |
Patients | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | 3.8 | 3.5 | 10.4 | 12.8 |
Other income | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenues | $ 23.1 | $ 21 | $ 67.5 | $ 60.6 |
Spin Off of Home Health and H_3
Spin Off of Home Health and Hospice Business - Additional Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | 15 Months Ended | |||
Jul. 01, 2022 $ / shares | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) segment | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 segment | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Number of operating segments | segment | 2 | 1 | |||||
Transition services, term | 2 years | ||||||
Common Stock | Enhabit | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Pro rata distribution of common stock | 0.5 | ||||||
Enhabit | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||
Enhabit | Discontinued operations, disposed of by means other than sale, spinoff | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Transition services | $ 0.7 | $ 1.1 | $ 2.6 | $ 1.1 | |||
Transaction costs | $ 19.8 | $ 52.3 | |||||
Enhabit | Discontinued operations, disposed of by means other than sale, spinoff | Trade name | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Transferred to discontinued operations | $ 104.2 |
Spin Off of Home Health and H_4
Spin Off of Home Health and Hospice Business - Schedule of Financial Information Related to Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Operating expenses: | ||||
(Loss) income from discontinued operations, net of tax | $ (1.3) | $ (18.5) | $ (3.5) | $ 16.7 |
Less: Net income attributable to noncontrolling interests included in discontinued operations | 0 | 0 | 0 | (1.3) |
Net (loss) income attributable to Encompass Health included in discontinued operations | $ (1.3) | (18.5) | $ (3.5) | 15.4 |
Enhabit | Discontinued operations, disposed of by means other than sale, spinoff | ||||
Income from discontinued operations | ||||
Net operating revenue | 0 | 542.3 | ||
Operating expenses: | ||||
Salaries and benefits | 0 | 376.4 | ||
Other operating expenses | 0 | 47.6 | ||
Occupancy costs | 0 | 11 | ||
Supplies | 0 | 11.7 | ||
General and administrative expenses | 19.8 | 54.8 | ||
Depreciation and amortization | 0 | 16.7 | ||
Total operating expenses | 19.8 | 518.2 | ||
Interest expense and amortization of debt discounts and fees | 0 | 0.1 | ||
(Loss) income from discontinued operations before income taxes | (19.8) | 24 | ||
Provision for income tax (benefit) expense | (1.3) | 7.3 | ||
(Loss) income from discontinued operations, net of tax | (18.5) | 16.7 | ||
Less: Net income attributable to noncontrolling interests included in discontinued operations | 0 | (1.3) | ||
Net (loss) income attributable to Encompass Health included in discontinued operations | $ (18.5) | $ 15.4 |
Business Combinations - Additio
Business Combinations - Additional Information (Details) $ in Millions | Sep. 30, 2023 USD ($) bed | Mar. 31, 2023 bed |
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | ||
Business Acquisition [Line Items] | ||
Goodwill expected to be tax-deductible amount | $ | $ 7.4 | |
Hospital Sisters Health System | Corporate Joint Venture | ||
Business Acquisition [Line Items] | ||
Business acquisition percentage of voting interests acquired | 50% | |
Number of beds acquired | 24 | |
Covenant Health | Corporate Joint Venture | ||
Business Acquisition [Line Items] | ||
Business acquisition percentage of voting interests acquired | 50% | |
Number of beds acquired | 48 | |
Piedmont Healthcare, Inc | Corporate Joint Venture | ||
Business Acquisition [Line Items] | ||
Business acquisition percentage of voting interests acquired | 50% | |
Number of beds acquired | 29 |
Business Combinations - Fair Va
Business Combinations - Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,281.3 | $ 1,263.2 | |
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | |||
Business Acquisition [Line Items] | |||
Property and equipment, net | 0.1 | ||
Goodwill | 18.1 | ||
Total assets acquired | 31.1 | ||
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | Noncompete agreements | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | 0.5 | ||
Finite-lived intangible asset useful life (in years) | 3 years | ||
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | Trade name | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | 1.8 | ||
Finite-lived intangible asset useful life (in years) | 20 years | ||
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | Certificates of need | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | $ 10.6 | ||
Finite-lived intangible asset useful life (in years) | 20 years |
Business Combinations - Net Cas
Business Combinations - Net Cash Paid for Acquisitions (Details) - Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Fair value of assets acquired | $ 3.6 | $ 0.3 | $ 13 | $ 0.3 |
Goodwill | 10.6 | 10.4 | 18.1 | 10.4 |
Fair value of noncontrolling interest owned by joint venture partner | (14.2) | (10.7) | (31.1) | (10.7) |
Net cash paid for acquisitions | $ 0 | $ 0 | $ 0 | $ 0 |
Business Combinations - Pro For
Business Combinations - Pro Forma Results of Operation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Business acquisition, pro forma revenue | $ 1,209 | $ 1,097.2 | $ 3,566 | $ 3,234.4 |
Business acquisition, pro forma net income | 85.7 | $ 46.3 | $ 266.3 | $ 184.3 |
Hospital Sisters Health System , Covenant Health And Piedmont Healthcare, Inc | ||||
Business Acquisition [Line Items] | ||||
Business combination, pro forma information, revenue of acquiree since acquisition date, actual | 0 | |||
Business combination, pro forma information, earnings of acquiree since acquisition date, actual | $ 0 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Details) - VIE - entity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Variable Interest Entity [Line Items] | ||
Number of consolidated limited partnership-like entities | 8 | 8 |
Minimum | ||
Variable Interest Entity [Line Items] | ||
Ownership interest in consolidated entities (as percent) | 50% | |
Maximum | ||
Variable Interest Entity [Line Items] | ||
Ownership interest in consolidated entities (as percent) | 75% |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Carrying Amounts and Classifications of VIE's Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Current assets: | |||||
Cash and cash equivalents | $ 99.7 | $ 21.8 | $ 59.8 | $ 49.4 | |
Accounts receivable | 535.9 | 536.8 | |||
Other current assets | 136.6 | 127 | |||
Total current assets | 813.7 | 717.2 | |||
Property and equipment, net | 3,186.3 | 2,939.2 | |||
Operating lease right-of-use assets | 196.8 | 212.5 | |||
Goodwill | 1,281.3 | 1,263.2 | |||
Intangible assets, net | 276.4 | 282.3 | |||
Other long-term assets | 209.8 | 222.1 | |||
Total assets | [1] | 5,964.3 | 5,636.5 | ||
Current liabilities: | |||||
Current portion of long-term debt | 23.9 | 25.2 | |||
Current operating lease liabilities | 24.9 | 25.6 | |||
Accounts payable | 165.4 | 132.9 | |||
Accrued expenses and other current liabilities | 425 | 392.2 | |||
Total current liabilities | 639.2 | 575.9 | |||
Long-term debt, net of current portion | 2,692.7 | 2,741.8 | |||
Long-term operating lease liabilities | 183.9 | 199.7 | |||
Total liabilities | 3,775.1 | 3,774.6 | |||
VIE | |||||
Current assets: | |||||
Cash and cash equivalents | 0.8 | 0.2 | |||
Accounts receivable | 32.6 | 34 | |||
Other current assets | 7.5 | 6.7 | |||
Total current assets | 40.9 | 40.9 | |||
Property and equipment, net | 126.3 | 129 | |||
Operating lease right-of-use assets | 1.3 | 1.7 | |||
Goodwill | 15.9 | 15.9 | |||
Intangible assets, net | 1.2 | 1.5 | |||
Other long-term assets | 18.6 | 18.8 | |||
Total assets | 204.2 | 207.8 | |||
Current liabilities: | |||||
Current portion of long-term debt | 0.9 | 0.8 | |||
Current operating lease liabilities | 0 | 0.4 | |||
Accounts payable | 7.5 | 7 | |||
Accrued expenses and other current liabilities | 18.2 | 23.9 | |||
Total current liabilities | 26.6 | 32.1 | |||
Long-term debt, net of current portion | 13.8 | 14.5 | |||
Long-term operating lease liabilities | 1.3 | 1.3 | |||
Total liabilities | $ 41.7 | $ 47.9 | |||
[1] Our consolidated assets as of September 30, 2023 and December 31, 2022 include total assets of variable interest entities of $204.2 million and $207.8 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of September 30, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $41.7 million and $47.9 million, respectively. See Note 4, Variable Interest Entities. |
Long-term Debt - Long-term Debt
Long-term Debt - Long-term Debt Outstanding (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 09, 2021 |
Schedule of Outstanding Long-term Debt | |||
Finance lease obligations | $ 345.3 | $ 359.8 | |
Total debt and finance lease obligations | 2,716.6 | 2,767 | |
Less: Current portion | (23.9) | (25.2) | |
Long-term debt, net of current portion | $ 2,692.7 | $ 2,741.8 | |
Senior Notes | 5.75% Senior Notes due 2025 | |||
Schedule of Outstanding Long-term Debt | |||
Debt instrument interest rate (as percent) | 5.75% | 5.75% | 5.75% |
Long-term debt | $ 348.3 | $ 347.7 | |
Senior Notes | 4.50% Senior Notes due 2028 | |||
Schedule of Outstanding Long-term Debt | |||
Debt instrument interest rate (as percent) | 4.50% | 4.50% | 4.50% |
Long-term debt | $ 784.2 | $ 781.8 | |
Senior Notes | 4.75% Senior Notes due 2030 | |||
Schedule of Outstanding Long-term Debt | |||
Debt instrument interest rate (as percent) | 4.75% | 4.75% | 4.75% |
Long-term debt | $ 780.9 | $ 779 | |
Senior Notes | 4.625% Senior Notes due 2031 | |||
Schedule of Outstanding Long-term Debt | |||
Debt instrument interest rate (as percent) | 4.625% | 4.625% | 4.625% |
Long-term debt | $ 391.3 | $ 390.6 | |
Other notes payable | |||
Schedule of Outstanding Long-term Debt | |||
Long-term debt | 66.6 | 53.1 | |
Advances under revolving credit facility | Line of credit | Credit Agreement | |||
Schedule of Outstanding Long-term Debt | |||
Long-term debt | $ 0 | $ 55 |
Long-term Debt - Principal Paym
Long-term Debt - Principal Payments Due on Long-term Debt (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Face Amount | |
Long-term Debt by Maturity | |
October 1 through December 31, 2023 | $ 5.5 |
2024 | 40.4 |
2025 | 382.3 |
2026 | 29.2 |
2027 | 43.2 |
2028 | 831.7 |
Thereafter | 1,429.8 |
Total | 2,762.1 |
Net Amount | |
Long-term Debt by Maturity | |
October 1 through December 31, 2023 | 5.5 |
2024 | 40.4 |
2025 | 380.6 |
2026 | 29.2 |
2027 | 43.2 |
2028 | 815.9 |
Thereafter | 1,401.8 |
Total | $ 2,716.6 |
Long-term Debt - Additional Inf
Long-term Debt - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jun. 30, 2022 | Jan. 31, 2022 | Jan. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 09, 2021 | |
Debt Instrument [Line Items] | |||||||||||
Financing cash flows from finance leases | $ 35.9 | $ 14.3 | |||||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | 0 | 1.4 | |||||||
Repayments of long-term lines of credit | $ 115 | $ 340 | |||||||||
Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, covenant, leverage ratio | 3.5 | ||||||||||
Debt instrument, reduction in capacity under restricted payments builder basket | $ 200 | ||||||||||
Amendment agreement, amount to be paid | $ 40.5 | ||||||||||
Senior notes, total | $ 20.5 | $ 20 | |||||||||
5.75% Senior Notes due 2025 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate (as percent) | 5.75% | 5.75% | 5.75% | 5.75% | |||||||
4.50% Senior Notes due 2028 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate (as percent) | 4.50% | 4.50% | 4.50% | 4.50% | |||||||
4.75% Senior Notes due 2030 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate (as percent) | 4.75% | 4.75% | 4.75% | 4.75% | |||||||
4.625% Senior Notes due 2031 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate (as percent) | 4.625% | 4.625% | 4.625% | 4.625% | |||||||
5.125% Senior Notes due 2023 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate (as percent) | 5.125% | ||||||||||
Redemption amount | $ 100 | ||||||||||
Loss on early extinguishment of debt | $ 0.3 | ||||||||||
EHC Credit Agreement | Term loan facilities | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Repayments of debt | 236 | ||||||||||
EHC Credit Agreement | Line of credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Loss on early extinguishment of debt | $ 1.1 | ||||||||||
EHC Credit Agreement | Line of credit | Advances under revolving credit facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Repayments of long-term lines of credit | 250 | ||||||||||
Enhabit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from lines of credit | $ 566.6 | ||||||||||
Ocean Health | Treasure Coast Hospital | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Financing cash flows from finance leases | $ 21.4 |
Redeemable Noncontrolling Int_3
Redeemable Noncontrolling Interests - Redeemable Noncontrolling Interests Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Roll Forward] | ||||
Balance at beginning of period | $ 35.6 | |||
Net income attributable to noncontrolling interests | $ 1.9 | $ 1.6 | 6.2 | $ 5 |
Distributions declared | (28.8) | (27.4) | (87.5) | (72.8) |
Balance at end of period | 41.5 | 41.5 | ||
Redeemable Noncontrolling Interest | ||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Roll Forward] | ||||
Balance at beginning of period | 35.6 | 42.2 | ||
Net income attributable to noncontrolling interests | 6.2 | 5 | ||
Distributions declared | (0.3) | (4.3) | ||
Spin off of Enhabit, Inc. | 0 | (5.1) | ||
Balance at end of period | $ 41.5 | $ 37.8 | $ 41.5 | $ 37.8 |
Redeemable Noncontrolling Int_4
Redeemable Noncontrolling Interests - Reconciliation of Noncontrolling Interests (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | ||||
Net income attributable to nonredeemable noncontrolling interests | $ 26.2 | $ 20 | $ 73.3 | $ 61.8 |
Net income attributable to redeemable noncontrolling interests | 1.9 | 1.6 | 6.2 | 5 |
Net income attributable to noncontrolling interests | $ 28.1 | $ 21.6 | $ 79.5 | $ 66.8 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value, Assets and Liabilities Measured on a Recurring Basis (Details) - Recurring - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | $ 122 | $ 110 |
Redeemable noncontrolling interests | 41.5 | 35.6 |
Other Current Assets | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | 37.2 | 30.9 |
Other Noncurrent Assets | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | 84.8 | 79.1 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | 3.7 | 3.7 |
Redeemable noncontrolling interests | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | 118.3 | 106.3 |
Redeemable noncontrolling interests | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | ||
Equity securities | 0 | 0 |
Redeemable noncontrolling interests | $ 41.5 | $ 35.6 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Nonrecurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Gains or losses related to non-financial assets and liabilities | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amounts and Estimated Fair Values, Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 09, 2021 |
Senior Notes | 5.75% Senior Notes due 2025 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt instrument interest rate (as percent) | 5.75% | 5.75% | 5.75% |
Senior Notes | 5.75% Senior Notes due 2025 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 348.3 | $ 347.7 | |
Senior Notes | 5.75% Senior Notes due 2025 | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 343.7 | $ 347.7 | |
Senior Notes | 4.50% Senior Notes due 2028 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt instrument interest rate (as percent) | 4.50% | 4.50% | 4.50% |
Senior Notes | 4.50% Senior Notes due 2028 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 784.2 | $ 781.8 | |
Senior Notes | 4.50% Senior Notes due 2028 | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 731.1 | $ 726.7 | |
Senior Notes | 4.75% Senior Notes due 2030 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt instrument interest rate (as percent) | 4.75% | 4.75% | 4.75% |
Senior Notes | 4.75% Senior Notes due 2030 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 780.9 | $ 779 | |
Senior Notes | 4.75% Senior Notes due 2030 | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 708.7 | $ 703.7 | |
Senior Notes | 4.625% Senior Notes due 2031 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt instrument interest rate (as percent) | 4.625% | 4.625% | 4.625% |
Senior Notes | 4.625% Senior Notes due 2031 | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 391.3 | $ 390.6 | |
Senior Notes | 4.625% Senior Notes due 2031 | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 339.2 | 342.2 | |
Other notes payable | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 66.6 | 53.1 | |
Other notes payable | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 66.6 | 53.1 | |
Advances under revolving credit facility | Line of credit | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 0 | 55 | |
Advances under revolving credit facility | Line of credit | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 0 | 55 | |
Letters of credit | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | 0 | 0 | |
Letters of credit | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying amounts and estimated fair values of financial instruments | $ 33.7 | $ 32.7 |
Share-Based Payments (Details)
Share-Based Payments (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2023 shares | |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted stock awards issued (in shares) | 0.6 |
Restricted Stock | Service Condition | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted stock awards issued (in shares) | 0.3 |
Restricted Stock | Service and Performance Condition | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance measurement period (in years) | 2 years |
Restricted Stock | Service and Market Condition | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance measurement period (in years) | 3 years |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options granted (in shares) | 0.1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 30.3 | $ 21.8 | $ 95 | $ 68.2 |
Earnings per Common Share - Com
Earnings per Common Share - Computation of Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||
Income from continuing operations | $ 114.7 | $ 85.5 | $ 347.4 | $ 231.7 |
Less: Net income attributable to noncontrolling interests included in continuing operations | (28.1) | (21.6) | (79.5) | (65.5) |
Less: Income from continuing operations allocated to participating securities | (0.6) | (0.3) | (1.8) | (0.6) |
Income from continuing operations attributable to Encompass Health common shareholders | 86 | 63.6 | 266.1 | 165.6 |
(Loss) income from discontinued operations, net of tax | (1.3) | (18.5) | (3.5) | 16.7 |
Less: Net income attributable to noncontrolling interests included in discontinued operations | 0 | 0 | 0 | (1.3) |
Less: Income from discontinued operations allocated to participating securities | 0 | 0 | 0 | (0.1) |
(Loss) income from discontinued operations attributable to Encompass Health common shareholders | (1.3) | (18.5) | (3.5) | 15.3 |
Net income attributable to Encompass Health common shareholders | $ 84.7 | $ 45.1 | $ 262.6 | $ 180.9 |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 99.5 | 99.2 | 99.5 | 99.2 |
Basic earnings per share attributable to Encompass Health common shareholders: | ||||
Continuing operations (in dollars per share) | $ 0.86 | $ 0.64 | $ 2.68 | $ 1.67 |
Discontinued operations (in dollars per share) | (0.01) | (0.19) | (0.04) | 0.15 |
Net income (in dollars per share) | $ 0.85 | $ 0.45 | $ 2.64 | $ 1.82 |
Numerator: | ||||
Income from continuing operations | $ 114.7 | $ 85.5 | $ 347.4 | $ 231.7 |
Less: Net income attributable to noncontrolling interests included in continuing operations | (28.1) | (21.6) | (79.5) | (65.5) |
Income from continuing operations attributable to Encompass Health common shareholders | 86.6 | 63.9 | 267.9 | 166.2 |
(Loss) income from discontinued operations, net of tax | (1.3) | (18.5) | (3.5) | 16.7 |
Less: Net income attributable to noncontrolling interests included in discontinued operations | 0 | 0 | 0 | 1.3 |
(Loss) income from discontinued operations attributable to Encompass Health common shareholders | (1.3) | (18.5) | (3.5) | 15.4 |
Net income attributable to Encompass Health common shareholders | $ 85.3 | $ 45.4 | $ 264.4 | $ 181.6 |
Denominator: | ||||
Diluted weighted average common shares outstanding (in shares) | 101.4 | 100.5 | 101.1 | 100.3 |
Diluted earnings per share attributable to Encompass Health common shareholders: | ||||
Continuing operations (in dollars per share) | $ 0.85 | $ 0.63 | $ 2.65 | $ 1.66 |
Discontinued operations (in dollars per share) | (0.01) | (0.18) | (0.03) | 0.15 |
Net income (in dollars per share) | $ 0.84 | $ 0.45 | $ 2.62 | $ 1.81 |
Earnings per Common Share - Rec
Earnings per Common Share - Reconciliation of Weighted Average Number of Shares Outstanding (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average common shares outstanding (in shares) | 99.5 | 99.2 | 99.5 | 99.2 |
Restricted stock awards, dilutive stock options, and restricted stock units (in shares) | 1.9 | 1.3 | 1.6 | 1.1 |
Diluted weighted average common shares outstanding (in shares) | 101.4 | 100.5 | 101.1 | 100.3 |