☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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63-0860407
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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EHC
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New York Stock Exchange
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Page
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Item 16.
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•
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each of the factors discussed in Item 1A, Risk Factors; as well as uncertainties and factors, if any, discussed elsewhere in this Form 10-K, in our other filings from time to time with the SEC, or in materials incorporated therein by reference;
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•
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changes in the rules and regulations of the healthcare industry at either or both of the federal and state levels, including those contemplated now and in the future as part of national healthcare reform and deficit reduction (such as the re-basing of payment systems, the introduction of site neutral payments or case-mix weightings across post-acute settings, the Patient-Driven Groupings Model for home health, the new patient assessment measures, which we refer to as “Section GG functional measures,” for inpatient rehabilitation, and other payment system reforms), which may decrease revenues and increase the costs of complying with the rules and regulations;
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reductions or delays in, or suspension of, reimbursement for our services by governmental or private payors, including our ability to obtain and retain favorable arrangements with third-party payors;
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•
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restrictive interpretations of the regulations governing the claims that are reimbursable by Medicare;
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our ability to comply with extensive and changing healthcare regulations as well as the increased costs of regulatory compliance and compliance monitoring in the healthcare industry, including the costs of investigating and defending asserted claims, whether meritorious or not;
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any adverse outcome of various lawsuits, claims, and legal or regulatory proceedings, including disclosed and undisclosed qui tam suits;
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•
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the use by governmental agencies and contractors of statistical sampling and extrapolation to expand claims of overpayment or noncompliance;
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delays in the administrative appeals process associated with denied Medicare reimbursement claims, including from various Medicare audit programs, and our exposure to the related delay or reduction in the receipt of the reimbursement amounts for services previously provided, including through recoupment of ongoing claims reimbursement by CMS;
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the ongoing evolution of the healthcare delivery system, including alternative payment models and value-based purchasing initiatives, which may decrease our reimbursement rate or increase costs associated with our operations;
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•
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a pandemic, epidemic, or other widespread outbreak of an infectious disease or other public health crisis, which could decrease our patient volumes and revenues and lead to staffing and supply shortages and associated cost increases;
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our ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment with often severe staffing shortages and the impact on our labor expenses from potential union activity and staffing recruitment and retention;
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•
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competitive pressures in the healthcare industry, including from other providers that may be participating in integrated delivery payment arrangements in which we do not participate, and our response to those pressures;
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•
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our ability to successfully complete and integrate de novo developments, acquisitions, investments, and joint ventures consistent with our growth strategy, including realization of anticipated revenues, cost savings, productivity improvements arising from the related operations and avoidance of unanticipated difficulties, costs or liabilities that could arise from acquisitions or integrations;
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•
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increased costs of defending and insuring against alleged professional liability and other claims and the ability to predict the costs related to claims;
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potential incidents affecting the proper operation, availability, or security of our or our vendors’ or partners’ information systems, including the patient information stored there;
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new or changing quality reporting requirements impacting operational costs or our Medicare reimbursement;
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the price of our common stock as it affects our willingness and ability to repurchase shares and the financial and accounting effects of any repurchases;
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our ability and willingness to continue to declare and pay dividends on our common stock;
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our ability to maintain proper local, state and federal licensing, including compliance with the Medicare conditions of participation and provider enrollment requirements, which is required to participate in the Medicare program;
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our ability to attract and retain key management personnel;
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changes in our payor mix or the acuity of our patients affecting reimbursement rates; and
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general conditions in the economy and capital markets, including any disruption, instability, or uncertainty related to armed conflict or an act of terrorism, a governmental impasse over approval of the United States federal budget, an increase to the debt ceiling, an international trade war, a sovereign debt crisis, or a widespread outbreak of an infectious disease.
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Item 1.
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Business.
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As of or for the Year Ended December 31,
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||||||||||
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2019
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2018
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2017
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Consolidated data:
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(Actual Amounts)
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Inpatient rehabilitation:
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Number of hospitals (1)
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133
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130
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127
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Discharges
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186,842
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179,846
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171,922
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Number of licensed beds
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9,249
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8,966
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8,851
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Home health and hospice:
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Number of home health locations (2)
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245
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220
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200
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Home health admissions
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159,727
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137,396
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124,870
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Number of hospice locations
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83
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58
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37
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Hospice admissions
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10,452
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7,474
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4,870
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Net operating revenues:
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(In Millions)
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Inpatient
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$
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3,423.5
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$
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3,247.9
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$
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3,039.3
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Outpatient and other
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89.5
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98.3
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102.0
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Total inpatient rehabilitation
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3,513.0
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3,346.2
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3,141.3
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Home health
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918.0
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814.6
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702.4
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Hospice
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174.0
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116.5
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70.2
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Total home health and hospice
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1,092.0
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931.1
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772.6
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Net operating revenues
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$
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4,605.0
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$
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4,277.3
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$
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3,913.9
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(1)
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These amounts include one hospital as of December 31, 2018, and 2017 operating as a joint venture, which we accounted for using the equity method of accounting. As a result of an amendment to the joint venture agreement related to this hospital, the accounting for it changed from the equity method to consolidated effective July 1, 2019.
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(2)
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These amounts include two locations as of December 31, 2019, 2018, and 2017 which we account for using the equity method of accounting.
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•
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People. We believe our employees share a steadfast commitment to providing outstanding care to our patients. We undertake significant efforts to ensure our clinical and support staff receives the education and training necessary to provide the highest quality care in the most cost-effective manner. We also have hospital staff trained for all patient acuity levels faced in the post-acute setting. We embrace the Encompass Health Way, our core set of values developed through input from a broad cross section of our employees. The Encompass Health Way calls on each of our employees to set the standard, lead with empathy, do what’s right, focus on the positive, and ensure we are stronger together.
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Change Agility. We have a demonstrated ability to adapt in the face of numerous and significant regulatory and legislative changes. For example, we successfully managed through the significant regulatory, financial, and other challenges associated with the Centers for Medicare & Medicaid Services (“CMS”) rule commonly referred to as the “75% Rule” in 2004, reimbursement rate reductions associated with the shift from the 75% Rule to the “60% Rule” in 2007, sequestration beginning in 2013, multiple reimbursement rate reductions associated with healthcare reform and otherwise, introduction of significantly more quality reporting requirements beginning in 2013, and implementation of both voluntary and mandatory alternative payment models in recent years.
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•
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Strategic Relationships. We have a long and successful history of building strategic relationships with major healthcare systems. Our experience will be important in growing the Company as the industry evolves toward integrated delivery models. We entered into our first joint venture in 1991 with a nationally prominent university’s acute care hospital. Approximately one-third of our inpatient rehabilitation hospitals currently operate as joint ventures with acute care hospitals or systems. Joint ventures with market leading acute care hospitals establish a solid foundation for operating our business within integrated delivery and alternative payment models.
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Clinical Expertise and High-Quality Outcomes. We have extensive facility-based and home-based clinical experience from which we have developed standardized best practices and protocols. We believe these clinical best practices and protocols, particularly as leveraged with industry-leading technology, help ensure the delivery of consistently high-quality healthcare services. Our “TeamWorks” program is a series of operations-focused initiatives using identified and standardized best practices to reduce inefficiencies and improve performance
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Cost Effectiveness. Our size, data-driven business practices, and culture help us provide facility-based and home-based healthcare services on a cost-effective basis. For example, our inpatient rehabilitation hospitals historically have received, on average, a lower per discharge payment from Medicare than the industry average payment while also treating patients with higher average acuity. Additionally, our hospitals historically have received, on average, significantly less Medicare high cost outlier reimbursement than other inpatient rehabilitation providers have. High cost outlier payments are supplemental payments from Medicare intended to cover high cost cases in excess of a fixed-loss threshold amount.
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Financial Resources. We have a proven track record of generating strong cash flows from operations that have allowed us to successfully pursue our growth strategy, manage our financial leverage, and make significant shareholder distributions. As of December 31, 2019, we have a strong, well-capitalized balance sheet, including ownership of approximately 70% of our hospital real estate, no significant debt maturities prior to 2023, and ample availability under our revolving credit facility, which along with the cash flows generated from operations should, we believe, provide sufficient support for our business strategy.
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Advanced Technology and Innovation. We are focused on developing technology-enabled real-time strategies for the next generation of integrated healthcare. Our post-acute innovation strategy is based on leveraging our clinical expertise, our large post-acute datasets, and our proven capabilities in enterprise-level electronic medical record technologies, data analytics, data integration, and predictive analytics to drive value-based performance across the healthcare continuum for our patients, our partners, and our payors. We have devoted substantial resources, effort and expertise to leveraging technology to create post-acute solutions that improve patient care and operating efficiencies.
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Item 1A.
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Risk Factors
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Performance Year
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Calendar Year for Payment Adjustment
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Maximum Payment Adjustment (+/-)
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2017
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2019
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5%
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2018
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2020
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6%
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2019
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2021
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7%
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2020
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2022
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8%
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•
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licensure, certification, enrollments, and accreditation;
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•
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policies, either at the national or local level, delineating what conditions must be met to qualify for reimbursement under Medicare (also referred to as coverage requirements);
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•
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coding and billing for services;
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•
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requirements of the 60% compliance threshold under the 2007 Medicare Act;
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•
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relationships with physicians and other referral sources, including physician self-referral and anti-kickback laws;
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•
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quality of medical care;
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•
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use and maintenance of medical supplies and equipment;
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•
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maintenance and security of patient information and medical records;
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•
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minimum staffing;
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•
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acquisition and dispensing of pharmaceuticals and controlled substances; and
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•
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disposal of medical and hazardous waste.
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New Denials
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Collections of Previously Denied Claims
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Revenue Reserve for New Denials
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(In Millions)
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2019
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$20.2
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$14.9
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$6.1
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2018
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10.2
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14.1
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3.0
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2017
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43.6
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27.6
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13.0
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2016
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74.9
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26.2
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20.6
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2015
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79.0
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15.0
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20.6
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•
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gross charge (charge as reflected on a hospital’s chargemaster, absent any discounts),
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•
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payer-specific negotiated charge (charge negotiated with a third party payer for an item or service),
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•
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de-identified minimum negotiated charge (lowest charge negotiated with all third-party payers),
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•
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de-identified maximum negotiated charge (highest charge negotiated with all third-party payers), and
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•
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discounted cash price (charge that applies to an individual who pays cash).
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•
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limitations, including state CONs as well as anti-trust, Medicare, and other regulatory approval requirements, on our ability to complete such acquisitions, particularly those involving not-for-profit providers, on terms, timetables, and valuations reasonable to us;
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•
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limitations in obtaining financing for acquisitions at a cost reasonable to us;
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•
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difficulties integrating acquired operations, personnel, and information systems, and in realizing projected revenues, efficiencies and cost savings, or returns on invested capital;
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•
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entry into markets, businesses or services in which we may have little or no experience;
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•
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diversion of business resources or management’s attention from ongoing business operations; and
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•
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exposure to undisclosed or unforeseen liabilities of acquired operations, including liabilities for failure to comply with healthcare laws and anti-trust considerations in specific markets as well as risks and liabilities related to previously compromised information systems.
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•
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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy and other general corporate purposes;
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•
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making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing conditions;
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•
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placing us at a competitive disadvantage compared with competing providers that have less debt; and
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exposing us to risks inherent in interest rate fluctuations for outstanding amounts under our credit facility, which could result in higher interest expense in the event of increases in interest rates, as discussed in Item 7A, Quantitative and Qualitative Disclosures about Market Risk.
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incur or guarantee indebtedness;
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pay dividends on, or redeem or repurchase, our capital stock; or repay, redeem or repurchase our subordinated obligations;
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issue or sell certain types of preferred stock;
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make investments;
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incur obligations that restrict the ability of our subsidiaries to make dividends or other payments to us;
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sell assets;
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engage in transactions with affiliates;
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•
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create certain liens;
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•
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enter into sale/leaseback transactions; and
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•
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merge, consolidate, or transfer all or substantially all of our assets.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Number of Hospitals
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State
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Licensed Beds
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Building and Land Owned
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Building Owned and Land Leased
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Building and Land Leased
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Total
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Home Health and Hospice Locations
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Alabama *+
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427
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2
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3
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2
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7
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59
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Arizona
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396
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1
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2
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3
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6
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5
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Arkansas +
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360
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3
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|
|
1
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|
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1
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5
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5
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California
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184
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2
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—
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|
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1
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|
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3
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|
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—
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Colorado
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104
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|
1
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—
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1
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2
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6
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Connecticut*
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—
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—
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—
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—
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—
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1
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Delaware *
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37
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—
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1
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—
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1
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—
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Florida *
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947
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10
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—
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2
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12
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18
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Georgia *+
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160
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|
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2
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(1)
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1
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3
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26
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Idaho
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40
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—
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1
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—
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1
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12
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Illinois *
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65
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—
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1
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—
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1
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3
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Indiana
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98
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|
|
1
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|
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—
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—
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|
|
1
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|
|
1
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Kansas
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242
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|
|
1
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|
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—
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|
|
2
|
|
|
3
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|
|
6
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|
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Kentucky *+
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323
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|
|
2
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|
|
1
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|
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—
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3
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|
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3
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Louisiana
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47
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|
|
1
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—
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|
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—
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|
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1
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|
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3
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Maine *
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100
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|
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—
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—
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|
|
1
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|
|
1
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|
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—
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Maryland *+
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64
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|
|
1
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|
|
—
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|
|
—
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|
|
1
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|
|
3
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|
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Massachusetts *
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|
560
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|
|
2
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|
|
—
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|
|
2
|
|
|
4
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|
|
5
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|
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Mississippi*+
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|
33
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|
|
—
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|
|
—
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|
|
1
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|
|
1
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|
|
20
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|
|
Missouri *
|
|
191
|
|
|
—
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|
|
2
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
Nevada *
|
|
219
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
4
|
|
|
New Hampshire
|
|
50
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
New Jersey *+
|
|
199
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
New Mexico
|
|
87
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
7
|
|
|
North Carolina *+
|
|
68
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
Ohio
|
|
210
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
Oklahoma
|
|
60
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
22
|
|
|
Oregon*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Pennsylvania
|
|
745
|
|
|
5
|
|
|
—
|
|
|
4
|
|
|
9
|
|
|
4
|
|
|
Puerto Rico *+
|
|
72
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
Rhode Island *+
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
South Carolina *+
|
|
456
|
|
|
2
|
|
|
4
|
|
|
1
|
|
|
7
|
|
|
4
|
|
|
Tennessee *+
|
|
493
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
9
|
|
|
8
|
|
|
Texas
|
|
1,573
|
|
|
12
|
|
|
3
|
|
|
9
|
|
|
24
|
|
|
63
|
|
|
Utah
|
|
84
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
15
|
|
|
Virginia *
|
|
297
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
6
|
|
|
11
|
|
|
West Virginia *+
|
|
258
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
Wyoming
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
9,249
|
|
|
63
|
|
|
31
|
|
|
39
|
|
|
133
|
|
|
328
|
|
(2)
|
(1)
|
The inpatient rehabilitation hospitals in Augusta and Newnan, Georgia are parties to industrial development bond financings that reduce the ad valorem taxes payable by each hospital. In connection with each of these bond structures, title to the related property is held by the local development authority. We lease the related hospital property and hold the bonds issued by that authority, the payment on which equals the amount payable under the lease. We may terminate each bond financing and the associated lease at any time at our option without penalty, and fee title to the related hospital property will return to us.
|
(2)
|
This total includes 245 locations where we provide home health services and 83 locations where we provide hospice services.
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Number of securities to be issued upon exercise of outstanding options
|
|
Weighted-average exercise price of outstanding options(1)
|
Number of securities available for future issuance
|
|
||||
Plans approved by stockholders
|
2,744,223
|
|
(2)
|
$
|
43.02
|
|
9,160,752
|
|
(3)
|
Plans not approved by stockholders
|
86,830
|
|
(4)
|
|
—
|
|
|
||
Total
|
2,831,053
|
|
|
$
|
43.02
|
|
9,160,752
|
|
|
(1)
|
This calculation does not take into account awards of restricted stock, restricted stock units, or performance share units.
|
(2)
|
This amount assumes maximum performance by performance-based awards for which the performance has not yet been determined.
|
(3)
|
This amount represents the number of shares available for future equity grants under the 2016 Omnibus Performance Incentive Plan approved by our stockholders in May 2016.
|
(4)
|
This amount represents 86,830 restricted stock units issued under the 2004 Amended and Restated Director Incentive Plan, the material terms of which are described below.
|
Period
|
|
Total Number of Shares (or Units) Purchased(1)
|
|
Average Price Paid per Share (or Unit) ($)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs(2)
|
||||
October 1 through October 31, 2019
|
|
5,803
|
|
|
$
|
67.41
|
|
|
—
|
|
|
$204,120,171
|
November 1 through November 30, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
204,120,171
|
|
December 1 through December 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
204,120,171
|
|
Total
|
|
5,803
|
|
|
$
|
67.41
|
|
|
—
|
|
|
|
(1)
|
Except as noted in the following sentence, the number of shares reported in this column represents shares tendered by an employee as payment of the tax liabilities incident to the vesting of previously awarded shares of restricted stock. In October, 276 shares were purchased pursuant to our Directors’ Deferred Stock Investment Plan. This plan is a nonqualified deferral plan allowing non-employee directors to make advance elections to defer a fixed percentage of their director fees. The plan administrator acquires the shares in the open market which are then held in a rabbi trust. The plan also provides that dividends paid on the shares held for the accounts of the directors will be reinvested in shares of our common stock which will also be held in the trust. The directors’ rights to all shares in the trust are nonforfeitable, but the shares are only released to the directors after departure from our board.
|
(2)
|
On October 28, 2013, we announced our board of directors authorized the repurchase of up to $200 million of our common stock. On February 14, 2014, our board approved an increase in this common stock repurchase authorization from $200 million to $250 million. On July 24, 2018, our board approved resetting the aggregate common stock repurchase authorization to $250 million. The repurchase authorization does not require the repurchase of a specific number of shares, has an indefinite term, and is subject to termination at any time by our board of directors. Subject to certain terms and conditions, including a maximum price per share and compliance with federal and state securities and other laws, the repurchases may be made from time to time in open market transactions, privately negotiated transactions, or other transactions, including trades under a plan established in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
|
|
|
For the Year Ended December 31,
|
||||||||||||||||
|
|
Base Period
|
|
Cumulative Total Return
|
||||||||||||||
Company/Index Name
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||
Encompass Health Corporation
|
|
100.00
|
|
|
92.50
|
|
|
112.22
|
|
|
137.31
|
|
|
174.20
|
|
|
198.99
|
|
Standard & Poor’s 500 Index
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
S&P Health Care Services Select Industry Index
|
|
100.00
|
|
|
103.27
|
|
|
92.30
|
|
|
98.26
|
|
|
99.47
|
|
|
115.83
|
|
Item 6.
|
Selected Financial Data
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(In Millions, Except per Share Data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net operating revenues
|
$
|
4,605.0
|
|
|
$
|
4,277.3
|
|
|
$
|
3,913.9
|
|
|
$
|
3,642.6
|
|
|
$
|
3,115.7
|
|
Operating earnings (1)
|
612.1
|
|
|
555.2
|
|
|
578.3
|
|
|
588.1
|
|
|
485.7
|
|
|||||
Provision for income tax expense
|
115.9
|
|
|
118.9
|
|
|
145.8
|
|
|
163.9
|
|
|
141.9
|
|
|||||
Income from continuing operations
|
446.4
|
|
|
374.3
|
|
|
350.6
|
|
|
318.1
|
|
|
253.7
|
|
|||||
(Loss) income from discontinued operations, net of tax
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.9
|
)
|
|||||
Net income
|
445.8
|
|
|
375.4
|
|
|
350.2
|
|
|
318.1
|
|
|
252.8
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|
(70.5
|
)
|
|
(69.7
|
)
|
|||||
Net income attributable to Encompass Health
|
358.7
|
|
|
292.3
|
|
|
271.1
|
|
|
247.6
|
|
|
183.1
|
|
|||||
Less: Convertible perpetual preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|||||
Net income attributable to Encompass Health common shareholders
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.1
|
|
|
$
|
247.6
|
|
|
$
|
181.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding: (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
98.0
|
|
|
97.9
|
|
|
93.7
|
|
|
89.1
|
|
|
89.4
|
|
|||||
Diluted
|
99.4
|
|
|
99.8
|
|
|
99.3
|
|
|
99.5
|
|
|
101.0
|
|
|||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Continuing operations
|
$
|
3.66
|
|
|
$
|
2.97
|
|
|
$
|
2.88
|
|
|
$
|
2.77
|
|
|
$
|
2.03
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income
|
$
|
3.65
|
|
|
$
|
2.98
|
|
|
$
|
2.88
|
|
|
$
|
2.77
|
|
|
$
|
2.02
|
|
Diluted earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Continuing operations
|
$
|
3.62
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
|
$
|
2.59
|
|
|
$
|
1.92
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income
|
$
|
3.61
|
|
|
$
|
2.93
|
|
|
$
|
2.84
|
|
|
$
|
2.59
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends per common share
|
$
|
1.10
|
|
|
$
|
1.04
|
|
|
$
|
0.98
|
|
|
$
|
0.94
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts attributable to Encompass Health:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income from continuing operations
|
$
|
359.3
|
|
|
$
|
291.2
|
|
|
$
|
271.5
|
|
|
$
|
247.6
|
|
|
$
|
184.0
|
|
(Loss) income from discontinued operations, net of tax
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.9
|
)
|
|||||
Net income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.1
|
|
|
$
|
247.6
|
|
|
$
|
183.1
|
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(In Millions)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
34.8
|
|
|
$
|
(10.4
|
)
|
|
$
|
184.7
|
|
|
$
|
178.9
|
|
|
$
|
172.3
|
|
Total assets (4)
|
6,080.7
|
|
|
5,175.0
|
|
|
4,864.5
|
|
|
4,663.8
|
|
|
4,592.2
|
|
|||||
Long-term debt, including current portion (2) (4)
|
3,062.6
|
|
|
2,514.4
|
|
|
2,577.7
|
|
|
3,016.4
|
|
|
3,171.5
|
|
|||||
Encompass Health shareholders’ equity (2)
|
1,352.2
|
|
|
1,276.7
|
|
|
1,152.5
|
|
|
717.8
|
|
|
597.5
|
|
(1)
|
We define operating earnings as income from continuing operations attributable to Encompass Health before (1) loss on early extinguishment of debt; (2) interest expense and amortization of debt discounts and fees; (3) other income; (4) loss on interest rate swaps; and (5) income tax expense or benefit.
|
(2)
|
During the fourth quarter of 2013, we exchanged $320 million in aggregate principal amount of newly issued 2.00% Convertible Senior Subordinated Notes due 2043 (“Convertible Notes”) for 257,110 shares of our then outstanding 6.50% Series A Convertible Perpetual Preferred Stock. On April 23, 2015, we exercised our rights to force conversion of all remaining outstanding shares of our Convertible perpetual preferred stock into common stock. During the second quarter of 2017, we exercised the early redemption option and subsequently retired all $320 million of the Convertible Notes reducing our long-term debt balance by approximately $278 million. Substantially all of the holders elected to convert their Convertible Notes to shares of our common stock, which resulted in the issuance of 8.9 million shares from treasury stock. See Note 10, Long-term Debt and Note 17, Earnings per Common Share, to the accompanying consolidated financial statements.
|
(3)
|
During 2019, we repurchased 0.8 million million shares of our common stock in the open market for $45.9 million. During 2017, we repurchased 0.9 million shares of our common stock in the open market for $38.1 million. During 2016, we repurchased 1.7 million shares of our common stock in the open market for $65.6 million. During 2015, we repurchased 1.3 million shares of our common stock in the open market for $45.3 million.
|
(4)
|
In May 2018, we acquired Camellia Healthcare and affiliated entities using cash on hand and borrowings under our revolving credit facility. In July 2019, we acquired privately owned Alacare Home Health & Hospice using cash on hand and borrowings under our revolving credit facility. See Note 2, Business Combinations, and Note 10, Long-term Debt, to the accompanying consolidated financial statements.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
providing high-quality, cost-effective care to patients in our existing markets;
|
•
|
achieving organic growth at our existing inpatient rehabilitation hospitals and home health and hospice locations;
|
•
|
expanding our services to more patients who require post-acute healthcare services by constructing and acquiring hospitals in new markets and acquiring and opening home health and hospice locations in new markets;
|
•
|
making shareholder distributions via common stock dividends and repurchases of our common stock; and
|
•
|
positioning the Company for success in the evolving healthcare delivery system through key operational initiatives that include increasing clinical collaboration between our inpatient rehabilitation hospitals and home health locations, building stroke market share, developing and implementing post-acute solutions, transitioning to the new inpatient rehabilitation patient assessment measures, commonly referred to as “Section GG” measures, and preparing for implementation of the home health Patient-Driven Groupings Model (“PDGM”).
|
•
|
began operating a 40-bed inpatient rehabilitation hospital in Lubbock, Texas with our joint venture partner, University Medical Center Health System, in May 2019;
|
•
|
began operating a 40-bed inpatient rehabilitation hospital in Boise, Idaho with our joint venture partner, Saint Alphonsus Regional Medical Center, in July 2019;
|
•
|
amended the joint venture agreement related to our 51-bed Yuma Rehabilitation Hospital which resulted in a change in accounting for this hospital from the equity method of accounting to a consolidated entity;
|
•
|
began operating our new 40-bed inpatient rehabilitation hospital in Katy, Texas in September 2019;
|
•
|
continued our capacity expansions by adding 152 new beds to existing hospitals; and
|
•
|
continued development of the following hospitals:
|
Location
|
# of Beds
|
Expected Operational Date
|
De novos:
|
|
|
Murrieta, California*
|
50
|
Q1 2020
|
Sioux Falls, South Dakota
|
40
|
Q2 2020
|
Toledo, Ohio
|
40
|
Q4 2020
|
Cumming, Georgia
|
50
|
Q1 2021
|
North Tampa, Florida
|
50
|
Q2 2021
|
Stockbridge, Georgia
|
50
|
Q3 2021
|
Greenville, South Carolina
|
40
|
Q3 2021
|
Joint ventures:
|
|
|
Coralville, Iowa
|
40
|
Q2 2020
|
San Angelo, Texas
|
40
|
Q2 2021
|
•
|
Operating in a Highly Regulated Industry. We are required to comply with extensive and complex laws and regulations at the federal, state, and local government levels. These rules and regulations have affected, or could in the future affect, our business activities by having an impact on the reimbursement we receive for services provided or the costs of compliance, mandating new documentation standards, requiring additional licensure or certification, regulating our relationships with physicians and other referral sources, regulating the use of our properties, and limiting our ability to enter new markets or add new capacity to existing hospitals and agencies. Ensuring continuous compliance with extensive laws and regulations is an operating requirement for all healthcare providers.
|
•
|
Changes to Our Operating Environment Resulting from Healthcare Reform. Concerns held by federal policymakers about the federal deficit and national debt levels, as well as other healthcare policy priorities, could result in enactment of legislation affecting portions of the Medicare program, including post-acute care services we provide. It is not clear what, if any, Medicare-related changes may ultimately be enacted and signed into law or otherwise implemented, but it is possible that any reductions in Medicare spending will have a material impact on reimbursements for healthcare providers generally and post-acute providers specifically. We cannot predict what, if any, changes in Medicare spending or modifications to the healthcare laws and regulations will result from future budget or other legislative or regulatory initiatives.
|
•
|
Maintaining Strong Volume Growth. Various factors, including competition and increasing regulatory and administrative burdens, may impact our ability to maintain and grow our hospital, home health, and hospice volumes. In any particular market, we may encounter competition from local or national entities with longer operating histories or other competitive advantages, such as acute care hospitals who provide post-acute services similar to ours or other post-acute providers with relationships with referring acute care hospitals or physicians. Aggressive payment review practices by Medicare contractors, aggressive enforcement of regulatory policies by government agencies, and restrictive or burdensome rules, regulations or statutes governing admissions practices may lead us to not accept patients who would be appropriate for and would benefit from the services we provide. In addition, from time to time, we must get regulatory approval to expand our services and locations in states with certificate of need laws. This approval may be withheld or take longer than expected. In the case of new-store volume growth, the addition of hospitals, home health agencies, and hospice agencies to our portfolio also may be difficult and take longer than expected.
|
•
|
Recruiting and Retaining High-Quality Personnel. See Item 1A, Risk Factors, for a discussion of competition for staffing, shortages of qualified personnel, and other factors that may increase our labor costs. Recruiting and retaining qualified personnel, including management, for our inpatient hospitals and home health and hospice agencies remain a high priority for us. We attempt to maintain a comprehensive compensation and benefits package that allows us to remain competitive in this challenging staffing environment while remaining consistent with our goal of being a high-quality, cost-effective provider of post-acute services.
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Medicare
|
75.1
|
%
|
|
75.9
|
%
|
|
76.0
|
%
|
Medicare Advantage
|
10.6
|
%
|
|
9.2
|
%
|
|
8.6
|
%
|
Managed care
|
8.3
|
%
|
|
8.8
|
%
|
|
9.3
|
%
|
Medicaid
|
2.8
|
%
|
|
2.6
|
%
|
|
2.5
|
%
|
Other third-party payors
|
0.9
|
%
|
|
1.1
|
%
|
|
1.3
|
%
|
Workers' compensation
|
0.7
|
%
|
|
0.7
|
%
|
|
0.7
|
%
|
Patients
|
0.5
|
%
|
|
0.5
|
%
|
|
0.5
|
%
|
Other income
|
1.1
|
%
|
|
1.2
|
%
|
|
1.1
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
For the Year Ended December 31,
|
|
Percentage Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
(In Millions)
|
|
|
|
|
||||||||||||
Net operating revenues
|
$
|
4,605.0
|
|
|
$
|
4,277.3
|
|
|
$
|
3,913.9
|
|
|
7.7
|
%
|
|
9.3
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Salaries and benefits
|
2,573.0
|
|
|
2,354.0
|
|
|
2,154.6
|
|
|
9.3
|
%
|
|
9.3
|
%
|
|||
Other operating expenses
|
623.6
|
|
|
585.1
|
|
|
531.6
|
|
|
6.6
|
%
|
|
10.1
|
%
|
|||
Occupancy costs
|
82.3
|
|
|
78.0
|
|
|
73.5
|
|
|
5.5
|
%
|
|
6.1
|
%
|
|||
Supplies
|
167.9
|
|
|
158.7
|
|
|
149.3
|
|
|
5.8
|
%
|
|
6.3
|
%
|
|||
General and administrative expenses
|
247.0
|
|
|
220.2
|
|
|
171.7
|
|
|
12.2
|
%
|
|
28.2
|
%
|
|||
Depreciation and amortization
|
218.7
|
|
|
199.7
|
|
|
183.8
|
|
|
9.5
|
%
|
|
8.7
|
%
|
|||
Government, class action, and related settlements
|
—
|
|
|
52.0
|
|
|
—
|
|
|
(100.0
|
)%
|
|
N/A
|
|
|||
Total operating expenses
|
3,912.5
|
|
|
3,647.7
|
|
|
3,264.5
|
|
|
7.3
|
%
|
|
11.7
|
%
|
|||
Loss on early extinguishment of debt
|
7.7
|
|
|
—
|
|
|
10.7
|
|
|
N/A
|
|
|
(100.0
|
)%
|
|||
Interest expense and amortization of debt discounts and fees
|
159.7
|
|
|
147.3
|
|
|
154.4
|
|
|
8.4
|
%
|
|
(4.6
|
)%
|
|||
Other income
|
(30.5
|
)
|
|
(2.2
|
)
|
|
(4.1
|
)
|
|
1,286.4
|
%
|
|
(46.3
|
)%
|
|||
Equity in net income of nonconsolidated affiliates
|
(6.7
|
)
|
|
(8.7
|
)
|
|
(8.0
|
)
|
|
(23.0
|
)%
|
|
8.8
|
%
|
|||
Income from continuing operations before income tax expense
|
562.3
|
|
|
493.2
|
|
|
496.4
|
|
|
14.0
|
%
|
|
(0.6
|
)%
|
|||
Provision for income tax expense
|
115.9
|
|
|
118.9
|
|
|
145.8
|
|
|
(2.5
|
)%
|
|
(18.4
|
)%
|
|||
Income from continuing operations
|
446.4
|
|
|
374.3
|
|
|
350.6
|
|
|
19.3
|
%
|
|
6.8
|
%
|
|||
(Loss) income from discontinued operations, net of tax
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|
(154.5
|
)%
|
|
(375.0
|
)%
|
|||
Net income
|
445.8
|
|
|
375.4
|
|
|
350.2
|
|
|
18.8
|
%
|
|
7.2
|
%
|
|||
Less: Net income attributable to noncontrolling interests
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|
4.8
|
%
|
|
5.1
|
%
|
|||
Net income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.1
|
|
|
22.7
|
%
|
|
7.8
|
%
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Operating expenses:
|
|
|
|
|
|
|||
Salaries and benefits
|
55.9
|
%
|
|
55.0
|
%
|
|
55.0
|
%
|
Other operating expenses
|
13.5
|
%
|
|
13.7
|
%
|
|
13.6
|
%
|
Occupancy costs
|
1.8
|
%
|
|
1.8
|
%
|
|
1.9
|
%
|
Supplies
|
3.6
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
General and administrative expenses
|
5.4
|
%
|
|
5.1
|
%
|
|
4.4
|
%
|
Depreciation and amortization
|
4.7
|
%
|
|
4.7
|
%
|
|
4.7
|
%
|
Government, class action, and related settlements
|
—
|
%
|
|
1.2
|
%
|
|
—
|
%
|
Total operating expenses
|
85.0
|
%
|
|
85.3
|
%
|
|
83.4
|
%
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Medicare
|
72.2
|
%
|
|
73.2
|
%
|
|
73.6
|
%
|
Medicare Advantage
|
10.7
|
%
|
|
9.2
|
%
|
|
8.3
|
%
|
Managed care
|
9.8
|
%
|
|
10.3
|
%
|
|
10.7
|
%
|
Medicaid
|
3.1
|
%
|
|
3.0
|
%
|
|
3.0
|
%
|
Other third-party payors
|
1.2
|
%
|
|
1.5
|
%
|
|
1.6
|
%
|
Workers’ compensation
|
0.8
|
%
|
|
0.8
|
%
|
|
0.9
|
%
|
Patients
|
0.7
|
%
|
|
0.6
|
%
|
|
0.6
|
%
|
Other income
|
1.5
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
For the Year Ended December 31,
|
|
Percentage Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
(In Millions, Except Percentage Change)
|
||||||||||||||||
Net operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Inpatient
|
$
|
3,423.5
|
|
|
$
|
3,247.9
|
|
|
$
|
3,039.3
|
|
|
5.4
|
%
|
|
6.9
|
%
|
Outpatient and other
|
89.5
|
|
|
98.3
|
|
|
102.0
|
|
|
(9.0
|
)%
|
|
(3.6
|
)%
|
|||
Inpatient rehabilitation segment revenues
|
3,513.0
|
|
|
3,346.2
|
|
|
3,141.3
|
|
|
5.0
|
%
|
|
6.5
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries and benefits
|
1,813.1
|
|
|
1,701.5
|
|
|
1,603.8
|
|
|
6.6
|
%
|
|
6.1
|
%
|
|||
Other operating expenses
|
521.9
|
|
|
502.3
|
|
|
462.5
|
|
|
3.9
|
%
|
|
8.6
|
%
|
|||
Supplies
|
147.0
|
|
|
140.6
|
|
|
135.7
|
|
|
4.6
|
%
|
|
3.6
|
%
|
|||
Occupancy costs
|
64.8
|
|
|
63.8
|
|
|
61.9
|
|
|
1.6
|
%
|
|
3.1
|
%
|
|||
Other income
|
(10.5
|
)
|
|
(3.6
|
)
|
|
(4.1
|
)
|
|
191.7
|
%
|
|
(12.2
|
)%
|
|||
Equity in net income of nonconsolidated affiliates
|
(5.5
|
)
|
|
(7.5
|
)
|
|
(7.3
|
)
|
|
(26.7
|
)%
|
|
2.7
|
%
|
|||
Noncontrolling interests
|
82.6
|
|
|
77.2
|
|
|
67.6
|
|
|
7.0
|
%
|
|
14.2
|
%
|
|||
Segment Adjusted EBITDA
|
$
|
899.6
|
|
|
$
|
871.9
|
|
|
$
|
821.2
|
|
|
3.2
|
%
|
|
6.2
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Actual Amounts)
|
||||||||||||||||
Discharges
|
186,842
|
|
|
179,846
|
|
|
171,922
|
|
|
3.9
|
%
|
|
4.6
|
%
|
|||
Net patient revenue per discharge
|
$
|
18,323
|
|
|
$
|
18,059
|
|
|
$
|
17,678
|
|
|
1.5
|
%
|
|
2.2
|
%
|
Outpatient visits
|
375,525
|
|
|
488,754
|
|
|
576,345
|
|
|
(23.2
|
)%
|
|
(15.2
|
)%
|
|||
Average length of stay (days)
|
12.6
|
|
|
12.6
|
|
|
12.7
|
|
|
—
|
%
|
|
(0.8
|
)%
|
|||
Occupancy %
|
69.5
|
%
|
|
69.3
|
%
|
|
67.8
|
%
|
|
0.3
|
%
|
|
2.2
|
%
|
|||
# of licensed beds
|
9,249
|
|
|
8,966
|
|
|
8,851
|
|
|
3.2
|
%
|
|
1.3
|
%
|
|||
Full-time equivalents*
|
21,967
|
|
|
21,335
|
|
|
20,802
|
|
|
3.0
|
%
|
|
2.6
|
%
|
|||
Employees per occupied bed
|
3.42
|
|
|
3.43
|
|
|
3.47
|
|
|
(0.3
|
)%
|
|
(1.2
|
)%
|
*
|
Full-time equivalents included in the above table represent our employees who participate in or support the operations of our hospitals and include an estimate of full-time equivalents related to contract labor.
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Operating expenses:
|
|
|
|
|
|
|||
Salaries and benefits
|
51.6
|
%
|
|
50.8
|
%
|
|
51.1
|
%
|
Other operating expenses
|
14.9
|
%
|
|
15.0
|
%
|
|
14.7
|
%
|
Supplies
|
4.2
|
%
|
|
4.2
|
%
|
|
4.3
|
%
|
Occupancy costs
|
1.8
|
%
|
|
1.9
|
%
|
|
2.0
|
%
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Medicare
|
84.2
|
%
|
|
85.3
|
%
|
|
85.7
|
%
|
Medicare Advantage
|
10.2
|
%
|
|
9.5
|
%
|
|
9.7
|
%
|
Managed care
|
3.6
|
%
|
|
3.6
|
%
|
|
3.8
|
%
|
Medicaid
|
1.7
|
%
|
|
1.2
|
%
|
|
0.6
|
%
|
Workers’ compensation
|
0.1
|
%
|
|
0.2
|
%
|
|
—
|
%
|
Patients
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Other income
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
For the Year Ended December 31,
|
|
Percentage Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
(In Millions, Except Percentage Change)
|
||||||||||||||||
Net operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Home health
|
$
|
918.0
|
|
|
$
|
814.6
|
|
|
$
|
702.4
|
|
|
12.7
|
%
|
|
16.0
|
%
|
Hospice
|
174.0
|
|
|
116.5
|
|
|
70.2
|
|
|
49.4
|
%
|
|
66.0
|
%
|
|||
Home health and hospice segment revenues
|
1,092.0
|
|
|
931.1
|
|
|
772.6
|
|
|
17.3
|
%
|
|
20.5
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services sold (excluding depreciation and amortization)
|
506.2
|
|
|
438.4
|
|
|
363.3
|
|
|
15.5
|
%
|
|
20.7
|
%
|
|||
Support and overhead costs
|
381.7
|
|
|
323.5
|
|
|
277.2
|
|
|
18.0
|
%
|
|
16.7
|
%
|
|||
Other income
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
100.0
|
%
|
|
N/A
|
|
|||
Equity in net income of nonconsolidated affiliates
|
(1.2
|
)
|
|
(1.2
|
)
|
|
(0.7
|
)
|
|
—
|
%
|
|
71.4
|
%
|
|||
Noncontrolling interests
|
9.5
|
|
|
8.5
|
|
|
6.9
|
|
|
11.8
|
%
|
|
23.2
|
%
|
|||
Segment Adjusted EBITDA
|
$
|
195.8
|
|
|
$
|
162.4
|
|
|
$
|
125.9
|
|
|
20.6
|
%
|
|
29.0
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Actual Amounts)
|
||||||||||||||||
Home health:
|
|
|
|
|
|
|
|
|
|
||||||||
Admissions
|
159,727
|
|
|
137,396
|
|
|
124,870
|
|
|
16.3
|
%
|
|
10.0
|
%
|
|||
Recertifications
|
116,084
|
|
|
111,581
|
|
|
92,989
|
|
|
4.0
|
%
|
|
20.0
|
%
|
|||
Episodes
|
275,578
|
|
|
243,698
|
|
|
211,743
|
|
|
13.1
|
%
|
|
15.1
|
%
|
|||
Revenue per episode
|
$
|
2,972
|
|
|
$
|
2,968
|
|
|
$
|
2,984
|
|
|
0.1
|
%
|
|
(0.5
|
)%
|
Episodic visits per episode
|
17.1
|
|
|
17.6
|
|
|
17.9
|
|
|
(2.8
|
)%
|
|
(1.7
|
)%
|
|||
Total visits
|
5,431,621
|
|
|
4,959,645
|
|
|
4,390,958
|
|
|
9.5
|
%
|
|
13.0
|
%
|
|||
Cost per visit
|
$
|
77
|
|
|
$
|
76
|
|
|
$
|
75
|
|
|
1.3
|
%
|
|
1.3
|
%
|
Hospice:
|
|
|
|
|
|
|
|
|
|
||||||||
Admissions
|
10,452
|
|
|
7,474
|
|
|
4,870
|
|
|
39.8
|
%
|
|
53.5
|
%
|
|||
Patient days
|
1,197,927
|
|
|
790,984
|
|
|
479,350
|
|
|
51.4
|
%
|
|
65.0
|
%
|
|||
Average daily census
|
3,282
|
|
|
2,167
|
|
|
1,313
|
|
|
51.5
|
%
|
|
65.0
|
%
|
|||
Revenue per day
|
$
|
145
|
|
|
$
|
147
|
|
|
$
|
146
|
|
|
(1.4
|
)%
|
|
0.7
|
%
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Operating expenses:
|
|
|
|
|
|
|||
Cost of services sold (excluding depreciation and amortization)
|
46.4
|
%
|
|
47.1
|
%
|
|
47.0
|
%
|
Support and overhead costs
|
35.0
|
%
|
|
34.7
|
%
|
|
35.9
|
%
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
635.3
|
|
|
$
|
762.4
|
|
|
$
|
658.3
|
|
Net cash used in investing activities
|
(657.4
|
)
|
|
(424.5
|
)
|
|
(283.0
|
)
|
|||
Net cash provided by (used in) financing activities
|
48.2
|
|
|
(321.2
|
)
|
|
(359.9
|
)
|
|||
Increase in cash, cash equivalents, and restricted cash
|
$
|
26.1
|
|
|
$
|
16.7
|
|
|
$
|
15.4
|
|
|
Total
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
2025 and thereafter
|
||||||||||
Long-term debt obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt, excluding revolving credit facility and finance lease obligations (a)
|
$
|
2,633.5
|
|
|
$
|
18.3
|
|
|
$
|
41.5
|
|
|
$
|
1,236.8
|
|
|
$
|
1,336.9
|
|
Revolving credit facility
|
45.0
|
|
|
—
|
|
|
—
|
|
|
45.0
|
|
|
—
|
|
|||||
Interest on long-term debt (b)
|
840.0
|
|
|
135.8
|
|
|
269.3
|
|
|
230.2
|
|
|
204.7
|
|
|||||
Finance lease obligations (c)
|
640.5
|
|
|
50.4
|
|
|
94.4
|
|
|
90.0
|
|
|
405.7
|
|
|||||
Operating lease obligations (d)
|
384.2
|
|
|
57.5
|
|
|
98.6
|
|
|
75.1
|
|
|
153.0
|
|
|||||
Purchase obligations (e)
|
143.0
|
|
|
61.4
|
|
|
56.8
|
|
|
17.7
|
|
|
7.1
|
|
|||||
Other long-term liabilities (f)(g)
|
3.3
|
|
|
0.3
|
|
|
0.4
|
|
|
0.4
|
|
|
2.2
|
|
|||||
Total
|
$
|
4,689.5
|
|
|
$
|
323.7
|
|
|
$
|
561.0
|
|
|
$
|
1,695.2
|
|
|
$
|
2,109.6
|
|
(a)
|
Included in long-term debt are amounts owed on our bonds payable and other notes payable. These borrowings are further explained in Note 10, Long-term Debt, to the accompanying consolidated financial statements.
|
(b)
|
Interest on our fixed rate debt is presented using the stated interest rate. Interest expense on our variable rate debt is estimated using the rate in effect as of December 31, 2019. Interest pertaining to our credit agreement and bonds is included to their respective ultimate maturity dates. Interest related to finance lease obligations is excluded from this line (see Note 7, Leases, and Note 10, Long-term Debt, to the accompanying consolidated financial statements). Amounts exclude amortization of debt discounts, amortization of loan fees, or fees for lines of credit that would be included in interest expense in our consolidated statements of operations.
|
(c)
|
Amounts include interest portion of future minimum finance lease payments.
|
(d)
|
Our inpatient rehabilitation segment leases approximately 14% of its hospitals as well as other property and equipment under operating leases in the normal course of business. Our home health and hospice segment leases relatively small office spaces in the localities it serves, space for its corporate office, and other equipment under operating leases in the normal course of business. Amounts include interest portion of future minimum operating lease payments. For more information, see Note 7, Leases, to the accompanying consolidated financial statements.
|
(e)
|
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Encompass Health and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. Our purchase obligations primarily relate to software licensing and support and medical equipment. Purchase obligations are not recognized in our consolidated balance sheet.
|
(f)
|
Because their future cash outflows are uncertain, the following noncurrent liabilities are excluded from the table above: general liability, professional liability, and workers’ compensation risks, noncurrent amounts related to third-party billing audits, SARs, and deferred income taxes. As discussed above, the remaining SARs were exercised and settled during the first quarter of 2020. For more information, see Note 11, Self-Insured Risks, Note 14, Share-Based
|
(g)
|
The table above does not include Redeemable noncontrolling interests of $239.6 million because of the uncertainty surrounding the timing and amounts of any related cash outflows. As discussed above, a portion of the outstanding shares of Holdings were exercised and settled during the first quarter of 2020. See Note 12, Redeemable Noncontrolling Interests, to the accompanying consolidated financial statements.
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
445.8
|
|
|
$
|
375.4
|
|
|
$
|
350.2
|
|
Loss (income) from discontinued operations, net of tax, attributable to Encompass Health
|
0.6
|
|
|
(1.1
|
)
|
|
0.4
|
|
|||
Provision for income tax expense
|
115.9
|
|
|
118.9
|
|
|
145.8
|
|
|||
Interest expense and amortization of debt discounts and fees
|
159.7
|
|
|
147.3
|
|
|
154.4
|
|
|||
Loss on early extinguishment of debt
|
7.7
|
|
|
—
|
|
|
10.7
|
|
|||
Government, class action, and related settlements
|
—
|
|
|
52.0
|
|
|
—
|
|
|||
Net noncash loss on disposal of assets
|
11.1
|
|
|
5.7
|
|
|
4.6
|
|
|||
Depreciation and amortization
|
218.7
|
|
|
199.7
|
|
|
183.8
|
|
|||
Stock-based compensation expense
|
114.4
|
|
|
85.9
|
|
|
47.7
|
|
|||
Net income attributable to noncontrolling interests
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Transaction costs
|
2.1
|
|
|
1.0
|
|
|
—
|
|
|||
Gain on consolidation of Yuma
|
(19.2
|
)
|
|
—
|
|
|
—
|
|
|||
SARs mark-to-market impact on noncontrolling interests
|
(5.0
|
)
|
|
(2.6
|
)
|
|
—
|
|
|||
Change in fair market value of equity securities
|
(0.8
|
)
|
|
1.9
|
|
|
—
|
|
|||
Tax reform impact on noncontrolling interests
|
—
|
|
|
—
|
|
|
4.6
|
|
|||
Payroll taxes on SARs exercise
|
1.0
|
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
964.9
|
|
|
$
|
901.0
|
|
|
$
|
823.1
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
635.3
|
|
|
$
|
762.4
|
|
|
$
|
658.3
|
|
Interest expense and amortization of debt discounts and fees
|
159.7
|
|
|
147.3
|
|
|
154.4
|
|
|||
Equity in net income of nonconsolidated affiliates
|
6.7
|
|
|
8.7
|
|
|
8.0
|
|
|||
Net income attributable to noncontrolling interests in continuing operations
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Amortization of debt-related items
|
(4.5
|
)
|
|
(4.0
|
)
|
|
(8.7
|
)
|
|||
Distributions from nonconsolidated affiliates
|
(6.6
|
)
|
|
(8.3
|
)
|
|
(8.6
|
)
|
|||
Current portion of income tax expense
|
75.9
|
|
|
128.0
|
|
|
85.0
|
|
|||
Change in assets and liabilities
|
180.1
|
|
|
(46.0
|
)
|
|
7.4
|
|
|||
Tax reform impact on noncontrolling interests
|
—
|
|
|
—
|
|
|
4.6
|
|
|||
Cash used in operating activities of discontinued operations
|
4.4
|
|
|
(0.8
|
)
|
|
0.6
|
|
|||
Transaction costs
|
2.1
|
|
|
1.0
|
|
|
—
|
|
|||
SARs mark-to-market impact on noncontrolling interests
|
(5.0
|
)
|
|
(2.6
|
)
|
|
—
|
|
|||
Change in fair market value of equity securities
|
(0.8
|
)
|
|
1.9
|
|
|
—
|
|
|||
Payroll taxes on SARs exercise
|
1.0
|
|
|
—
|
|
|
—
|
|
|||
Other
|
3.7
|
|
|
(3.5
|
)
|
|
1.2
|
|
|||
Adjusted EBITDA
|
$
|
964.9
|
|
|
$
|
901.0
|
|
|
$
|
823.1
|
|
•
|
any obligation under certain guarantees or contracts;
|
•
|
a retained or contingent interest in assets transferred to an unconsolidated entity or similar entity or similar arrangement that serves as credit, liquidity, or market risk support to that entity for such assets;
|
•
|
any obligation under certain derivative instruments; and
|
•
|
any obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the registrant, or engages in leasing, hedging, or research and development services with the registrant.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In Millions)
|
||||||
Current:
|
|
|
|
||||
0 - 30 Days
|
$
|
385.6
|
|
|
$
|
362.5
|
|
31 - 60 Days
|
45.2
|
|
|
43.7
|
|
||
61 - 90 Days
|
25.4
|
|
|
18.4
|
|
||
91 - 120 Days
|
12.7
|
|
|
10.0
|
|
||
120 + Days
|
29.8
|
|
|
25.3
|
|
||
Patient accounts receivable
|
498.7
|
|
|
459.9
|
|
||
Other accounts receivable
|
7.4
|
|
|
7.8
|
|
||
|
506.1
|
|
|
467.7
|
|
||
Noncurrent patient accounts receivable
|
152.1
|
|
|
155.5
|
|
||
Accounts receivable
|
$
|
658.2
|
|
|
$
|
623.2
|
|
Net self-insurance reserves as of December 31, 2019:
|
|
|
As reported, with 50% statistical confidence level
|
130.9
|
|
With 70% statistical confidence level
|
139.9
|
|
•
|
Macroeconomic conditions, such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;
|
•
|
Industry and market considerations and changes in healthcare regulations, including reimbursement and compliance requirements under the Medicare and Medicaid programs;
|
•
|
Cost factors, such as an increase in labor, supply, or other costs;
|
•
|
Overall financial performance, such as negative or declining cash flows or a decline in actual or forecasted revenue or earnings;
|
•
|
Other relevant company-specific events, such as material changes in management or key personnel or outstanding litigation;
|
•
|
Material events, such as a change in the composition or carrying amount of each reporting unit’s net assets, including acquisitions and dispositions;
|
•
|
Consideration of the relationship of our market capitalization to our book value, as well as a sustained decrease in our share price; and
|
•
|
Length of time since most recent qualitative analysis.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
Financial Instrument:
|
|
Book Value
|
|
Market Value
|
|
Book Value
|
|
Market Value
|
||||||||
5.125% Senior Notes due 2023
|
|
|
|
|
|
|
|
|
||||||||
Carrying Value
|
|
$
|
297.3
|
|
|
$
|
—
|
|
|
$
|
296.6
|
|
|
$
|
—
|
|
Unamortized debt discount and fees
|
|
2.7
|
|
|
—
|
|
|
3.4
|
|
|
—
|
|
||||
Principal amount
|
|
300.0
|
|
|
306.6
|
|
|
300.0
|
|
|
298.5
|
|
||||
5.75% Senior Notes due 2024
|
|
|
|
|
|
|
|
|
||||||||
Carrying Value
|
|
697.3
|
|
|
—
|
|
|
1,194.7
|
|
|
—
|
|
||||
Unamortized debt discount and fees
|
|
2.7
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
||||
Principal amount
|
|
700.0
|
|
|
708.8
|
|
|
1,200.0
|
|
|
1,200.0
|
|
||||
5.75% Senior Notes due 2025
|
|
|
|
|
|
|
|
|
||||||||
Carrying Value
|
|
345.6
|
|
|
—
|
|
|
345.0
|
|
|
—
|
|
||||
Unamortized debt discount and fees
|
|
4.4
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
||||
Principal amount
|
|
350.0
|
|
|
369.7
|
|
|
350.0
|
|
|
339.5
|
|
||||
4.50% Senior Notes due 2028
|
|
|
|
|
|
|
|
|
||||||||
Carrying Value
|
|
491.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Unamortized debt discount and fees
|
|
8.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Principal amount
|
|
500.0
|
|
|
519.4
|
|
|
—
|
|
|
—
|
|
||||
4.75% Senior Notes due 2030
|
|
|
|
|
|
|
|
|
||||||||
Carrying Value
|
|
491.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Unamortized debt discount and fees
|
|
8.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Principal amount
|
|
500.0
|
|
|
520.0
|
|
|
—
|
|
|
—
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors and Executive Officers of the Registrant
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Item 16.
|
Form 10-K Summary
|
|
ENCOMPASS HEALTH CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ MARK J. TARR
|
|
|
|
Mark J. Tarr
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
February 27, 2020
|
|
Signature
|
Capacity
|
Date
|
|
|
|
/s/ MARK J. TARR
|
President and Chief Executive Officer and Director
|
February 27, 2020
|
Mark J. Tarr
|
|
|
|
|
|
/s/ DOUGLAS E. COLTHARP
|
Executive Vice President and Chief Financial Officer
|
February 27, 2020
|
Douglas E. Coltharp
|
|
|
|
|
|
/s/ ANDREW L. PRICE
|
Chief Accounting Officer
|
February 27, 2020
|
Andrew L. Price
|
|
|
|
|
|
/s/ LEO I. HIGDON, JR.
|
Chairman of the Board of Directors
|
February 27, 2020
|
Leo I. Higdon, Jr.
|
|
|
|
|
|
/s/ Greg D. Carmichael
|
Director
|
February 27, 2020
|
Greg D. Carmichael
|
|
|
|
|
|
/s/ JOHN W. CHIDSEY
|
Director
|
February 27, 2020
|
John W. Chidsey
|
|
|
|
|
|
/s/ DONALD L. CORRELL
|
Director
|
February 27, 2020
|
Donald L. Correll
|
|
|
|
|
|
/s/ YVONNE M. CURL
|
Director
|
February 27, 2020
|
Yvonne M. Curl
|
|
|
|
|
|
/s/ CHARLES M. ELSON
|
Director
|
February 27, 2020
|
Charles M. Elson
|
|
|
|
|
|
/s/ JOAN E. HERMAN
|
Director
|
February 27, 2020
|
Joan E. Herman
|
|
|
|
|
|
/s/ LESLYE G. KATZ
|
Director
|
February 27, 2020
|
Leslye G. Katz
|
|
|
|
|
|
/s/ Patricia A. Maryland
|
Director
|
February 27, 2020
|
Patricia A. Maryland
|
|
|
|
|
|
/s/ JOHN E. MAUPIN, JR.
|
Director
|
February 27, 2020
|
John E. Maupin, Jr.
|
|
|
|
|
|
/s/ Nancy M. Schlichting
|
Director
|
February 27, 2020
|
Nancy M. Schlichting
|
|
|
|
|
|
/s/ L. EDWARD SHAW, JR.
|
Director
|
February 27, 2020
|
L. Edward Shaw, Jr.
|
|
|
|
|
|
/s/ Terrance Williams
|
Director
|
February 27, 2020
|
Terrance Williams
|
|
|
Item 15.
|
Financial Statements
|
Encompass Health Corporation and Subsidiaries
Consolidated Statements of Operations
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In Millions, Except Per Share Data)
|
||||||||||
Net operating revenues
|
$
|
4,605.0
|
|
|
$
|
4,277.3
|
|
|
$
|
3,913.9
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Salaries and benefits
|
2,573.0
|
|
|
2,354.0
|
|
|
2,154.6
|
|
|||
Other operating expenses
|
623.6
|
|
|
585.1
|
|
|
531.6
|
|
|||
Occupancy costs
|
82.3
|
|
|
78.0
|
|
|
73.5
|
|
|||
Supplies
|
167.9
|
|
|
158.7
|
|
|
149.3
|
|
|||
General and administrative expenses
|
247.0
|
|
|
220.2
|
|
|
171.7
|
|
|||
Depreciation and amortization
|
218.7
|
|
|
199.7
|
|
|
183.8
|
|
|||
Government, class action, and related settlements
|
—
|
|
|
52.0
|
|
|
—
|
|
|||
Total operating expenses
|
3,912.5
|
|
|
3,647.7
|
|
|
3,264.5
|
|
|||
Loss on early extinguishment of debt
|
7.7
|
|
|
—
|
|
|
10.7
|
|
|||
Interest expense and amortization of debt discounts and fees
|
159.7
|
|
|
147.3
|
|
|
154.4
|
|
|||
Other income
|
(30.5
|
)
|
|
(2.2
|
)
|
|
(4.1
|
)
|
|||
Equity in net income of nonconsolidated affiliates
|
(6.7
|
)
|
|
(8.7
|
)
|
|
(8.0
|
)
|
|||
Income from continuing operations before income tax expense
|
562.3
|
|
|
493.2
|
|
|
496.4
|
|
|||
Provision for income tax expense
|
115.9
|
|
|
118.9
|
|
|
145.8
|
|
|||
Income from continuing operations
|
446.4
|
|
|
374.3
|
|
|
350.6
|
|
|||
(Loss) income from discontinued operations, net of tax
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|||
Net income
|
445.8
|
|
|
375.4
|
|
|
350.2
|
|
|||
Less: Net income attributable to noncontrolling interests
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Net income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.1
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
98.0
|
|
|
97.9
|
|
|
93.7
|
|
|||
Diluted
|
99.4
|
|
|
99.8
|
|
|
99.3
|
|
|||
Earnings per common share:
|
|
|
|
|
|
||||||
Basic earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
$
|
3.66
|
|
|
$
|
2.97
|
|
|
$
|
2.88
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
3.65
|
|
|
$
|
2.98
|
|
|
$
|
2.88
|
|
Diluted earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
3.62
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
3.61
|
|
|
$
|
2.93
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
||||||
Amounts attributable to Encompass Health:
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations
|
$
|
359.3
|
|
|
$
|
291.2
|
|
|
$
|
271.5
|
|
(Loss) income from discontinued operations, net of tax
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|||
Net income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.1
|
|
Encompass Health Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In Millions)
|
||||||||||
COMPREHENSIVE INCOME
|
|
|
|
|
|
||||||
Net income
|
$
|
445.8
|
|
|
$
|
375.4
|
|
|
$
|
350.2
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|||
Net change in unrealized loss on available-for-sale securities:
|
|
|
|
|
|
|
|
|
|||
Unrealized net holding loss arising during the period
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Other comprehensive loss before income taxes
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Provision for income tax benefit related to other comprehensive loss items
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive loss, net of tax:
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Comprehensive income
|
445.8
|
|
|
375.4
|
|
|
350.1
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Comprehensive income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
271.0
|
|
Encompass Health Corporation and Subsidiaries
Consolidated Balance Sheets
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In Millions, Except Share Data)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
94.8
|
|
|
$
|
69.2
|
|
Restricted cash
|
57.4
|
|
|
59.0
|
|
||
Accounts receivable
|
506.1
|
|
|
467.7
|
|
||
Prepaid expenses and other current assets
|
97.5
|
|
|
66.2
|
|
||
Total current assets
|
755.8
|
|
|
662.1
|
|
||
Property and equipment, net
|
1,959.3
|
|
|
1,634.8
|
|
||
Operating lease right-of-use assets
|
276.5
|
|
|
—
|
|
||
Goodwill
|
2,305.2
|
|
|
2,100.8
|
|
||
Intangible assets, net
|
476.3
|
|
|
443.4
|
|
||
Deferred income tax assets
|
2.9
|
|
|
42.9
|
|
||
Other long-term assets
|
304.7
|
|
|
291.0
|
|
||
Total assets(1)
|
$
|
6,080.7
|
|
|
$
|
5,175.0
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current portion of long-term debt
|
$
|
39.3
|
|
|
$
|
35.8
|
|
Current operating lease liabilities
|
40.4
|
|
|
—
|
|
||
Accounts payable
|
94.6
|
|
|
90.0
|
|
||
Accrued payroll
|
210.5
|
|
|
188.4
|
|
||
Accrued interest payable
|
32.4
|
|
|
24.4
|
|
||
Other current liabilities
|
303.8
|
|
|
333.9
|
|
||
Total current liabilities
|
721.0
|
|
|
672.5
|
|
||
Long-term debt, net of current portion
|
3,023.3
|
|
|
2,478.6
|
|
||
Long-term operating lease liabilities
|
243.8
|
|
|
—
|
|
||
Self-insured risks
|
117.2
|
|
|
119.6
|
|
||
Other long-term liabilities
|
42.7
|
|
|
85.6
|
|
||
|
4,148.0
|
|
|
3,356.3
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
239.6
|
|
|
261.7
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
||
Encompass Health shareholders’ equity:
|
|
|
|
|
|
||
Common stock, $.01 par value; 200,000,000 shares authorized; issued: 113,230,774 in 2019; 112,492,690 in 2018
|
1.1
|
|
|
1.1
|
|
||
Capital in excess of par value
|
2,369.9
|
|
|
2,588.7
|
|
||
Accumulated deficit
|
(526.5
|
)
|
|
(885.2
|
)
|
||
Treasury stock, at cost (14,637,858 shares in 2019 and 13,566,209 shares in 2018)
|
(492.3
|
)
|
|
(427.9
|
)
|
||
Total Encompass Health shareholders’ equity
|
1,352.2
|
|
|
1,276.7
|
|
||
Noncontrolling interests
|
340.9
|
|
|
280.3
|
|
||
Total shareholders’ equity
|
1,693.1
|
|
|
1,557.0
|
|
||
Total liabilities(1) and shareholders’ equity
|
$
|
6,080.7
|
|
|
$
|
5,175.0
|
|
(1)
|
Our consolidated assets as of December 31, 2019 and December 31, 2018 include total assets of variable interest entities of $215.0 million and $197.5 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of December 31, 2019 and December 31, 2018 include total liabilities of the variable interest entities of $41.1 million and $50.8 million, respectively. See Note 3, Variable Interest Entities.
|
Encompass Health Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity
|
|
|
Encompass Health Common Shareholders
|
|
|
|
|
|||||||||||||||||||||||||
|
Number of Common Shares Outstanding
|
|
Common Stock
|
|
Capital in Excess of Par Value
|
|
Accumulated
Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury
Stock
|
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
|
(In Millions)
|
|||||||||||||||||||||||||||||
December 31, 2016
|
88.9
|
|
|
$
|
1.1
|
|
|
$
|
2,781.0
|
|
|
$
|
(1,448.4
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(614.7
|
)
|
|
$
|
192.8
|
|
|
$
|
910.6
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
271.1
|
|
|
—
|
|
|
—
|
|
|
61.2
|
|
|
332.3
|
|
|||||||
Receipt of treasury stock
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19.8
|
)
|
|
—
|
|
|
(19.8
|
)
|
|||||||
Dividends declared ($0.98 per share)
|
—
|
|
|
—
|
|
|
(95.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95.2
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
21.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.3
|
|
|||||||
Stock options exercised
|
1.1
|
|
|
—
|
|
|
20.4
|
|
|
—
|
|
|
—
|
|
|
(19.3
|
)
|
|
—
|
|
|
1.1
|
|
|||||||
Stock warrants exercised
|
0.7
|
|
|
—
|
|
|
26.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.6
|
|
|||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.5
|
)
|
|
(50.5
|
)
|
|||||||
Repurchases of common stock in open market
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.1
|
)
|
|
—
|
|
|
(38.1
|
)
|
|||||||
Capital contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.2
|
|
|
46.2
|
|
|||||||
Fair value adjustments to redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(67.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67.0
|
)
|
|||||||
Conversion of convertible debt, net of tax
|
8.9
|
|
|
—
|
|
|
53.7
|
|
|
—
|
|
|
—
|
|
|
274.5
|
|
|
—
|
|
|
328.2
|
|
|||||||
Other
|
0.5
|
|
|
—
|
|
|
6.6
|
|
|
1.1
|
|
|
(0.1
|
)
|
|
(1.1
|
)
|
|
(6.8
|
)
|
|
(0.3
|
)
|
|||||||
December 31, 2017
|
98.3
|
|
|
1.1
|
|
|
2,747.4
|
|
|
(1,176.2
|
)
|
|
(1.3
|
)
|
|
(418.5
|
)
|
|
242.9
|
|
|
1,395.4
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
292.3
|
|
|
—
|
|
|
—
|
|
|
69.2
|
|
|
361.5
|
|
|||||||
Receipt of treasury stock
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(8.3
|
)
|
|||||||
Dividends declared ($1.04 per share)
|
—
|
|
|
—
|
|
|
(103.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103.7
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
28.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.9
|
|
|||||||
Stock options exercised
|
0.1
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71.1
|
)
|
|
(71.1
|
)
|
|||||||
Capital contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38.8
|
|
|
38.8
|
|
|||||||
Fair value adjustments to redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(91.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(91.0
|
)
|
|||||||
Other
|
0.7
|
|
|
—
|
|
|
3.9
|
|
|
(1.3
|
)
|
|
1.3
|
|
|
(1.1
|
)
|
|
0.5
|
|
|
3.3
|
|
|||||||
December 31, 2018
|
98.9
|
|
|
1.1
|
|
|
2,588.7
|
|
|
(885.2
|
)
|
|
—
|
|
|
(427.9
|
)
|
|
280.3
|
|
|
1,557.0
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
358.7
|
|
|
—
|
|
|
—
|
|
|
74.5
|
|
|
433.2
|
|
|||||||
Receipt of treasury stock
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.6
|
)
|
|
—
|
|
|
(16.6
|
)
|
|||||||
Dividends declared ($1.10 per share)
|
—
|
|
|
—
|
|
|
(109.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109.3
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
32.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.4
|
|
|||||||
Stock options exercised
|
0.1
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70.2
|
)
|
|
(70.2
|
)
|
|||||||
Repurchases of common stock in open market
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45.9
|
)
|
|
—
|
|
|
(45.9
|
)
|
|||||||
Capital contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.0
|
|
|
20.0
|
|
|||||||
Fair value adjustments to redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(147.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147.6
|
)
|
|||||||
Consolidation of Yuma Rehabilitation Hospital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.0
|
|
|
25.0
|
|
|||||||
Other
|
0.7
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
11.3
|
|
|
13.7
|
|
|||||||
December 31, 2019
|
98.6
|
|
|
$
|
1.1
|
|
|
$
|
2,369.9
|
|
|
$
|
(526.5
|
)
|
|
$
|
—
|
|
|
$
|
(492.3
|
)
|
|
$
|
340.9
|
|
|
$
|
1,693.1
|
|
Encompass Health Corporation and Subsidiaries
Consolidated Statements of Cash Flows
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In Millions)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
445.8
|
|
|
$
|
375.4
|
|
|
$
|
350.2
|
|
Loss (income) from discontinued operations, net of tax
|
0.6
|
|
|
(1.1
|
)
|
|
0.4
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities—
|
|
|
|
|
|
|
|
|
|||
Provision for government, class action, and related settlements
|
—
|
|
|
52.0
|
|
|
—
|
|
|||
Depreciation and amortization
|
218.7
|
|
|
199.7
|
|
|
183.8
|
|
|||
Amortization of debt-related items
|
4.5
|
|
|
4.0
|
|
|
8.7
|
|
|||
Loss on early extinguishment of debt
|
7.7
|
|
|
—
|
|
|
10.7
|
|
|||
Equity in net income of nonconsolidated affiliates
|
(6.7
|
)
|
|
(8.7
|
)
|
|
(8.0
|
)
|
|||
Distributions from nonconsolidated affiliates
|
6.6
|
|
|
8.3
|
|
|
8.6
|
|
|||
Stock-based compensation
|
114.4
|
|
|
85.9
|
|
|
47.7
|
|
|||
Deferred tax expense (benefit)
|
40.0
|
|
|
(9.1
|
)
|
|
60.8
|
|
|||
Gain on consolidation of Yuma Rehabilitation Hospital
|
(19.2
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
7.4
|
|
|
9.2
|
|
|
3.4
|
|
|||
Changes in assets and liabilities, net of acquisitions —
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(22.9
|
)
|
|
7.0
|
|
|
(31.5
|
)
|
|||
Prepaid expenses and other assets
|
(35.4
|
)
|
|
11.5
|
|
|
(12.6
|
)
|
|||
Accounts payable
|
(6.1
|
)
|
|
6.6
|
|
|
7.5
|
|
|||
Accrued payroll
|
13.2
|
|
|
14.8
|
|
|
24.4
|
|
|||
Other liabilities
|
(128.9
|
)
|
|
6.1
|
|
|
4.8
|
|
|||
Net cash (used in) provided by operating activities of discontinued operations
|
(4.4
|
)
|
|
0.8
|
|
|
(0.6
|
)
|
|||
Total adjustments
|
188.9
|
|
|
388.1
|
|
|
307.7
|
|
|||
Net cash provided by operating activities
|
635.3
|
|
|
762.4
|
|
|
658.3
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
(231.5
|
)
|
|
(143.9
|
)
|
|
(38.8
|
)
|
|||
Purchases of property and equipment
|
(372.4
|
)
|
|
(254.5
|
)
|
|
(225.8
|
)
|
|||
Additions to capitalized software costs
|
(13.0
|
)
|
|
(16.0
|
)
|
|
(19.2
|
)
|
|||
Purchases of intangible assets
|
(18.7
|
)
|
|
(5.7
|
)
|
|
(3.7
|
)
|
|||
Proceeds from sale of restricted investments
|
17.6
|
|
|
11.6
|
|
|
4.2
|
|
|||
Purchases of restricted investments
|
(32.9
|
)
|
|
(13.3
|
)
|
|
(8.5
|
)
|
|||
Other, net
|
(6.5
|
)
|
|
(2.7
|
)
|
|
8.8
|
|
|||
Net cash used in investing activities
|
(657.4
|
)
|
|
(424.5
|
)
|
|
(283.0
|
)
|
Encompass Health Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In Millions)
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from bond issuance
|
1,000.0
|
|
|
—
|
|
|
—
|
|
|||
Principal payments on debt, including pre-payments
|
(519.5
|
)
|
|
(20.6
|
)
|
|
(129.9
|
)
|
|||
Borrowings on revolving credit facility
|
635.0
|
|
|
325.0
|
|
|
273.3
|
|
|||
Payments on revolving credit facility
|
(620.0
|
)
|
|
(390.0
|
)
|
|
(330.3
|
)
|
|||
Principal payments under finance lease obligations
|
(19.5
|
)
|
|
(17.9
|
)
|
|
(15.3
|
)
|
|||
Debt amendment and issuance costs
|
(21.5
|
)
|
|
(0.1
|
)
|
|
(4.1
|
)
|
|||
Repurchases of common stock, including fees and expenses
|
(45.9
|
)
|
|
—
|
|
|
(38.1
|
)
|
|||
Dividends paid on common stock
|
(108.7
|
)
|
|
(100.8
|
)
|
|
(91.5
|
)
|
|||
Purchase of equity interests in consolidated affiliates
|
(162.9
|
)
|
|
(65.1
|
)
|
|
—
|
|
|||
Proceeds from exercising stock warrants
|
—
|
|
|
—
|
|
|
26.6
|
|
|||
Distributions paid to noncontrolling interests of consolidated affiliates
|
(79.8
|
)
|
|
(75.4
|
)
|
|
(51.9
|
)
|
|||
Taxes paid on behalf of employees for shares withheld
|
(16.6
|
)
|
|
(8.3
|
)
|
|
(19.8
|
)
|
|||
Contributions from consolidated affiliates
|
15.9
|
|
|
12.6
|
|
|
20.8
|
|
|||
Other, net
|
(8.3
|
)
|
|
19.4
|
|
|
0.3
|
|
|||
Net cash provided by (used in) financing activities
|
48.2
|
|
|
(321.2
|
)
|
|
(359.9
|
)
|
|||
Increase in cash, cash equivalents, and restricted cash
|
26.1
|
|
|
16.7
|
|
|
15.4
|
|
|||
Cash, cash equivalents. and restricted cash at beginning of year
|
133.5
|
|
|
116.8
|
|
|
101.4
|
|
|||
Cash, cash equivalents, and restricted cash at end of year
|
$
|
159.6
|
|
|
$
|
133.5
|
|
|
$
|
116.8
|
|
|
|
|
|
|
|
||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
$
|
69.2
|
|
|
$
|
54.4
|
|
|
$
|
40.5
|
|
Restricted cash at beginning of period
|
59.0
|
|
|
62.4
|
|
|
60.9
|
|
|||
Restricted cash included in other long-term assets at beginning of period
|
5.3
|
|
|
—
|
|
|
—
|
|
|||
Cash, cash equivalents, and restricted cash at beginning of period
|
$
|
133.5
|
|
|
$
|
116.8
|
|
|
$
|
101.4
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
94.8
|
|
|
$
|
69.2
|
|
|
$
|
54.4
|
|
Restricted cash at end of period
|
57.4
|
|
|
59.0
|
|
|
62.4
|
|
|||
Restricted cash included in other long-term assets at end of period
|
7.4
|
|
|
5.3
|
|
|
—
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
159.6
|
|
|
$
|
133.5
|
|
|
$
|
116.8
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash (paid) received during the year for —
|
|
|
|
|
|
||||||
Interest
|
$
|
(155.7
|
)
|
|
$
|
(149.6
|
)
|
|
$
|
(150.5
|
)
|
Income tax refunds
|
0.1
|
|
|
0.6
|
|
|
1.9
|
|
|||
Income tax payments
|
(104.2
|
)
|
|
(115.4
|
)
|
|
(96.4
|
)
|
|||
|
|
|
|
|
|
||||||
Supplemental schedule of noncash financing activities:
|
|
|
|
|
|
||||||
Conversion of convertible debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
319.4
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
1.
|
Summary of Significant Accounting Policies:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
•
|
licensure, certification, and accreditation;
|
•
|
policies, either at the national or local level, delineating what conditions must be met to qualify for reimbursement under Medicare (also referred to as coverage requirements);
|
•
|
coding and billing for services;
|
•
|
requirements of the 60% compliance threshold under The Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007;
|
•
|
relationships with physicians and other referral sources, including physician self-referral and anti-kickback laws;
|
•
|
quality of medical care;
|
•
|
use and maintenance of medical supplies and equipment;
|
•
|
maintenance and security of patient information and medical records;
|
•
|
acquisition and dispensing of pharmaceuticals and controlled substances; and
|
•
|
disposal of medical and hazardous waste.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Inpatient Rehabilitation
|
|
Home Health and Hospice
|
|
Consolidated
|
||||||||||||||||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Medicare
|
$
|
2,537.3
|
|
|
$
|
2,451.7
|
|
|
$
|
2,313.6
|
|
|
$
|
920.0
|
|
|
$
|
794.5
|
|
|
$
|
662.9
|
|
|
$
|
3,457.3
|
|
|
$
|
3,246.2
|
|
|
$
|
2,976.5
|
|
Medicare Advantage
|
375.5
|
|
|
306.5
|
|
|
261.0
|
|
|
111.9
|
|
|
88.6
|
|
|
74.8
|
|
|
487.4
|
|
|
395.1
|
|
|
335.8
|
|
|||||||||
Managed care
|
342.7
|
|
|
343.3
|
|
|
335.6
|
|
|
39.1
|
|
|
33.2
|
|
|
29.1
|
|
|
381.8
|
|
|
376.5
|
|
|
364.7
|
|
|||||||||
Medicaid
|
110.3
|
|
|
101.3
|
|
|
93.2
|
|
|
18.4
|
|
|
11.6
|
|
|
4.3
|
|
|
128.7
|
|
|
112.9
|
|
|
97.5
|
|
|||||||||
Other third-party payors
|
43.4
|
|
|
49.0
|
|
|
49.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.4
|
|
|
49.0
|
|
|
49.9
|
|
|||||||||
Workers’ compensation
|
29.2
|
|
|
27.4
|
|
|
27.5
|
|
|
1.0
|
|
|
1.5
|
|
|
0.1
|
|
|
30.2
|
|
|
28.9
|
|
|
27.6
|
|
|||||||||
Patients
|
23.3
|
|
|
18.7
|
|
|
18.4
|
|
|
0.6
|
|
|
0.8
|
|
|
0.7
|
|
|
23.9
|
|
|
19.5
|
|
|
19.1
|
|
|||||||||
Other income
|
51.3
|
|
|
48.3
|
|
|
42.1
|
|
|
1.0
|
|
|
0.9
|
|
|
0.7
|
|
|
52.3
|
|
|
49.2
|
|
|
42.8
|
|
|||||||||
Total
|
$
|
3,513.0
|
|
|
$
|
3,346.2
|
|
|
$
|
3,141.3
|
|
|
$
|
1,092.0
|
|
|
$
|
931.1
|
|
|
$
|
772.6
|
|
|
$
|
4,605.0
|
|
|
$
|
4,277.3
|
|
|
$
|
3,913.9
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
As of December 31,
|
||||
|
2019
|
|
2018
|
||
Medicare
|
72.1
|
%
|
|
73.2
|
%
|
Managed care and other discount plans, including Medicare Advantage
|
20.1
|
%
|
|
19.3
|
%
|
Medicaid
|
3.1
|
%
|
|
2.8
|
%
|
Other third-party payors
|
2.6
|
%
|
|
2.7
|
%
|
Workers' compensation
|
1.2
|
%
|
|
1.1
|
%
|
Patients
|
0.9
|
%
|
|
0.9
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Years
|
||
Buildings
|
10 to 30
|
||
Leasehold improvements
|
2 to 15
|
||
Vehicles
|
5
|
||
Furniture, fixtures, and equipment
|
2 to 10
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Estimated Useful Life
and Amortization Basis
|
||||
Certificates of need
|
10 to 30 years using straight-line basis
|
||||
Licenses
|
10 to 20 years using straight-line basis
|
||||
Noncompete agreements
|
1 to 18 years using straight-line basis
|
||||
Trade names:
|
|
||||
Encompass
|
indefinite-lived asset
|
||||
All other
|
1 to 20 years using straight-line basis
|
||||
Internal-use software
|
3 to 7 years using straight-line basis
|
||||
Market access assets
|
20 years using accelerated basis
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
•
|
Level 1 – Observable inputs such as quoted prices in active markets;
|
•
|
Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
•
|
Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;
|
•
|
Cost approach – Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and
|
•
|
Income approach – Techniques to convert future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing models, and lattice models).
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
2.
|
Business Combinations:
|
•
|
In July 2019, we acquired approximately 51% of the operations of a 30-bed inpatient rehabilitation unit in Boise, Idaho when Saint Alphonsus Regional Medical Center contributed those operations to a joint venture with us. We funded our ownership interest in that consolidated joint venture through contributions of cash which the joint venture entity used to fund the construction of a 40-bed de novo inpatient rehabilitation hospital.
|
•
|
In September 2019, we acquired 75% of the operations of Heritage Valley Sewickley Hospital’s 11-bed inpatient rehabilitation unit in Sewickley, Pennsylvania, when Heritage Valley Health System, Inc. contributed those operations to our existing joint venture entity in connection with the opening of a new hospital.
|
Identifiable intangible assets:
|
|
|
|
Noncompete agreements (useful lives of 2 years)
|
$
|
0.1
|
|
Trade name (useful life of 20 years)
|
0.4
|
|
|
Goodwill
|
4.8
|
|
|
Total assets acquired
|
5.3
|
|
|
Total liabilities assumed
|
0.2
|
|
|
Net assets acquired
|
$
|
5.1
|
|
Fair value of assets acquired
|
$
|
0.5
|
|
Goodwill
|
4.8
|
|
|
Fair value of liabilities assumed
|
(0.2
|
)
|
|
Fair value of noncontrolling interest owned by joint venture partner
|
(5.1
|
)
|
|
Net cash paid for acquisitions
|
$
|
—
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Accounts receivable
|
$
|
10.2
|
|
Prepaid expenses and other current assets
|
1.7
|
|
|
Property and equipment, net
|
0.7
|
|
|
Identifiable intangible assets:
|
|
|
|
Noncompete agreements (useful lives of 5 years)
|
1.0
|
|
|
Trade name (useful life of 6 months)
|
1.0
|
|
|
Certificates of need (useful lives of 10 years)
|
34.3
|
|
|
Licenses (useful lives of 10 years)
|
14.6
|
|
|
Internal-use software (useful lives of 3 years)
|
0.1
|
|
|
Goodwill
|
163.9
|
|
|
Other long-term assets
|
5.0
|
|
|
Total assets acquired
|
232.5
|
|
|
Liabilities assumed:
|
|
||
Current portion of long-term debt
|
0.3
|
|
|
Accounts payable
|
1.2
|
|
|
Accrued payroll
|
8.1
|
|
|
Other current liabilities
|
2.0
|
|
|
Long-term operating lease liabilities
|
3.1
|
|
|
Total liabilities assumed
|
14.7
|
|
|
Net assets acquired
|
$
|
217.8
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Fair value of assets acquired
|
$
|
68.6
|
|
Goodwill
|
163.9
|
|
|
Fair value of liabilities assumed
|
(14.7
|
)
|
|
Net cash paid for acquisition
|
$
|
217.8
|
|
•
|
In February 2019, we acquired the assets of Tidewater Home Health, PA in Columbia, South Carolina.
|
•
|
In March 2019, we acquired the assets and assumed the liabilities of two home health locations from Care Resource Group in East Providence, Rhode Island and Westport, Massachusetts.
|
Operating lease right-of-use assets
|
$
|
0.2
|
|
Identifiable intangible assets:
|
|
||
Noncompete agreements (useful lives of 5 years)
|
0.2
|
|
|
Certificates of need (useful lives of 10 years)
|
2.0
|
|
|
License (useful life of 10 years)
|
0.8
|
|
|
Goodwill
|
10.8
|
|
|
Total assets acquired
|
14.0
|
|
|
Liabilities assumed:
|
|
||
Current operating lease liabilities
|
0.1
|
|
|
Accrued payroll
|
0.1
|
|
|
Long-term lease liabilities
|
0.1
|
|
|
Total liabilities assumed
|
0.3
|
|
|
Net assets acquired
|
$
|
13.7
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Fair value of assets acquired
|
$
|
3.2
|
|
Goodwill
|
10.8
|
|
|
Fair value of liabilities assumed
|
(0.3
|
)
|
|
Net cash paid for acquisitions
|
$
|
13.7
|
|
|
Net Operating Revenues
|
|
Net (Loss) Income Attributable to Encompass Health
|
||||
Acquired entities only: Actual from acquisition date to December 31, 2019
|
|
|
|
||||
Inpatient Rehabilitation
|
$
|
4.4
|
|
|
$
|
(1.3
|
)
|
Alacare
|
58.5
|
|
|
1.6
|
|
||
Home Health and Hospice
|
6.5
|
|
|
(1.5
|
)
|
||
Combined entity: Supplemental pro forma from 01/01/2019-12/31/2019 (unaudited)
|
4,674.6
|
|
|
364.3
|
|
||
Combined entity: Supplemental pro forma from 01/01/2018-12/31/2018 (unaudited)
|
4,415.9
|
|
|
301.8
|
|
•
|
In September 2018, we acquired approximately 62% of a 29-bed inpatient rehabilitation unit, including a 60-bed certificate of need, in Murrells Inlet, South Carolina through a joint venture with Tidelands Health. The acquisition was funded through contributions of funds to be utilized by the consolidated joint venture to build a 46-bed de novo inpatient rehabilitation satellite location.
|
•
|
In October 2018, we acquired approximately 50% of a 68-bed inpatient rehabilitation unit in Winston-Salem, North Carolina through a joint venture with Novant Health Inc. This acquisition was funded through a contribution of a 68‑bed de novo inpatient rehabilitation hospital to the consolidated joint venture.
|
•
|
In November 2018, we acquired approximately 68% of a 17-bed inpatient rehabilitation unit in Littleton, Colorado through a joint venture with Portercare Adventist Health System. The acquisition was funded through the contribution of our existing inpatient rehabilitation hospital in Littleton, Colorado to the consolidated joint venture.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Property and equipment
|
$
|
0.1
|
|
Identifiable intangible assets:
|
|
|
|
Noncompete agreements (useful lives of 2 to 3 years)
|
1.4
|
|
|
Trade names (useful lives of 20 years)
|
2.3
|
|
|
Certificates of need (useful lives of 20 years)
|
12.5
|
|
|
Goodwill
|
23.2
|
|
|
Total assets acquired
|
39.5
|
|
|
Total liabilities assumed
|
(0.2
|
)
|
|
Net assets acquired
|
$
|
39.3
|
|
Fair value of assets acquired
|
$
|
16.3
|
|
Goodwill
|
23.2
|
|
|
Fair value of liabilities assumed
|
(0.2
|
)
|
|
Fair value of noncontrolling interest owned by joint venture partner
|
(39.3
|
)
|
|
Net cash paid for acquisitions
|
$
|
—
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Cash and cash equivalents
|
$
|
1.3
|
|
Prepaid expenses and other current assets
|
0.3
|
|
|
Property and equipment, net
|
0.6
|
|
|
Identifiable intangible assets:
|
|
||
Noncompete agreements (useful lives of 5 years)
|
0.5
|
|
|
Trade name (useful life of 1 year)
|
1.4
|
|
|
Certificates of need (useful lives of 10 years)
|
16.6
|
|
|
Licenses (useful lives of 10 years)
|
21.6
|
|
|
Goodwill
|
96.1
|
|
|
Total assets acquired
|
138.4
|
|
|
Liabilities assumed:
|
|
||
Accounts payable
|
1.7
|
|
|
Accrued payroll
|
4.0
|
|
|
Total liabilities assumed
|
5.7
|
|
|
Net assets acquired
|
$
|
132.7
|
|
Fair value of assets acquired, net of $1.3 million of cash acquired
|
$
|
41.0
|
|
Goodwill
|
96.1
|
|
|
Fair value of liabilities assumed
|
(5.7
|
)
|
|
Net cash paid for acquisition
|
$
|
131.4
|
|
•
|
In January 2018, we acquired the assets of one hospice location from Golden Age Hospice, Inc. in Oklahoma City, Oklahoma.
|
•
|
In June 2018, we acquired the assets of one hospice location from Medical Services of America in Las Vegas, Nevada.
|
•
|
In November 2018, we acquired the assets of one home health and one hospice location from Tenet Hospital Limited in Birmingham, Alabama and El Paso, Texas. We also acquired 75% of the assets of a home health location in Talladega, Alabama through a joint venture with Tenet Hospital Limited.
|
•
|
In December 2018, we acquired 75% of the assets of a hospice location in Talladega, Alabama through a joint venture with Tenet Hospital Limited.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Total current assets
|
$
|
0.1
|
|
Identifiable intangible asset:
|
|
||
Noncompete agreements (useful lives of 5 years)
|
0.2
|
|
|
Certificates of need (useful lives of 10 years)
|
2.5
|
|
|
Licenses (useful lives of 10 years)
|
1.5
|
|
|
Goodwill
|
8.9
|
|
|
Total assets acquired
|
13.2
|
|
|
Total liabilities assumed
|
(0.1
|
)
|
|
Net assets acquired
|
$
|
13.1
|
|
Fair value of assets acquired
|
$
|
4.3
|
|
Goodwill
|
8.9
|
|
|
Fair value of liabilities assumed
|
(0.1
|
)
|
|
Fair value of noncontrolling interest owned by joint venture partner
|
(0.6
|
)
|
|
Net cash paid for acquisitions
|
$
|
12.5
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Net Operating Revenues
|
|
Net (Loss) Income Attributable to Encompass Health
|
||||
Acquired entities only: Actual from acquisition date to December 31, 2018
|
|
|
|
||||
Inpatient Rehabilitation
|
$
|
9.1
|
|
|
$
|
(1.6
|
)
|
Camellia
|
50.0
|
|
|
(0.9
|
)
|
||
All Other Home Health and Hospice
|
3.5
|
|
|
(0.3
|
)
|
||
Combined entity: Supplemental pro forma from 01/01/2018-12/31/2018 (unaudited)
|
4,337.4
|
|
|
300.0
|
|
||
Combined entity: Supplemental pro forma from 01/01/2017-12/31/2017 (unaudited)
|
4,039.9
|
|
|
289.0
|
|
•
|
In April 2017, we acquired 80% of the 33-bed inpatient rehabilitation unit of Memorial Hospital at Gulfport in Gulfport, Mississippi, through a joint venture with Memorial Hospital at Gulfport. This acquisition was funded on March 31, 2017 using cash on hand.
|
•
|
In April 2017, we also acquired approximately 80% of the inpatient rehabilitation unit of Mount Carmel West in Columbus, Ohio, through a joint venture with Mount Carmel Health System. This acquisition was funded through a contribution of a 60‑bed de novo inpatient rehabilitation hospital to the consolidated joint venture.
|
•
|
In July 2017, we acquired 50% of the inpatient rehabilitation unit at Jackson-Madison County General Hospital through a joint venture with West Tennessee Healthcare. The acquisition was funded through a contribution of our existing inpatient rehabilitation hospital in Martin, Tennessee to the consolidated joint venture.
|
•
|
In September 2017, we acquired 75% of Heritage Valley Beaver Hospital’s inpatient rehabilitation unit in Beaver, Pennsylvania, through a joint venture with Heritage Valley Health System, Inc. The acquisition was funded through the exchange of 25% of our existing inpatient rehabilitation hospital in Sewickley, Pennsylvania.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Property and equipment
|
$
|
0.1
|
|
Identifiable intangible assets:
|
|
|
|
Noncompete agreements (useful lives of 2 to 3 years)
|
0.6
|
|
|
Trade name (useful life of 20 years)
|
0.5
|
|
|
Certificate of need (useful life of 20 years)
|
9.8
|
|
|
Goodwill
|
24.0
|
|
|
Total assets acquired
|
$
|
35.0
|
|
Fair value of assets acquired
|
$
|
11.0
|
|
Goodwill
|
24.0
|
|
|
Fair value of noncontrolling interest owned by joint venture partner
|
(24.1
|
)
|
|
Net cash paid for acquisitions
|
$
|
10.9
|
|
•
|
In February 2017, we acquired the assets of Celtic Healthcare of Maryland, Inc., a home health provider with locations in Owings Mill, Maryland and Rockville, Maryland.
|
•
|
In February 2017, we also acquired the assets of two home health locations from Community Health Services, Inc., located in Owensboro, Kentucky and Elizabethtown, Kentucky.
|
•
|
In May 2017, we acquired the assets of two home health locations from Bio Care Home Health Services, Inc. and Kinsman Enterprises, Inc., located in Irving, Texas and Longview, Texas.
|
•
|
In July 2017, we acquired the assets of four home health locations from VNA Healthtrends, located in Bourbonnais, Illinois; Des Plaines, Illinois; Schererville, Indiana; and Tempe, Arizona.
|
•
|
In August 2017, we acquired the assets of two home health locations from VNA Healthtrends, located in Canton, Ohio and Forsyth, Illinois.
|
•
|
In October 2017, we acquired the assets of a home health location from Ware Visiting Nurses Services, Inc. located in Savannah, Georgia; and
|
•
|
In October 2017, we also acquired the assets of a home health location from Pickens County Health Care Authority located in Carrollton, Alabama.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Total current assets
|
$
|
0.1
|
|
Identifiable intangible asset:
|
|
|
|
Noncompete agreements (useful lives of 5 years)
|
0.8
|
|
|
Trade name (useful life of 1 year)
|
0.1
|
|
|
Certificates of need (useful lives of 10 years)
|
1.8
|
|
|
Licenses (useful lives of 10 years)
|
4.0
|
|
|
Goodwill
|
21.4
|
|
|
Total assets acquired
|
28.2
|
|
|
Total liabilities assumed
|
(0.3
|
)
|
|
Net assets acquired
|
$
|
27.9
|
|
Fair value of assets acquired
|
$
|
6.8
|
|
Goodwill
|
21.4
|
|
|
Fair value of liabilities assumed
|
(0.3
|
)
|
|
Net cash paid for acquisitions
|
$
|
27.9
|
|
|
Net Operating Revenues
|
|
Net (Loss) Income Attributable to Encompass Health
|
||||
Acquired entities only: Actual from acquisition date to December 31, 2017
|
$
|
32.9
|
|
|
$
|
(6.3
|
)
|
Combined entity: Supplemental pro forma from 01/01/2017-12/31/2017 (unaudited)
|
3,996.1
|
|
|
260.3
|
|
||
Combined entity: Supplemental pro forma from 01/01/2016-12/31/2016 (unaudited)
|
3,771.5
|
|
|
254.8
|
|
3.
|
Variable Interest Entities:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Accounts receivable
|
29.3
|
|
|
31.0
|
|
||
Other current assets
|
6.4
|
|
|
4.9
|
|
||
Total current assets
|
35.9
|
|
|
36.2
|
|
||
Property and equipment, net
|
122.6
|
|
|
111.5
|
|
||
Operating lease right-of-use assets
|
6.0
|
|
|
—
|
|
||
Goodwill
|
15.9
|
|
|
15.9
|
|
||
Intangible assets, net
|
3.3
|
|
|
4.3
|
|
||
Deferred income tax assets
|
0.7
|
|
|
0.6
|
|
||
Other long-term assets
|
30.6
|
|
|
29.0
|
|
||
Total assets
|
$
|
215.0
|
|
|
$
|
197.5
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
0.8
|
|
|
$
|
0.6
|
|
Current operating lease liabilities
|
1.4
|
|
|
—
|
|
||
Accounts payable
|
6.7
|
|
|
5.2
|
|
||
Accrued payroll
|
7.7
|
|
|
7.0
|
|
||
Other current liabilities
|
9.3
|
|
|
38.0
|
|
||
Total current liabilities
|
25.9
|
|
|
50.8
|
|
||
Long-term debt, net of current portion
|
10.5
|
|
|
—
|
|
||
Long-term operating lease liabilities
|
4.7
|
|
|
—
|
|
||
Total liabilities
|
$
|
41.1
|
|
|
$
|
50.8
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
4.
|
Cash and Marketable Securities:
|
|
Cash & Cash Equivalents
|
|
Restricted Cash
|
|
Restricted Marketable Securities
|
|
Total
|
||||||||
Cash
|
$
|
94.8
|
|
|
$
|
64.8
|
|
|
$
|
—
|
|
|
$
|
159.6
|
|
Equity securities
|
—
|
|
|
—
|
|
|
63.5
|
|
|
63.5
|
|
||||
Debt securities
|
—
|
|
|
—
|
|
|
12.6
|
|
|
12.6
|
|
||||
Total
|
$
|
94.8
|
|
|
$
|
64.8
|
|
|
$
|
76.1
|
|
|
$
|
235.7
|
|
|
Cash & Cash Equivalents
|
|
Restricted Cash
|
|
Restricted Marketable Securities
|
|
Total
|
||||||||
Cash
|
$
|
69.2
|
|
|
$
|
64.3
|
|
|
$
|
—
|
|
|
$
|
133.5
|
|
Equity securities
|
—
|
|
|
—
|
|
|
55.6
|
|
|
55.6
|
|
||||
Debt securities
|
—
|
|
|
—
|
|
|
6.4
|
|
|
6.4
|
|
||||
Total
|
$
|
69.2
|
|
|
$
|
64.3
|
|
|
$
|
62.0
|
|
|
$
|
195.5
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current:
|
|
|
|
||||
Affiliate cash
|
$
|
16.0
|
|
|
$
|
16.4
|
|
Self-insured captive funds
|
41.4
|
|
|
42.6
|
|
||
|
57.4
|
|
|
59.0
|
|
||
Noncurrent:
|
|
|
|
||||
Self-insured captive funds
|
7.4
|
|
|
5.3
|
|
||
Total restricted cash
|
$
|
64.8
|
|
|
$
|
64.3
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Debt securities
|
$
|
12.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12.6
|
|
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Debt securities
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Proceeds from sales and maturities of available-for-sale marketable securities
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
12.6
|
|
|
$
|
12.6
|
|
Due after one year through five years
|
—
|
|
|
—
|
|
||
Due after five years through ten years
|
—
|
|
|
—
|
|
||
Due after ten years
|
—
|
|
|
—
|
|
||
Total
|
$
|
12.6
|
|
|
$
|
12.6
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
5.
|
Accounts Receivable:
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current:
|
|
|
|
||||
Patient accounts receivable
|
$
|
498.7
|
|
|
$
|
459.9
|
|
Other accounts receivable
|
7.4
|
|
|
7.8
|
|
||
|
506.1
|
|
|
467.7
|
|
||
Noncurrent patient accounts receivable
|
152.1
|
|
|
155.5
|
|
||
Accounts receivable
|
$
|
658.2
|
|
|
$
|
623.2
|
|
6.
|
Property and Equipment:
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land
|
$
|
169.6
|
|
|
$
|
142.4
|
|
Buildings
|
2,084.8
|
|
|
1,875.2
|
|
||
Leasehold improvements
|
192.6
|
|
|
147.5
|
|
||
Vehicles
|
31.2
|
|
|
24.6
|
|
||
Furniture, fixtures, and equipment
|
505.1
|
|
|
441.6
|
|
||
|
2,983.3
|
|
|
2,631.3
|
|
||
Less: Accumulated depreciation and amortization
|
(1,211.8
|
)
|
|
(1,147.0
|
)
|
||
|
1,771.5
|
|
|
1,484.3
|
|
||
Construction in progress
|
187.8
|
|
|
150.5
|
|
||
Property and equipment, net
|
$
|
1,959.3
|
|
|
$
|
1,634.8
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Depreciation expense
|
$
|
130.0
|
|
|
$
|
124.2
|
|
|
$
|
111.8
|
|
Interest capitalized
|
$
|
8.3
|
|
|
$
|
6.0
|
|
|
$
|
3.7
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
7.
|
Leases:
|
|
For the Year Ended December 31, 2019
|
||
Operating lease cost
|
$
|
72.9
|
|
Finance lease cost:
|
|
||
Amortization of right-of-use assets
|
30.3
|
|
|
Interest on lease liabilities
|
29.5
|
|
|
Total finance lease cost
|
59.8
|
|
|
Variable lease cost
|
1.5
|
|
|
Sublease income
|
(3.2
|
)
|
|
Total lease cost
|
$
|
131.0
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
Classification
|
|
As of December 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease
|
|
Operating lease right-of-use assets
|
|
$
|
276.5
|
|
Finance lease (1)
|
|
Property and equipment, net
|
|
327.0
|
|
|
Total leased assets
|
|
|
|
$
|
603.5
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
||
Operating lease
|
|
Current operating lease liabilities
|
|
$
|
40.4
|
|
Finance lease
|
|
Current portion of long-term debt
|
|
21.0
|
|
|
Noncurrent liabilities:
|
|
|
|
|
||
Operating lease
|
|
Long-term operating lease liabilities
|
|
243.8
|
|
|
Finance lease
|
|
Long-term debt, net of current portion
|
|
363.1
|
|
|
Total leased liabilities
|
|
|
|
$
|
668.3
|
|
(1)
|
Finance lease assets are recorded net of accumulated amortization of $99.6 million as of December 31, 2019.
|
|
|
As of December 31, 2019
|
|
Weighted Average Remaining Lease Term
|
|
|
|
Operating lease
|
|
9.1 years
|
|
Finance lease
|
|
13.4 years
|
|
Weighted Average Discount Rate
|
|
|
|
Operating lease
|
|
6.2
|
%
|
Finance lease
|
|
7.9
|
%
|
Year Ending December 31,
|
Operating Leases
|
|
Finance
Leases
|
||||
2020
|
$
|
57.5
|
|
|
$
|
50.4
|
|
2021
|
53.2
|
|
|
48.9
|
|
||
2022
|
45.4
|
|
|
45.5
|
|
||
2023
|
40.7
|
|
|
45.3
|
|
||
2024
|
34.4
|
|
|
44.7
|
|
||
2025 and thereafter
|
153.0
|
|
|
405.7
|
|
||
Total lease payments
|
384.2
|
|
|
640.5
|
|
||
Less: Interest portion
|
(100.0
|
)
|
|
(256.4
|
)
|
||
Total lease liabilities
|
$
|
284.2
|
|
|
$
|
384.1
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
70.4
|
|
Operating cash flows from finance leases
|
30.0
|
|
|
Financing cash flows from finance leases
|
19.5
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
43.8
|
|
Finance leases
|
34.2
|
|
|
As of December 31, 2018
|
||
Assets under capital lease obligations:
|
|
|
|
Buildings
|
$
|
329.6
|
|
Vehicles
|
21.1
|
|
|
Equipment
|
0.3
|
|
|
|
351.0
|
|
|
Less: Accumulated amortization
|
(126.9
|
)
|
|
Assets under capital lease obligations, net
|
$
|
224.1
|
|
|
For the Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Amortization expense
|
$
|
24.1
|
|
|
$
|
22.7
|
|
Rent expense:
|
|
|
|
|
|
||
Minimum rent payments
|
$
|
69.8
|
|
|
$
|
66.5
|
|
Contingent and other rents
|
24.9
|
|
|
24.1
|
|
||
Other
|
9.1
|
|
|
8.9
|
|
||
Total rent expense
|
$
|
103.8
|
|
|
$
|
99.5
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Year Ending December 31,
|
|
Operating Leases
|
|
Capital Lease Obligations
|
||||
2019
|
|
$
|
71.4
|
|
|
$
|
36.2
|
|
2020
|
|
65.8
|
|
|
32.3
|
|
||
2021
|
|
54.3
|
|
|
30.3
|
|
||
2022
|
|
41.0
|
|
|
28.7
|
|
||
2023
|
|
35.3
|
|
|
28.0
|
|
||
2024 and thereafter
|
|
148.2
|
|
|
299.7
|
|
||
|
|
$
|
416.0
|
|
|
455.2
|
|
|
Less: Interest portion
|
|
|
|
|
(191.4
|
)
|
||
Obligations under capital leases
|
|
|
|
|
$
|
263.8
|
|
8.
|
Goodwill and Other Intangible Assets:
|
|
Inpatient Rehabilitation
|
|
Home Health and Hospice
|
|
Consolidated
|
||||||
Goodwill as of December 31, 2016
|
$
|
1,142.0
|
|
|
$
|
785.2
|
|
|
$
|
1,927.2
|
|
Acquisitions
|
24.0
|
|
|
21.4
|
|
|
45.4
|
|
|||
Goodwill as of December 31, 2017
|
1,166.0
|
|
|
806.6
|
|
|
1,972.6
|
|
|||
Acquisitions
|
23.2
|
|
|
105.0
|
|
|
128.2
|
|
|||
Goodwill as of December 31, 2018
|
1,189.2
|
|
|
911.6
|
|
|
2,100.8
|
|
|||
Acquisitions
|
4.8
|
|
|
174.7
|
|
|
179.5
|
|
|||
Consolidation of joint venture formerly accounted for under the equity method of accounting
|
24.9
|
|
|
—
|
|
|
24.9
|
|
|||
Goodwill as of December 31, 2019
|
$
|
1,218.9
|
|
|
$
|
1,086.3
|
|
|
$
|
2,305.2
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||
Certificates of need:
|
|
|
|
|
|
||||||
2019
|
$
|
197.2
|
|
|
$
|
(40.4
|
)
|
|
$
|
156.8
|
|
2018
|
148.3
|
|
|
(28.2
|
)
|
|
120.1
|
|
|||
Licenses:
|
|
|
|
|
|
|
|
|
|||
2019
|
$
|
187.3
|
|
|
$
|
(94.1
|
)
|
|
$
|
93.2
|
|
2018
|
169.1
|
|
|
(82.2
|
)
|
|
86.9
|
|
|||
Noncompete agreements:
|
|
|
|
|
|
|
|
|
|||
2019
|
$
|
74.2
|
|
|
$
|
(62.3
|
)
|
|
$
|
11.9
|
|
2018
|
65.6
|
|
|
(58.6
|
)
|
|
7.0
|
|
|||
Trade name - Encompass:
|
|
|
|
|
|
||||||
2019
|
$
|
135.2
|
|
|
$
|
—
|
|
|
$
|
135.2
|
|
2018
|
135.2
|
|
|
—
|
|
|
135.2
|
|
|||
Trade names - all other:
|
|
|
|
|
|
|
|
|
|||
2019
|
$
|
41.6
|
|
|
$
|
(22.4
|
)
|
|
$
|
19.2
|
|
2018
|
38.9
|
|
|
(19.4
|
)
|
|
19.5
|
|
|||
Internal-use software:
|
|
|
|
|
|
|
|
|
|||
2019
|
$
|
173.8
|
|
|
$
|
(116.0
|
)
|
|
$
|
57.8
|
|
2018
|
161.3
|
|
|
(89.3
|
)
|
|
72.0
|
|
|||
Market access assets:
|
|
|
|
|
|
||||||
2019
|
$
|
13.2
|
|
|
$
|
(11.0
|
)
|
|
$
|
2.2
|
|
2018
|
13.2
|
|
|
(10.5
|
)
|
|
2.7
|
|
|||
Total intangible assets:
|
|
|
|
|
|
|
|
|
|||
2019
|
$
|
822.5
|
|
|
$
|
(346.2
|
)
|
|
$
|
476.3
|
|
2018
|
731.6
|
|
|
(288.2
|
)
|
|
443.4
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Amortization expense
|
$
|
58.4
|
|
|
$
|
51.4
|
|
|
$
|
49.3
|
|
Year Ending December 31,
|
Estimated
Amortization Expense
|
||
2020
|
$
|
55.9
|
|
2021
|
46.2
|
|
|
2022
|
38.2
|
|
|
2023
|
33.9
|
|
|
2024
|
31.0
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
9.
|
Investments in and Advances to Nonconsolidated Affiliates:
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Equity method investments:
|
|
|
|
||||
Capital contributions
|
$
|
0.9
|
|
|
$
|
0.9
|
|
Cumulative share of income
|
68.1
|
|
|
114.0
|
|
||
Cumulative share of distributions
|
(63.6
|
)
|
|
(102.7
|
)
|
||
|
5.4
|
|
|
12.2
|
|
||
Cost method investments:
|
|
|
|
|
|
||
Capital contributions, net of distributions and impairments
|
2.0
|
|
|
—
|
|
||
Total investments in and advances to nonconsolidated affiliates
|
$
|
7.4
|
|
|
$
|
12.2
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets—
|
|
|
|
||||
Current
|
$
|
4.2
|
|
|
$
|
9.9
|
|
Noncurrent
|
9.3
|
|
|
17.8
|
|
||
Total assets
|
$
|
13.5
|
|
|
$
|
27.7
|
|
Liabilities and equity—
|
|
|
|
|
|
||
Current liabilities
|
$
|
0.5
|
|
|
$
|
1.4
|
|
Noncurrent liabilities
|
0.3
|
|
|
0.1
|
|
||
Partners’ capital and shareholders’ equity—
|
|
|
|
|
|
||
Encompass Health
|
4.9
|
|
|
12.2
|
|
||
Outside partners
|
7.8
|
|
|
14.0
|
|
||
Total liabilities and equity
|
$
|
13.5
|
|
|
$
|
27.7
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net operating revenues
|
$
|
32.6
|
|
|
$
|
42.6
|
|
|
$
|
40.9
|
|
Operating expenses
|
(19.1
|
)
|
|
(25.6
|
)
|
|
(24.1
|
)
|
|||
Income from continuing operations, net of tax
|
13.4
|
|
|
17.1
|
|
|
17.0
|
|
|||
Net income
|
13.4
|
|
|
17.1
|
|
|
17.0
|
|
10.
|
Long-term Debt:
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Credit Agreement—
|
|
|
|
||||
Advances under revolving credit facility
|
$
|
45.0
|
|
|
$
|
30.0
|
|
Term loan facilities
|
265.2
|
|
|
280.1
|
|
||
Bonds payable—
|
|
|
|
||||
5.125% Senior Notes due 2023
|
297.3
|
|
|
296.6
|
|
||
5.75% Senior Notes due 2024
|
697.3
|
|
|
1,194.7
|
|
||
5.75% Senior Notes due 2025
|
345.6
|
|
|
345.0
|
|
||
4.50% Senior Notes due 2028
|
491.7
|
|
|
—
|
|
||
4.75% Senior Notes due 2030
|
491.7
|
|
|
—
|
|
||
Other notes payable
|
44.7
|
|
|
104.2
|
|
||
Finance lease obligations
|
384.1
|
|
|
263.8
|
|
||
|
3,062.6
|
|
|
2,514.4
|
|
||
Less: Current portion
|
(39.3
|
)
|
|
(35.8
|
)
|
||
Long-term debt, net of current portion
|
$
|
3,023.3
|
|
|
$
|
2,478.6
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Year Ending December 31,
|
|
Face Amount
|
|
Net Amount
|
||||
2020
|
|
$
|
39.3
|
|
|
$
|
39.3
|
|
2021
|
|
35.5
|
|
|
35.5
|
|
||
2022
|
|
46.3
|
|
|
46.3
|
|
||
2023
|
|
335.1
|
|
|
332.4
|
|
||
2024
|
|
995.7
|
|
|
991.6
|
|
||
Thereafter
|
|
1,638.6
|
|
|
1,617.5
|
|
||
Total
|
|
$
|
3,090.5
|
|
|
$
|
3,062.6
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Period
|
|
Redemption Price*
|
|
2019
|
|
102.563
|
%
|
2020
|
|
101.281
|
%
|
2021 and thereafter
|
|
100.000
|
%
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Period
|
|
Redemption
Price*
|
|
2019
|
|
100.958
|
%
|
2020 and thereafter
|
|
100.000
|
%
|
Period
|
|
Redemption
Price*
|
|
2020
|
|
102.875
|
%
|
2021
|
|
101.917
|
%
|
2022
|
|
100.958
|
%
|
2023 and thereafter
|
|
100.000
|
%
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Period
|
|
Redemption
Price*
|
|
2023
|
|
102.250
|
%
|
2024
|
|
101.125
|
%
|
2025 and thereafter
|
|
100.000
|
%
|
Period
|
|
Redemption
Price*
|
|
2025
|
|
102.375
|
%
|
2026
|
|
101.583
|
%
|
2027
|
|
100.792
|
%
|
2028 and thereafter
|
|
100.000
|
%
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
As of December 31,
|
|
|
||||||
|
2019
|
|
2018
|
|
Interest Rates
|
||||
Sale/leaseback transactions involving real estate accounted for as financings
|
$
|
28.0
|
|
|
$
|
82.8
|
|
|
8.1% to 11.2% as of December 31, 2019;
7.8% to 11.2% as of December 31, 2018 |
Construction of a new hospital
|
12.9
|
|
|
14.6
|
|
|
5.0% as of December 31, 2019;
4.8% to 5.0% as of December 31, 2018 |
||
Other
|
3.8
|
|
|
6.8
|
|
|
4.3% to 6.8%
|
||
Other notes payable
|
$
|
44.7
|
|
|
$
|
104.2
|
|
|
|
11.
|
Self-Insured Risks:
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of period, gross
|
$
|
160.9
|
|
|
$
|
171.0
|
|
|
$
|
171.4
|
|
Less: Reinsurance receivables
|
(25.6
|
)
|
|
(39.9
|
)
|
|
(41.4
|
)
|
|||
Balance at beginning of period, net
|
135.3
|
|
|
131.1
|
|
|
130.0
|
|
|||
Increase for the provision of current year claims
|
46.9
|
|
|
47.1
|
|
|
44.7
|
|
|||
Decrease for the provision of prior year claims
|
(12.6
|
)
|
|
(8.7
|
)
|
|
(3.0
|
)
|
|||
Expenses related to discontinued operations
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|||
Payments related to current year claims
|
(7.5
|
)
|
|
(7.0
|
)
|
|
(5.0
|
)
|
|||
Payments related to prior year claims
|
(31.1
|
)
|
|
(27.0
|
)
|
|
(35.1
|
)
|
|||
Balance at end of period, net
|
130.9
|
|
|
135.3
|
|
|
131.1
|
|
|||
Add: Reinsurance receivables
|
26.4
|
|
|
25.6
|
|
|
39.9
|
|
|||
Balance at end of period, gross
|
$
|
157.3
|
|
|
$
|
160.9
|
|
|
$
|
171.0
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
12.
|
Redeemable Noncontrolling Interests:
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of period
|
$
|
261.7
|
|
|
$
|
220.9
|
|
|
$
|
138.3
|
|
Net income attributable to noncontrolling interests
|
12.6
|
|
|
13.9
|
|
|
17.9
|
|
|||
Distributions declared
|
(9.2
|
)
|
|
(8.6
|
)
|
|
(4.6
|
)
|
|||
Contribution to joint venture
|
1.0
|
|
|
9.6
|
|
|
2.3
|
|
|||
Reclassification to noncontrolling interests
|
(11.2
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of redeemable noncontrolling interests
|
(162.9
|
)
|
|
(65.1
|
)
|
|
—
|
|
|||
Change in fair value
|
147.6
|
|
|
91.0
|
|
|
67.0
|
|
|||
Balance at end of period
|
$
|
239.6
|
|
|
$
|
261.7
|
|
|
$
|
220.9
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to nonredeemable noncontrolling interests
|
$
|
74.5
|
|
|
$
|
69.2
|
|
|
$
|
61.2
|
|
Net income attributable to redeemable noncontrolling interests
|
12.6
|
|
|
13.9
|
|
|
17.9
|
|
|||
Net income attributable to noncontrolling interests
|
$
|
87.1
|
|
|
$
|
83.1
|
|
|
$
|
79.1
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
13.
|
Fair Value Measurements:
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
As of December 31, 2019
|
|
Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Valuation Technique (1)
|
||||||||
Other long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities
|
|
$
|
63.5
|
|
|
$
|
—
|
|
|
$
|
63.5
|
|
|
$
|
—
|
|
|
M
|
Debt securities
|
|
12.6
|
|
|
12.6
|
|
|
—
|
|
|
—
|
|
|
M
|
||||
Redeemable noncontrolling interests
|
|
239.6
|
|
|
—
|
|
|
—
|
|
|
239.6
|
|
|
I
|
||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities
|
|
$
|
55.6
|
|
|
$
|
—
|
|
|
$
|
55.6
|
|
|
$
|
—
|
|
|
M
|
Debt securities
|
|
6.4
|
|
|
6.4
|
|
|
—
|
|
|
—
|
|
|
M
|
||||
Redeemable noncontrolling interests
|
|
261.7
|
|
|
—
|
|
|
—
|
|
|
261.7
|
|
|
I
|
(1)
|
The three valuation techniques are: market approach (M), cost approach (C), and income approach (I).
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Carrying Amount
|
|
Estimated Fair Value
|
||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advances under revolving credit facility
|
$
|
45.0
|
|
|
$
|
45.0
|
|
|
$
|
30.0
|
|
|
$
|
30.0
|
|
Term loan facilities
|
265.2
|
|
|
266.6
|
|
|
280.1
|
|
|
281.3
|
|
||||
5.125% Senior Notes due 2023
|
297.3
|
|
|
306.6
|
|
|
296.6
|
|
|
298.5
|
|
||||
5.75% Senior Notes due 2024
|
697.3
|
|
|
708.8
|
|
|
1,194.7
|
|
|
1,200.0
|
|
||||
5.75% Senior Notes due 2025
|
345.6
|
|
|
369.7
|
|
|
345.0
|
|
|
339.5
|
|
||||
4.50% Senior Notes due 2028
|
491.7
|
|
|
519.4
|
|
|
—
|
|
|
—
|
|
||||
4.75% Senior Notes due 2030
|
491.7
|
|
|
520.0
|
|
|
—
|
|
|
—
|
|
||||
Other notes payable
|
44.7
|
|
|
44.7
|
|
|
104.2
|
|
|
104.2
|
|
||||
Financial commitments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Letters of credit
|
—
|
|
|
38.9
|
|
|
—
|
|
|
37.4
|
|
14.
|
Share-Based Payments:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Expected volatility
|
25.3
|
%
|
|
29.2
|
%
|
|
30.5
|
%
|
Risk-free interest rate
|
2.7
|
%
|
|
2.7
|
%
|
|
2.1
|
%
|
Expected life (years)
|
7.1
|
|
|
7.1
|
|
|
7.7
|
|
Dividend yield
|
2.1
|
%
|
|
2.2
|
%
|
|
2.2
|
%
|
|
Shares
(In Thousands)
|
|
Weighted- Average Exercise Price per Share
|
|
Weighted- Average Remaining Life (Years)
|
|
Aggregate Intrinsic Value
(In Millions)
|
|||||
Outstanding, December 31, 2018
|
537
|
|
|
$
|
35.22
|
|
|
|
|
|
||
Granted
|
106
|
|
|
63.77
|
|
|
|
|
|
|||
Exercised
|
(78
|
)
|
|
17.73
|
|
|
|
|
|
|||
Outstanding, December 31, 2019
|
565
|
|
|
43.02
|
|
|
6.3
|
|
$
|
14.8
|
|
|
Exercisable, December 31, 2019
|
364
|
|
|
35.16
|
|
|
5.1
|
|
12.4
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
As of December 31,
|
||||
|
2019
|
|
2018
|
||
Expected volatility
|
38.6
|
%
|
|
27.1
|
%
|
Risk-free interest rate
|
1.5
|
%
|
|
2.6
|
%
|
Expected life (years)
|
0.3
|
|
|
1.3
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Nonvested shares at December 31, 2018
|
907
|
|
|
$
|
37.61
|
|
Granted
|
660
|
|
|
49.84
|
|
|
Vested
|
(718
|
)
|
|
34.84
|
|
|
Forfeited
|
(31
|
)
|
|
48.65
|
|
|
Nonvested shares at December 31, 2019
|
818
|
|
|
49.49
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
15.
|
Employee Benefit Plans:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
16.
|
Income Taxes:
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
58.1
|
|
|
$
|
103.8
|
|
|
$
|
72.2
|
|
State and other
|
17.8
|
|
|
24.2
|
|
|
12.8
|
|
|||
Total current expense
|
75.9
|
|
|
128.0
|
|
|
85.0
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
32.0
|
|
|
(13.7
|
)
|
|
58.4
|
|
|||
State and other
|
8.0
|
|
|
4.6
|
|
|
2.4
|
|
|||
Total deferred expense (benefit)
|
40.0
|
|
|
(9.1
|
)
|
|
60.8
|
|
|||
Total income tax expense related to continuing operations
|
$
|
115.9
|
|
|
$
|
118.9
|
|
|
$
|
145.8
|
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Tax expense at statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
|
|
|
State and other income taxes, net of federal tax benefit
|
4.3
|
%
|
|
4.5
|
%
|
|
3.5
|
%
|
Increase (decrease) in valuation allowance
|
0.8
|
%
|
|
(0.4
|
)%
|
|
0.4
|
%
|
Government, class action, and related settlements
|
(1.2
|
)%
|
|
2.7
|
%
|
|
—
|
%
|
Noncontrolling interests
|
(3.0
|
)%
|
|
(3.2
|
)%
|
|
(4.6
|
)%
|
Share-based windfall tax benefits
|
(1.0
|
)%
|
|
(0.4
|
)%
|
|
(1.8
|
)%
|
Tax Act
|
—
|
%
|
|
—
|
%
|
|
(2.8
|
)%
|
Other, net
|
(0.3
|
)%
|
|
(0.1
|
)%
|
|
(0.3
|
)%
|
Income tax expense
|
20.6
|
%
|
|
24.1
|
%
|
|
29.4
|
%
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred income tax assets:
|
|
|
|
||||
Net operating loss
|
$
|
61.8
|
|
|
$
|
66.0
|
|
Property, net
|
33.9
|
|
|
30.8
|
|
||
Insurance reserve
|
17.0
|
|
|
16.8
|
|
||
Stock-based compensation
|
38.3
|
|
|
33.0
|
|
||
Revenue reserves
|
—
|
|
|
6.1
|
|
||
Operating lease liabilities
|
30.6
|
|
|
—
|
|
||
Other accruals
|
23.4
|
|
|
22.5
|
|
||
Tax credits
|
6.8
|
|
|
4.7
|
|
||
Other
|
0.2
|
|
|
0.6
|
|
||
Total deferred income tax assets
|
212.0
|
|
|
180.5
|
|
||
Less: Valuation allowance
|
(38.4
|
)
|
|
(33.7
|
)
|
||
Net deferred income tax assets
|
173.6
|
|
|
146.8
|
|
||
Deferred income tax liabilities:
|
|
|
|
|
|
||
Revenue reserves
|
(11.6
|
)
|
|
—
|
|
||
Intangibles
|
(94.6
|
)
|
|
(88.5
|
)
|
||
Operating lease right-of-use assets
|
(30.3
|
)
|
|
—
|
|
||
Carrying value of partnerships
|
(34.0
|
)
|
|
(15.2
|
)
|
||
Other
|
(0.2
|
)
|
|
(0.2
|
)
|
||
Total deferred income tax liabilities
|
(170.7
|
)
|
|
(103.9
|
)
|
||
Net deferred income tax assets
|
$
|
2.9
|
|
|
$
|
42.9
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Gross Unrecognized Income Tax Benefits
|
|
Accrued Interest and Penalties
|
||||
January 1, 2017
|
$
|
2.8
|
|
|
$
|
—
|
|
Gross amount of decreases in unrecognized tax benefits related to prior periods
|
(0.4
|
)
|
|
—
|
|
||
Decreases in unrecognized tax benefits relating to settlements with taxing authorities
|
(2.1
|
)
|
|
—
|
|
||
December 31, 2017
|
0.3
|
|
|
—
|
|
||
Gross amount of increases in unrecognized tax benefits related to prior periods
|
0.8
|
|
|
0.1
|
|
||
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations
|
(0.2
|
)
|
|
—
|
|
||
December 31, 2018
|
0.9
|
|
|
0.1
|
|
||
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations
|
(0.5
|
)
|
|
—
|
|
||
December 31, 2019
|
$
|
0.4
|
|
|
$
|
0.1
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Basic:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
446.4
|
|
|
$
|
374.3
|
|
|
$
|
350.6
|
|
Less: Net income attributable to noncontrolling interests included in continuing operations
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Less: Income allocated to participating securities
|
(1.3
|
)
|
|
(0.9
|
)
|
|
(0.9
|
)
|
|||
Income from continuing operations attributable to Encompass Health common shareholders
|
358.0
|
|
|
290.3
|
|
|
270.6
|
|
|||
(Loss) income from discontinued operations, net of tax, attributable to Encompass Health common shareholders
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|||
Net income attributable to Encompass Health common shareholders
|
$
|
357.4
|
|
|
$
|
291.4
|
|
|
$
|
270.2
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Basic weighted average common shares outstanding
|
98.0
|
|
|
97.9
|
|
|
93.7
|
|
|||
Basic earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
$
|
3.66
|
|
|
$
|
2.97
|
|
|
$
|
2.88
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
3.65
|
|
|
$
|
2.98
|
|
|
$
|
2.88
|
|
|
|
|
|
|
|
||||||
Diluted:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
446.4
|
|
|
$
|
374.3
|
|
|
$
|
350.6
|
|
Less: Net income attributable to noncontrolling interests included in continuing operations
|
(87.1
|
)
|
|
(83.1
|
)
|
|
(79.1
|
)
|
|||
Add: Interest on convertible debt, net of tax
|
—
|
|
|
—
|
|
|
4.6
|
|
|||
Add: Loss on extinguishment of convertible debt, net of tax
|
—
|
|
|
—
|
|
|
6.2
|
|
|||
Income from continuing operations attributable to Encompass Health common shareholders
|
359.3
|
|
|
291.2
|
|
|
282.3
|
|
|||
(Loss) income from discontinued operations, net of tax, attributable to Encompass Health common shareholders
|
(0.6
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
|||
Net income attributable to Encompass Health common shareholders
|
$
|
358.7
|
|
|
$
|
292.3
|
|
|
$
|
281.9
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Diluted weighted average common shares outstanding
|
99.4
|
|
|
99.8
|
|
|
99.3
|
|
|||
Diluted earnings per share attributable to Encompass Health common shareholders:
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
$
|
3.62
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
3.61
|
|
|
$
|
2.93
|
|
|
$
|
2.84
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Basic weighted average common shares outstanding
|
98.0
|
|
|
97.9
|
|
|
93.7
|
|
Convertible senior subordinated notes
|
—
|
|
|
—
|
|
|
4.0
|
|
Restricted stock awards, dilutive stock options, and restricted stock units
|
1.4
|
|
|
1.9
|
|
|
1.6
|
|
Diluted weighted average common shares outstanding
|
99.4
|
|
|
99.8
|
|
|
99.3
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Number of Warrants
|
|
Weighted Average Exercise Price
|
|||
Common stock warrants outstanding as of December 31, 2016
|
8.2
|
|
|
$
|
41.40
|
|
Cashless exercise
|
(6.5
|
)
|
|
41.40
|
|
|
Cash exercise
|
(0.6
|
)
|
|
41.40
|
|
|
Expired
|
(1.1
|
)
|
|
41.40
|
|
|
Common stock warrants outstanding as of January 17, 2017
|
—
|
|
|
|
18.
|
Contingencies and Other Commitments:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
19.
|
Segment Reporting:
|
•
|
Inpatient Rehabilitation - Our national network of inpatient rehabilitation hospitals stretches across 33 states and Puerto Rico, with a concentration of hospitals in the eastern half of the United States and Texas. As of December 31, 2019, we operate 133 inpatient rehabilitation hospitals. We are the sole owner of 86 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 47 jointly owned hospitals. In addition, we manage four inpatient rehabilitation units through management contracts. We provide specialized rehabilitative treatment on both an inpatient and outpatient basis. Our inpatient rehabilitation hospitals provide a higher level of rehabilitative care to patients who are recovering from conditions such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations.
|
•
|
Home Health and Hospice - As of December 31, 2019, we provide home health services in 245 locations and hospice services in 83 locations across 31 states with concentrations in the Southeast and Texas. In addition, two of these home health agencies operate as joint ventures which we account for using the equity method of accounting. We are the sole owner of 320 of these locations. We retain 50.0% to 81.0% ownership in the remaining eight jointly owned locations. Our home health services include a comprehensive range of Medicare-certified home nursing services to adult patients in need of care. These services include, among others, skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services. Our hospice services include in-home services to terminally ill patients and their families to address patients’ physical needs, including pain control and symptom management, and to provide emotional and spiritual support.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
Inpatient Rehabilitation
|
|
Home Health and Hospice
|
||||||||||||||||||||
|
For the Year Ended December 31,
|
|
For the Year Ended December 31,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Net operating revenues
|
$
|
3,513.0
|
|
|
$
|
3,346.2
|
|
|
$
|
3,141.3
|
|
|
$
|
1,092.0
|
|
|
$
|
931.1
|
|
|
$
|
772.6
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Inpatient rehabilitation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Salaries and benefits
|
1,813.1
|
|
|
1,701.5
|
|
|
1,603.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other operating expenses
|
521.9
|
|
|
502.3
|
|
|
462.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Supplies
|
147.0
|
|
|
140.6
|
|
|
135.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Occupancy costs
|
64.8
|
|
|
63.8
|
|
|
61.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Home health and hospice:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services sold (excluding depreciation and amortization)
|
—
|
|
|
—
|
|
|
—
|
|
|
506.2
|
|
|
438.4
|
|
|
363.3
|
|
||||||
Support and overhead costs
|
—
|
|
|
—
|
|
|
—
|
|
|
381.7
|
|
|
323.5
|
|
|
277.2
|
|
||||||
|
2,546.8
|
|
|
2,408.2
|
|
|
2,263.9
|
|
|
887.9
|
|
|
761.9
|
|
|
640.5
|
|
||||||
Other income
|
(10.5
|
)
|
|
(3.6
|
)
|
|
(4.1
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
||||||
Equity in net income of nonconsolidated affiliates
|
(5.5
|
)
|
|
(7.5
|
)
|
|
(7.3
|
)
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|
(0.7
|
)
|
||||||
Noncontrolling interests
|
82.6
|
|
|
77.2
|
|
|
67.6
|
|
|
9.5
|
|
|
8.5
|
|
|
6.9
|
|
||||||
Segment Adjusted EBITDA
|
$
|
899.6
|
|
|
$
|
871.9
|
|
|
$
|
821.2
|
|
|
$
|
195.8
|
|
|
$
|
162.4
|
|
|
$
|
125.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
$
|
391.4
|
|
|
$
|
264.6
|
|
|
$
|
238.0
|
|
|
$
|
12.7
|
|
|
$
|
11.6
|
|
|
$
|
10.7
|
|
|
Inpatient Rehabilitation
|
|
Home Health and Hospice
|
|
Encompass Health Consolidated
|
||||||
As of December 31, 2019
|
|
|
|
|
|
||||||
Total assets
|
$
|
4,501.4
|
|
|
$
|
1,612.8
|
|
|
$
|
6,080.7
|
|
Investments in and advances to nonconsolidated affiliates
|
2.0
|
|
|
5.4
|
|
|
7.4
|
|
|||
As of December 31, 2018
|
|
|
|
|
|
||||||
Total assets
|
$
|
3,900.9
|
|
|
$
|
1,314.6
|
|
|
$
|
5,175.0
|
|
Investments in and advances to nonconsolidated affiliates
|
9.5
|
|
|
2.7
|
|
|
12.2
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Total segment Adjusted EBITDA
|
$
|
1,095.4
|
|
|
$
|
1,034.3
|
|
|
$
|
947.1
|
|
General and administrative expenses
|
(247.0
|
)
|
|
(220.2
|
)
|
|
(171.7
|
)
|
|||
Depreciation and amortization
|
(218.7
|
)
|
|
(199.7
|
)
|
|
(183.8
|
)
|
|||
Loss on disposal of assets
|
(11.1
|
)
|
|
(5.7
|
)
|
|
(4.6
|
)
|
|||
Government, class action, and related settlements
|
—
|
|
|
(52.0
|
)
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
(7.7
|
)
|
|
—
|
|
|
(10.7
|
)
|
|||
Interest expense and amortization of debt discounts and fees
|
(159.7
|
)
|
|
(147.3
|
)
|
|
(154.4
|
)
|
|||
Net income attributable to noncontrolling interests
|
87.1
|
|
|
83.1
|
|
|
79.1
|
|
|||
SARs mark-to-market impact on noncontrolling interests
|
5.0
|
|
|
2.6
|
|
|
—
|
|
|||
Change in fair market value of equity securities
|
0.8
|
|
|
(1.9
|
)
|
|
—
|
|
|||
Tax reform impact on noncontrolling interests
|
—
|
|
|
—
|
|
|
(4.6
|
)
|
|||
Gain on consolidation of Yuma
|
19.2
|
|
|
—
|
|
|
—
|
|
|||
Payroll taxes on SARs exercise
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|||
Income from continuing operations before income tax expense
|
$
|
562.3
|
|
|
$
|
493.2
|
|
|
$
|
496.4
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||
Total assets for reportable segments
|
$
|
6,114.2
|
|
|
$
|
5,215.5
|
|
Reclassification of noncurrent deferred income tax liabilities to net noncurrent deferred income tax assets
|
(33.5
|
)
|
|
(40.5
|
)
|
||
Total consolidated assets
|
$
|
6,080.7
|
|
|
$
|
5,175.0
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Inpatient rehabilitation:
|
|
|
|
|
|
||||||
Inpatient
|
$
|
3,423.5
|
|
|
$
|
3,247.9
|
|
|
$
|
3,039.3
|
|
Outpatient and other
|
89.5
|
|
|
98.3
|
|
|
102.0
|
|
|||
Total inpatient rehabilitation
|
3,513.0
|
|
|
3,346.2
|
|
|
3,141.3
|
|
|||
Home health and hospice:
|
|
|
|
|
|
||||||
Home health
|
918.0
|
|
|
814.6
|
|
|
702.4
|
|
|||
Hospice
|
174.0
|
|
|
116.5
|
|
|
70.2
|
|
|||
Total home health and hospice
|
1,092.0
|
|
|
931.1
|
|
|
772.6
|
|
|||
Total net operating revenues
|
$
|
4,605.0
|
|
|
$
|
4,277.3
|
|
|
$
|
3,913.9
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
20.
|
Quarterly Data (Unaudited):
|
|
|
2019
|
||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
|
|
(In Millions, Except Per Share Data)
|
||||||||||||||||||
Net operating revenues
|
|
$
|
1,124.0
|
|
|
$
|
1,135.0
|
|
|
$
|
1,161.6
|
|
|
$
|
1,184.4
|
|
|
$
|
4,605.0
|
|
Operating earnings (a)
|
|
167.1
|
|
|
152.6
|
|
|
151.2
|
|
|
141.2
|
|
|
612.1
|
|
|||||
Provision for income tax expense
|
|
30.8
|
|
|
23.5
|
|
|
34.3
|
|
|
27.3
|
|
|
115.9
|
|
|||||
Income from continuing operations
|
|
125.7
|
|
|
111.0
|
|
|
119.5
|
|
|
90.2
|
|
|
446.4
|
|
|||||
Loss from discontinued operations, net of tax
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||||
Net income
|
|
125.2
|
|
|
110.9
|
|
|
119.5
|
|
|
90.2
|
|
|
445.8
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
(22.9
|
)
|
|
(19.7
|
)
|
|
(21.9
|
)
|
|
(22.6
|
)
|
|
(87.1
|
)
|
|||||
Net income attributable to Encompass Health
|
|
$
|
102.3
|
|
|
$
|
91.2
|
|
|
$
|
97.6
|
|
|
$
|
67.6
|
|
|
$
|
358.7
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share attributable to Encompass Health common shareholders: (b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
1.05
|
|
|
$
|
0.93
|
|
|
$
|
0.99
|
|
|
$
|
0.69
|
|
|
$
|
3.66
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income
|
|
$
|
1.04
|
|
|
$
|
0.93
|
|
|
$
|
0.99
|
|
|
$
|
0.69
|
|
|
$
|
3.65
|
|
Diluted earnings per share attributable to Encompass Health common shareholders: (b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
1.04
|
|
|
$
|
0.92
|
|
|
$
|
0.98
|
|
|
$
|
0.68
|
|
|
$
|
3.62
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income
|
|
$
|
1.03
|
|
|
$
|
0.92
|
|
|
$
|
0.98
|
|
|
$
|
0.68
|
|
|
$
|
3.61
|
|
(a)
|
We define operating earnings as income from continuing operations attributable to Encompass Health before (1) loss on early extinguishment of debt; (2) interest expense and amortization of debt discounts and fees; (3) other income; and (4) income tax expense.
|
(b)
|
Per share amounts may not sum due to the weighted average common shares outstanding during each quarter compared to the weighted average common shares outstanding during the entire year.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
2018
|
||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
|
|
(In Millions, Except Per Share Data)
|
||||||||||||||||||
Net operating revenues
|
|
$
|
1,046.0
|
|
|
$
|
1,067.7
|
|
|
$
|
1,067.6
|
|
|
$
|
1,096.0
|
|
|
$
|
4,277.3
|
|
Operating earnings (a)
|
|
150.0
|
|
|
157.3
|
|
|
154.5
|
|
|
93.4
|
|
|
555.2
|
|
|||||
Provision for income tax expense
|
|
30.0
|
|
|
29.3
|
|
|
30.2
|
|
|
29.4
|
|
|
118.9
|
|
|||||
Income from continuing operations
|
|
105.7
|
|
|
113.0
|
|
|
109.4
|
|
|
46.2
|
|
|
374.3
|
|
|||||
(Loss) income from discontinued operations, net of tax
|
|
(0.5
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
|
1.5
|
|
|
1.1
|
|
|||||
Net income
|
|
105.2
|
|
|
113.2
|
|
|
109.3
|
|
|
47.7
|
|
|
375.4
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
(21.4
|
)
|
|
(21.4
|
)
|
|
(20.7
|
)
|
|
(19.6
|
)
|
|
(83.1
|
)
|
|||||
Net income attributable to Encompass Health
|
|
$
|
83.8
|
|
|
$
|
91.8
|
|
|
$
|
88.6
|
|
|
$
|
28.1
|
|
|
$
|
292.3
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share attributable to Encompass Health common shareholders: (b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.86
|
|
|
$
|
0.93
|
|
|
$
|
0.90
|
|
|
$
|
0.27
|
|
|
$
|
2.97
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
0.01
|
|
|||||
Net income
|
|
$
|
0.85
|
|
|
$
|
0.93
|
|
|
$
|
0.90
|
|
|
$
|
0.29
|
|
|
$
|
2.98
|
|
Diluted earnings per share attributable to Encompass Health common shareholders: (b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.85
|
|
|
$
|
0.92
|
|
|
$
|
0.89
|
|
|
$
|
0.26
|
|
|
$
|
2.92
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
0.01
|
|
|||||
Net income
|
|
$
|
0.84
|
|
|
$
|
0.92
|
|
|
$
|
0.89
|
|
|
$
|
0.28
|
|
|
$
|
2.93
|
|
(a)
|
We define operating earnings as income from continuing operations attributable to Encompass Health before (1) loss on early extinguishment of debt; (2) interest expense and amortization of debt discounts and fees; (3) other income; and (4) income tax expense.
|
(b)
|
Per share amounts may not sum due to the weighted average common shares outstanding during each quarter compared to the weighted average common shares outstanding during the entire year.
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
|
|
21.
|
Condensed Consolidating Financial Information:
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
For the Year Ended December 31, 2019
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net operating revenues
|
$
|
20.7
|
|
|
$
|
2,425.5
|
|
|
$
|
1,221.7
|
|
|
$
|
1,074.1
|
|
|
$
|
(137.0
|
)
|
|
$
|
4,605.0
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries and benefits
|
59.6
|
|
|
1,176.5
|
|
|
608.7
|
|
|
748.9
|
|
|
(20.7
|
)
|
|
2,573.0
|
|
||||||
Other operating expenses
|
45.0
|
|
|
351.8
|
|
|
189.3
|
|
|
88.4
|
|
|
(50.9
|
)
|
|
623.6
|
|
||||||
Occupancy costs
|
2.1
|
|
|
100.8
|
|
|
27.5
|
|
|
17.3
|
|
|
(65.4
|
)
|
|
82.3
|
|
||||||
Supplies
|
—
|
|
|
98.0
|
|
|
49.3
|
|
|
20.6
|
|
|
—
|
|
|
167.9
|
|
||||||
General and administrative expenses
|
160.0
|
|
|
—
|
|
|
—
|
|
|
87.0
|
|
|
—
|
|
|
247.0
|
|
||||||
Depreciation and amortization
|
19.9
|
|
|
106.8
|
|
|
54.9
|
|
|
37.1
|
|
|
—
|
|
|
218.7
|
|
||||||
Total operating expenses
|
286.6
|
|
|
1,833.9
|
|
|
929.7
|
|
|
999.3
|
|
|
(137.0
|
)
|
|
3,912.5
|
|
||||||
Loss on early extinguishment of debt
|
7.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
||||||
Interest expense and amortization of debt discounts and fees
|
131.0
|
|
|
24.7
|
|
|
5.6
|
|
|
28.4
|
|
|
(30.0
|
)
|
|
159.7
|
|
||||||
Other income
|
(32.3
|
)
|
|
(21.1
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
30.0
|
|
|
(30.5
|
)
|
||||||
Equity in net income of nonconsolidated affiliates
|
—
|
|
|
(5.1
|
)
|
|
(0.4
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
(6.7
|
)
|
||||||
Equity in net income of consolidated affiliates
|
(492.6
|
)
|
|
(67.0
|
)
|
|
—
|
|
|
—
|
|
|
559.6
|
|
|
—
|
|
||||||
Management fees
|
(160.8
|
)
|
|
117.8
|
|
|
43.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income from continuing operations before income tax (benefit) expense
|
281.1
|
|
|
542.3
|
|
|
250.9
|
|
|
47.6
|
|
|
(559.6
|
)
|
|
562.3
|
|
||||||
Provision for income tax (benefit) expense
|
(78.2
|
)
|
|
140.3
|
|
|
40.3
|
|
|
13.5
|
|
|
—
|
|
|
115.9
|
|
||||||
Income from continuing operations
|
359.3
|
|
|
402.0
|
|
|
210.6
|
|
|
34.1
|
|
|
(559.6
|
)
|
|
446.4
|
|
||||||
Loss from discontinued operations, net of tax
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||||
Net income
|
358.7
|
|
|
402.0
|
|
|
210.6
|
|
|
34.1
|
|
|
(559.6
|
)
|
|
445.8
|
|
||||||
Less: Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(83.3
|
)
|
|
(3.8
|
)
|
|
—
|
|
|
(87.1
|
)
|
||||||
Net income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
402.0
|
|
|
$
|
127.3
|
|
|
$
|
30.3
|
|
|
$
|
(559.6
|
)
|
|
$
|
358.7
|
|
Comprehensive income
|
$
|
358.7
|
|
|
$
|
402.0
|
|
|
$
|
210.6
|
|
|
$
|
34.1
|
|
|
$
|
(559.6
|
)
|
|
$
|
445.8
|
|
Comprehensive income attributable to Encompass Health
|
$
|
358.7
|
|
|
$
|
402.0
|
|
|
$
|
127.3
|
|
|
$
|
30.3
|
|
|
$
|
(559.6
|
)
|
|
$
|
358.7
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
For the Year Ended December 31, 2018
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net operating revenues
|
$
|
21.0
|
|
|
$
|
2,351.8
|
|
|
$
|
1,118.9
|
|
|
$
|
915.9
|
|
|
$
|
(130.3
|
)
|
|
$
|
4,277.3
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries and benefits
|
49.5
|
|
|
1,132.2
|
|
|
550.4
|
|
|
643.3
|
|
|
(21.4
|
)
|
|
2,354.0
|
|
||||||
Other operating expenses
|
37.9
|
|
|
344.3
|
|
|
177.4
|
|
|
75.3
|
|
|
(49.8
|
)
|
|
585.1
|
|
||||||
Occupancy costs
|
1.9
|
|
|
95.7
|
|
|
25.4
|
|
|
14.1
|
|
|
(59.1
|
)
|
|
78.0
|
|
||||||
Supplies
|
—
|
|
|
95.8
|
|
|
44.9
|
|
|
18.0
|
|
|
—
|
|
|
158.7
|
|
||||||
General and administrative expenses
|
161.0
|
|
|
—
|
|
|
—
|
|
|
59.2
|
|
|
—
|
|
|
220.2
|
|
||||||
Depreciation and amortization
|
14.3
|
|
|
108.2
|
|
|
47.6
|
|
|
29.6
|
|
|
—
|
|
|
199.7
|
|
||||||
Government, class action, and related settlements
|
52.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52.0
|
|
||||||
Total operating expenses
|
316.6
|
|
|
1,776.2
|
|
|
845.7
|
|
|
839.5
|
|
|
(130.3
|
)
|
|
3,647.7
|
|
||||||
Interest expense and amortization of debt discounts and fees
|
124.2
|
|
|
22.6
|
|
|
2.2
|
|
|
23.5
|
|
|
(25.2
|
)
|
|
147.3
|
|
||||||
Other income
|
(22.4
|
)
|
|
(1.0
|
)
|
|
(3.5
|
)
|
|
(0.5
|
)
|
|
25.2
|
|
|
(2.2
|
)
|
||||||
Equity in net income of nonconsolidated affiliates
|
—
|
|
|
(7.1
|
)
|
|
(0.4
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
(8.7
|
)
|
||||||
Equity in net income of consolidated affiliates
|
(465.6
|
)
|
|
(63.4
|
)
|
|
—
|
|
|
—
|
|
|
529.0
|
|
|
—
|
|
||||||
Management fees
|
(153.1
|
)
|
|
114.0
|
|
|
39.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income from continuing operations before income tax (benefit) expense
|
221.3
|
|
|
510.5
|
|
|
235.8
|
|
|
54.6
|
|
|
(529.0
|
)
|
|
493.2
|
|
||||||
Provision for income tax (benefit) expense
|
(69.9
|
)
|
|
136.6
|
|
|
38.4
|
|
|
13.8
|
|
|
—
|
|
|
118.9
|
|
||||||
Income from continuing operations
|
291.2
|
|
|
373.9
|
|
|
197.4
|
|
|
40.8
|
|
|
(529.0
|
)
|
|
374.3
|
|
||||||
Income from discontinued operations, net of tax
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
||||||
Net income
|
292.3
|
|
|
373.9
|
|
|
197.4
|
|
|
40.8
|
|
|
(529.0
|
)
|
|
375.4
|
|
||||||
Less: Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(77.8
|
)
|
|
(5.3
|
)
|
|
—
|
|
|
(83.1
|
)
|
||||||
Net income attributable to Encompass Health
|
$
|
292.3
|
|
|
$
|
373.9
|
|
|
$
|
119.6
|
|
|
$
|
35.5
|
|
|
$
|
(529.0
|
)
|
|
$
|
292.3
|
|
Comprehensive income
|
$
|
292.3
|
|
|
$
|
373.9
|
|
|
$
|
197.4
|
|
|
$
|
40.8
|
|
|
$
|
(529.0
|
)
|
|
$
|
375.4
|
|
Comprehensive income attributable to Encompass Health
|
$
|
292.3
|
|
|
$
|
373.9
|
|
|
$
|
119.6
|
|
|
$
|
35.5
|
|
|
$
|
(529.0
|
)
|
|
$
|
292.3
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
For the Year Ended December 31, 2017
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net operating revenues
|
$
|
21.3
|
|
|
$
|
2,252.5
|
|
|
$
|
1,006.4
|
|
|
$
|
759.8
|
|
|
$
|
(126.1
|
)
|
|
$
|
3,913.9
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries and benefits
|
34.7
|
|
|
1,088.7
|
|
|
508.9
|
|
|
543.3
|
|
|
(21.0
|
)
|
|
2,154.6
|
|
||||||
Other operating expenses
|
32.8
|
|
|
324.8
|
|
|
160.2
|
|
|
62.4
|
|
|
(48.6
|
)
|
|
531.6
|
|
||||||
Occupancy costs
|
1.9
|
|
|
93.7
|
|
|
23.0
|
|
|
11.4
|
|
|
(56.5
|
)
|
|
73.5
|
|
||||||
Supplies
|
—
|
|
|
94.2
|
|
|
41.7
|
|
|
13.4
|
|
|
—
|
|
|
149.3
|
|
||||||
General and administrative
|
143.7
|
|
|
—
|
|
|
—
|
|
|
28.0
|
|
|
—
|
|
|
171.7
|
|
||||||
Depreciation and amortization
|
8.8
|
|
|
106.6
|
|
|
44.7
|
|
|
23.7
|
|
|
—
|
|
|
183.8
|
|
||||||
Total operating expenses
|
221.9
|
|
|
1,708.0
|
|
|
778.5
|
|
|
682.2
|
|
|
(126.1
|
)
|
|
3,264.5
|
|
||||||
Loss on early extinguishment of debt
|
10.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
||||||
Interest expense and amortization of debt discounts and fees
|
130.5
|
|
|
23.2
|
|
|
2.5
|
|
|
19.2
|
|
|
(21.0
|
)
|
|
154.4
|
|
||||||
Other (income) loss
|
(21.7
|
)
|
|
0.2
|
|
|
(3.6
|
)
|
|
—
|
|
|
21.0
|
|
|
(4.1
|
)
|
||||||
Equity in net income of nonconsolidated affiliates
|
—
|
|
|
(6.9
|
)
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
(8.0
|
)
|
||||||
Equity in net income of consolidated affiliates
|
(342.1
|
)
|
|
(39.0
|
)
|
|
—
|
|
|
—
|
|
|
381.1
|
|
|
—
|
|
||||||
Management fees
|
(145.0
|
)
|
|
109.5
|
|
|
35.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income from continuing operations before income tax (benefit) expense
|
167.0
|
|
|
457.5
|
|
|
193.9
|
|
|
59.1
|
|
|
(381.1
|
)
|
|
496.4
|
|
||||||
Provision for income tax (benefit) expense
|
(104.5
|
)
|
|
182.6
|
|
|
66.8
|
|
|
0.9
|
|
|
—
|
|
|
145.8
|
|
||||||
Income from continuing operations
|
271.5
|
|
|
274.9
|
|
|
127.1
|
|
|
58.2
|
|
|
(381.1
|
)
|
|
350.6
|
|
||||||
Loss from discontinued operations, net of tax
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
Net income
|
271.1
|
|
|
274.9
|
|
|
127.1
|
|
|
58.2
|
|
|
(381.1
|
)
|
|
350.2
|
|
||||||
Less: Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(68.7
|
)
|
|
(10.4
|
)
|
|
—
|
|
|
(79.1
|
)
|
||||||
Net income attributable to Encompass Health
|
$
|
271.1
|
|
|
$
|
274.9
|
|
|
$
|
58.4
|
|
|
$
|
47.8
|
|
|
$
|
(381.1
|
)
|
|
$
|
271.1
|
|
Comprehensive income
|
$
|
271.0
|
|
|
$
|
274.9
|
|
|
$
|
127.1
|
|
|
$
|
58.2
|
|
|
$
|
(381.1
|
)
|
|
$
|
350.1
|
|
Comprehensive income attributable to Encompass Health
|
$
|
271.0
|
|
|
$
|
274.9
|
|
|
$
|
58.4
|
|
|
$
|
47.8
|
|
|
$
|
(381.1
|
)
|
|
$
|
271.0
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of December 31, 2019
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
53.7
|
|
|
$
|
5.2
|
|
|
$
|
6.0
|
|
|
$
|
29.9
|
|
|
$
|
—
|
|
|
$
|
94.8
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
57.4
|
|
|
—
|
|
|
—
|
|
|
57.4
|
|
||||||
Accounts receivable
|
—
|
|
|
280.4
|
|
|
125.6
|
|
|
100.1
|
|
|
—
|
|
|
506.1
|
|
||||||
Prepaid expenses and other current assets
|
64.3
|
|
|
35.4
|
|
|
9.3
|
|
|
7.8
|
|
|
(19.3
|
)
|
|
97.5
|
|
||||||
Total current assets
|
118.0
|
|
|
321.0
|
|
|
198.3
|
|
|
137.8
|
|
|
(19.3
|
)
|
|
755.8
|
|
||||||
Property and equipment, net
|
133.4
|
|
|
1,246.0
|
|
|
551.2
|
|
|
28.7
|
|
|
—
|
|
|
1,959.3
|
|
||||||
Operating lease right-of-use assets
|
10.1
|
|
|
171.5
|
|
|
86.5
|
|
|
43.7
|
|
|
(35.3
|
)
|
|
276.5
|
|
||||||
Goodwill
|
—
|
|
|
912.2
|
|
|
323.0
|
|
|
1,070.0
|
|
|
—
|
|
|
2,305.2
|
|
||||||
Intangible assets, net
|
17.7
|
|
|
101.7
|
|
|
65.3
|
|
|
291.6
|
|
|
—
|
|
|
476.3
|
|
||||||
Deferred income tax assets
|
27.2
|
|
|
11.1
|
|
|
0.1
|
|
|
—
|
|
|
(35.5
|
)
|
|
2.9
|
|
||||||
Other long-term assets
|
53.6
|
|
|
85.4
|
|
|
151.6
|
|
|
14.1
|
|
|
—
|
|
|
304.7
|
|
||||||
Intercompany notes receivable
|
737.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(737.8
|
)
|
|
—
|
|
||||||
Intercompany receivable and investments in consolidated affiliates
|
3,155.4
|
|
|
523.6
|
|
|
—
|
|
|
—
|
|
|
(3,679.0
|
)
|
|
—
|
|
||||||
Total assets
|
$
|
4,253.2
|
|
|
$
|
3,372.5
|
|
|
$
|
1,376.0
|
|
|
$
|
1,585.9
|
|
|
$
|
(4,506.9
|
)
|
|
$
|
6,080.7
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
17.0
|
|
|
$
|
10.4
|
|
|
$
|
3.8
|
|
|
$
|
8.1
|
|
|
$
|
—
|
|
|
$
|
39.3
|
|
Current operating lease liabilities
|
1.3
|
|
|
21.9
|
|
|
16.0
|
|
|
12.1
|
|
|
(10.9
|
)
|
|
40.4
|
|
||||||
Accounts payable
|
9.8
|
|
|
56.5
|
|
|
24.3
|
|
|
4.0
|
|
|
—
|
|
|
94.6
|
|
||||||
Accrued payroll
|
34.8
|
|
|
76.2
|
|
|
40.4
|
|
|
59.1
|
|
|
—
|
|
|
210.5
|
|
||||||
Accrued interest payable
|
30.4
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.4
|
|
||||||
Other current liabilities
|
82.2
|
|
|
30.5
|
|
|
68.8
|
|
|
141.6
|
|
|
(19.3
|
)
|
|
303.8
|
|
||||||
Total current liabilities
|
175.5
|
|
|
197.5
|
|
|
153.3
|
|
|
224.9
|
|
|
(30.2
|
)
|
|
721.0
|
|
||||||
Long-term debt, net of current portion
|
2,670.6
|
|
|
305.4
|
|
|
41.6
|
|
|
5.7
|
|
|
—
|
|
|
3,023.3
|
|
||||||
Long-term operating lease liabilities
|
9.0
|
|
|
153.9
|
|
|
73.6
|
|
|
31.9
|
|
|
(24.6
|
)
|
|
243.8
|
|
||||||
Intercompany notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
737.8
|
|
|
(737.8
|
)
|
|
—
|
|
||||||
Self-insured risks
|
19.3
|
|
|
—
|
|
|
97.9
|
|
|
—
|
|
|
—
|
|
|
117.2
|
|
||||||
Other long-term liabilities
|
26.6
|
|
|
12.2
|
|
|
2.4
|
|
|
37.0
|
|
|
(35.5
|
)
|
|
42.7
|
|
||||||
Intercompany payable
|
—
|
|
|
—
|
|
|
66.0
|
|
|
4.4
|
|
|
(70.4
|
)
|
|
—
|
|
||||||
|
2,901.0
|
|
|
669.0
|
|
|
434.8
|
|
|
1,041.7
|
|
|
(898.5
|
)
|
|
4,148.0
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
31.4
|
|
|
208.2
|
|
|
—
|
|
|
239.6
|
|
||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Encompass Health shareholders’ equity
|
1,352.2
|
|
|
2,703.5
|
|
|
568.9
|
|
|
336.0
|
|
|
(3,608.4
|
)
|
|
1,352.2
|
|
||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
340.9
|
|
|
—
|
|
|
—
|
|
|
340.9
|
|
||||||
Total shareholders’ equity
|
1,352.2
|
|
|
2,703.5
|
|
|
909.8
|
|
|
336.0
|
|
|
(3,608.4
|
)
|
|
1,693.1
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
4,253.2
|
|
|
$
|
3,372.5
|
|
|
$
|
1,376.0
|
|
|
$
|
1,585.9
|
|
|
$
|
(4,506.9
|
)
|
|
$
|
6,080.7
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of December 31, 2018
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
5.1
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
69.2
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
59.0
|
|
|
—
|
|
|
—
|
|
|
59.0
|
|
||||||
Accounts receivable
|
—
|
|
|
270.7
|
|
|
121.6
|
|
|
75.4
|
|
|
—
|
|
|
467.7
|
|
||||||
Prepaid expenses and other current assets
|
36.3
|
|
|
17.6
|
|
|
26.2
|
|
|
4.9
|
|
|
(18.8
|
)
|
|
66.2
|
|
||||||
Total current assets
|
77.8
|
|
|
291.3
|
|
|
211.9
|
|
|
99.9
|
|
|
(18.8
|
)
|
|
662.1
|
|
||||||
Property and equipment, net
|
123.9
|
|
|
1,041.5
|
|
|
445.2
|
|
|
24.2
|
|
|
—
|
|
|
1,634.8
|
|
||||||
Goodwill
|
—
|
|
|
912.2
|
|
|
293.3
|
|
|
895.3
|
|
|
—
|
|
|
2,100.8
|
|
||||||
Intangible assets, net
|
21.4
|
|
|
96.6
|
|
|
67.5
|
|
|
257.9
|
|
|
—
|
|
|
443.4
|
|
||||||
Deferred income tax assets
|
47.9
|
|
|
28.9
|
|
|
0.1
|
|
|
—
|
|
|
(34.0
|
)
|
|
42.9
|
|
||||||
Other long-term assets
|
47.9
|
|
|
100.4
|
|
|
130.9
|
|
|
11.8
|
|
|
—
|
|
|
291.0
|
|
||||||
Intercompany notes receivable
|
535.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(535.3
|
)
|
|
—
|
|
||||||
Intercompany receivable and investments in consolidated affiliates
|
2,904.4
|
|
|
457.6
|
|
|
—
|
|
|
—
|
|
|
(3,362.0
|
)
|
|
—
|
|
||||||
Total assets
|
$
|
3,758.6
|
|
|
$
|
2,928.5
|
|
|
$
|
1,148.9
|
|
|
$
|
1,289.1
|
|
|
$
|
(3,950.1
|
)
|
|
$
|
5,175.0
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
35.0
|
|
|
$
|
7.5
|
|
|
$
|
4.4
|
|
|
$
|
6.4
|
|
|
$
|
(17.5
|
)
|
|
$
|
35.8
|
|
Accounts payable
|
8.9
|
|
|
46.4
|
|
|
30.4
|
|
|
4.3
|
|
|
—
|
|
|
90.0
|
|
||||||
Accrued payroll
|
35.0
|
|
|
69.1
|
|
|
35.4
|
|
|
48.9
|
|
|
—
|
|
|
188.4
|
|
||||||
Accrued interest payable
|
22.3
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
24.4
|
|
||||||
Other current liabilities
|
154.5
|
|
|
5.1
|
|
|
85.7
|
|
|
89.6
|
|
|
(1.0
|
)
|
|
333.9
|
|
||||||
Total current liabilities
|
255.7
|
|
|
130.5
|
|
|
155.9
|
|
|
149.2
|
|
|
(18.8
|
)
|
|
672.5
|
|
||||||
Long-term debt, net of current portion
|
2,188.7
|
|
|
262.1
|
|
|
20.0
|
|
|
7.8
|
|
|
—
|
|
|
2,478.6
|
|
||||||
Intercompany notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
535.3
|
|
|
(535.3
|
)
|
|
—
|
|
||||||
Self-insured risks
|
16.1
|
|
|
—
|
|
|
103.5
|
|
|
—
|
|
|
—
|
|
|
119.6
|
|
||||||
Other long-term liabilities
|
21.4
|
|
|
17.1
|
|
|
5.0
|
|
|
76.0
|
|
|
(33.9
|
)
|
|
85.6
|
|
||||||
Intercompany payable
|
—
|
|
|
—
|
|
|
48.9
|
|
|
4.2
|
|
|
(53.1
|
)
|
|
—
|
|
||||||
|
2,481.9
|
|
|
409.7
|
|
|
333.3
|
|
|
772.5
|
|
|
(641.1
|
)
|
|
3,356.3
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
38.3
|
|
|
223.4
|
|
|
—
|
|
|
261.7
|
|
||||||
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Encompass Health shareholders’ equity
|
1,276.7
|
|
|
2,518.8
|
|
|
497.0
|
|
|
293.2
|
|
|
(3,309.0
|
)
|
|
1,276.7
|
|
||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
280.3
|
|
|
—
|
|
|
—
|
|
|
280.3
|
|
||||||
Total shareholders’ equity
|
1,276.7
|
|
|
2,518.8
|
|
|
777.3
|
|
|
293.2
|
|
|
(3,309.0
|
)
|
|
1,557.0
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
3,758.6
|
|
|
$
|
2,928.5
|
|
|
$
|
1,148.9
|
|
|
$
|
1,289.1
|
|
|
$
|
(3,950.1
|
)
|
|
$
|
5,175.0
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Cash Flows
|
|
|
For the Year Ended December 31, 2019
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
(110.8
|
)
|
|
$
|
450.3
|
|
|
$
|
247.9
|
|
|
$
|
47.9
|
|
|
$
|
—
|
|
|
$
|
635.3
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Acquisition of businesses, net of cash acquired
|
(217.8
|
)
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|
—
|
|
|
(231.5
|
)
|
||||||
Purchases of property and equipment
|
(38.6
|
)
|
|
(207.3
|
)
|
|
(117.9
|
)
|
|
(8.6
|
)
|
|
—
|
|
|
(372.4
|
)
|
||||||
Additions to capitalized software costs
|
(7.4
|
)
|
|
(0.7
|
)
|
|
(1.4
|
)
|
|
(3.5
|
)
|
|
—
|
|
|
(13.0
|
)
|
||||||
Purchases of intangible assets
|
—
|
|
|
(18.0
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
||||||
Proceeds from sale of restricted investments
|
—
|
|
|
—
|
|
|
17.6
|
|
|
—
|
|
|
—
|
|
|
17.6
|
|
||||||
Purchases of restricted investments
|
—
|
|
|
—
|
|
|
(30.9
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
(32.9
|
)
|
||||||
Funding of intercompany note receivable
|
(64.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64.0
|
|
|
—
|
|
||||||
Proceeds from repayment of intercompany note receivable
|
93.0
|
|
|
—
|
|
|
17.5
|
|
|
—
|
|
|
(110.5
|
)
|
|
—
|
|
||||||
Other, net
|
(8.3
|
)
|
|
8.2
|
|
|
(6.7
|
)
|
|
0.3
|
|
|
—
|
|
|
(6.5
|
)
|
||||||
Net cash provided used in investing activities
|
(243.1
|
)
|
|
(217.8
|
)
|
|
(121.8
|
)
|
|
(28.2
|
)
|
|
(46.5
|
)
|
|
(657.4
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Proceeds from bond issuance
|
1,000.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000.0
|
|
||||||
Principal payments on debt, including pre-payments
|
(517.8
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(519.5
|
)
|
||||||
Principal borrowings on intercompany note payable
|
—
|
|
|
—
|
|
|
—
|
|
|
64.0
|
|
|
(64.0
|
)
|
|
—
|
|
||||||
Principal payments on intercompany note payable
|
(17.5
|
)
|
|
—
|
|
|
—
|
|
|
(93.0
|
)
|
|
110.5
|
|
|
—
|
|
||||||
Borrowings on revolving credit facility
|
635.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
635.0
|
|
||||||
Payments on revolving credit facility
|
(620.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(620.0
|
)
|
||||||
Principal payments under finance lease obligations
|
(0.7
|
)
|
|
(8.3
|
)
|
|
(2.6
|
)
|
|
(7.9
|
)
|
|
—
|
|
|
(19.5
|
)
|
||||||
Debt amendment and issuance costs
|
(21.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
||||||
Repurchases of common stock, including fees and expenses
|
(45.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45.9
|
)
|
||||||
Dividends paid on common stock
|
(108.6
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(108.7
|
)
|
||||||
Purchase of equity interests in consolidated affiliates
|
(162.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(162.9
|
)
|
||||||
Distributions paid to noncontrolling interests of consolidated affiliates
|
—
|
|
|
—
|
|
|
(79.8
|
)
|
|
—
|
|
|
—
|
|
|
(79.8
|
)
|
||||||
Taxes paid on behalf of employees for shares withheld
|
(15.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(16.6
|
)
|
||||||
Contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
15.9
|
|
|
—
|
|
|
—
|
|
|
15.9
|
|
||||||
Other, net
|
(4.4
|
)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|
(8.3
|
)
|
||||||
Change in intercompany advances
|
245.8
|
|
|
(222.0
|
)
|
|
(56.5
|
)
|
|
32.7
|
|
|
—
|
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
366.1
|
|
|
(230.3
|
)
|
|
(124.7
|
)
|
|
(9.4
|
)
|
|
46.5
|
|
|
48.2
|
|
||||||
Increase in cash, cash equivalents, and restricted cash
|
12.2
|
|
|
2.2
|
|
|
1.4
|
|
|
10.3
|
|
|
—
|
|
|
26.1
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of year
|
41.5
|
|
|
3.0
|
|
|
69.4
|
|
|
19.6
|
|
|
—
|
|
|
133.5
|
|
||||||
Cash, cash equivalents and restricted cash at end of year
|
$
|
53.7
|
|
|
$
|
5.2
|
|
|
$
|
70.8
|
|
|
$
|
29.9
|
|
|
$
|
—
|
|
|
$
|
159.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at beginning of period
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
5.1
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
69.2
|
|
Restricted cash at beginning of period
|
—
|
|
|
—
|
|
|
59.0
|
|
|
—
|
|
|
—
|
|
|
59.0
|
|
||||||
Restricted cash included in other long-term assets at beginning of period
|
—
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of period
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
69.4
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
133.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
53.7
|
|
|
$
|
5.2
|
|
|
$
|
6.0
|
|
|
$
|
29.9
|
|
|
$
|
—
|
|
|
$
|
94.8
|
|
Restricted cash at end of period
|
—
|
|
|
—
|
|
|
57.4
|
|
|
—
|
|
|
—
|
|
|
57.4
|
|
||||||
Restricted cash included in other long-term assets at end of period
|
—
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
||||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
53.7
|
|
|
$
|
5.2
|
|
|
$
|
70.8
|
|
|
$
|
29.9
|
|
|
$
|
—
|
|
|
$
|
159.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental schedule of noncash financing activity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intercompany note activity
|
$
|
(232.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
232.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Cash Flows
|
|
|
For the Year Ended December 31, 2018
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
(11.3
|
)
|
|
$
|
422.2
|
|
|
$
|
259.0
|
|
|
$
|
92.5
|
|
|
$
|
—
|
|
|
$
|
762.4
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Acquisition of businesses, net of cash acquired
|
(131.4
|
)
|
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|
—
|
|
|
(143.9
|
)
|
||||||
Purchases of property and equipment
|
(34.1
|
)
|
|
(133.9
|
)
|
|
(79.9
|
)
|
|
(6.6
|
)
|
|
—
|
|
|
(254.5
|
)
|
||||||
Additions to capitalized software costs
|
(14.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(1.8
|
)
|
|
—
|
|
|
(16.0
|
)
|
||||||
Purchases of intangible assets
|
(2.5
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
(5.7
|
)
|
||||||
Proceeds from sale of restricted investments
|
—
|
|
|
—
|
|
|
11.6
|
|
|
—
|
|
|
—
|
|
|
11.6
|
|
||||||
Purchases of restricted investments
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
||||||
Proceeds from repayment of intercompany note receivable
|
87.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87.0
|
)
|
|
—
|
|
||||||
Other, net
|
(6.0
|
)
|
|
2.8
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
(2.7
|
)
|
||||||
Net cash used in investing activities
|
(101.1
|
)
|
|
(131.2
|
)
|
|
(81.7
|
)
|
|
(23.5
|
)
|
|
(87.0
|
)
|
|
(424.5
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal payments on debt, including pre-payments
|
(17.6
|
)
|
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
|
(20.6
|
)
|
||||||
Principal payments on intercompany notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
(87.0
|
)
|
|
87.0
|
|
|
—
|
|
||||||
Borrowings on revolving credit facility
|
325.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
325.0
|
|
||||||
Payments on revolving credit facility
|
(390.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(390.0
|
)
|
||||||
Principal payments under finance lease obligations
|
—
|
|
|
(8.4
|
)
|
|
(4.2
|
)
|
|
(5.3
|
)
|
|
—
|
|
|
(17.9
|
)
|
||||||
Debt amendment and issuance costs
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
Dividends paid on common stock
|
(100.7
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(100.8
|
)
|
||||||
Purchase of equity interests in consolidated affiliates
|
(65.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65.1
|
)
|
||||||
Distributions paid to noncontrolling interests of consolidated affiliates
|
—
|
|
|
—
|
|
|
(75.4
|
)
|
|
—
|
|
|
—
|
|
|
(75.4
|
)
|
||||||
Taxes paid on behalf of employees for shares withheld
|
(7.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(8.3
|
)
|
||||||
Contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
12.6
|
|
|
—
|
|
|
—
|
|
|
12.6
|
|
||||||
Other, net
|
3.0
|
|
|
—
|
|
|
13.2
|
|
|
3.2
|
|
|
—
|
|
|
19.4
|
|
||||||
Change in intercompany advances
|
372.4
|
|
|
(282.5
|
)
|
|
(118.9
|
)
|
|
29.0
|
|
|
—
|
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
119.6
|
|
|
(290.9
|
)
|
|
(175.8
|
)
|
|
(61.1
|
)
|
|
87.0
|
|
|
(321.2
|
)
|
||||||
Increase in cash, cash equivalents, and restricted cash
|
7.2
|
|
|
0.1
|
|
|
1.5
|
|
|
7.9
|
|
|
—
|
|
|
16.7
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of year
|
34.3
|
|
|
2.9
|
|
|
67.9
|
|
|
11.7
|
|
|
—
|
|
|
116.8
|
|
||||||
Cash, cash equivalents, and restricted cash at end of year
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
69.4
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
133.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at beginning of period
|
$
|
34.3
|
|
|
$
|
2.9
|
|
|
$
|
5.5
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
54.4
|
|
Restricted cash at beginning of period
|
—
|
|
|
—
|
|
|
62.4
|
|
|
—
|
|
|
—
|
|
|
62.4
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of period
|
$
|
34.3
|
|
|
$
|
2.9
|
|
|
$
|
67.9
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
116.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
5.1
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
69.2
|
|
Restricted cash at end of period
|
—
|
|
|
—
|
|
|
59.0
|
|
|
—
|
|
|
—
|
|
|
59.0
|
|
||||||
Restricted cash included in other long-term assets at end of period
|
—
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
||||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
41.5
|
|
|
$
|
3.0
|
|
|
$
|
69.4
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
133.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental schedule of noncash investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intercompany note activity
|
$
|
(136.8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Encompass Health Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Condensed Consolidating Statement of Cash Flows
|
|
|
For the Year Ended December 31, 2017
|
||||||||||||||||||||||
|
Encompass Health Corporation
|
|
Guarantor Subsidiaries
|
|
Non-guarantor Subsidiaries
|
|
Holdings
|
|
Eliminating Entries
|
|
Encompass Health Consolidated
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Net cash provided by operating activities
|
$
|
28.2
|
|
|
$
|
385.9
|
|
|
$
|
181.2
|
|
|
$
|
63.0
|
|
|
$
|
—
|
|
|
$
|
658.3
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Acquisition of businesses, net of cash acquired
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|
(27.9
|
)
|
|
—
|
|
|
(38.8
|
)
|
||||||
Purchases of property and equipment
|
(39.4
|
)
|
|
(106.5
|
)
|
|
(75.4
|
)
|
|
(4.5
|
)
|
|
—
|
|
|
(225.8
|
)
|
||||||
Additions to capitalized software costs
|
(16.3
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
(19.2
|
)
|
||||||
Purchases of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
|
—
|
|
|
(3.7
|
)
|
||||||
Proceeds from sale of restricted investments
|
—
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
||||||
Purchases of restricted investments
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
||||||
Proceeds from repayment of intercompany note receivable
|
51.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.0
|
)
|
|
—
|
|
||||||
Other, net
|
(3.7
|
)
|
|
11.7
|
|
|
0.2
|
|
|
0.6
|
|
|
—
|
|
|
8.8
|
|
||||||
Net cash used in investing activities
|
(19.3
|
)
|
|
(95.1
|
)
|
|
(79.6
|
)
|
|
(38.0
|
)
|
|
(51.0
|
)
|
|
(283.0
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal payments on debt, including pre-payments
|
(126.9
|
)
|
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
|
(129.9
|
)
|
||||||
Principal payments on intercompany notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.0
|
)
|
|
51.0
|
|
|
—
|
|
||||||
Borrowings on revolving credit facility
|
273.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
273.3
|
|
||||||
Payments on revolving credit facility
|
(330.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(330.3
|
)
|
||||||
Principal payments under finance lease obligations
|
—
|
|
|
(7.3
|
)
|
|
(3.9
|
)
|
|
(4.1
|
)
|
|
—
|
|
|
(15.3
|
)
|
||||||
Debt amendment and issuance costs
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
||||||
Repurchases of common stock, including fees and expenses
|
(38.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.1
|
)
|
||||||
Dividends paid on common stock
|
(91.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(91.5
|
)
|
||||||
Proceeds from exercising stock warrants
|
26.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.6
|
|
||||||
Distributions paid to noncontrolling interests of consolidated affiliates
|
—
|
|
|
—
|
|
|
(51.9
|
)
|
|
—
|
|
|
—
|
|
|
(51.9
|
)
|
||||||
Taxes paid on behalf of employees for shares withheld
|
(19.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(19.8
|
)
|
||||||
Contributions from consolidated affiliates
|
—
|
|
|
—
|
|
|
20.8
|
|
|
—
|
|
|
—
|
|
|
20.8
|
|
||||||
Other, net
|
1.0
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
0.3
|
|
||||||
Change in intercompany advances
|
314.3
|
|
|
(282.2
|
)
|
|
(62.0
|
)
|
|
29.9
|
|
|
—
|
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
4.8
|
|
|
(289.5
|
)
|
|
(100.0
|
)
|
|
(26.2
|
)
|
|
51.0
|
|
|
(359.9
|
)
|
||||||
Increase in cash, cash equivalents, and restricted cash
|
13.7
|
|
|
1.3
|
|
|
1.6
|
|
|
(1.2
|
)
|
|
—
|
|
|
15.4
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of year
|
20.6
|
|
|
1.6
|
|
|
66.3
|
|
|
12.9
|
|
|
—
|
|
|
101.4
|
|
||||||
Cash, cash equivalents, and restricted cash at end of year
|
$
|
34.3
|
|
|
$
|
2.9
|
|
|
$
|
67.9
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
116.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at beginning of period
|
$
|
20.6
|
|
|
$
|
1.6
|
|
|
$
|
5.4
|
|
|
$
|
12.9
|
|
|
$
|
—
|
|
|
$
|
40.5
|
|
Restricted cash at beginning of period
|
—
|
|
|
—
|
|
|
60.9
|
|
|
—
|
|
|
—
|
|
|
60.9
|
|
||||||
Cash, cash equivalents, and restricted cash at beginning of period
|
$
|
20.6
|
|
|
$
|
1.6
|
|
|
$
|
66.3
|
|
|
$
|
12.9
|
|
|
$
|
—
|
|
|
$
|
101.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
34.3
|
|
|
$
|
2.9
|
|
|
$
|
5.5
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
54.4
|
|
Restricted cash at end of period
|
—
|
|
|
—
|
|
|
62.4
|
|
|
—
|
|
|
—
|
|
|
62.4
|
|
||||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
34.3
|
|
|
$
|
2.9
|
|
|
$
|
67.9
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
116.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental schedule of noncash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intercompany note activity
|
$
|
(8.8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Conversion of convertible debt
|
319.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
319.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
Sections of the Encompass Health Corporation Annual Report on Form 10-K for the year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language), submitted in the following files:
|
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
+
|
Management contract or compensatory plan or arrangement.
|
*
|
Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment. The nonpublic information has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
ENCOMPASS HEALTH CORPORATION
NONQUALIFIED 401(K) PLAN
As Amended and Restated January 2, 2018
|
|
Page
|
1
|
|
1.1 Purpose of Plan
|
1
|
1.2 Nature of Plan
|
1
|
2
|
|
2.1 Definitions
|
2
|
2.2 Construction
|
8
|
2.3 409A Compliance
|
8
|
9
|
|
3.1 Eligibility and Participation
|
9
|
3.2 Continued Eligibility and Participation
|
9
|
3.3 Cessation of Participation
|
9
|
10
|
|
4.1 Deferral Elections
|
10
|
4.2 Company Contributions
|
10
|
4.3 Vesting
|
11
|
4.4 Plan Benefits
|
12
|
4.5 Accounting for Deferred Compensation.
|
12
|
14
|
|
5.1 General Rule Regarding Payment of Account
|
14
|
5.2 Subsequent Deferrals
|
14
|
5.3 Distributions on Death
|
15
|
5.4 Distributions on Disability
|
15
|
5.5 Unforeseeable Emergency
|
16
|
5.6 Time and Form of Payment
|
16
|
18
|
|
6.1 Payment Due an Incompetent
|
18
|
6.2 Nonalienation of Benefits
|
18
|
19
|
|
7.1 Funding
|
19
|
7.2 Creditor Status
|
19
|
20
|
|
8.1 Appointment of Benefits Committee
|
20
|
8.2 Committee Powers and Duties
|
20
|
8.3 Appointment of Daily Administrator
|
21
|
8.4 Daily Administrator Powers and Duties
|
21
|
8.5 Claim Procedures
|
23
|
8.6 Benefits Committee Procedures
|
24
|
25
|
|
9.1 Other Plans
|
25
|
26
|
|
10.1 Amendment
|
26
|
10.2 Termination
|
26
|
10.3 Nonguarantee of Employment
|
27
|
10.4 Indemnification
|
27
|
10.5 Withholding
|
27
|
10.6 Expenses
|
27
|
APPENDIX A SERVICE CREDITING
|
A-1
|
APPENDIX B DOMESTIC PARTNER GUIDELINES FOR THE ENCOMPASS HEALTH CORPORATION GROUP LIFE, AD&D, DISABILITY AND MEDICAL PLAN AND THE ENCOMPASS HEALTH CORPORATION RETIREMENT INVESTMENT PLAN
|
B-1
|
1.1
|
Purpose of Plan
|
1.2
|
Nature of Plan
|
2.1
|
Definitions
|
(a)
|
"Account" means one or more of the bookkeeping accounts maintained by the Company or its agent on behalf of a Participant, as described in more detail in Section 4.5.
|
(b)
|
"Affiliate" means a corporation that is (i) a member of a controlled group of corporations (as defined in section 414(b) of the Code) which includes the Company, (ii) any trade or business (whether or not incorporated) which is in common control (as defined in section 414(c) of the Code) with the Company, or (iii) any entity that
|
(c)
|
"Benefits Committee" means the administrative committee responsible for the administration of the Plan in accordance with Article VIII.
|
(d)
|
"Board" means the Board of Directors of the Company.
|
(e)
|
"Claimant" means a Participant or Beneficiary who files a claim for benefits pursuant to Section 8.5.
|
(f)
|
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations or rulings issued thereunder.
|
(g)
|
"Company" means Encompass Health Corporation or any successor thereto.
|
(h)
|
"Compensation" means the total of all amounts paid by the Employer to or for the benefit of an Employee for services rendered or labor performed for the Employer while a Participant and while an Employee, which are required to be reported on the Employee's Federal Wage and Tax Statement, Form W-2 or its successor; provided, however, that Compensation will not include: (i) mileage reimbursements; (ii) severance pay; (iii) termination vacation payouts; (iv) termination paid time-off payouts; (v) relocation reimbursements; (vi) income from the exercise or award of any stock options or stock grants; (vii) imputed income from life insurance; (viii) car allowances; (ix) club dues; (x) housing allowances; (xi) any stock purchase plan match monies, (xii) dividends on Company stock paid in connection with the exercise or award of stock options or stock grants or (xiii) Scheduled In-Service Withdrawals. Further, Compensation excludes:
|
(i)
|
elective contributions made on the Employee's behalf by the Employer that are not includible in income under sections 125, 132(f)(4), 402(e)(3), 402(h), or 403(b) of the Code;
|
(ii)
|
compensation deferred under an eligible deferred compensation plan within the meaning of section 457(b) of the Code; and
|
(iii)
|
employee contributions described in section 414(h) of the Code that are picked up by the employing unit and treated as employer contributions.
|
(i)
|
"Compensation Committee" means the Compensation Committee of the Board of Directors of the Company.
|
(j)
|
"Compensation Deferral" means the deferral described in Section 4.1 made by a Participant who has elected to defer all or a portion of his Compensation under the Plan including a deferral of Compensation classified as a bonus that is subject to a separate and distinct deferral election.
|
(k)
|
"Daily Administrator" means the individuals, entity or department designated by the Compensation Committee or the Benefits Committee to handle the day to day administration of the Plan and to make initial claim determinations pursuant to Section 8.5. In the event the Compensation Committee or the Benefits Committee fails to appoint a Daily Administrator, the Benefits Committee will be the Daily Administrator.
|
(l)
|
"Disability" means that due to a physical or mental condition, the Participant has been determined to be totally and permanently disabled by the Social Security Administration and is eligible to receive Social Security disability benefits.
|
(m)
|
"Effective Date" means January 2, 2018, except as expressly provided otherwise herein.
|
(n)
|
"Election Process" means the written forms or on-line processes provided by the Daily Administrator, or delegate thereof, pursuant to which the Participant consents to participation in the Plan, elects to defer Compensation as a Compensation Deferral and specifies the time and form in which such Compensation Deferrals, Employer Matching Contributions attributable to such Compensation Deferrals and any Employer Discretionary Contributions will be paid as provided in Article V. Such Participant consent and elections may be done either in writing or on-line through an electronic signature as determine by the Daily Administrator.
|
(o)
|
"Eligible Employee" means each Employee who holds the position of an Executive Officer, Senior Vice President, Vice President or Director or is the Chief Executive Officer or Chief Financial Officer of one of the Company's hospitals; provided, however, that each such individual must earn more than the compensation limit set forth in section 414(q) of the Code (i.e., one hundred twenty thousand dollars ($120,000) for 2018 (as adjusted under section 414(q)(1) of the Code)).
|
(p)
|
"Employee" means any person employed by the Employer in the capacity of a common law employee and not in the capacity of an Leased Employee or independent contractor, even if such Leased Employee or independent contractor is subsequently determined by the Employer, the Internal Revenue Service, the Department of Labor or a court of competent jurisdiction to be a common law employee of the Employer. Each such Employee who is currently employed by the Employer or an Affiliate will be referred to herein as an "Active Employee" and each such Employee who is no longer employed by the Employer or an Affiliate but has an Account balance under the Plan will be referred to herein as an "Inactive Employee."
|
(q)
|
"Employer" means the Company and any other Affiliate which adopts the Plan. An Affiliate may evidence its adoption of the Plan either by a formal action of its governing body or by commencing deferrals and taking other administrative actions with respect to this Plan on behalf of its employees.
|
(r)
|
"Employer Discretionary Contribution" means discretionary profit sharing contributions made to the Plan on behalf of a Participant.
|
(s)
|
"Employer Matching Contribution" means the matching contributions made to the Plan on behalf of a Participant.
|
(t)
|
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations or rulings issued thereunder.
|
(u)
|
"Hour of Service" means each hour for which an Employee is directly or indirectly paid, or is entitled to payment, by the Employer (including any predecessor business of an Employer conducted as a corporation, partnership or proprietorship) or Affiliate for the performance of duties or reasons other than the performance of duties, including but not limited to vacation, holidays, sickness, disability, paid layoff, jury duty, military duty, leave of absence and similar paid periods of nonworking time. An Hour of Service also includes each hour, not credited above, for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer or an Affiliate. For all purposes of the Plan, Hours of Service will be credited for any individual considered to be a Leased Employee and for any individual considered an Employee under section 414(o) of the Code and the final regulations thereunder.
|
(i)
|
Acquired Entities. Service or employment completed by an Employee of an acquired facility or an acquired employee group before such facility became an Affiliate or before the employees of such employee group become Employees will not be credited except to the extent provided in the acquisition agreement, a resolution by the Board of Directors or other governing body of the Employer. Any such prior vesting service credit will be described in Appendix A attached hereto. Appendix A may be revised from time-to-time by the Daily Administrator without the need for a formal amendment to the Plan.
|
(ii)
|
Licensed Professionals. Service or employment completed by licensed professionals on behalf of professional corporations for which the Company provides payroll services who become Employees will be taken into account for purposes of determining Hours of Service under this Plan.
|
(v)
|
"Investment Options" means the investment options used under the Plan to measure the investment returns attributable to each Participant's Account. As of the Effective Date, any investment fund offered through the Charles Schwab Trust Company may be selected as an Investment Option under the Plan. The Benefits Committee may revise the Investment Options provided under the Plan from time to time without the need for a formal Plan amendment, in which case the new Investment Options will be communicated to Participants.
|
(w)
|
"Key Employee" means a key employee within the meaning of section 416(i) of the Code. Specifically, an individual who is:
|
(i)
|
an officer of the Company or an Affiliate having compensation of greater than one hundred thirty thousand dollars ($130,000) (as adjusted under section 416(i)(1) of the Code) (i.e., one hundred seventy-five thousand dollars ($175,000) for 2018);
|
(ii)
|
a five percent (5%) owner of the Company or an Affiliate as defined in section 416 of the Code; or
|
(iii)
|
a one percent (1%) owner of the Company or an Affiliate as defined in section 416 of the Code having compensation of more than one hundred fifty thousand dollars ($150,000).
|
(x)
|
“Leased Employee” means each person who is not an employee of the Employer or an Affiliate but who performs services for the Employer or an Affiliate pursuant to an agreement (oral or written) between the Employer or an Affiliate and any leasing organization, provided that such person has performed such services for the Employer or an Affiliate or for related persons (within the meaning of section 144(a)(3) of the Code) on a substantially full-time basis for a period of at least one (1) year and such services are performed under primary direction or control by the Employer or an Affiliate. In the case of any person who is a Leased Employee before or after a Period of Service as an Employee, the entire period during which he has performed services as a Leased Employee will be counted as Service as an Employee for all purposes of the Plan, except that he will not, by reason of that status, become a Member of the Plan.
|
(y)
|
"Normal Retirement Age" means the date the Participant reaches age sixty-five (65).
|
(z)
|
"Participant" means each Eligible Employee who has elected to participate in the Plan by timely completing the Election Process and whose participation in this Plan has not terminated. Each such Participant who is currently employed by the Employer will be referred to herein as an "Active Participant" and each such Employee who is no longer employed by the Employer or is employed by an Affiliate who has not adopted the Plan but has an Account balance under the Plan will be referred to herein as an "Inactive Participant."
|
(aa)
|
"Plan" means the Encompass Health Corporation Nonqualified 401(k) Plan, as described in this document, and as it may hereafter be amended.
|
(bb)
|
"Plan Year" means the fiscal year of this Plan, which will commence on January 1 each year and end on December 31 of such year, except that the initial Plan Year will commence on March 1 and end on December 31.
|
(cc)
|
"Rabbi Trust" means the grantor trust established by the Company to assist with the payment of benefits under the Plan. The Rabbi Trust will be unfunded within the meaning of ERISA and its assets will be subject to the claims of the Employer's and Affiliate's general creditors. Such Rabbi Trust and its assets will conform to the terms of the model trust, as described in Revenue Procedure 92- 64.
|
(dd)
|
"Scheduled In-Service Withdrawal" means a distribution elected by the Participant pursuant to Section 5.1 for an in-service withdrawal of amounts of Compensation Deferrals, Employer Matching Contributions attributable to such Compensation Deferrals and any Employer Discretionary Contributions made in a given Plan Year, and earnings or losses attributable thereto, as set forth in the Election Process for such Plan Year.
|
(ee)
|
"Scheduled In-Service Withdrawal Date" means the distribution date elected by the Participant for a Scheduled In-Service Withdrawal.
|
(ff)
|
“Spouse” means the legal spouse (including a same sex spouse) of an Eligible Employee, except that such term will not include a common law spouse unless all documentation of the common law marriage required by the Plan Administrator has been received by the Plan Administrator.
|
(gg)
|
"Termination of Employment" means the date that such Employee ceases performing services for the Employer and its Affiliates in the capacity of an Employee. For this purpose an Employee who is on a leave of absence that exceeds six (6) months and who does not have statutory or contractual reemployment rights with respect to such leave, will be deemed to have incurred a Termination of Employment on the first day of the seventh (7th) month of such leave, An Employee who transfers employment from an Employer to an Affiliate, regardless of whether such Affiliate has adopted the Plan as a participating employer, will not incur a Termination of Employment.
|
(hh)
|
"Trustee" means the individual or entity appointed to serve as trustee of any trust established as a possible source of funds for the payment of benefits under the Plan as provided in Section 7.1.
|
(ii)
|
"Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, his Spouse, his beneficiary, or his dependent (as defined under section 152(a) of the Code), (ii) a loss of the Participant's property due to casualty, or (iii) any other similar extraordinary and unforeseeable loss arising from events beyond the control of the Participant, as determined by the Daily Administrator in its sole and absolute discretion in accordance with the requirements of section 409A of the Code.
|
(jj)
|
"Year of Vesting Service" means a Plan year in which an Employee is credited with no less than one thousand (1,000) Hours of Service.
|
2.2
|
Construction
|
2.3
|
409A Compliance
|
3.1
|
Eligibility and Participation
|
3.2
|
Continued Eligibility and Participation
|
4.1
|
Deferral Elections
|
4.2
|
Company Contributions
|
(a)
|
Employer Matching Contribution. Each Plan Year, the Employer will make an Employer Matching Contribution to the Plan for each Participant who makes Compensation Deferrals pursuant to Section 4.1 above. Such Employer Matching Contribution will equal fifty percent (50%) of the first six percent (6%) of the
|
(b)
|
Employer Discretionary Contribution. The Employer may elect to make an Employer Discretionary Contribution to the Plan at such time and in such amount as may be determined by the Compensation Committee.
|
4.3
|
Vesting
|
(a)
|
Participant Deferrals. A Participant will be one hundred percent (100%) vested in the Compensation Deferrals credited to his Account, including the earnings and losses thereon.
|
(b)
|
Employer Matching Contributions. A Participant will become vested in Employer Matching Contributions made on his behalf to the Plan in accordance with the following schedule:
|
Years of Vesting Service
|
Percentage Vested
|
2 or fewer years
|
0%
|
3 or more years
|
100%
|
(c)
|
Employer Discretionary Contributions. Each Employer Discretionary Contribution may be subject to a vesting schedule, as determined by the Compensation Committee, in its sole discretion, at the time such Employer Discretionary Compensation is elected to be made to the Plan.
|
4.4
|
Plan Benefits
|
4.5
|
Accounting for Deferred Compensation.
|
(a)
|
Establishment of Accounts. The Daily Administrator will establish and maintain an individual Account under the name of each Participant under the Plan. Further, in the sole discretion of the Daily Administrator, additional Accounts may be established for each Participant to facilitate record keeping convenience and accuracy. Each such Account will be credited and adjusted as provided in this Plan. Such Account will be maintained until all amounts credited to such Account have been distributed in accordance with the terms and provisions of this Plan. The establishment and maintenance of a separate Account or Accounts for each Participant will not be construed as giving any person any interest in assets of the Company or an Affiliate, or a right to payment other than as provided hereunder. Amounts credited to such Accounts will be held with the general assets of the Employer.
|
(b)
|
Crediting Accounts. All amounts deferred under the Plan as Compensation Deferrals will be credited to the Participant's Account at the end of the pay period during which such Compensation would have otherwise been paid to the Participant. The amount of Employer Matching Contributions to be contributed to the Plan on the Participant's behalf will be computed on the last day of each month and will be contributed as soon as administratively practicable after such computation. Any Employer Discretionary Contributions made to the Plan will be credited to the Participant's Account at the time such contributions are made.
|
(c)
|
Adjustment of Accounts. Each Account will be adjusted on each business day that the New York Stock Exchange is open to reflect the Compensation Deferrals, Employer Matching Contributions and any Employer Discretionary Contributions made to the Plan, any earnings credited on such Compensation Deferrals, Employer Matching Contributions and Employer Discretionary Contributions pursuant to this Section 4.5(c), and any payment of such Compensation Deferrals, Employer Matching Contributions and Employer Discretionary Contributions under the Plan.
|
(i)
|
Participant Investment Recommendations. For purposes of measuring the investment returns of the Participant's Account(s), the Participant may select the Investment Options in which all or part of his Account(s) will be deemed to be invested. The Participant will make his initial investment designation in the Enrollment Process and such an investment designation will remain effective until it is subsequently changed by the Participant pursuant to this Section 4.5(c). The Participant may change his investment designation each Plan Year at the time and manner specified by the Daily Administrator. The Participant may change the investment allocation of his existing Account(s) at the time and manner specified by the Daily Administrator. During the Plan Year, a Participant may elect to make transfers
|
(ii)
|
Benefits Committee Investment Designation. Notwithstanding the foregoing, the Benefits Committee in its sole and absolute discretion may direct the Daily Administrator to disregard the Participant's investment designation and determine that all interests in the Account(s) will be deemed to be invested in one particular or a mixture of the Investment Options. Likewise, if a Participant fails to make any investment recommendations, the Daily Administrator will invest the Participant's Account(s) in any default investment fund established under the Plan by the Benefits Committee or in such other manner as the Benefits Committee deems appropriate in its sole and absolute discretion.
|
5.1
|
General Rule Regarding Payment of Account
|
5.2
|
Subsequent Deferrals
|
(a)
|
such distribution is deferred for a period of at least five (5) years from the date such amounts would otherwise be paid,
|
(b)
|
in the case of a Scheduled In-Service Withdrawal, such distribution election does not defer such distribution more than forty (40) calendar years from the first day of the Plan Year in which such Compensation would have otherwise been paid,
|
(c)
|
in the case of a Termination of Employment Distribution, such election may also modify the form of payment (e.g., a lump sum to installments or visa versa); provided, that the lump sum payment or first installment, as applicable, satisfies the five (5) year deferral requirement of Section 5.2(a); and
|
(d)
|
the Active Participant makes such subsequent deferral election at least twelve (12) months before the date such amounts would otherwise be paid (i.e., in the case of the first subsequent deferral election for a Scheduled In-Service Withdrawal before the date certain and in the case of the first subsequent deferral election for a Termination of Employment distribution before the date of his Termination of Employment).
|
5.3
|
Distributions on Death
|
5.4
|
Distributions on Disability
|
5.5
|
Unforeseeable Emergency
|
5.6
|
Time and Form of Payment
|
6.1
|
Payment Due an Incompetent
|
(a)
|
Directly to such person;
|
(b)
|
To his legal guardian or conservator; or
|
(c)
|
To his Spouse or to any person charged with the duty of his support, to be expended for his benefit and/or that of his dependents.
|
6.2
|
Nonalienation of Benefits
|
7.1
|
Funding
|
7.2
|
Creditor Status
|
8.1
|
Appointment of Benefits Committee
|
8.2
|
Committee Powers and Duties
|
(a)
|
to appoint a Daily Administrator to handle the day-to-day administration of the Plan pursuant to Section 8.3, and, if applicable, to appoint the Trustee of the Rabbi Trust;
|
(b)
|
to construe and interpret the Plan, decide all questions of eligibility, determine the amount, manner and time of payment of any benefits under the Plan and make final determinations regarding all benefit claims;
|
(c)
|
to prescribe rules for the operation of the Plan;
|
(d)
|
to receive from the Employer and from Employees such information as will be necessary for the proper administration of the Plan;
|
(e)
|
to make any necessary filings with the appropriate government agency;
|
(f)
|
to furnish any Employee or Beneficiary, who requests in writing, statements indicating such Employee's or Beneficiary's total Account balances;
|
(g)
|
to maintain all records necessary for the administration of the Plan;
|
(h)
|
to select the Investment Options under the Plan;
|
(i)
|
to report to the Trustee of the Rabbi Trust all available information regarding the amount of benefits payable to each Employee, the computations with respect to the allocation of assets, and any other information which the Trustee may require;
|
(j)
|
to delegate to one or more of the members of the Benefits Committee the right to act in its behalf in all matters connected with the administration of the Plan and Rabbi Trust;
|
(k)
|
to delegate to any individual such of the powers and duties as the Benefits Committee deems appropriate; and
|
(l)
|
to appoint or employ for the Plan any agents it deems advisable, including, but not limited to, legal counsel.
|
8.3
|
Appointment of Daily Administrator
|
8.4
|
Daily Administrator Powers and Duties
|
(a)
|
to direct the administration of the Plan in accordance with its terms;
|
(b)
|
to adopt rules of procedure and regulations necessary for the administration of the Plan, provided such rules are not inconsistent with the terms of the Plan;
|
(c)
|
to determine all questions with regard to rights of Employees, Participants, and Beneficiaries under the Plan including, but not limited to, questions involving
|
(d)
|
to enforce the terms of the Plan and any rules and regulations adopted by the Benefits Committee;
|
(e)
|
to review and render decisions respecting an initial claim for a benefit under the Plan;
|
(f)
|
to furnish the Employer with information which the Employer may require for tax or other purposes;
|
(g)
|
to engage the service of counsel (who may, if appropriate, be counsel for the Employer), actuaries, and agents whom it may deem advisable to assist it with the performance of its duties;
|
(h)
|
to prescribe procedures to be followed by distributees in obtaining benefits;
|
(i)
|
to receive from the Employer and from Employees such information as is necessary for the proper administration of the Plan;
|
(j)
|
to receive and review reports from the Trustee of the financial condition and receipts of disbursements from the Rabbi Trust;
|
(k)
|
to establish and maintain, or cause to be maintained, the individual Account(s) described in Section 2.1(a);
|
(l)
|
to create and maintain such records and forms as are required for the efficient administration of the Plan;
|
(m)
|
to make all determinations and computations concerning the benefits, credits and debits to which any Participant, or other Beneficiary, is entitled under the Plan;
|
(n)
|
to give the Trustee specific directions in writing with respect to:
|
(i)
|
the making of distribution payments, giving the names of the payees, the amounts to be paid and the time or times when payments will be made; and
|
(ii)
|
the making of any other payments which the Trustee is not by the terms of the Trustee Agreement authorized to make without a direction in writing by the Daily Administrator;
|
(o)
|
to prepare, or cause to be prepared, an annual report for the Employer, as of the last day of each Plan Year, in such form as may be required by the Employer;
|
(p)
|
to determine and maintain records of the age and amount of Compensation, Hours of Service, and Service of each Employee;
|
(q)
|
to comply (or transfer responsibility for compliance to the Trustee) with all applicable Federal income tax withholding requirements for benefit distributions; and
|
(r)
|
to construe the Plan, in its sole and absolute discretion, and make equitable adjustments for any mistakes and errors made in the administration of the Plan.
|
8.5
|
Claim Procedures
|
(a)
|
Initial Claim. In the event that an Employee, Eligible Employee, Participant or his Beneficiary claims to be eligible for benefits, or claims any rights under this Plan, such Claimant must complete and submit such claim forms and supporting documentation as will be required by the Daily Administrator, in its sole and absolute discretion. Likewise, any Participant or Beneficiary who feels unfairly treated as a result of the administration of the Plan must file a written claim, setting forth the basis of the claim, with the Daily Administrator. In connection with the determination of a claim, or in connection with review of a denied claim, the Claimant may examine this Plan, and any other pertinent documents generally available to Participants that are specifically related to the claim.
|
(b)
|
Request for Review. Within ninety (90) days after receiving the notice of the Daily Administrator's disposition of the claim, the Claimant may file with the Benefits Committee a written request for review of his claim. In connection with the request for review, the Claimant will be entitled to be represented by counsel and will be given, upon request and free of charge, reasonable access to all pertinent documents for the preparation of his claim. If the Claimant does not file a written request for review within ninety (90) days after receiving notice of the Daily Administrator's disposition of the claim, the Claimant will be deemed to have accepted the Daily Administrator's written or electronic disposition, unless the Claimant was physically or mentally incapacitated so as to be unable to request review within the ninety (90) day period.
|
(c)
|
Decision on Review. After receipt by the Benefits Committee of a written application for review of his claim, the Benefits Committee will review the claim taking into
|
8.6
|
Benefits Committee Procedures
|
9.1
|
Other Plans
|
10.1
|
Amendment
|
10.2
|
Termination
|
(a)
|
Corporate Dissolution or Bankruptcy. The Compensation Committee may terminate and liquidate the Plan within twelve (12) months of a corporate dissolution taxed under section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that the amounts deferred under the Plan are included in Participants; gross incomes in the latest of the following years (or if earlier, the taxable year in which the amount is actually or constructively received):
|
(i)
|
The calendar year in which the Plan termination and liquidation occurs.
|
(ii)
|
The first calendar year in which the amount is no longer subject to a substantial risk of forfeiture.
|
(iii)
|
The first calendar year in which the payment is administratively practicable.
|
(b)
|
Change in Control. The Compensation Committee may terminate and liquidate the Plan within the thirty (30) days preceding or the twelve (12) months following a change in control event, as defined in Treasury Regulation section 1.409A-3(i)(5)),
|
(c)
|
Termination of Plan. The Compensation Committee may terminate and liquidate the Plan provided that (i) the termination and liquidation does not occur by reason of a downturn of the financial health of the Company or an Employer, (ii) all plans or arrangements that would be aggregated with the Plan under section 409A of the Code are also terminated and liquidated, (iii) no payments in liquidation of the Plan are made within twelve (12) months of the date of termination of the Plan other than payments that would be made in the ordinary course operation of the Plan, (iv) all payments are made within twenty-four (24) months of the date the Plan is terminated and (v) the Company or the Employer, as applicable depending on whether the Plan is terminated with respect to such entity, do not adopt a new plan that would be aggregated with the Plan within three (3) years of the date of the termination of the Plan.
|
10.3
|
Nonguarantee of Employment
|
10.4
|
Indemnification
|
10.5
|
Withholding
|
10.6
|
Expenses
|
Acquisition or Transaction
|
Effective Date
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Each partner must be at least 18 years of age or, if lower, the age at which a person may be legally married in the state in which the partners share the same permanent address;
|
(b)
|
The partners must share the same permanent residence and have done so for at least 12 months;
|
(c)
|
The partners cannot be related by blood to a degree that would prohibit marriage;
|
(d)
|
The partners cannot be legally married to each other or anyone else or in a domestic partnership with another individual nor have had another domestic partner within the prior six months;
|
(e)
|
The partners must share the same permanent address and must be able to provide their driver’s licenses listing the common address;
|
(f)
|
The partners must share joint financial responsibility for basic living expenses, including food, shelter and coverage expenses;
|
(g)
|
The partners must each be mentally competent to consent to contract; and
|
(h)
|
The partners must be financially interdependent, demonstrated by at least two of the following:
|
i.
|
Ownership of a joint bank account; ownership of a joint credit account; or evidence of joint obligation on a loan;
|
ii.
|
Common ownership of a motor vehicle;
|
iii.
|
Joint ownership of a residence; or evidence of a joint mortgage or lease;
|
iv.
|
Evidence of common household expenses, e.g. utility, phone;
|
v.
|
Execution of wills naming each other as executor and/or beneficiary;
|
vi.
|
Granting each other durable powers of attorney; or
|
vii.
|
Designation of each other as beneficiary under a retirement benefit account.
|
(a)
|
A "child" as defined in the GHP (e.g., a natural child of the Domestic Partner, step child of the Domestic Partner or adopted child of the Domestic Partner);
|
(b)
|
Unmarried; and
|
(c)
|
Under the age of 26.
|
(a)
|
Each Employee with a Domestic Partner has an obligation to notify “change in status”, by filing the Declaration of Termination of Domestic Partnership (attached hereto), if there is any change in the Domestic Partnership status as attested to in the Affidavit that would terminate such partnership (such as the death of a Domestic Partner, a change in residence of one partner, termination of the relationship, etc.). The Employee must notify Human Resources within thirty-one (31) days of such change in the Domestic Partnership for purposes of the GHP.
|
(b)
|
Upon termination of the Domestic Partnership, the GHP coverage of the Domestic Partner who is not an employee as well as coverage of any Dependent Children of such Domestic Partner will cease, unless the Dependent Children continue to satisfy the definition of Dependent Children under the GHP (i.e., are unmarried and under the age
|
(c)
|
In the event a Domestic Partnership is terminated for reasons other than death of a Domestic Partner, an Employee cannot re-enroll for Domestic Partnership coverage under the GHP until six months from the date the Domestic Partnership ended.
|
(d)
|
A Domestic Partner will no longer be the Participant’s default beneficiary under the 401(k) Plan and the Nonqualified 401(k) Plan following the filing of a Declaration of Termination of Domestic Partnership.
|
(a)
|
Domestic Partner. Under federal law, COBRA is only available to qualifying employees and their qualifying spouses and dependent children. Thus, under the law a Domestic Partner may not elect COBRA in his or her own right. However, an Employee on COBRA may add a Domestic Partner to the GHP in the same manner as is permitted for active employees. In the event an Employee who is a COBRA beneficiary dies or becomes Medicare entitled, or the Domestic Partnership is terminated, the Employee’s Domestic Partner (or former Domestic Partner) may not make an election under the GHP pursuant to COBRA as a second qualifying event.
|
(b)
|
Dependent Children. If dependent coverage of the Dependent Child of the Domestic Partner ends under the GHP because such a child or children cease to satisfy the definition of Dependent Children under such plan, such children will be eligible to elect COBRA.
|
1.
|
We acknowledge that we have read and understand the Guidelines, which summarize the eligibility criteria, termination provisions, available benefits, employee responsibilities, taxation, and notification requirements pertaining to Domestic Partner status.
|
2.
|
We declare that we meet the eligibility requirements for Domestic Partner status as set forth below: [Check a., b. and c. below as applicable]
|
____ a.
|
We are currently registered as domestic partners with a state or local government (and we meet the requirements of such registry);
|
____ b.
|
We have entered into a legally binding civil union; or
|
____ c.
|
We meet the alternative criteria for establishing Domestic Partner status as set forth below:
|
____ A.
|
Ownership of a joint bank account; ownership of a joint credit account; or evidence of joint obligation on a loan;
|
____ B.
|
Common ownership of a motor vehicle;
|
____ C.
|
Joint ownership of a residence; or evidence of a joint mortgage or lease;
|
____ D.
|
Evidence of common household expenses, e.g. utility, phone;
|
____ E.
|
Execution of wills naming each other as executor and/or beneficiary;
|
____ F.
|
Granting each other durable powers of attorney; or
|
____ G.
|
Designation of each other as beneficiary under a retirement benefit account.
|
3.
|
We acknowledge that the Plan Administrator reserves the right, at its discretion, to require that we supply copies of appropriate documentation supporting any of the certifications made in this Affidavit, including certification of Domestic Partner status, Dependent Children status or federal tax dependent status.
|
4.
|
We understand that obtaining Domestic Partner recognition and coverage and the execution of this Affidavit may affect our liability to each other, to taxing authorities, and to third parties. We understand that we should consult with our respective tax and/or legal advisors regarding these and other potential consequences, and we acknowledge that we have been advised to do so.
|
5.
|
We understand that EHC may take disciplinary action against us if we misrepresent or falsify any of the information in this Affidavit. Disciplinary action may include termination of employment by EHC and appropriate legal action, such as reimbursement of EHC for the contributions and benefits that were improperly obtained and costs incurred related to such misrepresentation or falsification.
|
6.
|
We acknowledge that we have read and understand this Affidavit and that all information set forth in this Affidavit is true and correct. We further acknowledge that EHC will rely on this Affidavit and that EHC will not be liable for a false or inaccurate Affidavit.
|
7.
|
We seek to obtain Domestic Partner coverage in the following GHP plans or programs offered by EHC: [Check below as applicable]
|
8.
|
We seek to obtain coverage for the Dependent Children of the Domestic Partner in the following GHP plans or programs offered by EHC: [Check below as applicable]
|
9.
|
We understand the GHP coverage for the Domestic Partner and the Dependent Children of Domestic Partners (as applicable) will not take effect until the dates set forth in the Guidelines.
|
10.
|
We further understand that the benefits under the GHP will be provided to the Domestic Partner on an after-tax basis for federal income tax purposes unless the Domestic Partner qualifies as a dependent (within the meaning of section 152 (without regard to sections 152(b)(1), (b)(2), or (d)(1)(B)) of the Internal Revenue Code such that benefits under the GHP may be provided on a pre-tax basis for purposes of federal law. We hereby certify that the Domestic Partner ___ is ___ is not (select one) the Employee’s federal tax dependent within the meaning of Code section 152 (determined without regard to Code sections 152(b)(1), (b)(2), and (d)(1)(B)).
|
11.
|
We further understand that the benefits under the GHP will be provided on an after-tax basis for state income tax purposes, unless such benefits qualify for pre-tax payment or an income tax exclusion under state tax law. We hereby certify that we ___ are___ are not (select one) eligible to pay for Domestic Partner health benefits on a pre-tax basis for state tax purposes.
|
12.
|
We, understand that the benefits under the GHP for the Domestic Partner’s Child(ren) who do not qualify as the Employee’s Child(ren) as defined under the Plan will be provided on an after-tax basis for federal and state law purposes. I certify that we ___ are ___ are not (select one) eligible to pay for the Domestic Partner’s children’s health benefits on a pre-tax basis for __ federal and/or __ state tax (select as appropriate) purposes.
|
13.
|
We agree that each year during the annual open enrollment period, or at such time as there is a material change in GHP benefits (or at other times, at the discretion of the Plan Administrator), we will certify to the status of the Domestic Partner (and any enrolled Dependent Children of the Domestic Partner).
|
14.
|
We agree to notify EHC within 31 days after the termination of the Domestic Partner relationship for any reason, including death. We understand that, except in cases of death, the Employee will not be eligible to cover another Domestic Partner under the GHP or recognize until six months after notification to EHC of termination of this Domestic Partner relationship.
|
15.
|
We acknowledge that solely for purposes of the 401(k) Plan and the Nonqualified 401(k) Plan, pursuant to this Affidavit, the Domestic Partner will be the default death beneficiary for the Employee’s account balances under the 401(k) Plan and the Nonqualified 401(k) Plan if the Employee has not completed a beneficiary designation in accordance with the policies and procedures under the 401(k) Plan at the time of the Employee’s death. We
|
Subscribed and sworn to me this ______day of ____________, 20____.
Witness my hand and official seal.
_________________________________
[Seal]
My Commission expires:
Notary Public:
|
Subscribed and sworn to me this ______day of ____________, 20____.
Witness my hand and official seal.
_________________________________
[Seal]
My Commission expires:
Notary Public:
|
1.
|
I make and file this Declaration of Termination of Domestic Partnership in order to cancel the Affidavit Declaring Domestic Partnership filed with EHC on __/__/__.
|
2.
|
Termination of the Affidavit Declaring Domestic Partnership is due to: [Check below as applicable]
|
Subsidiary Name
|
Jurisdiction
of
Incorporation
|
DBA
|
A & B Home Health Solutions, LLC
|
CT
|
Encompass Health Home Health
|
Abba Home Health, L.P.
|
TX
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Advanced Homecare Management, Inc.
|
DE
|
Encompass Health
|
|
|
Encompass Health Home Health & Hospice
|
AHM Action Home Health, LP
|
TX
|
Encompass Health Home Health
|
AnMed Encompass Health Rehabilitation Hospital, LLC
|
SC
|
AnMed Health Rehabilitation Hospital
|
Apex Hospice LLC
|
TX
|
Encompass Health Hospice
|
Best Home Care LP
|
TX
|
Encompass Health Home Health
|
Camellia Home Health of East Tennessee, LLC
|
TN
|
Encompass Health Home Health
|
Camellia Home Health of the Gulf Coast, LLC
|
MS
|
Encompass Health - Home Health of the Gulf Coast
|
Camellia Hospice of East Louisiana, LLC
|
LA
|
Encompass Health Hospice of Vidalia
|
Camellia Hospice of Louisiana, LLC
|
LA
|
Encompass Health Hospice of Bogalusa
|
Camellia Hospice of North Mississippi, LLC
|
MS
|
Encompass Health - Hospice of North Mississippi
|
Camellia Hospice of Northeast Alabama, LLC
|
AL
|
Encompass Health Hospice - Rainbow City
|
Camellia Hospice of Northeast Mississippi, LLC
|
MS
|
Encompass Health - Hospice of Northeast Mississippi
|
Camellia Hospice of South Alabama, LLC
|
MS
|
Encompass Health Hospice - Dothan
|
|
|
Encompass Health Hospice - Prattville
|
Camellia Hospice of the Gulf Coast, LLC
|
MS
|
Encompass Health - Hospice of the Gulf Coast
|
CareServices of Bethesda, LLC
|
FL
|
Encompass Health Home Health of Bethesda
|
CareSouth HHA Holdings of Columbus, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Dothan, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Gainesville, LLC
|
GA
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
CareSouth HHA Holdings of Greensboro, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Lexington, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Middle Georgia, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of North Florida, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Panama City, LLC
|
FL
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Richmond, LLC
|
VA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Tallahassee, LLC
|
FL
|
Encompass Health Home Health
|
CareSouth HHA Holdings of the Bay Area, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of the Treasure Coast, LLC
|
GA
|
Encompass Health Home Health of Jupiter Medical Center
|
CareSouth HHA Holdings of Valley, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Virginia, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Washington, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth HHA Holdings of Western Carolina, LLC
|
GA
|
Encompass Health Home Health
|
CareSouth Hospice, LLC
|
GA
|
Encompass Health Hospice
|
Central Arkansas Rehabilitation Associates, L.P.
|
DE
|
CHI St. Vincent Sherwood Rehabilitation Hospital, a partner of Encompass Health
|
|
|
CHI St. Vincent Hot Springs Rehabilitation Hospital, a partner of Encompass Health
|
Central Louisiana Rehab Associates, L.P.
|
DE
|
Encompass Health Rehabilitation Hospital of Alexandria
|
CMS Rehab of WF, L.P.
|
DE
|
Encompass Health Rehabilitation Hospital of Wichita Falls
|
Continental Home Care, Inc.
|
OK
|
Encompass Health Home Health of Eastern Oklahoma
|
Day-By-Day Staff Relief, Inc.
|
OK
|
Encompass Health Home Health
|
|
|
Encompass Health Home Health of Northeast Oklahoma
|
|
|
Encompass Health Hospice
|
Dosik, Inc.
|
TX
|
Encompass Health Home Health
|
DRC Health Systems, L.P.
|
TX
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Encompass Health Alabama Real Estate, LLC
|
DE
|
|
Encompass Health Arizona Real Estate, LLC
|
DE
|
|
Encompass Health Arkansas Real Estate, LLC
|
DE
|
|
Encompass Health California Real Estate, LLC
|
DE
|
|
Encompass Health Deaconess Rehabilitation Hospital, LLC
|
IN
|
Encompass Health Deaconess Rehabilitation Hospital
|
Encompass Health Fairlawn Holdings, LLC
|
DE
|
|
Encompass Health Home Health of Alabama, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Health Home Health of Birmingham, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Health Home Health of Florida, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Health Home Health of Kentucky, LLC
|
DE
|
Encompass Health Home Health of Kentucky
|
Encompass Health Home Health of Talladega, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Health Hospice of Alabama, LLC
|
DE
|
Encompass Health Hospice
|
Encompass Health Hospice of Pennsylvania, LLC
|
DE
|
Encompass Health Hospice
|
Encompass Health Hospice of Talladega, LLC
|
DE
|
Encompass Health Hospice Talladega
|
Encompass Health Iowa Real Estate, LLC
|
DE
|
|
Encompass Health Jonesboro Holdings, Inc.
|
DE
|
|
Encompass Health Kansas Real Estate, LLC
|
DE
|
|
Encompass Health Kentucky Real Estate, LLC
|
DE
|
|
Encompass Health Maryland Real Estate, LLC
|
DE
|
|
Encompass Health Massachusetts Real Estate, LLC
|
DE
|
|
Encompass Health Methodist Rehabilitation Hospital, LP
|
TN
|
Encompass Health Rehabilitation Hospital of Memphis,
a partner of Methodist Healthcare
|
|
|
Encompass Health Rehabilitation Hospital of
North Memphis, a partner of Methodist Healthcare
|
Encompass Health Nevada Real Estate, LLC
|
DE
|
|
Encompass Health New Mexico Real Estate, LLC
|
DE
|
|
Encompass Health Ohio Real Estate, LLC
|
DE
|
|
Encompass Health Pennsylvania Real Estate, LLC
|
DE
|
|
Encompass Health Rehabilitation Hospital of Abilene, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Abilene
|
Encompass Health Rehabilitation Hospital of Albuquerque, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Albuquerque
|
Encompass Health Rehabilitation Hospital of Altamonte Springs, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Altamonte Springs
|
Encompass Health Rehabilitation Hospital of Altoona, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Altoona
|
Encompass Health Rehabilitation Hospital of Arlington, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Arlington
|
Encompass Health Rehabilitation Hospital of Austin, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Austin
|
Encompass Health Rehabilitation Hospital of Bakersfield, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Bakersfield
|
Encompass Health Rehabilitation Hospital of Bluffton, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Bluffton
|
Encompass Health Rehabilitation Hospital of Braintree, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Braintree
|
Encompass Health Rehabilitation Hospital of Cardinal Hill, LLC
|
DE
|
Cardinal Hill Rehabilitation Hospital
|
Encompass Health Rehabilitation Hospital of Charleston, LLC
|
SC
|
Encompass Health Rehabilitation Hospital of Charleston
|
Encompass Health Rehabilitation Hospital of Cincinnati, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Cincinnati
|
Encompass Health Rehabilitation Hospital of City View, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of City View
|
Encompass Health Rehabilitation Hospital of Colorado Springs, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of
Colorado Springs
|
Encompass Health Rehabilitation Hospital of Columbia, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Columbia
|
Encompass Health Rehabilitation Hospital of Concord, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Concord
|
Encompass Health Rehabilitation Hospital of Cypress, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Cypress
|
Encompass Health Rehabilitation Hospital of Dallas, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Dallas
|
Encompass Health Rehabilitation Hospital of Dayton, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Dayton
|
Encompass Health Rehabilitation Hospital of Desert Canyon, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Desert Canyon
|
Encompass Health Rehabilitation Hospital of Dothan, Inc.
|
AL
|
Encompass Health Rehabilitation Hospital of Dothan
|
Encompass Health Rehabilitation Hospital of East Valley, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of East Valley
|
Encompass Health Rehabilitation Hospital of Erie, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Erie
|
Encompass Health Rehabilitation Hospital of Florence, Inc.
|
SC
|
Encompass Health Rehabilitation Hospital of Florence
|
Encompass Health Rehabilitation Hospital of Fort Smith, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Fort Smith
|
Encompass Health Rehabilitation Hospital of Franklin, LLC
|
TN
|
Encompass Health Rehabilitation Hospital of Franklin
|
Encompass Health Rehabilitation Hospital of Fredericksburg, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Fredericksburg
|
Encompass Health Rehabilitation Hospital of Gadsden, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Gadsden
|
Encompass Health Rehabilitation Hospital of Gulfport, LLC
|
DE
|
Encompass Health Rehabilitation Hospital,
a partner of Memorial Hospital at Gulfport
|
Encompass Health Rehabilitation Hospital of Harmarville, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Harmarville
|
Encompass Health Rehabilitation Hospital of Henderson, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Henderson
|
Encompass Health Rehabilitation Hospital of Humble, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Humble
|
Encompass Health Rehabilitation Hospital of Jonesboro, LLC
|
AR
|
Encompass Health Rehabilitation Hospital of Jonesboro
|
Encompass Health Rehabilitation Hospital of Katy, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Katy
|
Encompass Health Rehabilitation Hospital of Kingsport, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Kingsport
|
Encompass Health Rehabilitation Hospital of Lakeview, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Lakeview
|
Encompass Health Rehabilitation Hospital of Largo, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Largo
|
Encompass Health Rehabilitation Hospital of Las Vegas, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Las Vegas
|
Encompass Health Rehabilitation Hospital of Manati, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Manati
|
Encompass Health Rehabilitation Hospital of Martin County, LLC
|
DE
|
Encompass Health Rehabilitation Hospital,
an affiliate of Martin Health
|
Encompass Health Rehabilitation Hospital of Mechanicsburg, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Mechanicsburg
|
Encompass Health Rehabilitation Hospital of Miami, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Miami
|
Encompass Health Rehabilitation Hospital of Middletown, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Middletown
|
Encompass Health Rehabilitation Hospital of Midland Odessa, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Midland Odessa
|
Encompass Health Rehabilitation Hospital of Modesto, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Modesto
|
Encompass Health Rehabilitation Hospital of Montgomery, Inc.
|
AL
|
Encompass Health Rehabilitation Hospital of Montgomery
|
Encompass Health Rehabilitation Hospital of New England, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of New England
|
Encompass Health Rehabilitation Hospital of Newnan, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Newnan
|
Encompass Health Rehabilitation Hospital of Nittany Valley, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of
Nittany Valley
|
Encompass Health Rehabilitation Hospital of Northern Kentucky, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Northern Kentucky
|
Encompass Health Rehabilitation Hospital of Northern Virginia, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Northern Virginia
|
Encompass Health Rehabilitation Hospital of Northwest Tucson, L.P.
|
DE
|
Encompass Health Rehabilitation Hospital of
Northwest Tucson
|
Encompass Health Rehabilitation Hospital of Ocala, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Ocala
|
Encompass Health Rehabilitation Hospital of Panama City, Inc.
|
FL
|
Encompass Health Rehabilitation Hospital of Panama City
|
Encompass Health Rehabilitation Hospital of Pearland, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Pearland
|
Encompass Health Rehabilitation Hospital of Petersburg, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Petersburg
|
Encompass Health Rehabilitation Hospital of Plano, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Plano
|
Encompass Health Rehabilitation Hospital of Reading, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Reading
|
Encompass Health Rehabilitation Hospital of Richardson, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Richardson
|
Encompass Health Rehabilitation Hospital of Rock Hill, LLC
|
SC
|
Encompass Health Rehabilitation Hospital of Rock Hill
|
Encompass Health Rehabilitation Hospital of Round Rock, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Round Rock
|
Encompass Health Rehabilitation Hospital of San Antonio, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of San Antonio
|
Encompass Health Rehabilitation Hospital of San Juan, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of San Juan
|
Encompass Health Rehabilitation Hospital of Sarasota, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Sarasota
|
Encompass Health Rehabilitation Hospital of Savannah, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Savannah
|
Encompass Health Rehabilitation Hospital of Scottsdale, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Scottsdale
|
Encompass Health Rehabilitation Hospital of Sewickley, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Sewickley
|
Encompass Health Rehabilitation Hospital of Shelby County, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
Shelby County
|
Encompass Health Rehabilitation Hospital of Spring Hill, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Spring Hill
|
Encompass Health Rehabilitation Hospital of Sugar Land, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Sugar Land
|
Encompass Health Rehabilitation Hospital of Sunrise, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Sunrise
|
Encompass Health Rehabilitation Hospital of Tallahassee, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Tallahassee
|
Encompass Health Rehabilitation Hospital of Texarkana, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Texarkana
|
Encompass Health Rehabilitation Hospital of the Mid-Cities, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of
the Mid-Cities
|
Encompass Health Rehabilitation Hospital of The Woodlands, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of
The Woodlands
|
Encompass Health Rehabilitation Hospital of Toms River, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Toms River
|
Encompass Health Rehabilitation Hospital of Treasure Coast, Inc.
|
DE
|
Encompass Health Rehabilitation Hospital of Treasure Coast
|
Encompass Health Rehabilitation Hospital of Tustin, L.P.
|
DE
|
Encompass Health Rehabilitation Hospital of Tustin
|
Encompass Health Rehabilitation Hospital of Utah, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Utah
|
Encompass Health Rehabilitation Hospital of Vineland, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Vineland
|
Encompass Health Rehabilitation Hospital of Western Massachusetts, LLC
|
MA
|
Encompass Health Rehabilitation Hospital of Western Massachusetts
|
Encompass Health Rehabilitation Hospital of Westerville, LLC
|
DE
|
Mount Carmel Rehabilitation Hospital,
an affiliate of Encompass Health
|
Encompass Health Rehabilitation Hospital of York, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of York
|
Encompass Health Rehabilitation Hospital The Vintage, LLC
|
DE
|
Encompass Health Rehabilitation Hospital The Vintage
|
Encompass Health Rehabilitation Hospital Vision Park, LLC
|
DE
|
Encompass Health Rehabilitation Hospital Vision Park
|
Encompass Health Rehabilitation Institute of Tucson, LLC
|
AL
|
Encompass Health Rehabilitation Institute of Tucson
|
Encompass Health Sewickley Holdings, LLC
|
DE
|
|
Encompass Health South Carolina Real Estate, LLC
|
DE
|
|
Encompass Health South Dakota Real Estate, LLC
|
DE
|
|
Encompass Health Texas Real Estate, LLC
|
DE
|
|
Encompass Health Utah Real Estate, LLC
|
DE
|
|
Encompass Health ValleyofTheSun Rehabilitation Hospital, LLC
|
DE
|
Encompass Health Valley of The Sun
Rehabilitation Hospital
|
Encompass Health Virginia Real Estate, LLC
|
DE
|
|
Encompass Health Walton Rehabilitation Hospital, LLC
|
DE
|
Walton Rehabilitation Hospital, an affiliate of
Encompass Health
|
Encompass Health West Virginia Real Estate, LLC
|
DE
|
|
Encompass Home Health of Austin, LLC
|
TX
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Encompass Home Health of Colorado, LLC
|
CO
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Encompass Home Health of DFW, LLC
|
TX
|
Encompass Health Home Health
|
Encompass Home Health of East Texas, LLC
|
DE
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Encompass Home Health of Roanoke, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Home Health of the Mid Atlantic, LLC
|
VA
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Encompass Home Health of the Midwest, LLC
|
DE
|
Encompass Health Home Health
|
Encompass Home Health of the Southeast, LLC
|
FL
|
Encompass Health Home Health
|
Encompass Home Health of the West, LLC
|
ID
|
Encompass Health Home Health
|
|
|
Encompass Health Home Health of Eastern Idaho
|
|
|
Encompass Health Home Health of Southern Utah
|
|
|
Encompass Health Hospice of Southern Utah
|
Encompass Hospice of the West, LLC
|
ID
|
Encompass Health Hospice
|
|
|
Encompass Health Hospice of Eastern Idaho
|
Encompass of Fort Worth, LP
|
TX
|
Encompass Health Home Health
|
Encompass of West Texas, LP
|
TX
|
Encompass Health Home Health
|
Encompass PAHS Rehabilitation Hospital, LLC
|
CO
|
Encompass Health Rehabilitation Hospital of Littleton
|
Geisinger Encompass Health Limited Liability Company
|
PA
|
Geisinger Encompass Health Rehabilitation Hospital
|
Guardian Home Care, Inc.
|
ID
|
Encompass Health Home Health
|
|
|
Encompass Health Home Health of Idaho
|
Hallmark Homecare, L.P.
|
TX
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
HCA Wesley Rehabilitation Hospital, Inc.
|
DE
|
Wesley Rehabilitation Hospital, an affiliate of
Encompass Health
|
HealthCare Innovations of Oklahoma, L.L.C.
|
TX
|
Encompass Health Home Health of Southeast Oklahoma
|
|
|
Encompass Health Hospice
|
HealthCare Innovations of Western Oklahoma, L.L.C.
|
TX
|
Encompass Health Home Health of Western Oklahoma
|
HealthCare Innovations-Travertine Health Services, L.L.C.
|
TX
|
Encompass Health Home Health of Central Oklahoma
|
Home Health Care of Bogalusa, Inc.
|
LA
|
Encompass Health Home Health of Bogalusa
|
Home Health Care Systems, Inc.
|
MS
|
Encompass Health - Home Health & Hospice
|
Hospice Care of Mississippi, LLC
|
MS
|
Encompass Health - Hospice
|
K.C. Rehabilitation Hospital, Inc.
|
DE
|
MidAmerica Rehabilitation Hospital
|
Kansas Rehabilitation Hospital, Inc.
|
DE
|
Kansas Rehabilitation Hospital, a joint venture of Encompass Health and Stormont Vail Health
|
MMC Encompass Health Rehabilitation Hospital, LLC
|
NJ
|
Encompass Health Rehabilitation Hospital of Tinton Falls, a Joint Venture with Monmouth Medical Center
|
Myrtle Beach Rehabilitation Hospital, LLC
|
DE
|
Tidelands Health Rehabilitation Hospital, an affiliate of Encompass Health
|
New England Rehabilitation Hospital of Portland, LLC
|
ME
|
New England Rehabilitation Hospital of Portland,
a Joint Venture of Maine Medical Center and Encompass Health
|
New England Rehabilitation Services of Central Massachusetts, Inc.
|
MA
|
Fairlawn Rehabilitation Hospital, an affiliate of Encompass Health
|
Northwest Arkansas Rehabilitation Associates
|
AR
|
Encompass Health Rehabilitation Hospital, a partner of Washington Regional
|
Novant Health Rehabilitation Hospital of Winston-Salem, LLC
|
DE
|
Novant Health Rehabilitation Hospital, an affiliate of Encompass Health
|
Orion Homecare, LLC
|
ID
|
Encompass Health Home Health
|
|
|
Encompass Health Home Health of Western Idaho
|
|
|
Encompass Health Hospice
|
Preferred Home Health, L.P.
|
TX
|
Encompass Health Home Health
|
Quillen Rehabilitation Hospital of Johnson City, LLC
|
DE
|
Quillen Rehabilitation Hospital, a joint venture of
Ballad Health and Encompass Health
|
Rebound, LLC
|
DE
|
Encompass Health Lakeshore Rehabilitation Hospital
|
|
|
Encompass Health Rehabilitation Hospital of Chattanooga
|
|
|
Encompass Health Rehabilitation Hospital of Huntington
|
Rehabilitation Hospital Corporation of America, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of Salisbury
|
|
|
Encompass Health Rehabilitation Hospital of Richmond
|
|
|
Encompass Health Rehabilitation Hospital of Parkersburg
|
|
|
Encompass Health Rehabilitation Hospital of Princeton
|
Rehabilitation Hospital of Bristol, LLC
|
DE
|
Rehabilitation Hospital of Bristol, a joint venture of Ballad Health and Encompass Health
|
Rehabilitation Hospital of North Alabama, LLC
|
DE
|
Encompass Health Rehabilitation Hospital of North Alabama
|
Rehabilitation Hospital of Phenix City, L.L.C.
|
AL
|
Regional Rehabilitation Hospital
|
Rusk Rehabilitation Center, L.L.C.
|
MO
|
Rusk Rehabilitation Hospital, an affiliation of Encompass Health and MU Health Care
|
Saint Alphonsus Regional Rehabilitation Hospital, LLC
|
ID
|
Saint Alphonsus Regional Rehabilitation Hospital, an affiliate of Encompass Health
|
Sea Pines Rehabilitation Hospital Limited Partnership
|
AL
|
Sea Pines Rehabilitation Hospital, an affiliate of Encompass Health
|
South Plains Rehabilitation Hospital, LLC
|
TX
|
South Plains Rehabilitation Hospital, an affiliate of UMC and Encompass Health
|
St. John Encompass Health Rehabilitation Hospital, LLC
|
DE
|
St. John Rehabilitation Hospital, an affiliate of Encompass Health
|
St. Joseph Encompass Health Rehabilitation Hospital, LLC
|
DE
|
CHI St. Joseph Health Rehabilitation Hospital, an affiliate of Encompass Health
|
Texas Senior Care, L.P.
|
TX
|
Encompass Health Home Health
|
TH of San Antonio LLC
|
TX
|
Encompass Health Hospice
|
The Rehabilitation Institute of St. Louis, LLC
|
MO
|
The Rehabilitation Institute of St. Louis, an affiliation of BJC HealthCare and Encompass Health
|
Tyler Rehab Associates, L.P.
|
DE
|
Christus Trinity Mother Frances Rehabilitation Hospital, a partner of Encompass Health
|
UVA Encompass Health Rehabilitation Hospital, LLC
|
VA
|
UVA Encompass Health Rehabilitation Hospital
|
Van Matre Encompass Health Rehabilitation Hospital, LLC
|
IL
|
Van Matre Encompass Health Rehabilitation Hospital
|
Vanderbilt Stallworth Rehabilitation Hospital, L.P.
|
TN
|
Vanderbilt Stallworth Rehabilitation Hospital
|
WellCare, Inc.
|
NM
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
Wellmark Healthcare Services of El Paso, Inc.
|
TX
|
Encompass Health Home Health
|
|
|
Encompass Health Hospice
|
West Mississippi Home Health Services, Inc.
|
MS
|
Encompass Health - Home Health
|
West Tennessee Rehabilitation Hospital, LLC
|
DE
|
West Tennessee Healthcare Rehabilitation Hospital Jackson, a partnership with Encompass Health
|
|
|
West Tennessee Healthcare Rehabilitation Hospital Cane Creek, a partnership with Encompass Health
|
West Virginia Rehabilitation Hospital, Inc.
|
WV
|
Encompass Health Rehabilitation Hospital of Morgantown
|
Yuma Rehabilitation Hospital, L.L.C.
|
AZ
|
Yuma Rehabilitation Hospital, an affiliation of Encompass Health and Yuma Regional Medical Center
|
1.
|
I have reviewed this Annual Report on Form 10-K of Encompass Health Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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By:
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/s/ MARK J. TARR
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Name: Mark J. Tarr
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Title: President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Encompass Health Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
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By:
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/s/ DOUGLAS E. COLTHARP
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|
|
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Name: Douglas E. Coltharp
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|
|
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Title: Executive Vice President and Chief Financial Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Encompass Health Corporation.
|
|
By:
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/s/ MARK J. TARR
|
|
|
|
Name: Mark J. Tarr
|
|
|
|
Title: President and Chief Executive Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Encompass Health Corporation.
|
|
By:
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/s/ DOUGLAS E. COLTHARP
|
|
|
|
Name: Douglas E. Coltharp
|
|
|
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Title: Executive Vice President and Chief Financial Officer
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