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Earnings per Common Share | 6 Months Ended
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Jun. 30, 2018
Earnings Per Share [Abstract] |
Earnings per Common Share | Earnings per Common Share The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Basic: |  |  |  |  |  |  |
Numerator: |  |  |  |  |  |  |
Income from continuing operations | $ | 113.0 |  |  | $ | 79.2 |  |  | $ | 218.7 |  |  | $ | 163.9 |
Less: Net income attributable to noncontrolling interests included in continuing operations | (21.4 | ) |  | (16.4 | ) |  | (42.8 | ) |  | (34.0 | )
Less: Income allocated to participating securities | (0.3 | ) |  | (0.2 | ) |  | (0.6 | ) |  | (0.4 | )
Income from continuing operations attributable to Encompass Health common shareholders | 91.3 |  |  | 62.6 |  |  | 175.3 |  |  | 129.5 |
Income (loss) from discontinued operations, net of tax, attributable to Encompass Health common shareholders | 0.2 |  |  | 0.2 |  |  | (0.3 | ) |  | (0.1 | )
Net income attributable to Encompass Health common shareholders | $ | 91.5 |  |  | $ | 62.8 |  |  | $ | 175.0 |  |  | $ | 129.4 |
Denominator: |  |  |  |  |  |  |
Basic weighted average common shares outstanding | 97.9 |  |  | 90.3 |  |  | 97.9 |  |  | 89.5 |
Basic earnings per share attributable to Encompass Health common shareholders: |  |  |  |  |  |  |
Continuing operations | $ | 0.93 |  |  | $ | 0.70 |  |  | $ | 1.79 |  |  | $ | 1.45 |
Discontinued operations | — |  |  | — |  |  | — |  |  | — |
Net income | $ | 0.93 |  |  | $ | 0.70 |  |  | $ | 1.79 |  |  | $ | 1.45 |
Diluted: |  |  |  |  |  |  |
Numerator: |  |  |  |  |  |  |
Income from continuing operations | $ | 113.0 |  |  | $ | 79.2 |  |  | $ | 218.7 |  |  | $ | 163.9 |
Less: Net income attributable to noncontrolling interests included in continuing operations | (21.4 | ) |  | (16.4 | ) |  | (42.8 | ) |  | (34.0 | )
Add: Interest on convertible debt, net of tax | — |  |  | 2.1 |  |  | — |  |  | 4.6 |
Add: Loss on extinguishment of convertible debt, net of tax | — |  |  | 6.2 |  |  | — |  |  | 6.2 |
Income from continuing operations attributable to Encompass Health common shareholders | 91.6 |  |  | 71.1 |  |  | 175.9 |  |  | 140.7 |
Income (loss) from discontinued operations, net of tax, attributable to Encompass Health common shareholders | 0.2 |  |  | 0.2 |  |  | (0.3 | ) |  | (0.1 | )
Net income attributable to Encompass Health common shareholders | $ | 91.8 |  |  | $ | 71.3 |  |  | $ | 175.6 |  |  | $ | 140.6 |
Denominator: |  |  |  |  |  |  |
Diluted weighted average common shares outstanding | 99.6 |  |  | 98.9 |  |  | 99.6 |  |  | 99.0 |
Diluted earnings per share attributable to Encompass Health common shareholders: |  |  |  |  |  |  |
Continuing operations | $ | 0.92 |  |  | $ | 0.70 |  |  | $ | 1.76 |  |  | $ | 1.42 |
Discontinued operations | — |  |  | — |  |  | — |  |  | — |
Net income | $ | 0.92 |  |  | $ | 0.70 |  |  | $ | 1.76 |  |  | $ | 1.42 |
The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Basic weighted average common shares outstanding | 97.9 |  |  | 90.3 |  |  | 97.9 |  |  | 89.5 |
Convertible senior subordinated notes | — |  |  | 7.5 |  |  | — |  |  | 8.1 |
Restricted stock awards, dilutive stock options, and restricted stock units | 1.7 |  |  | 1.1 |  |  | 1.7 |  |  | 1.4 |
Diluted weighted average common shares outstanding | 99.6 |  |  | 98.9 |  |  | 99.6 |  |  | 99.0 |
For the second quarter of 2017, adding back the loss on extinguishment of convertible debt, net of tax to our Income from continuing operations attributable to Encompass Health common shareholders causes a per share increase when calculating diluted earnings per common share resulting in an antidilutive per share amount. In October 2017, February 2018, and May 2018, our board of directors declared cash dividends of $0.25 per share that were paid in January 2018, April 2018, and July 2018, respectively. On July 24, 2018, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.27 per share, payable on October 15, 2018 to stockholders of record on October 1, 2018. As of June 30, 2018 and December 31, 2017, accrued common stock dividends of $26.0 million and $25.4 million, respectively, were included in Accrued expenses and other current liabilities in our condensed consolidated balance sheets. Future dividend payments are subject to declaration by our board of directors. On September 30, 2009, we issued 5.0 million shares of common stock and 8.2 million common stock warrants in full satisfaction of our obligation to do so under the January 2007 comprehensive settlement of the consolidated securities action brought against us by our stockholders and bondholders. Under the terms of the related warrant agreement, the warrants were exercisable at a price of $41.40 per share by means of a cash or a cashless exercise at the option of the holder. The warrants were not assumed exercised for dilutive shares outstanding because they were antidilutive in the periods presented. The warrants expired on January 17, 2017. The following table summarizes information relating to these warrants and their activity through their expiration date (number of warrants in millions):
| 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 | — |  |  |
The above exercises resulted in the issuance of 0.7 million shares of common stock. Cash exercises resulted in gross proceeds of approximately $27 million. See Note 9, Long-term Debt and Note 16, Earnings per Common Share, to the consolidated financial statements accompanying the 2017 Form 10-K for additional information related to our convertible senior subordinated notes, common stock and common stock warrants.

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