Investments in and Advances to Nonconsolidated Affiliates

6 Months Ended

Jun. 30, 2019

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Investments in and Advances to Nonconsolidated Affiliates

As of June 30, 2019 and December 31, 2018, we had $13.9 million and $12.2 million, respectively, of investments in and advances to nonconsolidated affiliates included in Other long-term assets in our condensed consolidated balance sheets.

Investments in and advances to nonconsolidated affiliates represent our investments in six partially owned subsidiaries, of which five are general or limited partnerships, limited liability companies, or joint ventures in which Encompass Health or one of its subsidiaries is a general or limited partner, managing member, member, or venturer, as applicable. We do not control these affiliates but have the ability to exercise significant influence over the operating and financial policies of certain of these affiliates. Our ownership percentages in these affiliates range from approximately 8% to 60%. We account for these investments using the cost and equity methods of accounting.

The following summarizes the combined results of operations of our equity method affiliates (on a 100% basis, in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net operating revenues	$	10.5		$	10.5		$	22.1		$	21.5
Operating expenses	(6.8		)	(5.6		)	(13.5		)	(13.2		)
Income from continuing operations, net of tax	3.7			4.9			8.6			8.3
Net income	3.7			4.9			8.6			8.3

As a result of negotiations with our partner to amend the joint venture agreement related to Yuma Rehabilitation Hospital, the accounting for this hospital will change from the equity method of accounting to a consolidated entity effective July 1, 2019. We will account for this change in control as a business combination and consolidate this entity using the acquisition method. As a result of our consolidation of this hospital and the remeasurement of our previously held equity interest at fair value, we estimate an approximate $20 million gain as part of Other income in the third quarter of 2019.