Earnings per Common Share

12 Months Ended

Dec. 31, 2019

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):



	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

The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions):



	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

Options to purchase approximately 0.1 million and 0.2 million shares of common stock were outstanding as of December 31, 2019 and 2017, respectively, but were not included in the computation of diluted weighted-average shares because to do so would have been antidilutive. There were no antidilutive options to purchase shares of common stock outstanding as of December 31, 2018.

In February 2014, our board of directors approved an increase in our common stock repurchase authorization from $200 million 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. On July 24, 2018, the Company's board approved resetting the aggregate common stock repurchase authorization to $250 million. During 2019 and 2017, we repurchased 0.8 million and 0.9 million shares of our common stock in the open market for $45.9 million and $38.1 million, respectively. There were no repurchases of our common stock during 2018.

In July 2016, our board of directors approved an increase in the quarterly cash dividend on our common stock and declared a dividend of $0.24 per share. The cash dividend of $0.24 per common share was declared and paid each quarter through July 2017. In July 2017, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.25 per share. The cash dividend of $0.25 per common share was declared and paid in each quarter through July 2018. In July 2018, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.27 per share. The cash dividend of $0.27 per common share was declared and paid in each quarter through July 2019. In July 2019, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.28 per share. The cash dividend of $0.28 per share was declared in July 2019 and October 2019 and paid in October 2019 and January 2020, respectively. As of December 31, 2019 and 2018, accrued common stock dividends of $29.0 million and $28.4 million were included in Other current liabilities in our consolidated balance sheet. 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. Prior to their expiration on January 17, 2017, 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 2016.

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 in January 2017. Cash exercises resulted in gross proceeds of $26.7 million in January 2017.