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Segment Reporting
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Our internal financial reporting and management structure is focused on the major types of services provided by Encompass Health. We manage our operations using two operating segments which are also our reportable segments: (1) inpatient rehabilitation and (2) home health and hospice. These reportable operating segments are consistent with information used by our chief executive officer, who is our chief operating decision maker, to assess performance and allocate resources. The following is a brief description of our reportable segments:
•Inpatient Rehabilitation - Our national network of inpatient rehabilitation hospitals stretches across 36 states and Puerto Rico, with a concentration of hospitals in the eastern half of the United States and Texas. As of September 30, 2020, we operate 136 inpatient rehabilitation hospitals. We are the sole owner of 87 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 49 jointly owned hospitals. In addition, we manage three 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 September 30, 2020, we provide home health services in 242 locations and hospice services in 83 locations across 31 states with concentrations in the Southeast and Texas. In addition, one of these home health agencies operates as a joint venture which we account for using the equity method of accounting. We are the sole owner of 317 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.
    The accounting policies of our reportable segments are the same as those described in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements accompanying the 2019 Form 10‑K. All revenues for our services are generated through external customers. See Note 1, Basis of Presentation, “Net Operating Revenues,” for the disaggregation of our revenues. No corporate overhead is allocated to either of our reportable segments. Our chief operating decision maker evaluates the performance of our segments and allocates resources to them based on adjusted earnings before interest, taxes, depreciation, and amortization (“Segment Adjusted EBITDA”).
Selected financial information for our reportable segments is as follows (in millions):
Inpatient RehabilitationHome Health and Hospice
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20202019202020192020201920202019
Net operating revenues$899.4 $872.3 $2,633.1 $2,616.3 $274.5 $289.3 $796.9 $804.3 
Operating expenses:
Inpatient rehabilitation:
Salaries and benefits
475.0 459.1 1,408.7 1,347.7 — — — — 
Other operating expenses
135.5 131.3 394.5 386.1 — — — — 
Supplies
45.3 37.0 126.9 109.3 — — — — 
Occupancy costs
15.3 17.0 46.0 49.1 — — — — 
Home health and hospice:
Cost of services sold (excluding depreciation and amortization)
— — — — 121.8 136.4 389.4 372.8 
Support and overhead costs
— — — — 100.7 99.6 299.2 278.1 
671.1 644.4 1,976.1 1,892.2 222.5 236.0 688.6 650.9 
Other income(2.1)(1.8)(3.9)(6.5)— — — — 
Equity in net income of nonconsolidated affiliates
(0.9)(1.0)(2.1)(4.5)(0.1)(0.2)(0.4)(1.0)
Noncontrolling interests22.1 20.1 58.0 60.6 0.3 2.7 0.9 8.2 
Segment Adjusted EBITDA
$209.2 $210.6 $605.0 $674.5 $51.8 $50.8 $107.8 $146.2 
Capital expenditures$90.4 $103.6 $262.6 $266.0 $0.5 $3.1 $2.6 $11.1 
Inpatient RehabilitationHome Health and HospiceEncompass Health Consolidated
As of September 30, 2020
Total assets$5,058.9 $1,611.9 $6,610.5 
Investments in and advances to nonconsolidated affiliates
1.7 3.9 5.6 
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 
    Segment reconciliations (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Total Segment Adjusted EBITDA$261.0 $261.4 $712.8 $820.7 
General and administrative expenses(39.1)(52.5)(117.7)(183.0)
Depreciation and amortization(61.2)(55.1)(180.7)(160.3)
Loss on disposal or impairment of assets(7.5)(0.9)(10.6)(3.3)
Government, class action, and related settlements— — (2.8)— 
Loss on early extinguishment of debt— — — (2.3)
Interest expense and amortization of debt discounts and fees(49.0)(40.3)(138.0)(115.2)
Net income attributable to noncontrolling interests22.4 21.9 58.9 64.5 
SARs mark-to-market impact on noncontrolling interests— 0.9 — 4.3 
Change in fair market value of equity securities0.4 — 0.3 1.2 
Gain on consolidation of joint venture formerly accounted for under the equity method of accounting— 19.2 2.2 19.2 
Payroll taxes on SARs exercise— (0.8)(1.5)(1.0)
Income from continuing operations before income tax expense$127.0 $153.8 $322.9 $444.8 
September 30, 2020December 31, 2019
Total assets for reportable segments$6,670.8 $6,114.2 
Reclassification of deferred income tax liabilities to net deferred income tax assets
(60.3)(33.5)
Total consolidated assets
$6,610.5 $6,080.7 
Additional detail regarding the revenues of our operating segments by service line follows (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Inpatient rehabilitation:
Inpatient$883.2 $850.6 $2,581.2 $2,550.0 
Outpatient and other16.2 21.7 51.9 66.3 
Total inpatient rehabilitation899.4 872.3 2,633.1 2,616.3 
Home health and hospice:
Home health223.3 238.9 649.9 681.1 
Hospice51.2 50.4 147.0 123.2 
Total home health and hospice274.5 289.3 796.9 804.3 
Total net operating revenues$1,173.9 $1,161.6 $3,430.0 $3,420.6