Investments in and Advances to Nonconsolidated Affiliates

12 Months Ended

Dec. 31, 2020

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

Investments in and Advances to Nonconsolidated Affiliates

Investments in and Advances to Nonconsolidated Affiliates:

Investments in and advances to nonconsolidated affiliates as of December 31, 2020 represents our investment in four partially owned subsidiaries, of which three 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 51%. We account for these investments using the equity method of accounting and measurement alternative. Our investments, which are included in Other long-term assets in our consolidated balance sheets, consist of the following (in millions):


	As of December 31,
	2020		2019
Equity method investments:
Capital contributions	$	0.9	$	0.9
Cumulative share of income	68.7		68.1
Cumulative share of distributions	(66.1)		(63.6)
	3.5		5.4
Measurement alternative investments:
Capital contributions, net of distributions and impairments	2.0		2.0
Total investments in and advances to nonconsolidated affiliates	$	5.5	$	7.4

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


	As of December 31,
	2020		2019
Assets—
Current	$	2.9	$	4.2
Noncurrent	7.7		9.3
Total assets	$	10.6	$	13.5
Liabilities and equity—
Current liabilities	$	0.3	$	0.5
Noncurrent liabilities	0.2		0.3
Partners’ capital and shareholders’ equity—
Encompass Health	3.5		4.9
Outside partners	6.6		7.8
Total liabilities and equity	$	10.6	$	13.5

Condensed statements of comprehensive income (in millions):


	For the Year Ended December 31,
	2020		2019		2018
Net operating revenues	$	16.0	$	32.6	$	42.6
Operating expenses	(8.1)		(19.1)		(25.6)
Income from continuing operations, net of tax	7.9		13.4		17.1
Net income	7.9		13.4		17.1

As a result of an amendment to the joint venture agreement related to our Jupiter, Florida home health agency, the accounting for this agency changed from the equity method of accounting to a consolidated entity effective January 1, 2020. The amendment revised certain participatory rights held by our joint venture partner resulting in Encompass Health gaining control of this entity from an accounting perspective. We accounted for this change in control as a business combination and consolidated this entity using the acquisition method. The consolidation of the Jupiter, Florida agency did not have a material impact on our financial position, results of operations, or cash flows. As a result of our consolidation of this home health agency and the remeasurement of our previously held equity interest at fair value, Goodwill increased by $3.3 million and we recorded a $2.2 million gain as part of Other income during the year ended December 31, 2020.

As a result of an amendment to the joint venture agreement related to Yuma Rehabilitation Hospital, the accounting for this hospital changed from the equity method of accounting to a consolidated entity effective July 1, 2019. The amendment revised certain participatory rights held by our joint venture partner resulting in Encompass Health gaining control of this entity from an accounting perspective. We accounted for this change in control as a business combination and consolidated this entity using the acquisition method. The consolidation of Yuma Rehabilitation Hospital did not have a material impact on our financial position, results of operations, or cash flows. As a result of our consolidation of this hospital and the remeasurement of our previously held equity interest at fair value, Goodwill increased by $24.9 million and we recorded a $19.2 million gain as part of Other income during the year ended December 31, 2019.