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Basis of Presentation | 6 Months Ended
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Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Basis of Presentation | Basis of Presentation Encompass Health Corporation (the “Company” or “Encompass Health”), incorporated in Delaware in 1984, including its subsidiaries, is a leading provider of post-acute healthcare services, offering both facility-based and home-based patient services in 42 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. We manage our operations and disclose financial information using two reportable segments: (1) inpatient rehabilitation and (2) home health and hospice. See also Note 11, Segment Reporting. The accompanying unaudited condensed consolidated financial statements of Encompass Health Corporation and Subsidiaries should be read in conjunction with the consolidated financial statements and accompanying notes contained in Encompass Health’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on February 25, 2022 (the “2021 Form 10‑K”). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim financial information. Certain information and note disclosures included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted in these interim statements, as allowed by such SEC rules and regulations. The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited financial statements, but it does not include all disclosures required by GAAP. However, we believe the disclosures are adequate to make the information presented not misleading. The unaudited results of operations for the interim periods shown in these financial statements are not necessarily indicative of operating results for the entire year. In our opinion, the accompanying condensed consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state the financial position, results of operations, and cash flows for each interim period presented. Certain prior-year amounts have been reclassified to conform to the current year presentation. Separation of Home Health and Hospice Business— On July 1, 2022, we completed the previously announced separation of our home health and hospice business through the distribution (the “Distribution”) of all of the outstanding shares of common stock, par value $0.01 per share, of Enhabit, Inc. (“Enhabit”) to the stockholders of record of Encompass Health as of the close of business on June 24, 2022 (the “Record Date”). The Distribution was effective at 12:01 a.m., Eastern Time, on July 1, 2022. The Distribution was structured as a pro rata distribution of one share of Enhabit common stock for every two shares of Encompass Health common stock held of record as of the Record Date. No fractional shares have been or will be distributed. A cash payment will be made in lieu of any fractional shares. As a result of the Distribution, Enhabit is now an independent public company and its common stock is listed under the symbol “EHAB” on the New York Stock Exchange. The accompanying unaudited condensed consolidated financial statements include the historical results of Encompass Health, as the Distribution did not take place until July 1, 2022. Immediately after the Distribution, we will no longer consolidate our home health and hospice business into our financial results. Beginning in the third quarter of 2022, Enhabit's historical financial results for periods prior to July 1, 2022 will be reflected in our condensed consolidated financial statements as discontinued operations. Prior to July 1, 2022, we operated under two reporting segments. In future filings, we expect to operate under one reporting segment. As a result of the Distribution, the accompanying unaudited condensed consolidated financial statements are not indicative of our future financial position, results of operations or cash flows. In connection with the Distribution, on June 30, 2022, we entered into several agreements with Enhabit that govern the relationship of the parties following the Distribution, including a Separation and Distribution Agreement, a Transition Services Agreement, a Tax Matters Agreement and an Employee Matters Agreement. See also Note 4, Long-term Debt. Net Operating Revenues— Our Net operating revenues disaggregated by payor source and segment are as follows (in millions):
| Inpatient Rehabilitation |  | Home Health and Hospice |  | Consolidated
| Three Months Ended June 30, |  | Three Months Ended June 30, |  | Three Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Medicare | $ | 690.7 |  |  | $ | 650.8 |  |  | $ | 210.2 |  |  | $ | 234.9 |  |  | $ | 900.9 |  |  | $ | 885.7 |
Medicare Advantage | 160.7 |  |  | 153.6 |  |  | 36.9 |  |  | 29.9 |  |  | 197.6 |  |  | 183.5 |
Managed care | 123.3 |  |  | 114.7 |  |  | 18.0 |  |  | 16.6 |  |  | 141.3 |  |  | 131.3 |
Medicaid | 47.5 |  |  | 41.8 |  |  | 2.8 |  |  | 4.2 |  |  | 50.3 |  |  | 46.0 |
Other third-party payors | 9.4 |  |  | 11.0 |  |  | — |  |  | — |  |  | 9.4 |  |  | 11.0 |
Workers’ compensation | 5.9 |  |  | 5.2 |  |  | 0.1 |  |  | — |  |  | 6.0 |  |  | 5.2 |
Patients | 4.1 |  |  | 4.3 |  |  | — |  |  | 0.3 |  |  | 4.1 |  |  | 4.6 |
Other income | 20.9 |  |  | 20.2 |  |  | — |  |  | 0.2 |  |  | 20.9 |  |  | 20.4 |
Total | $ | 1,062.5 |  |  | $ | 1,001.6 |  |  | $ | 268.0 |  |  | $ | 286.1 |  |  | $ | 1,330.5 |  |  | $ | 1,287.7 |
| Inpatient Rehabilitation |  | Home Health and Hospice |  | Consolidated
| Six Months Ended June 30, |  | Six Months Ended June 30, |  | Six Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Medicare | $ | 1,380.8 |  |  | $ | 1,265.3 |  |  | $ | 427.4 |  |  | $ | 458.8 |  |  | $ | 1,808.2 |  |  | $ | 1,724.1 |
Medicare Advantage | 316.7 |  |  | 312.0 |  |  | 71.4 |  |  | 57.9 |  |  | 388.1 |  |  | 369.9 |
Managed care | 254.8 |  |  | 226.9 |  |  | 36.9 |  |  | 30.9 |  |  | 291.7 |  |  | 257.8 |
Medicaid | 89.3 |  |  | 80.8 |  |  | 6.3 |  |  | 8.0 |  |  | 95.6 |  |  | 88.8 |
Other third-party payors | 19.4 |  |  | 23.1 |  |  | — |  |  | — |  |  | 19.4 |  |  | 23.1 |
Workers’ compensation | 12.0 |  |  | 10.9 |  |  | 0.2 |  |  | 0.1 |  |  | 12.2 |  |  | 11.0 |
Patients | 9.2 |  |  | 9.2 |  |  | 0.1 |  |  | 0.5 |  |  | 9.3 |  |  | 9.7 |
Other income | 39.6 |  |  | 33.3 |  |  | — |  |  | 0.4 |  |  | 39.6 |  |  | 33.7 |
Total | $ | 2,121.8 |  |  | $ | 1,961.5 |  |  | $ | 542.3 |  |  | $ | 556.6 |  |  | $ | 2,664.1 |  |  | $ | 2,518.1 |
See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements accompanying the 2021 Form 10-K for our policy related to Net operating revenues. Recently Adopted Accounting Pronouncements— We do not believe any recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows.

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