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Segment Reporting | 6 Months Ended
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Jun. 30, 2022
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. As of June 30, 2022, 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. Going forward, we expect to have one reportable segment: inpatient rehabilitation. The following is a brief description of our reportable segments as of June 30, 2022: •Inpatient Rehabilitation - Our national network of inpatient rehabilitation hospitals stretches across 35 states and Puerto Rico, with a concentration of hospitals in the eastern half of the United States and Texas. As of June 30, 2022, we operate 150 inpatient rehabilitation hospitals. We are the sole owner of 95 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 55 jointly owned hospitals. In addition, we manage two 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 June 30, 2022, we provide home health services in 251 locations and hospice services in 100 locations across 34 states with concentrations in the southern half of the United States. We are the sole owner of 336 of these locations. We retain 50.0% to 90.0% ownership in the remaining 15 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. Hospice care focuses on the quality of life for patients who are experiencing an advanced, life limiting illness while treating the person and symptoms of the disease, rather than the disease itself. 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 2021 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 Rehabilitation |  | Home Health and Hospice
| Three Months Ended June 30, |  | Six Months Ended June 30, |  | Three Months Ended June 30, |  | Six Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Net operating revenues | $ | 1,062.5 |  |  | $ | 1,001.6 |  |  | $ | 2,121.8 |  |  | $ | 1,961.5 |  |  | $ | 268.0 |  |  | $ | 286.1 |  |  | $ | 542.3 |  |  | $ | 556.6 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inpatient rehabilitation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and benefits | 585.9 |  |  | 515.9 |  |  | 1,173.3 |  |  | 1,017.8 |  |  | — |  |  | — |  |  | — |  |  | — |
Other operating expenses | 166.4 |  |  | 147.5 |  |  | 324.7 |  |  | 287.5 |  |  | — |  |  | — |  |  | — |  |  | — |
Supplies | 47.4 |  |  | 44.1 |  |  | 97.2 |  |  | 89.3 |  |  | — |  |  | — |  |  | — |  |  | — |
Occupancy costs | 13.8 |  |  | 15.0 |  |  | 29.2 |  |  | 30.1 |  |  | — |  |  | — |  |  | — |  |  | — |
Home health and hospice: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of service (excluding depreciation and amortization) | — |  |  | — |  |  | — |  |  | — |  |  | 124.2 |  |  | 122.6 |  |  | 248.6 |  |  | 240.7 |
Support and overhead costs | — |  |  | — |  |  | — |  |  | — |  |  | 99.3 |  |  | 103.1 |  |  | 198.5 |  |  | 204.5 |
| 813.5 |  |  | 722.5 |  |  | 1,624.4 |  |  | 1,424.7 |  |  | 223.5 |  |  | 225.7 |  |  | 447.1 |  |  | 445.2 |
Other expense (income) | 3.1 |  |  | (2.3) |  |  | 4.2 |  |  | (3.8) |  |  | — |  |  | (1.6) |  |  | — |  |  | (1.6) |
Equity in net income of nonconsolidated affiliates | (1.0) |  |  | (0.8) |  |  | (1.9) |  |  | (1.6) |  |  | — |  |  | (0.2) |  |  | — |  |  | (0.4) |
Noncontrolling interests | 21.9 |  |  | 28.2 |  |  | 43.9 |  |  | 53.3 |  |  | 0.7 |  |  | 0.5 |  |  | 1.3 |  |  | 0.9 |
Segment Adjusted EBITDA | $ | 225.0 |  |  | $ | 254.0 |  |  | $ | 451.2 |  |  | $ | 488.9 |  |  | $ | 43.8 |  |  | $ | 61.7 |  |  | $ | 93.9 |  |  | $ | 112.5 |
Capital expenditures | $ | 117.5 |  |  | $ | 120.4 |  |  | $ | 235.3 |  |  | $ | 220.2 |  |  | $ | 2.6 |  |  | $ | 2.2 |  |  | $ | 4.9 |  |  | $ | 3.1 |
| Inpatient Rehabilitation |  | Home Health and Hospice |  | Encompass Health Consolidated
As of June 30, 2022 |  |  |  |  |
Total assets | $ | 5,459.0 |  |  | $ | 1,623.2 |  |  | $ | 7,082.2 |
Investments in and advances to nonconsolidated affiliates | 1.3 |  |  | 1.6 |  |  | 2.9 |
As of December 31, 2021 |  |  |  |  |
Total assets | $ | 5,143.0 |  |  | $ | 1,721.9 |  |  | $ | 6,864.9 |
Investments in and advances to nonconsolidated affiliates | 2.4 |  |  | 1.6 |  |  | 4.0 |
Segment reconciliations (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Total Segment Adjusted EBITDA | $ | 268.8 |  |  | $ | 315.7 |  |  | $ | 545.1 |  |  | $ | 601.4 |
General and administrative expenses | (60.3) |  |  | (54.2) |  |  | (108.7) |  |  | (92.8) |
Depreciation and amortization | (68.8) |  |  | (63.4) |  |  | (135.0) |  |  | (125.9) |
Loss on disposal or impairment of assets | (2.3) |  |  | (2.9) |  |  | (2.9) |  |  | (2.8) |
Loss on early extinguishment of debt | (1.1) |  |  | (1.0) |  |  | (1.4) |  |  | (1.0) |
Interest expense and amortization of debt discounts and fees | (60.6) |  |  | (41.8) |  |  | (100.2) |  |  | (84.6) |
Net income attributable to noncontrolling interests | 22.6 |  |  | 28.7 |  |  | 45.2 |  |  | 54.2 |
Change in fair market value of equity securities | (3.2) |  |  | 0.7 |  |  | (5.7) |  |  | 0.6 |
Income from continuing operations before income tax expense | $ | 95.1 |  |  | $ | 181.8 |  |  | $ | 236.4 |  |  | $ | 349.1 |
Additional detail regarding the revenues of our operating segments by service line follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Inpatient rehabilitation: |  |  |  |  |  |  |
Inpatient | $ | 1,037.8 |  |  | $ | 976.9 |  |  | $ | 2,074.0 |  |  | $ | 1,919.2 |
Outpatient and other | 24.7 |  |  | 24.7 |  |  | 47.8 |  |  | 42.3 |
Total inpatient rehabilitation | 1,062.5 |  |  | 1,001.6 |  |  | 2,121.8 |  |  | 1,961.5 |
Home health and hospice: |  |  |  |  |  |  |
Home health | 220.2 |  |  | 232.3 |  |  | 445.1 |  |  | 452.2 |
Hospice | 47.8 |  |  | 53.8 |  |  | 97.2 |  |  | 104.4 |
Total home health and hospice | 268.0 |  |  | 286.1 |  |  | 542.3 |  |  | 556.6 |
Total net operating revenues | $ | 1,330.5 |  |  | $ | 1,287.7 |  |  | $ | 2,664.1 |  |  | $ | 2,518.1 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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