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Business Combinations | 9 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations During the nine months ended September 30, 2022, we completed the following acquisitions, none of which were individually material to our financial position, results of operations, or cash flows. Each acquisition was made to enhance our position and ability to provide inpatient rehabilitation services to patients in the applicable geographic areas. •In August 2022, we acquired 60% of the operations of a 23-bed inpatient rehabilitation unit in Grand Forks, North Dakota when Altru Health System contributed those operations to our existing joint venture. •In August 2022, we acquired 50% of the operations of a 22-bed inpatient rehabilitation unit in Moline, Illinois when Trinity Medical Center contributed those operations to our existing joint venture. We accounted for these transactions under the acquisition method of accounting and reported the results of operations of the acquired hospitals from the respective dates of acquisition. Assets acquired were recorded at their estimated fair values as of the acquisition date. Estimated fair values were based on an income approach using discounted cash flow techniques for the noncompete intangible assets. The aforementioned income method utilize management’s estimates of future operating results and cash flows discounted using a weighted-average cost of capital. The excess of the fair value of the consideration conveyed over the fair value of the assets acquired was recorded as goodwill. The goodwill reflects our expectations of our ability to gain access to and penetrate the acquired hospitals’ historical patient base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive demographic trends in these markets. None of the goodwill recorded as a result from these transactions is deductible for federal income tax purposes. The fair value of the assets acquired at the acquisition dates were as follows (in millions):
Identifiable intangible assets: |
Noncompete agreements (useful lives of 2 to 3 years) | $ | 0.3 |
Goodwill | 10.4 |
Total assets acquired | $ | 10.7 |
Information regarding the net cash paid for the acquisitions during each period presented is as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Fair value of assets acquired | $ | 0.3 |  |  | $ | 0.6 |  |  | $ | 0.3 |  |  | $ | 1.4 |
Goodwill | 10.4 |  |  | 5.3 |  |  | 10.4 |  |  | 8.8 |
Fair value of noncontrolling interest owned by joint venture partner | (10.7) |  |  | (5.9) |  |  | (10.7) |  |  | (9.1) |
Net cash paid for acquisitions | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1.1 |
Pro Forma Results of Operations The following table summarizes the results of operations of the above mentioned acquisitions from the dates of acquisitions included in our consolidated results of operations and the unaudited pro forma results of operations of the combined entity had the dates of the acquisitions been January 1, 2021 (in millions):
| Net Operating Revenues |  | Net Income Attributable to Encompass Health
Acquired entities only: Actual from acquisition date to September 30, 2022 | $ | — |  |  | $ | — |
Combined entity: Supplemental pro forma from 07/01/22-9/30/22 | 1,090.4 |  |  | 45.4 |
Combined entity: Supplemental pro forma from 07/01/21-9/30/21 | 1,012.8 |  |  | 100.1 |
Combined entity: Supplemental pro forma from 01/01/22-9/30/22 | 3,216.1 |  |  | 181.8 |
Combined entity: Supplemental pro forma from 01/01/21-9/30/21 | 2,978.3 |  |  | 320.9 |
The information presented above is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisitions had occurred as of the beginning of our 2021 reporting period. See Note 2, Business Combinations, to the consolidated financial statements accompanying the 2021 Form 10‑K for information regarding acquisitions completed in 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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