(Commission File Number) | (IRS Employer Identification No.) | ||||
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Exhibit Number | Description | |||||||
104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document |
ENCOMPASS HEALTH CORPORATION | ||||||||
By: | /S/ DOUGLAS E. COLTHARP | |||||||
Name: | Douglas E. Coltharp | |||||||
Title: | Executive Vice President and Chief Financial Officer |
Media Contact | August 1, 2022 | ||||
Casey Winger, 205 447-6410 | |||||
casey.winger@encompasshealth.com | |||||
Investor Relations Contact | |||||
Mark Miller, 205 970-5860 | |||||
mark.miller@encompasshealth.com |
1 |
Growth | |||||||||||||||||||||||
Q2 2022 | Q2 2021 | Dollars | Percent | ||||||||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||||||||||
Net operating revenues | $ | 1,330.5 | $ | 1,287.7 | $ | 42.8 | 3.3 | % | |||||||||||||||
Income from continuing operations attributable to Encompass Health per diluted share | 0.49 | 1.13 | (0.64) | (56.6) | % | ||||||||||||||||||
Adjusted earnings per share | 0.89 | 1.17 | (0.28) | (23.9) | % | ||||||||||||||||||
Cash flows provided by operating activities | 244.6 | 255.9 | (11.3) | (4.4) | % | ||||||||||||||||||
Adjusted EBITDA | 240.2 | 278.9 | (38.7) | (13.9) | % | ||||||||||||||||||
Adjusted free cash flow | 205.7 | 205.6 | 0.1 | — | % | ||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Cash flows provided by operating activities | $ | 463.5 | $ | 414.4 | $ | 49.1 | 11.8 | % | |||||||||||||||
Adjusted free cash flow | 371.6 | 313.0 | 58.6 | 18.7 | % |
Q2 2022 | % of Consolidated Revenue | Q2 2021 | % of Consolidated Revenue | ||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
General and administrative expenses, excluding stock-based compensation | $ | 28.6 | 2.1% | $ | 36.8 | 2.9% |
2 |
Growth | |||||||||||||||||||||||
Q2 2022 | Q2 2021 | Dollars | Percent | ||||||||||||||||||||
Net operating revenues: | (In Millions) | ||||||||||||||||||||||
Inpatient | $ | 1,037.8 | $ | 976.9 | $ | 60.9 | 6.2 | % | |||||||||||||||
Outpatient and other | 24.7 | 24.7 | — | — | % | ||||||||||||||||||
Total segment revenue | $ | 1,062.5 | $ | 1,001.6 | $ | 60.9 | 6.1 | % | |||||||||||||||
(Actual Amounts) | |||||||||||||||||||||||
Discharges | 51,902 | 49,492 | 2,410 | 4.9 | % | ||||||||||||||||||
Same-store discharge growth | 1.6 | % | |||||||||||||||||||||
Net patient revenue per discharge | $ | 19,995 | $ | 19,739 | $ | 256 | 1.3 | % | |||||||||||||||
Revenue reserves related to bad debt as a percent of revenue | 2.2 | % | 1.7 | % | 50 bps | ||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Adjusted EBITDA | $ | 225.0 | $ | 254.0 | $ | (29.0) | (11.4) | % |
Growth | |||||||||||||||||||||||
Q2 2022 | Q2 2021 | Dollars | Percent | ||||||||||||||||||||
Net operating revenues: | (In Millions) | ||||||||||||||||||||||
Home health | $ | 220.2 | $ | 232.3 | $ | (12.1) | (5.2) | % | |||||||||||||||
Hospice | 47.8 | 53.8 | (6.0) | (11.2) | % | ||||||||||||||||||
Total segment revenue | $ | 268.0 | $ | 286.1 | $ | (18.1) | (6.3) | % | |||||||||||||||
Adjusted EBITDA | $ | 43.8 | $ | 61.7 | $ | (17.9) | (29.0) | % | |||||||||||||||
3 |
2022 Guidance Ranges | |||||
(In Millions, Except Per Share Data) | |||||
Net operating revenues | $4,250 to $4,300 | ||||
Adjusted EBITDA | $820 to $840 | ||||
Adjusted earnings per share from continuing operations attributable to Encompass Health | $2.77 to $2.91 |
4 |
5 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||||||||||
Net operating revenues | $ | 1,330.5 | $ | 1,287.7 | $ | 2,664.1 | $ | 2,518.1 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Salaries and benefits | 773.8 | 708.2 | 1,549.8 | 1,395.4 | |||||||||||||||||||
Other operating expenses | 193.4 | 172.7 | 375.5 | 335.0 | |||||||||||||||||||
Occupancy costs | 19.3 | 20.2 | 40.2 | 40.4 | |||||||||||||||||||
Supplies | 52.8 | 50.0 | 108.9 | 101.9 | |||||||||||||||||||
General and administrative expenses | 60.3 | 54.2 | 108.7 | 92.8 | |||||||||||||||||||
Depreciation and amortization | 68.8 | 63.4 | 135.0 | 125.9 | |||||||||||||||||||
Total operating expenses | 1,168.4 | 1,068.7 | 2,318.1 | 2,091.4 | |||||||||||||||||||
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 | |||||||||||||||||||
Other expense (income) | 6.3 | (4.6) | 9.9 | (6.0) | |||||||||||||||||||
Equity in net income of nonconsolidated affiliates | (1.0) | (1.0) | (1.9) | (2.0) | |||||||||||||||||||
Income from continuing operations before income tax expense | 95.1 | 181.8 | 236.4 | 349.1 | |||||||||||||||||||
Provision for income tax expense | 23.8 | 39.5 | 55.0 | 74.0 | |||||||||||||||||||
Income from continuing operations | 71.3 | 142.3 | 181.4 | 275.1 | |||||||||||||||||||
Loss from discontinued operations, net of tax | — | (0.3) | — | (0.3) | |||||||||||||||||||
Net and comprehensive income | 71.3 | 142.0 | 181.4 | 274.8 | |||||||||||||||||||
Less: Net and comprehensive income attributable to noncontrolling interests | (22.6) | (28.7) | (45.2) | (54.2) | |||||||||||||||||||
Net and comprehensive income attributable to Encompass Health | $ | 48.7 | $ | 113.3 | $ | 136.2 | $ | 220.6 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 99.2 | 99.0 | 99.2 | 99.0 | |||||||||||||||||||
Diluted | 100.3 | 100.2 | 100.2 | 100.2 | |||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic earnings per share attributable to Encompass Health common shareholders: | |||||||||||||||||||||||
Continuing operations | $ | 0.49 | $ | 1.14 | $ | 1.37 | $ | 2.22 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
Net income | $ | 0.49 | $ | 1.14 | $ | 1.37 | $ | 2.22 | |||||||||||||||
Diluted earnings per share attributable to Encompass Health common shareholders: | |||||||||||||||||||||||
Continuing operations | $ | 0.49 | $ | 1.13 | $ | 1.36 | $ | 2.20 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
Net income | $ | 0.49 | $ | 1.13 | $ | 1.36 | $ | 2.20 | |||||||||||||||
Amounts attributable to Encompass Health common shareholders: | |||||||||||||||||||||||
Income from continuing operations | $ | 48.7 | $ | 113.6 | $ | 136.2 | $ | 220.9 | |||||||||||||||
Loss from discontinued operations, net of tax | — | (0.3) | — | (0.3) | |||||||||||||||||||
Net income attributable to Encompass Health | $ | 48.7 | $ | 113.3 | $ | 136.2 | $ | 220.6 |
6 |
June 30, 2022 | December 31, 2021 | ||||||||||
(In Millions) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 186.5 | $ | 54.8 | |||||||
Restricted cash | 70.8 | 65.1 | |||||||||
Accounts receivable | 658.7 | 680.3 | |||||||||
Other current assets | 116.4 | 121.2 | |||||||||
Total current assets | 1,032.4 | 921.4 | |||||||||
Property and equipment, net | 2,730.1 | 2,601.6 | |||||||||
Operating lease right-of-use assets | 238.5 | 242.0 | |||||||||
Goodwill | 2,456.5 | 2,427.9 | |||||||||
Intangible assets, net | 398.4 | 417.5 | |||||||||
Other long-term assets | 226.3 | 254.5 | |||||||||
Total assets | $ | 7,082.2 | $ | 6,864.9 | |||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 49.2 | $ | 42.8 | |||||||
Current operating lease liabilities | 36.7 | 38.4 | |||||||||
Accounts payable | 138.3 | 137.6 | |||||||||
Accrued expenses and other current liabilities | 611.2 | 530.0 | |||||||||
Total current liabilities | 835.4 | 748.8 | |||||||||
Long-term debt, net of current portion | 3,233.5 | 3,243.9 | |||||||||
Long-term operating lease liabilities | 211.9 | 213.1 | |||||||||
Deferred income tax liabilities | 79.8 | 86.7 | |||||||||
Other long-term liabilities | 177.0 | 173.2 | |||||||||
4,537.6 | 4,465.7 | ||||||||||
Commitments and contingencies | |||||||||||
Redeemable noncontrolling interests | 43.3 | 42.2 | |||||||||
Shareholders’ equity: | |||||||||||
Encompass Health shareholders’ equity | 2,003.0 | 1,911.3 | |||||||||
Noncontrolling interests | 498.3 | 445.7 | |||||||||
Total shareholders’ equity | 2,501.3 | 2,357.0 | |||||||||
Total liabilities and shareholders’ equity | $ | 7,082.2 | $ | 6,864.9 |
7 |
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
(In Millions) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 181.4 | $ | 274.8 | |||||||
Loss from discontinued operations, net of tax | — | 0.3 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities— | |||||||||||
Depreciation and amortization | 135.0 | 125.9 | |||||||||
Stock-based compensation | 16.3 | 14.8 | |||||||||
Deferred tax expense | (7.9) | 6.2 | |||||||||
Other, net | 22.0 | 4.0 | |||||||||
Changes in assets and liabilities, net of acquisitions — | |||||||||||
Accounts receivable | 29.8 | (38.1) | |||||||||
Other assets | 2.2 | (17.2) | |||||||||
Accounts payable | 3.9 | 6.6 | |||||||||
Accrued payroll | 16.1 | 27.4 | |||||||||
Other liabilities | 64.7 | 10.3 | |||||||||
Net cash used in operating activities of discontinued operations | — | (0.6) | |||||||||
Total adjustments | 282.1 | 139.3 | |||||||||
Net cash provided by operating activities | 463.5 | 414.4 | |||||||||
Cash flows from investing activities: | |||||||||||
Acquisition of businesses, net of cash acquired | — | (97.7) | |||||||||
Purchases of property and equipment | (230.0) | (212.7) | |||||||||
Additions to capitalized software costs | (4.9) | (10.0) | |||||||||
Other, net | (11.4) | (1.2) | |||||||||
Net cash used in investing activities | (246.3) | (321.6) | |||||||||
Cash flows from financing activities: | |||||||||||
Principal borrowings on notes | 400.0 | — | |||||||||
Principal payments on debt, including pre-payments | (345.2) | (207.3) | |||||||||
Borrowings on revolving credit facility | 300.0 | 45.0 | |||||||||
Payments on revolving credit facility | (330.0) | — | |||||||||
Principal payments under finance lease obligations | (11.9) | (11.8) | |||||||||
Debt amendment and issuance costs | (25.0) | — | |||||||||
Taxes paid on behalf of employees for shares withheld | (7.7) | (16.4) | |||||||||
Contributions from noncontrolling interests of consolidated affiliates | 42.6 | 36.1 | |||||||||
Dividends paid on common stock | (56.3) | (56.9) | |||||||||
Distributions paid to noncontrolling interests of consolidated affiliates | (46.6) | (52.7) | |||||||||
Other, net | (0.1) | 0.1 | |||||||||
Net cash used in financing activities | (80.2) | (263.9) | |||||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | 137.0 | (171.1) | |||||||||
Cash, cash equivalents. and restricted cash at beginning of period | 120.3 | 310.9 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 257.3 | $ | 139.8 | |||||||
8 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||||||||||
Adjusted EBITDA | $ | 240.2 | $ | 278.9 | $ | 485.2 | $ | 529.7 | |||||||||||||||
Depreciation and amortization | (68.8) | (63.4) | (135.0) | (125.9) | |||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (60.6) | (41.8) | (100.2) | (84.6) | |||||||||||||||||||
Stock-based compensation | (8.8) | (12.0) | (16.3) | (14.8) | |||||||||||||||||||
Loss on disposal or impairment of assets | (2.3) | (2.9) | (2.9) | (2.8) | |||||||||||||||||||
99.7 | 158.8 | 230.8 | 301.6 | ||||||||||||||||||||
Items not indicative of ongoing operating performance: | |||||||||||||||||||||||
Loss on early extinguishment of debt | (1.1) | (1.0) | (1.4) | (1.0) | |||||||||||||||||||
Costs associated with the strategic alternatives review | (22.9) | (4.1) | (32.5) | (5.0) | |||||||||||||||||||
Costs associated with the Frontier acquisition | — | (1.3) | — | (1.3) | |||||||||||||||||||
Change in fair market value of equity securities | (3.2) | 0.7 | (5.7) | 0.6 | |||||||||||||||||||
Pre-tax income | 72.5 | 153.1 | 191.2 | 294.9 | |||||||||||||||||||
Income tax expense | (23.8) | (39.5) | (55.0) | (74.0) | |||||||||||||||||||
Income from continuing operations (1) | $ | 48.7 | $ | 113.6 | $ | 136.2 | $ | 220.9 | |||||||||||||||
Basic shares | 99.2 | 99.0 | 99.2 | 99.0 | |||||||||||||||||||
Diluted shares | 100.3 | 100.2 | 100.2 | 100.2 | |||||||||||||||||||
Basic earnings per share (1) | $ | 0.49 | $ | 1.14 | $ | 1.37 | $ | 2.22 | |||||||||||||||
Diluted earnings per share (1) | $ | 0.49 | $ | 1.13 | $ | 1.36 | $ | 2.20 |
9 |
Q2 | 6 Months | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Earnings per share, as reported | $ | 0.49 | $ | 1.13 | $ | 1.36 | $ | 2.20 | |||||||||||||||
Adjustments, net of tax: | |||||||||||||||||||||||
Costs associated with the strategic alternatives review | 0.32 | 0.03 | 0.39 | 0.04 | |||||||||||||||||||
Costs associated with the Frontier acquisition | — | 0.01 | — | 0.01 | |||||||||||||||||||
Income tax adjustments | 0.05 | — | 0.06 | (0.03) | |||||||||||||||||||
Loss on early extinguishment of debt | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||||||||||
Change in fair market value of equity securities | 0.02 | — | 0.04 | — | |||||||||||||||||||
Adjusted earnings per share* | $ | 0.89 | $ | 1.17 | $ | 1.86 | $ | 2.22 |
10 |
For the Three Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||||||||||
As Reported | Loss on Early Extinguishment of Debt | Income Tax Adjustments | Costs Associated with the Strategic Alternatives Review | Change in Fair Market Value of Equity Securities | As Adjusted | ||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||||
Adjusted EBITDA* | $ | 240.2 | $ | — | $ | — | $ | — | $ | — | $ | 240.2 | |||||||||||||||||||||||
Depreciation and amortization | (68.8) | — | — | — | — | (68.8) | |||||||||||||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (60.6) | — | — | 20.5 | — | (40.1) | |||||||||||||||||||||||||||||
Stock-based compensation | (8.8) | — | — | — | — | (8.8) | |||||||||||||||||||||||||||||
Loss on disposal or impairment of assets | (2.3) | — | — | — | — | (2.3) | |||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (1.1) | 1.1 | — | — | — | — | |||||||||||||||||||||||||||||
Costs associated with the strategic alternatives review | (22.9) | — | — | 22.9 | — | — | |||||||||||||||||||||||||||||
Change in fair market value of equity securities | (3.2) | — | — | — | 3.2 | — | |||||||||||||||||||||||||||||
Income from continuing operations before income tax expense | 72.5 | 1.1 | — | 43.4 | 3.2 | 120.2 | |||||||||||||||||||||||||||||
Provision for income tax expense | (23.8) | (0.3) | 5.5 | (11.3) | (0.9) | (30.8) | |||||||||||||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 48.7 | $ | 0.8 | $ | 5.5 | $ | 32.1 | $ | 2.3 | $ | 89.4 | |||||||||||||||||||||||
Diluted earnings per share from continuing operations** | $ | 0.49 | $ | 0.01 | $ | 0.05 | $ | 0.32 | $ | 0.02 | $ | 0.89 | |||||||||||||||||||||||
Diluted shares used in calculation | 100.3 |
11 |
For the Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||||||||||||||||
As Reported | Loss on Early Exting. of Debt | Income Tax Adjustments | Costs Associated with the Strategic Alternatives Review | Costs Associated with the Frontier Acquisition | Change in Fair Market Value of Equity Securities | As Adjusted | |||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA* | $ | 278.9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 278.9 | |||||||||||||||||||||||||||
Depreciation and amortization | (63.4) | — | — | — | — | — | (63.4) | ||||||||||||||||||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (41.8) | — | — | — | — | — | (41.8) | ||||||||||||||||||||||||||||||||||
Stock-based compensation | (12.0) | — | — | — | — | — | (12.0) | ||||||||||||||||||||||||||||||||||
Loss on disposal or impairment of assets | (2.9) | — | — | — | — | — | (2.9) | ||||||||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (1.0) | 1.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Costs associated with the strategic alternatives review | (4.1) | — | — | 4.1 | — | — | |||||||||||||||||||||||||||||||||||
Costs associated with the Frontier Acquisition | (1.3) | — | — | — | 1.3 | — | — | ||||||||||||||||||||||||||||||||||
Change in fair market value of equity securities | 0.7 | — | — | — | — | (0.7) | — | ||||||||||||||||||||||||||||||||||
Income from continuing operations before income tax expense | 153.1 | 1.0 | — | 4.1 | 1.3 | (0.7) | 158.8 | ||||||||||||||||||||||||||||||||||
Provision for income tax expense | (39.5) | (0.3) | (0.1) | (1.1) | (0.3) | 0.2 | (41.1) | ||||||||||||||||||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 113.6 | $ | 0.7 | $ | (0.1) | $ | 3.0 | $ | 1.0 | $ | (0.5) | $ | 117.7 | |||||||||||||||||||||||||||
Diluted earnings per share from continuing operations** | $ | 1.13 | $ | 0.01 | $ | — | $ | 0.03 | $ | 0.01 | $ | — | $ | 1.17 | |||||||||||||||||||||||||||
Diluted shares used in calculation | 100.2 |
12 |
For the Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||||||||||
As Reported | Loss on Early Extinguishment of Debt | Income Tax Adjustments | Costs Associated with the Strategic Alternatives Review | Change in Fair Market Value of Equity Securities | As Adjusted | ||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||||
Adjusted EBITDA* | $ | 485.2 | $ | — | $ | — | $ | — | $ | — | $ | 485.2 | |||||||||||||||||||||||
Depreciation and amortization | (135.0) | — | — | — | — | (135.0) | |||||||||||||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (100.2) | — | — | 20.5 | — | (79.7) | |||||||||||||||||||||||||||||
Stock-based compensation | (16.3) | — | — | — | — | (16.3) | |||||||||||||||||||||||||||||
Loss on disposal or impairment of assets | (2.9) | — | — | — | — | (2.9) | |||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (1.4) | 1.4 | — | — | — | — | |||||||||||||||||||||||||||||
Costs associated with the strategic alternatives review | (32.5) | — | — | 32.5 | — | — | |||||||||||||||||||||||||||||
Change in fair market value of equity securities | (5.7) | — | — | — | 5.7 | — | |||||||||||||||||||||||||||||
Income from continuing operations before income tax expense | 191.2 | 1.4 | — | 53.0 | 5.7 | 251.3 | |||||||||||||||||||||||||||||
Provision for income tax expense | (55.0) | (0.4) | 5.7 | (13.8) | (1.5) | (65.0) | |||||||||||||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 136.2 | $ | 1.0 | $ | 5.7 | $ | 39.2 | $ | 4.2 | $ | 186.3 | |||||||||||||||||||||||
Diluted earnings per share from continuing operations** | $ | 1.36 | $ | 0.01 | $ | 0.06 | $ | 0.39 | $ | 0.04 | $ | 1.86 | |||||||||||||||||||||||
Diluted shares used in calculation | 100.2 |
13 |
For the Six Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||||||||||||||||
As Reported | Loss on Early Exting. of Debt | Income Tax Adjustments | Costs Associated with the Strategic Alternatives Review | Costs Associated with the Frontier Acquisition | Change in Fair Market Value of Equity Securities | As Adjusted | |||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA* | $ | 529.7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 529.7 | |||||||||||||||||||||||||||
Depreciation and amortization | (125.9) | — | — | — | — | — | (125.9) | ||||||||||||||||||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (84.6) | — | — | — | — | — | (84.6) | ||||||||||||||||||||||||||||||||||
Stock-based compensation | (14.8) | — | — | — | — | — | (14.8) | ||||||||||||||||||||||||||||||||||
Loss on disposal or impairment of assets | (2.8) | — | — | — | — | — | (2.8) | ||||||||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (1.0) | 1.0 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Costs associated with the strategic alternatives review | (5.0) | — | — | 5.0 | — | — | |||||||||||||||||||||||||||||||||||
Costs associated with the Frontier Acquisition | (1.3) | — | — | — | 1.3 | — | — | ||||||||||||||||||||||||||||||||||
Change in fair market value of equity securities | 0.6 | — | — | — | — | (0.6) | — | ||||||||||||||||||||||||||||||||||
Income from continuing operations before income tax expense | 294.9 | 1.0 | — | 5.0 | 1.3 | (0.6) | 301.6 | ||||||||||||||||||||||||||||||||||
Provision for income tax expense | (74.0) | (0.3) | (3.4) | (1.3) | (0.3) | 0.2 | (79.1) | ||||||||||||||||||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 220.9 | $ | 0.7 | $ | (3.4) | $ | 3.7 | $ | 1.0 | $ | (0.4) | $ | 222.5 | |||||||||||||||||||||||||||
Diluted earnings per share from continuing operations** | $ | 2.20 | $ | 0.01 | $ | (0.03) | $ | 0.04 | $ | 0.01 | $ | — | $ | 2.22 | |||||||||||||||||||||||||||
Diluted shares used in calculation | 100.2 |
14 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Net income | $ | 71.3 | $ | 142.0 | $ | 181.4 | $ | 274.8 | |||||||||||||||
Loss from discontinued operations, net of tax, attributable to Encompass Health | — | 0.3 | — | 0.3 | |||||||||||||||||||
Net income attributable to noncontrolling interests | (22.6) | (28.7) | (45.2) | (54.2) | |||||||||||||||||||
Provision for income tax expense | 23.8 | 39.5 | 55.0 | 74.0 | |||||||||||||||||||
Interest expense and amortization of debt discounts and fees | 60.6 | 41.8 | 100.2 | 84.6 | |||||||||||||||||||
Depreciation and amortization | 68.8 | 63.4 | 135.0 | 125.9 | |||||||||||||||||||
Loss on early extinguishment of debt | 1.1 | 1.0 | 1.4 | 1.0 | |||||||||||||||||||
Loss on disposal or impairment of assets | 2.3 | 2.9 | 2.9 | 2.8 | |||||||||||||||||||
Stock-based compensation | 8.8 | 12.0 | 16.3 | 14.8 | |||||||||||||||||||
Costs associated with the strategic alternatives review | 22.9 | 4.1 | 32.5 | 5.0 | |||||||||||||||||||
Costs associated with the Frontier acquisition | — | 1.3 | — | 1.3 | |||||||||||||||||||
Change in fair market value of equity securities | 3.2 | (0.7) | 5.7 | (0.6) | |||||||||||||||||||
Adjusted EBITDA | $ | 240.2 | $ | 278.9 | $ | 485.2 | $ | 529.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
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 |
15 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 244.6 | $ | 255.9 | $ | 463.5 | $ | 414.4 | |||||||||||||||
Interest expense and amortization of debt discounts and fees | 60.6 | 41.8 | 100.2 | 84.6 | |||||||||||||||||||
Equity in net income of nonconsolidated affiliates | 1.0 | 1.0 | 1.9 | 2.0 | |||||||||||||||||||
Net income attributable to noncontrolling interests in continuing operations | (22.6) | (28.7) | (45.2) | (54.2) | |||||||||||||||||||
Amortization of debt-related items | (2.5) | (2.0) | (4.8) | (4.0) | |||||||||||||||||||
Distributions from nonconsolidated affiliates | (1.9) | (0.8) | (2.9) | (1.8) | |||||||||||||||||||
Current portion of income tax expense | 33.7 | 42.0 | 62.9 | 67.8 | |||||||||||||||||||
Change in assets and liabilities | (91.4) | (39.3) | (116.7) | 11.0 | |||||||||||||||||||
Cash (provided by) used in operating activities of discontinued operations | (0.1) | 0.6 | — | 0.6 | |||||||||||||||||||
Costs associated with the strategic alternatives review | 22.9 | 4.1 | 32.5 | 5.0 | |||||||||||||||||||
Costs associated with the Frontier acquisition | — | 1.3 | — | 1.3 | |||||||||||||||||||
Change in fair market value of equity securities | 3.2 | (0.7) | 5.7 | (0.6) | |||||||||||||||||||
Other | (7.3) | 3.7 | (11.9) | 3.6 | |||||||||||||||||||
Adjusted EBITDA | $ | 240.2 | $ | 278.9 | $ | 485.2 | $ | 529.7 |
16 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 244.6 | $ | 255.9 | $ | 463.5 | $ | 414.4 | |||||||||||||||
Impact of discontinued operations | (0.1) | 0.6 | — | 0.6 | |||||||||||||||||||
Net cash provided by operating activities of continuing operations | 244.5 | 256.5 | 463.5 | 415.0 | |||||||||||||||||||
Capital expenditures for maintenance | (39.5) | (30.5) | (74.0) | (53.8) | |||||||||||||||||||
Distributions paid to noncontrolling interests of consolidated affiliates | (25.3) | (24.9) | (46.6) | (52.7) | |||||||||||||||||||
Items not indicative of ongoing operating performance: | |||||||||||||||||||||||
Transaction costs and related assumed liabilities | 26.0 | 4.5 | 28.7 | 4.5 | |||||||||||||||||||
Adjusted free cash flow | $ | 205.7 | $ | 205.6 | $ | 371.6 | $ | 313.0 |
17 |
18 |
19 |
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