Company: EHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000785161-25-000052
Chunk: 48

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 48
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 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 unit’s historical patient base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive demographic trends in this market. None of the goodwill recorded as a result of this transaction is deductible for federal income tax purposes.

9

Encompass Health Corporation and SubsidiariesNotes to Condensed Consolidated Financial Statements

The fair values recorded were based upon a preliminary valuation. Estimates and assumptions used in such valuation are subject to change, which could be significant, within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary valuation that are not yet finalized relate to the fair value of amounts for the intangible asset and the final amount of residual goodwill. We expect to continue to obtain information to assist us in determining the fair value of the net assets acquired at the acquisition date during the measurement period.The fair value of the assets acquired at the acquisition dates were as follows (in millions):Identifiable intangible asset: Noncompete agreement (useful life of 2 years)$0.5 Goodwill19.0 Total assets acquired$19.5 Information regarding the net cash paid for the acquisitions during each period presented is as follows (in millions):Three Months Ended June 30,Six Months Ended June 30,2025202420252024Fair value of assets acquired$0.5 $5.8 $0.5 $5.8 Goodwill19.0 2.7 19.0 2.7 Fair value of noncontrolling interest owned by joint venture partner(19.5)(8.5)(19.5)(8.5)Net cash paid for acquisitions$— $— $— $— The pro forma effects of the above mentioned acquisition on our results of operations for periods prior to the respective acquisition date were not material.

10

Encompass Health Corporation and SubsidiariesNotes to Condensed Consolidated Financial Statements

3.Variable Interest Entities

As of June 30, 2025 and December 31, 2024, we consolidated eight limited partnership-like entities that are variable interest entities (“VIEs”) and of which we are the primary beneficiary. Our ownership percentages in these entities range from 50.0% to 75.0% as of June