Company: EHC
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000785161-25-000021
Chunk: 62

Company: Encompass Health Corp
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 62
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 accompanying the 2024 Form 10‑K.

(b)    Interest on our fixed rate debt is presented using the stated interest rate. Interest pertaining to our bonds is included to their respective ultimate maturity dates. Interest related to finance lease obligations is excluded from this line. Amounts exclude amortization of debt discounts, amortization of loan fees, or fees for lines of credit that would be included in interest expense in our condensed consolidated statements of comprehensive income.

(c)    Amounts include interest portion of future minimum finance lease payments.

(d)    We lease approximately 9% of our hospitals as well as other property and equipment under operating leases in the normal course of business. Amounts include interest portion of future minimum operating lease payments. For more information, see Note 7, Leases, to the consolidated financial statements accompanying the 2024 Form 10‑K.

(e)    Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Encompass Health and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. Our purchase obligations primarily relate to software licensing and support and medical equipment. Purchase obligations are not recognized in our condensed consolidated balance sheet.

Our capital expenditures include costs associated with our hospital renovation program, de novo projects, capacity expansions, technology initiatives, and building and equipment upgrades and purchases. During the three months ended March 31, 2025, we made capital expenditures of approximately $163 million for property, equipment, and intangible assets. During 2025, we expect to spend approximately $755 million to $790 million for capital expenditures using cash on hand and borrowings under our revolving credit facility. Approximately $215 million to $225 million of this budgeted amount is considered nondiscretionary expenditures, which we may refer to in other filings as “maintenance” expenditures. Actual amounts spent will be dependent upon the timing of development projects. At March 31, 2025, we have projects under construction which have an estimated additional cost to complete over the next two years of approximately $327 million. We expect to fund capital expenditures using cash on hand and borrowings under our revolving credit facility.

Authorizations for Returning Capital to Stakeholders

In October 2024 and February 2025, our board of directors declared cash dividends of $0.17 per share that were paid in January 2025 and April