Company: EHC
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000785161-25-000009
Chunk: 45

Company: Encompass Health Corp
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 45
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 its common stock is listed under the symbol “EHAB” on the New York Stock Exchange.In accordance with applicable accounting guidance, the historical results of Enhabit have been presented as discontinued operations and, as such, have been excluded from continuing operations for the year ended December 31, 2022. In anticipation of the Spin Off, Enhabit transferred the “Encompass” trade name (net book value of $104.2 million) to us during the second quarter of 2022.In connection with the Spin Off, on June 30, 2022, we entered into several agreements with Enhabit that govern the relationship of the parties following the Spin Off, including a Separation and Distribution Agreement.

F-22

Encompass Health Corporation and SubsidiariesNotes to Consolidated Financial Statements

The following table presents the results of operations of Enhabit as discontinued operations (in millions):For the Year Ended December 31,2022Net operating revenue$542.3 Operating expenses:Salaries and benefits376.4 Other operating expenses47.5 Occupancy costs11.0 Supplies11.7 General and administrative expenses59.3 Depreciation and amortization16.7 Total operating expenses522.6 Interest expense and amortization of debt discounts and fees0.2 Income from discontinued operations before income taxes19.5 Provision for income tax expense4.3 Income from discontinued operations, net of tax15.2 Less: Net income attributable to noncontrolling interests included in discontinued operations(1.3)Net income attributable to Encompass Health included in discontinued operations$13.9 Transaction costs of $56.7 million incurred during the year ended December 31, 2022 are included in general and administrative expenses in the table above and in (Loss) income from discontinued operations, net of tax, in the consolidated statements of comprehensive income. These charges primarily related to third-party advisory, consulting, legal and professional services, that were associated with the Spin Off.During 2024 and 2023, we incurred legal costs of $2.9 million and $15.8 million, respectively, related to ongoing litigation against former executive officers of our home health and hospice business. These costs are included in (Loss) income from discontinued operations, net of tax, in the consolidated statements of comprehensive income.

3.Variable Interest Entities:

As of December 31, 2024 and December 31, 2023, we consolidated