Company: EHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000785161-25-000052
Chunk: 79

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 79
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1,545.7 Intercompany expenses incurred in transactions with non-guarantor subsidiaries20.6 Total operating expenses$1,566.3 Income from continuing operations$184.3 Net income$182.9 Net income attributable to Encompass Health$182.9 

31

As of June 30, 2025As ofDecember 31, 2024(In Millions)Total current assets$642.0 $609.5 Property and equipment, net$2,550.1 $2,394.0 Goodwill893.2 893.2 Intercompany receivable due from non-guarantor subsidiaries25.8 47.4 Other noncurrent assets498.6 490.9 Total noncurrent assets$3,967.7 $3,825.5 Total current liabilities$677.1 $677.7 Long-term debt, net of current portion$2,238.2 $2,273.3 Other noncurrent liabilities341.4 336.1 Total noncurrent liabilities$2,579.6 $2,609.4 

Adjusted EBITDA

Management believes Adjusted EBITDA as defined in our credit agreement is a measure of our ability to service our debt and our ability to make capital expenditures. We reconcile Adjusted EBITDA to Net cash provided by operating activities and to Net income.

We use Adjusted EBITDA on a consolidated basis as a liquidity measure. We believe this financial measure on a consolidated basis is important in analyzing our liquidity because it is the key component of certain material covenants contained within our credit agreement, which is discussed in more detail in Note 9, Long-term Debt, to the consolidated financial statements accompanying the 2024 Form 10‑K. These covenants are material terms of the credit agreement. Noncompliance with these financial covenants under our credit agreement—our interest coverage ratio and our leverage ratio—could result in our lenders requiring us to immediately repay all amounts borrowed. If we anticipated a potential covenant violation, we would seek relief from our lenders, which would have some cost to us, and such relief might be on terms less favorable to us than those in our existing credit agreement. In addition, if we cannot satisfy these financial covenants, we would be prohibited under our credit agreement from engaging in certain activities, such as incurring additional indebtedness, paying common stock dividends, making certain payments