Company: EHC
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000785161-25-000021
Chunk: 9

Company: Encompass Health Corp
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 2
Chunk 9
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 primarily due to salary and benefit cost increases for our employees and increased patient volumes, including an increase in the number of full-time equivalents as a result of our development activities. Salaries and benefits decreased as a percent of Net operating revenues during the three months ended March 31, 2025 compared to the same period of 2024 primarily due to higher volumes.

Other Operating Expenses

Other operating expenses increased during the three months ended March 31, 2025 compared to the same period of 2024 primarily due to increased provider taxes and higher costs resulting from our development activities. Other operating expenses decreased as a percent of Net operating revenues during the three months ended March 31, 2025 compared to the same period of 2024 primarily due to higher volumes. 

Other operating expenses during the three months ended March 31, 2024 included a $10.4 million impairment charge related to the closure of our joint venture inpatient rehabilitation hospital in Eau Claire, Wisconsin. In January 2024, we received notice that our joint venture partner intended to close its acute-care hospital in which our joint venture inpatient rehabilitation hospital was located. We closed that joint venture hospital in February 2024 and incurred a one-time impairment charge of $10.4 million. The impact to Net income attributable to Encompass Health during the three months ended March 31, 2024 resulting from the impairment was $1.8 million after reductions for Net income attributable to noncontrolling interests of $7.3 million and the Provision for income tax expense of $1.3 million.

General and Administrative Expenses

General and administrative expenses increased during the three months ended March 31, 2025 compared to the same period of 2024 primarily due to higher salaries, benefits, and software expenses partially offset by mark-to-market adjustments on our non-qualified deferred compensation plan. General and administrative expenses decreased as a percent of Net operating revenues during the three months ended March 31, 2025 compared to the same period of 2024 primarily due to higher volumes.

Depreciation and Amortization

Depreciation and amortization increased during the three months ended March 31, 2025 compared to the same period of 2024 due to our capital investments. See “Executive Overview” section of this item for information related to our development activity. We expect Depreciation and amortization to increase going forward as a result of our recent and ongoing capital investments.

Income from Continuing Operations Before Income Tax Expense

Our pre-tax income