Company: EHC
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000785161-25-000115
Chunk: 55

Company: Encompass Health Corp
Filing Date: 2025-10-31
Form: 10-Q
Item: Part I, Item 1
Chunk 55
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 determined using the policies described in Note 1, Summary of Significant Accounting Policies, and Note 13, Share-Based Payments, to the consolidated financial statements accompanying the 2024 Form 10‑K.

9.Income Taxes

Our Provision for income tax expense of $44.9 million for the three months ended September 30, 2025 primarily resulted from the application of our estimated effective blended federal and state income tax rate. Our Provision for income tax expense of $137.5 million for the nine months ended September 30, 2025 primarily resulted from the application of our estimated effective blended federal and state income tax rate and non-deductible executive compensation, partially offset by tax benefits resulting from share-based compensation windfalls. Our Provision for income tax expense of $36.0 million and $112.6 million for the three and nine months ended September 30, 2024, respectively, primarily resulted from the application of our estimated effective blended federal and state income tax rate partially offset by tax benefits resulting from share-based compensation windfalls.On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains a broad range of tax reform provisions affecting businesses. While tax changes in the OBBBA are not expected to have a material impact on our effective tax rate, we do anticipate that certain tax provisions in the OBBBA, namely the provision that permanently extends bonus depreciation for assets placed in service after January 19, 2025 and the provision allowing for immediate expensing of certain research and development costs, to result in current deductions that will result in lower cash income tax for 2025. We currently estimate these provisions to produce an additional approximately $180 million in current deductions resulting in approximately $50 million in cash tax savings in 2025. We continue to evaluate the tax and other provisions of the OBBBA and the potential effects on our financial position, results of operations, and cash flows.

15

Encompass Health Corporation and SubsidiariesNotes to Condensed Consolidated Financial Statements

10.Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts): Three Months Ended September 30,Nine Months Ended September 30, 2025202420252024Basic:Numerator:  Income from continuing operations$175.0 $147.8 $557.8 $435.6 Less: Net income attributable