Company: EHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000785161-25-000052
Chunk: 47

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 47
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2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which intends to improve the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We are required to apply the guidance prospectively but have the option to apply it retrospectively. We are currently evaluating the requirements of this standard and any potential impact it may have on our condensed consolidated financial statements.In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregation of certain expense captions into specified categories within the notes to the financial statements for both interim and annual reporting periods. ASU 2024-03 is effective for our annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028. Early adoption is permitted. We are currently evaluating the requirements of this standard and any potential impact it may have on our condensed consolidated financial statements.We do not believe any other recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows.

2.Business Combinations

During the six months ended June 30, 2025, we completed the following acquisition which was not individually material to our financial position, results of operations, or cash flows. The acquisition was made to enhance our position and ability to provide inpatient rehabilitation services to patients in the applicable geographic area.•In May 2025, we acquired 51% of the operations of a 54-bed inpatient rehabilitation unit in Fort Myers, Florida when Lee Healthcare Holdings, LLC contributed those operations to our existing joint venture.We accounted for this transaction under the acquisition method of accounting and reported the results of operations of the acquired unit from the date of acquisition. Assets acquired were recorded at their estimated fair values as of the acquisition date. The estimated fair value of the noncompete intangible asset was based on an income approach using discounted cash flow techniques. The aforementioned income method utilizes management’s estimates of future operating results and cash flows discounted using a weighted-average cost of