Company: EHC
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000785161-25-000115
Chunk: 12

Company: Encompass Health Corp
Filing Date: 2025-10-31
Form: 10-Q
Item: Part I, Item 2
Chunk 12
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 and Administrative Expenses

General and administrative expenses increased during the three months ended September 30, 2025 compared to the same period of 2024 primarily due to higher contract services and software expenses. General and administrative expenses increased during the nine months ended September 30, 2025 compared to the same period of 2024 primarily due to higher incentive compensation, benefits, and software expenses. General and administrative expenses decreased as a percent of Net operating revenues during the three and nine months ended September 30, 2025 compared to the same periods of 2024 primarily due to higher volumes.

Depreciation and Amortization

Depreciation and amortization increased during the three and nine months ended September 30, 2025 compared to the same periods of 2024 due to our capital investments. See the “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 from continuing operations increased during the three and nine months ended September 30, 2025 compared to the same periods of 2024 primarily due to the increase in Net operating revenues as discussed above.

Provision for Income Tax Expense

Our Provision for income tax expense increased during the three and nine months ended September 30, 2025 compared to the same periods of 2024 primarily due to higher Income from continuing operations before income tax expense.

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 

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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 currently estimate our cash payments for income taxes to be approximately $110 million to $130 million, net of refunds, for 2025. These payments are expected to primarily result from federal and state income tax expenses based on estimates of taxable income for 2025 which include estimates of the tax provisions contained in the OBBBA