Company: EHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000785161-25-000052
Chunk: 71

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 71
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, 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 six months ended June 30, 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. Other operating expenses decreased as a percent of Net operating revenues during the six months ended June 30, 2025 compared to the same period of 2024 primarily due to higher volumes.

General and Administrative Expenses

General and administrative expenses increased in terms of dollars and as a percent of Net operating revenues during the three months ended June 30, 2025 compared to the same period of 2024 primarily due to mark-to-market adjustments on our non-qualified deferred compensation plan and higher incentive compensation, benefits, and salaries. General and administrative expenses increased during the six months ended June 30, 2025 compared to the same period of 2024 primarily due to higher incentive compensation, benefits, and software expenses.

Depreciation and Amortization

Depreciation and amortization increased during the three and six months ended June 30, 2025 compared to the same periods 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 from continuing operations increased during the three and six months ended June 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 six months ended June 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