HealthSouth is a leading provider of post-acute healthcare services, offering both facility-based 
    and home-based post-acute services in 34 states and Puerto Rico through its network of 
    inpatient rehabilitation hospitals, home health agencies, and hospice agencies.
 Investor Reference Book
 Post Q4 2017 Earnings Release
 Last Updated March 13, 2018
 Encompass Health 2
 Forward-Looking Statements
 The information contained in this Investor Reference Book includes certain estimates, projections and other forward-
 looking information that reflect Encompass Health’s current outlook, views and plans with respect to future events,
 including legislative and regulatory developments, strategy, capital expenditures, acquisition and other development
 activities, cyber security, dividend strategies, repurchases of securities, effective tax rates, financial performance,
 financial assumptions, business model, balance sheet and cash flow plans, disintermediation, and shareholder value-
 enhancing transactions. These estimates, projections and other forward-looking information are based on assumptions
 the Company believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such
 estimates and actual events or results, and those differences may be material.
 There can be no assurance any estimates, projections or forward-looking information will be realized.
 All such estimates, projections and forward-looking information speak only as of the date hereof. Encompass
 Health undertakes no duty to publicly update or revise the information contained herein.
 You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in
 this Investor Reference Book as they are based on current expectations and general assumptions and are subject to
 various risks, uncertainties and other factors, including those set forth in the Form 10-K for the year ended
 December 31, 2017 and in other documents Encompass Health previously filed with the SEC, many of which are
 beyond Encompass Health’s control, that may cause actual events or results to differ materially from the views,
 beliefs, and estimates expressed herein.
 Note Regarding Presentation of Non-GAAP Financial Measures
 The following Investor Reference Book includes certain “non-GAAP financial measures” as defined in Regulation G
 under the Securities Exchange Act of 1934, including Adjusted EBITDA, leverage ratios, adjusted earnings per share,
 and adjusted free cash flow. Schedules are attached that reconcile the non-GAAP financial measures included in the
 following Investor Reference Book to the most directly comparable financial measures calculated and presented in
 accordance with Generally Accepted Accounting Principles in the United States. The Company’s Form 8-K, dated
 March 13, 2018, to which the following Investor Reference Book is attached as Exhibit 99.1, provides further
 explanation and disclosure regarding Encompass Health’s use of non-GAAP financial measures and should be read in
 conjunction with this Investor Reference Book.
 Encompass Health 3
 Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
 Investment Thesis and Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-24
 Business Outlook, Including Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-40
 Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-52
 Alternative Payment Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53-58
 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59-64
 Information Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65-68
 Operational Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69-74
 Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75-87
 Segment Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88-92
 Reconciliations to GAAP and Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93-105
 End Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106-110
 Table of Contents
 Encompass Health 4
 Company Overview
 Encompass Health is a leading provider of inpatient rehabilitation and
 home-based care committed to delivering high-quality, cost-effective,
 integrated care across the post-acute continuum.
 Encompass Health 5
 Portfolio as of December 31, 2017
 Inpatient Rehabilitation Hospitals (“IRFs”)
 Home Health Locations
 Hospice Locations
 7 Future IRFs**
 36 States and Puerto Rico  ~37,900 Employees
 * Excluding markets that have home health licensure barriers  ** Previously announced under development  † Based on 2016 data
 Note: One of the 127 IRFs and two of the 200 home health locations are nonconsolidated.
           These locations are accounted for using the equity method of accounting.
 Encompass Health A Leading Provider of Inpatient Rehabilitation and Home-Based Care
 Market Overlap
 ~60% of EHC’s IRFs have an 
EHC home health location 
within a 30-mile radius.*
 Inpatient Rehabilitation - 12/31/17
 127 IRFs (42 are Joint Ventures)
 31 States and Puerto Rico
 ~29,400 Employees
 22% of Licensed Beds†
 29% of Medicare Patients Served†
 Key Statistics - Full-Year 2017
 171,922 Inpatient Discharges
 ~$3.2 Billion in Revenue
 Largest Owner and
 Operator of IRFs
 4th Largest Provider of
 Medicare-Certified Skilled
 Home Health Services
 Home Health and Hospice - 12/31/17
 200 Home Health Locations
 37 Hospice Locations
 28 States
 ~8,500 Employees
 Key Statistics - Full-Year 2017
 124,870 Home Health Admissions
 4,870 Hospice Admissions
 ~$783 Million in Revenue
 Encompass Health 6
 Major Services 
• Rehabilitation Physicians: manage and treat medical conditions and oversee rehabilitation program
 • Rehabilitation Nurses: provide personal care and oversee treatment plan for patients
 • Physical Therapists: address physical function, mobility, strength, balance, and safety
 • Occupational Therapists: promote independence through activities of daily living (“ADLs”)
 • Speech-Language Therapists: address speech/voice functions, swallowing, memory/cognition, and
 language/communication
 • Case Managers: coordinate care plan with physician, Care Transition Coordinators, caregivers and family
 • Post-Discharge Services: outpatient therapy and home health
 Inpatient Rehabilitation
 Hospitals
   Refer to pages 106-110 for end notes. 
105 of the Company’s IRFs hold one or more disease-specific
 certifications from The Joint Commission’s Disease-Specific
 Care Certification Program.(1)
 Company Overview Inpatient Rehabilitation
 Encompass Health 7
 Major Services 
• Skilled Nurses: comprehensively assess, teach, train, and manage care related to injury or illness
 • Home Health Aides: provide personal care and assistance with ADLs
 • Physical Therapists: address physical function, mobility, strength, balance, and safety
 • Occupational Therapists: promote independence through training on self-management of ADLs
 • Speech-Language Therapists: address speech/voice functions, swallowing, memory/cognition, and
 language/communication
 • Medical Social Workers: provide assessment of social and emotional factors; assist with obtaining
 community resources
 Home Health Agencies
 The Company offers evidence-based specialty programs 
related to: Post-Operative Care, Fall Prevention, Chronic
 Disease Management, and Transitional Care.
 Hospice: provides services to terminally ill patients and their families to address patients’ physical needs,
 including pain control and symptom management, and also provides emotional and spiritual support.
 Company Overview Home Health and Hospice
 Encompass Health 8
 IRF Patient Mix
 Referral Sources:
 • Physicians and acute care hospital case managers are key
 decision makers.
 • All IRF patients must meet reasonable and necessary criteria
 and must be admitted by a physician.
 • All IRF patients must be medically stable and have potential to
 tolerate three hours of therapy per day (minimum).
 • IRF patients receive 24-hour, 7 days a week nursing care.
 • Average length of stay = 12.7 days
 Admission to an IRF:
 Average Age of the Company’s IRF Patients: 
All Patients = 71    Medicare FFS = 76
 Home Health Patient Mix
 Acute Care Hospitals – 91%
 Physician Offices / Community – 7%
 Skilled Nursing Facilities – 2%
 Referral Sources:
 • For Medicare, a patient must be confined to the home and need
 skilled services.
 • The patient must be under the care of a physician and receive
 services under a home health plan of care established and
 periodically reviewed by a physician.
 • Medicare also requires a face-to-face encounter related to the
 primary reason the patient requires home health services with a
 physician or an allowed non-physician practitioner.
 Admission to home health:
 100
 90
 80
 70
 60
 50
 40
 30
 20
 10
 Pe
 rc
 en
 ta
 ge
 24.0%
 36.7% 31.9%
 85.1%
 Age 85+ Lives
 alone
 Has 2 or
 more ADL
 limitations
 Has 3 or 
more chronic
 conditions
 Demographics of all Medicare Home Health Users**:
 * Rehabilitation Impairment Categories (RICs) represent how the Company admitted the patient; BPCI/CJR (pages 55-57) 
  uses Diagnostic-Related Groups (DRGs) which represent how the acute care hospital discharged the patient. 
** Source: Avalere Health and Alliance for Home Health Quality and Innovation Home Health Chart Book 2017
 Rehabilitation Impairment Category* 2017 2016
 RIC 01 Stroke 18.0% 17.6%
 RIC 02/03 Brain dysfunction 10.1% 9.4%
 RIC 04/05 Spinal cord dysfunction 4.0% 3.9%
 RIC 06 Neurological conditions 21.6% 20.4%
 RIC 07 Fracture of lower extremity 7.9% 8.1%
 RIC 08 Replacement of lower extremity joint 4.1% 5.1%
 RIC 09 Other orthopedic 9.3% 9.9%
 RIC 10/11 Amputation 2.6% 2.6%
 RIC 14 Cardiac 4.3% 4.7%
 RIC 17/18 Major multiple trauma 5.3% 5.2%
 RIC 20 Other disabling impairments 10.0% 10.0%
 — All other RICs 2.8% 3.1%
 Acute Care Hospitals – 35%
 Physician Offices / Community – 38%
 IRFs / LTCHs / SNFs – 27%
 Average Age of the Company’s Home Health Patients: 
All Patients = 78    Medicare FFS = 79
 Encompass Health 9
 2015 2016 2017
 10.6%
 10.4% 10.4%
 10.6% 10.7% 10.7%
 2015 2016 2017
 13.9% 13.1% 12.7%
 10.7% 10.1% 9.3%
 2015 2016 2017
 75.2% 75.7% 76.0%
 78.0% 78.7%
 79.4%
 Home Health QualityIRF Quality
 Discharge to Community 
Discharge to Skilled Nursing 
Discharge to Acute Hospital 
Refer to pages 106-110 for end notes.
 3.3
 3.7 Quality of Care
 Star Ratings(3)
 96% of our home health agencies
 are 3 Stars or higher;
 47% are 4 Stars or higher
 3.4
 3.7 Patient Satisfaction 
Star Ratings(3)
 95% of our home health agencies
 are 3 Stars or higher;
 62% are 4 Stars or higher
 Encompass Health
 16.9%
 16.4%
 30-Day 
Readmission Rate
  Percent of patients
 readmitted to an acute care
 hospital. Lower is better.
  50 bps bette
 r
       UDSMR(2)                 Encompass Health
 Leading Positions in Quality of Care
 National Average
 Percent of cases
 discharged to
 the community,
 including home
 or home with
 home health. 
Higher is better.
 Percent of
 patients
 discharged to a
 skilled nursing
 facility. 
Lower is better.
 Percent of
 patients
 discharged to an
 acute care
 hospital. 
Lower is better.
 Encompass Health 10
 Leading Position in Cost Effectiveness Inpatient Rehabilitation
 Medicare pays
 Encompass Health
 less per discharge,
 on average, and 
Encompass Health
 treats a higher 
acuity patient.
 #
 Avg.
 Beds
 per IRF
 Avg.
 Medicare
 Discharges
 per IRF(5)
 Case
 Mix
 Index(6)
 Avg. Est.
 Total Cost
 per
 Discharge
 for FY 2018
 Avg. Est.
 Total
 Payment
 per
 Discharge
 for FY 2018
 Encompass
 Health(4) = 123 67 955 1.26 $12,903 $19,776
 Free-Standing =
 (Non-Encompass Health) 153 57 577 1.26 $17,363 $20,749
 Hospital
 Units = 864 24 229 1.20 $20,798 $21,153
 Total(7) 1,140 33 354 1.23 $17,753 $20,665
 The average estimated total payment per discharge, as stated, does not reflect a 2% reduction for sequestration.(8)
 Refer to pages 106-110 for end notes. 
 
The Company differentiates
 itself by:
  “Best Practices” clinical
 protocols
  Supply chain efficiencies
  Sophisticated
 management information
 systems
  Economies of scale
 Encompass Health 11
 2017
 Episodes
 Average
 Revenue 
per Episode
 Average
 Visits
 per Episode
 Average
 Revenue
 per Visit
 Cost
 per Visit
 Encompass
 Health 211,743 $2,998 17.9 $161 $75
 Public Peer
 Average 283,366 $2,835 17.4* $148* $81*
 Comparison to
 Peer Average 5.7% 2.9% 8.8% (7.4)%
 Public peer average represents 2017 data from publicly traded home health providers.
 * One publicly traded company (Kindred) does not report visit counts. 
Average revenue per
 episode is 5.7%
 higher than the peer
 average due to higher
 acuity patient mix.
 Cost per visit is 7.4%
 lower due to market
 density and operational
 efficiency:
  Caregiver
     optimization
  Optimization of HCHB
  Employee culture of
 excellence
  ~75% of visits 
    conducted by full-
     time staff
  Daily monitoring of 
    productivity
 Leading Position in Cost Effectiveness Home Health
 Encompass Health 12* Includes consolidated inpatient rehabilitation hospitals classified as same store during each period  ** Data provided by UDSMRRefer to pages 106-110 for end notes.
 New-Store/Same-Store Growth Inpatient Rehabilitation
 25.0
 20.0
 15.0
 10.0
 5.0
 0.0
 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
 Fairlawn(9) 2.0% 1.1%
 New Store 1.8% 4.4% 5.7% 15.6% 14.2% 11.7% 10.7% 1.3% 1.2% 1.9% 2.4% 2.0%
 Same Store* 2.9% 2.8% 3.9% 3.0% 2.8% 1.9% 1.9% 0.1% 1.6% 1.6% 1.4% 3.9%
 Total by Qtr. 6.7% 8.3% 9.6% 18.6% 17.0% 13.6% 12.6% 1.4% 2.8% 3.5% 3.8% 5.9%
 Total by Year 10.9% 10.8% 4.0%
 Same-Store
 Year* 3.2% 1.7% 1.8%
 Same-Store
 Year UDS** 1.3% (0.6)% (0.5)%
 Reliant (857 beds)
 Franklin, TN (40 beds)
 Lexington, KY (158 beds)
 Savannah, GA (50 beds)
 Pearland, TX
 (40 beds)
 Modesto, CA
 (50 beds)
 Gulfport, MS (33 beds)
 Westerville, OH (60 beds)
 Bryan, TX (49 beds)
 Broken Arrow, OK (22 beds)
 Hot Springs, AR (27 beds)
 Jackson, TN
 (48 beds)
 Encompass Health 13* Includes consolidated home health agencies classified as same store during each period
 New-Store/Same-Store Growth Home Health
 70.0
 60.0
 50.0
 40.0
 30.0
 20.0
 10.0
 0.0
 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017Admissions Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
 New Store 43.5% 41.6% 35.4% 8.1% 5.7% 6.4% 6.7% 3.5%
 Same Store* 12.6% 11.1% 15.3% 14.0% 13.9% 13.3% 8.8% 10.1%
 Total by Quarter 56.1% 52.7% 50.7% 22.1% 19.6% 19.7% 15.5% 13.6%
 Total by Year 43.6% 17.0%
 Same-Store Year* 13.7% 11.4%
 Acquired CareSouth 
(44 home health agencies in 7 states)
 in November 2015
 u In 2016, the Company acquired or opened 10 home health locations.
 u In 2017, the Company acquired or opened 15 home health locations.
 Encompass Health 14
  Medicaid
  Medicare Advantage
  Managed Care
  Medicare
  Other             
Per Diem/Visit or CMG/Episodes
   - Negotiated rate
   - Some are “tiered” for acuity/severity
 Per Diem/Visit or CMG/Episodes
   - Negotiated rate
   - Some are “tiered” for acuity/severity
 Prospective Payment System (“PPS”)
  - IRF: Paid per discharge by Case Mix Group (“CMG”)
  - Home Health: Paid per 60-day episode of care by  
   Home Health Resource Group (“HHRG”)
 • An episode is paid in two installments: 
1) Request for Anticipated Payment (“RAP”)
 2) Final bill after episode is complete
 Varies by state
 Payors (Q4 2017)
 Payor Source Payment Methodology% of Revenues
 86.1%73.6%
 8.9%
 8.3%
 3.7%
 10.5%
 3.0%
 1.1%4.6%
 0.2%
 Inpatient
 Rehab
 Segment
 Home
 Health &
 Hospice
 Segment
 Variety of methodologies
 Encompass Health 15
 Independent Research Concludes IRFs are a Better
 Rehabilitation Option for Stroke Patients than SNFs
 “If the hospital suggests sending your loved one to
 a skilled nursing facility after a stroke, advocate
 for the patient to go to an inpatient
 rehabilitation facility instead...”*
 “Whenever possible, the American Stroke Association
 strongly recommends that stroke patients be treated
 at an inpatient rehabilitation facility rather than a
 skilled nursing facility. While in 
an inpatient rehabilitation facility, a patient participates in at
 least three hours of rehabilitation a day from physical therapists,
 occupational therapists, and speech therapists. Nurses are
 continuously available and doctors typically visit daily.”*
 *
 **
 AHA/ASA press release, “Inpatient rehab recommended over nursing homes for stroke rehab,” 
issued May 4, 2016 (newsroom.heart.org)
 “Guidelines for Adult Stroke Rehabilitation and Recovery,” issued May 2016 (stroke.ahajournals.org)
 “The studies that have compared outcomes in hospitalized stroke
 patients first discharged to an IRF, a SNF, or a nursing home have
 generally shown that IRF patients have higher rates of return
 to community living and greater functional recovery,
 whereas patients discharged to a SNF or a nursing home have higher
 rehospitalization rates and substantially poorer survival.”**
 103 of the Company’s IRFs hold The Joint
 Commission’s Disease-Specific Care
 Certification in Stroke Rehabilitation.
 Encompass Health 16
 • Largest provider of inpatient rehabilitation services
 • 4th largest provider of Medicare-certified skilled home health services
 • Consistent delivery of high-quality, cost-effective, integrated facility-
 based and home-based care
 • Enhanced utilization of technology (e.g., clinical, data management,
 and technology-enabled business processes)
 Strong and Sustainable Business Fundamentals
 • Effective labor management
 • Efficient supply chain
 • Economies related to scale and market density
 • Strong balance sheet and liquidity, no significant near-term maturities
 (credit agreement matures in 2022; bonds mature in 2023 and beyond)
 • Substantial free cash flow generation
 • Attractive organic growth opportunities in both segments 
• Flexible inpatient rehabilitation de novo and acquisition strategy
 • Home health and hospice platform with track record of growth through
 acquisitions
 • Portfolio of 127* IRFs as of December 31, 2017
 P 88 owned and 39 leased
 • Favorable demographic trends driving increased demand
 • Nondiscretionary nature of many conditions treated
 • Highly fragmented post-acute sectors present acquisition and joint
 venture opportunities
 * Includes one nonconsolidated entity.
   Real Estate Ownership
   Attractive Healthcare Sectors
   Growth Opportunities
   Cost-Effectiveness
   Financial Strength
   Industry Leading Positions
 Encompass Health 17
 Investment Thesis  
and Strategy
 Encompass Health’s ability to adapt to changes, build strategic
 relationships, and consistently provide high-quality, cost-effective care
 positions the Company for success in the evolving healthcare industry.
 Encompass Health 18
 Investment Thesis
 Encompass Health is positioned to become the nation's leading provider of integrated post-acute services.
 The healthcare industry is evolving toward integrated delivery models and value-based care. 
Providers must be able to adapt to changes, build strategic relationships across the healthcare 
continuum, and consistently provide high-quality, cost-effective care to be successful.
 Change Agility Demonstrated ability to adapt across economic cycles and in the face of numerousand significant regulatory and legislative changes
 Strategic
 Relationships
 Joint ventures with acute-care partners comprise one-third of IRF portfolio.
 Formed Post-Acute Innovation Center in collaboration with Cerner Corporation to
 develop enhanced tools to manage patients across the continuum of care
 Partnered with the American Heart Association/American Stroke Association to
 jointly work to elevate national and local awareness that stroke is treatable and
 beatable through rehabilitation and community support
 Quality of 
Patient Outcomes Outcomes in both operating segments exceed national industry standards.
 Cost
 Effectiveness
 Treatment of more medically complex patients at lower average costs than other
 post-acute providers through superior clinical protocols, economies of scale, and
 technology-enabled business processes
 Growth Both of the Company's segments benefit from favorable demographic trends and thenondiscretionary nature of many conditions treated.
 Encompass Health 19
  Elements of Strategy
 Strategy
 The Company’s strategy is to expand its network of inpatient rehabilitation 
hospitals and home health and hospice agencies, further strengthen its relationships
 with healthcare systems, provider networks, and payors in order to connect patient
 care across the healthcare continuum, and to deliver superior outcomes. 
Clinical Expertise
 and High-Quality
 Outcomes
 Financial
 Resources
 Advanced
 Technology
 Sustained 
Growth
 Post-Acute
 Innovation
 Encompass Health 20
 Elements of Strategy
 Clinical
 Expertise 
and 
High-Quality
 Outcomes
 Institutional programs and advanced treatment protocols connect care and allow
 seamless transition of patients across the healthcare continuum
 Leverage technology to strengthen clinical data analytics
 Integration of care transition coordinators
 105 Encompass Health inpatient rehabilitation hospitals hold one or more disease-
 specific certifications, including 103 with stroke-specific certifications
 Outcomes in both operating segments exceed national industry standards (see page 9)
 Financial
 Resources
 Strong, well-capitalized balance sheet
 Free cash flow funds growth and shareholder distributions
 Advanced
 Technology
 Proprietary rehabilitation-specific clinical information system (known as "ACE-IT")
 Proprietary management reporting system (known as "Beacon")
 Optimization of Homecare Homebase
 Sustained
 Growth
 Highly fragmented sectors present acquisition and joint venture growth opportunities
 Technology-facilitated and data-driven sales processes
 Barriers to entry include capital investments, clinical expertise, regulatory compliance,
 and Certificate of Need (“CON”) requirements
 Post-Acute
 Innovation
 Predictive analytics used to enhance patient outcomes (e.g., ReACT; Sepsis Alert)
 Ongoing innovation with initiatives such as the Post-Acute Innovation Center
 Active participant in various alternative payment models
 Encompass Health 21
 Home-Based Post-Acute Services
 • More care in the home (lowest cost setting)
 • Ability to care for high-acuity patients with
 multiple chronic conditions
 Future Post-Acute Providers
  Inpatient Rehabilitation Hospitals
 • Full range: low acuity à high acuity
 • 24/7 nursing coverage
 • Eliminates payment silos
 •  Integrated Delivery
 Payment Models
 • Value-Based
 Payments
 • Site Neutrality
 Current Post-Acute Providers
 Facility-Based Post Acute Services
  Skilled Nursing Facilities
  Home Health
  Long-Term Acute Care Hospitals
 • Medicare payments/regulations are site
 specific (e.g., 60% Rule, 3-Hour Rule,
 “preponderance” of one-to-one therapy).
 ▪ The Company believes the healthcare industry is moving toward integrated delivery
 payment models, value-based purchasing, and site neutrality. 
▪ To succeed, providers must be able to adapt to changes in the regulatory and
 operating environments, build strategic relationships across the healthcare continuum,
 and consistently provide high-quality care at a cost-effective price.
 The Healthcare Landscape is Changing.
 • Medicare payments/regulations will be
 outcome focused.
 • Many existing regulations will become
 unnecessary.
 Encompass Health 22
  
      Always Available
        Sometimes Available
        Seldom Available
 Therapy
 Gym &
 Training
 Systems for
 All PAC
 Patients
 Staff Trained
 for All Acuity
 Therapy
 Gym &
 Training
 Systems for
 All PAC
 Patients
 Staff Trained
 for All Acuity
 Therapy
 Gym &
 Training
 Systems for
 All PAC
 Patients
 Staff Trained
 for All Acuity
 LTACs IRFs SNFs
 Home Health
 The Company is Well-Positioned for the Progression Towards Site Neutrality as It Will
 be Able to Treat All Types of Post-Acute Patients by Leveraging Its Operational
 Expertise Across Its Network of Facility-Based and Home-Based Assets.
 Higher acuity patients will
 transition from post-acute
 inpatient hospitals to
 home health. Lower acuity
 patients will go directly to
 home health.Post-Acute Inpatient Spectrum
 Higher Acuity Lower Acuity
 Progression to Site Neutrality
  Post-Acute Inpatient Hospitals
 Presen
 t
 Futur
 e
 The Company’s IRFs have the physical construct, clinical staffing, 
and operating expertise to “pivot from the center” to address the full
 spectrum of inpatient post-acute needs in a site neutral environment.
 Encompass Health 23
 The Company Continues to Improve the Patient
 Experience Through Integrated Care Delivery
 Inpatient Rehabilitation–Home Health Clinical Collaboration (All Payors)
 Overlap Markets*
 Q4 2016 Q4 2017
 10,074 10,660
 3,963
 4,939
 28.2%
 Collaboration Rate
 31.7%
 Collaboration Rateu As of December 31, 2017, ~60% of Encompass
 Health’s inpatient rehabilitation hospitals were
 located within overlap markets.*
 u The clinical collaboration rate with Encompass
 Health’s inpatient rehabilitation hospitals
 increased by 350 basis points in Q4 2017
 compared to Q4 2016.
 u The Company’s clinical collaboration rate
 objective for overlap markets is 35% to 40%
 within the next two years.
 u TeamWorks clinical collaboration is a process to
 identify and standardize best practices for
 integrated patient care.
  Initiative launched in February 2017
  Began piloting redesigned clinical
 collaboration process in July 2017
  Implementation completed in December 2017
 Encompass Health
 IRF Discharges to:
 Encompass Health Home Health
 Non-Encompass Health Home Health
 * Overlap markets have an Encompass Health IRF and an Encompass Health home health location within a
 30-mile radius, excluding markets that have home health licensure barriers. Home health locations in
 overlap markets are open for 12 months before inclusion in the clinical collaboration rate.
 Encompass Health 24
 Solution:
 Utilize extensive proprietary
 database of IRF patients to 
engage in predictive modeling to
 identify patients at risk for acute
 care transfer and implement
 intervention strategies as part 
of the plan of care.
 Solution:
 Standardize and improve
 infection control practices
 across the company in order to
 reduce the risk of infection to
 patients and apply evidenced-
 based decision making in the
 Company’s IRFs.
 Solution:
 Develop clinical protocols and 
coordinated discharge planning between
 IRFs and home health agencies; implement
 TeamWorks initiative to standardize best
 practices across all overlap markets; and
 integrate Care Transition Coordinators to
 implement patient-centered transition
 plans that promote quality, safety and
 patient choice. 
Problem:
 Acute care transfers can
 negatively influence patient
 outcomes and result in
 unnecessary healthcare
 expenditures and penalties.
 Problem:
 Infections are a threat 
to patient safety and add to
 growing healthcare costs.
 Problem:
 Poor coordination of the discharge
 process between healthcare 
providers can result in challenges with
 the transition of care, unnecessary
 duplication of services, and avoidable
 medical errors.
 Clinical Initiatives to Further Improve Quality
 Reduce Acute Care Transfers
 (tracked in the IRF QRP*) Infection Control Clinical Collaboration
 * IRF Quality Reporting Program
 Encompass Health 25
 Business Outlook, Including Guidance 
(as of March 13, 2018)
 Encompass Health 26
 2017 Summary
 GROWTH
 CAPITAL STRUCTURE
 OPERATIONAL INITIATIVES
 u Opened or acquired 4 new IRFs (including 3 joint ventures)
  6 IRF projects underway as of December 31, 2017
 u Expanded existing IRFs by 166 beds
 u Acquired or opened 15 home health agencies and 2 hospice locations
 u Increased clinical collaboration between IRFs and Home Health
  Clinical collaboration rate increased by 350 basis points over Q4 2016
  Completed TEAMWORKS initiative to extend best practices across all overlap markets. 
u Enhanced use of technology to further improve patient outcomes
  Completed installation of ACE-IT and continued in-service upgrades
  Enhanced utilization of clinical data analytics (e.g., ReAct; Sepsis Alert)
  Announced formation of Post-Acute Innovation Center in collaboration with Cerner
 u Reduced leverage
  Redeemed $320 million of convertible notes by issuing ~8.9 million shares common stock and paying
 cash of $0.6 million
 u Increased size of revolver from $600 million to $700 million and extended maturity to 2022
 u Continued shareholder distributions
  Repurchased 0.9 million shares of common stock for ~$38 million
  Paid ~$92 million in cash dividends
  Raised quarterly cash dividend per common share for fourth straight year (from $0.24 to $0.25)
 Encompass Health 27
 GROWTH
 OPERATIONAL INITIATIVES
 CAPITAL STRUCTURE
 Priorities for 2018
 u Expand portfolio of inpatient rehabilitation hospitals
  Demographic trends driving increased demand for inpatient rehabilitation services
  IRFs are best positioned to expand service offering in the progression towards site
 neutrality (see page 22)
  Joint venture or wholly owned opportunities based on market-specific dynamics
  Increase capacity at existing IRFs via bed additons
 u Expand portfolio of home health and hospice agencies
  Demographic trends driving increased demand for skilled home health services
 and in-home hospice services
  Home health benefiting from skilled nursing facility (“SNF”) disintermediation
  Continue emphasis on:
 ü Increasing overlap with the Company’s inpatient rehabilitation hospitals
 ü Increasing market density via acquisitions in existing and contiguous home
 health markets
  Build scale in hospice service line
 Encompass Health 28
 CAPITAL STRUCTURE
 OPERATIONAL INITIATIVES
 u Implement rebranding and name change (see page 34)
 u Continue to develop and implement post-acute patient navigation tools
 • Post-Acute Innovation Center
 ü Enhanced data analytics to design post-acute clinical pathways
 ü Formation of post-acute networks including third-party providers
 u Continue to enhance clinical collaboration between the Company’s IRFs and home health
 locations, including TEAMWORKS initiative to extend best practices across all overlap
 markets
 u Refine and expand use of predictive data analytics to further improve patient outcomes
 (e.g., ReAct; Sepsis Alert)
 u Increase participation in alternative payment models
 Priorities for 2018
 GROWTH
 u Maintain real estate ownership and balance sheet flexibility
 u Consider opportunistic refinancings
 u Continue to augment returns from investments in operations with shareholder
 distributions
 Encompass Health 29Refer to pages 106-110 for end notes.
 Guidance - as of March 13, 2018
 Adjusted EBITDA(10) 
Adjusted Earnings per Share
 from Continuing Operations
 Attributable to Encompass
 Health(11)
 Net Operating Revenues*
 2018 Guidance
 Net Operating Revenues*
 Adjusted EBITDA(10) 
$830 million to $850 million
 Adjusted Earnings per Share
 from Continuing Operations
 Attributable to Encompass
 Health(11)
 $3.25 to $3.40
 $3,919.0 million
 $823.1 million
 $2.76
 $4,080 million to $4,190 million
 2017 Actuals
 * In the first quarter of 2018, the Company will adopt a new revenue recognition accounting standard. Under the new standard,
 amounts the Company previously presented as provision for doubtful accounts become a component of consolidated net operating
 revenues. See "Estimated Impact of the New Revenue Recognition Accounting Standard" on page 30 for more details.
 Encompass Health 30
 Expected Impact of the New Revenue Standard - Historical Periods
 As Reported Recast
 Q4-17 Q3-17 Q2-17 Q1-17 FY 2017 FY 2016 Q4-17 Q3-17 Q2-17 Q1-17 FY 2017 FY 2016
 Net operating revenue
 (millions) $1,019.7 $ 995.6 $ 981.3 $ 974.8 $3,971.4 $3,707.2 $1,010.0 $ 983.0 $ 967.6 $ 958.4 $3,919.0 $3,646.0
 Provision for doubtful
 accounts (millions) 9.7 12.6 13.7 16.4 52.4 61.2 — — — — — —
 Inpatient rehabilitation
 revenue/discharge 17,871 17,896 17,823 18,131 17,929 17,577 17,693 17,654 17,557 17,812 17,679 17,265
 Home health revenue/
 episode 2,989 3,022 2,989 2,991 2,998 3,031 2,976 3,008 2,975 2,978 2,984 3,017
 Adjusted EBITDA (millions) 208.2 204.6 209.5 200.8 823.1 793.6 No Change
 Adjusted EPS 0.70 0.66 0.71 0.70 2.76 2.67 No Change
 Estimated Impact of the New Revenue Recognition
 Accounting Standard
 Expected Impact of the New Revenue Standard - 2018 Guidance
 (in millions, except per share data) Prior Recast
 Net operating revenue $4,150 - 4,250 $4,080 - 4,190
 Adjusted EBITDA 830 - 850 No change
 Adjusted EPS 3.25 - 3.40 No change
 u During the first quarter of 2018, Encompass Health will adopt a new accounting standard (ASC 606 -
 Revenue from Contracts with Customers) which clarifies the standards for recognizing revenue.
 u Based on the Company's current evaluation of the new standard, the expected impact to the Company
 will be that amounts previously presented as provision for doubtful accounts become a component of
 consolidated net operating revenue (both segments impacted similarly).
 • This will have the effect of reducing net operating revenues but will be neutral to Adjusted EBITDA
 and adjusted EPS.
 u The Company will retrospectively adopt the new standard during Q1 2018, which means previously
 reported quarterly and full-year results for 2017 will be updated to reflect the requirements of the
 new standard.
 Encompass Health 31
 2018 Guidance Considerations
 Inpatient Rehabilitation
 u Estimated 0.8% increase in Medicare pricing
 for Q1 through Q3; ~1.25% for Q4
 u Salary increase of ~3.0%; benefits increase
 of ~8.0% to 12.0%
 u Bad debt expense of 1.6% to 1.9% of net
 operating revenues*
 Home Health and Hospice
 u Estimated 0.5% net Medicare pricing
 reduction for CY 2018
 u Salary increase of ~3.0%; benefits increase
 of ~8.0% to 12.0%
 u Inclusive of home health and hospice
 acquisitions in 2018
 Consolidated
 u Includes approximately $11 million to $13 million of operating expenses (included in corporate
 general and administrative expenses) associated with the rebranding and name change
 u Diluted share count of ~99.5 million shares
 u Tax rate of ~28% (includes impact from Tax Cuts and Jobs Act)
 * In the first quarter of 2018, the Company will adopt a new revenue recognition accounting standard. Under the new standard,
 amounts the Company previously presented as provision for doubtful accounts become a component of consolidated net operating
 revenues. See "Estimated Impact of the New Revenue Recognition Accounting Standard" on page 30 for more details.
 Encompass Health 32Reconciliations to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 u Increased cash payments for taxes
 in 2018 primarily due to exhaustion
 of federal NOL in Q1 2017
 Adjusted Free Cash Flow(12) Assumptions
 Certain Cash Flow Items
 (millions) 2017 Actuals
 2018
 Assumptions
 • Cash interest expense
      (net of amortization of debt discounts 
      and fees)
 $145.7 $140 to $150
 • Cash payments for taxes, net of refunds $94.5 $105 to $135
 • Working capital and other $(23.0) $50 to $70
 • Maintenance CAPEX $138.3 $130 to $150
 • Adjusted Free Cash Flow $467.6 $325 to $425
 u Maintenance capital expenditures
 in 2018 reflect completion of new
 home office and completion of the
 ACE-IT installation, offset by
 expenditures associated with
 rebranding.
 u Working capital increase in 2018
 due to expected resumption of
 Medicare pre-payment claims
 denials
 Encompass Health 33See the debt schedule on page 62. Refer to pages 106-110 for end notes.
 Uses of Free Cash Flow 
2017
 Actuals
 2018
 Assumptions
 Growth in
 Core
 Business
 IRF bed expansions $25.5 $30 to $40
 New IRFs
   - De novos 75.2 80 to 110
   - Acquisitions 10.9 opportunistic
   - Replacement IRFs and other 9.7 40 to 50
 New home health and hospice
 acquisitions 27.9 50 to 100
 $149.2
 $200 to $300,
 excluding IRF
 acquisitions
 Debt
 Reduction Debt redemptions (borrowings), net $163.0 $ opportunistic
 Shareholder
 Distributions
 Cash dividends on common stock(13) 91.5 ~100
 Purchase of Home Health Holdings
 rollover shares (see page 64) N/A ~65
 Common stock repurchases $38.1 opportunistic
 $292.6 $TBD
 Quarterly cash dividend currently set at
 $0.25 per common share
 ~$58 million authorization remaining
 as of December 31, 2017
 Net redemptions in 2017 exclude 
~$276 million associated with the non-
 cash conversion of the Convertible
 Senior Subordinated Notes.
 Encompass Health 34
 Rebranding and Name Change
 u The Company’s rebranding and name change reinforce its existing strategy and position as an
 integrated provider of inpatient and home-based care.
  Effective January 1, 2018, HealthSouth Corporation changed its name to Encompass Health
 Corporation, with a corresponding ticker symbol change from “HLS” to “EHC.”
  Both business segments — inpatient rehabilitation and home health and hospice — will fully transition
 to the Encompass Health branding by the end of the first quarter of 2019.
  Total rebranding investment estimated to be ~$25 million to $30 million, to be incurred between 2017
 and 2019
 2017 2018 2019 Total
 Operating expenses* ~$6 million ~$11 to $13 million ~$1 to $2 million ~$18 to $21 million
 Capital expenditures ~$1 million ~$5 to $6 million ~$1 to $2 million ~$7 to $9 million
 Total rebranding investment ~$7 million ~$16 to $19 million ~$2 to $4 million ~$25 to $30 million
 * Included in corporate general and administrative expenses line item
 Encompass Health 35
 Business Outlook: 2018 to 2020
 2018 2019 2020
 Key 
Operational
 Initiatives
 • Implement rebranding and name change
 • Develop and implement post-acute patient navigation tools
 • Enhance clinical collaboration between the Company’s IRFs and home health
 locations, including TEAMWORKS initiative to extend best practices across all overlap
 markets
 • Refine and expand use of clinical data analytics to further improve patient outcomes
 (e.g., ReAct; Sepsis Alert)
 • Increase participation in alternative payment models
 Core
 Growth
 • Same-store IRF growth
 • New-store IRF growth (de novos and acquisitions)
 • Same-store home health and hospice growth
 • New-store home health and hospice growth (acquisitions and de novos)
 Expansion of
 Service
 Offerings
 • Consider acquisitions of other complementary businesses
 Strong
 Balance Sheet • Maintain real estate ownership strategy and balance sheet flexibility
 Shareholder
 Distributions
 • Quarterly cash dividends on common stock
 • Purchases of Home Health Holdings rollover shares
 • Opportunistic common stock repurchases
 Encompass Health 36
 Business Outlook 2018 to 2020: Revenue Assumptions
 Volume
 (Includes New Stores)
 Inpatient Rehabilitation* Home Health*
 3+% annual discharge growth 10+% annual admission growth
 Medicare Pricing
 Approx. 73% of Revenue Approx. 85% of Revenue
 FY 2018
 Q417-Q318(14)
 FY 2019
 Q418-Q319
 Estimate†
 FY 2020
 Q419-Q320
 Estimate†
 CY 2018
 Q118-Q418(14)
 CY 2019
 Q119-Q419
 Estimate†
 CY 2020
 Q120-Q420(15)
 Market basket update 1.0% 2.8% 2.9% 1.0% 2.8% 1.5%
 Healthcare reform reduction - (75) bps - - - -
 Coding intensity reduction - - - (0.9%) - -
 Legislative changes to the 
rural add-on program(15) - - - - ~(0.1%) ~(0.2%)
 Healthcare reform 
productivity adjustment - (80) bps (50) bps - (80) bps -
 Net impact - all providers 1.0% 1.25% 2.4% 0.1% ~1.9% ~1.3%
 Impact from 
case mix re-weighting - - - (0.6%) - -
 Estimated impact 
to Encompass Health(16) 0.8% (0.5%)
 Medicare Advantage 
and Managed Care Pricing Approx. 19% of Revenue Approx. 14% of Revenue
 Expected Increases 2-4% 2-4% 2-4% 0-2% 0-2% 0-2%
 * Outpatient and hospice, which services accounted for 4.6% of total operating revenues for full-year 2017, are not included in the pricing assumptions.
 † Estimates are based on current CMS and Congressional Budget Office projections 
which do not include potential changes from legislation or the CMS rule-making process.
 Refer to pages 106-110 for end notes.
 Encompass Health 37
 Inpatient Rehabilitation Home Health and Hospice
 Business Outlook 2018 to 2020: Labor and Other Expense Assumptions
 Salaries 
and Benefits
 ~70%
 IRF
 Expenses
 ~30%
 Salaries and Benefits 2018 2019 2020
 Salary increases 2.75-3.25% 2.75-3.25% 2.75-3.25%
 Benefit costs increases 8-12%* 5-10% 5-10%
 IRF Expenses
 •Other operating expenses and supply
 costs tracking with inflation
 Salaries 
and Benefits
 ~85%
 Other
 Expenses
 ~15%
   Home Health and Hospice Expenses
 •Other operating expenses and supply
 costs tracking with inflation
 % of Salaries and Benefits
 Salaries ~90%
 Benefits ~10%
 * Expected benefit costs increase in 2018 is reflective of lower group medical expenses incurred in 2017.
 % of Total Operating Expenses % of Total Operating Expenses
 Encompass Health 38
 IRF-PPS Fiscal Year 2018 Final Rule: Key Provisions
 Company Observations
 Pricing: 
• Net pricing impact to the
 Company expected to be an
 increase of approx. 0.8% for 
FY 2018 (see page 36)
 • Because of its efficient cost
 structure, the Company receives
 very few outlier payments
 despite treating higher acuity
 patients (see page 87). 
Quality:
 • The Company will supplement
 existing quality reporting
 systems to meet the new
 requirements.
 Source: https://www.federalregister.gov/documents/2017/08/03/2017-16291/medicare-program-inpatient-
 rehabilitation-facility-prospective-payment-system-for-federal-fiscal
 CMS:
 • Removed All-Cause Unplanned Readmission Measure for 30 Days Post-
 Discharge from IRF;
 • Removed and replaced the Percent of Residents or Patients with Pressure
 Ulcers That Are New or Worsened (Short Stay) (NQF #0678) measure with a
 modified version entitled Changes in Skin Integrity Post-Acute Care:
 Pressure Ulcer/Injury beginning with the FY 2020 IRF QRP;
 • Added six quality measures to those publicly reported on IRF Compare; and
 • Finalized the data elements currently reported on the IRF-PAI that meet
 the definition of standardized patient assessment data for the IMPACT Act. 
New Quality Reporting
 Update to Payment Rates
 The final rule:
 • Implemented a net 1.0% market basket increase as established by the
 Medicare Access and CHIP Reauthorization Act (MACRA) of 2015;
 • Updated Case-Mix Group Relative Weights and Average Length of Stay Values;
 • Updated the outlier threshold; and
 • Updated wage index values.
 60% Rule - Update to Presumptive Methodology Code List
 • CMS finalized certain changes to the list of codes it uses to presumptively
 test compliance with the 60% Rule.
 – The final rule adds ICD-10-CM diagnosis codes for traumatic brain
 injury, hip fracture, and major multiple trauma (effective beginning
 on or after October 1, 2017).
 – The final rule does not include the originally proposed removal of
 certain ICD-10-CM codes.
 Encompass Health 39
 The final rule:
 • Implemented a net 1.0% market basket increase as established by the
 Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 and
 • Implemented year three of a three-year nominal case-mix coding
 intensity reduction adjustment of (0.9%).
 The final rule would have implemented the expiration of the rural add-on
 (0.5%), but Congress elected to extend the adjustment through 2022(15),
 albeit declining in amount along the way.
 New Quality Reporting Measures
 Final Rule Update to 2018 Payment Rates
 Company Observations
 CMS adopted, for the CY 2020 payment determination, three measures to
 meet the requirements of the IMPACT Act:
 • Changes in skin integrity post-acute care pressure ulcer/injury;
 • Application of % of residents experiencing one or more falls with major
 injury; and
 • Application of % of long-term care hospital patients with an admit and
 discharge functional assessment and care plan that addresses function.
 These finalized measures will be calculated from OASIS data.
 Sources: https://www.federalregister.gov/documents/2017/11/07/2017-23935/medicare-and-medicaid-
 programs-cy-2018-home-health-prospective-payment-system-rate-update-and-cy
 Proposed Home Health Groupings Model Not Finalized(15)
 CMS did not finalize its proposal to implement significant changes to the
 home health payment system beginning on January 1, 2019. These changes
 were known as the Home Health Groupings Model (“HHGM”).
 Payment System(15):
 • The Company will continue to
 engage with CMS, Congress, and
 other stakeholders to ensure any
 change to the underlying payment
 system maintains access to needed
 home health services.
 Pricing: 
• Net pricing impact to the
 Company expected to be a
 decrease of approx. 0.5% for 
CY 2018 (see page 36)
 Quality:
 • The Company will supplement
 existing processes and systems to
 meet the new requirements.
 HH-PPS Calendar Year 2018 Final Rule: Key Provisions
 Encompass Health 40
 Company observations and considerations with respect to the IMPACT Act: 
▪ It was developed on a bi-partisan basis by the House Ways and Means and Senate Finance Committees and
 incorporated feedback from healthcare providers and provider organizations that responded to the
 Committees’ solicitation of post-acute payment reform ideas and proposals. 
▪ It directs the United States Department of Health and Human Services (“HHS”), in consultation with
 healthcare stakeholders, to implement standardized data collection processes for post-acute quality and
 resource use measures.  
▪ Although the IMPACT Act does not specifically call for the implementation of a new post-acute payment
 system, the Company believes this act will lay the foundation for possible future post-acute payment
 policies that would be based on patients’ medical conditions and other clinical factors rather than the
 setting where the care is provided. 
▪ It will create additional data reporting requirements for the Company’s IRFs(17) and home health agencies.
 The precise details of these new reporting requirements, including timing and content, will be developed
 and implemented by the Centers for Medicare and Medicaid Services through the regulatory process the
 Company expects will take place over the next several years.
 ▪ While the Company cannot quantify the potential financial effect of the IMPACT Act on Encompass Health,
 the Company believes any post-acute payment system that is data driven and focuses on the needs and
 underlying medical conditions of post-acute patients will be positive for providers who offer high-quality,
 cost-effective care. Encompass Health believes it is doing just that and expects this act will be positive for
 the Company. 
▪ However, it will likely take years for the quality data to be gathered, standardized patient assessment data
 to be assembled and disseminated, and potential payment policies to be developed, tested and
 promulgated. As the nation’s largest owner and operator of inpatient rehabilitation hospitals, the Company
 looks forward to working with HHS, the Medicare Payment Advisory Commission and other healthcare
 stakeholders on these initiatives.
 IMPACT Act of 2014 - Enacted October 6, 2014
   
Source: https://www.govtrack.us/congress/bills/113/hr4994/text
 Refer to pages 106-110 for end notes.
 Encompass Health 41
 Growth
 Encompass Health is a leader in serving the post-acute patient population
 and has multiple avenues available for sustained growth in both segments.
 Favorable demographic trends are driving increased demand.
 Encompass Health 42
 The Company Has Multiple Avenues Available 
for Sustained Growth in Both Segments
 u The Company continues to have excellent organic growth opportunities ininpatient rehabilitation, home health, and hospice.
 — Track record of consistent market share gains
 — IRF organic growth supplemented by bed additions
 — Maturation of acquired home health locations
 u Target four to six new inpatient rehabilitation hospitals per year to complementorganic growth
 — De novos and acquisitions will allow entry into, and growth in, new markets.
 — Proven track record of success
 u Target $50 to $100 million per year toward home health and hospice acquisitionsto complement organic growth
 — Home health acquisitions and new-store growth prioritized in Encompass Health
 IRF markets without current overlap
 — Build additional scale in hospice via acquisitions and de novos
 Encompass Health 43
 Both Segments Benefit from a Demographic Tailwind:
 Growth in the Medicare Beneficiary Population
 Projected Population of Age 65+
 Age 80+Age 70-79Age 65-69
 Millions • The growth rate of Medicare
 beneficiaries increased in 2011 to an
 approx. 3% CAGR as “Baby Boomers”
 started turning age 65.
 • The CAGR for the population in
 Encompass Health’s average patient
 age range is ~5%.
 41% 
(19.0M)
 43%
 (22.8M)
 45%
 (27.0M)
 46%
 (31.1M)
 46%
 (33.8M)
 CAGR (Population Growth by Age)
 Age 2014to 2018
 2018
 to 2022
 2022
 to 2026
 2026
 to 2030
 65-69 3.0% 2.7% 1.6% (0.1)%
 70-74 5.1% 3.8% 2.6% 2.1%
 75-79 4.1% 5.1% 5.0% 2.1%
 80+ 1.6% 2.5% 3.6% 5.3%
 Total 3.3% 3.4% 3.0% 2.3%
 ~3% CAGR
 Source: www.census.gov/data/datasets/2014/demo/popproj/2014-popproj.html
 Baby Boomer wave 
reaches average age of
 an Encompass Health 
Medicare patient (~76).
 Encompass Health 44
 1,600
 1,400
 1,200
 1,000
 800
 600
 400
 200
 0
 132
 127
 122
 117
 112
 107
 102
 97
 92
 87
 82
 77
 72
 2013 2014 2015 2016 2017 Projected
 2018
 % Increase in licensed beds 4% 18% 1% 4% 3%
 Total number of licensed beds 6,825 7,095 8,404 8,504* 8,851 9,120
 Total number of IRFs 103 107 121 123* 127 131
 Multi-faceted Inpatient Rehabilitation Growth Strategy
 Total IRFsNew Beds
 2017 bed count
 increase
 • Gulfport, MS (33 beds)
 • Westerville, OH (60 beds)
 • Jackson, TN (48 beds)
 • Pearland, TX (40 beds)
 • Bed expansions (166 beds)
 2018 projected bed
 count increase
 • Shelby County, AL (34 beds)
 • Hilton Head, SC (38 beds)
 • Murrells Inlet, SC (29 beds)
 • Winston-Salem, NC (68 beds)
 • Bed expansions (~100 beds)
 * 2016 total number of licensed beds and total number of IRFs includes the disposal of 61 beds at 
  Beaumont, TX (sold June 2016) and 83 beds at Austin, TX (closed August 2016).
 Wholly Owned and Joint 
Venture
 s
 Bed
 Expansions
 De Novos
 Acquisitions
 Encompass Health 45
 Disciplined Approach to New Store Growth
  
–   $7.4 Billion Medicare IRF Market   – 
Considerations:
 – Market demographics
 – Presence of other IRFs
 – Geographic proximity to other Company
 IRFs and home health locations
 – Potential joint venture partners
 Source: MedPAC December 2016 Public Meeting presentation 
CA = confidentiality agreement
 Inpatient Rehabilitation Growth Pipeline
 Typical Development Pipeline
 Factors:
 • Certificate of Need process/timeline
 • Fair market valuation of contributed assets (joint
 ventures only)
 • Partnership complexities
 The Company’s Value Proposition
 ü CAPEX to build free-standing IRF, freeing up space formedical/surgical beds in an acute care facility for a JV
 partner
 ü Enhance the position of the acute care hospital to meetquality requirements and effectively participate in alternative
 payment models
 ü Increased acute care hospital flow-through by takingappropriate higher acuity patients faster than other post-
 acute settings
 ü Clinical collaboration between the Company’s IRFs and homehealth locations
 ü
 Proprietary rehabilitation-specific clinical information system
 (“ACE-IT”) integrated with acute care hospitals’ clinical
 information systems to facilitate patient transfers, reduce
 readmissions, and enhance outcomes
 ü
 Proprietary real-time performance management systems (care
 management, labor productivity, quality reporting, therapy
 analysis and expense management) to ensure appropriate
 clinical oversight and improve profitability
 ü Proven track record of efficient management of regulatoryprocess (CON, licensure, occupancy, etc.)
 ü Experienced transaction/integration team
 ü National leader in post-acute policy activities
 ü TeamWorks approach to sales and marketing
 ü Supply chain efficiencies
 ü Medical leadership and clinical advisory boards
 No. of Projects
 Exploratory /
 CA Executed
 30 - 40
 Actively
 Working
 10 - 12
 Near-term
 Actionable
 4 - 6
 Encompass Health 46
 • The Company’s IRF joint ventures began in 1991 with Vanderbilt University Medical Center.
 • The Company’s joint venture acute care hospital partners own equity that ranges from 2.5% to 50%.
 • 41 of 42 IRFs are consolidated joint ventures, with one accounted for under the equity method.
 Inpatient Rehabilitation Acute Care Joint Venture Partnerships
 42* IRF joint venture hospitals in place with major healthcare systems such as:
    Joint ventures with acute care hospitals establish a solid foundation for integrated delivery 
   and alternative payment models.
 • Barnes-Jewish • Monmouth Medical Center (Barnabas Health)
 • University of Virginia Medical Center • Yuma Regional Medical Center
 • Vanderbilt University Medical Center • Mercy Health System
 • Geisinger Health System • Maine Medical Center
 • Martin Health System • Methodist Healthcare-Memphis Hospitals,
 a subsidiary of Methodist Le Bonheur Healthcare
      * Excludes IRF joint venture hospitals that have been announced but were not operational as of December 31, 2017:
 Winston-Salem, NC; Murrells Inlet, SC; Lubbock, TX; and Boise, ID.
 Encompass Health 47
 De Novo IRFs and Acquisitions
 Investment Considerations
 • IRR objective of 13% (after tax) 
• Joint venture capitalization
 • Certificate of Need (“CON”) costs, where applicable
 • Clinical Information System (“CIS”) installation costs
 • Medicare certification for new hospitals
 (minimum of 30 patients treated for zero revenue)
 De Novo IRFs
 Operational
 Date Location Beds
 Joint
 Venture
 2019 Boise, ID 40 Yes
 2019 Lubbock, TX 40 Yes
 2019 Murrieta, CA 50
 Q4 2018 Winston-Salem, NC 68 Yes
 Q2 2018 Hilton Head, SC 38
 Q2 2018 Shelby County, AL 34
 Q4 2017 Pearland, TX 40
 Q3 2017 Jackson, TN 48 Yes
 Q3 2017 Broken Arrow, OK* 40 Yes
 Q2 2017 Westerville, OH 60 Yes
 Q4 2016 Modesto, CA 50
 Q3 2016 Bryan, TX* 49 Yes
 Q3 2016 Hot Springs, AR* 40 Yes
 Q2 2016 Savannah, GA* 50 Yes
 Acquisitions
 Acquisition
 Date Location Beds
 Joint
 Venture
 Q3 2018 Murrells Inlet, SC 29 Yes
 Q2 2017 Gulfport, MS 33 Yes
 Q3 2016 Broken Arrow, OK* 22 Yes
 Q3 2016 Bryan, TX* 19 Yes
 Q1 2016 Hot Springs, AR* 20 Yes
 Q2 2015 Lexington, KY 232
 Q2 2015 Savannah, GA* 50 Yes
 * An acquisition that began operations in an existing IRF or unit while a new IRF was/is constructed
 Encompass Health 48
 CON Process
 (if applicable) Zoning & Design Permitting Construction
 OpeningGroundbreaking
 De Novo Costs and Timeline
 Capital Cost  (millions) Low High
 Construction, design, permitting, etc. $17 $21
 Land   2   3
 Equipment (including CIS)   3   4
 Range of a typical 40-50 bed IRF $22 $28
 Pre-Opening Expenses(18) (millions) Low High
 Operating $0.5 $1.0
 Salaries, wages, benefits   0.4   1.0
 $0.9  $2.0
 • Prototype includes all private rooms
 • Core infrastructure of building anticipates
 future expansion (accretive to financial
 returns)
 • Factors that impact costs/timeline:
 ◦ CON status
 ◦ State regulatory requirements
 ◦ Local planning and zoning approvals
 ◦ Hospital-specific complexities
 Project Start
 20 months6 months to 3 years
 Illustrative Timeline
 Refer to pages 106-110 for end notes.
 Encompass Health 49
 Stuart (06/2013) Altamonte
 Springs (10/2014)
 Newnan (12/2014) Middletown (12/2014)
 Franklin (12/2015) Modesto (10/2016) Westerville (04/2017) Pearland (10/2017)
 The Company’s average
 100%
 90%
 80%
 70%
 60%
 50%
 40%
 30%
 20%
 10%
 0%
 1 2 3 4 5 6 7 8 9 10 11 12
 Months
 IRF De Novo Occupancy and EBITDA* Trends
 Occupancy
          Sustained Positive EBITDA
 * IRF EBITDA = earnings before interest, taxes, depreciation, and amortization
 directly attributable to the related hospital.
 2017 occupancy
 Encompass Health 50
 • Strong demand due to cost effectiveness of home-based care and
 implementation of alternative payment models
 • Strong organic growth from existing agencies
 • Located in markets with attractive demographics
 * Currently located in states that represent ~67% of total Medicare home
 health and hospice spend
 • Prioritization of existing home health markets
 • Opportunity to build scale and leverage components of existing
 infrastructure
 • Attractive partner due to quality of outcomes, data management, scale
 and market density, and willingness/ability to treat high acuity and/or
 chronic patients
 • Plan of care coordination with the Company’s IRFs
 • Care Transition Coordinators serve as representatives in transitional care
 activities and strategic relationships with other healthcare providers
 • Highly fragmented market
 • Prioritization of new IRF overlap markets
 • Proven ability to consummate and integrate acquisitions
 • Sustainable and replicable culture
 • Implementation of best practices and technology
 Organic Growth
 Home Health
 Acquisitions
 and De Novos
 Hospice
 Acquisitions
 and De Novos
 Clinical
 Collaboration 
Multi-faceted Home Health and Hospice Growth Strategy
 Encompass Health 51
 13,000
 12,000
 11,000
 10,000
 9,000
 8,000
 7,000
 6,000
 5,000
 4,000
 #
 of
 Ag
 en
 ci
 es
 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
 Home Health Growth Pipeline 
• $18.1 billion Medicare home
 health market is highly
 fragmented with over 12,300
 home health agencies.
 • Approx. 94% of these have
 annual revenue of less than
 $5 million.
 • Top 5 public companies
 represent approx. 20% of the
 Medicare market.
 • The Company represents
 3.1% of the Medicare home
 health market.
 Prioritize acquisitions in 
Company IRF markets to
 enhance clinical collaboration
 Number of Home Health Agencies Over Time
 Cost-
 Based
 Interim
 Payment
 Systems
 (IPS)
 Prospective Payment System (PPS)
 The number of home health agencies 
is near an all-time high and presents
 significant consolidation opportunities.
 Source: MedPAC, Medicare Payment Policy - March 2017, page 231; March 2016, page 214; March 2015, page 218;
 March 2014, page 221; March 2013, page 194; and March 2003, page 112; MedPAC - Healthcare spending and the
 Medicare program, June 2006, page 131; Medicare Claims Data
 Encompass Health 52
 Freestanding
 Hospital/SNF
 based
 Home Health
 based
 4,000
 3,000
 2,000
 1,000
 0
 2000 2007 2013 2014 2015
 1,069
 2,103
 2,844 3,024 3,138807
 704
 578 558
 547
 378
 443
 503 510
 514
 Hospice Growth Pipeline
 • Medicare hospice market is approx. $16 billion.
 • 1.4 million Medicare beneficiaries received hospice
 services from approx. 4,200 providers in 2015.
 • Hospice use among Medicare beneficiaries has grown
 substantially in recent years, suggesting greater
 awareness of and access to hospice services. 
• Since 2000, there has been a substantial increase in
 the number of for-profit providers.
 Acquisition Strategy for
 Hospice
 • Build additional scale
 • Medicare focus
 • Home-based service
 offering
 • Strong clinical practice
 and clean compliance
 record
 • Highly regarded market
 reputation
 • Attractive geography
 and demographics
 • Ability to leverage
 existing infrastructure
 Hospice Providers over Time
 Source: MedPAC, Medicare Payment Policy, March 2017, pages 317, 319, and 324.
 Encompass Health 53
 Alternative Payment Models
 Encompass Health 54
 Accountable Care Organizations (“ACOs”)
 Medicare Shared Savings Program (MSSP)   
(2018 - 561 ACOs / 10.5 million Medicare beneficiaries)
 • Performance Year 4 (2016) results:
 ◦ 241 of 432 ACOs (56%) held spending below their benchmark.
 ▪ 107 of these ACOs reduced health costs compared to their benchmark, but did not meet 
the minimum savings threshold for shared savings.
 ◦ 191 ACOs (44%) did not reduce costs compared to their benchmark.
 ◦ Shared Savings Program ACOs generated total program savings of $652 million.
 • A new MSSP model called Track 1+ Model began with 55 ACOs in 2018 and incorporates more limited
 downside risk than Tracks 2 or 3 (two-sided risk models) of the MSSP  
Source: CMS/HHS press releases and public use files
 The Company serves as Premier ACO’s exclusive preferred home health provider.
 (~22,000 covered lives in north Texas and southern Oklahoma)
  Receives increased referrals for Medicare home health patients from the ACO
  Eligible to receive a portion of the ACO’s shared savings
  Total shared savings achieved by ACO in 2016 was $12.5 million.
 - Ranked 2nd in savings rate out of all MSSP ACOs with >20,000 assigned beneficiaries
 - Met the minimum savings rate to participate in shared savings
 Next Generation ACOs
 (2018 - 58 ACOs / ~2.0 million Medicare beneficiaries)
 • Initiative launched in January 2016 for ACOs that are experienced in coordinating care for populations 
of patients
 • Allows providers to assume higher levels of financial risk and reward than are available under the MSSP
 • Performance Year 1 (2016) results:
 ◦ 11 out of 18 ACOs generated savings and received shared savings of $58 million.
 ◦ Remaining 7 ACOs generated losses and were required to pay back $20 million to CMS.
 As of 
January 2018,
 there were 
619
 MSSP and 
Next Generation
 ACOs serving 
~12.5 million
 Medicare 
and/or Medicaid
 beneficiaries.
 Performance
 results so far
 have been
 mixed.
 Encompass Health 55
 Bundled Payments
 Model  1
 All acute patients (all DRGs)
 – Concluded December 31, 2016 –
 The Bundled Payments for Care Improvement
 (BPCI) initiative currently tests
 four types of bundles
 (i.e. “Models”):
 Model  2*
 Hospital plus post-acute period (selected DRGs)
 Model  3*
 Post acute only (selected DRGs)
 Model  4*
 Hospital plus readmissions 
(selected DRGs)
 How the Retrospective Models Work
  The BPCI “convener” is responsible for bringing
 providers together to provide a continuum of services
 throughout an episode of care. The BPCI “awardee”
 is the entity that bears the financial risk and receives
 the shared savings from CMS.
  Each participating provider in the care sequence
 continues to receive its traditional reimbursement
 from Medicare.
  The sum of all payments made to each provider for
 selected DRGs is then retroactively reconciled to a
 target payment determined by CMS. Payment
 reconciliations are performed quarterly, typically
 with a 9- to 12-month lag.
  Payment reconciliations: If actual spending exceeds
 the target, the awardee is responsible for paying a
 portion of the difference to CMS. If actual spending is
 less than the target, the awardee keeps a portion of
 the savings.
  The convener can choose to partner with other
 providers in shared savings agreements and allocate
 the savings across the providers who participated in
 providing the continuum of care.
  Shared savings agreements must be reviewed and
 approved by the Center for Medicare and Medicaid
 Innovation.
 Models 2 & 3 have the most impact on post-acute providers.
 Notes: Models 1, 2, and 3 are retrospective models; model 4 is a prospective model.
             The convener and awardee can be, but may not be, the same entity.
 * BPCI Models 2, 3, and 4 will end on September 30, 2018 and be replaced by the BPCI Advanced model which begins on October 1, 2018 and runs through
 December 31, 2023. BPCI Advanced is a new voluntary episode payment model that will test a new iteration of bundled payments for 29 inpatient clinical
 episodes and 3 outpatient clinical episodes. For more information regarding BPCI Advanced, see https://innovation.cms.gov/initiatives/bpci-advanced.
 Encompass Health 56
 The Company’s Participation in BPCI Model 3
 Inpatient Rehabilitation
 BPCI Bundle ParticipatingIRFs
 Bundle Length
 (in days)
 % of the Company’s
 Total Discharges
 Stroke 3 60 0.12%
 Simple Pneumonia 1 60 0.02%
 Sepsis 1 60 0.01%
 Double-lower extremity joint replacement 2 60 <0.01%
 Upper extremity joint replacement 1 60 <0.01%
 Total 8 0.16%
 Home Health
 BPCI Bundle BundledArrangements
 Bundle Length
 (in days)
 % of the Company’s
 Total Episodes
 Major joint replacement of the lower extremity 26 90 0.80%
 Spinal fusion (non-cervical) 9 60/90 0.06%
 Sepsis 14 90 0.06%
 Revision of the hip or knee 14 90 0.05%
 Simple pneumonia and respiratory infections 8 90 0.04%
 Major joint replacement of the upper extremity 8 60/90 0.04%
 Other respiratory 19 90 0.04%
 Urinary tract infection 6 90 0.04%
 Congestive heart failure 32 90 0.02%
 Chronic obstructive pulmonary disease 17 90 0.01%
 All other episode types 51 30/60/90 0.12%
 Total 204* 1.29%
 * Represents a total of 79 locations participating in 204 bundled payment arrangements throughout 2016  
As of December 31, 2017, 72 locations were participating in 128 active bundled payment arrangements.
 Note: Data based on 2016 discharges/episodes
 Encompass Health 57* These comorbidities are specific to acute care hospitals and are defined differently than IRFs’ comorbidities.Source:  https://innovation.cms.gov/initiatives/cjr
 Acute care hospital patients are categorized by Medicare Severity Diagnosis Related Groups (“MS-DRGs”); 
the CJR model covers two MS-DRGs:
 MS-DRG 469 Major joint replacement or reattachment of lower extremity with major complications or comorbidities*
 MS-DRG 470 Major joint replacement or reattachment of lower extremity without major complications or comorbidities*
 IRF patients are categorized by Rehabilitation Impairment Categories (“RICs”); CJR model patients are a subset of two RICs:
 RIC 07 Lower extremity fractures (~30% are MS-DRGs 469 and 470)
 RIC 08 Lower extremity joint replacements (~75% are MS-DRGs 469 and 470)
 Since the implementation of the 60% Rule in 2007, the relative number of 
RIC 07 and RIC 08 patients treated in the Company’s IRFs has declined significantly.
 RIC
 % of the Company’s Medicare Discharges
 2005 2007 2009 2011 2013 2015 2016
 Total RIC 07 (Fractures) 13.1% 14.8% 13.6% 11.6% 10.2% 9.8% 6.5%
 Total RIC 08 (Replacements) 17.9% 11.8% 9.0% 7.6% 6.7% 5.5% 3.2%
 Comprehensive Care for Joint Replacement Model
 The Comprehensive Care for Joint Replacement Model (“CJR”) is a payment model for episodes of care 
related to knee and hip replacements under Medicare.  The CJR model was a mandatory five-year model 
that began April 1, 2016 in 67 geographic areas. On November 30, 2017, CMS issued a Final Rule which 
reduced the number of geographic areas that were required to participate; 33 of the 67 geographic areas 
were moved to “voluntary” status.  The Final Rule also canceled the Episode Payment Models and the 
Cardiac Rehabilitation Incentive Payment Model that were scheduled to begin on January 1, 2018.
 u~380 acute care hospitals are included in the 34 geographic areas that are required to participate in CJR.
 uEncompass Health has 25 IRFs located in these 34 mandatory markets (12 overlap with Encompass Health 
  home health locations).
 uIn 2016, mandatory CJR patients in Encompass Health markets would have represented ~0.7% of total 
  Encompass Health IRF discharges.
 Encompass Health 58
 Medicare-certified home health agencies
 that provide services in the following
 states will be required to participate in
 the model:
 1. Arizona 5
 2. Florida 17
 3. Iowa —
 4. Maryland 3
 5. Massachusetts 3
 6. Nebraska —
 7. North Carolina 6
 8. Tennessee 5
 9. Washington —
 Company Locations 39
 In the calendar year 2016 HH-PPS final rule,
 CMS finalized a Home Health Value-Based
 Purchasing (“HHVBP”) Model that covers five
 performance years beginning January 1, 2016
 and concluding on December 31, 2022.
 Home Health Value-Based Purchasing Model
 Over the long term, the Company believes it is well-positioned to benefit from a delivery
 system that rewards providers who are committed to providing high-quality care.
 • Two process measures from existing Outcome and
 Assessment Information Set (“OASIS”) data collection
 and three process measures submitted through the
 HHVBP portal
 • Seven outcome measures from existing OASIS data
 collection and two outcome measures from claims data
 • Five HHCAHPS** consumer satisfaction measures
 Total Performance Scores (a numeric score ranging
 from 0 to 100 based on each agency’s performance)
 will be calculated from the following set of measures*
 for Performance Year 2018:
 Performance Years Calendar Year forPayment Adjustment
 Maximum Payment
 Adjustment (-/+)
 2016  2018† 3%
 2017 2019 5%
 2018 2020 6%
 2019 2021 7%
 2020 2022 8%
 Source:  https://innovation.cms.gov/initiatives/home-health-value-based-purchasing-model
 * Per the CY 2018 HH Final Rule at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-23935.pdf
 ** Home Health Care Consumer Assessment of Healthcare Providers and Systems
      
~22% of the Company’s home health Medicare revenue
 1st Adjustment
 † Majority of Company’s locations in the nine VBP states were acquired in late
 2015 or 2016; Company expects impact of ($0.3) million, or a (0.27%) payment
 adjustment to Medicare revenue in the nine VBP states, in 2018.
 Encompass Health 59
 Capital Structure
 Encompass Health is positioned with a 
cost-efficient, flexible capital structure.
 Encompass Health 60
 Debt Maturity Profile - Face Value
 2018 2021 2022 2022 2023 2024 2025
 $350 Senior
 Notes 5.75%
 $1,200
 Senior
 Notes
 5.75%
 $300 Senior
 Notes 5.125%
 $95 Drawn +
 $35 reserved
 for LC’s 
As of December 31, 2017*
 ($ in millions)
 $570
 Available
 Callable beginning
 November 2017
 Revolver
 Revolver
 Capacity
 $295
 Term Loans
 Callable beginning
 September 2020
 No significant debt
 maturities prior to 2022
 Callable beginning
 March 2018
 * This chart does not include ~$272 million of capital lease obligations or ~$82 million of other notes payable.
 See the debt schedule on page 62.
 Encompass Health 61
 2013 2014 2015 2016 2017
 1.52
 2.11
 3.17 3.02
 2.58
 S&P Moody’s
 Corporate Rating BB- Ba3
 Outlook Stable Stable
 Revolver Rating BB+ Baa3
 Senior Notes Rating B+ B1
 Financial Leverage and Liquidity
 (1)  
Liquidity
 Credit Ratings 
(billions) Leverage Ratio(19)
 Total Debt
 3.1x
 December 31,
 2017
 December 31,
 2016
 Cash Available $ 54.4 $ 40.5
 Revolver $ 700.0 $ 600.0
 Less:
 - Draws (95.0) (152.0)
 - Letters of Credit (35.4) (33.3)
 Available $ 569.6 $ 414.7
 Total Liquidity $ 624.0 $ 455.2
 2.8x
 Reconciliations to GAAP provided on pages 93-104.
 Refer to pages 106-110 for end notes. See also the debt schedule on page 62.
 4.6x*
 * Increase in financial leverage at the end of 2015 due to the acquisition
 of Encompass Home Health and Hospice, Reliant Hospital Partners, and
 CareSouth Health System, Inc.
 Encompass Health 62Reconciliations to GAAP provided on pages 93-104.
 Debt Schedule
 Change in
 December 31, December 31,  Debt vs.
 ($millions) 2017 2016 YE 2016
 Advances under $700 million revolving credit facility,
     September 2022 - LIBOR +150bps $ 95.0 $ 152.0 $ (57.0)
 Term loan facility, September 2022 - LIBOR +150bps 294.7 421.2 (126.5)
 Bonds Payable:
 5.125% Senior Notes due 2023 295.9 295.3 0.6
 5.75% Senior Notes due 2024 1,193.9 1,193.2 0.7
 5.75% Senior Notes due 2025 344.4 343.9 0.5
 2.0% Convertible Senior Subordinated Notes due 2043 — 275.7 (275.7)
 Other notes payable 82.3 55.8 26.5
 Capital lease obligations 271.5 279.3 (7.8)
 Long-term debt $ 2,577.7 $ 3,016.4 $ (438.7)
 Debt to Adjusted EBITDA 3.1x 3.8x
 Encompass Health 63
 39 Lease Building and Land
 A CON is a regulatory requirement in some states and federal
 jurisdictions that require state authorization prior to proposed
 acquisitions, expansions, or construction of new hospitals. 
59 Own Building and Land
 29 Own Building Only
 IRF Real Estate Portfolio
 127 Inpatient Rehabilitation Hospitals: 8,851 Licensed Beds
 4,499 Licensed Beds
 in CON States
 4,352 Licensed Beds
 in Non-CON States
 1 of the 127 IRFs is nonconsolidated. For that IRF, the
 Company owns the building only. The Company’s licensed bed
 count does not include the 51 beds associated with the
 nonconsolidated IRF.
 As of December 31, 2017
 Encompass Health 64
 Options
 Holder – The right (but not the obligation) to sell for cash up to 1/3 of the Rollover Shares to the parent after 1/1/18*; 
2/3 after 1/1/19; and all outstanding Rollover Shares after 1/1/20
 Company – The right (but not the obligation) to purchase for cash all or any portion of the Rollover Shares after 1/1/20 
upon 20 days prior written notice
 Valuation
 Fair value of the Rollover Shares is determined using the product of Home Health Holdings’ EBITDA for the trailing 
12-month period and a median market price multiple based on a basket of public home health companies and recent
 transactions, less the current balance of the intracompany note(s) to the parent.
 As of December 31, 2017, the value of the Rollover Shares was ~$192 million.
    
    In connection with the 2014 acquisition of Encompass Home Health and Hospice:
 • Certain members of that management team rolled a portion of their pre-
 acquisition equity into the post-acquisition entity (“Home Health Holdings”)
 resulting in a 16.7% ownership interest (the “Rollover Shares”).
 • Home Health Holdings was capitalized with a promissory note to the parent
 company totaling ~$385 million (equal to 5.5x the segment’s 2014 EBITDA).
 This was done to provide the opportunity for leveraged returns on the equity,
 thereby mimicking a private equity transaction structure.
 • To the extent Home Health Holdings needs cash (e.g., acquisitions, capex,
 etc.), such amounts may be added to the principal amount of the note or via 
the creation of new notes. Cash generated from the operations of Home
 Health Holdings may be used to pay interest and principal on the note(s).
 Overview of Rollover Shares Held by Members of the
 Home Health and Hospice Management Team
 Background
 Home Health
 Holdings
 Rollover Shares
 16.7%
 * In February 2018, each management investor exercised the right to sell 1/3 of his or her Rollover Shares to EHC, representing ~5.6%
 of the outstanding common shares of Holdings. EHC settled the acquisition of those shares upon payment of ~$65 million in cash.
 Encompass Health 65
 Information Technology
 Encompass Health utilizes information technology to 
improve patient care and generate operating efficiencies.
 Encompass Health 66
 IRF Clinical Information System (“CIS”): Improved
 Patient Safety and Streamlined Operational Efficiencies 
Pre-Admission Assessment 
& Approval
 Discharge Planning 
and Patient Education
 •Patient History
 •Problems and Diagnoses 
•Orders and Results
 •Plan of Care
 •Workflow Alerts and Reminders
 •Treatment and Interventions 
Document
 Imaging
 Charge and 
Registration Services
 •Registration
 •Census
 •Coding 
•Billing
 Quality Reporting
 •Uniform Data Systems
 •Clinical Data Warehouse
 •Clinical Intelligence 
Referral Hospitals
 Ancillary Services
 Clinical Notes
 • Physician
 • Nursing
 • Therapy
 • Care Mgmt.
 Integrated and 
Bar-coded Point of Care
 Medication Administration
 Treatment Plan
 • Computerized 
Physician Order 
Entry ("CPOE")
 • Clinical Decision 
Support ("CDS")
 Coordinate Care 
and Engage Patients
 Encompass Health 67
 IRF Proprietary Management System: Beacon
 Encompass Health 68
 Homecare Homebase
 (“HCHB”) was born
 out of the Company’s
 operating model;
 HCHB is a leading IT
 platform provider in
 the home health and
 hospice industry.
 Optimization of
 capabilities in
 leading-edge
 technology embedded
 in culture, driving
 superior clinical,
 operational, and
 financial outcomes.
 Home Health and Hospice Information System: Homecare Homebase
 Clinical
 • HCHB manages the entire patient
 workflow and provides field clinicians
 with access to patient records, diagnostic
 information, and notes from prior visits
 via a mobile application.
 • Real-time, customized feedback and
 instructions provided on-site
 • Enhances patient data capture and
 database management which aids in the
 development of algorithms that 
can improve the plan of care
 Sales
 • Provides real-time market intelligence to
 sales area managers, allowing them to
 quickly identify the most valuable
 referral sources
 • Specialty programs integrate individual
 physician protocols into HCHB.
 – Creates loyalty and incentives for
 physicians and facilities, generating
 additional future referrals
 • Web-based portal allows referring
 physicians to easily monitor the care and
 progress of patients and to sign orders
 electronically.
 Compliance
 • Field clinicians are required to adhere to
 clinical protocols and physician orders,
 ensuring that proper regulatory and
 compliance procedures are followed.
 • Internal branch-level audits completed
 three times a year
 – HCHB-generated outputs reviewed by
 management to identify any branches
 requiring additional oversight
 • Compliance program also involves
 extensive internal training
 Management and Operations
 • Best-in-class data management and
 reporting ensures managers have access
 to relevant data needed to make correct
 decisions.
 • Rules-based algorithms ensure
 accountability by escalating tasks and
 notifying management when processes
 are delayed.
 • Seamless billing with processes in place to
 ensure claim completeness
 Encompass Health 69
 Operational Metrics
 Encompass Health 70
 •Salaries and Benefits includes group medical costs and is impacted by
 staffing levels based on patient volumes.
 •IRF-related Expenses includes other operating expenses (excluding loss on
 disposal or impairment of assets), supplies, and occupancy costs.
 •Provision for Doubtful Accounts is impacted by reserve activity related to
 the level of pre-payment denials by Medicare Administrative Contractors.
 (see page 71)
 •Employees per Occupied Bed (“EPOB”) is calculated by dividing the
 number of full-time equivalents, including an estimate of full-time
 equivalents from the utilization of contract labor, by the number of
 occupied beds during each period. The number of occupied beds is
 determined by multiplying the number of licensed beds by the Company’s
 occupancy percentage.
 Salaries and Benefits IRF-Related Expenses Provision for Doubtful Accounts
 47.9
 20.7
 1.1
 48.3
 20.7
 1.3
 49.4
 20.9
 1.7
 49.4
 20.6
 1.9
 50.3
 20.7
 1.5
 IRF Operational Metrics: Expense Efficiencies 
3.44 3.40 3.41 3.44 3.47
 EPOB
 (Percent of Net Operating Revenues) 
    2013       2014        2015       2016        2017       2013       2014        2015        2016       2017      2013       2014        2015       2016       2017
 Encompass Health 71
 Pre-Payment Claims Denials - Inpatient Rehabilitation Segment
 Impact to Income Statement
 Period New Denials
 Collections of
 Previously
 Denied Claims
 Bad Debt
 Expense for
 New Denials
 Update of
 Reserve for
 Prior
 Denials
 (In Millions)
 Q4 2017 $0.7 $(7.8) $0.2 $—
 Q3 2017 7.4 (6.2) 2.2 —
 Q2 2017 16.5 (7.7) 4.9 —
 Q1 2017 19.0 (5.9) 5.7 —
 Q4 2016 17.8 (4.4) 5.4 0.5
 Q3 2016 15.7 (8.5) 4.6 —
 Q2 2016 18.7 (4.9) 4.6 —
 Q1 2016 22.7 (8.4) 6.0 —
 Q4 2015 22.5 (4.1) 5.6 (1.3)
 Q3 2015 22.0 (4.1) 5.9 (1.1)
 Q2 2015 18.2 (3.8) 4.9 —
 Q1 2015 16.3 (3.0) 4.2 —
 Impact to Balance Sheet
 Dec. 31,
 2017
 Dec. 31,
 2016
 Dec. 31,
 2015
 (In Millions)
 Pre-payment claims denials $ 164.0 $ 159.7 $ 114.8
 Recorded reserves (49.2) (47.9) (31.2)
 Net accounts receivable from
 pre-payment claims denials $ 114.8 $ 111.8 $ 83.6
 Background
 • For several years, under programs designated as “widespread probes,”
 certain Medicare Administrative Contractors (“MACs”) have conducted pre-
 payment claim reviews and denied payment for certain diagnosis codes.
 • Encompass Health appeals most denials. On claims it takes to an
 administrative law judge (“ALJ”), Encompass Health historically has
 experienced an approximate 70% success rate.
 – MACs identify medical documentation issues as a leading basis for
 denials.
 – Encompass Health’s investment in clinical information systems and its
 medical services department has further improved its documentation
 and reduced technical denials.
 – However, MACs and other HHS contractors continue to issue denials
 without regulatory basis.
 • By statute, ALJ decisions are due within 90 days of a request for hearing,
 but appeals are taking years. HHS has implemented rule changes to address
 the backlog of appeals, but their effect is uncertain.
 • In 2016, a federal court ordered HHS to eliminate the backlog by the end of
 CY 2020. HHS continues to object that it cannot clear the backlog in the
 timeframe established by the court. Although HHS remains bound by the
 order, the courts are considering how HHS will comply.
 • All Medicare providers continue to experience delays. The backlog is
 growing because the ALJs receive one year’s worth of appeals every four to
 six weeks, according to HHS.
 – Currently, ALJs are hearing Encompass Health appeals from claims
 denied up to eight years ago.
 • In summer 2017, CMS announced the Targeted Probe and Educate (“TPE”)
 initiative. For more information regarding TPE, see https://www.cms.gov/
 Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-
 Compliance-Programs/Medical-Review/Targeted-Probe-and-
 EducateTPE.html
 • Effective February 2018, Palmetto GBA assumed responsibilities for
 Cahaba’s MAC jurisdiction. See announcement from CMS at https://
 www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-
 Contractors/Downloads/JurisdictionJAwardFactSheet-09082017.pdf
 Encompass Health reserves pre-payment claim denials via the provision
 for doubtful accounts upon notice from a MAC a claim is under review.
 Encompass Health 72
 Inpatient Rehabilitation Operational and Labor Metrics
 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year
 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016
 (In Millions)
 Net patient revenue-
 inpatient $ 784.7 $ 768.6 $ 762.9 $ 766.2 $ 740.9 $ 724.1 $ 721.2 $ 719.4 $ 3,082.4 $ 2,905.5
 Net patient revenue-
 outpatient and other
 revenues
 26.1 26.2 27.1 26.3 26.7 27.6 31.4 29.8 105.7 115.6
 Net operating
 revenues $ 810.8 $ 794.8 $ 790.0 $ 792.5 $ 767.6 $ 751.7 $ 752.6 $ 749.2 $ 3,188.1 $ 3,021.1
 (Actual Amounts)
 Discharges(20) 43,910 42,948 42,805 42,259 41,474 41,368 41,365 41,098 171,922 165,305
 Net patient revenue
 per discharge $ 17,871 $ 17,896 $ 17,823 $ 18,131 $ 17,864 $ 17,504 $ 17,435 $ 17,505 $ 17,929 $ 17,577
 Outpatient visits 131,787 138,689 153,415 152,454 154,311 158,981 164,761 162,649 576,345 640,702
 Average length of stay 12.6 12.8 12.7 12.9 12.8 12.7 12.6 12.9 12.7 12.8
 Occupancy % 67.7% 68.2% 69.3% 71.0% 67.8% 67.8% 68.2% 68.9% 67.8% 67.8%
 # of licensed beds* 8,851 8,748 8,641 8,528 8,504 8,441 8,430 8,481 8,851 8,504
 Occupied beds 5,992 5,966 5,988 6,055 5,766 5,723 5,749 5,843 6,001 5,766
 Full-time equivalents
 (FTEs)(21) 20,739 20,740 20,474 20,254 19,930 19,663 19,503 19,352 20,552 19,612
 Contract labor 255 235 251 260 245 241 205 194 250 221
 Total FTE and
 contract labor 20,994 20,975 20,725 20,514 20,175 19,904 19,708 19,546 20,802 19,833
 EPOB(22) 3.50 3.52 3.46 3.39 3.50 3.48 3.43 3.35 3.47 3.44
 * The decrease in licensed beds from Q1 2016 to Q2 2016 was due to the sale of the IRF in Beaumont, TX (61 beds). 
Refer to pages 106-110 for end notes.
 Encompass Health 73Refer to pages 106-110 for end notes.
 Home Health and Hospice Operational Metrics
 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year
 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016
 (In Millions)
 Net home health revenue $ 187.3 $ 181.2 $ 172.9 $ 165.3 $ 165.2 $ 162.0 $ 157.1 $ 150.9 $ 706.7 $ 635.2
 Net hospice revenue 21.6 19.6 18.4 17.0 17.1 13.1 11.0 9.7 76.6 50.9
 Net operating revenues $ 208.9 $ 200.8 $ 191.3 $ 182.3 $ 182.3 $ 175.1 $ 168.1 $ 160.6 $ 783.3 $ 686.1
 Home Health: (Actual Amounts)
 Admissions(23) 31,766 31,471 30,823 30,810 27,957 27,239 25,753 25,763 124,870 106,712
 Recertifications 25,479 24,396 22,568 20,546 21,422 20,888 20,432 19,453 92,989 82,195
 Episodes 56,625 53,757 52,101 49,260 49,253 46,866 45,774 43,844 211,743 185,737
 Average revenue per
 episode $ 2,989 $ 3,022 $ 2,989 $ 2,991 $ 3,023 $ 3,032 $ 3,033 $ 3,035 $ 2,998 $ 3,031
 Episodic visits per episode 17.3 17.7 18.1 18.7 18.4 19.0 18.9 19.1 17.9 18.8
 Total visits 1,124,268 1,101,109 1,095,225 1,070,356 1,033,502 1,001,021 967,968 937,804 4,390,958 3,940,295
 Cost per visit $ 77 $ 76 $ 73 $ 75 $ 76 $ 75 $ 73 $ 73 $ 75 $ 74
 Hospice:
 Admissions(24) 1,355 1,273 1,114 1,128 996 832 785 724 4,870 3,337
 Patient days 134,113 123,491 113,028 108,717 104,183 83,628 71,277 63,431 479,350 322,519
 Revenue per day $ 161 $ 159 $ 162 $ 157 $ 164 $ 157 $ 154 $ 153 $ 160 $ 158
 Encompass Health 74
 Payment Sources (Percent of Revenues)
 Inpatient
 Rehabilitation
 Segment
 Home Health and
 Hospice Segment Consolidated
 Q4 Q4 Q4 Full Year
 2017 2016 2017 2016 2017 2016 2017 2016
 Medicare 73.6% 73.3% 86.1% 84.3% 76.2% 75.3% 75.5% 75.2%
 Medicare Advantage 8.3% 7.8% 8.9% 8.7% 8.4% 8.0% 8.7% 7.9%
 Managed care 10.5% 10.9% 3.7% 3.9% 9.1% 9.6% 9.5% 9.8%
 Medicaid* 3.0% 3.0% 1.1% 3.0% 2.6% 3.0% 2.7% 3.2%
 Other third-party payors 1.7% 1.9% —% —% 1.4% 1.5% 1.3% 1.4%
 Workers’ compensation 0.8% 1.1% —% —% 0.6% 0.9% 0.7% 0.8%
 Patients 0.7% 0.7% 0.1% —% 0.6% 0.6% 0.5% 0.5%
 Other income 1.4% 1.3% 0.1% 0.1% 1.1% 1.1% 1.1% 1.2%
 Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
 * In Q4 2016, the home health and hospice segment sold its pediatric home health assets. As a result, the
 segment’s percentage of Medicaid has declined.
 Encompass Health 75
 Industry Structure
 Encompass Health 76
 Health Consumption Spending*: $2,840.
 7
 Overall Healthcare Spending
 (billions)
 Source: Centers for Medicare & Medicaid Services, National Health Expenditure Data (Historical), Table 2 - 2015
 * Excludes Net Cost of Health Insurance
 National Healthcare Spending: $3,205.6 billion in 2015
 Personal Healthcare: $2,717.
 2
 $154.7 Investment
 $42.6 Government Administration
 $80.9 Government Public Health
 $432.0 Retail of Medical Products
 $88.8 Home Health Care
 $163.3 Other Health, Residential and Personal Care
 $840.2 Professional Services
 $156.8 Nursing Care Facilities and Continuing Care Retirement Communities
 $1,036.1 Hospital CareIncludes Inpatient Rehabilitation, Long-Term Care Hospitals
 Encompass Health 77Source: Centers for Medicare & Medicaid Services, Medicare Trustee’s Report July 2016 – page 10; and MedPAC, Medicare Payment Policy, March 2017 - pages 197, 231, 257, 289, and 317
 Medicare 2015 Spending = $647.6 Billion
 $  29.8B Skilled Nursing
 $141.7B Inpatient Hospital
 $70.3B Physician Payments
 $46.5B Outpatient Hospital
 $18.1B Home Health
 $15.9B Hospice
 $63.5B Other Services
 $172.3B Medicare Managed
                 Care
 $89.5B Outpatient Rx
 $7.4B (1%)  
Inpatient Rehabilitation Hospitals
 (Included in Inpatient Hospitals)
 14%
 3%
 7%
 10%
 11%
 26%
 22%
 Medicare Part A
 Medicare Part B
 Medicare Parts A&B
 Medicare Part C
 Medicare Part D
 5%
 Inpatient hospital includes spending for acute care hospitals along with inpatient rehabilitation and long-term acute care hospital
 services. In 2015, Medicare spent $7.4 billion and $5.3 billion, respectively for inpatient rehabilitation and long-term acute care
 hospital services.
  
2%
 Encompass Health 78
 Preventive 
Routine health care
 (screenings, check-
 ups, patient
 counseling) to
 prevent illnesses,
 disease, or other
 health problems.
 Home health and
 care management
 services to prevent
 or reduce acute
 admissions.
 Continuum of Healthcare Services
 Acute
 Medical
 treatment of
 diseases for
 which a patient
 is treated for a
 brief but severe
 episode of
 illness
 Ambulatory
 Medical care
 delivered on an
 outpatient basis
 (blood tests, X-
 rays, endoscopy,
 certain biopsies,
 certain surgical
 procedures)
 Post-Acute
 Medical care
 provided after a
 period of acute
 care (long-term
 acute care,
 inpatient
 rehabilitation, 
skilled nursing,
 home health)
 Palliative
 Medical care 
 that is focused
 on providing
 relief from the
 symptoms and
 stress of a
 serious illness
 (hospice)
 Encompass Health 79
 Post-Acute Care Services
 Acute Care
 Hospital
 Home 
Health
 Long-Term
 Acute Care
 Hospital
 Inpatient
 Rehabilitation
 Hospital
 Skilled
 Nursing
 Facility
 Discharge
 Medicare Spending (billions) $5.3 $7.4 $29.8 $18.1*
 # of Discharges ~131,000 ~381,000 ~2,400,000 ~3,500,000
 Length of Stay 26.6 days 12.7 days 38.5 days N/A
 # of Providers ~430 ~1,200 ~15,000 ~12,300
 Facility Ownership Mix**
 For-Profit (79%)
 Non-Profit (17%)
 Gov’t (4%)
 For-Profit (30%)
 Non-Profit (58%)
 Gov’t (12%)
 For-Profit (70%)
 Non-Profit (24%)
 Gov’t (6%)
 For-Profit (78%)
 Non-Profit (22%)
 Free-standing vs. Hospital Based N/A Free-Standing (22%)Hospital Based (78%)
 Free-Standing (95%)
 Hospital Based (5%)
 Free-Standing (85%)
 Hospital Based (15%)
 Rural vs. Urban** Urban (95%)Rural (5%)
 Urban (86%)
 Rural (14%)
 Urban (72%)
 Rural (28%)
 Urban (83%)
 Rural (17%)
 (Lowest Acuity)(Highest Acuity)
 Source: MedPAC, Medicare Payment Policy, March 2017 - pages 197, 201, 216, 217, 231, 247, 257, 270, 271, 289,
 298, and 300; MedPAC, Health Care Spending and the Medicare Program, June 2017 - pages 121
 * Not all home health spending occurs as a post-acute service.
 ** Facility Ownership Mix / Rural vs. Urban - home health data represents freestanding agencies only.
 Encompass Health 80
 $35
 $30
 $25
 $20
 $15
 $10
 $5
 $0
 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
 Medicare Spending on Post-Acute Services
 Post-Acute
 Settings
 2015
 Medicare
 Margin**
 Projected
 2017
 Medicare
 Margin**
 12.6%           10.6%
 15.6%           13.7%
 13.9%           14.3%
  4.6%             5.4%
  
Skilled nursing facilities
 Home health agencies*
 Inpatient rehabilitation 
hospitals
 Long-term acute care
 hospitals
 Inpatient rehabilitation
 spending (% of total
 Medicare spending)
 6
 3
 0
 (P
 er
 ce
 nt
 )
 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
 1.8 2.1 2.2 2.1 1.9 1.5 1.4 1.3 1.2 1.2 1.2 1.2 1.2 1.2 1.1
 3.2
 3.6 3.6 3.5 3.7
 3.2 3.6 3.6 3.8 3.7 3.4 3.3 3.1 2.9 2.8
 Home health spending*
 (% of total Medicare
 spending)
 Total Medicare Spending on Post-Acute Services ~$61 billion in 2015
 Source: MedPAC, Medicare Payment Policy, March 2017 – pages 197, 198, 231, 232, 257, 258, 289, 290, and 291;
 MedPAC, Health Care Spending and the Medicare Program, June 2017 – page 112 
* Not all home health spending occurs as a post-acute service.
 ** 2015 Medicare Margin / Projected 2017 Medicare Margin - home health data represents freestanding agencies only.
 Encompass Health 81
 Different Levels of Services
 Inpatient Rehabilitation Hospital Nursing Home
 Average length of stay                             = 12.7 days Average length of stay                                         = 38.5 days
 Discharge to community                          = 76.0% Discharge to community                       = 38.8%
 Requirements: Requirements:
 IRFs must also satisfy regulatory/policy requirements for hospitals,
 including Medicare hospital conditions of participation.
 No similar requirement; Nursing homes are regulated as nursing
 homes only
 All patients must be admitted by a rehab physician. No similar requirement
 Rehab physicians must re-confirm each admission w/n 24 hours. No similar requirement
 All patients, regardless of diagnoses/condition, must demonstrate need
 and receive at least three hours of daily intensive therapy.
 No similar requirement
 All patients must see a rehabilitation physician “in person” at least
 three times weekly.
 No similar requirement; some SNF patients may go a week or
 longer without seeing a physician, and often a non-
 rehabilitation physician.
 IRFs are required to provide 24 hour, 7 days per week nursing care;
 many nurses are RNs and rehab nurses. No similar requirement
 IRFs are required to use a coordinated interdisciplinary team approach
 led by a rehab physician; includes a rehab nurse, a case manager, and a
 licensed therapist from each therapy discipline who must meet weekly
 to evaluate/discuss each patient’s case.
 No similar requirement; Nursing homes are not required to
 provide care on a interdisciplinary basis and are not required to
 hold regular meetings for each patient.
 IRFs are required to follow stringent admission/coverage policies and
 must carefully document justification for each admission; further
 restricted in number/type of patients (60% Rule). 
Nursing homes have comparatively few policies governing the
 number or types of patients they treat.
 Source: MedPAC, Medicare Payment Policy, March 2017 - pages 208, 216, 217, 271, and 275
 Encompass Health 82
 Supply of IRFs is Relatively Stable
  
Average Annual Change
 Share of
 Medicare
 DischargesType of IRF 2004 2006 2008 2010 2013 2014 2015 2006-2013 2013-2015
 All IRFs 100% 1,221 1,225 1,202 1,179 1,161 1,177 1,182 -0.8% 0.9%
 Urban 92 1,024 1,018 1,001 981 977 1,013 1,020 -0.6 2.2
 Rural 8 197 207 201 198 184 164 162 -1.7 -6.2
 Freestanding 48 217 217 221 233 243 251 262 1.6 3.8
 Hospital based 52 1,004 1,008 981 946 918 926 920 -1.3 0.1
 Nonprofit 42 768 758 738 729 677 681 681 -1.6 0.3
 For profit 50 292 299 291 294 322 338 352 1.1 4.6
 Government 7 161 168 173 156 155 149 138 -1.1 -5.6
 Source: MedPAC, Medicare Payment Policy, March 2017 - page 270
 Encompass Health 83
 Inpatient Rehabilitation Sector Margins
 Share of
 Medicare
 discharges Margins
 Type of IRF 2015 2004 2006 2008 2010 2012 2013 2014 2015
 All IRFs 100% 16.7% 12.5% 9.3% 8.6% 11.2% 11.5% 12.5% 13.9%
 Urban 92 17.0 12.8 9.6 9.0 11.6 11.9 12.9 14.2
 Rural 8 13.2 10.0 6.9 4.7 6.5 6.0 6.4 8.6
 Freestanding 48 24.7 17.5 18.2 21.4 23.9 24.6 25.3 26.7
 Hospital based 52 12.2 9.9 3.9 -0.6 0.6 -0.1 1.1 2.0
 Nonprofit 42 12.8 10.9 5.3 2.1 2.4 1.2 2.3 3.6
 For profit 50 24.4 16.3 16.9 19.6 22.9 23.6 24.0 25.0
 Government 7 N/A N/A N/A N/A N/A N/A N/A N/A
 Number of beds
 1 to 10 2 3.7 -3.6 -4.9 -10.3 -6.8 -11.3 -10.4 -7.8
 11 to 24 22 10.5 7.3 1.2 -3.3 -1.3 -0.8 -0.2 -0.5
 25 to 64 47 18.3 13.7 10.1 10.6 12.2 13.2 14.4 16.1
 65 or more 28 21.5 17.8 17.3 17.5 21.0 20.0 20.7 22.7
 Source: MedPAC, Medicare Payment Policy, March 2017 - page 280
 Encompass Health 84
 Inpatient Rehabilitation Standardized Comparison of Costs
 Type of IRF
  
 Median Standardized
 Cost Per Discharge
 All IRFs $14,960
 Hospital based 15,847
 Freestanding 11,436
 Nonprofit 15,574
 For profit 12,960
 Government 16,601
 Urban 14,608
 Rural 17,724
 Number of beds
    1 to 10 18,085
    11 to 24 16,169
    25 to 64 13,619
    65 or more 11,621
 Quartile
 Characteristic Low Cost High Cost
 Percent:
   Hospital based 36% 94%
   Freestanding 64 6
   Nonprofit 29 59
   For profit 67 23
   Government 4 18
   Urban 93 71
   Rural 7 29
 Median Medicare Margin:
   All 28.5% -22.0%
   Hospital based 22.1 -22.0
   Freestanding 32.0 -25.0
 Median:
   Number of beds 50 17
   Occupancy rate 74% 49%
   Case-mix index 1.30 1.23
 Median costs per discharge:
   All $11,124 $19,443
   Hospital based 11,756 19,434
   Freestanding 10,610 19,881
 Median standardized
 costs per discharge are
 lower for freestanding
 IRFs and larger facilities.
 High margin IRFs 
(both hospital-based
 and freestanding) are
 concentrated in the
 low-cost quartile of
 standardized costs.
 Source: MedPAC, Medicare Payment Policy, March 2017 - page 278 and 279
 Encompass Health 85
 “60% Rule”: Medicare Regulation for IRFs
 1983
 1983: 75% Rule
 established –
 Requires 75% of IRF
 patients to have a
 qualifying condition
 if the IRF is to
 maintain
 reimbursement on a
 “cost plus” basis vs.
 “prospective”
 ( i.e., fixed) basis.
 2002                    2004                          2007
 2002: IRF
 reimbursement
 transitions to
 prospective
 payment system
 (“PPS”)
 2002: CMS suspends
 75% Rule
 implementation
 2004: “New” 75%
 Rule initiated with
 a “new” list of
 “qualifying
 conditions”
 2007: 75% Rule
 permanently changed to
 “60% Rule” with passage
 of “Medicare, Medicaid
 & SCHIP Extension Act of
 2007”
 Paid for through a
 Medicare price rollback &
 18-month freeze from
 4/1/2008 to 9/30/2009
 The 60% Rule requires at least 60% of all patients admitted must have at least
 one medical diagnosis or functional impairment from a list of 13 compliant
 conditions (a.k.a. “compliant conditions” or “CMS-13”).
 Encompass Health 86
 1. Stroke
 2. Brain injury
 3. Amputation
 4. Spinal cord
 5. Fracture of the femur
 6. Neurological disorder
 7. Multiple trauma
 8. Congenital deformity
 9. Burns
 IRF Qualifying Conditions
 1. Stroke
 2. Brain injury
 3. Amputation
 4. Spinal cord
 5. Fracture of the femur
 6. Neurological disorder
 7. Multiple trauma
 8. Congenital deformity
 9. Burns
 10. Osteoarthritis (after less intensive setting)
 11. Rheumatoid arthritis (after less intensive setting) 
12. Joint replacement
 13. Systemic vasculidities (after less-intensive setting)
 Original Qualifying Conditions Current Qualifying Conditions
 ■  Bilateral
 ■  Age ≥ 85
 ■  Body Mass Index >50
 10. Polyarthritis (includes “joint
 replacement”)
 Became
 Encompass Health 87
 Inpatient Rehabilitation Outlier Payments(7)
 Refer to pages 106-110 for end notes. 
  More      Efficient     Less
  
Outlier Observations:
 • 10% of IRFs receive 50% of the outlier payments; none of the 10% are Encompass Health IRFs. 
• The Company receives 1.7% of the IRF outlier payments despite treating approx. 29% of the
 Medicare patients/discharges.
 • As a result of outlier payments, CMS pays the Company approx. $822 less per discharge than other
 providers.
 • Capping the IRF industry outlier payments at 10% of each IRF’s total Medicare payments could save
 Medicare approx. $632 million over 10 years.
            # of IRFs Total Outlier Payments  Avg Outlier Payment per Discharge
 IRF
 Deciles
 Encompass
 Health
 Non-
 Encompass
 Health Total
 Encompass
 Health
 Non-
 Encompass
 Health Total  %
 Encompass
 Health
 Non-
 Encompass
 Health Total
 90-100 — 114 114 $ — $ 126,369,880 $ 126,369,880 50.5%  N/A $ 2,733 $ 2,733
 80-90 1 113 114 $ 358,714 $ 47,373,108 $ 47,731,822 19.1% $ 435 $ 1,475 $ 1,449
 70-80 1 113 114 $ 218,625 $ 28,361,135 $ 28,579,760 11.4% $ 305 $ 921 $ 907
 60-70 3 111 114 $ 454,703 $ 18,001,296 $ 18,455,999 7.4% $ 192 $ 512 $ 491
 50-60 9 105 114 $ 941,985 $ 11,092,159 $ 12,034,144 4.8% $ 105 $ 367 $ 307
 40-50 9 105 114 $ 574,291 $ 7,217,299 $ 7,791,590 3.1% $ 63 $ 279 $ 223
 30-40 16 98 114 $ 773,886 $ 4,404,167 $ 5,178,053 2.1% $ 48 $ 178 $ 126
 20-30 24 90 114 $ 631,125 $ 2,437,454 $ 3,068,579 1.2% $ 26 $ 114 $ 67
 10-20 34 80 114 $ 359,168 $ 821,588 $ 1,180,756 0.5% $ 11 $ 44 $ 23
 0-10 26 88 114 $ 12,917 $ 50,396 $ 63,313 —% $ 1 $ 2 $ 1
 Totals 123 1,017 1,140 $ 4,325,414 $ 246,128,482 $ 250,453,896 100.0%
 Encompass Health 88
 Segment Operating Results
 Encompass Health 89
 Inpatient Rehabilitation Segment Adjusted EBITDA
 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year Full Year
 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016
 Net operating revenues: (In Millions)
 Inpatient $ 784.7 $ 768.6 $ 762.9 $ 766.2 $ 740.9 $ 724.1 $ 721.2 $ 719.4 3,082.4 $ 2,905.5
 Outpatient and other 26.1 26.2 27.1 26.3 26.7 27.6 31.4 29.8 105.7 115.6
 Total segment revenue 810.8 794.8 790.0 792.5 767.6 751.7 752.6 749.2 3,188.1 3,021.1
 Less: Provision for doubtful
 accounts (8.4) (11.3) (12.4) (14.7) (13.2) (13.7) (14.5) (15.6) (46.8) (57.0)
 Net operating revenues less
 provision for doubtful accounts 802.4 783.5 777.6 777.8 754.4 738.0 738.1 733.6 3,141.3 2,964.1
 Operating expenses:
 Salaries and benefits (408.1) (403.2) (394.3) (398.2) (386.2) (371.2) (366.1) (369.9) (1,603.8) (1,493.4)
 % of revenue 50.3% 50.7% 49.9% 50.2% 50.3% 49.4% 48.6% 49.4% 50.3% 49.4%
 Other operating expenses(a) (120.4) (117.4) (112.9) (111.8) (109.8) (110.1) (106.8) (104.8) (462.5) (431.5)
 Supplies (35.1) (33.1) (33.8) (33.7) (32.7) (31.9) (31.8) (32.4) (135.7) (128.8)
 Occupancy costs (15.6) (15.7) (15.5) (15.1) (15.2) (15.0) (15.4) (15.6) (61.9) (61.2)
 (171.1) (166.2) (162.2) (160.6) (157.7) (157.0) (154.0) (152.8) (660.1) (621.5)
 % of revenue 21.1% 20.9% 20.5% 20.3% 20.5% 20.9% 20.5% 20.4% 20.7% 20.6%
 Equity in nonconsolidated affiliates 1.7 1.9 1.8 1.9 2.4 2.3 2.2 2.2 7.3 9.1
 Other income 1.2 1.0 0.9 1.0 0.8 0.8 0.7 0.6 4.1 2.9
 Noncontrolling interests(b) (19.0) (16.7) (15.4) (16.5) (16.1) (14.3) (16.8) (16.8) (67.6) (64.0)
 Segment Adjusted EBITDA $ 207.1 $ 200.3 $ 208.4 $ 205.4 $ 197.6 $ 198.6 $ 204.1 $ 196.9 $ 821.2 $ 797.2
 In arriving at Adjusted EBITDA, the
 following was excluded:
 (a) Loss (gain) on disposal of assets $ 1.3 $ 3.1 $ 0.8 $ (0.4) $ 2.0 $ 1.6 $ 0.2 $ 0.5 $ 4.8 $ 4.3
 (b) Tax reform impact on noncontrolling
 interests $ 0.5 $ — $ — $ — $ — $ — $ — $ — $ 0.5 $ —
 Reconciliations to GAAP provided on pages 93-104.
 Encompass Health 90
 Home Health and Hospice Segment Adjusted EBITDA
 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year Full Year
 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016
 Net operating revenues: (In Millions)
 Home health revenue $ 187.3 $ 181.2 $ 172.9 $ 165.3 $ 165.2 $ 162.0 $ 157.1 $ 150.9 $ 706.7 $ 635.2
 Hospice revenue 21.6 19.6 18.4 17.0 17.1 13.1 11.0 9.7 76.6 50.9
 Total segment revenue 208.9 200.8 191.3 182.3 182.3 175.1 168.1 160.6 783.3 686.1
 Less: Provision for doubtful
 accounts (1.3) (1.3) (1.3) (1.7) (1.3) (1.1) (0.9) (0.9) (5.6) (4.2)
 Net operating revenues less
 provision for doubtful accounts 207.6 199.5 190.0 180.6 181.0 174.0 167.2 159.7 777.7 681.9
 Operating expenses(a)
 Cost of services (97.2) (93.5) (88.7) (89.0) (89.7) (86.8) (81.6) (78.4) (368.4) (336.5)
 % of revenue 46.5% 46.6% 46.4% 48.8% 49.2% 49.6% 48.5% 48.8% 47.0% 49.0%
 Support and overhead costs (73.8) (68.9) (67.7) (66.8) (62.7) (59.5) (58.0) (57.0) (277.2) (237.2)
 % of revenue 35.3% 34.3% 35.4% 36.6% 34.4% 34.0% 34.5% 35.5% 35.4% 34.6%
 (171.0) (162.4) (156.4) (155.8) (152.4) (146.3) (139.6) (135.4) (645.6) (573.7)
 % of revenue 81.9% 80.9% 81.8% 85.5% 83.6% 83.6% 83.0% 84.3% 82.4% 83.6%
 Equity in net income of
 nonconsolidated affiliates 0.1 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.7 0.7
 Noncontrolling interests(b) (2.3) (2.5) (1.0) (1.1) (0.7) (2.1) (1.8) (1.9) (6.9) (6.5)
 Segment Adjusted EBITDA $ 34.4 $ 34.8 $ 32.8 $ 23.9 $ 28.0 $ 25.8 $ 26.0 $ 22.6 $ 125.9 $ 102.4
 In arriving at Adjusted EBITDA, the
 following was excluded:
 (a) Gain on disposal of assets $ — $ (0.1) $ — $ (0.1) $ (3.3) $ — $ — $ (0.3) $ (0.2) $ (3.6)
 (b) Tax reform impact on
 noncontrolling interests $ 4.1 $ — $ — $ — $ — $ — $ — $ — $ 4.1 $ —
 Reconciliations to GAAP provided on pages 93-104.
 Encompass Health 91Reconciliations to GAAP provided on pages 93-104.
 Segment Operating Results
 Q4 2017 Q4 2016
 IRF
 Home
 Health and
 Hospice Reclasses Consolidated IRF
 Home
 Health and
 Hospice Reclasses Consolidated
 Net operating revenues $ 810.8 $ 208.9 $ — $ 1,019.7 $ 767.6 $ 182.3 $ — $ 949.9
 Less: Provision for doubtful accounts (8.4) (1.3) — (9.7) (13.2) (1.3) — (14.5)
 802.4 207.6 — 1,010.0 754.4 181.0 — 935.4
 Operating Expenses:
 Inpatient Rehabilitation:
 Salaries and benefits (408.1) — (146.5) (554.6) (386.2) — (130.1) (516.3)
 Other operating expenses(a) (120.4) — (17.8) (138.2) (109.8) — (16.6) (126.4)
 Supplies (35.1) — (3.6) (38.7) (32.7) — (3.1) (35.8)
 Occupancy (15.6) — (3.1) (18.7) (15.2) — (2.6) (17.8)
 Home Health and Hospice:
 Cost of services sold (excluding
 depreciation and amortization) — (97.2) 97.2 — — (89.7) 89.7 —
 Support and overhead costs — (73.8) 73.8 — — (62.7) 62.7 —
 (579.2) (171.0) — (750.2) (543.9) (152.4) — (696.3)
 Other income 1.2 — — 1.2 0.8 — — 0.8
 Equity in net income of nonconsolidated
 affiliates 1.7 0.1 — 1.8 2.4 0.1 — 2.5
 Noncontrolling interest(b) (19.0) (2.3) — (21.3) (16.1) (0.7) — (16.8)
 Segment Adjusted EBITDA $ 207.1 $ 34.4 $ — 241.5 $ 197.6 $ 28.0 $ — 225.6
 General and administrative expenses(c) (33.3) (26.8)
 Adjusted EBITDA $ 208.2 $ 198.8
 In arriving at Adjusted EBITDA, the following were excluded:
 (a) Loss (gain) on disposal of assets $ 1.3 $ — $ — $ 1.3 $ 2.0 $ (3.3) $ — $ (1.3)
 (b) Tax reform impact on
 noncontrolling interests $ 0.5 $ 4.1 $ — $ 4.6 $ — $ — $ — $ —
 (c) Stock-based compensation $ — $ — $ — $ 9.8 $ — $ — $ — $ 10.0
 Encompass Health 92Reconciliations to GAAP provided on pages 93-104.
 Year Ended December 31, 2017 Year Ended December 31, 2016
 IRF
 Home
 Health and
 Hospice Reclasses Consolidated IRF
 Home
 Health and
 Hospice Reclasses Consolidated
 Net operating revenues $ 3,188.1 $ 783.3 $ — $ 3,971.4 $ 3,021.1 $ 686.1 $ — $ 3,707.2
 Less: Provision for doubtful accounts (46.8) (5.6) — (52.4) (57.0) (4.2) — (61.2)
 3,141.3 777.7 — 3,919.0 2,964.1 681.9 — 3,646.0
 Operating Expenses:
 Inpatient Rehabilitation:
 Salaries and benefits (1,603.8) — (550.8) (2,154.6) (1,493.4) — (492.5) (1,985.9)
 Other operating expenses(a) (462.5) — (69.6) (532.1) (431.5) — (59.9) (491.4)
 Supplies (135.7) — (13.6) (149.3) (128.8) — (11.2) (140.0)
 Occupancy (61.9) — (11.6) (73.5) (61.2) — (10.1) (71.3)
 Home Health and Hospice:
 Cost of services sold (excluding
 depreciation and amortization) — (368.4) 368.4 — — (336.5) 336.5 —
 Support and overhead costs — (277.2) 277.2 — — (237.2) 237.2 —
 (2,263.9) (645.6) — (2,909.5) (2,114.9) (573.7) — (2,688.6)
 Other income 4.1 — — 4.1 2.9 — — 2.9
 Equity in net income of nonconsolidated
 affiliates 7.3 0.7 — 8.0 9.1 0.7 — 9.8
 Noncontrolling interest(b) (67.6) (6.9) — (74.5) (64.0) (6.5) — (70.5)
 Segment Adjusted EBITDA $ 821.2 $ 125.9 $ — 947.1 $ 797.2 $ 102.4 $ — 899.6
 General and administrative expenses(c) (124.0) (106.0)
 Adjusted EBITDA $ 823.1 $ 793.6
 In arriving at Adjusted EBITDA, the following were excluded:
 (a) Loss (gain) on disposal of assets $ 4.8 $ (0.2) $ — $ 4.6 $ 4.3 $ (3.6) $ — $ 0.7
 (b) Tax reform impact on
 noncontrolling interests $ 0.5 $ 4.1 $ — $ 4.6 $ — $ — $ — $ —
 (c) Stock-based compensation $ — $ — $ — $ 47.7 $ — $ — $ — $ 27.4
 Segment Operating Results
 Encompass Health 93
 Reconciliations to GAAP
 and Share Information
 Encompass Health 94
 Reconciliation of Net Income to Adjusted EBITDA(10)
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 106-110 for end notes.
 2017
 Q1 Q2 Q3 Q4 Full Year
 (in millions, except per share data) Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share
 Net Income $ 84.4 $ 79.4 $ 85.1 $ 86.5 $ 335.4
 Loss (income) from disc ops, net of tax,
 attributable to Encompass Health 0.3 (0.2) 0.1 0.2 0.4
 Net income attributable to noncontrolling interests (17.6) (16.4) (19.2) (25.9) (79.1)
 Income from continuing operations attributable
 to Encompass Health* 67.1 $ 0.70 62.8 $ 0.66 66.0 $ 0.67 60.8 $ 0.61 256.7 $ 2.69
 Provision for income tax expense 39.7 28.6 43.1 49.2 160.6
 Interest expense and amortization of debt
 discounts and fees 41.3 40.4 36.8 35.9 154.4
 Depreciation and amortization 45.2 45.8 46.2 46.6 183.8
 Loss on early extinguishment of debt — 10.4 0.3 — 10.7
 Net noncash (gain) loss on disposal of assets (0.5) 0.8 3.0 1.3 4.6
 Stock-based compensation expense 8.0 20.7 9.2 9.8 47.7
 Tax reform impact on noncontrolling interests — — — 4.6 4.6
 Adjusted EBITDA $ 200.8 $ 209.5 $ 204.6 $ 208.2 $ 823.1
 Weighted average common shares outstanding:
 Basic 88.8 90.3 97.8 97.6 93.7
 Diluted 99.0 98.9 99.0 99.2 99.3
 Encompass Health 95
 2016
 Q1 Q2 Q3 Q4 Full Year
 (in millions, except per share data) Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share Total
 Per
 Share
 Net Income $ 76.7 $ 81.2 $ 78.1 $ 82.1 $ 318.1
 Loss (income) from disc ops, net of tax,
 attributable to Encompass Health 0.1 0.1 0.1 (0.3) —
 Net income attributable to noncontrolling interests (18.7) (18.6) (16.4) (16.8) (70.5)
 Income from continuing operations attributable
 to Encompass Health* 58.1 $ 0.61 62.7 $ 0.65 61.8 $ 0.64 65.0 $ 0.68 247.6 $ 2.59
 Professional fees — accounting, tax, and legal 0.2 1.7 — — 1.9
 Provision for income tax expense 39.7 42.4 42.1 39.7 163.9
 Interest expense and amortization of debt
 discounts and fees 44.6 43.4 42.5 41.6 172.1
 Depreciation and amortization 42.4 42.9 43.5 43.8 172.6
 Loss on early extinguishment of debt 2.4 2.4 2.6 — 7.4
 Net noncash loss (gain) on disposal of assets 0.2 0.2 1.6 (1.3) 0.7
 Stock-based compensation expense 4.5 8.6 4.3 10.0 27.4
 Adjusted EBITDA $ 192.1 $ 204.3 $ 198.4 $ 198.8 $ 793.6
 Weighted average common shares outstanding:
 Basic 89.5 89.3 89.1 88.6 89.1
 Diluted 99.4 99.4 99.4 99.2 99.5
 Reconciliation of Net Income to Adjusted EBITDA(10)
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 106-110 for end notes.
 Encompass Health 96
 Reconciliation of Segment Adjusted EBITDA to Income
 from Continuing Operations Before Income Tax Expense
 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year
 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016
 (In Millions)
 Total segment Adjusted EBITDA $ 241.5 $ 235.1 $ 241.2 $ 229.3 $ 225.6 $ 224.4 $ 230.1 $ 219.5 $ 947.1 $ 899.6
 General and administrative
 expenses
 (43.1) (39.7) (52.4) (36.5) (36.8) (30.3) (34.4) (31.9) (171.7) (133.4)
 Depreciation and amortization (46.6) (46.2) (45.8) (45.2) (43.8) (43.5) (42.9) (42.4) (183.8) (172.6)
 (Loss) gain on disposal of assets (1.3) (3.0) (0.8) 0.5 1.3 (1.6) (0.2) (0.2) (4.6) (0.7)
 Professional fees — accounting,
 tax, and legal — — — — — — (1.7) (0.2) — (1.9)
 Loss on early extinguishment of
 debt — (0.3) (10.4) — — (2.6) (2.4) (2.4) (10.7) (7.4)
 Interest expense and amortization
 of debt discounts and fees (35.9) (36.8) (40.4) (41.3) (41.6) (42.5) (43.4) (44.6) (154.4) (172.1)
 Net income attributable to
 noncontrolling interests 25.9 19.2 16.4 17.6 16.8 16.4 18.6 18.7 79.1 70.5
 Tax reform impact on
 noncontrolling interests(25) (4.6) — — — — — — — (4.6) —
 Income from continuing
 operations before income tax
 expense $ 135.9 $ 128.3 $ 107.8 $ 124.4 $ 121.5 $ 120.3 $ 123.7 $ 116.5 $ 496.4 $ 482.0
 Refer to pages 106-110 for end notes.
 Encompass Health 97
 Adjusted EPS(11) - Q4 2017
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 For the Three Months Ended December 31, 2017
 Adjustments
 As Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Income Tax
 Adjustments(27)
 Tax Reform
 Impact(25) As Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 208.2 $ — $ — $ — $ 208.2
 Depreciation and amortization (46.6) — — — (46.6)
 Interest expense and amortization of debt discounts
 and fees (35.9) — — — (35.9)
 Stock-based compensation (9.8) (0.6) — — (10.4)
 Loss on disposal of assets (1.3) — — — (1.3)
 Tax reform impact on noncontrolling interests(25) (4.6) — — 4.6 —
 Income from continuing operations before
 income tax expense 110.0 (0.6) — 4.6 114.0
 Provision for income tax expense (49.2) 0.3 2.7 1.2 (45.0)
 Income from continuing operations attributable
 to Encompass Health $ 60.8 $ (0.3) $ 2.7 $ 5.8 $ 69.0
 Add: Interest, amortization, and loss on
 extinguishment of convertible debt, net of tax — —
 Numerator for diluted earnings per share $ 60.8 $ 69.0
 Diluted earnings per share from continuing
 operations, as reported* $ 0.61 $ — $ 0.03 $ 0.06 $ 0.70
 Diluted shares used in calculation 99.2
 Encompass Health 98
 For the Three Months Ended September 30, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Income Tax
 Adjustments(27)
 Loss on Early
 Extinguishment
 of Debt(28)
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 204.6 $ — $ — $ — $ 204.6
 Depreciation and amortization (46.2) — — — (46.2)
 Loss on early extinguishment of debt(28) (0.3) — — 0.3 —
 Interest expense and amortization of debt discounts
 and fees (36.8) — — — (36.8)
 Stock-based compensation (9.2) (1.0) — — (10.2)
 Loss on disposal of assets (3.0) — — — (3.0)
 Income from continuing operations before income
 tax expense 109.1 (1.0) — 0.3 108.4
 Provision for income tax expense (43.1) 0.4 (0.4) (0.1) (43.2)
 Income from continuing operations attributable to
 Encompass Health $ 66.0 $ (0.6) $ (0.4) $ 0.2 $ 65.2
 Add: Interest, amortization, and loss on
 extinguishment of convertible debt, net of tax — —
 Numerator for diluted earnings per share $ 66.0 $ 65.2
 Diluted earnings per share from continuing
 operations, as reported* $ 0.67 $ (0.01) $ — $ — $ 0.66
 Diluted shares used in calculation 99.0
 Adjusted EPS(11) - Q3 2017
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 Encompass Health 99
 Adjusted EPS(11) - Q2 2017
 For the Three Months Ended June 30, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Income Tax
 Adjustments(27)
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 209.5 $ — $ — $ 209.5
 Depreciation and amortization (45.8) — — (45.8)
 Loss on early extinguishment of debt(28) (10.4) — — (10.4)
 Interest expense and amortization of debt discounts and fees (40.4) — — (40.4)
 Stock-based compensation (20.7) 11.6 — (9.1)
 Loss on disposal or impairment of assets (0.8) — — (0.8)
 Income from continuing operations before income tax
 expense 91.4 11.6 — 103.0
 Provision for income tax expense (28.6) (4.6) (7.4) (40.6)
 Income from continuing operations attributable to
 Encompass Health $ 62.8 $ 7.0 $ (7.4) $ 62.4
 Add: Interest, amortization, and loss on extinguishment
 of convertible debt, net of tax 8.3 8.3
 Numerator for diluted earnings per share $ 71.1 $ 70.7
 Diluted earnings per share from continuing operations $ 0.72
 Impact of antidilution $ (0.02)
 Diluted earnings per share from continuing operations, as
 reported* $ 0.70 $ 0.07 $ (0.07) $ 0.71
 Diluted shares used in calculation 98.9
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 Encompass Health 100
 Adjusted EPS(11) - Q1 2017
 For the Three Months Ended March 31, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Income Tax
 Adjustments
 and
 Settlements(27)
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 200.8 $ — $ — $ 200.8
 Depreciation and amortization (45.2) — — (45.2)
 Interest expense and amortization of debt
 discounts and fees (41.3) — — (41.3)
 Stock-based compensation (8.0) 3.3 — (4.7)
 Gain on disposal or impairment of assets 0.5 — — 0.5
 Income from continuing operations before
 income tax expense 106.8 3.3 — 110.1
 Provision for income tax expense (39.7) (1.3) (2.6) (43.6)
 Income from continuing operations
 attributable to Encompass Health $ 67.1 $ 2.0 $ (2.6) $ 66.5
 Add: Interest on convertible debt, net of tax 2.5 2.5
 Numerator for diluted earnings per share $ 69.6 $ 69.0
 Diluted earnings per share from continuing
 operations* $ 0.70 $ 0.02 $ (0.03) $ 0.70
 Diluted shares used in calculation 99.0
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 Encompass Health 101
 Adjusted EPS(11) - 2017
 For the Year Ended December 31, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Tax Reform
 Impact(25)
 Loss on Early
 Extinguishment
 of Debt(28)
 Income Tax
 Adjustments(27)
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 823.1 $ — $ — $ — $ — $ 823.1
 Depreciation and amortization (183.8) — — — — (183.8)
 Loss on early extinguishment of debt(28) (10.7) — — 0.3 — (10.4)
 Interest expense and amortization of debt
 discounts and fees (154.4) — — — — (154.4)
 Stock-based compensation (47.7) 13.3 — — — (34.4)
 Loss on disposal of assets (4.6) — — — — (4.6)
 Tax reform impact of noncontrolling interests(25) (4.6) — 4.6 — — —
 Income from continuing operations before
 income tax expense 417.3 13.3 4.6 0.3 — 435.5
 Provision for income tax expense (160.6) (5.3) 1.2 (0.1) (7.7) (172.5)
 Income from continuing operations
 attributable to Encompass Health $ 256.7 $ 8.0 $ 5.8 $ 0.2 $ (7.7) $ 263.0
 Add: Interest, amortization, and loss on
 extinguishment of convertible debt, net of
 tax 10.8 10.8
 Numerator for diluted earnings per share $ 267.5 $ 273.8
 Diluted earnings per share from continuing
 operations, as reported* $ 2.69 $ 0.08 $ 0.06 $ — $ (0.08) $ 2.76
 Diluted shares used in calculation 99.3
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 Encompass Health 102
 For the Year Ended December 31, 2016
 Adjustments
 As
 Reported
 Pro.
 Fees -
 Acct.,
 Tax, &
 Legal
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(26)
 Loss on
 Early
 Exting.
 of Debt
 Sale of
 Pediatric
 Home Health
 Assets and
 Hospital
 Income Tax
 Valuation
 and Other
 Adjustments
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 793.6 $ — $ — $ — $ — $ — $ 793.6
 Depreciation and amortization (172.6) — — — — — (172.6)
 Professional fees — accounting, tax, and legal (1.9) 1.9 — — — — —
 Loss on early extinguishment of debt (7.4) — — 7.4 — — —
 Interest expense and amortization of debt
 discounts and fees (172.1) — — — — — (172.1)
 Stock-based compensation (27.4) — 1.6 — — — (25.8)
 Loss on disposal of assets (0.7) — — — (4.2) — (4.9)
 Income from continuing operations before
 income tax expense 411.5 1.9 1.6 7.4 (4.2) — 418.2
 Provision for income tax expense (163.9) (0.8) (0.6) (3.0) 6.5 (0.6) (162.4)
 Income from continuing operations
 attributable to Encompass Health $ 247.6 $ 1.1 $ 1.0 $ 4.4 $ 2.3 $ (0.6) $ 255.8
 Add: Interest on convertible debt, net of
 tax 9.7 9.7
 Numerator for diluted earnings per share $ 257.3 $ 265.5
 Diluted earnings per share from continuing
 operations* $ 2.59 $ 0.01 $ 0.01 $ 0.04 $ 0.02 $ (0.01) $ 2.67
 Diluted shares used in calculation 99.5
 Adjusted EPS(11) - 2016
   Reconciliation to GAAP provided on pages 93-104. Refer to pages 106-110 for end notes.
 * Adjusted EPS may not sum across due to rounding.
 Encompass Health 103
 Adjusted Free Cash Flow History(12)
 Q4 Full Year
 (Millions) 2017 2016 2017 2016
 Net cash provided by operating activities $ 151.4 $ 135.0 $ 657.2 $ 634.4
 Impact of discontinued operations (0.1) 0.1 0.6 0.7
 Net cash provided by operating
 activities of continuing operations 151.3 135.1 657.8 635.1
 Capital expenditures for maintenance (46.2) (39.7) (138.3) (104.2)
 Distributions paid to noncontrolling interests
 of consolidated affiliates (13.6) (15.4) (51.9) (64.9)
 Items non-indicative of ongoing operating 
   performance:
 Transaction costs and related assumed liabilities — — — 0.8
 Net premium on bond issuance/repayment — — — 5.8
 Cash paid for professional fees — accounting, tax, and legal — — — 1.9
 Adjusted free cash flow $ 91.5 $ 80.0 $ 467.6 $ 474.5
 Cash dividends on common stock(13) $ 24.5 $ 21.4 $ 91.5 $ 83.8
 Refer to pages 106-110 for end notes.
 Information regarding investing and financing categories of the statement of cash flows for the periods presented can be found on
 Encompass Health’s website in the Earnings Releases for those periods.
 Encompass Health 104
 Net Cash Provided by Operating Activities Reconciled 
to Adjusted EBITDA
 Information regarding investing and financing categories of the statement of cash flows for the periods presented can be found on
 Encompass Health’s website in the Earnings Releases for those periods.
 Q4 Full Year
 (Millions) 2017 2016 2017 2016 2015 2014 2013
 Net cash provided by operating activities $ 151.4 $ 135.0 $ 657.2 $ 634.4 $ 502.0 $ 454.6 $ 476.1
 Provision for doubtful accounts (9.7) (14.5) (52.4) (61.2) (47.2) (31.6) (26.0)
 Professional fees — accounting, tax, and legal — — — 1.9 3.0 9.3 9.5
 Interest expense and amortization of debt discounts and fees 35.9 41.6 154.4 172.1 142.9 109.2 100.4
 Equity in net income of nonconsolidated affiliates 1.8 2.5 8.0 9.8 8.7 10.7 11.2
 Net income attributable to noncontrolling interests in
 continuing operations (25.9) (16.8) (79.1) (70.5) (69.7) (59.7) (57.8)
 Amortization of debt-related items (1.0) (3.5) (8.7) (13.8) (14.3) (12.7) (5.0)
 Distributions from nonconsolidated affiliates (2.0) (2.6) (8.6) (8.5) (7.7) (12.6) (11.4)
 Current portion of income tax expense 24.9 17.4 85.0 31.0 14.8 13.3 6.3
 Change in assets and liabilities 28.3 39.6 60.9 91.3 129.9 80.4 43.1
 Net premium paid on bond transactions — — — 5.8 3.9 4.3 1.7
 Tax reform impact on noncontrolling interests(25) 4.6 — 4.6 — — — —
 Cash (provided by) used in operating activities of
 discontinued operations (0.1) 0.1 0.6 0.7 0.7 1.2 1.9
 Transaction costs — — — — 12.3 9.3 —
 Other — — 1.2 0.6 3.2 1.9 1.6
 Adjusted EBITDA $ 208.2 $ 198.8 $ 823.1 $ 793.6 $ 682.5 $ 577.6 $ 551.6
 Refer to pages 106-110 for end notes.
 Encompass Health 105Refer to pages 106-110 for end notes.
 Share Information
 Weighted Average for the Period
 Q4 Full Year
 2017 2016 2017 2016
 Basic shares outstanding(29) 97.6 88.6 93.7 89.1
 Convertible senior subordinated notes(29) — 8.6 4.0 8.5
 Restricted stock awards, dilutive stock options, restricted
 stock units, and common stock warrants(30) 1.6 2.0 1.6 1.9
 Diluted shares outstanding 99.2 99.2 99.3 99.5
 End of Period
 Q4 Full Year
 (Millions) 2017 2016 2017 2016
 Basic shares outstanding(29) 97.6 88.3 97.6 88.3
 Encompass Health 106
 End Notes
 Encompass Health 107
 (1) Under this program, Joint Commission accredited organizations, like the Company’s IRFs, may seek certification for chronic diseases or conditions such
 as brain injury or stroke rehabilitation by complying with Joint Commission standards, effectively using evidence-based clinical practice guidelines to
 manage and optimize patient care, and using an organized approach to performance measurement and evaluation of clinical outcomes. Obtaining such
 certifications demonstrates the Company’s commitment to excellence in providing disease-specific care.
 (2) Data compares Encompass Health IRFs to IRFs comprising the Uniform Data System for Medical Rehabilitation (“UDSMR”), a division of UB Foundation
 Activities, Inc., a data gathering and analysis organization for the rehabilitation industry which represents approximately 70% of the industry, including
 Encompass Health sites. Data is adjusted by applying Encompass Health IRF case-mix to non-Encompass Health UDS IRFs.
 (3) Source: https://data.medicare.gov/data/home-health-compare. Data on this page was published in January 2018 and reflects OASIS and HHCAHPS
 Survey data collected from July 2016 through June 2017 and claims-based data collected from April 2016 through March 2017.
 (4) The 123 for Encompass Health excludes the inpatient rehabilitation hospitals at HealthSouth Rehabilitation Hospital of Modesto (opened October 2016);
 HealthSouth Rehabilitation Hospital of Gulfport (opened April 2017); Mount Carmel Rehabilitation Hospital, in partnership with HealthSouth (opened
 April 2017); Spire Rehabilitation Hospital, in partnership with HealthSouth (opened July 2017); HealthSouth Rehabilitation Hospital of Pearland (opened
 October 2017); and HealthSouth Rehabilitation Hospital of Beaumont (sold June 2016). The 123 does include HealthSouth Rehabilitation Hospital of
 Austin, which was closed August 2016.
 (5) In 2016, the Company averaged 1,386 total Medicare and non-Medicare discharges per IRF in its then 118 consolidated IRFs that were open the full
 year.
 (6) Case Mix Index (CMI) from the rate-setting file is adjusted for short-stay transfer cases. The Company’s unadjusted CMI for 2016 was 1.36 versus 1.33
 for the industry as measured by UDSMR.
 (7) Source: FY 2018 CMS Final Rule Rate Setting File and the last publicly available Medicare cost reports (FYE 2015/2016) or in the case of new IRFs, the
 June 2017 CMS Provider of Service File.
 a.All data provided was filtered and compiled from the Centers for Medicare and Medicaid Services (CMS) Fiscal Year 2018 IRF Final Rule Rate Setting
 File found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/FY2018_datafiles_final.zip.
 The data presented was developed entirely by CMS and is based on its definitions which are different in form and substance from the criteria
 Encompass Health uses for external reporting purposes. Because CMS does not provide its detailed methodology, Encompass Health is not able to
 reconstruct the CMS projections or the calculation.
 b.The CMS file contains data for each of the 1,140 inpatient rehabilitation facilities used to estimate the policy updates for the FY 2018 IRF-PPS Final
 Rule. Most of the data represents historical information from the CMS fiscal year 2016 period and may or may not reflect the same Encompass
 Health IRFs in operation today. The data presented was separated into three categories: Freestanding, Units, and Encompass Health. Encompass
 Health is a subset of Freestanding and the Total.
 (8) The Budget Control Act of 2011 included a reduction of up to 2% to Medicare payments for all providers that began on April 1, 2013 (as modified by
 H.R. 8). The reduction was made from whatever level of payment would otherwise have been provided under Medicare law and regulation.
 (9) The Company acquired an additional 30% equity interest in Fairlawn Rehabilitation Hospital in Worcester, MA from its joint venture partner. This
 transaction increased the Company’s ownership interest from 50% to 80% and resulted in a change in accounting for the hospital from the equity
 method to a consolidated entity effective June 1, 2014.
 (10) Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four
 quarters) is, likewise, a non-GAAP measure. Management and some members of the investment community utilize Adjusted EBITDA as a financial
 measure and the leverage ratio as a liquidity measure on an ongoing basis. These measures are not recognized in accordance with GAAP and should not
 be viewed as an alternative to GAAP measures of performance or liquidity. In evaluating Adjusted EBITDA, the reader should be aware that in the
 future the Company may incur expenses similar to the adjustments set forth. Further explanation and disclosure relating to Adjusted EBITDA are
 included in the Company’s Form 8-K, dated March 13, 2018, to which this Investor Reference Book is attached as Exhibit 99.1.
 End Notes
 Encompass Health 108
 (11) The Company is providing adjusted earnings per share from continuing operations attributable to Encompass Health (“adjusted earnings per share”),
 which is a non-GAAP measure. The Company believes the presentation of adjusted earnings per share provides useful additional information to investors
 because it provides better comparability of ongoing operating performance to prior periods given that it excludes the impact of government, class
 action, and related settlements, professional fees - accounting, tax, and legal, mark-to-market adjustments for stock appreciation rights, gains or
 losses related to hedging instruments, loss on early extinguishment of debt, adjustments to its income tax provision (such as valuation allowance
 adjustments and settlements of income tax claims), items related to corporate and facility restructurings, and certain other items deemed to be non-
 indicative of ongoing operating performance. It is reasonable to expect that one or more of these excluded items will occur in future periods, but the
 amounts recognized can vary significantly from period to period and may not directly relate to the Company’s ongoing operating performance.
 Accordingly, they can complicate comparisons of the Company’s results of operations across periods and comparisons of the Company’s results to those
 of other healthcare companies. Adjusted earnings per share should not be considered as a measure of financial performance under generally accepted
 accounting principles in the United States as the items excluded from it are significant components in understanding and assessing financial
 performance. Because adjusted earnings per share is not a measurement determined in accordance with GAAP and is thus susceptible to varying
 calculations, it may not be comparable as presented to other similarly titled measures of other companies. Further explanation and disclosure relating
 to adjusted EPS are included in the Company’s Form 8-K, dated March 13, 2018, to which this Investor Reference Book is attached as Exhibit 99.1.
 (12) Definition of adjusted free cash flow, which is a non-GAAP measure, is net cash provided by operating activities of continuing operations minus capital
 expenditures for maintenance, dividends paid on preferred stock, distributions to noncontrolling interests, and certain other items deemed to be non-
 indicative of ongoing operating performance. Common stock dividends are not included in the calculation of adjusted free cash flow. Because this
 measure is not determined in accordance with GAAP and is susceptible to varying calculations, it may not be comparable to other similarly titled
 measures presented by other companies. Further explanation and disclosure relating to adjusted free cash flow are included in the Company’s 
Form 8-K, dated March 13, 2018, to which this Investor Reference Book is attached as Exhibit 99.1.
 Note:  Adjusted free cash flow for prior periods has been recast to conform to the new guidance in ASU 2016-09, “Improvements to Employee Share-
 Based Payment Accounting.” The Company’s stock-based compensation plans permit shares to be withheld to pay the employee’s tax withholding
 obligations incurred in connection with the vesting of a stock award. The Company then remits the value of those withheld shares in cash to the
 applicable tax authority on the employee’s behalf. Under the new guidance, all cash payments made to taxing authorities on employees’ behalf for
 shares withheld should be presented as a financing activity in the statement of cash flows. Historically, the Company presented such payments as an
 operating activity. 
Adjusted Free Cash Flow
 As Previously 
Reported
 Payroll Taxes Paid
 Reclassified to
 Financing Activities
 As Currently 
Reported
 Q1 2016 $ 129.5 $ 9.9 $ 139.4
 Q2 2016 115.3 — 115.3
 Q3 2016 139.8 — 139.8
 Q4 2016 78.3 1.7 80.0
 FY 2016 $ 462.9 $ 11.6 $ 474.5
 (13) On July 21, 2016, the board of directors approved a $0.01 per share, or 4.3%, increase to the quarterly cash dividend on the Company’s common stock,
 bringing the quarterly cash dividend to $0.24 per common share. On July 20, 2017, the board of directors approved a $0.01 per share, or 4.2%, increase
 to the quarterly cash dividend on the Company’s common stock, bringing the quarterly cash dividend to $0.25 per common share.
 (14) The Medicare Access and CHIP Reauthorization Act of 2015 mandated a market basket update of +1.0% in 2018 for post-acute providers including
 inpatient rehabilitation hospitals as well as home health and hospice agencies.
 End Notes, con't.
 Encompass Health 109
 (15) The Bipartisan Budget Act of 2018, signed into law on February 9, 2018, provides for a home health market basket update of 1.5% for CY 2020 and the
 elimination of any productivity adjustment to the market basket for that year. It also provides for the extension of the rural add-on adjustment through
 2022, albeit declining in amount along the way. Additionally, it requires that a new case mix payment model be introduced in 2020 that would be based
 on a 30-day unit of service, not include therapy thresholds as a component of the system, and be implemented in a budget neutral manner.
 (16) The Company estimates the expected impact of each rule utilizing, among other things, the acuity of its patients over the 8-month (home health
 segment) to 12-month (inpatient rehabilitation segment) period prior to each rule’s release and incorporates other adjustments included in each rule.
 These estimates are prior to the impact of sequestration.
 (17) Quality reporting requirements and potential penalties were enabled for IRFs as part of the Healthcare Reform Bill (PPACA). The IMPACT Act of 2014
 requires additional quality and clinical data reporting for IRFs to be subject to the original 2% penalty.
 (18) Pre-opening expenses include expenses for training new employees on the clinical information system, which vary based on the timing of the first
 admission.
 (19) The leverage ratio is based on trailing four quarters of Adjusted EBITDA of $823.1 million from Q1 2017 to Q4 2017.
 (20) Represents discharges from 126 consolidated IRFs in Q4 2017; 125 consolidated IRFs in Q3 2017; 124 consolidated IRFs in Q2 2017; 122 consolidated IRFs
 in Q1 2017 and Q4 2016; 121 consolidated IRFs in Q3 2016; 120 consolidated IRFs in Q2 2016; and 121 consolidated IRFs in Q1 2016.
 (21) Full-time equivalents included in the table represent Encompass Health employees who participate in or support the operations of our hospitals and
 include an estimate of full-time equivalents related to contract labor.
 (22) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of full-time equivalents, including an estimate of full-time equivalents
 from the utilization of contract labor, by the number of occupied beds during each period. The number of occupied beds is determined by multiplying
 the number of licensed beds by the Company’s occupancy percentage.
 (23) Represents home health admissions from 198 consolidated locations in Q4 2017; 196 consolidated locations in Q3 2017; 191 consolidated locations in Q2
 2017 and Q1 2017; 186 consolidated locations in Q4 2016; 188 consolidated locations in Q3 2016; 187 consolidated locations in Q2 2016; and 184
 consolidated locations in Q1 2016
 (24) Represents hospice admissions from 37 locations in Q4 2017, Q3 2017 and Q2 2017; 35 locations in Q1 2017 and Q4 2016; 33 locations in Q3 2016; 29
 locations in Q2 2016; and 27 locations in Q1 2016
 (25) The application of the lower income tax rate that resulted from the Tax Cuts and Jobs Act to the Company’s net deferred tax assets resulted in a net
 $1.2 million increase in tax expense in Q4 2017. Application of the new tax rate to the Company’s joint venture entities’ deferred tax liabilities
 resulted in a net reduction in tax expense in Q4 2017. The Company’s joint venture partners’ share of this net tax benefit was $4.6 million, which
 resulted in an increase in noncontrolling interest expense in Q4 2017.
 (26) In connection with the acquisition of Encompass Home Health & Hospice, the Company granted stock appreciation rights based on the fair value of the
 common stock of HealthSouth Home Health Holdings, Inc. to certain members of Encompass Home Health & Hospice management. The fair value of
 Holdings’ common stock is the amount by which the product of the trailing 12-month adjusted EBITDA for Holdings and the median market EBITDA
 multiple based on a basket of public home health companies and certain public home health acquisition transactions exceeds the initial fair value
 assigned to the Holdings’ stock. The fair value also takes into consideration the balance of the intercompany note in place and the net debt of
 Holdings. The fair value of these SARs will vary from period to period primarily based on the performance of the Company’s home health and hospice
 segment and the change in the median market multiple. Half of the SARs vest of January 1, 2019, and the other half vest on January 1, 2020. Once
 vested, they are exercisable until they expire on December 31, 2024 or in connection with termination of employment.
 (27) New guidance in ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” requires entities to record all of the tax effects related
 to share-based payment at settlement (or expiration) through the income statement. Historically, the Company recorded such tax effects to equity.
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 Encompass Health 110
 (28) The interest and amortization and the loss on early extinguishment of debt related to the convertible senior subordinated notes must be added to
 income from continuing operations when calculating diluted earnings per share because the debt was assumed to have been converted at the beginning
 of the period, and the applicable shares were included in the diluted share count.
 (29) In November 2013, the Company closed separate, privately negotiated exchanges in which it issued $320 million of 2.0% Convertible Senior
 Subordinated Notes due 2043 in exchange for 257,110 shares of its 6.5% Series A Convertible Perpetual Preferred Stock. The Company recorded ~$249
 million as debt and ~$71 million as equity. In May 2017, the Company provided notice of its intent to redeem all $320 million of outstanding convertible
 notes. In lieu of receiving the redemption price, the holders had the right to convert their notes into shares of the Company’s common stock at a
 conversion rate of 27.2221 shares per $1,000 principal amount of Notes, which rate was increased by a make-whole premium. In the aggregate, holders
 of $319.4 million in principal elected to convert, which resulted in the Company issuing 8,895,483 shares of common stock (approximately 8.6 million
 shares were previously included in the diluted share count). The remaining $0.6 million of principal was redeemed by cash payment.
 (30) The agreement to settle the Company’s class action securities litigation received final court approval in January 2007. The 5.0 million shares of
 common stock and warrants to purchase ~8.2 million shares of common stock at a strike price of $41.40 (expired January 17, 2017) related to this
 settlement were issued on September 30, 2009. The 5.0 million common shares are included in the basic outstanding shares. The warrants were not
 included in the diluted share count prior to 2015 because the strike price had historically been above the market price. In full-year 2016, zero shares
 related to the warrants were included in the diluted share count due to antidilution based on the stock price.
 End Notes, con't.