Fourth Quarter
 2017 Earnings Call
 February 27, 2018
 Supplemental Information
 Encompass Health 2
 The information contained in this presentation 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
 presentation 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, when
 filed, 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 presentation 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 presentation 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 February 26, 2018, to which the following presentation is
 attached as Exhibit 99.2, 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.
 Forward-Looking Statements
 Encompass Health 3
 Q4 2017 Summary............................................................................................................... 4-5
 Rebranding and Name Change ................................................................................................ 6
 Clinical Collaboration Rate.................................................................................................... 7
 Inpatient Rehabilitation Segment ............................................................................................ 8-9
 Home Health & Hospice Segment ............................................................................................ 10-11
 Consolidated Adjusted EBITDA................................................................................................ 12
 Earnings per Share.............................................................................................................. 13-14
 Adjusted Free Cash Flow ...................................................................................................... 15
 Guidance ......................................................................................................................... 16-17
 Free Cash Flow.................................................................................................................. 18-19
 Appendix
 Map of Locations................................................................................................................ 21
 Pre-Payment Claims Denials - Inpatient Rehabilitation Segment........................................................ 22
 Expansion Activity .............................................................................................................. 23
 Estimated Impact of New Revenue Recognition Accounting Standard.................................................. 24
 Business Outlook ................................................................................................................ 25-27
 Debt Schedule and Maturity Profile.......................................................................................... 28-29
 Overview of Rollover Shares .................................................................................................. 30
 New-Store/Same-Store Growth............................................................................................... 31-32
 Payment Sources (Percent of Revenues) .................................................................................... 33
 Inpatient Rehabilitation Operational and Labor Metrics.................................................................. 34
 Home Health & Hospice Operational Metrics............................................................................... 35
 Share Information .............................................................................................................. 36
 Segment Operating Results.................................................................................................... 37-38
 Reconciliations to GAAP ....................................................................................................... 39-47
 End Notes ........................................................................................................................ 48-50
 Table of Contents
 Encompass Health 4
 Q4 2017 Summary
 Q4 Full Year
 (In Millions) Q4 2017 Q4 2016 Growth 2017 2016 Growth
 Encompass Health Consolidated
 Net operating revenues $ 1,019.7 $ 949.9 7.3% $ 3,971.4 $ 3,707.2 7.1%
 Adjusted EBITDA $ 208.2 $ 198.8 4.7% $ 823.1 $ 793.6 3.7%
 Inpatient Rehabilitation Segment
 Net operating revenues $ 810.8 $ 767.6 5.6% $ 3,188.1 $ 3,021.1 5.5%
 Adjusted EBITDA $ 207.1 $ 197.6 4.8% $ 821.2 $ 797.2 3.0%
 Home Health and Hospice Segment
 Net operating revenues $ 208.9 $ 182.3 14.6% $ 783.3 $ 686.1 14.2%
 Adjusted EBITDA $ 34.4 $ 28.0 22.9% $ 125.9 $ 102.4 22.9%
 Major takeaways:
 u Strong Q4 2017 revenue growth in both segments
  Inpatient rehabilitation growth driven by volume
 ü Discharge growth of 5.9%; same store = 3.9%
 ü Net revenue per discharge was flat.
 ü Holiday-related timing differences favorably impacted discharge growth and negatively impacted net patient
 revenue per discharge.
  Home health and hospice growth driven by volume
 ü Admissions growth of 13.6%; same store = 10.1%
 ü Revenue per episode decrease of 1.1%
 u Consolidated Adjusted EBITDA increased 4.7% to $208.2 million in Q4 2017
 u Adjusted EPS of $0.70 per diluted share in Q4 2017 and $2.76 per diluted share in FY 2017 - see pages 13 and 14.
 u FY 2017 adjusted free cash flow of $467.6 million - see page 15.
 Reconciliations to GAAP provided on pages 39-47
 Encompass Health 5
 Q4 2017 Summary (cont.) 
u Expansion Activity (see page 23)
 – Began operating a new 40-bed inpatient rehabilitation hospital in Pearland, TX
 – Expanded existing inpatient rehabilitation hospitals by 63 beds
 – Acquired two home health locations in Georgia and Alabama
 u Balance Sheet
 – Leverage ratio of 3.1x at end of 2017
 u Shareholder Distributions
 – Paid quarterly cash dividend of $0.25 per share in October 2017
 – Declared a $0.25 per share quarterly cash dividend in October 2017 (paid in January 2018)
 Encompass Health 6
 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 $30 million
 *Included in corporate general and administrative expenses line item
 Encompass Health 7
 The Company Continues to Improve the Patient
 Experience Through Integrated Care Delivery
 Inpatient Rehabilitation–Home Health Clinical Collaboration (All Payors)
 Overlap Markets*
 Q4 2016 Q4 2017
 10,074 10,660
 3,963
 4,939
 28.2%
 Collaboration Rate
 31.7%
 Collaboration Rateu As of December 31, 2017, ~60% of Encompass
 Health’s inpatient rehabilitation hospitals were
 located within overlap markets.*
 u The clinical collaboration rate with Encompass
 Health’s inpatient rehabilitation hospitals
 increased by 350 basis points in Q4 2017
 compared to Q4 2016.
 u The Company’s clinical collaboration rate
 objective for overlap markets is 35% to 40%
 within the next two years.
 u TeamWorks clinical collaboration is a process to
 identify and standardize best practices for
 integrated patient care.
  Initiative launched in February 2017
  Began piloting redesigned clinical
 collaboration process in July 2017
  Implementation completed in December 2017
 Encompass Health
 IRF Discharges to:
 Encompass Health Home Health
 Non-Encompass Health Home Health
 * Overlap markets have an Encompass Health IRF and an Encompass Health home health location within a
 30-mile radius, excluding markets that have home health licensure barriers. Home health locations in
 overlap markets are open for 12 months before inclusion in the clinical collaboration rate.
 Encompass Health 8
 Inpatient Rehabilitation Segment - Revenue
 Q4 Q4 Favorable/
 ($millions) 2017 2016 (Unfavorable)
 Net operating revenues:
 Inpatient $ 784.7 $ 740.9 5.9%
 Outpatient and other 26.1 26.7 (2.2%)
 Total segment revenue $ 810.8 $ 767.6 5.6%
 (Actual Amounts)
 Discharges 43,910 41,474 5.9%
 Same-store discharge growth 3.9%
 Net patient revenue per discharge $ 17,871 $ 17,864 —%
 u Revenue growth was driven by volume growth.
  New-store discharge growth resulted from joint ventures in Gulfport, MS (April 2017),
 Westerville, OH (April 2017), and Jackson, TN (July 2017) and wholly owned hospitals in
 Modesto, CA (October 2016) and Pearland, TX (October 2017).
  Holiday-related timing differences favorably impacted discharge growth and negatively impacted
 revenue per discharge.
 u Outpatient and other revenue decreased in Q4 2017 notwithstanding $1.9 million in provider tax
 recoveries.
 Encompass Health 9
 Inpatient Rehabilitation Segment - Adjusted EBITDA 
Q4 % of
 Revenue
 Q4 % of
 Revenue($millions) 2017 2016
 Net operating revenues $ 810.8 $ 767.6
  Less: Provision for doubtful accounts (8.4) 1.0% (13.2) 1.7%
 Net operating revenues less provision for
 doubtful accounts 802.4 754.4
 Operating expenses:
     Salaries and benefits (408.1) 50.3% (386.2) 50.3%
 Other operating expenses(a) (120.4) 14.8% (109.8) 14.3%
 Supplies (35.1) 4.3% (32.7) 4.3%
 Occupancy costs (15.6) 1.9% (15.2) 2.0%
 Hospital operating expenses (171.1) 21.1% (157.7) 20.5%
 Other income 1.2 0.8
 Equity in nonconsolidated affiliates 1.7 2.4
 Noncontrolling interests(b) (19.0) (16.1)
 Segment Adjusted EBITDA $ 207.1 $ 197.6
 Percent change 4.8%
 In arriving at Adjusted EBITDA, the following was excluded:
 (a) Loss on disposal of assets $ 1.3 $ 2.0
 (b) Tax reform impact on noncontrolling
 interests $ 0.5 $ —
 u Segment Adjusted EBITDA for
 the quarter of $207.1 million
 • Salaries and benefits as a
 percent of revenue benefited
 from lower group medical
 expenses that offset
 compensation increases and
 the impact from the ramping
 up of new stores.
 • Other operating expenses as a
 percent of revenue increased
 primarily due to higher
 provider tax expense in Q4
 2017 and the impact of
 favorable franchise tax
 recoveries in Q4 2016.
  Bad debt expense as a percent
 of revenue decreased due
 primarily to a reduction in
 new pre-payment claims
 denials (see page 22).
 Reconciliations to GAAP provided on pages 39-47
 Encompass Health 10
 Home Health and Hospice Segment - Revenue
 Q4 Q4 Favorable/
 ($millions) 2017 2016 (Unfavorable)
 Net operating revenues:
    Home health revenue $ 187.3 $ 165.2 13.4 %
    Hospice revenue 21.6 17.1 26.3 %
    Total segment revenue $ 208.9 $ 182.3 14.6 %
 (Actual Amounts)
 Admissions 31,766 27,957 13.6 %
 Same-store admissions growth 10.1 %
 Episodes 56,625 49,253 15.0 %
 Same-store episode growth 11.2 %
 Revenue per episode $ 2,989 $ 3,023 (1.1)%
 u Revenue growth was driven by strong volume growth.
  Approximately 120 basis points of same-store admissions growth resulted from clinical
 collaboration with Encompass Health’s IRFs.
 u Decrease in revenue per episode resulted from Medicare reimbursement rate cuts partially offset by
 changes in patient mix and reconciliation payments attributed to various alternative payment
 models (e.g., BPCI; ACOs).
 u Hospice revenue increase primarily was due to acquisitions in 2016.
 Encompass Health 11
 Q4 % of
 Revenue
 Q4 % of
 Revenue($millions) 2017 2016
 Net operating revenues $ 208.9 $ 182.3
  Less: Provision for doubtful accounts (1.3) 0.6% (1.3) 0.7%
 Net operating revenues less provision for
 doubtful accounts 207.6 181.0
 Operating expenses:(a)
   Cost of services (97.2) 46.5% (89.7) 49.2%
   Support and overhead costs (73.8) 35.3% (62.7) 34.4%
 (171.0) 81.9% (152.4) 83.6%
 Equity in net income of nonconsolidated
 affiliates 0.1 0.1
 Noncontrolling interests(b) (2.3) (0.7)
 Segment Adjusted EBITDA $ 34.4 $ 28.0
 Percent change 22.9%
 In arriving at Adjusted EBITDA, the following was excluded:
 (a) Gain on disposal of assets $ — $ (3.3)
 (b) Tax reform impact on noncontrolling
 interests $ 4.1 $ —
 Home Health and Hospice Segment -  Adjusted EBITDA
 * Reconciliation to GAAP provided on pages 29-31
 Reconciliations to GAAP provided on pages 39-47
 uSegment Adjusted EBITDA for
 the quarter of $34.4 million.
  Cost of services as a percent
 of revenue decreased
 primarily due to staffing
 productivity gains.
  Support and overhead costs
 increased as a percent of
 revenue primarily due to
 continued investments in
 additional sales and
 marketing associates.
 Encompass Health 12
 Consolidated Adjusted EBITDA
 ($millions)
 Q4
 2017
 % of 
Consolidated
 Revenue
 Q4
 2016
 % of 
Consolidated
 Revenue
 Inpatient rehabilitation segment Adjusted
 EBITDA $ 207.1 $ 197.6
 Home health and hospice segment Adjusted
 EBITDA 34.4 28.0
 General and administrative expenses* (33.3) 3.3% (26.8) 2.8%
 Consolidated Adjusted EBITDA $ 208.2 $ 198.8
 Percentage change 4.7%
 General and Administrative Expenses Associated with
 Rebranding and TeamWorks
 ($millions)
 Q1
 2017
 Q2
 2017
 Q3
 2017
 Q4
 2017
 FY
 2017
 Rebranding and name change $ 0.5 $ 1.7 $ 1.5 $ 2.5 $ 6.2
 TeamWorks clinical collaboration(1) — 1.7 2.3 0.4 4.4
 * General and administrative expenses in the above table exclude stock compensation of $9.8 million and $10.0 million for the fourth
 quarter of 2017 and 2016, respectively.
 . Reconciliations to GAAP provided on pages 39-47; Refer to pages 48-50 for end notes.
 Consolidated Adjusted EBITDA
 for the quarter of
 $208.2 million
 u General and administrative expenses increased as a percent of consolidated revenue primarily
 due to a year-over-year increase in incentive compensation, as well as expenses associated
 with the Company’s rebranding and name change, and the TeamWorks clinical collaboration
 initiative.
 Encompass Health 13
 Earnings per Share - As Reported
 Q4 Year Ended
 (In Millions, Except Per Share Data) 2017 2016 2017 2016
 Consolidated Adjusted EBITDA $ 208.2 $ 198.8 $ 823.1 $ 793.6
 Interest expense and amortization of debt
 discounts and fees (35.9) (41.6) (154.4) (172.1)
 Depreciation and amortization (46.6) (43.8) (183.8) (172.6)
 Stock-based compensation expense (9.8) (10.0) (47.7) (27.4)
 Noncash (loss) gain on disposal of assets (1.3) 1.3 (4.6) (0.7)
 114.6 104.7 432.6 420.8
 Certain items non-indicative of ongoing
 operating performance:
 Loss on early extinguishment of debt — — (10.7) (7.4)
 Professional fees — accounting, tax, and legal — — — (1.9)
 Tax reform impact on noncontrolling interests(2) (4.6) — (4.6) —
 Pre-tax income 110.0 104.7 417.3 411.5
 Income tax expense(2) (49.2) (39.7) (160.6) (163.9)
 Income from continuing operations* $ 60.8 $ 65.0 $ 256.7 $ 247.6
 Interest and amortization on 2.0% Convertible
 Senior Subordinated Notes (net of tax)(3) — 2.5 4.6 9.7
 Loss on extinguishment of 2.0% Convertible
 Senior Subordinated Notes (net of tax)(3) — — 6.2 —
 Diluted shares (see page 36) 99.2 99.2 99.3 99.5
 Diluted earnings per share*(3) $ 0.61 $ 0.68 $ 2.69 $ 2.59
 u EPS for the fourth quarter of 2017 were
 impacted by:
  Lower interest expense due primarily to
 the Company’s exercise of its early
 redemption option on its 2.0%
 Convertible Senior Subordinated Notes in
 Q2 2017
  Higher depreciation and amortization
 resulting from capital investments
  Income tax reform(2)
 uEPS for full-year 2017 were impacted by
 the items discussed above for Q4 2017 as
 well as:
  Higher stock-based compensation
 expense
  Loss on early extinguishment of debt
 due to the Company’s exercise of its
 early redemption option on its 2.0%
 Convertible Senior Subordinated Notes in
 Q2 2017
 uEPS for Q4 2016 and full-year 2016 were
 impacted by the gain on the sale of the
 Company’s pediatric home heath assets
 in Q4 2016.
 uEPS for full-year 2016 were impacted by
 the loss on early extinguishment of debt
 associated with the redemptions of the
 7.75% Senior Notes due 2022.
 * Earnings per share are determined using income from continuing operations attributable to Encompass Health.
 Refer to pages 48-50 for end notes.
 Encompass Health 14
 Q4 Year Ended
 2017 2016 2017 2016
 Earnings per share, as reported $ 0.61 $ 0.68 $ 2.69 $ 2.59
 Adjustments, net of tax:
 Professional fees — accounting, tax, and
 legal — — — 0.01
 Mark-to-market adjustment for stock
 appreciation rights(5) — 0.02 0.08 0.01
 Income tax adjustments(6) 0.03 (0.01) (0.08) (0.01)
 Tax reform impact(2) 0.06 — 0.06 —
 Loss on early extinguishment of debt(3) — — — 0.04
 Sale of pediatric home health assets and
 hospital — 0.03 — 0.02
 Adjusted earnings per share* $ 0.70 $ 0.72 $ 2.76 $ 2.67
 Adjusted Earnings per Share(4)
 * Adjusted EPS may not sum due to rounding. See complete calculations of adjusted earnings per share on pages 44-47
 Refer to pages 48-50 for end notes.
 Adjusted earnings per share removes from the GAAP earnings per share calculation
 the impact of items the Company believes are non-indicative of its ongoing
 operating performance.
 Encompass Health 15
 Adjusted Free Cash
 Flow FY 2016 (7)
 Adjusted
 EBITDA
 Working Capital
 and Other
 Cash Interest
 Expense
 Cash Tax
 Payments,
 Net of Refunds
 Maintenance
 Capital Expenditures
 Adjusted Free Cash
 Flow FY 2017
 $474.5
 $29.5
 $47.6 $12.7
 ($62.6) ($34.1)
 $467.6
 2017 Adjusted Free Cash Flow(7) 
Reconciliations to GAAP provided on pages 39-47
 Refer to pages 48-50 for end notes.
 u Adjusted free cash flow in full-year 2017 decreased primarily as a result of increased cash payments
 for taxes and increased maintenance capital expenditures.
  Cash payments for taxes increased due to exhaustion of federal NOL in Q1 2017.
  Increased maintenance capital expenditures resulted from leasehold improvements and
 furnishings associated with the Company’s new home office location, refurbishments at certain
 larger hospitals, growth in the IRF segment, and an enhanced hospital maintenance program.
  Working capital decreased primarily due to improved collection of accounts receivable (fewer
 claims denials) and lower cash distributions to joint venture partners (certain joint venture
 partners funded their share of capital investments through reductions in cash distributions).
 Encompass Health 16* See also the "Estimated Impact of the New Revenue Recognition Accounting Standard" on page 24.Refer to pages 48-50 for end notes.
 Guidance 
Adjusted EBITDA(8) 
Adjusted Earnings per Share
 from Continuing Operations
 Attributable to Encompass
 Health(4) 
Net Operating Revenues*
 2018
 Guidance
 Net Operating Revenues*
 Adjusted EBITDA(8) 
$830 million to $850 million
 Adjusted Earnings per Share
 from Continuing Operations
 Attributable to Encompass
 Health(4) 
$3.25 to $3.40
 $3,971.4 million
 $823.1 million
 $2.76
 $4,150 million to $4,250 million
 2017 Actuals
 Encompass Health 17
 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)
 Encompass Health 18
 u Increased cash payments for taxes
 in 2018 primarily due to exhaustion
 of federal NOL in Q1 2017
 Adjusted Free Cash Flow(7) Assumptions
 Reconciliations to GAAP provided on pages 39-47. Refer to pages 48-50 for end notes.
 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 19
 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(9) 91.5 ~100
 Purchase of Home Health Holdings
 rollover shares (see page 30) 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.
 See the debt schedule on page 28. Refer to pages 48-50 for end notes.
 Appendix
 Encompass Health 21
 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
 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
 Largest Owner and
 Operator of IRFs
 4th Largest Provider of
 Medicare-Certified Skilled
 Home Health Services
 Encompass Health 22
 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 23
 Expansion Activity
 Inpatient Rehabilitation Facilities
 # of New Beds
 2017 2018 2019
 De Novo:
     Pearland, TX (October) 40 — —
     Shelby County, AL — 34 —
 Hilton Head, SC — 38 —
 Murrieta, CA — — 50
 Joint Ventures:
 Gulfport, MS   (April) 33 — —
     Westerville, OH (April) 60 — —
     Jackson, TN* (July) 48 — —
     Murrells Inlet, SC — 29 —
 Winston-Salem, NC — 68 —
 Lubbock, TX — — 40
 Boise, ID — — 40
 Bed Expansions, net** 166 ~100 ~100
 347 ~269 ~230
 *
 **
 Existing wholly owned, 40-bed IRF in Martin, TN became JV in conjunction with this opening
 Net bed expansions in each year may change due to the timing of certain regulatory approvals and/or construction delays.
 Q4 2017 acquisition highlights:
 u Acquired two home health locations in Georgia and
 Alabama
 Q4 2017 expansion activity highlights:
 u Began operating a new 40-bed inpatient rehabilitation
 hospital in Pearland, TX
 Expanded existing hospitals by 63 beds
 1
 2
 3
 7 Previously Announced
 IRF Development
 Projects Underway
 3 New States
 Home Health and Hospice
 # of locations
 December 31, 2016 223
 Acquisitions 14
 Opening of new locations 3
 Merging of locations (3)
 December 31, 2017 237
 5 Winston-Salem, NC
 Gulfport, MS
 6
 7
 4
 Boise, ID
 Encompass Health 24
 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) Current 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 25
 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 26
 † 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 48-50 for end notes.
 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(10)
 FY 2019
 Q418-Q319
 Estimate†
 FY 2020
 Q419-Q320
 Estimate†
 CY 2018
 Q118-Q418(10)
 CY 2019
 Q119-Q419
 Estimate†
 CY 2020
 Q120-Q420(11)
 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(11) - - - - ~(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(12) 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.
 Encompass Health 27
 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.
 Encompass Health 28
 Debt Schedule
 Reconciliations to GAAP provided on pages 39-47.
 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 29
 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 28.
 Encompass Health 30
 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 31
 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(13) 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(14) 1.3% (0.6)%
 Reliant (857 beds)
 Franklin, TN (40 beds)
 Lexington, KY (158 beds)
 Savannah, GA (50 beds)
 * Includes consolidated inpatient rehabilitation hospitals classified as same store during each period
 Refer to pages 48-50 for end notes.
 New-Store/Same-Store Growth Inpatient Rehabilitation
 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 32
 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
 * Includes consolidated home health agencies classified as same store during each period
 New-Store/Same-Store Growth Home Health
 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 33
 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 34
 Inpatient Rehabilitation Operational and Labor Metrics
 * 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 48-50 for end notes.
 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(15) 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)(16) 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(17) 3.50 3.52 3.46 3.39 3.50 3.48 3.43 3.35 3.47 3.44
 Encompass Health 35
 Home Health and Hospice Operational Metrics
 Refer to pages 48-50 for end notes.
 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 and other
 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(18) 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(19) 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 36
 Share Information
 Refer to pages 48-50 for end notes.
 Weighted Average for the Period
 Q4 Full Year
 2017 2016 2017 2016 2015
 Basic shares outstanding(20) 97.6 88.6 93.7 89.1 89.4
 Convertible perpetual preferred stock (21) — — — — 1.0
 Convertible senior subordinated notes(20) — 8.6 4.0 8.5 8.3
 Restricted stock awards, dilutive stock options, restricted
 stock units, and common stock warrants(22) 1.6 2.0 1.6 1.9 2.3
 Diluted shares outstanding 99.2 99.2 99.3 99.5 101.0
 End of Period
 Q4 Full Year
 (Millions) 2017 2016 2017 2016 2015
 Basic shares outstanding(20) 97.6 88.3 97.6 88.3 89.3
 Encompass Health 37
 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
 Reconciliations to GAAP provided on pages 39-47.
 Encompass Health 38
 Segment Operating Results
 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
 Reconciliations to GAAP provided on pages 39-47.
 Encompass Health 39
 Reconciliation of Net Income to Adjusted EBITDA(8)
 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
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 48-50 for end notes.
 Encompass Health 40
 Reconciliation of Net Income to Adjusted EBITDA(8)
 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 — acct, 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
 * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.
 Refer to pages 48-50 for end notes.
 Encompass Health 41
 Net Cash Provided by Operating Activities Reconciled
 to Adjusted EBITDA
 Q4 Full Year
 (In Millions) 2017 2016 2017 2016
 Net cash provided by operating activities $ 151.4 $ 135.0 $ 657.2 $ 634.4
 Provision for doubtful accounts (9.7) (14.5) (52.4) (61.2)
 Professional fees — accounting, tax, and legal — — — 1.9
 Interest expense and amortization of debt discounts and fees 35.9 41.6 154.4 172.1
 Equity in net income of nonconsolidated affiliates 1.8 2.5 8.0 9.8
 Net income attributable to noncontrolling interests in continuing
 operations (25.9) (16.8) (79.1) (70.5)
 Amortization of debt-related items (1.0) (3.5) (8.7) (13.8)
 Distributions from nonconsolidated affiliates (2.0) (2.6) (8.6) (8.5)
 Current portion of income tax expense 24.9 17.4 85.0 31.0
 Change in assets and liabilities 28.3 39.6 60.9 91.3
 Net premium paid on bond transactions — — — 5.8
 Tax reform impact on noncontrolling interests(2) 4.6 — 4.6 —
 Cash (provided by) used in operating activities of discontinued
 operations (0.1) 0.1 0.6 0.7
 Other — — 1.2 0.6
 Adjusted EBITDA $ 208.2 $ 198.8 $ 823.1 $ 793.6
 Refer to pages 48-50 for end notes.
 Encompass Health 42
 Reconciliation of Segment Adjusted EBITDA to Income
 from Continuing Operations Before Income Tax Expense
 Three Months Ended Year Ended
 December 31, December 31,
 2017 2016 2017 2016
 (In Millions)
 Total segment Adjusted EBITDA $ 241.5 $ 225.6 $ 947.1 $ 899.6
 General and administrative expenses (43.1) (36.8) (171.7) (133.4)
 Depreciation and amortization (46.6) (43.8) (183.8) (172.6)
 (Loss) gain on disposal of assets (1.3) 1.3 (4.6) (0.7)
 Professional fees — accounting, tax, and legal — — — (1.9)
 Loss on early extinguishment of debt — — (10.7) (7.4)
 Interest expense and amortization of debt discounts and fees (35.9) (41.6) (154.4) (172.1)
 Net income attributable to noncontrolling interests 25.9 16.8 79.1 70.5
 Tax reform impact on noncontrolling interests(2) (4.6) — (4.6) —
    Income from continuing operations before income tax expense $ 135.9 $ 121.5 $ 496.4 $ 482.0
 Refer to pages 48-50 for end notes.
 Encompass Health 43
 Reconciliation of Net Cash Provided by Operating
 Activities to Adjusted Free Cash Flow(7) 
Q4 Full Year
 (In 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:
 Cash paid for professional fees — accounting, tax, and legal — — — 1.9
 Transaction costs and related assumed liabilities — — — 0.8
 Net premium on bond issuance/repayment — — — 5.8
 Adjusted free cash flow $ 91.5 $ 80.0 $ 467.6 $ 474.5
 Cash dividends on common stock $ 24.5 $ 21.4 $ 91.5 $ 83.8
 Refer to pages 48-50 for end notes.
 Encompass Health 44
 For the Three Months Ended December 31, 2017
 Adjustments
 As Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(5)
 Income Tax
 Adjustments(6)
 Tax Reform
 Impact(2) 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(2) (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
 Adjusted EPS(4) - Q4 2017
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 Encompass Health 45
 For the Three Months Ended December 31, 2016
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(5)
 Sale of
 Pediatric
 Home Health
 Assets and
 Hospital
 Income Tax
 Valuation and
 Other
 Adjustments
 As
 Adjusted
 (In Millions, Except Per Share Amounts)
 Adjusted EBITDA $ 198.8 $ — $ — $ — $ 198.8
 Depreciation and amortization (43.8) — — — (43.8)
 Interest expense and amortization of debt discounts and
 fees (41.6) — — — (41.6)
 Stock-based compensation (10.0) 3.0 — — (7.0)
 Loss on disposal of assets 1.3 — (3.3) — (2.0)
 Income from continuing operations before income tax
 expense 104.7 3.0 (3.3) — 104.4
 Provision for income tax expense (39.7) (1.1) 6.1 (0.6) (35.3)
 Income from continuing operations attributable to
 Encompass Health $ 65.0 $ 1.9 $ 2.8 $ (0.6) $ 69.1
 Add: Interest on convertible debt, net of tax 2.5 2.5
 Numerator for diluted earnings per share $ 67.5 $ 71.6
 Diluted earnings per share from continuing operations* $ 0.68 $ 0.02 $ 0.03 $ (0.01) $ 0.72
 Diluted shares used in calculation 99.2
 Adjusted EPS(4) - Q4 2016
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 Encompass Health 46
 Adjusted EPS(4) - YTD 2017
 For the Year Ended December 31, 2017
 Adjustments
 As
 Reported
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(5)
 Tax Reform
 Impact(2)
 Loss on Early
 Extinguishment
 of Debt
 Income Tax
 Adjustments(6)
 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(3) (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(2) (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
 *  Adjusted EPS may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 Encompass Health 47
 Adjusted EPS(4) - YTD 2016
 For the Year Ended December 31, 2016
 Adjustments
 As
 Reported
 Pro.
 Fees —
 Acct.,
 Tax, &
 Legal
 Mark-to-
 Market
 Adjustment
 for Stock
 Appreciation
 Rights(5)
 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 may not sum across due to rounding.
    Refer to pages 48-50 for end notes.
 Encompass Health 48
 End Notes
 (1) In the first quarter of 2017, approximately $1 million associated with the TeamWorks clinical collaboration initiative was included in operating expenses within
 the inpatient rehabilitation segment. Total costs to the Company in 2017 for the TeamWorks clinical collaboration initiative was $5.4 million.
 (2) 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.
 (3) 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.
 (4) 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.*
 (5) 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.
 (6) 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.
 * Reconciliations to GAAP provided on pages 39-47
 Encompass Health 49
 End Notes, con’t.
 (7) 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.
 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. 
(8) 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.
 (9) 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.
 (10) The Medicare Access and CHIP Reauthorization Act of 2015 mandated a market basket update of +1.0% in 2018 for post-acute providers including rehabilitation
 hospitals as well as home health and hospice agencies.
 (11) The Bipartisan Budget Act of 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. The
 adjustment is a reimbursement add-on for episodes in areas with a population density of six or fewer individuals per square mile.
 (12) The Company estimates the expected impact of each rule utilizing, among other things, the acuity of its patients over the 8-month (home health) to 12-month
 (inpatient rehabilitation) period prior to each rule’s release and incorporates other adjustments included in each rule. These estimates are prior to the impact
 of sequestration.
 (13) 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 this hospital from the equity method to a consolidated
 entity effective June 1, 2014.
 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
 FY 2015 $ 389.0 $ 17.2 $ 406.2
 Encompass Health 50
 End Notes, con’t.
 (14) Data provided by Uniform Data System for Medical Rehabilitation, a division of UB Foundation Activities, Inc., a data gathering and analysis organization for the
 rehabilitation industry; represents ~70% of industry, including Encompass Health inpatient rehabilitation sites
 (15) Represents discharges from 126 consolidated hospitals in Q4 2017; 125 consolidated hospitals in Q3 2017; 124 consolidated hospitals in Q2 2017; 122
 consolidated hospitals in Q1 2017 and Q4 2016; 121 consolidated hospitals in Q3 2016; 120 consolidated hospitals in Q2 2016; and 121 consolidated hospitals in
 Q1 2016
 (16) 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.
 (17) 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.
 (18) 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
 (19) 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 
(20) 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.
 (21) In March 2006, the Company completed the sale of 400,000 shares of its 6.5% Series A Convertible Perpetual Preferred Stock. In Q4 2013, the Company
 exchanged $320 million of newly issued 2.0% Convertible Senior Subordinated Notes due 2043 for 257,110 shares of its outstanding preferred stock. In April
 2015, the Company exercised its rights to force conversion of all outstanding shares of its preferred stock. On the conversion date, each outstanding share of
 preferred stock was converted into 33.9905 shares of common stock, resulting in the issuance of 3,271,415 shares of common stock.
 (22) 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. In full-year 2015, 80,814 shares related to the warrants were included in the diluted share
 count using the treasury stock method.