Second Quarter 2019    Earnings Call  July 30, 2019 Supplemental information
 Forward-looking statements  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 earnings release attached as Exhibit 99.1 to the Company’s Form 8-K dated July 29, 2019 (the “Q2 Earnings Release Form 8-K”), the Form 10-K for the year ended Dec. 31, 2018, the Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019, 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 Q2 Earnings Release Form 8-K, 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 supplemental information.   Encompass Health                                                                                        2
 Table of contents        Q2 2019 summary.................................................................................................... 4-5       Clinical collaboration rate ......................................................................................... 6       Inpatient rehabilitation segment ................................................................................. 7-8       Home health & hospice segment.................................................................................. 9-10       Consolidated Adjusted EBITDA..................................................................................... 11       Earnings per share................................................................................................... 12-13       Adjusted free cash flow ............................................................................................ 14       Guidance.............................................................................................................. 15-16       Free cash flow assumptions and uses............................................................................. 17-18       Overview of rollover shares and SARs ............................................................................ 19                                              Appendix       Map of locations ..................................................................................................... 21       Rebranding and name change ..................................................................................... 22       Expansion activity ................................................................................................... 23       Pre-payment claims denials - inpatient rehabilitation segment ............................................. 24       Business outlook ..................................................................................................... 25-27       Debt schedule and maturity profile .............................................................................. 28-29       New-store/same-store growth..................................................................................... 30-31       Payment sources (percent of revenues) ......................................................................... 32       Inpatient rehabilitation operational and labor metrics ....................................................... 33       Home health & hospice operational metrics .................................................................... 34       Share information ................................................................................................... 35       Segment operating results ......................................................................................... 36-38       Reconciliations to GAAP ............................................................................................ 39-47       End notes ............................................................................................................. 48-49   Encompass Health                                                                                        3
 Q2 2019 summary                                                        Q2                      Growth    ($millions)                               Q2 2019      Q2 2018       Dollars     Percent    Encompass Health Consolidated    Net operating revenues                   $  1,135.0   $  1,067.7   $    67.3         6.3%    Adjusted EBITDA                          $    252.2   $    231.6   $    20.6         8.9%    Inpatient Rehabilitation Segment    Net operating revenues                   $    873.9   $    834.6   $    39.3         4.7%    Adjusted EBITDA                          $    233.9   $    223.5   $    10.4         4.7%    Home Health and Hospice Segment    Net operating revenues                   $    261.1   $    233.1   $    28.0        12.0%    Adjusted EBITDA                          $     49.1   $     41.6   $     7.5        18.0%      Major takeaways:     u Strong revenue growth        Inpatient rehabilitation segment         ü Discharge growth of 3.7%; same store = 2.2%         ü Net revenue per discharge increase of 1.5%        Home health and hospice segment         ü Admissions growth of 11.2%; same store = 8.3%         ü Revenue per episode decrease of 0.3%     u Consolidated Adjusted EBITDA increased 8.9% to $252.2 million.     u Adjusted EPS of $1.08 per diluted share increased 9.1% - see pages 12 and 13.     u Year-to-date adjusted free cash flow of $270.0 million - see page 14.   Encompass Health                       Reconciliations to GAAP provided on pages 39-47         4
 Q2 2019 summary (cont.)    u      Expansion activity (see page 23)        Began operating a new 40-bed inpatient rehabilitation hospital in Lubbock, Texas in May 2019, a joint         venture with University Medical Center Health System        Added 81 beds to existing hospitals        Opened new home health location in South Carolina        Acquired Alacare Home Health and Hospice on July 1, 2019         ü  23 home health locations and 23 hospice locations in Alabama         ü  $217.5 million cash purchase price funded with cash on hand and borrowings under revolving credit            facility         ü  Three new IRF overlap markets         ü  Income tax benefit with an estimated present value of ~$30 million   u      Balance sheet        Leverage ratio of 2.9x at end of second quarter         ü  Included funding for Alacare acquisition and DOJ settlement(1)        Redeemed $100 million of 5.75% Senior Notes due 2024 at 101.917% in June 2019   u      Shareholder and other distributions        Repurchased 521,262 shares of common stock for ~$31 million(2)         ü  Year-to-date repurchases of 740,970 shares of common stock for ~$44 million(2)        Paid quarterly cash dividend of $0.27 per share in April 2019        Declared a $0.27 per share quarterly cash dividend in May 2019 (paid in July 2019)        Declared a $0.28 per share quarterly cash dividend in July 2019 (to be paid in October 2019)        Received notice of exercise from holders of Home Health Holdings in July 2019 for the vested portion of         their rollover shares and SARs which will result in cash distributions of ~$218 million expected to be paid         in Q3 2019 (see page 19).   Encompass Health                            Refer to pages 48-49 for end notes.                         5
 The Company continues to improve the patient experience and outcomes through integrated care delivery.                 Inpatient rehabilitation–home health clinical collaboration (all payors)                                               overlap markets*                                                                                        34.9%                                                                 33.2%               Collaboration rate                                                              Collaboration rate     u As of June 30, 2019, Encompass Health had 83       overlap markets.*     u The clinical collaboration rate with Encompass                                    5,871                                                                 5,219       Health’s inpatient rehabilitation hospitals increased       170 basis points in Q2 2019 compared to Q2 2018.     u The clinical collaboration rate objective is 40% in       the near term.     u The objectives of clinical collaboration are to       improve the patient experience and outcomes and       to reduce the total cost of care across a post-acute       episode.                                                  10,486                 10,955         Coordination between our IRFs and home health          teams is resulting in lower discharges to skilled          nursing facilities, higher discharges to home and          improved patient satisfaction.                                                                 Q2  2018               Q2  2019                                                                              Encompass Health home                                                               Encompass     health                                                               Health IRF                                                            discharges to:   Non-Encompass Health                                                                             home health                          * Overlap markets have an Encompass Health IRF and an Encompass Health home health location within an  Encompass Health        approximate 30-mile radius, excluding markets that have home health licensure barriers. Overlap 6                          markets are open for 12 months before inclusion in the clinical collaboration rate.
 Inpatient rehabilitation segment - revenue                                                      Q2             Q2           Favorable/    ($millions)                                     2019           2018         (Unfavorable)    Net operating revenues:      Inpatient                                  $     851.8    $     809.6         5.2%      Outpatient and other                              22.1           25.0        (11.6%)      Total segment revenue                      $    873.9     $     834.6         4.7%    (Actual Amounts)    Discharges                                        46,679         45,010         3.7%                     Same-store discharge growth                                    2.2%    Net patient revenue per discharge            $    18,248    $    17,987         1.5%    Revenue reserves related to bad debt as a      percent of revenue                                 1.4%           1.2%    20 basis points      u Revenue growth was driven by volume and pricing growth.        New-store discharge growth resulted from joint ventures in Murrells Inlet, SC (September         2018), Winston-Salem, NC (October 2018), and Lubbock, TX (May 2019) and wholly owned         hospitals in Shelby County, AL (April 2018) and Bluffton, SC (June 2018).        Same-store discharge growth in Q2 2019 was negatively impacted by ~20 basis points due to         the ongoing effects of Hurricane Michael on operations in the Panama City, Florida market.        Growth in net patient revenue per discharge primarily resulted from an increase in         reimbursement rates from all payors and improvements in discharge destination partially         offset by lower prior period cost report adjustments compared to Q2 2018.     u Revenue reserves related to bad debt as a percent of revenue increased 20 basis points to       1.4% primarily due to the initiation of Targeted Probe and Educate, or TPE, reviews at certain       hospitals and a decline in collections of previously denied claims (see page 24).  Encompass Health                                                                               7
 Inpatient rehabilitation segment - Adjusted EBITDA                                                                            u Segment Adjusted EBITDA for the                                                                            quarter of $233.9 million.                                                                            • All expense ratios were                                             Q2             Q2                negatively impacted by an                                                    % of           % of    ($millions)                             2019   Revenue 2018  Revenue      increase in revenue reserves                                                                              related to bad debt (see page 7)    Net operating revenues                 $ 873.9        $ 834.6             and a decrease in prior period    Operating expenses:                                                       cost report adjustments.        Salaries and benefits               (443.6)  50.8% (416.5)  49.9%   • The increase in salaries and                                                                              benefits as a percent of revenue                          (a)                                                  was within the Company’s      Other operating expenses              (127.2)  14.6% (126.9)  15.2%     expected range.      Supplies                               (36.7)   4.2%  (34.7)   4.2%     ü Salaries and benefits in Q2      Occupancy costs                        (16.3)   1.9%  (16.0)   1.9%       2019 were impacted by:         Hospital operating expenses        (180.2)  20.6% (177.6)  21.3%       § higher salaries and wages              (b)                                                                 per full-time equivalent and    Other income                               1.9            1.2                 an increase in group medical    Equity in nonconsolidated affiliates       1.4            1.6                 expense    Noncontrolling interests                 (19.5)         (19.8)              § partially offset by a    Segment Adjusted EBITDA                $ 233.9        $ 223.5                 reduction in workers’                                                                                  compensation expense.                              Percent change   4.7%                         • Other operating expenses    In arriving at Adjusted EBITDA, the following were excluded:              decreased as a percent of                                                                              revenue in the second quarter of (a) Loss on disposal of assets            $   1.4        $   2.4             2019 due primarily to lower (b) Change in fair market value of equity securities $ (0.3) $ 0.4           provider and other taxes,                                                                              favorable trends in general and                                                                              professional liability expense,                                                                              and operating leverage resulting                                                                              from revenue growth.    Encompass Health                           Reconciliations to GAAP provided on pages 39-47              8
 Home health and hospice segment - revenue                                                Q2                 Q2             Favorable/     ($millions)                               2019              2018           (Unfavorable)     Net operating revenues:        Home health revenue              $         222.7    $         204.8              8.7 %        Hospice revenue                             38.4               28.3             35.7 %        Total segment revenue            $         261.1    $        233.1              12.0 %     Home Health Metrics (Actual Amounts)     Admissions                                    37,828            34,026             11.2 %             Same-store admissions growth                                                8.3 %     Episodes                                      66,881            61,238              9.2 %               Same-store episode growth                                                 6.2 %     Revenue per episode                 $         2,959    $         2,968             (0.3)%        u Revenue growth was driven by volume growth.          New-store admissions growth included the acquisition of Camellia Healthcare on May 1,           2018.       u Revenue per episode decreased 0.3% due primarily to the timing of completed episodes         and the resolution of a Zone Program Integrity Contractor audit that positively impacted         pricing in Q2 2018.       u Hospice revenue increased primarily due to acquisitions and same-store admissions growth         of 13.6%.   Encompass Health                                                                               9
 Home health and hospice segment -  Adjusted EBITDA                                                                                               u   Segment Adjusted EBITDA                                                                                                 for the quarter of $49.1                                                         Q2                 Q2                                                                   % of             % of         million.     ($millions)                                       2019      Revenue   2018   Revenue         Included the acquisition of     Net operating revenues                         $     261.1           $ 233.1                  Camellia Healthcare which                                                                                                   closed on May 1, 2018                                                                                                        Cost of services                                  (119.9)    45.9% (109.1)    46.8%         Cost of services as a       Support and overhead costs(a)                      (89.7)    34.4%   (80.8)   34.7%         percent of revenue                                                                                                   decreased primarily due          Operating expenses                             (209.6)    80.3% (189.9)    81.5%         to:                                                                                                   üimprovements in     Other income                                            —               0.5                      caregiver optimization     Equity in net income of nonconsolidated affiliates     0.4              0.4                      and productivity in home     Noncontrolling interests(b)                           (2.8)             (2.5)                    health and                                                                                                   ü     Segment Adjusted EBITDA                        $     49.1            $ 41.6                      increased scale and                                                                                                      efficiencies in hospice.                                    Percent change         18.0%                                  Support and overhead                                                                                                   costs as a percent of     In arriving at Adjusted EBITDA, the following were excluded:                                  revenue decreased (a)                                                                                               primarily due to favorable     Gain on disposal of assets                     $      (0.1)          $    —                   group medical expense and (b) SARs mark-to-market impact on noncontrolling                                                  operating leverage      interests (see page 19)                       $      (2.6)          $  (0.9)                 resulting from revenue                                                                                                   growth.     Encompass Health                                 Reconciliations to GAAP provided on pages 39-47                              10
 Consolidated Adjusted EBITDA                                            Consolidated Adjusted EBITDA                                                   for the quarter of                                                      $252.2 million          u  General and administrative expenses decreased as a percent of consolidated revenue             primarily due to expenses associated with the Company’s rebranding and name change in             2018 and operating leverage resulting from revenue growth.                                                                      % of Consolidated                     % of Consolidated   ($millions)                                         Q2 2019           Revenue            Q2 2018            Revenue    Inpatient rehabilitation segment Adjusted EBITDA $       233.9                         $      223.5   Home health and hospice segment Adjusted     EBITDA                                                  49.1                                 41.6   General and administrative expenses*                     (30.8)         2.7%                   (33.5)         3.1%    Consolidated Adjusted EBITDA                     $       252.2                         $      231.6                                  Percentage change            8.9%                       General and Administrative Expenses Associated with Rebranding and Name Change     ($millions)                           Q1                 Q2                 Q3                Q4            Year to Date    2019                            $           0.8   $            0.2               TBD                TBD   $            1.0    2018                                        3.6                2.8                1.9               2.6               10.9    2017                                        0.5                1.7                1.5               2.5                6.2                                     See rebranding and name change information on page 22.                     * General and administrative expenses in the above table exclude stock compensation of $45.9 million and $21.4 million for the second quarter Encompass Health    of 2019 and 2018, respectively, as well as $0.4 million in transaction costs for the second quarter of 2019. 11                     .                                 Reconciliations to GAAP provided on pages 39-47
 Earnings per share - as reported                                                                                            u  Reported earnings per diluted share for                                                                                             both periods in 2019 compared to the                                                    Q2                 6 Months              same periods of 2018 reflect an increase  (In Millions, Except Per Share Data)       2019        2018       2019      2018           in Adjusted EBITDA and a lower effective  Consolidated Adjusted EBITDA             $   252.2   $  231.6   $  495.1   $ 454.9         tax rate offset by an increase in stock-   Depreciation and amortization               (52.7)      (49.7)   (105.2)    (95.6)        based compensation.   Interest expense and amortization of                                                   u     debt discounts and fees                   (37.7)      (37.7)    (74.9)    (73.3)        Higher depreciation and amortization   Stock-based compensation expense            (45.9)      (21.4)    (65.3)    (47.5)        resulted from capital investments.                                                                                          u   Noncash loss on disposal of assets           (1.3)       (2.4)      (2.4)    (3.2)        Stock-based compensation increased in                                               114.6      120.4      247.3     235.3         2019 due to higher SARs cost resulting  Certain items non-indicative of ongoing                                                    from an increase in the applicable peer    operating performance:                                                                   multiple and Adjusted EBITDA growth in   Loss on early extinguishment of debt         (2.3)         —        (2.3)       —         the home health and hospice segment   Transaction costs                            (0.4)         —        (1.0)    (1.0)        (see page 19).   SARs mark-to-market impact on                                                          u     noncontrolling interests (see page 19)      2.6         0.9       3.4       1.9         The loss on early extinguishment of debt   Change in fair market value of equity                                                     resulted from the Company’s redemption     securities                                  0.3        (0.4)      1.2      (1.0)        of $100 million of its 5.75% Senior Notes   Payroll taxes on SARs exercise                 —           —        (0.2)       —         due 2024 in Q2 2019.(3)  Pre-tax income                               114.8      120.9      248.4     235.2      u  The lower effective tax rate in 2019     Income tax expense                        (23.5)      (29.3)    (54.3)    (59.3)        resulted primarily from the deductible  Income from continuing operations*       $    91.3   $    91.6  $  194.1   $ 175.9         portion of the settlement with the United                                                                                                                               (1)  Diluted shares (see page 35)                  99.3        99.6      99.5      99.6         States Department of Justice         and  Diluted earnings per share*              $   0.92    $   0.92   $   1.95   $  1.76         windfall tax benefits related to the                                                                                             vesting of share-based compensation.   Encompass Health              * Earnings per share are determined using income from continuing operations attributable to Encompass Health.   12                                                               Refer to pages 48-49 for end notes.
 Adjusted earnings per share(4)                                                            Q2                   6 Months                                                    2019        2018       2019        2018  Earnings per share, as reported               $       0.92 $     0.92  $     1.95 $     1.76  Adjustments, net of tax:    Mark-to-market adjustment for stock     appreciation rights (see page 19)                  0.21       0.07        0.28       0.15    Transaction costs                                     —           —        0.01       0.01    Income tax adjustments                             (0.07)      (0.01)     (0.12)      (0.01)    Loss on early extinguishment of debt(3)             0.02          —        0.02          —    Change in fair market value of equity securities      —           —       (0.01)      0.01  Adjusted earnings per share*                  $       1.08 $     0.99  $     2.12 $     1.92       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.                    * Adjusted EPS may not sum due to rounding. See complete calculations of adjusted earnings per share on pages 44-47. Encompass Health                                                                              13                                          Refer to pages 48-49 for end notes.
 2019 Adjusted free cash flow(5)                       $40.2                                                            $18.8         $8.0                                  ($76.8)       ($1.6)        $281.4                                                                         $270.0      Adjusted free cash Adjusted Working capital Cash interest Cash tax  Maintenance Adjusted free cash     flow 6 Mos. 2018 EBITDA      and other   payments      payments, capital expenditures flow 6 Mos. 2019                                                          net of refunds     u Adjusted free cash flow for year-to-date 2019 decreased as increased Adjusted EBITDA and lower cash      taxes were offset by an increase in working capital.       Increased working capital primarily resulted from higher accounts receivable related to the        initiation of TPE reviews in both segments in the first half of 2019 and the recovery of previously        denied claims in the first half of 2018 (see page 24).                                       Reconciliations to GAAP provided on pages 39-47 Encompass Health                                                                              14                                        Refer to pages 48-49 for end notes.
 Guidance - updated as of July 29, 2019      Previous 2019 Full-Year             Updated 2019 Full-Year            Guidance                            Guidance     Net operating revenues              Net operating revenues      $4,500 million to $4,600 million    $4,500 million to $4,600 million     Adjusted EBITDA(6)                  Adjusted EBITDA(6)        $925 million to $945 million        $940 million to $960 million     Adjusted earnings per share         Adjusted earnings per share    from continuing operations          from continuing operations    attributable to Encompass           attributable to Encompass    Health(4)                           Health(4)             $3.71 to $3.85                      $3.71 to $3.85        2019 guidance now includes the Company's acquisition of Alacare Home Health and Hospice which closed on July 1, 2019.  Encompass Health             Refer to pages 48-49 for end notes.   15
 2019 Guidance considerations        Inpatient rehabilitation                        Home health and hospice u  Estimated 1.2% increase in Medicare pricing u Estimated 1.5% net Medicare pricing increase before    before reserves related to bad debt for Q3;   reserves related to bad debt for second half of 2019    estimated 0% to (0.25)% reimbursement rate    (see page 26)    change for Q4 (see page 26)                u  Salary increase of approx. 3.0%; benefits increase of u                                                approx. 6.0% to 8.0% (see page 27)    Salary increase of approx. 3.0%; benefits  u    increase of approx. 6.0% to 8.0% (see page 27) Inclusive of up to $50 million of home health and                                                  hospice acquisitions in 2019 and the acquisition of u  Revenue reserve related to bad debt of 1.4%   Alacare on July 1, 2019                                               u    to 1.6% of net operating revenues             Inclusive of the reduction in noncontrolling interests                                                  related to the redemption of the rollover shares (see u  Administrative costs related to transition to page 19)                                               u    CARE Tool payment system                      Administrative costs related to the Review Choice                                                  Demonstration program and preparation for PDGM                                         Consolidated u  Increased interest expense associated with funding the Alacare acquisition, DOJ settlement(1), purchase of    the home health rollover shares, and exercise of the stock appreciation rights (see page 19) u  Increased depreciation and amortization resulting from the acquisition of Alacare u  Investments of $3 million to $5 million in strategic initiatives, including post-acute solutions u  Ongoing effects of Hurricane Michael on operations in the Panama City, Florida market u  Diluted share count of ~100 million shares u  Tax rate of ~27% u  Adoption of new lease accounting standard resulted in a gross-up of assets and corresponding liabilities of    ~$350 million and will not have a material impact on our income statement or statement of cash flows.   Encompass Health                                                                              16
 Adjusted free cash flow(5) assumptions                                6 Months    6 Months                                  u     Certain cash flow items     2018        2019        2018         2019              Increased 2019           (millions)           Actual      Actual       Actual   Assumptions           assumption for cash                                                                                        interest payments                                                                                        due to funding of                                                                                        the acquisition of  Cash interest payments (net                                                           Alacare (see  of amortization of debt        $71.3       $72.9       $143.3    $155 to $165         page 5), DOJ                                                                                                  (1)  discounts and fees)                                                                   Settlement , and                                                                                        put of home health                                                                                        rollover shares and                                                                                        SARs (see page 19);  Cash payments for income                                                              former range was                                 $51.4       $32.6       $114.8    $110 to $130  taxes, net of refunds                                                                 $145 million to $155                                                                                        million                                                                                      u  Increased 2019  Working capital and other     $(21.3)      $55.5      $(48.1)     $30 to $50          assumption for free                                                                                        cash flow due to                                                                                        increased Adjusted                                                                                        EBITDA guidance                                                                                        range partially  Maintenance CAPEX              $72.1       $64.1       $152.9    $160 to $170         offset by higher                                                                                        cash interest                                                                                        expense (see pages                                                                                        15 and 16); former                                                                                        range was $420  Adjusted free cash flow       $281.4      $270.0       $538.1    $425 to $505         million to $500                                                                                        million   Encompass Health            Reconciliations to GAAP provided on pages 39-47; Refer to pages 48-49 for end notes. 17
 Uses of free cash flow                                                        6 Months                                                         2019          2019         2018                                                        Actuals    Assumptions     Actuals                    IRF bed expansions                   $21.0      $40 to $50      $22.3                    New IRFs                      - De novos                         48.3        85 to 115       76.4                      - Acquisitions                       —       opportunistic      —                      - Replacement IRFs and other       37.0        90 to 110       24.5         Growth in            core    Home health and hospice acquisitions          business    - Alacare Home Health and Hospice    —           217.5          —                      - Camellia Healthcare                —            —           131.4                      - All other                        13.7          ~50           12.5                                                                   $482 to $543,                                                                   excluding IRF                          Quarterly cash dividend currently $120.0  acquisitions    $267.1                          set at $0.28 per common share(7)           Debt         reduction  Debt (borrowings) redemptions, net  $(243.3)      $ TBD         $63.3                    Cash dividends on common stock(7)    54.9          ~108         100.8        Shareholder Purchase of Home Health Holdings         and other  rollover shares and exercise of SARs        distributions (see page 19)                      13.4          231.6         69.4                    Common stock repurchases             43.8      opportunistic      —                                                        $(131.2)       $TBD         $233.5                         ~$206 million authorization as of                                June 30, 2019(2)   Encompass Health                  See the debt schedule on page 28. Refer to pages 48-49 for end notes. 18
 Overview of rollover shares and SARs held by members of  the home health and hospice management team                                                       Background    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  •   The Company also granted stock appreciation rights (“SARs”) based on the fair value of the      common stock of Home Health Holdings to certain members of that management team. Half of the                                                                                                          Holdings      SARs vested on Jan. 1, 2019, and the other half vest on Jan. 1, 2020. Once vested, they are      exercisable until they expire on Dec. 31, 2024 or in connection with termination of employment.                  Original   •   Home Health Holdings was capitalized with a promissory note to the parent company totaling ~                    Rollover       $385 million (equal to 5.5x the segment’s 2014 EBITDA). This was done to provide the opportunity                 Shares      for leveraged returns on the equity, thereby mimicking a private equity transaction structure.                   16.7%  •   To the extent Home Health Holdings needs cash (e.g., acquisitions, capex, etc.), such amounts are      added to the principal amount of the note(s). Cash generated from the operations of Home Health      Holdings may be used to pay interest and principal on the note(s).                         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;   Options               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                         Fair value of the Rollover Shares and SARs 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  Valuation             recent transactions, less the current balance of the intracompany note(s) to the parent.                        As of June 30, 2019, the value of the Rollover Shares was ~$326 million and the value of the SARs was ~$123 million.                        In February 2018 and July 2019, holders exercised their rights to sell their Rollover Shares to EHC. Each exercise                        represented ~5.6% of the outstanding common shares of Home Health Holdings. EHC settled the acquisition of the                        February 2018 exercise upon payment of ~$65 million and expects to settle the acquisition of the July 2019 exercise                        upon payment of ~$163 million in Q3 2019. After settling the July 2019 exercise, management’s ownership interest will  Activity              be ~5.6%.                        In the first quarter of 2019, holders exercised a portion of their vested SARs for cash proceeds of ~$13 million. In July                        2019, holders exercised the remaining portion of their vested SARs for cash proceeds of ~$55 million, which is                        expected to be paid in cash in Q3 2019.   Encompass Health                                                                                                              19
 Appendix
 Encompass Health                     a leading provider of inpatient rehabilitation                                        and home-based care                                                                                          Market overlap                                                                                    83 of EHC’s IRFs have an                                                                                   EHC home health location                                                                                    within the service area.*                                                                                 Portfolio as of June 30, 2019                                                                             Inpatient rehabilitation hospitals (“IRFs”)                                                                             Home health locations                                                                             Hospice locations                                                                             5 Future IRFs**                                                                          37 States and Puerto Rico  ~41,700 employees                                                                            The 23 home health and 23 hospice locations acquired                                                                              in the acquisition of Alacare on July 1, 2019 are                                                                                     excluded from these tables.    Inpatient rehabilitation - 06/30/19                                       Home health and hospice - 06/30/19     131  IRFs (46 are joint ventures)                                          222   Home health locations      32  States and Puerto Rico                Largest owner and                59   Hospice locations ~30,800  Employees                              operator of IRFs                31   States      22% of licensed beds†                                                  ~10,900  Employees                                             4th Largest provider of      30% of Medicare patients served†                                           Key statistics - trailing 4 quarters                                                Medicare-certified     Key statistics - trailing 4 quarters      skilled home health           145,287  Home health admissions 182,016  Inpatient discharges                       services                  8,786  Hospice admissions   ~$3.4  Billion in revenue                                                   ~$1.0  Billion in revenue                                                                                            †                  * Excluding markets that have home health licensure barriers  ** Previously announced under development   Based on 2017 data  Encompass Health  Note: One of the 131 IRFs, two of the 222 home health locations, and one of the 59 hospice locations are nonconsolidated. 21                                             These locations are accounted for using the equity method of accounting.
 Rebranding and name change  The Company’s rebranding and name change reinforce its existing strategy and  position as an integrated provider of inpatient and home-based care.  JULY 2017          APRIL 2018               OCT. 2018 Announced          Phase 1 field asset      Phase 3 field asset planned            conversions              conversions name change     JAN. 2018            JULY 2018              JAN. 2019        As of Jan. 1, 2019, all of the   Legally changed      Phase 2 field asset    Phase 4 field asset Company’s hospitals and   name and             conversions            conversions;       home health and hospice   stock ticker to                             transition complete  locations have been   Encompass Health   Corporation (EHC)                                                 transitioned to the                                                                  Encompass Health brand.                                     2017        2018         2019        Total          Operating expenses*     ~$6 million ~$11 million ~$1 million ~$18 million          Capital expenditures    ~$1 million ~$3 million  ~$3 million ~$7 million          Total rebranding investment ~$7 million ~$14 million ~$4 million ~$25 million   Encompass Health           *Included in corporate general and administrative expenses line item 22
 Expansion activity     Inpatient Rehabilitation Facilities - As of June 30, 2019  Previously announced IRF                                    # of New Beds          5   development projects                               2019     2020     2021          underway as of June 30, 2019  De novo:                                                           3  1 Murrieta, CA                50       —        —             New states  2 Katy, TX                    40  3 Sioux Falls, SD             —        40       —                                                          Q2 2019 expansion activity highlights:  4 Coralville, IA              —        40       —                                                          u  Began operating a new 40-bed inpatient  Joint ventures:                                            rehabilitation  hospital in Lubbock, Texas in May    Lubbock, TX                 40       —        —          2019, a joint venture with University Medical    Boise, ID                   40       —        —          Center Health System  5                                                       u  Bed expansions, net*         ~150     ~100     ~100        Added 81 beds to existing hospitals                               ~320     ~180     ~100            Home Health and Hospice Locations           Q2 2019 expansion activity highlights:                                      # of Locations  u  Opened one new home health location in South  Dec. 31, 2018                           278            Carolina  Acquisitions                             2          u  Acquired Alacare Home Health and Hospice on July 1,  Opening of new locations                 2             2019                                                         ü  Merging of locations                     (1)             23 home health and 23 hospice locations across  June 30, 2019                           281              Alabama (not included in location count as of                                                           June 30, 2019)   Encompass Health  * Net bed expansions in each year may change due to the timing of certain regulatory approvals and/or construction delays. 23
 Pre-payment claims denials - inpatient rehabilitation segment  Background                                                              Encompass Health reserves pre-payment claim denials as a reduction of • For several years prior to 2018, under programs designated as         net operating revenues upon notice from a MAC a claim is under review.   “widespread probes,” certain Medicare Administrative Contractors   (“MACs”) conducted pre-payment claim reviews and denied payment for   certain diagnosis codes.                                                              Impact to Income Statement • Encompass Health appeals most denials. On claims it takes to an                                                       Update of                                                                                             Collections of  Revenue    Reserve for   administrative law judge (“ALJ”), Encompass Health historically has   Period  New Denials   Previously   Reserve for    Prior   experienced an approximate 70% success rate.                                              Denied Claims New Denials    Denials   –  MACs identify medical documentation issues as a leading basis for                              (In Millions)      denials.                                                          Q2 2019     $3.5         $(1.7)        $1.1         $—   –  Encompass Health’s investment in clinical information systems and its Q1 2019  1.6         (2.5)         0.5          —      medical services department has further improved its documentation Q4 2018     4.6         (3.2)         1.4          —      and reduced technical denials.                                                                        Q3 2018      0.7         (1.3)         0.2          — • By statute, ALJ decisions are due within 90 days of a request for hearing,                                                                        Q2 2018      1.8         (2.8)         0.5          —   but appeals are taking years. HHS has implemented rule changes to   address the backlog of appeals, but their effect is uncertain.       Q1 2018      3.1         (6.8)         0.9          —                                                                        Q4 2017      0.7         (7.8)         0.2          — • In November 2018, a federal court ordered HHS to reduce the backlog in   the following increments: a 19% reduction by the end of FY 2019; a 49% Q3 2017    7.4         (6.2)         2.2          —   reduction by the end of FY 2020; a 75% reduction by the end of FY 2021; Q2 2017  16.5         (7.7)         4.9          —   and elimination of the backlog by the end of FY 2022.                Q1 2017     19.0         (5.9)         5.7          — • All Medicare providers continue to experience delays resulting in a  Q4 2016     17.8         (4.4)         5.4          0.5   growing backlog.                                                     Q3 2016     15.7         (8.5)         4.6          —   –  Currently, ALJs are hearing Encompass Health appeals from claims  Q2 2016     18.7         (4.9)         4.6          —      denied up to eight years ago.                                                                                           Impact to Balance Sheet • In late 2017, CMS implemented the Targeted Probe and Educate (“TPE”)   initiative. For more information regarding TPE, see https://                                       June 30,  Dec. 31,  Dec. 31,   www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-                                        2019       2018      2017   Programs/Medicare-FFS-Compliance-Programs/Medical-Review/Targeted-                                          (In Millions)   Probe-and-EducateTPE.html                                                                        Pre-payment claims denials   $   156.1 $    158.1 $  164.0 • Effective February 2018, Palmetto GBA assumed responsibilities for   Recorded reserves                 (46.8)    (47.4)    (49.2)   Cahaba’s MAC jurisdiction. See announcement from CMS at https://   www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-   Net accounts receivable from   Contractors/Downloads/JurisdictionJAwardFactSheet-09082017.pdf         pre-payment claims denials $   109.3 $   110.7 $   114.8   Encompass Health                                                                                                              24
 Business outlook: 2019 to 2021                 2019             2020             2021                   • Enhance clinical collaboration between the Company’s IRFs and home health locations Key              • Build stroke market share (https://ehc.news/LifeAfterStroke) operational      • Develop and implement post-acute solutions initiatives                  • Implement changes to reimbursement models in both business segments                  • Participate in alternative payment models                  • Same-store IRF growth Core             • New-store IRF growth (de novos and acquisitions) growth                  • Same-store home health and hospice growth                  • New-store home health and hospice growth (acquisitions and de novos) Expansion of service                          Consider acquisitions of other complementary businesses offerings  Strong balance sheet    • Maintain real estate ownership strategy and balance sheet flexibility  Shareholder      • Quarterly cash dividends on common stock and other        • Opportunistic common stock repurchases distributions                  • Purchases of Home Health Holdings rollover shares and exercises of SARs   Encompass Health                                                                              25
 Business outlook 2019 to 2021: revenue assumptions              Volume                          Inpatient Rehabilitation*                            Home Health*     (includes new stores)                3+% annual discharge growth                   10+% annual admission growth                                          Approx. 73% of segment revenue                 Approx. 85% of segment revenue        Medicare Pricing                                       FY 2019         FY 2020         FY 2021        CY 2019         CY 2020        CY 2021    Amounts are approximations        Q418-Q319      Q419-Q320(8)    Q420-Q321       Q119-Q419      Q120-Q420(9)    Q121-Q421                                       Final Rule   Proposed Rule     Estimate†      Final Rule    Proposed Rule     Estimate†       Market basket update              2.9%            3.0%           3.3%            3.0%           1.5%            3.2%     Healthcare reform reduction        (0.75%)           -               -               -              -               -      Legislative changes to the        rural add-on program(9)             -              -               -            (0.1%)          (0.2%)         (0.1%)          Change in outlier         fixed-dollar loss ratio            -              -               -             0.1%             -               -         Healthcare reform        productivity adjustment          (0.8%)          (0.5%)         (0.6%)          (0.8%)            -            (0.6%)     Net market basket update           1.35%            2.5%           2.7%            2.2%           1.3%            2.5%    Change in wage index and other       (0.1%)          (0.1%)            -               -              -               -          labor adjustments Change in CMG relative weights and                    (2.4%) to    average length of stay values(8)    (0.1%)         (2.65%)            -               -              -               -     Change in outlier threshold        (0.0%)          (0.0%)            -               -              -               -            Impact from         case mix re-weighting              -              -               -            (0.7%)            -               -         Estimated impact         to Encompass Health              1.2%       0% to (0.25)%                       1.5%          (2.8%)**        Medicare Advantage                     Approx. 20% of revenue                         Approx. 13% of revenue    and managed care pricing        Expected increases               2-4%           1-3%            2-4%            0-2%           0-2%            0-2%    * Outpatient and hospice, which services accounted for 5.0% of total operating revenues for full-year 2018, are not included in the pricing assumptions.           ** Estimated PDGM impact of (4.1%) plus 1.3% net market basket update; excludes assumed behavioral change reduction of 8.0%.(9)                                      † Estimates are based on current CMS and Congressional Budget Office projections  Encompass Health                  which do not include potential changes from legislation or the CMS rule-making process.     26                                                       Refer to pages 48-49 for end notes.
 Business outlook 2019 to 2021: labor and other expense assumptions             Inpatient Rehabilitation                                   Home Health and Hospice                           Salaries and Benefits      2019          2020          2021                          Salary increases         2.75-3.25%    2.75-3.25%   2.85-3.35%                          Benefit costs increases     6-8%         5-10%         5-10%                                        Segment Operating Expenses                         Salaries                                                     Salaries                        and benefits                                                and benefits                           ~70%                                                        ~85%                                               % of Salaries and Benefits                                                Salaries        ~90%                     Other                                                       Other                    expenses                    Benefits        ~10%           expenses                      ~30%                                                       ~15%                       IRF Expenses                                Home Health and Hospice Expenses          •Other operating expenses and supply                      •Other operating expenses and supply            costs tracking with inflation                            costs tracking with inflation    Encompass Health                                                                                                 27
 Debt schedule                                                                                                      Change in                                                                   June 30,       December 31,         Debt vs.   ($millions)                                                      2019              2018            YE 2018   Advances under $700 million revolving credit facility,      September 2022 - LIBOR +150bps                          $         335.0  $           30.0  $          305.0   Term loan facility, September 2022 - LIBOR +150bps                    272.8             280.1               (7.3)   Bonds Payable:     5.125% Senior Notes due 2023                                        297.0             296.6               0.4     5.75% Senior Notes due 2024(3)                                    1,095.5           1,194.7              (99.2)     5.75% Senior Notes due 2025                                         345.3             345.0               0.3   Other notes payable                                                    16.9             104.2              (87.3)   Finance lease obligations                                             395.2             263.8             131.4     Long-term debt                                            $       2,757.7  $       2,514.4   $          243.3   Debt to Adjusted EBITDA                                                2.9x              2.8x   Encompass Health               Reconciliations to GAAP provided on pages 39-47 Refer to pages 48-49 for end notes. 28
 Debt maturity profile - face value      As of June 30, 2019*                                                                                                                                          Callable beginning                                                                                                                                          September 2020     ($ in millions)                                                                  Callable beginning                                                                                      November 2017(3)                                 $326                               Available                                                                                                                          $1,100                                                                                   Callable beginning                     Senior                                                                                        March 2018                        Notes                                                      Revolver                                                            5.75%                        $335 Drawn                    capacity                            + $39                        reserved for                                                                                                                                              $350 Senior                             LC’s                                              $273              $300 Senior                                                      Revolver                                                                               Notes 5.75%                                                                           Term Loans           Notes 5.125%            2018                  2021                   2022                  2022                  2023                  2024                   2025                                        No significant debt                                    maturities prior to 2022                                    * This chart does not include ~$395 million of finance lease obligations or ~$17 million of other notes payable. Encompass Health                                    See the debt schedule on page 28; Refer to pages 48-49 for end notes.                                         29
 New-store/same-store growth                                                Inpatient Rehabilitation              25.0                                                                              Shelby County, AL (34 beds)            20.0                       Bryan, TX (49 beds)                                      Bluffton, SC (38 beds)                   Broken Arrow, OK (22 beds)                                                                     Pearland, TX            15.0                                                                                    Murrells Inlet,                                                                       (40 beds)                                                Lubbock, TX                                   Gulfport, MS (33 beds)                                            SC (29 beds)                 (40 beds)                                 Westerville, OH (60 beds)            10.0                                                          Jackson, TN                                         Winston-Salem,                             Modesto, CA                    (48 beds)                                           NC (68 beds)                               (50 beds)             5.0               0.0   Discharges      Q3Q3 20162016 Q4Q4 20162016 Q1Q1 20172017 Q2Q2 20172017 Q3Q3 20172017 Q4Q4 20172017 Q1Q1 20182018 Q2Q2 20182018 QQ33 22018018 QQ44 22018018 QQ11 22019019 QQ22 22019019   New store         10.7%      1.3%      1.2%      1.9%       2.4%      2.0%       1.9%      1.6%      1.0%       1.7%      1.3%       1.5%   Same store        1.9%       0.1%      1.6%      1.6%       1.4%      3.9%       4.8%      3.6%      2.0%       1.9%      (0.2)%     2.2%   Total by qtr.     12.6%      1.4%      2.8%      3.5%       3.8%      5.9%       6.7%      5.2%      3.0%       3.6%      1.1%       3.7%   Total by year               10.8%                                     4.0%                                      4.6%   Same-store   year*                        1.7%                                     1.8%                                      2.8%   Same-store   year UDS(10)                (0.6)%                                   (0.5)%                                     1.1%                                     * Includes consolidated inpatient rehabilitation hospitals classified as same store during each period Encompass Health                                              Refer to pages 48-49 for end notes.                                             30
 New-store/same-store growth                                                Home Health                                  Acquired CareSouth             60.0       (44 home health locations in 7 states)                                  in November 2015             50.0             40.0             30.0                                                     Acquired Camellia Healthcare                                                                  (14 home health locations in 3 states)                                                                               in May 2018            20.0             10.0              0.0  Admissions        QQ33 2 2016016 QQ44  22016016 QQ11  22017017 QQ22  22017017 QQ33  22017017 QQ44  22017017 QQ11 22018018 QQ22 22018018 QQ33 22018018 QQ44 22018018 Q1Q1 20192019 Q2Q2 20192019  New store           35.4%      8.1%      5.7%      6.4%       6.7%      3.5%       2.5%      5.3%      5.4%       5.3%      5.7%       2.9%  Same store*         15.3%     14.0%     13.9%      13.3%      8.8%      10.1%      7.4%      5.1%      3.8%       5.4%      6.4%       8.3%  Total by quarter    50.7%     22.1%     19.6%      19.7%     15.5%      13.6%      9.9%     10.4%      9.2%      10.7%      12.1%     11.2%  Total by year                 43.6%                                     17.0%                                    10.0%  Same-store year*              13.7%                                     11.4%                                     5.6%                         u   In 2016, the Company acquired or opened 10 home health locations.                         u   In 2017, the Company acquired or opened 15 home health locations.                         u   In 2018, the Company acquired or opened 23 home health locations.                         u   In 2019, the Company acquired or opened 3 home health locations.  Encompass Health                      * Includes consolidated home health agencies classified as same store during each period                31
 Payment sources (percent of revenues)                              Inpatient         Home Health                          Rehabilitation        and Hospice                        Consolidated                             Segment             Segment                                 Q2                   Q2                  Q2                6 Months       Full Year                           2019       2018      2019      2018      2019      2018      2019       2018      2018  Medicare                   72.1%     72.8%      84.7%     85.5%     74.9%     75.5%     75.4%     76.1%      75.9%  Medicare Advantage         11.1%       9.4%     10.2%      9.3%     10.9%      9.4%     10.3%       9.1%      9.2%  Managed care                9.9%     10.4%       3.1%      3.7%      8.3%      8.9%      8.3%       8.9%      8.8%  Medicaid                    3.1%       3.2%      1.8%      1.2%      2.8%      2.8%      2.8%       2.6%      2.6%  Other third-party payors    1.2%       1.5%       —%        —%       0.9%      1.2%      0.9%       1.2%      1.1%  Workers’ compensation       0.7%       0.8%      0.1%      0.1%      0.6%      0.7%      0.7%       0.7%      0.7%  Patients                    0.6%       0.5%       —%       0.1%      0.5%      0.4%      0.5%       0.4%      0.5%  Other income                1.3%       1.4%      0.1%      0.1%      1.1%      1.1%      1.1%       1.0%      1.2%    Total                   100.0%    100.0%     100.0%    100.0%    100.0%    100.0%    100.0%    100.0%     100.0%   Encompass Health                                                                                                 32
 Inpatient rehabilitation operational and labor metrics                                                              Q2         Q1           Q4          Q3           Q2          Q1         Full Year                                                           2019       2019        2018         2018         2018        2018          2018                                                                                               (In Millions)          Net patient revenue-inpatient                   $   851.8  $  847.6   $     822.8  $     798.4  $    809.6  $     817.1   $   3,247.9         Net patient revenue-outpatient and other          revenues                                            22.1      22.5          22.9         27.2        25.0         23.2          98.3         Net operating revenues                          $   873.9  $  870.1   $     845.7  $     825.6  $    834.6  $     840.3   $   3,346.2                                                                                            (Actual Amounts)          Discharges(11)                                    46,679     45,609        45,498       44,230      45,010       45,108      179,846          Net patient revenue per discharge               $ 18,248   $ 18,584   $    18,084  $    18,051  $   17,987  $    18,114   $   18,059          Outpatient visits                                104,566    102,028       111,399     119,006      131,041      127,308      488,754          Average length of stay                               12.5      12.8          12.5         12.7        12.5         12.7          12.6          Occupancy %                                          70.6%     72.3%         68.8%        68.9%       70.1%        71.9%         69.3%          # of licensed beds                                  9,062     8,941         8,966        8,888       8,848        8,831        8,966          Occupied beds                                       6,398     6,464         6,169        6,124       6,202        6,349        6,213          Full-time equivalents (FTEs)(12)                  21,570     21,345        21,199       21,119      21,010       20,978       21,076          Contract labor                                       227        246           266         237          248          285          259          Total FTE and contract labor                      21,797     21,591        21,465       21,356      21,258       21,263       21,335          EPOB(13)                                             3.41      3.34          3.48         3.49        3.43         3.35          3.43                                                                     Refer to pages 48-49 for end notes. Encompass Health                                                                                                                              33
 Home health and hospice operational metrics                                                           Q2          Q1            Q4          Q3           Q2          Q1         Full Year                                                         2019        2019          2018        2018         2018        2018         2018                                                                                            (In Millions)     Net home health revenue                          $     222.7 $     219.5  $     215.3  $     209.2 $     204.8  $     185.3  $     814.6     Net hospice revenue                                     38.4        34.4         35.0         32.8        28.3         20.4        116.5     Net operating revenues                           $     261.1 $     253.9  $     250.3  $     242.0 $     233.1  $     205.7  $     931.1     Home Health:                                                                        (Actual Amounts)     Admissions(14)                                       37,828       37,944       35,151       34,364      34,026       33,855      137,396     Recertifications                                     28,129       28,282       29,530       28,733      28,089       25,229      111,581     Episodes                                             66,881       63,626       64,037       61,765      61,238       56,658      243,698     Average revenue per episode                      $     2,959 $     3,057  $     2,972  $     2,995 $     2,968  $     2,934  $     2,968     Episodic visits per episode                             17.1        17.7         17.4         17.6        17.5         17.9         17.6     Total visits                                       1,325,362   1,308,610    1,285,150    1,259,055   1,240,490    1,174,950    4,959,645     Cost per visit                                   $        76 $        75  $        76  $        77 $        76  $        75  $        76    Hospice:     Admissions(15)                                         2,324       2,378        2,030        2,054       1,797        1,593        7,474     Patient days                                        259,501      239,022      231,515      223,834     192,404      143,231      790,984     Average daily census                                   2,852       2,656        2,516        2,433       2,114        1,591        2,167     Revenue per day                                  $      148  $       144  $       151  $       147 $       148  $       142  $       147   Encompass Health                                                  Refer to pages 48-49 for end notes.                                         34
 Share information                                                                  Weighted Average for the Period                                                     Q2                6 Months                 Full Year                                               2019      2018      2019       2018      2018      2017      2016   Basic shares outstanding(16)                 98.0      97.9      98.2      97.9      97.9      93.7      89.1     Convertible senior subordinated notes(16)   —         —         —         —         —         4.0       8.5    Restricted stock awards, dilutive stock     options, restricted stock units, and     common stock warrants                     1.3       1.7       1.3       1.7        1.9       1.6       1.9   Diluted shares outstanding                   99.3      99.6      99.5      99.6      99.8      99.3      99.5                                                                         End of Period                                                     Q2                6 Months                 Full Year   (Millions)                                  2019      2018      2019       2018      2018      2017      2016   Basic shares outstanding(16)                 97.8      98.0      97.8      98.0      97.6      97.6      88.3   Encompass Health                           Refer to pages 48-49 for end notes.                                   35
 Segment operating results                                                               Q2 2019                                                 Q2 2018                                                        Home                                                    Home                                                     Health and                                              Health and (In Millions)                              IRF        Hospice     Reclasses   Consolidated         IRF        Hospice     Reclasses   Consolidated Net operating revenues                 $     873.9  $     261.1  $         —  $     1,135.0   $      834.6  $     233.1  $         —  $     1,067.7 Operating Expenses:      Inpatient Rehabilitation:        Salaries and benefits                (443.6)           —        (179.3)       (622.9)        (416.5)           —        (161.7)       (578.2)        Other operating expenses(a)          (127.2)           —         (21.3)       (148.5)        (126.9)           —         (20.1)       (147.0)        Supplies                               (36.7)          —          (5.0)        (41.7)         (34.7)           —          (4.6)        (39.3)        Occupancy                              (16.3)          —          (4.0)        (20.3)         (16.0)           —          (3.5)        (19.5)      Home Health and Hospice:        Cost of services sold (excluding         depreciation and amortization)           —        (119.9)      119.9              —              —       (109.1)       109.1             —        Support and overhead costs                —         (89.7)        89.7             —              —        (80.8)        80.8             —                                             (623.8)       (209.6)          —         (833.4)        (594.1)      (189.9)           —         (784.0) Other income(b)                                1.9            —            —            1.9            1.2          0.5            —            1.7 Equity in net income of nonconsolidated   affiliates                                   1.4           0.4           —            1.8            1.6          0.4            —            2.0 Noncontrolling interests(c)                   (19.5)        (2.8)          —          (22.3)         (19.8)         (2.5)          —          (22.3)      Segment Adjusted EBITDA           $     233.9  $      49.1  $         —          283.0   $      223.5  $      41.6  $         —         265.1 General and administrative expenses(d)(e)                                             (30.8)                                                  (33.5)      Adjusted EBITDA                                                          $       252.2                                           $      231.6    In arriving at Adjusted EBITDA, the following were excluded: (a)  Loss (gain) on disposal of assets $       1.4  $       (0.1) $        —  $         1.3   $        2.4  $         —  $         —  $         2.4 (b)  Change in fair market value of    $       (0.3) $        —  $         —  $        (0.3)  $        0.4  $         —  $         —  $         0.4        equity securities (c)  SARs mark-to-market impact on     $         —  $       (2.6) $        —  $        (2.6)  $          —  $       (0.9) $        —  $        (0.9)        noncontrolling interests (see        page 19) (d)  Stock-based compensation          $         —  $         —  $         —  $        45.9   $          —  $         —  $         —  $        21.4 (e)  Transaction costs                 $         —  $         —  $         —  $         0.4   $          —  $         —  $         —  $          —     Encompass Health                                      Reconciliations to GAAP provided on pages 39-47                                         36
 Segment operating results                                                   Six Months Ended June 30, 2019                          Six Months Ended June 30, 2018                                                        Home                                                    Home                                                     Health and                                              Health and (In Millions)                              IRF        Hospice     Reclasses   Consolidated         IRF        Hospice     Reclasses   Consolidated Net operating revenues                 $   1,744.0  $     515.0  $         —  $     2,259.0   $    1,674.9  $     438.8  $         —  $     2,113.7 Operating Expenses:      Inpatient Rehabilitation:        Salaries and benefits                (888.6)           —        (354.9)     (1,243.5)        (840.7)           —        (307.7)     (1,148.4)        Other operating expenses(a)          (254.8)           —         (42.7)       (297.5)        (249.8)           —         (37.6)       (287.4)        Supplies                               (72.3)          —          (9.5)        (81.8)         (70.6)           —          (8.6)        (79.2)        Occupancy                              (32.1)          —          (7.8)        (39.9)         (31.5)           —          (6.6)        (38.1)      Home Health and Hospice:        Cost of services sold (excluding         depreciation and amortization)           —        (236.4)      236.4              —              —       (207.7)       207.7             —        Support and overhead costs(b)             —        (178.5)      178.5              —              —       (152.8)       152.8             —                                            (1,247.8)      (414.9)          —       (1,662.7)      (1,192.6)      (360.5)           —       (1,553.1) Other income(c)                                4.7            —            —            4.7            1.7          0.5            —            2.2 Equity in net income of nonconsolidated   affiliates                                   3.5           0.8           —            4.3            3.6          0.7            —            4.3 Noncontrolling interests(d)                   (40.5)        (5.5)          —          (46.0)         (40.3)         (4.4)          —          (44.7)      Segment Adjusted EBITDA           $     463.9  $      95.4  $         —          559.3   $      447.3  $      75.1  $         —         522.4 General and administrative expenses(e)(f)                                             (64.2)                                                  (67.5)      Adjusted EBITDA                                                          $       495.1                                           $      454.9    In arriving at Adjusted EBITDA, the following were excluded: (a)  Loss (gain) on disposal of assets $       2.5  $       (0.1) $        —  $         2.4   $        3.2  $         —  $         —  $         3.2 (b)  Payroll taxes on SARs exercise    $         —  $        0.2 $         —  $         0.2   $          —  $         —  $         —  $          — (c)  Change in fair market value of    $       (1.2) $        —  $         —  $        (1.2)  $        1.0  $         —  $         —  $         1.0        equity securities (d)  SARs mark-to-market impact on     $         —  $       (3.4) $        —  $        (3.4)  $          —  $       (1.9) $        —  $        (1.9)        noncontrolling interests (see        page 19) (e)  Stock-based compensation          $         —  $         —  $         —  $        65.3   $          —  $         —  $         —  $        47.5 (f)  Transaction costs                 $         —  $         —  $         —  $         1.0   $          —  $         —  $         —  $         1.0    Encompass Health                                      Reconciliations to GAAP provided on pages 39-47                                         37
 Segment operating results                                                                                               Year Ended December 31, 2018                                                                                                    Home                                                                                                  Health and        (In Millions)                                                                    IRF       Hospice     Reclasses    Consolidated        Net operating revenues                                                      $    3,346.2 $      931.1 $         —  $     4,277.3        Operating Expenses:             Inpatient Rehabilitation:               Salaries and benefits                                                    (1,701.5)          —        (652.5)      (2,354.0)               Other operating expenses(a)                                                (502.3)          —         (77.1)        (579.4)               Supplies                                                                   (140.6)          —         (18.1)        (158.7)               Occupancy                                                                   (63.8)          —         (14.2)         (78.0)             Home Health and Hospice:               Cost of services sold (excluding depreciation and amortization)                —        (438.4)       438.4             —               Support and overhead costs                                                     —        (323.5)       323.5             —                                                                                        (2,408.2)      (761.9)          —        (3,170.1)        Other income(b)                                                                      3.6          0.5           —            4.1        Equity in net income of nonconsolidated affiliates                                   7.5          1.2           —            8.7        Noncontrolling interests(c)                                                        (77.2)        (8.5)          —           (85.7)             Segment Adjusted EBITDA                                                $     871.9  $     162.4  $         —        1,034.3        General and administrative expenses(d)(e)                                                                                  (133.3)             Adjusted EBITDA                                                                                               $       901.0           In arriving at Adjusted EBITDA, the following were excluded:        (a)  Loss on disposal of assets                                             $        5.7 $         —  $         —  $         5.7        (b)  Change in fair market value of equity securities                       $        1.9 $         —  $         —  $         1.9        (c)  SARs mark-to-market impact on noncontrolling interests (see page 19)   $         —  $       (2.6) $        —  $         (2.6)        (d)  Stock-based compensation                                               $         —  $         —  $         —  $        85.9        (e)  Transaction costs                                                      $         —  $         —  $         —  $         1.0   Encompass Health                                       Reconciliations to GAAP provided on pages 39-47                                        38                                                        .
 Reconciliation of net income to Adjusted EBITDA(6)                                                                                                                   2019                                                                                             Q1                    Q2                6 Months                                                                                                  Per                   Per                  Per (in millions, except per share data)                                                  Total     Share       Total    Share       Total     Share Net Income                                                                          $   125.2            $   110.9             $   236.1 Loss from disc ops, net of tax, attributable to Encompass Health                          0.5                  0.1                   0.6 Net income attributable to noncontrolling interests                                     (22.9)                (19.7)               (42.6) Income from continuing operations attributable to Encompass Health*                     102.8 $    1.04       91.3  $    0.92      194.1 $    1.95 Provision for income tax expense                                                         30.8                 23.5                  54.3 Interest expense and amortization of debt discounts and fees                             37.2                 37.7                  74.9 Depreciation and amortization                                                            52.5                 52.7                 105.2 Loss on early extinguishment of debt                                                       —                   2.3                   2.3 Net noncash loss on disposal of assets                                                    1.1                  1.3                   2.4 Stock-based compensation expense                                                         19.4                 45.9                  65.3 Transaction costs                                                                         0.6                  0.4                   1.0 SARs mark-to-market impact on noncontrolling interests (see page 19)                     (0.8)                 (2.6)                (3.4) Change in fair market value of equity securities                                         (0.9)                 (0.3)                (1.2) Payroll taxes on SARs exercise                                                            0.2                    —                   0.2 Adjusted EBITDA                                                                     $   242.9            $   252.2             $   495.1  Weighted average common shares outstanding: Basic                                                                                              98.4                  98.0                 98.2 Diluted                                                                                            99.7                  99.3                 99.5                                      * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.   Encompass Health                                               Refer to pages 48-49 for end notes.                                            39
 Reconciliation of net income to Adjusted EBITDA(6)                                                                                             2018                                                Q1                    Q2                    Q3                   Q4                 Full Year                                                     Per                   Per                   Per                  Per                   Per (in millions, except per share data)     Total     Share       Total     Share       Total    Share       Total     Share       Total     Share Net Income                             $   105.2             $   113.2            $   109.3             $    47.7             $  375.4 Loss (income) from disc ops, net of tax,   attributable to Encompass Health           0.5                  (0.2)                  0.1                 (1.5)                 (1.1) Net income attributable to   noncontrolling interests                 (21.4)                (21.4)                (20.7)               (19.6)                (83.1) Income from continuing operations   attributable to Encompass Health*         84.3  $    0.85       91.6 $    0.92       88.7  $    0.89       26.6  $    0.26     291.2  $    2.92 Gov’t, class action, and related   settlements                                  —                    —                     —                  52.0                  52.0 Provision for income tax expense            30.0                  29.3                 30.2                  29.4                118.9 Interest expense and amortization of   debt discounts and fees                   35.6                  37.7                 37.3                  36.7                147.3 Depreciation and amortization               45.9                  49.7                 51.2                  52.9                199.7 Net noncash loss (gain) on disposal of   assets                                     0.8                   2.4                  (1.0)                 3.5                   5.7 Stock-based compensation expense            26.1                  21.4                 18.1                  20.3                  85.9 Transaction costs                            1.0                    —                     —                     —                   1.0 SARs mark-to-market impact on   noncontrolling interests (see page 19)    (1.0)                 (0.9)                 (0.3)                (0.4)                 (2.6) Change in fair market value of equity   securities                                 0.6                   0.4                   0.1                  0.8                   1.9 Adjusted EBITDA                        $   223.3             $   231.6            $   224.3             $   221.8             $  901.0  Weighted average common shares   outstanding: Basic                                                  97.8                 97.9                  98.0                  98.0                 97.9 Diluted                                                99.4                 99.6                 100.0                100.0                  99.8    Encompass Health                  * Per share amounts for each period presented are based on diluted weighted-average shares outstanding.     40                                                                 Refer to pages 48-49 for end notes.
 Net cash provided by operating activities reconciled to Adjusted EBITDA(6)                                                                        Q2                    6 Months             Full Year   (In Millions)                                               2019         2018         2019         2018          2018   Net cash provided by operating activities                $     145.4  $     169.2  $    305.3  $     385.5  $         762.4   Interest expense and amortization of debt discounts and fees    37.7         37.7        74.9         73.3            147.3   Equity in net income of nonconsolidated affiliates               1.8          2.0          4.3         4.3              8.7   Net income attributable to noncontrolling interests in    continuing operations                                         (19.7)       (21.4)       (42.6)      (42.8)           (83.1)   Amortization of debt-related items                              (1.0)        (1.0)        (2.0)        (2.0)           (4.0)   Distributions from nonconsolidated affiliates                   (2.5)        (2.3)        (4.6)        (3.5)           (8.3)   Current portion of income tax expense                           25.5         29.9        53.7         62.9            128.0   Change in assets and liabilities                                65.2         18.4       101.7        (22.3)           (46.0)   Cash used in (provided by) operating activities of    discontinued operations                                         1.5         (0.1)         4.5         0.6             (0.8)   Transaction costs                                                0.4           —           1.0         1.0              1.0   SARs mark-to-market impact on noncontrolling interests (see    page 19)                                                       (2.6)        (0.9)        (3.4)        (1.9)           (2.6)   Payroll taxes on SARs exercise                                    —            —           0.2           —               —   Change in fair market value of equity securities                (0.3)         0.4         (1.2)        1.0              1.9   Other                                                            0.8         (0.3)         3.3         (1.2)           (3.5)   Adjusted EBITDA                                          $     252.2  $     231.6  $    495.1  $     454.9  $         901.0   Encompass Health                                 Refer to pages 48-49 for end notes.                                          41
 Reconciliation of segment Adjusted EBITDA to income  from continuing operations before income tax expense                                                                    Three Months Ended      Six Months Ended      Year Ended                                                                          June 30,              June 30,         December 31,                                                                       2019       2018       2019       2018          2018                                                                                             (In Millions)   Total segment Adjusted EBITDA                                     $  283.0   $   265.1  $   559.3  $   522.4  $      1,034.3   General and administrative expenses                                   (77.1)     (54.9)    (130.5)     (116.0)        (220.2)   Depreciation and amortization                                         (52.7)     (49.7)    (105.2)      (95.6)        (199.7)   Loss on disposal of assets                                             (1.3)      (2.4)       (2.4)      (3.2)          (5.7)   Government, class action, and related settlements                        —           —          —          —           (52.0)   Loss on early extinguishment of debt                                   (2.3)         —        (2.3)        —              —   Interest expense and amortization of debt discounts and fees          (37.7)     (37.7)      (74.9)     (73.3)        (147.3)   Net income attributable to noncontrolling interests                    19.7       21.4       42.6       42.8            83.1   SARs mark-to-market impact on noncontrolling interests (see page 19)    2.6        0.9        3.4        1.9             2.6   Change in fair market value of equity securities                        0.3       (0.4)       1.2        (1.0)          (1.9)   Payroll taxes on SARs exercise                                           —           —        (0.2)        —              —      Income from continuing operations before income tax expense    $  134.5   $   142.3  $   291.0  $   278.0  $       493.2   Encompass Health                                                                                                              42
 Reconciliation of net cash provided by operating  activities to adjusted free cash flow(5)                                                                         Q2               6 Months         Full Year  (In Millions)                                                   2019      2018      2019      2018        2018  Net cash provided by operating activities                     $  145.4  $  169.2  $  305.3  $   385.5  $     762.4  Impact of discontinued operations                                  1.5      (0.1)      4.5        0.6         (0.8) Net cash provided by operating activities of continuing  operations                                                      146.9     169.1     309.8      386.1        761.6  Capital expenditures for maintenance                             (34.5)    (36.0)     (64.1)    (72.1)      (152.9) Distributions paid to noncontrolling interests of consolidated  affiliates                                                      (17.0)    (19.8)     (36.5)    (35.2)       (75.4)  Items non-indicative of ongoing operating performance:  Cash paid for government, class action, and related settlements  46.4        —       46.4         —            —  Transaction costs and related assumed liabilities                 0.4      (2.1)      1.0       (1.7)         0.5  Cash paid for SARs exercise                                        —         —       13.4        4.3          4.3  Adjusted free cash flow                                       $ 142.2   $ 111.2   $  270.0  $  281.4   $    538.1  Cash dividends on common stock                                $   26.6  $   24.5  $   54.9  $   49.9   $    100.8   Encompass Health                            Refer to pages 48-49 for end notes.                                  43
 Adjusted EPS(4) - Q2 2019                                                                    For the Three Months Ended June 30, 2019                                                                                    Adjustments                                                            Mark-to-                                                             Market                                           Change in                                                           Adjustment    Loss on                             Fair Market                                                            for Stock     Early                                Value of                                                   As        Comp.       Exting.  Income Tax    Transaction    Equity        As                                                Reported    Expense      of Debt  Adjustments      Costs      Securities  Adjusted                                                                       (In Millions, Except Per Share Amounts) Adjusted EBITDA                               $   252.2  $          —  $     —   $         —   $        —   $         —  $  252.2 Depreciation and amortization                      (52.7)           —        —             —            —             —      (52.7) Loss on early extinguishment of debt(3)             (2.3)           —       2.3            —            —             —         — Interest expense and amortization of debt   discounts and fees                               (37.7)           —        —             —            —             —      (37.7) Stock-based compensation                           (45.9)        31.4        —             —            —             —      (14.5) Loss on disposal of assets                          (1.3)           —        —             —            —             —       (1.3) Transaction costs                                   (0.4)           —        —             —           0.4            —         — SARs mark-to-market impact on noncontrolling   interests (see page 19)                           2.6           (2.6)      —             —            —             —         — Change in fair market value of equity securities    0.3             —        —             —            —          (0.3)        —     Income from continuing operations before      income tax expense                           114.8          28.8       2.3            —           0.4         (0.3)     146.0 Provision for income tax expense                   (23.5)         (7.8)    (0.6)         (7.2)        (0.1)         0.1      (39.1)     Income from continuing operations      attributable to Encompass Health         $    91.3  $       21.0  $   1.7   $       (7.2) $       0.3  $      (0.2) $  106.9     Add: Interest, amortization, and loss on      extinguishment of convertible debt, net of      tax                                              —                                                                         —     Numerator for diluted earnings per share  $    91.3                                                                  $   106.9 Diluted earnings per share from continuing   operations*                                 $    0.92  $       0.21  $  0.02   $      (0.07) $        —   $         —  $   1.08 Diluted shares used in calculation                 99.3    Encompass Health                            *  Adjusted EPS may not sum across due to rounding.                               44                                                        Refer to pages 48-49 for end notes.
 Adjusted EPS(4) - Q2 2018                                                                            For the Three Months Ended June 30, 2018                                                                                          Adjustments                                                                             Mark-to-                                                                              Market                       Change in                                                                            Adjustment                    Fair Market                                                                             on Stock                       Value of                                                                  As      Compensation     Income Tax       Equity         As                                                               Reported      Expense       Adjustments     Securities   Adjusted                                                                             (In Millions, Except Per Share Amounts) Adjusted EBITDA                                             $     231.6  $           —   $           —  $          —  $    231.6 Depreciation and amortization                                      (49.7)            —               —             —        (49.7) Interest expense and amortization of debt discounts and fees       (37.7)            —               —             —        (37.7) Stock-based compensation                                           (21.4)          10.8              —             —        (10.6) Loss on disposal of assets                                          (2.4)            —               —             —         (2.4) SARs mark-to-market impact on noncontrolling interests (see  page 19)                                                            0.9           (0.9)             —             —           — Change in fair market value of equity securities                    (0.4)            —               —           0.4           —    Income from continuing operations before income tax      expense                                                      120.9             9.9              —           0.4       131.2 Provision for income tax expense                                   (29.3)          (2.8)           (0.6)         (0.1)      (32.8)    Income from continuing operations attributable to      Encompass Health                                       $      91.6  $          7.1  $        (0.6) $        0.3  $     98.4    Add: Interest, amortization, and loss on extinguishment of      convertible debt, net of tax                                     —                                                        —    Numerator for diluted earnings per share                 $      91.6                                               $     98.4 Diluted earnings per share from continuing operations*      $      0.92  $        0.07   $       (0.01) $          —  $     0.99 Diluted shares used in calculation                                 99.6    Encompass Health                            *  Adjusted EPS may not sum across due to rounding.                               45                                                       Refer to pages 48-49 for end notes.
 Adjusted EPS(4) - YTD 2019                                                                            For the Six Months Ended June 30, 2019                                                                                     Adjustments                                                          Mark-to-                                                           Market                                                  Change in                                                         Adjustment      Loss on                                  Fair Market     Payroll                                                          for Stock       Early                                     Value of     Taxes on                                               As          Comp.         Exting.    Income Tax     Transaction       Equity        SARs         As                                            Reported       Expense       of Debt    Adjustments       Costs        Securities    exercise   Adjusted                                                                             (In Millions, Except Per Share Amounts) Adjusted EBITDA                           $    495.1   $           —   $      —   $           —   $         —   $           —   $      —   $   495.1 Depreciation and amortization                  (105.2)             —          —               —             —               —          —      (105.2) Loss on early extinguishment of debt(3)          (2.3)             —         2.3              —             —               —          —           — Interest expense and amortization of debt   discounts and fees                            (74.9)             —          —               —             —               —          —        (74.9) Stock-based compensation                        (65.3)          41.0          —               —             —               —          —        (24.3) Loss on disposal of assets                       (2.4)             —          —               —             —               —          —         (2.4) Transaction costs                                (1.0)             —          —               —            1.0              —          —           — SARs mark-to-market impact on   noncontrolling interests (see page 19)          3.4            (3.4)        —               —             —               —          —           — Change in fair market value of equity   securities                                      1.2              —          —               —             —             (1.2)        —           — Payroll taxes on SARs exercise                   (0.2)             —          —               —             —               —         0.2          —     Income from continuing operations       before income tax expense                248.4            37.6         2.3              —            1.0            (1.2)       0.2      288.3 Provision for income tax expense                (54.3)          (10.2)      (0.6)          (12.4)         (0.3)           0.3          —        (77.5)     Income from continuing operations       attributable to Encompass Health    $    194.1   $        27.4   $     1.7  $       (12.4)  $        0.7  $        (0.9)  $    0.2   $   210.8     Add: Interest, amortization, and loss       on extinguishment of convertible       debt, net of tax                             —                                                                                               —     Numerator for diluted earnings per       share                               $    194.1                                                                                       $   210.8 Diluted earnings per share from   continuing operations*                  $     1.95   $        0.28   $   0.02   $       (0.12)  $      0.01   $       (0.01)  $      —   $    2.12 Diluted shares used in calculation              99.5     Encompass Health                                  *  Adjusted EPS may not sum across due to rounding.                                         46                                                               Refer to pages 48-49 for end notes.
 Adjusted EPS(4) - YTD 2018                                                                        For the Six Months Ended June 30, 2018                                                                                     Adjustments                                                                 Mark-to-                                                                 Market                                      Change in                                                               Adjustment                                   Fair Market                                                                 on Stock                                    Value of                                                     As       Compensation     Income Tax     Transaction     Equity         As                                                  Reported       Expense      Adjustments        costs       Securities   Adjusted                                                                       (In Millions, Except Per Share Amounts) Adjusted EBITDA                                 $    454.9   $           —  $           —   $          —  $          —  $    454.9 Depreciation and amortization                         (95.6)             —              —              —             —        (95.6) Interest expense and amortization of debt   discounts and fees                                  (73.3)             —              —              —             —        (73.3) Stock-based compensation                              (47.5)          22.4              —              —             —        (25.1) Loss on disposal of assets                             (3.2)             —              —              —             —         (3.2) Transaction costs                                      (1.0)             —              —            1.0             —           — SARs mark-to-market impact on noncontrolling   interests (see page 19)                               1.9            (1.9)            —              —             —           — Change in fair market value of equity securities       (1.0)             —              —              —           1.0           —    Income from continuing operations before      income tax expense                               235.2           20.5              —            1.0           1.0       257.7 Provision for income tax expense                      (59.3)           (5.7)          (0.7)          (0.3)        (0.3)       (66.3)    Income from continuing operations      attributable to Encompass Health           $    175.9   $        14.8  $         (0.7) $        0.7  $        0.7  $    191.4    Add: Interest, amortization, and loss on      extinguishment of convertible debt, net of      tax                                                 —                                                                       —    Numerator for diluted earnings per share     $    175.9                                                              $    191.4 Diluted earnings per share from continuing   operations*                                   $     1.76   $        0.15  $        (0.01) $       0.01  $       0.01  $     1.92 Diluted shares used in calculation                    99.6     Encompass Health                            *  Adjusted EPS may not sum across due to rounding.                               47                                                        Refer to pages 48-49 for end notes.
 End notes  (1)  As previously disclosed, since 2013, the Company had been cooperating with an investigation of alleged improper or fraudulent Medicare and Medicaid claims.      The investigation, under the direction of DOJ, had been pending seven years. The Company is aware of no evidence of fraud, falsity or wrongdoing. However,      based on discussions with DOJ and having considered the burdens and distractions associated with continuing the investigation and the likely costs of future      litigation, the Company estimated a settlement value of $48 million and accrued a loss contingency in that amount in the fourth quarter of 2018. Following      further discussions, the Company entered into an agreement effective as of June 21, 2019 to settle the DOJ investigation, together with related qui tam or      “whistleblower” lawsuits, for a cash payment of $48 million. (2)  On Oct. 28, 2013, the Company announced its board of directors authorized the repurchase of up to $200 million of its common stock. On Feb. 14, 2014, the      Company's board approved an increase in this common stock repurchase authorization from $200 million to $250 million. As of June 30, 2018, the remaining      repurchase authorization was approximately $58 million. On July 24, 2018, the Company's board approved resetting the aggregate common stock repurchase      authorization to $250 million. As of June 30, 2019, the remaining repurchase authorization was ~$206 million. (3)  In June 2019, the Company redeemed $100 million of its 5.75% Senior Notes due 2024 at a price of 101.917%, which resulted in a total cash outlay of ~$102      million. The redemption was funded using cash on hand and funding under the Company’s revolving credit facility. As a result of the redemption, the Company      recorded a $2.3 million loss on early extinguishment of debt in the second quarter of 2019. (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 and      equity instruments, loss on early extinguishment of debt, adjustments to its income tax provision (such as valuation allowance adjustments, settlements of      income tax claims and windfall tax benefits), 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)  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. (6)  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. (7)  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. On July 24, 2018, the board of directors approved a $0.02 per share, or 8.0%, increase to the      quarterly cash dividend on the Company’s common stock, bringing the quarterly cash dividend to $0.27 per common share. On July 23, 2019, the board of      directors approved a $0.01 per share, or 3.7%, increase to the quarterly cash dividend on the Company’s common stock, bringing the quarterly cash dividend      to $0.28 per common share.     Encompass Health                                 * Reconciliations to GAAP provided on pages 39-47.                                           48
 End notes, con’t.  (8) On April 17, 2019, the Centers for Medicare and Medicaid Services (“CMS”) released its notice of proposed rule making for fiscal year 2020 under the inpatient     rehabilitation facility prospective payment system (the “2020 Proposed IRF Rule”). Based on its analysis of the adjustments included in the proposed rule and     other factors, including the acuity of the Company’s patients over the six-month period ended June 30, 2019, the Company currently estimates its Medicare     payment rates for its inpatient rehabilitation segment will be flat to down 25 basis points in fiscal year 2020 (effective October 1, 2019). Beginning in FY 2020     (October 1, 2019), CMS proposes new case mix groupings, relative weights and length of stay values to reflect incorporation of CARE Tool assessment data.     These changes will impact payment under the IRF-PPS. (9) On July 11, 2019, CMS released its notice of proposed rulemaking for calendar year 2020 (the “2020 Proposed HH Rule”) for home health agencies under the     home health prospective payment system (the “HH-PPS”). The 2020 Proposed HH Rule would implement a net 1.3% market basket increase (market basket     update of 1.5% reduced by 0.2% for an extension of the rural payment add-on factor) in 2020. Additionally, pursuant to the requirements of The Bipartisan     Budget Act (“BBA”) of 2018, the 2020 Proposed HH Rule sets out significant changes to the HH-PPS, including a new payment system, referred to as the Patient-     Driven Groupings Model (“PDGM”), that uses 30-day payment periods and relies more heavily on clinical characteristics and other patient information (such as     principal diagnosis, functional level, referral source, and timing), rather than the current therapy service-use thresholds, to set payments. CMS also proposed     an 8.0% reduction in the base payment rate for 2020 intended to offset the provider behavioral changes that CMS assumes PDGM will drive. The 2020 Proposed     HH Rule would also eliminate by 2021 the process known as Request for Anticipated Payments (“RAPs”) which allows providers to seek reimbursement of either     50% or 60% of the estimated base payment for the full care episode at the beginning of that episode. As part of eliminating RAPs, CMS proposes that home     health agencies would be required to submit certain documentation and information, through a notice of admission (“NOA”) within five days of initiating a care     episode, with a payment penalty for failing to timely submit the NOA. CMS also proposed to adopt additional quality reporting measures and significantly     increase the standardized patient assessment data elements collected by providers. Based on 2018 data and assuming no change in the foregoing and other     factors, which are subject to potentially significant change, we estimate an approximate 2.8% incremental reduction (after the 1.3% net market basket update)     in Medicare payments for 2020 assuming the PDGM is implemented on a budget neutral basis. (10) 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 ~80% of industry, including Encompass Health inpatient rehabilitation sites (11) Represents discharges from 130 consolidated hospitals in Q2 2019; 129 consolidated hospitals in Q1 2019 and Q4 2018; 128 consolidated hospitals in Q3 2018;     127 consolidated hospitals in Q2 2018; and 126 consolidated hospitals in Q1 2018 (12) 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. (13) 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. (14) Represents home health admissions from 220 consolidated locations in Q2 2019; 219 consolidated locations in Q1 2019; 218 consolidated locations in Q4 2018;     214 consolidated locations in Q3 2018; 213 consolidated locations in Q2 2018; and 196 consolidated locations in Q1 2018 (15) Represents hospice admissions from 59 locations in Q2 and Q1 2019; 58 locations in Q4 2018; 57 locations in Q3 2018 and Q2 2018; and 38 locations in Q1 2018 (16) 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.     Encompass Health                                                                                                                              49