BIRMINGHAM, Ala., Oct. 29, 2018 /PRNewswire/ — Encompass Health Corp. (NYSE: EHC), a national leader in post-acute care, offering facility-based and home-based patient care through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies, today reported its results of operations for the third quarter ended September 30, 2018.
“The third quarter was another strong quarter for Encompass Health,” said President and Chief Executive Officer of Encompass Health Mark Tarr. “In addition to solid operating results, we continued to provide enhanced, coordinated post-acute care to patients, with our clinical collaboration rate increasing to 34.3%. We also continued to invest in growth opportunities in both business segments. Thus far in 2018, we’ve opened four new inpatient rehabilitation hospitals and added 16 net home health locations and 20 new hospice locations to our portfolio.”
Consolidated results
Growth |
||||||||||||||
Q3 2018 |
Q3 2017 |
Dollars |
Percent |
|||||||||||
(In Millions, Except per Share Data) |
||||||||||||||
Net operating revenues |
$ |
1,067.6 |
$ |
981.6 |
$ |
86.0 |
8.8 |
% |
||||||
Income from continuing operations |
0.89 |
0.67 |
0.22 |
32.8 |
% |
|||||||||
Adjusted earnings per share |
0.91 |
0.66 |
0.25 |
37.9 |
% |
|||||||||
Cash flows provided by operating activities |
198.5 |
174.9 |
23.6 |
13.5 |
% |
|||||||||
Adjusted EBITDA |
224.3 |
204.6 |
19.7 |
9.6 |
% |
|||||||||
Adjusted free cash flow |
143.4 |
123.2 |
20.2 |
16.4 |
% |
|||||||||
Nine Months Ended |
||||||||||||||
2018 |
2017 |
|||||||||||||
Cash flows provided by operating activities |
$ |
584.0 |
$ |
506.9 |
$ |
77.1 |
15.2 |
% |
||||||
Adjusted free cash flow |
424.8 |
377.2 |
47.6 |
12.6 |
% |
Revenue growth was driven by volume and pricing growth in the inpatient rehabilitation segment and volume growth in the home health and hospice segment. See the “Other Information” section of this release for discussion of the Company’s adoption of a new accounting standard for revenue recognition.
The increase in income from continuing operations attributable to Encompass Health per diluted share and adjusted earnings per share resulted primarily from increased revenue, a lower effective tax rate resulting from income tax reform, and property insurance recoveries related to the 2017 hurricanes.
Growth in cash flows provided by operating activities and adjusted free cash flow resulted primarily from revenue growth and favorable working capital changes.
See attached supplemental information for calculations of non-GAAP measures and reconciliations to their most comparable GAAP measure.
Inpatient rehabilitation segment results
Growth |
||||||||||||||
Q3 2018 |
Q3 2017 |
Dollars |
Percent |
|||||||||||
Net operating revenues: |
(In Millions) |
|||||||||||||
Inpatient |
$ |
798.4 |
$ |
758.2 |
$ |
40.2 |
5.3 |
% |
||||||
Outpatient and other |
27.2 |
25.3 |
1.9 |
7.5 |
% |
|||||||||
Total segment revenue |
$ |
825.6 |
$ |
783.5 |
$ |
42.1 |
5.4 |
% |
||||||
(Actual Amounts) |
||||||||||||||
Discharges |
44,230 |
42,948 |
1,282 |
3.0 |
% |
|||||||||
Same-store discharge growth |
2.0 |
% |
||||||||||||
Net patient revenue per discharge |
$ |
18,051 |
$ |
17,654 |
$ |
397 |
2.2 |
% |
||||||
(In Millions) |
||||||||||||||
Adjusted EBITDA |
$ |
212.9 |
$ |
200.3 |
$ |
12.6 |
6.3 |
% |
- Revenue – Revenue growth resulted from volume growth and an increase in net patient revenue per discharge. Discharge growth from new stores resulted from the Company’s joint venture in Murrells Inlet, South Carolina (September 2018), as well as wholly owned hospitals in Pearland, Texas (October 2017), Shelby County, Alabama (April 2018), and Bluffton, South Carolina (June 2018 – formerly referred to as Hilton Head, South Carolina). Growth in net patient revenue per discharge primarily resulted from an increase in reimbursement rates from all payors and patient mix within non-Medicare payors.
Other revenue in the third quarter of 2018 included $4.5 million of business interruption insurance recoveries related to the 2017 hurricanes.
- Adjusted EBITDA – The increase in Adjusted EBITDA primarily resulted from revenue growth. Expense ratios in the third quarter of 2018 were impacted by the inclusion of $4.5 million of business interruption insurance recoveries related to the 2017 hurricanes. Expense ratios in the third quarter of 2017 were impacted by the inclusion of $2.5 million of hurricane-related expenses. After removing the impact of the hurricane-related items in both years, salaries and benefits as a percent of revenue were essentially flat as labor management and productivity gains were offset by group medical cost increases and the ramping up of new stores. Other operating expenses as a percent of net operating revenues increased primarily due to increases in contract services.
Home health and hospice segment results
Growth |
||||||||||||||
Q3 2018 |
Q3 2017 |
Dollars |
Percent |
|||||||||||
Net operating revenues: |
(In Millions) |
|||||||||||||
Home health |
$ |
209.2 |
$ |
180.3 |
$ |
28.9 |
16.0 |
% |
||||||
Hospice |
32.8 |
17.8 |
15.0 |
84.3 |
% |
|||||||||
Total segment revenue |
$ |
242.0 |
$ |
198.1 |
$ |
43.9 |
22.2 |
% |
||||||
Home Health Metrics |
||||||||||||||
(Actual Amounts) |
||||||||||||||
Admissions |
34,364 |
31,471 |
2,893 |
9.2 |
% |
|||||||||
Same-store admissions growth |
3.8 |
% |
||||||||||||
Episodes |
61,765 |
53,757 |
8,008 |
14.9 |
% |
|||||||||
Same-store episode growth |
6.9 |
% |
||||||||||||
Revenue per episode |
$ |
2,995 |
$ |
3,008 |
$ |
(13) |
(0.4) |
% |
||||||
(In Millions) |
||||||||||||||
Adjusted EBITDA |
$ |
43.2 |
$ |
34.8 |
$ |
8.4 |
24.1 |
% |
- Revenue – Revenue growth was driven by volume growth, including the impact of the Camellia Healthcare acquisition which closed on May 1, 2018. Revenue per episode decreased 0.4% as the impact of Medicare reimbursement rate cuts was partially offset by changes in patient mix.
Hospice revenue increased primarily due to acquisitions and same-store admissions growth of 21.1%.
- Adjusted EBITDA – Growth in Adjusted EBITDA primarily resulted from revenue growth and operating leverage of support and overhead costs.
Corporate general and administrative expenses
Q3 2018 |
% of |
Q3 2017 |
% of |
||||||||
(In Millions) |
|||||||||||
General and administrative expenses, |
$ |
31.8 |
3.0% |
$ |
30.5 |
3.1% |
|||||
- General and administrative expenses decreased as a percent of consolidated revenue primarily due to operating leverage resulting from revenue growth.
During the third quarter of 2018, the Company invested $1.9 million in its rebranding and name change, all of which was included in general and administrative expenses. During the third quarter of 2017, the Company invested $1.5 million in its rebranding and name change.
“Growth in Adjusted EBITDA and favorable working capital flows have driven a 12.6% increase in adjusted free cash flow for the first nine months of 2018,” said Executive Vice President and Chief Financial Officer of Encompass Health Doug Coltharp. “Our strong and consistent free cash flow generation, together with the level and structure of our debt capital, positions us with great flexibility to capitalize on growth opportunities.”
2018 guidance
Based on its results for the first nine months of 2018 and its current expectations for the remainder of 2018, the Company is increasing its full-year guidance ranges for 2018.
Full-Year 2018 Guidance Ranges |
|||
Previous Guidance |
Updated Guidance |
||
(In Millions, Except Per Share Data) |
|||
Net operating revenues |
$4,200 to $4,275 |
$4,250 to $4,300 |
|
Adjusted EBITDA |
$865 to $880 |
$880 to $890 |
|
Adjusted earnings per share from continuing |
$3.45 to $3.58 |
$3.55 to $3.63 |
For additional considerations regarding the Company’s 2018 guidance ranges, see the supplemental information posted on the Company’s website at http://investor.encompasshealth.com. See also the “Other Information” section below for an explanation of why the Company does not provide guidance for comparable GAAP measures for Adjusted EBITDA and adjusted earnings per share.
Earnings conference call and webcast
The Company will host an investor conference call at 9:00 a.m. Eastern Time on Tuesday, October 30, 2018 to discuss its results for the third quarter of 2018. For reference during the call, the Company will post certain supplemental information at http://investor.encompasshealth.com.
The conference call may be accessed by dialing 877 587-6761 and giving the pass code 8884687. International callers should dial 706 679-1635 and give the same pass code. Please call approximately ten minutes before the start of the call to ensure you are connected. The conference call will also be webcast live and will be available for on-line replay at http://investor.encompasshealth.com by clicking on an available link.
About Encompass Health
As a national leader in post-acute care, Encompass Health (NYSE: EHC) offers both facility-based and home-based patient care through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. With a national footprint that spans 130 hospitals and 273 home health & hospice locations in 36 states and Puerto Rico, the Company is committed to delivering high-quality, cost-effective care across the post-acute continuum. Driven by a set of shared values, Encompass Health is the result of the union between HealthSouth Corporation and Encompass Home Health & Hospice, and is ranked as one of Fortune’s 100 Best Companies to Work For. For more information, visit encompasshealth.com, or follow us on Twitter and Facebook.
Other information
The information in this press release is summarized and should be read in conjunction with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (the “September 2018 Form 10‑Q”), when filed, as well as the Company’s Current Report on Form 8-K filed on October 29, 2018 (the “Q3 Earnings Form 8‑K”), to which this press release is attached as Exhibit 99.1. In addition, the Company will post supplemental information today on its website at http://investor.encompasshealth.com for reference during its October 30, 2018 earnings call.
During the first quarter of 2018, the Company adopted a new accounting standard (ASC 606 – Revenue from Contracts with Customers) which clarifies the standards for recognizing revenue. The impact to the Company’s financial reporting was that amounts previously presented as provision for doubtful accounts became a component of net operating revenues. This had the effect of reducing net operating revenues but had no effect on Adjusted EBITDA and adjusted earnings per share. The Company retrospectively adopted the new standard during the first quarter of 2018, which means previously reported quarterly and full-year results for 2017 have been updated to reflect the requirements of the new standard. For additional information, see the supplemental information posted on the Company’s website at http://investor.encompasshealth.com.
The financial data contained in the press release and supplemental information include non-GAAP financial measures, including the Company’s adjusted earnings per share, leverage ratio, Adjusted EBITDA, and adjusted free cash flow. Reconciliations to their most comparable GAAP measure, except with regard to non-GAAP guidance, are included below, in the supplemental information, or in the Q3 Earnings Form 8-K. Readers are encouraged to review the “Note Regarding Presentation of Non-GAAP Financial Measures” included in the Q3 Earnings Form 8-K which provides further explanation and disclosure regarding the Company’s use of these non-GAAP financial measures.
Excluding net operating revenues, the Company does not provide guidance on a GAAP basis because it is unable to predict, with reasonable certainty, the future impact of items that are deemed to be outside the control of the Company or otherwise non-indicative of its ongoing operating performance. Such items include government, class action, and related settlements; professional fees—accounting, tax, and legal; mark-to-market adjustments for stock appreciation rights; gains or losses related to hedging instruments; loss on early extinguishment of debt; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the Company believes to be non-indicative of its ongoing operations. These items cannot be reasonably predicted and will depend on several factors, including industry and market conditions, and could be material to the Company’s results computed in accordance with GAAP.
However, the following reasonably estimable GAAP measures for 2018 would be included in a reconciliation for Adjusted EBITDA if the other reconciling GAAP measures could be reasonably predicted:
- Interest expense and amortization of debt discounts and fees – estimate of $147 million to $157 million
- Amortization of debt-related items – approximately $7 million
The Q3 Earnings Form 8-K and, when filed, the September 2018 Form 10-Q can be found on the Company’s website at http://investor.encompasshealth.com and the SEC’s website at www.sec.gov.
Media Contact
Casey Lassiter, 205 447-6410
casey.lassiter@encompasshealth.com
Investor Relations Contact
Crissy Carlisle, 205 970-5860
crissy.carlisle@encompasshealth.com
Encompass Health Corporation and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited)
|
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
(In Millions, Except per Share Data) |
|||||||||||||||
Net operating revenues |
$ |
1,067.6 |
$ |
981.6 |
$ |
3,181.3 |
$ |
2,905.1 |
|||||||
Operating expenses: |
|||||||||||||||
Salaries and benefits |
592.3 |
542.1 |
1,740.7 |
1,600.0 |
|||||||||||
Other operating expenses |
142.9 |
136.2 |
433.5 |
393.3 |
|||||||||||
Occupancy costs |
19.6 |
18.6 |
57.7 |
54.8 |
|||||||||||
Supplies |
38.6 |
36.5 |
117.8 |
110.6 |
|||||||||||
General and administrative expenses |
49.9 |
39.7 |
165.9 |
128.6 |
|||||||||||
Depreciation and amortization |
51.2 |
46.2 |
146.8 |
137.2 |
|||||||||||
Total operating expenses |
894.5 |
819.3 |
2,662.4 |
2,424.5 |
|||||||||||
Loss on early extinguishment of debt |
— |
0.3 |
— |
10.7 |
|||||||||||
Interest expense and amortization of debt discounts and |
37.3 |
36.8 |
110.6 |
118.5 |
|||||||||||
Other income |
(1.7) |
(1.0) |
(2.9) |
(2.9) |
|||||||||||
Equity in net income of nonconsolidated affiliates |
(2.1) |
(2.1) |
(6.4) |
(6.2) |
|||||||||||
Income from continuing operations before income tax |
139.6 |
128.3 |
417.6 |
360.5 |
|||||||||||
Provision for income tax expense |
30.2 |
43.1 |
89.5 |
111.4 |
|||||||||||
Income from continuing operations |
109.4 |
85.2 |
328.1 |
249.1 |
|||||||||||
Loss from discontinued operations, net of tax |
(0.1) |
(0.1) |
(0.4) |
(0.2) |
|||||||||||
Net income |
109.3 |
85.1 |
327.7 |
248.9 |
|||||||||||
Less: Net income attributable to noncontrolling interests |
(20.7) |
(19.2) |
(63.5) |
(53.2) |
|||||||||||
Net income attributable to Encompass Health |
$ |
88.6 |
$ |
65.9 |
$ |
264.2 |
$ |
195.7 |
|||||||
Weighted average common shares outstanding: |
|||||||||||||||
Basic |
98.0 |
97.8 |
97.9 |
92.3 |
|||||||||||
Diluted |
100.0 |
99.0 |
99.7 |
99.1 |
|||||||||||
Earnings per common share: |
|||||||||||||||
Basic earnings per share attributable to Encompass |
|||||||||||||||
Continuing operations |
$ |
0.90 |
$ |
0.67 |
$ |
2.69 |
$ |
2.11 |
|||||||
Discontinued operations |
— |
— |
— |
— |
|||||||||||
Net income |
$ |
0.90 |
$ |
0.67 |
$ |
2.69 |
$ |
2.11 |
|||||||
Diluted earnings per share attributable to |
|||||||||||||||
Continuing operations |
$ |
0.89 |
$ |
0.67 |
$ |
2.65 |
$ |
2.08 |
|||||||
Discontinued operations |
— |
— |
— |
— |
|||||||||||
Net income |
$ |
0.89 |
$ |
0.67 |
$ |
2.65 |
$ |
2.08 |
|||||||
Cash dividends per common share |
$ |
0.27 |
$ |
0.25 |
$ |
0.77 |
$ |
0.73 |
|||||||
Amounts attributable to Encompass Health common |
|||||||||||||||
Income from continuing operations |
$ |
88.7 |
$ |
66.0 |
$ |
264.6 |
$ |
195.9 |
|||||||
Loss from discontinued operations, net of tax |
(0.1) |
(0.1) |
(0.4) |
(0.2) |
|||||||||||
Net income attributable to Encompass Health |
$ |
88.6 |
$ |
65.9 |
$ |
264.2 |
$ |
195.7 |
|||||||
Encompass Health Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
|
|||||||||||||||
September 30, |
December 31, |
||||||||||||||
(In Millions) |
|||||||||||||||
Assets |
|||||||||||||||
Current assets: |
|||||||||||||||
Cash and cash equivalents |
$ |
56.9 |
$ |
54.4 |
|||||||||||
Restricted cash |
62.1 |
62.4 |
|||||||||||||
Accounts receivable |
458.0 |
472.1 |
|||||||||||||
Other current assets |
61.0 |
113.3 |
|||||||||||||
Total current assets |
638.0 |
702.2 |
|||||||||||||
Property and equipment, net |
1,591.0 |
1,517.1 |
|||||||||||||
Goodwill |
2,081.1 |
1,972.6 |
|||||||||||||
Intangible assets, net |
443.2 |
403.1 |
|||||||||||||
Deferred income tax assets |
82.6 |
63.6 |
|||||||||||||
Other long-term assets |
296.0 |
235.1 |
|||||||||||||
Total assets |
$ |
5,131.9 |
$ |
4,893.7 |
|||||||||||
Liabilities and Shareholders’ Equity |
|||||||||||||||
Current liabilities: |
|||||||||||||||
Current portion of long-term debt |
$ |
37.1 |
$ |
32.3 |
|||||||||||
Accounts payable |
86.0 |
78.4 |
|||||||||||||
Accrued expenses and other current liabilities |
486.5 |
406.8 |
|||||||||||||
Total current liabilities |
609.6 |
517.5 |
|||||||||||||
Long-term debt, net of current portion |
2,503.9 |
2,545.4 |
|||||||||||||
Other long-term liabilities |
198.2 |
185.3 |
|||||||||||||
3,311.7 |
3,248.2 |
||||||||||||||
Commitments and contingencies |
|||||||||||||||
Redeemable noncontrolling interests |
236.5 |
220.9 |
|||||||||||||
Shareholders’ equity: |
|||||||||||||||
Encompass Health shareholders’ equity |
1,318.5 |
1,181.7 |
|||||||||||||
Noncontrolling interests |
265.2 |
242.9 |
|||||||||||||
Total shareholders’ equity |
1,583.7 |
1,424.6 |
|||||||||||||
Total liabilities and shareholders’ equity |
$ |
5,131.9 |
$ |
4,893.7 |
|||||||||||
Encompass Health Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|||||||||||||||
Nine Months Ended September 30, |
|||||||||||||||
2018 |
2017 |
||||||||||||||
(In Millions) |
|||||||||||||||
Cash flows from operating activities: |
|||||||||||||||
Net income |
$ |
327.7 |
$ |
248.9 |
|||||||||||
Loss from discontinued operations, net of tax |
0.4 |
0.2 |
|||||||||||||
Adjustments to reconcile net income to net cash provided by |
|||||||||||||||
Depreciation and amortization |
146.8 |
137.2 |
|||||||||||||
Loss on early extinguishment of debt |
— |
10.7 |
|||||||||||||
Equity in net income of nonconsolidated affiliates |
(6.4) |
(6.2) |
|||||||||||||
Stock-based compensation |
65.6 |
37.9 |
|||||||||||||
Deferred tax (benefit) expense |
(8.0) |
51.3 |
|||||||||||||
Other, net |
11.5 |
16.4 |
|||||||||||||
Change in assets and liabilities, net of acquisitions— |
|||||||||||||||
Accounts receivable |
12.3 |
(11.5) |
|||||||||||||
Other assets |
15.3 |
(7.4) |
|||||||||||||
Accounts payable |
— |
6.1 |
|||||||||||||
Accrued payroll |
(6.7) |
3.1 |
|||||||||||||
Accrued interest payable |
8.2 |
7.3 |
|||||||||||||
Other liabilities |
18.0 |
13.6 |
|||||||||||||
Net cash used in operating activities of discontinued operations |
(0.7) |
(0.7) |
|||||||||||||
Total adjustments |
255.9 |
257.8 |
|||||||||||||
Net cash provided by operating activities |
584.0 |
506.9 |
|||||||||||||
Cash flows from investing activities: |
|||||||||||||||
Purchases of property and equipment |
(171.5) |
(155.7) |
|||||||||||||
Additions to capitalized software costs |
(13.2) |
(14.6) |
|||||||||||||
Acquisitions of businesses, net of cash acquired |
(135.8) |
(36.6) |
|||||||||||||
Other, net |
(5.8) |
7.6 |
|||||||||||||
Net cash used in investing activities |
(326.3) |
(199.3) |
|||||||||||||
Encompass Health Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Continued) (Unaudited)
|
|||||||||||||||
Nine Months Ended September 30, |
|||||||||||||||
2018 |
2017 |
||||||||||||||
(In Millions) |
|||||||||||||||
Cash flows from financing activities: |
|||||||||||||||
Principal payments on debt, including pre-payments |
(16.1) |
(125.4) |
|||||||||||||
Borrowings on revolving credit facility |
285.0 |
241.3 |
|||||||||||||
Payments on revolving credit facility |
(315.0) |
(255.3) |
|||||||||||||
Repurchases of common stock, including fees and expenses |
— |
(38.1) |
|||||||||||||
Dividends paid on common stock |
(74.4) |
(67.0) |
|||||||||||||
Purchase of equity interests in consolidated affiliates |
(65.1) |
— |
|||||||||||||
Proceeds from exercising stock warrants |
— |
26.6 |
|||||||||||||
Distributions paid to noncontrolling interests of consolidated |
(56.5) |
(38.3) |
|||||||||||||
Taxes paid on behalf of employees for shares withheld |
(8.3) |
(19.8) |
|||||||||||||
Other, net |
(3.1) |
5.4 |
|||||||||||||
Net cash used in financing activities |
(253.5) |
(270.6) |
|||||||||||||
Increase in cash, cash equivalents, and restricted cash |
4.2 |
37.0 |
|||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period |
116.8 |
101.4 |
|||||||||||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
121.0 |
$ |
138.4 |
|||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash |
|||||||||||||||
Cash and cash equivalents at beginning of period |
$ |
54.4 |
$ |
40.5 |
|||||||||||
Restricted cash at beginning of period |
62.4 |
60.9 |
|||||||||||||
Cash, cash equivalents, and restricted cash at beginning of |
$ |
116.8 |
$ |
101.4 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
56.9 |
$ |
67.6 |
|||||||||||
Restricted cash at end of period |
62.1 |
70.8 |
|||||||||||||
Restricted cash included in other long-term assets at end of |
2.0 |
— |
|||||||||||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
121.0 |
$ |
138.4 |
|||||||||||
Supplemental schedule of noncash financing activity: |
|||||||||||||||
Conversion of convertible debt |
$ |
— |
$ |
319.4 |
|||||||||||
Encompass Health Corporation and Subsidiaries Supplemental Information Earnings Per Share
|
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
(In Millions, Except Per Share Data) |
|||||||||||||||
Adjusted EBITDA |
$ |
224.3 |
$ |
204.6 |
$ |
679.2 |
$ |
614.9 |
|||||||
Depreciation and amortization |
(51.2) |
(46.2) |
(146.8) |
(137.2) |
|||||||||||
Interest expense and amortization of debt discounts |
(37.3) |
(36.8) |
(110.6) |
(118.5) |
|||||||||||
Stock-based compensation expense |
(18.1) |
(9.2) |
(65.6) |
(37.9) |
|||||||||||
Noncash gain (loss) on disposal of assets |
1.0 |
(3.0) |
(2.2) |
(3.3) |
|||||||||||
118.7 |
109.4 |
354.0 |
318.0 |
||||||||||||
Certain items non-indicative of ongoing operating |
|||||||||||||||
Loss on early extinguishment of debt |
— |
(0.3) |
— |
(10.7) |
|||||||||||
Transaction costs |
— |
— |
(1.0) |
— |
|||||||||||
SARs mark-to-market impact on noncontrolling |
0.3 |
— |
2.2 |
— |
|||||||||||
Change in fair market value of equity securities |
(0.1) |
— |
(1.1) |
— |
|||||||||||
Pre-tax income |
118.9 |
109.1 |
354.1 |
307.3 |
|||||||||||
Income tax expense |
(30.2) |
(43.1) |
(89.5) |
(111.4) |
|||||||||||
Income from continuing operations (1) |
$ |
88.7 |
$ |
66.0 |
$ |
264.6 |
$ |
195.9 |
|||||||
Basic shares |
98.0 |
97.8 |
97.9 |
92.3 |
|||||||||||
Diluted shares |
100.0 |
99.0 |
99.7 |
99.1 |
|||||||||||
Basic earnings per share (1) |
$ |
0.90 |
$ |
0.67 |
$ |
2.69 |
$ |
2.11 |
|||||||
Diluted earnings per share (1) |
$ |
0.89 |
$ |
0.67 |
$ |
2.65 |
$ |
2.08 |
|||||||
(1) Income from continuing operations attributable to Encompass Health |
|||||||||||||||
Encompass Health Corporation and Subsidiaries Supplemental Information Adjusted Earnings Per Share
|
|||||||||||||||
Q3 |
9 Months |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Earnings per share, as reported |
$ |
0.89 |
$ |
0.67 |
$ |
2.65 |
$ |
2.08 |
|||||||
Adjustments, net of tax: |
|||||||||||||||
Mark-to-market adjustments for stock appreciation |
0.03 |
(0.01) |
0.18 |
0.08 |
|||||||||||
Transaction costs |
— |
— |
0.01 |
— |
|||||||||||
Change in fair market value of equity securities |
— |
— |
0.01 |
— |
|||||||||||
Income tax adjustments |
(0.01) |
— |
(0.01) |
(0.10) |
|||||||||||
Adjusted earnings per share(1) |
$ |
0.91 |
$ |
0.66 |
$ |
2.83 |
$ |
2.07 |
|||||||
(1) Adjusted EPS may not sum due to rounding. |
Encompass Health Corporation and Subsidiaries Supplemental Information Adjusted Earnings Per Share
|
|||||||||||||||||||
For the Three Months Ended September 30, 2018 |
|||||||||||||||||||
Adjustments |
|||||||||||||||||||
As |
Mark-to-Market Adjustment for Stock Compensation Expense |
Income Tax Adjustments |
Change in Fair Market Value of Equity Securities |
As |
|||||||||||||||
(In Millions, Except Per Share Amounts) |
|||||||||||||||||||
Adjusted EBITDA(1) |
$ |
224.3 |
$ |
— |
$ |
— |
$ |
— |
$ |
224.3 |
|||||||||
Depreciation and amortization |
(51.2) |
— |
— |
— |
(51.2) |
||||||||||||||
Interest expense and amortization of debt discounts and fees |
(37.3) |
— |
— |
— |
(37.3) |
||||||||||||||
Stock-based compensation |
(18.1) |
4.2 |
— |
— |
(13.9) |
||||||||||||||
Gain on disposal of assets |
1.0 |
— |
— |
— |
1.0 |
||||||||||||||
SARs mark-to-market impact on noncontrolling interests |
0.3 |
(0.3) |
— |
— |
— |
||||||||||||||
Change in fair market value of equity securities |
(0.1) |
— |
— |
0.1 |
— |
||||||||||||||
Income from continuing operations before income tax |
118.9 |
3.9 |
— |
0.1 |
122.9 |
||||||||||||||
Provision for income tax expense |
(30.2) |
(1.1) |
(0.7) |
— |
(32.0) |
||||||||||||||
Income from continuing operations attributable to |
$ |
88.7 |
$ |
2.8 |
$ |
(0.7) |
$ |
0.1 |
$ |
90.9 |
|||||||||
Add: Interest, amortization, and loss on extinguishment of |
— |
— |
|||||||||||||||||
Numerator for diluted earnings per share |
$ |
88.7 |
$ |
90.9 |
|||||||||||||||
Diluted earnings per share from continuing operations(2) |
$ |
0.89 |
$ |
0.03 |
$ |
(0.01) |
$ |
— |
$ |
0.91 |
|||||||||
Diluted shares used in calculation |
100.0 |
||||||||||||||||||
(1) See reconciliation of net income to Adjusted EBITDA (2) Adjusted EPS may not sum across due to rounding. |
Encompass Health Corporation and Subsidiaries Supplemental Information Adjusted Earnings Per Share
|
|||||||||||||||||||
For the Three Months Ended September 30, 2017 |
|||||||||||||||||||
Adjustments |
|||||||||||||||||||
As |
Mark-to-Market Adjustment for Stock Appreciation Rights |
Loss on Early Extinguishment of Debt |
Income Tax Adjustments |
As |
|||||||||||||||
(In Millions, Except Per Share Amounts) |
|||||||||||||||||||
Adjusted EBITDA(1) |
$ |
204.6 |
$ |
— |
$ |
— |
$ |
— |
$ |
204.6 |
|||||||||
Depreciation and amortization |
(46.2) |
— |
— |
— |
(46.2) |
||||||||||||||
Loss on early extinguishment of debt |
(0.3) |
— |
0.3 |
— |
— |
||||||||||||||
Interest expense and amortization of debt discounts and fees |
(36.8) |
— |
— |
— |
(36.8) |
||||||||||||||
Stock-based compensation |
(9.2) |
(1.0) |
— |
— |
(10.2) |
||||||||||||||
Loss on disposal of assets |
(3.0) |
— |
— |
— |
(3.0) |
||||||||||||||
Income from continuing operations before income tax |
109.1 |
(1.0) |
0.3 |
— |
108.4 |
||||||||||||||
Provision for income tax expense |
(43.1) |
0.4 |
(0.1) |
(0.4) |
(43.2) |
||||||||||||||
Income from continuing operations attributable to |
$ |
66.0 |
$ |
(0.6) |
$ |
0.2 |
$ |
(0.4) |
$ |
65.2 |
|||||||||
Add: Interest, amortization, and loss on extinguishment of |
— |
— |
|||||||||||||||||
Numerator for diluted earnings per share |
$ |
66.0 |
$ |
65.2 |
|||||||||||||||
Diluted earnings per share from continuing operations, as |
$ |
0.67 |
$ |
(0.01) |
$ |
— |
$ |
— |
$ |
0.66 |
|||||||||
Diluted shares used in calculation |
99.0 |
||||||||||||||||||
(1) See reconciliation of net income to Adjusted EBITDA (2) Adjusted EPS may not sum across due to rounding. |
Encompass Health Corporation and Subsidiaries Supplemental Information Adjusted Earnings Per Share
|
|||||||||||||||||||||||
For the Nine Months Ended September 30, 2018 |
|||||||||||||||||||||||
Adjustments |
|||||||||||||||||||||||
As |
Mark-to-Market Adjustment for Stock Compensation Expense |
Income Tax Adjustments |
Transaction Costs |
Change in Fair Market Value of Equity Securities |
As |
||||||||||||||||||
(In Millions, Except Per Share Amounts) |
|||||||||||||||||||||||
Adjusted EBITDA(1) |
$ |
679.2 |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
679.2 |
|||||||||||
Depreciation and amortization |
(146.8) |
— |
— |
— |
— |
(146.8) |
|||||||||||||||||
Interest expense and amortization of debt discounts and |
(110.6) |
— |
— |
— |
— |
(110.6) |
|||||||||||||||||
Stock-based compensation |
(65.6) |
26.6 |
— |
— |
— |
(39.0) |
|||||||||||||||||
Loss on disposal of assets |
(2.2) |
— |
— |
— |
— |
(2.2) |
|||||||||||||||||
Transaction costs |
(1.0) |
— |
— |
1.0 |
— |
— |
|||||||||||||||||
SARs mark-to-market impact on noncontrolling interests |
2.2 |
(2.2) |
— |
— |
— |
— |
|||||||||||||||||
Change in fair market value of equity securities |
(1.1) |
— |
— |
— |
1.1 |
— |
|||||||||||||||||
Income from continuing operations before income |
354.1 |
24.4 |
— |
1.0 |
1.1 |
380.6 |
|||||||||||||||||
Provision for income tax expense |
(89.5) |
(6.8) |
(1.4) |
(0.3) |
(0.3) |
(98.3) |
|||||||||||||||||
Income from continuing operations attributable to |
$ |
264.6 |
$ |
17.6 |
$ |
(1.4) |
$ |
0.7 |
$ |
0.8 |
$ |
282.3 |
|||||||||||
Add: Interest, amortization, and loss on |
— |
— |
|||||||||||||||||||||
Numerator for diluted earnings per share |
$ |
264.6 |
$ |
282.3 |
|||||||||||||||||||
Diluted earnings per share from continuing |
$ |
2.65 |
$ |
0.18 |
$ |
(0.01) |
$ |
0.01 |
$ |
0.01 |
$ |
2.83 |
|||||||||||
Diluted shares used in calculation |
99.7 |
||||||||||||||||||||||
(1) See reconciliation of net income to Adjusted EBITDA (2) Adjusted EPS may not sum across due to rounding. |
Encompass Health Corporation and Subsidiaries Supplemental Information Adjusted Earnings Per Share
|
|||||||||||||||||||
For the Nine Months Ended September 30, 2017 |
|||||||||||||||||||
Adjustments |
|||||||||||||||||||
As |
Mark-to-Market Adjustment for Stock Compensation Expense |
Loss on Early Extinguishment of Debt |
Income Tax Adjustments |
As |
|||||||||||||||
(In Millions, Except Per Share Amounts) |
|||||||||||||||||||
Adjusted EBITDA(1) |
$ |
614.9 |
$ |
— |
$ |
— |
$ |
— |
$ |
614.9 |
|||||||||
Depreciation and amortization |
(137.2) |
— |
— |
— |
(137.2) |
||||||||||||||
Loss on early extinguishment of debt |
(10.7) |
— |
0.3 |
— |
(10.4) |
||||||||||||||
Interest expense and amortization of debt discounts and fees |
(118.5) |
— |
— |
— |
(118.5) |
||||||||||||||
Stock-based compensation |
(37.9) |
13.9 |
— |
— |
(24.0) |
||||||||||||||
Loss on disposal of assets |
(3.3) |
— |
— |
— |
(3.3) |
||||||||||||||
Income from continuing operations before income tax |
307.3 |
13.9 |
0.3 |
— |
321.5 |
||||||||||||||
Provision for income tax expense |
(111.4) |
(5.6) |
(0.1) |
(10.4) |
(127.5) |
||||||||||||||
Income from continuing operations attributable to |
$ |
195.9 |
$ |
8.3 |
$ |
0.2 |
$ |
(10.4) |
$ |
194.0 |
|||||||||
Add: Interest, amortization, and loss on extinguishment of |
10.8 |
10.8 |
|||||||||||||||||
Numerator for diluted earnings per share |
$ |
206.7 |
$ |
204.8 |
|||||||||||||||
Diluted earnings per share from continuing operations(2) |
$ |
2.08 |
$ |
0.08 |
$ |
— |
$ |
(0.10) |
$ |
2.07 |
|||||||||
Diluted shares used in calculation |
99.1 |
||||||||||||||||||
(1) See reconciliation of net income to Adjusted EBITDA (2) Adjusted EPS may not sum across due to rounding. |
Encompass Health Corporation and Subsidiaries Supplemental Information Reconciliation of Net Income to Adjusted EBITDA
|
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
(In Millions) |
||||||||||||||||
Net income |
$ |
109.3 |
$ |
85.1 |
$ |
327.7 |
$ |
248.9 |
||||||||
Loss from discontinued operations, net of tax, attributable |
0.1 |
0.1 |
0.4 |
0.2 |
||||||||||||
Net income attributable to noncontrolling interests |
(20.7) |
(19.2) |
(63.5) |
(53.2) |
||||||||||||
Provision for income tax expense |
30.2 |
43.1 |
89.5 |
111.4 |
||||||||||||
Interest expense and amortization of debt discounts and |
37.3 |
36.8 |
110.6 |
118.5 |
||||||||||||
Depreciation and amortization |
51.2 |
46.2 |
146.8 |
137.2 |
||||||||||||
Loss on early extinguishment of debt |
— |
0.3 |
— |
10.7 |
||||||||||||
Net noncash (gain) loss on disposal of assets |
(1.0) |
3.0 |
2.2 |
3.3 |
||||||||||||
Stock-based compensation expense |
18.1 |
9.2 |
65.6 |
37.9 |
||||||||||||
Transaction costs |
— |
— |
1.0 |
— |
||||||||||||
SARs mark-to-market impact on noncontrolling interests |
(0.3) |
— |
(2.2) |
— |
||||||||||||
Change in fair market value of equity securities |
0.1 |
— |
1.1 |
— |
||||||||||||
Adjusted EBITDA |
$ |
224.3 |
$ |
204.6 |
$ |
679.2 |
$ |
614.9 |
Reconciliation of Segment Adjusted EBITDA to Income from Continuing Operations Before Income Tax Expense |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
Year Ended |
|||||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||||
(In Millions) |
|||||||||||||||||||
Total segment Adjusted EBITDA |
$ |
256.1 |
$ |
235.1 |
$ |
778.5 |
$ |
705.6 |
$ |
947.1 |
|||||||||
General and administrative expenses |
(49.9) |
(39.7) |
(165.9) |
(128.6) |
(171.7) |
||||||||||||||
Depreciation and amortization |
(51.2) |
(46.2) |
(146.8) |
(137.2) |
(183.8) |
||||||||||||||
Gain (loss) on disposal of assets |
1.0 |
(3.0) |
(2.2) |
(3.3) |
(4.6) |
||||||||||||||
Loss on early extinguishment of debt |
— |
(0.3) |
— |
(10.7) |
(10.7) |
||||||||||||||
Interest expense and amortization of debt |
(37.3) |
(36.8) |
(110.6) |
(118.5) |
(154.4) |
||||||||||||||
Net income attributable to noncontrolling |
20.7 |
19.2 |
63.5 |
53.2 |
79.1 |
||||||||||||||
SARs mark-to-market impact on |
0.3 |
— |
2.2 |
— |
— |
||||||||||||||
Change in fair market value of equity |
(0.1) |
— |
(1.1) |
— |
— |
||||||||||||||
Tax reform impact on noncontrolling |
— |
— |
— |
— |
(4.6) |
||||||||||||||
Income from continuing operations |
$ |
139.6 |
$ |
128.3 |
$ |
417.6 |
$ |
360.5 |
$ |
496.4 |
Encompass Health Corporation and Subsidiaries Supplemental Information Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
|
|||||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
Year Ended |
|||||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
2017 |
2016 |
||||||||||||||||||
(In Millions) |
|||||||||||||||||||||||
Net cash provided by operating |
$ |
198.5 |
$ |
174.9 |
$ |
584.0 |
$ |
506.9 |
$ |
658.3 |
$ |
640.2 |
|||||||||||
Professional fees—accounting, tax, and |
— |
— |
— |
— |
— |
1.9 |
|||||||||||||||||
Interest expense and amortization of |
37.3 |
36.8 |
110.6 |
118.5 |
154.4 |
172.1 |
|||||||||||||||||
Equity in net income of |
2.1 |
2.1 |
6.4 |
6.2 |
8.0 |
9.8 |
|||||||||||||||||
Net income attributable to |
(20.7) |
(19.2) |
(63.5) |
(53.2) |
(79.1) |
(70.5) |
|||||||||||||||||
Amortization of debt-related items |
(1.0) |
(1.0) |
(3.0) |
(7.7) |
(8.7) |
(13.8) |
|||||||||||||||||
Distributions from nonconsolidated |
(2.0) |
(2.2) |
(5.5) |
(6.6) |
(8.6) |
(8.5) |
|||||||||||||||||
Current portion of income tax expense |
34.6 |
36.0 |
97.5 |
60.1 |
85.0 |
31.0 |
|||||||||||||||||
Change in assets and liabilities |
(24.8) |
(23.5) |
(47.1) |
(11.2) |
7.4 |
30.1 |
|||||||||||||||||
Tax reform impact on noncontrolling |
— |
— |
— |
— |
4.6 |
— |
|||||||||||||||||
Cash used in operating activities of |
0.1 |