ehc-20240424

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 24, 2024

Encompass Health Corporation

(Exact name of Registrant as specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)


001-10315			63-0860407
(Commission File Number)			(IRS Employer Identification No.)

9001 Liberty Parkway, Birmingham, Alabama 35242

(Address of Principal Executive Offices, Including Zip Code)

(205) 967-7116

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	EHC	New York Stock Exchange

The information contained herein is being furnished pursuant to Item 2.02 of Form 8‑K, “Results of Operations and Financial Condition,” and Item 7.01 of Form 8-K, “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 2.02. Results of Operations and Financial Condition.

On April 24, 2024, Encompass Health Corporation (“Encompass Health” or the “Company”) issued a press release reporting the financial results of the Company for the three months ended March 31, 2024. A copy of the press release is attached to this report as Exhibit 99.1 and incorporated herein by reference.

The Company uses “same-store” comparisons to explain the changes in certain performance metrics and line items within its financial statements. Same-store comparisons are calculated based on hospitals open throughout both the full current and prior periods presented. These comparisons include the financial results of market consolidation transactions in existing markets, as it is difficult to determine, with precision, the incremental impact of these transactions on the Company's results of operations.

ITEM 7.01. Regulation FD Disclosure.

See Item 2.02, “Results of Operations and Financial Condition,” above.

In addition, a copy of the supplemental information which will be discussed during the Company’s earnings call at 10:00 a.m. Eastern Time on Thursday, April 25, 2024 is attached to this report as Exhibit 99.2 and incorporated herein by reference.

Note Regarding Presentation of Non-GAAP Financial Measures

The Company is providing adjusted earnings per share from continuing operations attributable to Encompass Health (“adjusted earnings per share”). 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 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 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 (“GAAP”) 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. The Company reconciles adjusted earnings per share to earnings per share in the press release attached as Exhibit 99.1 and the supplemental information attached as Exhibit 99.2.

The leverage ratio referenced therein is defined as the ratio of consolidated total debt to Adjusted EBITDA for the trailing four quarters. The Company believes its leverage ratio and Adjusted EBITDA are measures of its ability to service its debt and its ability to make capital expenditures. Additionally, the leverage ratio is a standard measurement used by investors to gauge the creditworthiness of an institution. The Company’s credit agreement also includes a maximum leverage ratio financial covenant which allows the Company to deduct cash on hand from consolidated total debt. In calculating the leverage ratio under our credit agreement, we are permitted to use pro forma Adjusted EBITDA, the calculation of which includes historical income statement items and pro forma adjustments, subject to certain limitations, resulting from (1) dispositions and repayments or incurrence of debt and (2) investments, acquisitions, mergers, amalgamations, consolidations and other operational changes to the extent such items or effects are not yet reflected in our trailing four-quarter financial statements. The Company reconciles Adjusted EBITDA to net cash provided by operating activities and net income in the press release attached as Exhibit 99.1 and the supplemental information attached as Exhibit 99.2.

The Company uses Adjusted EBITDA on a consolidated basis as a liquidity measure. The Company believes this financial measure on a consolidated basis is important in analyzing its liquidity because it is the key component of certain material covenants contained within the Company’s credit agreement, which is discussed in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Liquidity and Capital Resources,” and Note 10, Long-term Debt, to the consolidated financial statements included in its Annual Report on Form 10‑K for the year ended December 31, 2023 (the “2023 Form 10‑K”). These covenants are material terms of the credit agreement. Noncompliance with these financial covenants under the credit agreement—its interest coverage ratio and its leverage ratio—could result in the Company’s lenders requiring the Company to immediately repay all amounts borrowed. If the Company anticipated a potential covenant violation, it would seek relief from its lenders, which would have some cost to the Company, and such relief might be on terms less favorable to those in the Company’s existing credit agreement. In addition, if the Company cannot satisfy these financial covenants, it would be prohibited under the credit agreement from engaging in certain activities, such as incurring additional indebtedness, paying common stock dividends, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA is critical to the Company’s assessment of its liquidity.

In general terms, the credit agreement definition of Adjusted EBITDA, therein referred to as “Adjusted Consolidated EBITDA,” allows the Company to add back to consolidated net income interest expense, income taxes, and depreciation and amortization and then add back to consolidated net income (1) all unusual or nonrecurring items reducing consolidated net income (of which only up to $10 million in a year may be cash expenditures), (2) any losses from discontinued operations, (3) non-ordinary course fees, costs and expenses incurred with respect to any litigation or settlement, (4) share-based compensation expense, (5) costs and expenses associated with changes in the fair value of marketable securities, (6) costs and expenses associated with the issuance or prepayment of debt and acquisitions, and (7) any restructuring charges and certain pro-forma cost savings and synergies related to transactions and initiatives, which in the aggregate are not in excess of 25% of Adjusted Consolidated EBITDA. The Company also subtracts from consolidated net income all unusual or nonrecurring items to the extent they increase consolidated net income.

The calculation of Adjusted EBITDA under the credit agreement does not require us to deduct net income attributable to noncontrolling interests or gains on fair value adjustments of hedging and equity instruments, disposal of assets, and development activities. It also does not allow us to add back losses on fair value adjustments of hedging instruments or unusual or nonrecurring cash expenditures in excess of $10 million. These items and amounts, in addition to the items falling within the credit agreement’s “unusual or nonrecurring” classification, may occur in future periods, but can vary significantly from period to period and may not directly relate to, or be indicative of, the Company's ongoing liquidity or operating performance. Accordingly, the Adjusted EBITDA calculation presented here includes adjustments for them.

Adjusted EBITDA is not a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted EBITDA should not be considered a substitute for net income or cash flows from operating, investing, or financing activities. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Revenues and expenses are measured in accordance with the policies and procedures described in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements accompanying the 2023 Form 10‑K.

The Company also uses adjusted free cash flow as an analytical indicator to assess its performance. Management believes the presentation of adjusted free cash flow provides investors an efficient means by which they can evaluate the Company’s capacity to reduce debt, pursue development activities, and return capital to its common stockholders. The calculation of adjusted free cash flow and a reconciliation of net cash provided by operating activities to adjusted free cash flow are included in the press release attached as Exhibit 99.1 and the supplemental information attached as Exhibit 99.2. This measure is not a defined measure of financial performance under GAAP and should not be considered as an alternative to net cash provided by operating activities. The Company's definition of adjusted free cash flow is net cash provided by operating activities of continuing operations minus capital expenditures for maintenance, distributions to noncontrolling interests, and certain items deemed to be non-indicative of ongoing operating performance. Common stock dividends are not included in the calculation of adjusted free cash flow. The Company’s definition of adjusted free cash flow is limited and does not represent residual cash flows available for discretionary spending. 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. See the consolidated statements of cash flows included in the 2023 Form 10‑K, the condensed consolidated statements of cash flows included in the Company's quarterly report on Form 10-Q for the quarterly period ended March 31, 2024 (the "March 2024 Form 10-Q"), when filed, and in the press release attached as Exhibit 99.1 for the GAAP measures of cash flows from operating, investing, and financing activities.

Forward-Looking Statements

The information contained in the press release and supplemental information includes certain estimates, projections, and other forward-looking statements that involve known and unknown risks and relate to, among other things, future events, the business model, strategy, outlook and guidance, growth targets, labor cost trends, financial plans, dividend strategies or payments, effective income tax rates, plans to repurchase its debt or equity securities, future financial performance, projected business results, ability to return value to its shareholders, projected capital expenditures and development plans, leverage ratio, guidance considerations, and the impact of future legislation or regulation. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “targets,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These estimates, projections, and other forward-looking statements are based on assumptions the Company believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such estimates and actual results, and those differences may be material.

There can be no assurance that any estimates, projections, or forward-looking statements will be realized.

All such estimates, projections, and forward-looking statements speak only as of the date hereof. The Company undertakes no duty to publicly update or revise that information.

You are cautioned not to place undue reliance on the estimates, projections, and other forward-looking statements in this report, the press release, and supplemental information 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 attached press release and in the 2023 Form 10‑K, the March 2024 Form 10-Q when filed, and in other documents the Company previously filed with the SEC, many of which are beyond the Company’s control. These factors may cause actual results to differ materially from the views, beliefs, and estimates expressed herein.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number						Description
99.1						Press release of Encompass Health Corporation, dated April 24, 2024.
99.2						Supplemental information provided in connection with the first quarter 2024 earnings call of Encompass Health Corporation.
104						Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


ENCOMPASS HEALTH CORPORATION
By:	/S/ DOUGLAS E. COLTHARP
	Name:	Douglas E. Coltharp
	Title:	Executive Vice President and Chief Financial Officer

Dated: April 24, 2024

Exhibit 99.1


Media Contact			April 24, 2024
Kennedi Spurling, 205 970-5912
[email protected]

Investor Relations Contact
Mark Miller, 205 970-5860
[email protected]

Encompass Health reports results for first quarter 2024

Increases full-year guidance

BIRMINGHAM, Ala. - Encompass Health Corporation (NYSE: EHC), the largest owner and operator of inpatient rehabilitation hospitals in the United States, today reported its results of operations for the first quarter ended March 31, 2024.

Summary results


					Growth
	Q1 2024		Q1 2023		Dollars		Percent
	(In Millions, Except Per Share Data)
Net operating revenue	$	1,316.0	$	1,160.4	$	155.6	13.4	%
Income from continuing operations attributable to Encompass Health per diluted share	1.11		0.88		0.23		26.1	%
Adjusted earnings per share	1.12		0.88		0.24		27.3	%
Cash flows provided by operating activities	238.8		227.9		10.9		4.8	%
Adjusted EBITDA	273.0		229.0		44.0		19.2	%
Adjusted free cash flow	167.6		158.7		8.9		5.6	%

(Actual Amounts)
Discharges	61,111		55,557				10.0	%
Same-store discharge growth							6.7	%
Net patient revenue per discharge	$	20,990	$	20,415			2.8	%

See attached supplemental information for calculations of non-GAAP measures and reconciliations to their most comparable GAAP measure.

“We are pleased with our first quarter performance,” said President and Chief Executive Officer of Encompass Health Mark Tarr. “Revenue growth of 13.4% driven primarily by strong discharge growth combined with prudent expense management to drive Adjusted EBITDA growth of 19.2%. Our value proposition and operating strategy continue to be validated and we remain highly optimistic about the long-term prospects of our business.”


						1

•Revenue growth of 13.4% resulted primarily from discharge growth of 10.0%, including same-store growth of 6.7%. Net revenue per discharge grew 2.8%.

•Cash flows provided by operating activities increased 4.8% to $238.8 million, primarily due to an increase in net income partly offset by changes in working capital.

•Adjusted EBITDA increased 19.2%, primarily from increased revenue and overall expense management.

2024 Guidance

The Company increased its full-year guidance as follows:


	Full-Year 2024 Guidance
	Previous Guidance	Updated Guidance
	(In Millions, Except Per Share Data)
Net operating revenue	$5,200 to $5,300	$5,250 to $5,325
Adjusted EBITDA	$1,015 to $1,055	$1,030 to $1,065
Adjusted earnings per share from continuing operations attributable to Encompass Health	$3.77 to $4.06	$3.86 to $4.11

For considerations regarding the Company’s 2024 guidance, 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 10:00 a.m. Eastern Time on Thursday, April 25, 2024 to discuss its results for the first quarter of 2024. 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 800 579-2543 and giving the conference ID EHCQ124. International callers should dial 785 424-1699 and give the same conference ID. 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

Encompass Health (NYSE: EHC) is the largest owner and operator of inpatient rehabilitation hospitals in the United States. With a national footprint that includes 160 hospitals in 37 states and Puerto Rico, the Company provides high-quality, compassionate rehabilitative care for patients recovering from a major injury or illness, using advanced technology and innovative treatments to maximize recovery. Encompass Health is ranked as one of Fortune's World’s Most Admired Companies and Modern Healthcare’s Best Places to Work in Healthcare. For more information, visit encompasshealth.com, or follow us on our newsroom, Twitter, Instagram and Facebook.


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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 March 31, 2024 (the “March 2024 Form 10-Q”), when filed, as well as the Company’s Current Report on Form 8-K filed on April 24, 2024 (the “Q1 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 April 25, 2024 earnings call.

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 or in the Q1 Earnings Form 8-K. Readers are encouraged to review the “Note Regarding Presentation of Non-GAAP Financial Measures” included in the Q1 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 not 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 not 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 2024 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 - approximately $145 million

•Amortization of debt-related items - approximately $10 million

The Q1 Earnings Form 8-K and, when filed, the March 2024 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.


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Encompass Health Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
	2024		2023
	(In Millions, Except Per Share Data)
Net operating revenues	$	1,316.0	$	1,160.4
Operating expenses:
Salaries and benefits	711.6		629.0
Other operating expenses	203.9		177.9
Occupancy costs	14.0		13.8
Supplies	58.5		53.8
General and administrative expenses	50.2		43.4
Depreciation and amortization	70.3		63.9


Total operating expenses	1,108.5		981.8

Interest expense and amortization of debt discounts and fees	35.2		36.4
Other income	(5.4)		(3.6)
Equity in net income of nonconsolidated affiliates	(0.7)		(0.4)
Income from continuing operations before income tax expense	178.4		146.2
Provision for income tax expense	38.3		31.9
Income from continuing operations	140.1		114.3
Loss from discontinued operations, net of tax	(1.3)		(1.0)
Net and comprehensive income	138.8		113.3


Less: Net and comprehensive income attributable to noncontrolling interests	(26.3)		(25.6)
Net and comprehensive income attributable to Encompass Health	$	112.5	$	87.7



Weighted average common shares outstanding:
Basic	99.8		99.4
Diluted	102.2		100.9
Earnings per common share:
Basic earnings per share attributable to Encompass Health common shareholders:
Continuing operations	$	1.13	$	0.89
Discontinued operations	(0.01)		(0.01)
Net income	$	1.12	$	0.88
Diluted earnings per share attributable to Encompass Health common shareholders:
Continuing operations	$	1.11	$	0.88
Discontinued operations	(0.01)		(0.01)
Net income	$	1.10	$	0.87

Amounts attributable to Encompass Health common shareholders:
Income from continuing operations	$	113.8	$	88.7
Loss from discontinued operations, net of tax	(1.3)		(1.0)
Net income attributable to Encompass Health	$	112.5	$	87.7


						4

Encompass Health Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31, 2024		December 31, 2023
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	134.4	$	69.1
Restricted cash	38.3		35.1
Accounts receivable	619.3		611.6
Other current assets	137.8		126.0

Total current assets	929.8		841.8
Property and equipment, net	3,370.3		3,301.0
Operating lease right-of-use assets	199.1		208.5
Goodwill	1,281.3		1,281.3
Intangible assets, net	272.2		278.2

Other long-term assets	178.7		191.6

Total assets	$	6,231.4	$	6,102.4
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	25.6	$	24.8
Current operating lease liabilities	25.4		24.1
Accounts payable	166.1		170.0



Accrued expenses and other current liabilities	463.2		437.5

Total current liabilities	680.3		656.4
Long-term debt, net of current portion	2,682.6		2,687.8
Long-term operating lease liabilities	185.8		196.1

Deferred income tax liabilities	93.5		87.0
Other long-term liabilities	185.8		177.9

Total liabilities	3,828.0		3,805.2
Commitments and contingencies

Redeemable noncontrolling interests	41.1		42.0
Shareholders’ equity:
Encompass Health shareholders’ equity	1,741.9		1,647.5
Noncontrolling interests	620.4		607.7
Total shareholders’ equity	2,362.3		2,255.2
Total liabilities and shareholders’ equity	$	6,231.4	$	6,102.4


						5

Encompass Health Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2024		2023
	(In Millions)
Cash flows from operating activities:
Net income	$	138.8	$	113.3
Loss from discontinued operations, net of tax	1.3		1.0
Adjustments to reconcile net income to net cash provided by operating activities—

Depreciation and amortization	70.3		63.9




Stock-based compensation	9.3		7.9
Deferred tax expense	6.5		4.0


Other, net	14.9		1.2
Change in assets and liabilities, net of acquisitions—
Accounts receivable	(7.7)		23.7
Other assets	(16.0)		(3.7)
Accounts payable	(3.8)		1.2


Other liabilities	25.9		16.7

Net cash used in operating activities of discontinued operations	(0.7)		(1.3)
Total adjustments	98.7		113.6
Net cash provided by operating activities	238.8		227.9
Cash flows from investing activities:

Purchases of property, equipment, and intangible assets	(139.4)		(99.8)






Proceeds from sale of restricted investments	16.0		0.2
Other, net	(6.3)		(4.4)

Net cash used in investing activities	(129.7)		(104.0)





Cash flows from financing activities:



Principal payments on debt, including pre-payments	(1.0)		(0.6)
Borrowings on revolving credit facility	50.0		30.0
Payments on revolving credit facility	(50.0)		(45.0)



Taxes paid on behalf of employees for shares withheld	(12.1)		(7.7)


Contributions from noncontrolling interests of consolidated affiliates	18.4		17.0
Dividends paid on common stock	(15.9)		(15.6)
Distributions paid to noncontrolling interests of consolidated affiliates	(24.7)		(31.8)
Other, net	(5.3)		(4.3)

Net cash used in financing activities	(40.6)		(58.0)
Increase in cash, cash equivalents, and restricted cash	68.5		65.9
Cash, cash equivalents, and restricted cash at beginning of period	104.2		53.4
Cash, cash equivalents, and restricted cash at end of period	$	172.7	$	119.3











Reconciliation of Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents at beginning of period	$	69.1	$	21.8
Restricted cash at beginning of period	35.1		31.6


Cash, cash equivalents, and restricted cash at beginning of period	$	104.2	$	53.4

Cash and cash equivalents at end of period	$	134.4	$	85.0
Restricted cash at end of period	38.3		34.3


Cash, cash equivalents, and restricted cash at end of period	$	172.7	$	119.3


						6

Encompass Health Corporation and Subsidiaries

Supplemental Information

Earnings Per Share


	Three Months Ended March 31,
	2024		2023
	(In Millions, Except Per Share Data)
Adjusted EBITDA	$	273.0	$	229.0
Depreciation and amortization	(70.3)		(63.9)
Interest expense and amortization of debt discounts and fees	(35.2)		(36.4)
Stock-based compensation	(9.3)		(7.9)
Loss on disposal or impairment of assets	(13.7)		(0.7)
	144.5		120.1
Items not indicative of ongoing operating performance:






Change in fair market value of equity securities	0.3		0.5
Asset impairment impact on noncontrolling interests	7.3		—


Pre-tax income	152.1		120.6
Income tax expense	(38.3)		(31.9)
Income from continuing operations (1)	$	113.8	$	88.7

Basic shares	99.8		99.4
Diluted shares	102.2		100.9

Basic earnings per share (1)	$	1.13	$	0.89
Diluted earnings per share (1)	$	1.11	$	0.88

(1)Income from continuing operations attributable to Encompass Health


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Encompass Health Corporation and Subsidiaries

Supplemental Information

Adjusted Earnings Per Share


	Q1
	2024		2023

Earnings per share, as reported	$	1.11	$	0.88
Adjustments, net of tax:



Asset impairment impact	0.02		—


Income tax adjustments	(0.01)		—





Adjusted earnings per share*	$	1.12	$	0.88

* Adjusted EPS may not sum due to rounding.


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Encompass Health Corporation and Subsidiaries

Supplemental Information

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA


	Three Months Ended March 31,

	2024		2023
	(In Millions)
Net cash provided by operating activities	$	238.8	$	227.9

Interest expense and amortization of debt discounts and fees	35.2		36.4
Gain on sale of investments, excluding impairments	1.3		1.7
Equity in net income of nonconsolidated affiliates	0.7		0.4
Net income attributable to noncontrolling interests in continuing operations	(26.3)		(25.6)
Amortization of debt-related items	(2.4)		(2.3)
Distributions from nonconsolidated affiliates	(0.8)		(0.1)
Current portion of income tax expense	31.8		27.9
Change in assets and liabilities	1.6		(37.9)
Cash used in operating activities of discontinued operations	0.7		1.3





Asset impairment impact on noncontrolling interests	(7.3)		—
Change in fair market value of equity securities	(0.3)		(0.5)
Other	—		(0.2)
Adjusted EBITDA	$	273.0	$	229.0


						9

Encompass Health Corporation and Subsidiaries

Supplemental Information

Reconciliation of Income from Continuing Operations Attributable to Encompass Health per Diluted Share to Adjusted Earnings Per Share


	For the Three Months Ended March 31, 2024
			Adjustments
	As Reported		Asset Impairment Impact		Income Tax Adjustments		Change in Fair Market Value of Equity Securities		As Adjusted
	(In Millions, Except Per Share Amounts)
Adjusted EBITDA*	$	273.0	$	—	$	—	$	—	$	273.0
Depreciation and amortization	(70.3)		—		—		—		(70.3)
Interest expense and amortization of debt discounts and fees	(35.2)		—		—		—		(35.2)
Stock-based compensation	(9.3)		—		—		—		(9.3)
Loss on disposal or impairment of assets	(13.7)		10.4		—		—		(3.3)






Change in fair market value of equity securities	0.3		—		—		(0.3)		—
Asset impairment impact on noncontrolling interests	7.3		(7.3)		—		—		—


Income from continuing operations before income tax expense	152.1		3.1		—		(0.3)		154.9
Provision for income tax expense	(38.3)		(1.3)		(0.6)		0.1		(40.1)
Income from continuing operations attributable to Encompass Health	$	113.8	$	1.8	$	(0.6)	$	(0.2)	$	114.8



Diluted earnings per share from continuing operations**	$	1.11	$	0.02	$	(0.01)	$	—	$	1.12
Diluted shares used in calculation	102.2

* Reconciliation to GAAP provided on page 9

** Adjusted EPS may not sum across due to rounding.


						10

Encompass Health Corporation and Subsidiaries

Supplemental Information

Reconciliation of Income from Continuing Operations Attributable to Encompass Health per Diluted Share to Adjusted Earnings Per Share


	For the Three Months Ended March 31, 2023
			Adjustments
	As Reported		Income Tax Adjustments		Change in Fair Market Value of Equity Securities		As Adjusted
	(In Millions, Except Per Share Amounts)
Adjusted EBITDA*	$	229.0	$	—	$	—	$	229.0
Depreciation and amortization	(63.9)		—		—		(63.9)
Interest expense and amortization of debt discounts and fees	(36.4)		—		—		(36.4)
Stock-based compensation	(7.9)		—		—		(7.9)
Loss on disposal or impairment of assets	(0.7)		—		—		(0.7)






Change in fair market value of equity securities	0.5		—		(0.5)		—



Income from continuing operations before income tax expense	120.6		—		(0.5)		120.1
Provision for income tax expense	(31.9)		0.3		0.1		(31.5)
Income from continuing operations attributable to Encompass Health	$	88.7	$	0.3	$	(0.4)	$	88.6



Diluted earnings per share from continuing operations**	$	0.88	$	—	$	—	$	0.88
Diluted shares used in calculation	100.9

* Reconciliation to GAAP provided on page 9

** Adjusted EPS may not sum across due to rounding.


						11

Encompass Health Corporation and Subsidiaries

Supplemental Information

Reconciliation of Net Income to Adjusted EBITDA


	Three Months Ended March 31,
	2024		2023
	(In Millions)
Net income	$	138.8	$	113.3
Loss from discontinued operations, net of tax, attributable to Encompass Health	1.3		1.0
Net income attributable to noncontrolling interests included in continuing operations	(26.3)		(25.6)
Provision for income tax expense	38.3		31.9
Interest expense and amortization of debt discounts and fees	35.2		36.4
Depreciation and amortization	70.3		63.9



Loss on disposal or impairment of assets	13.7		0.7
Stock-based compensation	9.3		7.9





Change in fair market value of equity securities	(0.3)		(0.5)
Asset impairment impact on noncontrolling interests	(7.3)		—

Adjusted EBITDA	$	273.0	$	229.0


						12

Encompass Health Corporation and Subsidiaries

Supplemental Information

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow


	Three Months Ended March 31,

	2024		2023
	(In Millions)
Net cash provided by operating activities	$	238.8	$	227.9
Impact of discontinued operations	0.7		1.3
Net cash provided by operating activities of continuing operations	239.5		229.2
Capital expenditures for maintenance	(38.7)		(37.8)
Distributions paid to noncontrolling interests of consolidated affiliates	(24.7)		(31.8)
Items not indicative of ongoing operating performance:


Transaction costs and related liabilities	(8.5)		(0.9)

Adjusted free cash flow	$	167.6	$	158.7

For the three months ended March 31, 2024, net cash used in investing activities was $129.7 million and resulted primarily from capital expenditures. Net cash used in financing activities during the three months ended March 31, 2024 was $40.6 million and resulted primarily from distributions paid to noncontrolling interests of consolidated affiliates and cash dividends paid on common stock partially offset by contributions from noncontrolling interests of consolidated affiliates.

For the three months ended March 31, 2023, net cash used in investing activities was $104.0 million and resulted primarily from capital expenditures. Net cash used in financing activities during the three months ended March 31, 2023 was $58.0 million and resulted primarily from distributions paid to noncontrolling interests of consolidated affiliates, cash dividends paid on common stock, and net debt payments partially offset by contributions from noncontrolling interests of consolidated affiliates.


						13

Encompass Health Corporation and Subsidiaries

Forward-Looking Statements

Statements contained in this press release and the supplemental information which are not historical facts, such as those relating to the business, strategy, outlook, growth targets and guidance considerations, dividend strategies, effective income tax rates, cost trends, legislative and regulatory developments or their impacts, financial guidance, ability to return value to shareholders, projected capital expenditures, acquisition opportunities, development projects, addressable market size, other balance sheet and cash flow plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, Encompass Health, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. All such estimates, projections, and forward-looking information speak only as of the date hereof, and Encompass Health undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by Encompass Health include, but are not limited to, an infectious disease outbreak, including the speed, depth, geographic reach and duration of its spread, which could decrease our patient volumes and revenues and lead to staffing and supply shortages and associated cost increases; Encompass Health's infectious disease prevention and control efforts; the demand for Encompass Health’s services, including based on any downturns in the economy, consumer confidence, or the capital markets; the price of Encompass Health's common stock as it affects Encompass Health's willingness and ability to repurchase shares and the financial and accounting effects of any repurchases; any adverse outcome of various lawsuits, claims, and legal or regulatory proceedings involving Encompass Health, including any matters related to yet undiscovered issues, if any, in acquired operations; Encompass Health's ability to attract and retain key management personnel; any adverse effects on Encompass Health's stock price resulting from the integration of acquired operations; potential disruptions, breaches, or other incidents affecting the proper operation, availability, or security of Encompass Health's or its vendors' or partners’ information systems, including unauthorized access to or theft of patient, business associate, or other sensitive information or inability to provide patient care because of system unavailability as well as unforeseen issues, if any, related to integration of acquired systems; the ability to successfully integrate acquired operations, including realization of anticipated tax benefits, revenues, and cost savings, minimizing the negative impact on margins arising from the changes in staffing and other operating practices, and avoidance of unforeseen exposure to liabilities; Encompass Health's ability to successfully complete and integrate de novo developments, acquisitions, investments, and joint ventures consistent with its growth strategy; Encompass Health’s ability to realize construction cost savings from prefabrication of hospitals; increases in Medicare audit activity, including increased use of sampling and extrapolation, resulting in additional unpaid reimbursement claims and an increase in the backlog of appealed claims denials; changes, delays in (including in connection with resolution of Medicare payment reviews or appeals), or suspension of reimbursement for Encompass Health's services by governmental or private payors; changes in the regulation of the healthcare industry at either or both of the federal and state levels, including as part of national healthcare reform and deficit reduction and Encompass Health's ability to adapt operations to those changes, including in connection with the CMS inpatient rehabilitation review choice demonstration project; competitive pressures in the healthcare industry and Encompass Health's response thereto; Encompass Health's ability to obtain and retain favorable arrangements with third-party payors; Encompass Health's ability to control costs, particularly labor and employee benefit costs, including group medical expenses; adverse effects resulting from coverage determinations made by Medicare Administrative Contractors regarding its Medicare reimbursement claims and lengthening delays in Encompass Health's ability to recover improperly denied claims through the administrative appeals process on a timely basis; Encompass Health's ability to adapt to changes in the healthcare delivery system, including value-based purchasing and involvement in coordinated care initiatives or programs that may arise with its referral sources; Encompass Health's ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment with often severe staffing shortages, which may be worsened by infectious disease outbreaks, and the impact on Encompass Health's labor expenses from potential union activity, staffing shortages, and competitive compensation practices; general conditions in the economy and capital markets, including any


						14

Encompass Health Corporation and Subsidiaries

Forward-Looking Statements

instability or uncertainty related to armed conflict or an act of terrorism, governmental impasse over approval of the United States federal budget, an increase in the debt ceiling, or an international sovereign debt crisis; the increase in the cost of, or the decrease in the availability of, necessary supplies, such as personal protective equipment; the increase in the costs of defending and insuring against alleged professional liability claims, and Encompass Health's ability to predict the estimated costs related to such claims; and other factors which may be identified from time to time in Encompass Health's SEC filings and other public announcements, including Encompass Health's Form 10‑K for the year ended December 31, 2023 and Form 10-Q for the quarter ended March 31, 2024, when filed.


						15

2024 First Quarter Earnings Call April 25, 2024 Supplemental information

Encompass Health 2 The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Encompass Health’s current outlook, views and plans with respect to future events, including the business outlook, guidance and growth targets, value drivers, labor availability and costs, legislative and regulatory developments, strategy, capital expenditures, acquisition and other development activities, such as the de novo pipeline, costs, growth and timelines, operational initiatives, dividend strategies, leverage, repurchases of securities, effective tax rates, financial performance, financial assumptions and considerations, balance sheet and cash flow plans, market share capture, and addressable market size. 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 April 24, 2024 (the “Q1 Earnings Release Form 8-K”), the Form 10-K for the year ended December 31, 2023, the Form 10-Q for the quarter ended March 31, 2024, 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 Q1 Earnings Release Form 8-K 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. Forward-looking statements

Encompass Health 3 Q1 2024 Financial summary ............................................................................................................................................. 4 Key takeaways ...................................................................................................................................................................... 5 Revenue ................................................................................................................................................................................. 6 Adjusted EBITDA .................................................................................................................................................................. 7 Earnings per share ............................................................................................................................................................... 8-9 Adjusted free cash flow ..................................................................................................................................................... 10 2024 Guidance and guidance considerations ............................................................................................................... 11-12 Adjusted free cash flow assumptions ............................................................................................................................. 13 Uses of free cash flow ........................................................................................................................................................ 14 Appendix Map of locations ................................................................................................................................................................... 16 Growth targets, fundamentals and value drivers ........................................................................................................ 17 De novo activity ................................................................................................................................................................... 18 Debt maturity profile and schedule ................................................................................................................................ 19-20 New-store/same-store growth .......................................................................................................................................... 21 Payment sources .................................................................................................................................................................. 22 Operational metrics ............................................................................................................................................................ 23 Share information ................................................................................................................................................................ 24 Reconciliations to GAAP ..................................................................................................................................................... 25-30 End notes ............................................................................................................................................................................... 31-32 Table of contents

Encompass Health 4 Q1 2024 Financial summary Q1 ($ in millions, except per share data) 2024 2023 % △ Encompass Health Net operating revenue $ 1,316.0 $ 1,160.4 13.4 % Adjusted EBITDA $ 273.0 $ 229.0 19.2 % Adjusted EPS $ 1.12 $ 0.88 27.3 % Adjusted free cash flow $ 167.6 $ 158.7 5.6 % Reconciliations to GAAP provided on pages 25-30.

Encompass Health 5 Q1 2024 Key takeaways u Revenue Ÿ Net operating revenue growth of 13.4% ü Discharge growth of 10.0% (6.7% same store) u Adjusted EBITDA Ÿ Adjusted EBITDA growth of 19.2% u Balance sheet Ÿ Net leverage of 2.5x u Capacity additions Ÿ Added 51 beds to existing hospitals u Shareholder distributions Ÿ Paid a $0.15 per share quarterly cash dividend in January 2024 Ÿ Declared a $0.15 per share quarterly cash dividend in February 2024 (paid in April 2024) Reconciliations to GAAP provided on pages 25-30.

Encompass Health 6 Revenue Q1 Q1 % Change* ($ in millions) 2024 2023 Net operating revenue: Inpatient $ 1,282.7 $ 1,134.2 13.1% Outpatient and other 33.3 26.2 27.1% Total revenue $ 1,316.0 $ 1,160.4 13.4% (Actual Amounts) Discharges 61,111 55,557 10.0% New-store discharge growth 3.3% Same-store discharge growth 6.7% Net patient revenue per discharge $ 20,990 $ 20,415 2.8% Revenue reserves related to bad debt as a percent of revenue 2.2 % 2.4 % (20) bps u Outpatient and other revenue includes a $6.9 million increase in provider tax revenues (primarily based on payments related to prior periods). *Except for Revenue reserves related to bad debt as a percent of revenue, which is increase (decrease) Refer to pages 31-32 for end notes.

Encompass Health 7 Adjusted EBITDA(1) Q1 % of Revenue Q1 % of Revenue($ in millions) 2024 2023 Net operating revenue $ 1,316.0 $ 1,160.4 Operating expenses: Salaries and benefits (711.6) 54.1 % (629.0) 54.2 % Other operating expenses(a) (190.2) 14.5 % (177.2) 15.3 % Supplies (58.5) 4.4 % (53.8) 4.6 % Occupancy costs (14.0) 1.1 % (13.8) 1.2 % Hospital operating expenses (262.7) 20.0 % (244.8) 21.1 % General and administrative expenses(b) (38.9) 3.0 % (34.2) 2.9 % Other income(c) 3.1 1.8 Equity in nonconsolidated affiliates 0.7 0.4 Noncontrolling interests in continuing operations(d) (33.6) (25.6) Adjusted EBITDA $ 273.0 $ 229.0 Percent change 19.2 % Q1 Q1 ($ in millions) 2024 2023 In arriving at Adjusted EBITDA, the following were excluded: (a) Loss on disposal or impairment of assets(2) $ 13.7 $ 0.7 (b) Stock-based compensation and the change in fair market value of the non- qualified deferred comp plan $ 11.3 $ 9.2 (c) Change in fair market value of equity securities and the non-qualified deferred comp plan $ (2.3) $ (1.8) (d) Asset impairment impact on noncontrolling interests(2) $ (7.3) $ — u Other operating expenses as a percent of revenue decreased 80 basis points primarily due to the favorable impact from the implementation of on-site dialysis and efficiencies in recruiting. Reconciliations to GAAP provided on pages 25-30. Refer to pages 31-32 for end notes.

Encompass Health 8 Earnings per share - as reported Q1 ($ in millions, except per share data) 2024 2023 Adjusted EBITDA $ 273.0 $ 229.0 Depreciation and amortization (70.3) (63.9) Interest expense and amortization of debt discounts and fees (35.2) (36.4) Stock-based compensation (9.3) (7.9) Loss on disposal or impairment of assets (13.7) (0.7) 144.5 120.1 Items not indicative of ongoing operating performance: Change in fair market value of equity securities 0.3 0.5 Asset impairment impact on noncontrolling interests(2) 7.3 — Pre-tax income 152.1 120.6 Income tax expense (38.3) (31.9) Income from continuing operations* $ 113.8 $ 88.7 Diluted shares (see page 24) 102.2 100.9 Diluted earnings per share* $ 1.11 $ 0.88 * Earnings per share are determined using income from continuing operations attributable to Encompass Health. Reconciliations to GAAP provided on pages 25-30. Refer to pages 31-32 for end notes.

Encompass Health 9 Adjusted earnings per share(4) Refer to pages 31-32 for end notes. Q1 2024 2023 Diluted earnings per share, as reported $ 1.11 $ 0.88 Adjustments, net of tax: Asset impairment impact(2) 0.02 — Income tax adjustments (0.01) — Adjusted earnings per share* $ 1.12 $ 0.88 u Adjusted earnings per share removes from GAAP earnings per share the impact of items the Company believes are not indicative of its ongoing operating performance. u Asset impairment related to the closure of Rehabilitation Hospital of Western Wisconsin (Eau Claire). * Adjusted EPS may not sum due to rounding. See complete calculations of adjusted earnings per share on pages 28-30.

Encompass Health 10 $158.7 $44.0 $(28.7) $1.3 $(6.8) $(0.9) $167.6 Adjusted free cash flow 3 mos. 2023 Adjusted EBITDA Working capital and other Cash interest payments Cash tax payments, net of refunds Maintenance capital expenditures Adjusted free cash flow 3 mos. 2024 Q1 2024 Adjusted free cash flow(5) Reconciliations to GAAP provided on pages 25-30. Refer to pages 31-32 for end notes. ($ in millions)

Encompass Health 11 2024 Guidance - Updated as of April 24, 2024 Previous 2024 Guidance Updated 2024 Guidance ($ in millions, except per share data) Net Operating Revenue $5,200 to $5,300 $5,250 to $5,325 Adjusted EBITDA(1) $1,015 to $1,055 $1,030 to $1,065 Adjusted earnings per share from continuing operations attributable to Encompass Health(4) $3.77 to $4.06 $3.86 to $4.11 Refer to pages 31-32 for end notes.

Encompass Health 12 2024 Guidance considerations u Pricing Ÿ Medicare pricing increase of 3.3% for Q1 through Q3 and an estimated 3.0% for Q4 Ÿ Managed Care pricing increase of 2% to 3% Ÿ Bad debt reserves of 2.0% to 2.4% of net operating revenue u Labor Ÿ SWB per FTE (including contract labor, sign-on and shift bonuses) increase of 4% to 5% u Capacity additions Ÿ 6 de novos with 280 beds ü De novo net pre-opening and ramp-up costs of $15 million to $18 million (inclusive of costs associated with 2025 de novos incurred in 2024) Ÿ Approximately 150 beds to existing hospitals ü Inclusive of a 40-bed freestanding satellite hospital u Corporate Ÿ Tax rate of approximately 26% Ÿ Diluted share count of approximately 102 million shares

Encompass Health 13 Adjusted free cash flow(5) assumptions Certain cash flow items ($ in millions) 3 Months 2024 Actuals 2023 Actuals 2024 Assumptions Cash interest payments (net of amortization of debt discounts and fees) $32.8 $134.0 $130 to $140 Cash payments for income taxes, net of refunds $6.6 $106.6 $150 to $170 Working capital and other $27.3 $(12.1) $30 to $50 Maintenance CAPEX $38.7 $216.9 $185 to $195 Adjusted free cash flow $167.6 $525.7 $475 to $570 Increased cash taxes due to higher net income and phase-out of bonus depreciation; 2023 cash taxes benefited from $11 million overpayment in 2022 applied to 2023 Increased working capital due to growth in accounts receivable and the timing of payroll and payroll tax liabilities Investment in new equipment, renovations/improvements, and ongoing maintenance of existing hospitals Reconciliations to GAAP provided on pages 25-30. Refer to pages 31-32 for end notes.

Encompass Health 14 Uses of free cash flow ($ in millions) 3 Months 2024 Actuals 2023 Actuals 2024 Assumptions Growth in core business IRF bed expansions $19.9 $41.8 $105 to $115 New IRFs - De novos 80.8 321.6 290 to 300 - Replacement IRFs and other(6) — 24.2 — $100.7 $387.6 $395 to $415 Debt reduction Debt redemptions (borrowings), net $4.4 $54.4 TBD Shareholder distributions Cash dividends on common stock $15.9 $60.4 TBD Common stock repurchases $— $— TBD Ÿ ~$198 million remaining under current authorization as of March 31, 2024(7) Refer to pages 31-32 for end notes.

Appendix

Encompass Health 16 ~38,500 employees Rehabilitation hospitals “IRFs” IRFs under development* * IRFs under development - previously announced under development as of April 24, 2024 † Based on 2023 and 2022 data Encompass Health Largest owner and operator of rehabilitation hospitals Company profile as of 03/31/24 160 Rehabilitation hospitals “IRFs” 62 are joint ventures 20 37 IRFs under development* States and Puerto Rico 25% of Licensed beds † 34% of Medicare patients served † Key statistics trailing four quarters ~235,000 patient discharges ~$5.0 Billion in revenue

Encompass Health 17 Growth targets, fundamentals and value drivers u 2023 - 2027 Growth targets Ÿ 6 to 10 de novos per year Ÿ 80 to 120 bed additions per year Ÿ 6% to 8% discharge CAGR u Large, under penetrated, and growing inpatient rehabilitation market Ÿ Large addressable market indicated by low conversion rate of presumptively eligible inpatient rehabilitation patients Ÿ Favorable demographics driving increased demand for rehabilitation services Ÿ Unparalleled clinical expertise for treating inpatient rehabilitation conditions with consistent delivery of high-quality, cost-effective care Ÿ De novo and bed addition strategy delivers attractive financial returns Ÿ Cash flow and capital availability to fund capacity additions Ÿ Fragmented sector presents unit acquisition and joint venture opportunities Ÿ Significant barriers to entry and economies of scale Ÿ Resilient business model with focus on non-discretionary conditions occurring predominantly in an aging population u Shareholder distributions Ÿ Cash dividend (currently $0.15 per share per quarter) Ÿ Approximately $198 million remaining under current stock repurchase authorization

Encompass Health 18 Inpatient Rehabilitation Hospitals opened or under development Joint venture # of new beds 2024 2025 2026 De novo projects* 1 Kissimmee, FL 50 — — 2 Atlanta, GA ü 40 — — 3 Johnston, RI 50 — — 4 Fort Mill, SC 39 — — 5 Louisville, KY ü 40 — — 6 Houston, TX 61 — — 7 Daytona Beach, FL — 50 — 8 Fort Myers, FL ü — 60 — 9 Lake Worth, FL — 50 — 10 Concordville, PA — 50 — 11 Norristown, PA — 50 — 12 Wildwood, FL (in The Villages, FL) — 50 — 13 Athens, GA ü — 40 — 14 St. Petersburg, FL — 50 — 15 Palm Beach Gardens, FL — — 50 16 Amarillo, TX — — 50 17 Danbury, CT — — 40 18 Avondale, AZ — — 60 19 Loganville, GA ü — — 40 20 San Antonio, TX — — 50 Bed expansions, net* ~150 † ~80 ~80 *All dates are tentative and subject to change 430 480 370 † Inclusive of 40-bed freestanding satellite hospital De novo activity 1Q 2024 De novo activity highlights u Announced de novo # of beds JV Ÿ Avondale, AZ 60 Ÿ Loganville, GA 40 ü IRF development projects announced and underway 20

Encompass Health 19 2023 2024 2025 2026 2027 2028 2029 2030 2031 * This chart does not include ~$335 of finance lease obligations or ~$65 of other notes payable. See the debt schedule on page 20. Debt maturity profile - face value $350 Senior Notes 5.75% ($ in millions) Revolver capacity $800 Senior Notes 4.75% $800 Senior Notes 4.5% Revolver As of March 31, 2024* $964 Available $— Drawn + $36 reserved for LCs Callable at par Callable beginning February 2025Callable at 101.125 $400 Senior Notes 4.625% Callable beginning April 2026

Encompass Health 20 Debt schedule Change in March 31, December 31, Debt vs. ($ in millions) 2024 2023 YE 2023 Advances under $1 billion revolving credit facility $ — $ — $ — Bonds Payable: 5.75% Senior Notes due 2025 348.7 348.5 0.2 4.50% Senior Notes due 2028 785.9 785.0 0.9 4.75% Senior Notes due 2030 782.2 781.5 0.7 4.625% Senior Notes due 2031 391.8 391.5 0.3 Other notes payable 64.8 66.0 (1.2) Finance lease obligations 334.8 340.1 (5.3) Long-term debt $ 2,708.2 $ 2,712.6 $ (4.4) Debt to Adjusted EBITDA 2.7 x 2.8 x Leverage net of cash and cash equivalents 2.5 x 2.7 x Reconciliations to GAAP provided on pages 25-30. The leverage ratio for 1Q24 stated in terms of the most comparable GAAP measurement would be Debt to Net cash provided by operating activities: 3.1x The leverage ratio for 2023 stated in terms of the most comparable GAAP measurement would be Debt to Net cash provided by operating activities: 3.2x

Encompass Health 21 0.0% 5.0% 10.0% 15.0% 20.0% * Includes inpatient rehabilitation hospitals classified as same store during each period New-store/same-store growth North Tampa, FL (50 beds) Cumming, GA (50 beds) Shreveport, LA (40 beds) Waco, TX (40 beds) Greenville, SC (40 beds) Pensacola, FL (40 beds) Discharges Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 New store 1.8% 2.0% 3.6% 3.8% 3.3% 3.4% 3.1% 3.5% 3.6% 3.0% 3.0% 3.3% Same store* 16.9% 6.7% 6.0% 3.8% 1.6% 4.1% 4.2% 5.9% 6.2% 4.3% 5.3% 6.7% Total by quarter 18.7% 8.7% 9.6% 7.6% 4.9% 7.5% 7.3% 9.4% 9.8% 7.3% 8.3% 10.0% Total by year 8.7% 6.8% 8.7% Same store by year* 6.2% 3.1% 4.8% Shiloh, IL (40 beds) St. Augustine, FL (40 beds) Libertyville, IL (60 beds) Henry County, GA (50 beds) Moline, IL (40 beds) Naples, FL (50 beds) Grand Forks, ND (40 beds) Lakeland, FL (50 beds) Cape Coral, FL (40 beds) Jacksonville, FL (50 beds) Knoxville, TN (73 beds) Eau Claire, WI (36 beds) Owasso, OK (40 beds) Clermont, FL (50 beds) Bowie, MD (60 beds) Columbus, GA (40 beds) Prosper, TX (40 beds) Fitchburg, WI (56 beds)

Encompass Health 22 Payment sources (percent of revenues) Q1 Full Year 2024 2023 2023 Medicare 64.9 % 65.3 % 65.0 % Medicare Advantage 17.0 % 16.0 % 16.2 % Managed care 10.9 % 11.0 % 11.1 % Medicaid 3.4 % 4.1 % 4.0 % Other third-party payors 0.7 % 0.9 % 0.9 % Workers’ compensation 0.5 % 0.5 % 0.5 % Patients 0.3 % 0.2 % 0.3 % Other income 2.3 % 2.0 % 2.0 % Total 100.0 % 100.0 % 100.0 %

Encompass Health 23 Operational metrics Q1 Q4 Q3 Q2 Q1 Full Year 2024 2023 2023 2023 2023 2023 Net patient revenue-inpatient $ 1,282.7 $ 1,216.8 $ 1,180.5 $ 1,162.3 $ 1,134.2 $ 4,693.8 Net patient revenue-outpatient and other revenues 33.3 30.0 26.4 24.8 26.2 107.4 Net operating revenues $ 1,316.0 $ 1,246.8 $ 1,206.9 $ 1,187.1 $ 1,160.4 $ 4,801.2 Discharges(8) 61,111 59,247 57,665 57,011 55,557 229,480 Net patient revenue per discharge $ 20,990 $ 20,538 $ 20,472 $ 20,387 $ 20,415 $ 20,454 Outpatient visits 29,744 29,627 28,604 30,752 31,852 120,835 Average length of stay 12.3 12.3 12.4 12.3 12.5 12.4 Occupancy % 76.7 % 73.4 % 72.8 % 72.4 % 73.4 % 72.1 % # of licensed beds 10,781 10,778 10,677 10,611 10,510 10,778 Occupied beds 8,269 7,911 7,773 7,682 7,714 7,771 Full-time equivalents (FTEs) - internal 27,209 26,713 26,112 25,453 25,122 25,850 Contract labor FTEs 434 378 388 476 459 425 Total FTEs(9) 27,643 27,091 26,500 25,929 25,581 26,275 EPOB(10) 3.34 3.42 3.41 3.38 3.32 3.38 Refer to pages 31-32 for end notes.

Encompass Health 24 Share information Weighted Average for the Period Q1 Full Year (in millions) 2024 2023 2023 2022 2021 Basic shares outstanding 99.8 99.4 99.5 99.2 99.0 Restricted stock awards, dilutive stock options, and restricted stock units 2.4 1.5 1.8 1.2 1.2 Diluted shares outstanding 102.2 100.9 101.3 100.4 100.2 End of Period Q1 Full Year (in millions) 2024 2023 2023 2022 2021 Basic shares outstanding 100.7 100.2 100.3 99.8 99.5

Encompass Health 25 Net cash provided by operating activities reconciled to Adjusted EBITDA(1) Q1 Full Year ($ in millions) 2024 2023 2023 Net cash provided by operating activities $ 238.8 $ 227.9 $ 850.8 Interest expense and amortization of debt discounts and fees 35.2 36.4 143.5 Gain on sale of investments, excluding impairments 1.3 1.7 4.6 Equity in net income of nonconsolidated affiliates 0.7 0.4 3.2 Net income attributable to noncontrolling interests in continuing operations (26.3) (25.6) (111.0) Amortization of debt-related items (2.4) (2.3) (9.5) Distributions from nonconsolidated affiliates (0.8) (0.1) (1.6) Current portion of income tax expense 31.8 27.9 128.3 Change in assets and liabilities 1.6 (37.9) (50.3) Cash used in operating activities of discontinued operations 0.7 1.3 16.0 State regulatory change impact on noncontrolling interests(3) — — (2.2) Asset impairment impact on noncontrolling interests(2) (7.3) — — Change in fair market value of equity securities (0.3) (0.5) (0.7) Other — (0.2) — Adjusted EBITDA $ 273.0 $ 229.0 $ 971.1 Refer to pages 31-32 for end notes.

Encompass Health 26 Reconciliation of net income to Adjusted EBITDA(1) Q1 Full Year ($ in millions) 2024 2023 2023 Net income $ 138.8 $ 113.3 $ 463.0 Loss from discontinued operations, net of tax, attributable to Encompass Health 1.3 1.0 12.0 Net income attributable to noncontrolling interests included in continuing operations (26.3) (25.6) (111.0) Provision for income tax expense 38.3 31.9 132.2 Interest expense and amortization of debt discounts and fees 35.2 36.4 143.5 Depreciation and amortization(3) 70.3 63.9 273.9 Loss on disposal or impairment of assets 13.7 0.7 9.8 Stock-based compensation 9.3 7.9 50.6 State regulatory change impact on noncontrolling interests(3) — — (2.2) Change in fair market value of equity securities (0.3) (0.5) (0.7) Asset impairment impact on noncontrolling interests(2) (7.3) — — Adjusted EBITDA $ 273.0 $ 229.0 $ 971.1 Refer to pages 31-32 for end notes.

Encompass Health 27 Reconciliation of net cash provided by operating activities to adjusted free cash flow(5) Q1 Full Year ($ in millions) 2024 2023 2023 Net cash provided by operating activities $ 238.8 $ 227.9 $ 850.8 Impact of discontinued operations 0.7 1.3 16.0 Net cash provided by operating activities of continuing operations 239.5 229.2 866.8 Capital expenditures for maintenance (38.7) (37.8) (216.9) Distributions paid to noncontrolling interests of consolidated affiliates (24.7) (31.8) (114.7) Items not indicative of ongoing operating performance: Transaction costs and related liabilities (8.5) (0.9) (9.5) Adjusted free cash flow $ 167.6 $ 158.7 $ 525.7 Cash dividends on common stock $ 15.9 $ 15.6 $ 60.4 Refer to pages 31-32 for end notes.

Encompass Health 28 Adjusted EPS(4) - Q1 2024 For the Three Months Ended March 31, 2024 Adjustments As Reported Asset Impairment Impact Income Tax Adjustments Change in Fair Market Value of Equity Securities As Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 273.0 $ — $ — $ — $ 273.0 Depreciation and amortization (70.3) — — — (70.3) Interest expense and amortization of debt discounts and fees (35.2) — — — (35.2) Stock-based compensation (9.3) — — — (9.3) Loss on disposal or impairment of assets(2) (13.7) 10.4 — — (3.3) Change in fair market value of equity securities 0.3 — — (0.3) — Asset impairment impact on noncontrolling interests(2) 7.3 (7.3) — — — Income from continuing operations before income tax expense 152.1 3.1 — (0.3) 154.9 Provision for income tax expense (38.3) (1.3) (0.6) 0.1 (40.1) Income from continuing operations attributable to Encompass Health $ 113.8 $ 1.8 $ (0.6) $ (0.2) $ 114.8 Diluted earnings per share from continuing operations* $ 1.11 $ 0.02 $ (0.01) $ — $ 1.12 Diluted shares used in calculation 102.2 * Adjusted EPS may not sum across due to rounding. Refer to pages 31-32 for end notes.

Encompass Health 29 For the Three Months Ended March 31, 2023 Adjustments As Reported Income Tax Adjustments Change in Fair Market Value of Equity Securities As Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 229.0 $ — $ — $ 229.0 Depreciation and amortization (63.9) — — (63.9) Interest expense and amortization of debt discounts and fees (36.4) — — (36.4) Stock-based compensation (7.9) — — (7.9) Loss on disposal or impairment of assets (0.7) — — (0.7) Change in fair market value of equity securities 0.5 — (0.5) — Income from continuing operations before income tax expense 120.6 — (0.5) 120.1 Provision for income tax expense (31.9) 0.3 0.1 (31.5) Income from continuing operations attributable to Encompass Health $ 88.7 $ 0.3 $ (0.4) $ 88.6 Diluted earnings per share from continuing operations* $ 0.88 $ — $ — $ 0.88 Diluted shares used in calculation 100.9 Adjusted EPS(4) - Q1 2023 * Adjusted EPS may not sum across due to rounding. Refer to pages 31-32 for end notes.

Encompass Health 30 Adjusted EPS(4) - 2023 For the Year Ended December 31, 2023 Adjustments As Reported State Regulatory Change Impact Income Tax Adjustments Change in Fair Market Value of Equity Securities As Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 971.1 $ — $ — $ — $ 971.1 Depreciation and amortization(3) (273.9) 6.1 — — (267.8) Interest expense and amortization of debt discounts and fees (143.5) — — — (143.5) Stock-based compensation (50.6) — — — (50.6) Loss on disposal or impairment of assets (9.8) — — — (9.8) State regulatory change impact on noncontrolling interests(3) 2.2 (2.2) — — — Change in fair market value of equity securities 0.7 — — (0.7) — Income from continuing operations before income tax expense 496.2 3.9 — (0.7) 499.4 Provision for income tax expense (132.2) (1.0) 2.8 0.2 (130.2) Income from continuing operations attributable to Encompass Health $ 364.0 $ 2.9 $ 2.8 $ (0.5) $ 369.2 Diluted earnings per share from continuing operations* $ 3.59 $ 0.03 $ 0.03 $ — $ 3.64 Diluted shares used in calculation 101.3 * Adjusted EPS may not sum across due to rounding. Refer to pages 31-32 for end notes.

Encompass Health 31 End notes Reconciliations to GAAP provided on pages 25-30. (1) 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. (2) In January 2024, we received notice that our joint venture partner, Hospital Sisters Health System, intended to close its acute-care hospital, Sacred Heart Hospital in Eau Claire, WI, in which our joint venture inpatient rehabilitation hospital is located. We closed that joint venture hospital in February 2024 and incurred a one-time impairment charge of $10.4 million. The impact to net income attributable to Encompass Health during the three months ended March 31, 2024 resulting from the impairment was $1.8 million after reductions for net income attributable to noncontrolling interests of $7.3 million and the provision for income tax expense of $1.3 million. (3) In May of 2023, the governor of South Carolina signed into law S.164, which repealed the requirement of certain healthcare providers to obtain and/or maintain a certificate of need (“CON”). As a results of this repeal, in Q2 2023 we accelerated amortization of approximately $6 million in remaining carrying value of our South Carolina CON assets, increasing depreciation and amortization expense by approximately $6 million and reducing noncontrolling interest in continuing operations by approximately $2 million (related to our joint venture partner’s share of income at one impacted location). The impact of these adjustments have been excluded from the calculation of Adjusted EBITDA and adjusted earnings per share in the second quarter of 2023 given the non- recurring nature of the CON repeal (Florida is the only other state in recent history to repeal its CON law) is not indicative of ongoing operating performance. (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.

Encompass Health 32 End notes (continued) (5) The 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, distributions to noncontrolling interests, and certain 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) In September 2023, we purchased our Treasure Coast hospital (Vero Beach, Florida) real estate from Ocean Health Associates, LTD. (“Ocean Health”) for $21.4 million. Prior to the purchase, we leased the real estate from Ocean Health. The $21.4 million payment is included in Principal payments under finance lease obligations on the consolidated statement of cash flows for the twelve months ended December 31, 2023. (7) 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 March 31, 2024, the remaining repurchase authorization was approximately $198 million. (8) Represents discharges from 160 consolidated hospitals in Q1 2024; 161 consolidated hospitals in Q4 2023; 159 consolidated hospitals in Q3 2023; 158 consolidated hospitals in Q2 2023; and 156 consolidated hospitals in Q1 2023. (9) Total full-time equivalents included in the table represent Encompass Health employees who participate in or support the operations of our hospitals and include full-time equivalents related to contract labor. (10) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of total full-time equivalents, including full-time equivalents from the utilization of contract labor, by the number of occupied beds during each period. Reconciliations to GAAP provided on pages 25-30.