Encompass Health CorpEHC

Encompass Health Corp Fair Value Disclosure

10-KFiled Feb 26, 20262 min read
Fair Value Measurements:
Our financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in millions):
  Fair Value Measurements at Reporting Date Using
As of December 31, 2025Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Valuation Technique (1)
Equity securities$36.3 $20.3 $16.0 $— M
Available for sale debt securities:
U.S. government and agency securities40.4 40.4 — — M
Corporate bonds and notes69.1 — 69.1 — M
Redeemable noncontrolling interests58.3 — — 58.3 I
As of December 31, 2024     
Equity securities$130.9 $4.2 $126.7 $— M
Redeemable noncontrolling interests56.5 — — 56.5 I
(1)The two valuation techniques are: market approach (M) and income approach (I).
There are assets and liabilities that are not required to be measured at fair value on a recurring basis. However, these assets may be recorded at fair value as a result of impairment charges or other adjustments made to the carrying value of the applicable assets. During the years ended December 31, 2025, 2024, and 2023, we did not record any material gains or losses related to these assets.
As discussed in Note 1, Summary of Significant Accounting Policies, “Fair Value Measurements,” the carrying value equals fair value for our financial instruments that are not included in the table below and are classified as current in our consolidated balance sheets. The carrying amounts and estimated fair values for our other financial instruments are presented in the following table (in millions):
 As of December 31, 2025As of December 31, 2024
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt:    
Advances under revolving credit facility$130.0 $130.0 $20.0 $20.0 
5.75% Senior Notes due 2025
— — 99.8 99.7 
4.50% Senior Notes due 2028
792.0 799.6 788.4 772.3 
4.75% Senior Notes due 2030
787.0 796.6 784.2 759.0 
4.625% Senior Notes due 2031
393.6 392.7 392.5 369.9 
Other notes payable93.6 93.6 94.5 94.5 
Financial commitments:    
Letters of credit— 46.3 — 36.3 
Fair values for our long-term debt and financial commitments are determined using inputs, including quoted prices in nonactive markets, that are observable either directly or indirectly, or Level 2 inputs within the fair value hierarchy. See Note 1, Summary of Significant Accounting Policies, “Fair Value Measurements” and “Redeemable Noncontrolling Interests.”

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 28, 2025
2023Feb 28, 2024
2022Feb 27, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 27, 2020
2018Feb 27, 2019
2017Feb 28, 2018
2016Feb 22, 2017
2015Feb 25, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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