OPERATING AND REPORTABLE SEGMENTS

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

OPERATING AND REPORTABLE SEGMENTS

NOTE 9 – OPERATING AND REPORTABLE SEGMENTS

In accordance with ASC Topic 280, Segment Reporting (“ASC 280”), and based on the nature of the Company’s services, the Company has two operating and reportable segments: Infusion/Home Health Services and Pharmacy Services.

The Infusion/Home Health Services operating and reportable segment provides services consisting of home infusion therapy, respiratory therapy and the provision of durable medical equipment products and services.  Infusion services include the dispensing and administering of infusion-based drugs, which typically requires additional nursing and clinical management services, equipment to administer the correct dosage and patient training designed to improve patient outcomes.  Home health services include the provision of skilled nursing services and therapy visits, private duty nursing services, hospice services, rehabilitation services and medical social services to patients primarily in their home.

The Pharmacy Services operating and reportable segment consists of our traditional and specialty pharmacy mail operations, community pharmacies and integrated pharmacy benefit management (“PBM”) services, which includes discount cash card programs.  These segment operations are designed to offer customers and patients cost-effective delivery of traditional and specialty pharmacy products and services.  The services also include care management programs customized to each patient’s care plan in coordination with the patient’s physician.

The Company’s chief operating decision maker evaluates segment performance and allocates resources based on Segment Adjusted EBITDA.  Segment Adjusted EBITDA is defined as net (loss) income adjusted for net interest expense, income tax (expense) benefit, depreciation, amortization of intangibles and stock-based compensation expense and prior to the allocation of certain corporate expenses.  Segment Adjusted EBITDA excludes acquisition, integration and non-restructuring related severance expenses; restructuring expense, write-off of receivables related to the CAP contract and legal settlement expense.  Segment Adjusted EBITDA is a measure of earnings that management monitors as an important indicator of operating and financial performance.  The accounting policies of the operating and reportable segments are consistent with those described in the Company’s summary of significant accounting policies.

Segment Reporting Information

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Results of Operations:
Revenue:
Infusion/Home Health Services - product revenue	$	89,521		$	85,582		$	180,848		$	128,841
Infusion/Home Health Services - service revenue		19,811			21,093			38,962			23,935
Total Infusion/Home Health Services revenue		109,332			106,675			219,810			152,776
Pharmacy Services - product revenue		306,991			288,338			612,205			563,585
Pharmacy Services - service revenue		25,083			17,017			48,687			30,737
Total Pharmacy Services revenue		332,074			305,355			660,892			594,322
Total	$	441,406		$	412,030		$	880,702		$	747,098
Adjusted EBITDA by Segment before corporate overhead:
Infusion/Home Health Services	$	10,933		$	13,902		$	22,464		$	16,762
Pharmacy Services		14,057			12,402			27,566			20,389
Total Segment Adjusted EBITDA		24,990			26,304			50,030			37,151
Corporate overhead		(6,922	)		(7,883	)		(15,343	)		(16,045	)
Interest expense, net		(7,190	)		(8,224	)		(14,440	)		(11,393	)
Income tax benefit (expense)		343			(2,166	)		105			136
Depreciation		(2,373	)		(2,324	)		(4,735	)		(3,808	)
Amortization of intangibles		(1,363	)		(695	)		(2,760	)		(871	)
Stock-based compensation expense		(1,120	)		(825	)		(2,252	)		(1,629	)
Acquisition, integration and severance expenses		-			(1,059	)		-			(6,099	)
Restructuring expense		(3,891	)		-			(5,190	)		-
Legal settlement		(4,800	)		-			(4,800	)		-
Bad debt expense related to contract termination		-			-			-			(1,483	)
Net (loss) income:	$	(2,326	)	$	3,128		$	615		$	(4,041	)
Supplemental Operating Data
Capital Expenditures:
Infusion/Home Health Services	$	1,148		$	1,180		$	1,965		$	1,252
Pharmacy Services		66			1,401			1,449			1,941
Corporate unallocated		1,863			320			2,455			1,150
Total	$	3,077		$	2,901		$	5,869		$	4,343
Depreciation Expense:
Infusion/Home Health Services	$	1,157		$	1,018		$	2,347		$	1,254
Pharmacy Services		897			1,042			1,755			2,065
Corporate unallocated		319			264			633			489
Total	$	2,373		$	2,324		$	4,735		$	3,808
Total Assets
Infusion/Home Health Services							$	412,577		$	411,022
Pharmacy Services								203,829			205,468
Corporate unallocated								28,235			102,216
Total							$	644,641		$	718,706
Goodwill
Infusion/Home Health Services							$	299,643		$	295,350
Pharmacy Services								24,498			24,498
Total							$	324,141		$	319,848