Segment Information

The Company has two operating segments for which it recognizes revenue; Clinical Services and Pharma Services. Our Clinical Services segment provides various clinical testing services to community-based pathology practices, hospital pathology labs and academic centers with reimbursement from various payers including client direct billing, commercial insurance, Medicare and other government, and patients. Our Pharma Services segment supports pharmaceutical firms in their drug development programs by supporting various clinical trials and research.

In the fourth quarter of 2017, changes were made in the information provided to our Chief Operating Decision Maker (“CODM”); greater detail was provided regarding the performance of our Pharma business and our Clinical business as there was an increased focus on this financial data due to the growth of our Pharma business. Our CODM also changed the way he was using this financial information to make strategic decisions regarding allocation of resources and evaluating performance of the Company. This resulted in a change in our operating segments to align with how the CODM views our business which resulted in two operating segments; a Pharma Services segment and a Clinical Services segment.

We have presented the financial information reviewed by the CODM including revenues, cost of revenue and gross margin for each of our operating segments. The segment information presented in these financial statements has been conformed to present segments on this revised basis for all prior periods. Assets are not presented at the segment level as that information is not used by the CODM.

The following table summarizes segment information for the six month periods ended June 30, 2018 and 2017, respectively (in thousands).



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017 (as adjusted)			2018		2017 (as adjusted)
Net revenues:
Clinical Services	$	59,540		$	55,547		$	116,511	$	108,455
Pharma Services	8,206			6,717			14,658		11,238
Total Revenue	$	67,746		$	62,264		$	131,169	$	119,693

Cost of revenue:
Clinical Services	$	32,035		$	30,997		$	63,076	$	61,704
Pharma Services	5,181			3,915			10,260		7,688
Total Cost of Revenue	$	37,216		$	34,912		$	73,336	$	69,392

Gross Profit:
Clinical Services	$	27,505		$	24,550		$	53,435	$	46,751
Pharma Services	3,025			2,802			4,398		3,550
Total Gross Profit	$	30,530		$	27,352		$	57,833	$	50,301

Operating expenses:
General and administrative	$	20,983		$	18,432		$	38,050	$	35,450
Research and development	1,073			947			2,029		1,809
Sales and marketing	7,680			6,132			14,455		11,779
Total operating expenses	29,736			25,511			54,534		49,038
Income from Operations	794			1,841			3,299		1,263
Interest expense, net	1,407			1,411			2,892		2,775
Other expense	124			—			62		—
Income (loss) before taxes	(737		)	430			345		(1,512		)
Income tax (benefit) expense	(357		)	(53		)	81		(832		)
Net Income (Loss)	$	(380	)	$	483		$	264	$	(680	)