Segments and Geographical Information

3 Months Ended

Mar. 31, 2016

Notes To Financial Statements [Abstract]

Segments and Geographical Information

Segments and Geographical Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. We report segment information based on the management approach. The management approach designates the internal reporting used by the CODM for decision making and performance assessment as the basis for determining our reportable segments. The performance measures of our reportable segments include net revenues and gross profit.

We have grouped our operations into two reportable segments which are also our reporting units: Clear Aligner segment and Scanner segment.

• Our Clear Aligner segment consists of our Invisalign system which includes Invisalign Full, Express/Lite, Teen, Assist, Vivera retainers, along with our training and ancillary products for treating malocclusion.

• Our Scanner segment consists of intra-oral scanning systems and additional services available with the intra-oral scanners that provide digital alternatives to the traditional cast models. This segment includes our iTero scanner and OrthoCAD services.

These reportable operating segments are based on how our CODM views and evaluates our operations as well as allocation of resources. The following information relates to these segments (in thousands):

	For the Three Months Ended March 31,
Net Revenues	2016		2015
Clear Aligner	$	219,698	$	187,029
Scanner	19,022		11,057
Total net revenues	$	238,720	$	198,086
Gross profit
Clear Aligner	$	172,067	$	147,960
Scanner	8,560		3,130
Total gross profit	$	180,627	$	151,090

Geographical Information

Net revenues are presented below by geographic area (in thousands):

	For the Three Months Ended March 31,
	2016		2015
Net revenues: (1)
U.S.	$	166,101	$	139,704
the Netherlands	47,400		38,645
Other international	25,219		19,737
Total net revenues	$	238,720	$	198,086

⁽¹⁾ Net revenues are attributed to countries based on location of where revenue is recognized.

Tangible long-lived assets are presented below by geographic area (in thousands):

	March 31, 2016		December 31, 2015
Long-lived assets:(2)
United States	$	122,113	$	112,632
Mexico	15,971		15,422
Other International	9,945		8,419
Total long-lived assets	$	148,029	$	136,473

⁽²⁾ Long-lived assets are attributed to countries based on entity that owns the asset.