17. Segment Information

The Company operates in one line of business, which is operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As management reviews the operating results of its facilities in the U.S. (the “U.S. Facilities”) and its facilities in the U.K. (the “U.K. Facilities”) separately to assess performance and make decisions, the Company’s operating segments include its U.S. Facilities and U.K. Facilities. At June 30, 2017, the U.S. Facilities included 207 behavioral healthcare facilities with approximately 8,600 beds in 39 states and Puerto Rico, and the U.K. Facilities included 369 behavioral healthcare facilities with approximately 8,700 beds in the U.K.

The following tables set forth the financial information by operating segment, including a reconciliation of Segment EBITDA to income from continuing operations before income taxes (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue:
U.S. Facilities	$	461,414		$	430,209		$	901,637		$	838,473
U.K. Facilities		254,482			325,883			493,453			532,858
Corporate and Other		—			456			—			2,030

	$	715,896		$	756,548		$	1,395,090		$	1,373,361

Segment EBITDA (1):
U.S. Facilities	$	128,361		$	118,580		$	240,506		$	225,420
U.K. Facilities		52,090			72,938			96,276			117,869
Corporate and Other		(18,231	)		(19,292	)		(38,193	)		(40,051	)

	$	162,220		$	172,226		$	298,589		$	303,238


	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Segment EBITDA (1)	$	162,220		$	172,226		$	298,589		$	303,238
Plus (less):
Equity-based compensation expense		(7,436	)		(6,888	)		(14,832	)		(13,844	)
Gain (loss) on foreign currency derivatives		—			98			—			508
Debt extinguishment costs		(810	)		—			(810	)		—
Transaction-related expenses		(9,052	)		(6,074	)		(13,171	)		(32,372	)
Interest expense, net		(43,505	)		(48,758	)		(86,262	)		(86,472	)
Depreciation and amortization		(35,201	)		(36,752	)		(68,814	)		(64,727	)

Income before income taxes	$	66,216		$	73,852		$	114,700		$	106,331


	U.S. Facilities		U.K. Facilities			Corporate and Other		Consolidated
Goodwill:
Balance at January 1, 2017	$	2,041,795	$	639,393		$	—	$	2,681,188
Foreign currency translation		—		35,231			—		35,231
Purchase price allocation and other		797		(6,883	)		—		(6,086	)

Balance at June 30, 2017	$	2,042,592	$	667,741		$	—	$	2,710,333


	June 30, 2017		December 31, 2016
Assets (2):
U.S. Facilities	$	3,473,804	$	3,382,167
U.K. Facilities		2,537,317		2,441,018
Corporate and Other		216,901		201,541

	$	6,228,022	$	6,024,726

(1)

Segment EBITDA is defined as income before provision for income taxes, equity-based compensation expense, gain on foreign currency derivatives, transaction-related expenses, interest expense and depreciation and amortization. The Company uses Segment EBITDA as an analytical indicator to measure the performance of the Company’s segments and to develop strategic objectives and operating plans for those segments. Segment EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Segment EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from Segment EBITDA are significant components in understanding and assessing financial performance. Because Segment EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

(2)

Assets include property and equipment for the U.S. Facilities of $1.1 billion, U.K. Facilities of $1.7 billion and corporate and other of $33.6 million at June 30, 2017. Assets include property and equipment for the U.S. Facilities of $1.0 billion, U.K. Facilities of $1.7 billion and corporate and other of $27.1 million at December 31, 2016.