NOTE S — SEGMENT AND RELATED INFORMATION

We have identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each operating segment’s income from operations. The operating segments are described further below:

Patient Care — This segment consists of our owned and operated patient care clinics. The patient care clinics provide services to design and fit O&P devices to patients. These clinics also instruct patients in the use, care and maintenance of the devices. The principal reimbursement sources for our services are:

Commercial private payors and other, which consist of individuals, rehabilitation providers, commercial insurance companies, health management organizations (“HMOs”), preferred provider organizations (“PPOs”), hospitals, vocational rehabilitation, workers’ compensation programs, and similar sources;

Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in published fee schedules with 10 regional pricing areas for prosthetics and orthotics and by state for durable medical equipment;

Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and

U.S. Department of Veterans Affairs.

Our contract and network management business, known as Linkia, is the only network management company dedicated solely to serving the O&P market and is focused on managing the O&P services of national and regional insurance companies. We partner with healthcare insurance companies by securing a national or regional contract either as a preferred provider or to manage their O&P network of providers.

Products & Services - This segment consists of our distribution services business, which distributes and fabricates O&P products and components to sell to both the O&P industry and our own patient care clinics, and our therapeutic solutions business. The therapeutic solutions business provides and sells rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. This segment also develops emerging neuromuscular technologies for the O&P and rehabilitation markets.

Corporate & Other - This consists of corporate overhead and includes unallocated expenses such as personnel costs, professional fees, and corporate offices expenses.

The accounting policies of the segments are the same as those described in Note A - “Organization and Summary of Significant Accounting Policies” in our 2018 Form 10-K.

Intersegment revenue primarily relates to sales of O&P components from the Products & Services segment to the Patient Care segment. The sales are priced at the cost of the related materials plus overhead.

Summarized financial information concerning our reporting segments is shown in the following tables.

Total assets for each of the segments has not materially changed from December 31, 2018.


	Patient Care				Products & Services
	For the Three Months Ended				For the Three Months Ended
	March 31,				March 31,
(in thousands)	2019		2018		2019		2018
Net revenues
Third party	$	190,601	$	188,507	$	45,818	$	45,488
Intersegments		—		—		44,879		42,522
Total net revenue		190,601		188,507		90,697		88,010
Material costs
Third party suppliers		53,355		52,175		25,022		24,181
Intersegments		5,795		5,724		39,084		36,798
Total material costs		59,150		57,899		64,106		60,979
Personnel expenses		73,709		73,613		13,002		12,495
Other expenses		37,433		35,004		6,948		6,155
Depreciation & amortization		4,552		4,898		2,543		2,502
Segment income from operations	$	15,757	$	17,093	$	4,098	$	5,879

A reconciliation of the total of the reportable segments' income (loss) from operations to consolidated loss from operations is as follows:


	For the Three Months Ended
	March 31,
(in thousands)	2019		2018
(Loss) income from operations:
Patient Care	$	15,757	$	17,093
Products & Services		4,098		5,879
Corporate & other		(21,834)		(22,349)
(Loss) income from operations		(1,979)		623
Interest expense, net		8,538		12,263
Loss on extinguishment of debt		—		16,998
Non-service defined benefit plan expense		173		176
Loss before income taxes		(10,690)		(28,814)
Benefit for income taxes		(3,739)		(6,196)
Net loss	$	(6,951)	$	(22,618)

A reconciliation of the reportable segment net revenue to consolidated net revenue is as follows:


	For the Three Months Ended
	March 31,
(in thousands)	2019		2018
Net revenues
Patient Care	$	190,601	$	188,507
Products & Services		90,697		88,010
Corporate & other		—		—
Consolidating adjustments		(44,879)		(42,522)
Consolidated net revenue	$	236,419	$	233,995

A reconciliation of the reportable segment material costs to consolidated material costs is as follows:


	For the Three Months Ended
	March 31,
(in thousands)	2019		2018
Material costs
Patient Care	$	59,150	$	57,899
Products & Services		64,106		60,979
Corporate & other		—		—
Consolidating adjustments		(44,879)		(42,522)
Consolidated material costs	$	78,377	$	76,356