Business Segments

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segments

Business Segments

The company operates in four primary business segments: North America/Home Medical Equipment (North America/HME), Institutional Products Group (IPG), Europe and Asia/Pacific. The North America/HME segment sells each of the three primary product lines, which includes: lifestyle, mobility and seating, and respiratory therapy products. IPG sells, and rented prior to the disposition of the rentals businesses, long-term care medical equipment, health care furnishings and accessory products. Europe and Asia/Pacific sell product lines similar to North America/HME and IPG. The accounting policies of each segment are the same as those described in the summary of significant accounting policies for the company’s consolidated financial statements. Intersegment sales and transfers are based on the costs to manufacture plus a reasonable profit element.

As of the third quarter of 2016, the company redefined the measure by which it evaluates segment profit or loss. Segment performance is measured and resources are allocated based on a number of factors, with the primary profit or loss measure being segment operating profit (loss). Segment operating profit (loss) represents net sales less cost of products sold less selling general and administrative expenses. Segment operating profit (loss) excludes unallocated corporate general and administrative expenses not allocated to the segments and intersegment sales and profit eliminations, which are included in All Other. In addition, segment operating profit (loss) further excludes charges related to restructuring activities, asset write-downs and gain or loss on sales of businesses (as applicable). The previous performance measure was earnings before income taxes. With the issuance of convertible debt during 2016, this performance measure has not been utilized by the Chief Operating Decision Maker (CODM) as the interest expense incurred by the company is related to the company’s financing decision to issue convertible debt as compared to the operating decisions resulting from allocation of resources and segment operating income performance. In addition, earlier in 2016, the company included an operating income line on the consolidated statement of comprehensive income (loss) to emphasize the CODM’s emphasis on operating income (loss).

As noted, this performance measure, segment operating income (loss), is used by the CODM for purposes of making decisions about allocating resources to a segment and assessing its performance. In addition, this metric is reviewed by the company’s Board of Directors regarding segment performance and is a key metric in the performance management assessment of the company's employees.

The information by segment is as follows (in thousands):

	2016		2015		2014
Revenues from external customers
North America/HME	$	397,702	$	474,196	$	507,867
Institutional Products Group	64,413		87,137		102,796
Europe	540,013		536,463		610,555
Asia/Pacific	45,346		44,542		48,945
Consolidated	$	1,047,474	$	1,142,338	$	1,270,163
Intersegment revenues
North America/HME	$	100,793	$	111,321	$	84,247
Institutional Products Group	2,885		997		6,711
Europe	10,139		9,958		8,938
Asia/Pacific	19,366		20,661		26,173
Consolidated	$	133,183	$	142,937	$	126,069
Depreciation and amortization
North America/HME (1)	$	5,932	$	7,549	$	9,077
Institutional Products Group	254		1,980		7,656
Europe	7,062		7,183		11,111
Asia/Pacific	1,349		1,463		2,406
All Other (2)	38		29		173
Discontinued Operations	—		—		518
Consolidated (1)	$	14,635	$	18,204	$	30,941

	2016			2015			2014
Net interest expense (income)
North America/HME (1)	$	15,119		$	3,305		$	2,196
Institutional Products Group	191			1,028			2,244
Europe	197			(444		)	(209		)
Asia/Pacific	103			82			149
Consolidated (1)	$	15,610		$	3,971		$	4,380
Operating income (loss)
North America/HME	$	(37,748	)	$	(29,245	)	$	(59,124	)
Institutional Products Group	5,693			7,834			6,248
Europe	33,994			39,794			50,169
Asia/Pacific	(1,436		)	(3,493		)	(7,463		)
All Other (2)	(20,657		)	(20,712		)	(24,507		)
Charge related to restructuring activities	(2,447		)	(1,971		)	(11,112		)
Gains on sales of businesses	7,386			24			—
Asset write-off (3)	—			—			(13,041		)
Consolidated operating loss	(15,215		)	(7,769		)	(58,830		)
Net gain on convertible derivatives	1,268			—			—
Net Interest expense	(15,610		)	(3,971		)	(4,380		)
Loss from continuing operations before income taxes	$	(29,557	)	$	(11,740	)	$	(63,210	)
Assets
North America/HME (4)	$	261,538		$	203,851		$	209,122
Institutional Products Group (5)	38,657			38,730			42,692
Europe	575,981			557,740			638,896
Asia/Pacific	25,703			24,421			30,231
All Other (2)	1,864			1,752			15,647
Assets Held for Sale (4) (5)	—			11,649			27,143
Consolidated	$	903,743		$	838,143		$	963,731
Long-lived assets
North America/HME (4)	$	70,553		$	49,141		$	44,727
Institutional Products Group (3)	30,603			30,278			33,487
Europe	388,724			391,533			459,957
Asia/Pacific	2,927			3,140			4,046
All Other (2)	1,864			1,752			15,527
Consolidated	$	494,671		$	475,844		$	557,744
Expenditures for assets
North America/HME	$	3,398		$	1,232		$	2,960
Institutional Products Group	58			212			1,232
Europe	5,580			5,058			6,708
Asia/Pacific	1,115			969			1,417
All Other (2)	—			51			—
Discontinued Operations	—			—			10
Consolidated	$	10,151		$	7,522		$	12,327

  ________________________

(1) Restated 2015 and 2014 for reclass of debt fees from depreciation and amortization to net interest expense with adoption of ASU 2015-03.

(2) Consists of un-allocated corporate SG&A costs and intercompany profits, which do not meet the quantitative criteria for determining reportable segments, and gain or loss on convertible debt derivatives.

(3) Intangible asset impairment related to the rentals businesses which were included in the Institutional Products Group segment.

(4) Restated 2015 and 2014 for GCM sale on September 30, 2016 and classified as assets held for sale.

(5) Restated 2014 for rentals businesses sold in July 2015 and classified as assets held for sale.

Net sales by product, are as follows (in thousands):

	2016		2015		2014
North America/HME
Lifestyle Products	$	173,301	$	222,944	$	239,625
Mobility and Seating	116,722		117,232		115,776
Respiratory Therapy	104,631		130,349		149,063
Other(1)	3,048		3,671		3,403
	$	397,702	$	474,196	$	507,867
Institutional Products Group
Continuing Care	$	64,413	$	87,137	$	102,796
Europe
Lifestyle Products	$	274,684	$	275,932	$	322,370
Mobility and Seating	214,713		208,730		228,163
Respiratory Therapy	35,030		36,373		40,661
Other(1)	15,586		15,428		19,361
	$	540,013	$	536,463	$	610,555
Asia/Pacific
Mobility and Seating	$	25,254	$	25,655	$	28,174
Lifestyle Products	10,161		10,277		11,772
Continuing Care	3,521		3,115		3,956
Respiratory Therapy	1,244		807		1,286
Other(1)	5,166		4,688		3,757
	$	45,346	$	44,542	$	48,945
Total Consolidated	$	1,047,474	$	1,142,338	$	1,270,163

  ________________________

(1) Includes various services, including repair services, equipment rentals and external contracting.

No single customer accounted for more than 3.4% of the company’s sales.