Lines of Business

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Lines of Business

Lines of Business

Our business is divided into four operating segments: Animal Hospital, Laboratory, Medical Technology and Vetstreet. Our operating segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards.

Our reportable segments are aggregated into two reportable segments, "Animal Hospital" and "Laboratory". Our Animal Hospital reportable segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory reportable segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our Medical Technology and Vetstreet operating segments do not meet the quantitative requirements for separate reportable segments and are included in our "All Other" category. Our Medical Technology segment sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet segment provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. We also operate a corporate office that provides general and administrative support services for our segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2012 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

9. Lines of Business, continued

The segment information presented below includes a reclassification to eliminate discounts on certain Laboratory contracts that were previously allocated to the All Other operating segment from Eliminations in the prior year financial data. These reclasses better represent the corresponding discounts and thus the operating results of our standalone entities. These changes in segment reporting only revised the presentation within the table below and did not impact our condensed consolidated financial statements for any period presented. The segment information for the three and nine months ended September 30, 2012 has been adjusted retrospectively to conform to the current period presentation.

The following is a summary of certain financial data for each of our segments (in thousands):

	Animal Hospital			Laboratory		All Other			Corporate			Eliminations			Total
Three Months Ended September 30, 2013
External revenue	$	368,868		$	72,877	$	21,482		$	—		$	828		$	464,055
Intercompany revenue	—			13,583		5,980			—			(19,563		)	—
Total revenue	368,868			86,460		27,462			—			(18,735		)	464,055
Direct costs	308,029			45,650		17,456			—			(17,757		)	353,378
Gross profit	60,839			40,810		10,006			—			(978		)	110,677
Selling, general and administrative expense	8,678			7,921		7,618			14,530			—			38,747
Operating income (loss) before charges	52,161			32,889		2,388			(14,530		)	(978		)	71,930
Net (gain) loss on sale or disposal of assets	(110		)	11		—			(10		)	—			(109		)
Operating income (loss)	$	52,271		$	32,878	$	2,388		$	(14,520	)	$	(978	)	$	72,039
Depreciation and amortization	$	15,037		$	2,554	$	2,087		$	816		$	(450	)	$	20,044
Property and equipment additions	$	15,915		$	1,905	$	872		$	1,795		$	(900	)	$	19,587
Three Months Ended September 30, 2012
External revenue	$	342,840		$	68,139	$	21,970		$	—		$	664		$	433,613
Intercompany revenue	—			13,147		6,130			—			(19,277		)	—
Total revenue	342,840			81,286		28,100			—			(18,613		)	433,613
Direct costs	288,588			44,109		19,217			—			(17,482		)	334,432
Gross profit	54,252			37,177		8,883			—			(1,131		)	99,181
Selling, general and administrative expense	7,745			7,285		8,764			13,814			—			37,608
Operating income (loss) before charges	46,507			29,892		119			(13,814		)	(1,131		)	61,573
Net (gain) loss on sale or disposal of assets	(77		)	—		464			—			—			387
Operating income (loss)	$	46,584		$	29,892	$	(345	)	$	(13,814	)	$	(1,131	)	$	61,186
Depreciation and amortization	$	13,953		$	2,544	$	2,611		$	806		$	(395	)	$	19,519
Property and equipment additions	$	14,069		$	1,342	$	1,660		$	2,120		$	(1,099	)	$	18,092

9.    Lines of Business, continued

	Animal Hospital		Laboratory			All Other			Corporate			Eliminations			Total
Nine Months Ended September 30, 2013
External revenue	$	1,074,688	$	223,466		$	67,339		$	—		$	2,423		$	1,367,916
Intercompany revenue	—		41,559			16,118			—			(57,677		)	—
Total revenue	1,074,688		265,025			83,457			—			(55,254		)	1,367,916
Direct costs	908,537		136,524			54,394			—			(53,433		)	1,046,022
Gross profit	166,151		128,501			29,063			—			(1,821		)	321,894
Selling, general and administrative expense	25,723		23,891			24,573			43,429			—			117,616
Operating income (loss) before charges	140,428		104,610			4,490			(43,429		)	(1,821		)	204,278
Net loss (gain) on sale or disposal of assets	1,459		5			3			(280		)	—			1,187
Operating income (loss)	$	138,969	$	104,605		$	4,487		$	(43,149	)	$	(1,821	)	$	203,091
Depreciation and amortization	$	43,108	$	7,651		$	5,989		$	2,370		$	(1,335	)	$	57,783
Property and equipment additions	$	41,682	$	5,641		$	3,244		$	3,741		$	(1,626	)	$	52,682
Nine Months Ended September 30, 2012
External revenue	$	1,001,247	$	212,562		$	65,926		$	—		$	1,715		$	1,281,450
Intercompany revenue	—		40,074			15,917			—			(55,991		)	—
Total revenue	1,001,247		252,636			81,843			—			(54,276		)	1,281,450
Direct costs	852,059		132,612			54,499			—			(50,887		)	988,283
Gross profit	149,188		120,024			27,344			—			(3,389		)	293,167
Selling, general and administrative expense	22,797		22,393			27,076			43,390			—			115,656
Operating income (loss) before charges	126,391		97,631			268			(43,390		)	(3,389		)	177,511
Net loss (gain) on sale or disposal of assets	316		(14		)	704			16			—			1,022
Operating income (loss)	$	126,075	$	97,645		$	(436	)	$	(43,406	)	$	(3,389	)	$	176,489
Depreciation and amortization	$	40,536	$	7,618		$	7,456		$	2,374		$	(1,102	)	$	56,882
Property and equipment additions	$	40,132	$	4,691		$	4,430		$	8,111		$	(2,107	)	$	55,257

At September 30, 2013
Total assets	$	1,849,587	$	252,179	$	99,435	$	63,803	$	(29,669	)	$	2,235,335
At December 31, 2012
Total assets	$	1,648,578	$	244,551	$	98,159	$	127,963	$	(27,671	)	$	2,091,580