Lines of Business

9 Months Ended

Sep. 30, 2011

Lines of Business [Abstract]

Lines of Business

11. Lines of Business

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments included in “All Other” in the following tables are our Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet business, which provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a selection of products, information and services to the pet-owning community. These operating segments do not meet the quantitative or qualitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our other segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2010 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.

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

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344	$	-		$	-		$	385,135
Intercompany revenue		-			11,397		4,538		-			(15,935	)		-
Total revenue		303,203			78,985		18,882		-			(15,935	)		385,135
Direct costs		251,613			43,657		14,149		-			(14,421	)		294,998
Gross profit		51,590			35,328		4,733		-			(1,514	)		90,137
Selling, general and administrative expense		6,126			7,088		4,669		14,605			-			32,488
Net (gain) loss on sale and disposal of assets		(213	)		1		20		-			-			(192	)
Operating income (loss)	$	45,677		$	28,239	$	44	$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606	$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986	$	1,338		$	(629	)	$	14,841
Three Months Ended September 30, 2010
External revenue	$	276,739		$	67,872	$	14,092	$	-		$	-		$	358,703
Intercompany revenue		-			9,420		3,314		-			(12,734	)		-
Total revenue		276,739			77,292		17,406		-			(12,734	)		358,703
Direct costs		230,113			42,579		12,152		-			(11,440	)		273,404
Gross profit		46,626			34,713		5,254		-			(1,294	)		85,299
Selling, general and administrative expense		5,599			6,804		3,731		10,971			-			27,105
Net loss on sale and disposal of assets		114			20		17		1			-			152
Operating income (loss)	$	40,913		$	27,889	$	1,506	$	(10,972	)	$	(1,294	)	$	58,042
Depreciation and amortization	$	8,258		$	2,464	$	606	$	616		$	(263	)	$	11,681
Property and equipment additions	$	16,969		$	1,599	$	428	$	1,394		$	(640	)	$	19,750

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639	$	42,248	$	-		$	-		$	1,116,363
Intercompany revenue		-			33,280		11,939		-			(45,219	)		-
Total revenue		864,476			242,919		54,187		-			(45,219	)		1,116,363
Direct costs		720,393			130,192		40,206		-			(41,175	)		849,616
Gross profit		144,083			112,727		13,981		-			(4,044	)		266,747
Selling, general and administrative expense		18,253			20,577		11,809		34,695			-			85,334
Net (gain) loss on sale and disposal of assets		(84	)		19		22		-			-			(43	)
Operating income (loss)	$	125,914		$	92,131	$	2,150	$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542	$	2,931	$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049	$	3,003	$	3,923		$	(1,532	)	$	43,275
Nine Months Ended September 30, 2010
External revenue	$	791,002		$	210,531	$	41,823	$	-		$	-		$	1,043,356
Intercompany revenue		-			27,913		5,982		-			(33,895	)		-
Total revenue		791,002			238,444		47,805		-			(33,895	)		1,043,356
Direct costs		653,671			126,647		33,373		-			(31,913	)		781,778
Gross profit		137,331			111,797		14,432		-			(1,982	)		261,578
Selling, general and administrative expense		16,859			19,485		10,650		47,296			-			94,290
Net loss on sale and disposal of assets		63			21		71		8			-			163
Operating income (loss)	$	120,409		$	92,291	$	3,711	$	(47,304	)	$	(1,982	)	$	167,125
Depreciation and amortization	$	23,240		$	7,273	$	1,812	$	1,815		$	(753	)	$	33,387
Property and equipment additions	$	39,946		$	3,937	$	634	$	4,579		$	(1,421	)	$	47,675
At September 30, 2011
Total assets	$	1,417,062		$	229,252	$	220,964	$	149,801		$	(20,265	)	$	1,996,814
At December 31, 2010
Total assets	$	1,320,619		$	215,483	$	69,082	$	175,297		$	(14,059	)	$	1,766,422