Lines of Business

3 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Lines of Business

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 and ThinkPets businesses, 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 2011 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):

9. Lines of Business, continued

	Animal Hospital		Laboratory			All Other			Corporate			Intercompany Eliminations			Total
Three Months Ended March 31, 2012
External revenue	$	316,125	$	71,971		$	21,369		$	—		$	—		$	409,465
Intercompany revenue	—		12,759			4,956			—			(17,715		)	—
Total revenue	316,125		84,730			26,325			—			(17,715		)	409,465
Direct costs	270,569		44,179			17,658			—			(16,320		)	316,086
Gross profit	45,556		40,551			8,667			—			(1,395		)	93,379
Selling, general and administrative expense	7,057		7,598			9,283			15,113			—			39,051
Net loss (gain) on sale and disposal of assets	505		(7		)	8			17			—			523
Operating income (loss)	$	37,994	$	32,960		$	(624	)	$	(15,130	)	$	(1,395	)	$	53,805
Depreciation and amortization	$	11,344	$	2,553		$	2,263		$	764		$	(362	)	$	16,562
Property and equipment additions	$	10,766	$	1,067		$	1,722		$	2,983		$	(466	)	$	16,072
Three Months Ended March 31, 2011
External revenue	$	269,941	$	69,096		$	16,086		$	—		$	—		$	355,123
Intercompany revenue	—		10,453			3,010			—			(13,463		)	—
Total revenue	269,941		79,549			19,096			—			(13,463		)	355,123
Direct costs	230,388		42,819			14,638			—			(12,500		)	275,345
Gross profit	39,553		36,730			4,458			—			(963		)	79,778
Selling, general and administrative expense	6,083		6,636			3,556			9,908			—			26,183
Net loss on sale and disposal of assets	78		11			—			—			—			89
Operating income (loss)	$	33,392	$	30,083		$	902		$	(9,908	)	$	(963	)	$	53,506
Depreciation and amortization	$	9,873	$	2,471		$	657		$	680		$	(301	)	$	13,380
Property and equipment additions	$	9,535	$	1,236		$	759		$	958		$	(454	)	$	12,034
At March 31, 2012
Total assets	$	1,563,615	$	243,220		$	229,372		$	116,748		$	(23,364	)	$	2,129,591
At December 31, 2011
Total assets	$	1,439,103	$	232,423		$	202,187		$	142,793		$	(21,138	)	$	1,995,368