Lines of Business

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Lines of Business

15. 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, our Vetstreet business, which provides online and printed communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals and our Camp Bow Wow business, which primarily franchises the right to operate dog day care, overnight boarding and grooming services. These operating segments do not meet the quantitative 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 the same as those described in the summary of significant accounting policies included in Note 2, Summary of Significant Accounting Policies. 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.

15. Lines of Business, continued

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

	Animal Hospital		Laboratory			All Other			Corporate			Eliminations			Total
2014
External revenue	$	1,514,878	$	303,798		$	96,053		$	—		$	3,754		$	1,918,483
Intercompany revenue	—		56,598			19,732			—			(76,330		)	—
Total revenue	1,514,878		360,396			115,785			—			(72,576		)	1,918,483
Direct costs	1,284,077		184,588			77,161			—			(71,984		)	1,473,842
Gross profit	230,801		175,808			38,624			—			(592		)	444,641
Selling, general and administrative expense	39,022		33,550			33,456			65,478			—			171,506
Operating income (loss) before charges	191,779		142,258			5,168			(65,478		)	(592		)	273,135
Impairment of goodwill and other long-lived assets	—		—			27,019			—			—			27,019
Net loss (gain) on sale or disposal of assets	1,473		(88		)	(2,201		)	(336		)	—			(1,152		)
Operating income (loss)	$	190,306	$	142,346		$	(19,650	)	$	(65,142	)	$	(592	)	$	247,268
Depreciation and amortization	$	61,031	$	10,444		$	6,940		$	2,943		$	(1,931	)	$	79,427
Capital expenditures	$	55,814	$	8,306		$	4,912		$	6,649		$	(2,733	)	$	72,948
Total assets at December 31, 2014	$	2,021,725	$	258,550		$	89,596		$	270,414		$	(308,265	)	$	2,332,020
2013
External revenue	$	1,417,908	$	290,583		$	91,686		$	—		$	3,192		$	1,803,369
Intercompany revenue	—		54,248			21,054			—			(75,302		)	—
Total revenue	1,417,908		344,831			112,740			—			(72,110		)	1,803,369
Direct costs	1,208,781		180,952			74,139			—			(69,883		)	1,393,989
Gross profit	209,127		163,879			38,601			—			(2,227		)	409,380
Selling, general and administrative expense	34,133		31,915			32,941			58,922			—			157,911
Operating income (loss) before charges	174,994		131,964			5,660			(58,922		)	(2,227		)	251,469
Net loss (gain) on sale or disposal of assets	2,853		(77		)	7			(328		)	—			2,455
Operating income (loss)	$	172,141	$	132,041		$	5,653		$	(58,594	)	$	(2,227	)	$	249,014
Depreciation and amortization	$	57,748	$	10,251		$	7,909		$	3,284		$	(1,783	)	$	77,409
Capital expenditures	$	54,116	$	11,148		$	4,288		$	5,908		$	(2,190	)	$	73,270
Total assets at December 31, 2013	$	1,844,235	$	248,282		$	96,245		$	77,264		$	(37,817	)	$	2,228,209
2012
External revenue	$	1,331,314	$	275,406		$	90,616		$	—		$	2,306		$	1,699,642
Intercompany revenue	—		52,395			22,344			—			(74,739		)	—
Total revenue	1,331,314		327,801			112,960			—			(72,433		)	1,699,642
Direct costs	1,142,203		176,040			74,253			—			(67,828		)	1,324,668
Gross profit	189,111		151,761			38,707			—			(4,605		)	374,974
Selling, general and administrative expense	30,826		29,660			37,879			58,790			—			157,155
Operating income (loss) before charges	158,285		122,101			828			(58,790		)	(4,605		)	217,819
Impairment of goodwill and other long-lived assets	1,216		—			122,357			—			—			123,573
Net loss (gain) on sale or disposal of assets	713		(14		)	717			(106		)	—			1,310
Operating income (loss)	$	156,356	$	122,115		$	(122,246	)	$	(58,684	)	$	(4,605	)	$	92,936
Depreciation and amortization	$	54,835	$	10,141		$	9,582		$	3,198		$	(1,529	)	$	76,227
Capital expenditures	$	55,651	$	8,334		$	5,921		$	9,695		$	(2,794	)	$	76,807
Total assets at December 31, 2012	$	1,638,246	$	245,242		$	98,159		$	127,963		$	(27,671	)	$	2,081,939

15. Lines of Business, continued

The table below lists our revenue by geographic area for fiscal 2014, 2013 and 2012 (in thousands):

	2014		2013		2012
Revenue*
United States	$	1,760,946	$	1,671,170	$	1,589,588
Canada	157,537		132,199		110,054
Total	$	1,918,483	$	1,803,369	$	1,699,642

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*Revenues are determined based on the location of the customer. Long-lived assets were not disclosed, as the amounts attributable to the Canadian operations are immaterial, as compared to total consolidated long-lived assets.