Lines of Business

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Lines of Business

Lines of Business

Our Animal Hospital and Laboratory business segments are each considered reportable segments in accordance with the FASB's guidance related to Segment Reporting. 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 the “All Other” category 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 a premier provider of pet services including dog day care, overnight boarding, grooming and other ancillary services at specially designed pet care facilities. 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 our 2014 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.

8. 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
Three Months Ended June 30, 2015
External revenue	$	435,376		$	89,707		$	22,818	$	—		$	884		$	548,785
Intercompany revenue	—			16,515			5,851		—			(22,366		)	—
Total revenue	435,376			106,222			28,669		—			(21,482		)	548,785
Direct costs	361,991			49,519			17,280		—			(20,852		)	407,938
Gross profit	73,385			56,703			11,389		—			(630		)	140,847
Selling, general and administrative expense	10,453			9,487			7,741		16,804			—			44,485
Operating income (loss) before sale or disposal of assets	62,932			47,216			3,648		(16,804		)	(630		)	96,362
Net (gain) loss on sale or disposal of assets	(914		)	35			11		49			—			(819		)
Operating income (loss)	$	63,846		$	47,181		$	3,637	$	(16,853	)	$	(630	)	$	97,181
Depreciation and amortization	$	16,440		$	2,705		$	1,176	$	575		$	(530	)	$	20,366
Property and equipment additions	$	13,995		$	2,862		$	500	$	1,512		$	(874	)	$	17,995
Three Months Ended June 30, 2014
External revenue	$	386,776		$	81,320		$	20,457	$	—		$	919		$	489,472
Intercompany revenue	—			14,635			3,255		—			(17,890		)	—
Total revenue	386,776			95,955			23,712		—			(16,971		)	489,472
Direct costs	323,440			46,863			16,064		—			(17,310		)	369,057
Gross profit	63,336			49,092			7,648		—			339			120,415
Selling, general and administrative expense	9,864			8,281			7,411		14,375			—			39,931
Operating income (loss) before sale or disposal of assets	53,472			40,811			237		(14,375		)	339			80,484
Net loss (gain) on sale or disposal of assets	414			(7		)	97		74			—			578
Operating income (loss)	$	53,058		$	40,818		$	140	$	(14,449	)	$	339		$	79,906
Depreciation and amortization	$	15,110		$	2,563		$	2,004	$	826		$	(473	)	$	20,030
Property and equipment additions	$	8,119		$	1,304		$	920	$	1,333		$	(316	)	$	11,360

8. Lines of Business, continued

	Animal Hospital			Laboratory			All Other			Corporate			Eliminations			Total
Six Months Ended June 30, 2015
External revenue	$	828,402		$	168,516		$	49,351		$	—		$	1,969		$	1,048,238
Intercompany revenue	—			31,678			13,545			—			(45,223		)	—
Total revenue	828,402			200,194			62,896			—			(43,254		)	1,048,238
Direct costs	699,533			95,509			40,083			—			(41,596		)	793,529
Gross profit	128,869			104,685			22,813			—			(1,658		)	254,709
Selling, general and administrative expense	21,674			18,352			16,428			32,429			—			88,883
Operating income (loss) before charges	107,195			86,333			6,385			(32,429		)	(1,658		)	165,826
Net (gain) loss on sale or disposal of assets	(620		)	41			20			75			—			(484		)
Operating income (loss)	$	107,815		$	86,292		$	6,365		$	(32,504	)	$	(1,658	)	$	166,310
Depreciation and amortization	$	32,512		$	5,209		$	2,328		$	1,167		$	(1,053	)	$	40,163
Property and equipment additions	$	26,077		$	6,078		$	1,300		$	2,576		$	(1,510	)	$	34,521
Six Months Ended June 30, 2014
External revenue	$	738,364		$	156,103		$	42,658		$	—		$	1,854		$	938,979
Intercompany revenue	—			28,386			9,175			—			(37,561		)	—
Total revenue	738,364			184,489			51,833			—			(35,707		)	938,979
Direct costs	626,228			92,366			34,216			—			(35,697		)	717,113
Gross profit	112,136			92,123			17,617			—			(10		)	221,866
Selling, general and administrative expense	18,992			16,299			15,759			30,321			—			81,371
Operating income (loss) before charges	93,144			75,824			1,858			(30,321		)	(10		)	140,495
Net loss (gain) on sale or disposal of assets	582			(78		)	(1,087		)	(60		)	—			(643		)
Operating income (loss)	$	92,562		$	75,902		$	2,945		$	(30,261	)	$	(10	)	$	141,138
Depreciation and amortization	$	29,852		$	5,098		$	4,140		$	1,645		$	(938	)	$	39,797
Property and equipment additions	$	21,187		$	3,285		$	1,678		$	2,744		$	(915	)	$	27,979
At June 30, 2015
Total assets	$	2,092,935		$	304,685		$	80,994		$	340,002		$	(421,506	)	$	2,397,110
At December 31, 2014
Total assets	$	2,021,725		$	258,550		$	89,596		$	270,414		$	(308,265	)	$	2,332,020