Lines of Business

9 Months Ended

Sep. 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 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 September 30, 2015
External revenue	$	441,924	$	84,129	$	24,544		$	—		$	1,120		$	551,717
Intercompany revenue	—		16,180		6,294			—			(22,474		)	—
Total revenue	441,924		100,309		30,838			—			(21,354		)	551,717
Direct costs	366,983		48,901		19,077			—			(20,910		)	414,051
Gross profit	74,941		51,408		11,761			—			(444		)	137,666
Selling, general and administrative expense	10,677		9,542		7,660			16,981			—			44,860
Operating income (loss) before sale or disposal of assets	64,264		41,866		4,101			(16,981		)	(444		)	92,806
Business interruption insurance gain	—		—		(4,523		)	—			—			(4,523		)
Net loss on sale or disposal of assets	175		—		72			3			—			250
Operating income (loss)	$	64,089	$	41,866	$	8,552		$	(16,984	)	$	(444	)	$	97,079
Depreciation and amortization	$	16,520	$	2,731	$	1,181		$	588		$	(549	)	$	20,471
Property and equipment additions	$	19,429	$	5,735	$	127		$	2,773		$	(1,115	)	$	26,949
Three Months Ended September 30, 2014
External revenue	$	395,820	$	77,394	$	25,397		$	—		$	966		$	499,577
Intercompany revenue	—		14,509		4,684			—			(19,193		)	—
Total revenue	395,820		91,903		30,081			—			(18,227		)	499,577
Direct costs	327,283		46,879		19,945			—			(18,287		)	375,820
Gross profit	68,537		45,024		10,136			—			60			123,757
Selling, general and administrative expense	9,269		8,610		8,023			16,890			—			42,792
Operating income (loss) before sale or disposal of assets	59,268		36,414		2,113			(16,890		)	60			80,965
Impairment of goodwill and other long-lived assets	—		—		27,019			—			—			27,019
Net loss (gain) on sale or disposal of assets	598		7		—			(135		)	—			470
Operating income (loss)	$	58,670	$	36,407	$	(24,906	)	$	(16,755	)	$	60		$	53,476
Depreciation and amortization	$	15,201	$	2,671	$	1,781		$	688		$	(479	)	$	19,862
Property and equipment additions	$	17,224	$	2,391	$	1,123		$	2,025		$	(649	)	$	22,114

8. Lines of Business, continued

	Animal Hospital			Laboratory			All Other			Corporate			Eliminations			Total
Nine Months Ended September 30, 2015
External revenue	$	1,270,326		$	252,645		$	73,895		$	—		$	3,089		$	1,599,955
Intercompany revenue	—			47,858			19,839			—			(67,697		)	—
Total revenue	1,270,326			300,503			93,734			—			(64,608		)	1,599,955
Direct costs	1,066,516			144,410			59,160			—			(62,506		)	1,207,580
Gross profit	203,810			156,093			34,574			—			(2,102		)	392,375
Selling, general and administrative expense	32,351			27,894			24,088			49,410			—			133,743
Operating income (loss) before charges	171,459			128,199			10,486			(49,410		)	(2,102		)	258,632
Business interruption insurance gain	—			—			(4,523		)	—			—			(4,523		)
Net (gain) loss on sale or disposal of assets	(445		)	41			92			78			—			(234		)
Operating income (loss)	$	171,904		$	128,158		$	14,917		$	(49,488	)	$	(2,102	)	$	263,389
Depreciation and amortization	$	49,032		$	7,940		$	3,509		$	1,755		$	(1,602	)	$	60,634
Property and equipment additions	$	45,506		$	11,813		$	1,427		$	5,349		$	(2,625	)	$	61,470
Nine Months Ended September 30, 2014
External revenue	$	1,134,184		$	233,497		$	68,055		$	—		$	2,820		$	1,438,556
Intercompany revenue	—			42,895			13,859			—			(56,754		)	—
Total revenue	1,134,184			276,392			81,914			—			(53,934		)	1,438,556
Direct costs	953,511			139,245			54,161			—			(53,984		)	1,092,933
Gross profit	180,673			137,147			27,753			—			50			345,623
Selling, general and administrative expense	28,261			24,909			23,782			47,211			—			124,163
Operating income (loss) before charges	152,412			112,238			3,971			(47,211		)	50			221,460
Impairment of goodwill and other long-lived assets	—			—			27,019			—			—			27,019
Net loss (gain) on sale or disposal of assets	1,180			(71		)	(1,087		)	(195		)	—			(173		)
Operating income (loss)	$	151,232		$	112,309		$	(21,961	)	$	(47,016	)	$	50		$	194,614
Depreciation and amortization	$	45,053		$	7,769		$	5,921		$	2,333		$	(1,417	)	$	59,659
Property and equipment additions	$	38,411		$	5,676		$	2,801		$	4,769		$	(1,564	)	$	50,093
At September 30, 2015
Total assets	$	2,147,136		$	304,807		$	76,969		$	391,471		$	(489,193	)	$	2,431,190
At December 31, 2014
Total assets	$	2,021,725		$	258,550		$	89,596		$	270,414		$	(308,265	)	$	2,332,020