Lines of Business

9 Months Ended

Sep. 30, 2016

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, 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 each of our segments.

The accounting policies of our segments are the same as those described in the summary of significant accounting policies included in our 2015 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.

10. 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, 2016
External revenue	$	553,378	$	84,970	$	17,450		$	—		$	1,056		$	656,854
Intercompany revenue	—		20,170		5,537			—			(25,707		)	—
Total revenue	553,378		105,140		22,987			—			(24,651		)	656,854
Direct costs	459,242		50,934		14,066			—			(23,965		)	500,277
Gross profit	94,136		54,206		8,921			—			(686		)	156,577
Selling, general and administrative expense	15,541		9,728		6,064			18,010			—			49,343
Operating income (loss) before sale or disposal of assets	78,595		44,478		2,857			(18,010		)	(686		)	107,234
Net loss (gain) on sale or disposal of assets	304		1		1			(70		)	—			236
Operating income (loss)	$	78,291	$	44,477	$	2,856		$	(17,940	)	$	(686	)	$	106,998
Depreciation and amortization	$	23,363	$	2,826	$	848		$	679		$	(622	)	$	27,094
Property and equipment additions	$	24,917	$	4,953	$	383		$	2,794		$	(1,315	)	$	31,732
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 charges	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

10. Lines of Business, continued

	Animal Hospital			Laboratory			All Other			Corporate			Eliminations			Total
Nine Months Ended September 30, 2016
External revenue	$	1,552,377		$	267,475		$	50,560		$	—		$	3,370		$	1,873,782
Intercompany revenue	—			56,452			15,237			—			(71,689		)	—
Total revenue	1,552,377			323,927			65,797			—			(68,319		)	1,873,782
Direct costs	1,290,145			152,458			41,049			—			(67,175		)	1,416,477
Gross profit	262,232			171,469			24,748			—			(1,144		)	457,305
Selling, general and administrative expense	41,903			29,726			17,385			58,647			—			147,661
Operating income (loss) before sale or disposal of assets	220,329			141,743			7,363			(58,647		)	(1,144		)	309,644
Net loss (gain) on sale or disposal of assets	747			(34		)	4			(189		)	—			528
Operating income (loss)	$	219,582		$	141,777		$	7,359		$	(58,458	)	$	(1,144	)	$	309,116
Depreciation and amortization	$	62,811		$	8,446		$	2,635		$	1,985		$	(1,805	)	$	74,072
Property and equipment additions	$	68,947		$	14,355		$	2,475		$	7,981		$	(3,212	)	$	90,546
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
At September 30, 2016
Total assets	$	2,961,074		$	329,694		$	70,923		$	1,349,186		$	(1,501,815	)	$	3,209,062
At December 31, 2015
Total assets	$	2,186,959		$	306,296		$	73,491		$	471,112		$	(536,726	)	$	2,501,132