Lines of Business

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Lines of Business

15. 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. Also included in the

15. Lines of Business, continued

"All Other" category in 2015 and 2014 was our Vetstreet business, which provided online and printed communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. 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
2016
External revenue	$	2,091,780		$	347,648		$	73,311		$	—		$	4,124		$	2,516,863
Intercompany revenue	—			74,653			20,440			—			(95,093		)	—
Total revenue	2,091,780			422,301			93,751			—			(90,969		)	2,516,863
Direct costs	1,751,792			203,143			58,877			—			(89,013		)	1,924,799
Gross profit	339,988			219,158			34,874			—			(1,956		)	592,064
Selling, general and administrative expense	58,952			39,979			24,918			80,875			—			204,724
Operating income (loss) before sale or disposal of assets	281,036			179,179			9,956			(80,875		)	(1,956		)	387,340
Net loss (gain) on sale or disposal of assets	1,290			(49		)	3			(238		)	—			1,006
Operating income (loss)	$	279,746		$	179,228		$	9,953		$	(80,637	)	$	(1,956	)	$	386,334
Depreciation and amortization	$	87,818		$	11,425		$	3,472		$	2,690		$	(2,463	)	$	102,942
Property and equipment additions	$	87,665		$	26,093		$	3,245		$	10,558		$	(4,615	)	$	122,946
Total assets at December 31, 2016	$	3,137,177		$	331,484		$	74,752		$	1,502,150		$	(1,672,235	)	$	3,373,328
2015
External revenue	$	1,697,870		$	330,828		$	100,843		$	—		$	4,134		$	2,133,675
Intercompany revenue	—			63,072			26,145			—			(89,217		)	—
Total revenue	1,697,870			393,900			126,988			—			(85,083		)	2,133,675
Direct costs	1,433,535			192,198			80,286			—			(82,415		)	1,623,604
Gross profit	264,335			201,702			46,702			—			(2,668		)	510,071
Selling, general and administrative expense	44,311			38,075			33,569			68,040			—			183,995
Operating income (loss) before charges	220,024			163,627			13,133			(68,040		)	(2,668		)	326,076
Business interruption insurance gain	—			—			(4,523		)	—			—			(4,523		)
Net (gain) loss on sale or disposal of assets	(555		)	26			82			1,276			—			829
Operating income (loss)	$	220,579		$	163,601		$	17,574		$	(69,316	)	$	(2,668	)	$	329,770
Depreciation and amortization	$	66,129		$	10,726		$	4,640		$	2,349		$	(2,156	)	$	81,688
Property and equipment additions	$	71,155		$	17,418		$	1,849		$	8,319		$	(3,507	)	$	95,234
Total assets at December 31, 2015	$	2,186,959		$	306,296		$	73,491		$	471,112		$	(536,726	)	$	2,501,132
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
Property and equipment additions	$	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		$	232,209		$	(308,265	)	$	2,293,815

15. Lines of Business, continued

The table below lists our revenue by geographic area for fiscal 2016, 2015 and 2014 (in thousands):

	2016		2015		2014
Revenue*
United States	$	2,315,225	$	1,957,842	$	1,760,946
Canada	201,638		175,833		157,537
Total	$	2,516,863	$	2,133,675	$	1,918,483

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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.