Lines of Business

3 Months Ended

Mar. 31, 2017

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 2016 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.

9. 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 March 31, 2017
External revenue	$	568,181	$	90,549	$	18,639	$	—		$	882		$	678,251
Intercompany revenue	—		20,599		3,930		—			(24,529		)	—
Total revenue	568,181		111,148		22,569		—			(23,647		)	678,251
Direct costs	481,871		51,555		13,883		—			(23,526		)	523,783
Gross profit	86,310		59,593		8,686		—			(121		)	154,468
Selling, general and administrative expense	17,611		9,906		6,640		24,244			—			58,401
Operating income (loss) before sale or disposal of assets	68,699		49,687		2,046		(24,244		)	(121		)	96,067
Net loss on sale or disposal of assets	211		38		1		—			—			250
Operating income (loss)	$	68,488	$	49,649	$	2,045	$	(24,244	)	$	(121	)	$	95,817
Depreciation and amortization	$	26,658	$	2,908	$	829	$	692		$	(686	)	$	30,401
Property and equipment additions	$	19,603	$	7,640	$	1,118	$	1,621		$	(1,063	)	$	28,919
Three Months Ended March 31, 2016
External revenue	$	458,623	$	89,240	$	14,454	$	—		$	1,122		$	563,439
Intercompany revenue	—		17,487		4,959		—			(22,446		)	—
Total revenue	458,623		106,727		19,413		—			(21,324		)	563,439
Direct costs	385,206		50,011		12,503		—			(21,061		)	426,659
Gross profit	73,417		56,716		6,910		—			(263		)	136,780
Selling, general and administrative expense	12,085		10,296		5,299		22,448			—			50,128
Operating income (loss) before sale or disposal of assets	61,332		46,420		1,611		(22,448		)	(263		)	86,652
Net loss (gain) on sale or disposal of assets	575		—		—		(12		)	—			563
Operating income (loss)	$	60,757	$	46,420	$	1,611	$	(22,436	)	$	(263	)	$	86,089
Depreciation and amortization	$	17,573	$	2,781	$	883	$	638		$	(586	)	$	21,289
Property and equipment additions	$	18,544	$	4,652	$	607	$	2,851		$	(848	)	$	25,806
At March 31, 2017
Total assets	$	3,229,297	$	344,355	$	74,078	$	1,587,845		$	(1,774,897	)	$	3,460,678
At December 31, 2016
Total assets	$	3,137,177	$	331,484	$	74,752	$	1,502,150		$	(1,672,235	)	$	3,373,328