Business Segments

12 Months Ended

Dec. 31, 2017

Business Segments

Business Segments

18.      Business Segments

The Company operates in three reportable segments:

· MES is the segment through which the Company provides medical equipment outsourcing services to its customers, including approximately 7,000 acute care hospitals and alternate site providers in the United States, including some of the nation’s premier health care institutions. The Company also buys, sources, remarkets and disposes of pre-owned medical equipment for its customers through the Company’s Asset Recovery Program; provides sales and distribution of specialty medical equipment; and offers its customers disposable items that are used on a single use basis.

· CES offers a broad range of inspection, preventative maintenance, repair, logistic and consulting services through the Company’s team of more than 400 technicians and professionals located in its nationwide network of service centers.

· SS is the segment through which the Company provides high end, state-of-the-art surgical equipment along with trained and certified surgical equipment technologists to assist in the operation of the equipment.

	Year Ended December 31,
(in thousands)	2017		2016		2015
Medical Equipment Solutions
Net sales	$	299,156	$	303,664	$	285,059
Medical equipment depreciation		52,711		56,258		60,465
Gross margin		113,403		109,201		100,930
Assets		563,246		584,597		585,990
Amortization		3,689		6,884		7,962
Clinical Engineering Solutions
Net sales		140,929		107,751		99,188
Gross margin		30,546		22,029		20,200
Assets		133,503		131,537		110,588
Amortization		2,287		822		692
Surgical Services
Net sales		74,698		68,086		64,434
Medical equipment depreciation		7,139		5,899		6,313
Gross margin		27,806		25,622		23,662
Assets		108,696		101,989		100,997
Amortization		3,536		3,395		3,372
Corporate and Unallocated
Amortization and depreciation		10,882		11,008		13,097
Capital Expenditures		55,348		63,080		62,498
Total Company Assets, Amortization and Depreciation and Capital Expenditures
Assets		805,445		818,123		797,575
Amortization and depreciation		80,244		84,266		91,901
Capital Expenditures		55,348		63,080		62,498
Total Gross Margin and Reconciliation to Loss Before Income Taxes and Noncontrolling Interest
Total gross margin		171,755		156,852		144,792
Selling, general and administrative		126,670		120,111		122,454
Restructuring		—		—		2,321
(Gain) on settlement		—		(3,074)		(5,718)
Interest expense		53,002		52,321		53,195
Loss before income taxes and noncontrolling interest	$	(7,917)	$	(12,506)	$	(27,460)

Gross margin represents net revenues less total direct costs.

The following table provides additional detail on the percentage of revenue for each group of similar products sold or services provided in the MES, CES and SS segments:

	2017		2016		2015
MES
Equipment usage solutions	56.4	%	59.5	%	60.6	%
Equipment/disposable sales	1.7		3.8		2.9
	58.1		63.3		63.5
CES
Service solutions	26.7		22.5		22.1
Equipment sales	0.7		—		—
	27.4		22.5		22.1
SS
Equipment usage solutions	14.4		14.0		14.2
Equipment/disposable sales	0.1		0.2		0.2
	14.5		14.2		14.4
Total revenues	100.0	%	100.0	%	100.0	%