Segment Information | Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. In accordance with ASC 280, “Segment Reporting,” and based on the nature of the financial information that is received by the CODM, the Company operates in three operating segments, of which two are reportable segments, Radiology and Radiation Oncology, based on similar economic and other characteristics. The Radiology segment is comprised of diagnostic imaging services including MRI, PET/CT and other imaging services. The Radiation Oncology segment is comprised of radiation oncology services. All intercompany revenues, expenses, payables and receivables are eliminated in consolidation and are not reviewed when evaluating segment performance. Each segment’s performance is evaluated based on Revenue, Segment Income and Net Income. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to the Consolidated Financial Statements on Form 10-K for the year ended December 31, 2014. Additionally, the Company does not consider its wholesale revenue and retail revenue sources to constitute separate operating segments as discrete financial information does not exist and is not provided to the CODM. The following table summarizes the Company’s revenue by segment: Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Revenue Radiology $ 87,297 $ 84,994 $ 171,935 $ 166,381 Radiation Oncology 23,941 25,330 44,668 49,516 Corporate / Other — 8,180 — 12,036 Total $ 111,238 $ 118,504 $ 216,603 $ 227,933 The following are components of revenue: Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Revenue MRI $ 45,637 $ 45,249 $ 89,822 $ 88,136 PET/CT 34,178 32,594 67,547 64,144 Radiation Oncology 23,941 25,330 44,668 49,516 Other radiology 7,482 7,151 14,566 14,101 Corporate / Other — 8,180 — 12,036 Total $ 111,238 $ 118,504 $ 216,603 $ 227,933 Segment income represents net income before income taxes; interest expense and other, net; amortization expense; depreciation expense; share-based payment; severance and related costs; noncontrolling interest in subsidiaries; restructuring charges; transaction costs; impairment charges, loss on extinguishment of debt, other nonrecurring charges, and non-cash charges. Segment income is the most frequently used measure of each segment’s performance by the CODM and is commonly used in setting performance goals. The following table summarizes the Company’s segment income (loss): Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Segment income (loss) Radiology $ 33,248 $ 28,419 $ 64,257 $ 54,793 Radiation Oncology 11,167 12,581 20,490 24,344 Corporate / Other (7,746 ) (6,985 ) (15,126 ) (15,006 ) Total $ 36,669 $ 34,015 $ 69,621 $ 64,131 The reconciliation of net income (loss) to total segment income is shown below: Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Net income (loss) attributable to Alliance HealthCare Services, Inc. $ 2,784 $ (1,961 ) $ 4,715 $ (210 ) Income tax expense (benefit) 1,802 (1,366 ) 3,309 206 Interest expense and other, net 6,124 6,904 12,362 12,922 Amortization expense 1,957 2,495 3,909 4,530 Depreciation expense 14,274 12,072 30,069 23,705 Share-based payment (included in selling, general and administrative expenses) 376 430 710 819 Severance and related costs 1,727 195 1,860 454 Noncontrolling interest in subsidiaries 4,036 4,903 7,085 9,250 Restructuring charges (Note 2) 1,563 236 2,455 491 Transaction costs 937 1,113 939 1,532 Impairment charges 236 6,670 236 6,746 Legal settlements 822 1,543 1,621 2,903 Other non-cash charges (included in other income and expense, net) 31 781 351 783 Total segment income $ 36,669 $ 34,015 $ 69,621 $ 64,131 Net income (loss) for the Radiology and Radiation Oncology segments does not include charges for interest expense, net of interest income, income taxes or certain selling, general and administrative expenses. These costs are charged against the Corporate / Other segment. The following table summarizes the Company’s net income (loss) by segment: Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Net income (loss) Radiology $ 20,623 $ 17,937 $ 37,817 $ 34,934 Radiation Oncology 4,642 (1,629 ) 8,068 3,395 Corporate / Other (22,481 ) (18,269 ) (41,170 ) (38,539 ) Total $ 2,784 $ (1,961 ) $ 4,715 $ (210 ) The following table summarizes the Company’s identifiable assets by segment: As of December 31, 2014 As of June 30, 2015 Identifiable assets Radiology $ 229,141 $ 238,810 Radiation Oncology 182,880 180,990 Corporate / Other 88,864 146,616 Total $ 500,885 $ 566,416 The following table summarizes the Company’s goodwill by segment: Radiology Radiation Oncology Corporate / Other Total Balance at January 1, 2014 $ 42,166 $ 14,809 $ — $ 56,975 Goodwill acquired during the period — 6,889 — 6,889 Impairment charges — — — — Adjustments to goodwill during the period — — — — Balance at December 31, 2014 $ 42,166 $ 21,698 $ — $ 63,864 Goodwill acquired during the period — — 22,611 22,611 Impairment charges — — — — Adjustments to goodwill during the period — — — — Balance at June 30, 2015 $ 42,166 $ 21,698 $ 22,611 $ 86,475 Gross goodwill $ 196,508 $ 41,600 $ 22,611 $ 260,719 Accumulated impairment charges (154,342 ) (19,902 ) — (174,244 ) Balance at June 30, 2015 $ 42,166 $ 21,698 $ 22,611 $ 86,475 The following table summarizes the cash used for capital expenditures for the Radiology, Radiation Oncology and Corporate segments: Quarter Ended Six Months Ended June 30, June 30, 2014 2015 2014 2015 Cash used for capital expenditures Radiology $ 4,761 $ 5,865 $ 6,828 $ 12,695 Radiation Oncology 19 3,022 19 3,757 Corporate / Other 2,741 2,806 6,409 2,806 |