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 Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Revenue Radiology $ 86,587 $ 86,284 $ 258,522 $ 252,665 Radiation Oncology 23,550 25,224 68,218 74,740 Corporate / Other — 9,276 — 21,312 Total $ 110,137 $ 120,784 $ 326,740 $ 348,717 The following are components of revenue: Quarter Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Revenue MRI $ 45,719 $ 47,603 $ 135,541 $ 135,739 PET/CT 33,542 32,248 101,089 96,392 Radiation Oncology 23,550 25,224 68,218 74,740 Other radiology 7,326 6,433 21,892 20,534 Corporate / Other — 9,276 — 21,312 Total $ 110,137 $ 120,784 $ 326,740 $ 348,717 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 Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Segment income (loss) Radiology $ 32,265 $ 28,526 $ 96,523 $ 83,319 Radiation Oncology 10,910 12,661 31,400 37,005 Corporate / Other (8,222 ) (7,325 ) (23,349 ) (22,331 ) Total $ 34,953 $ 33,862 $ 104,574 $ 97,993 The reconciliation of net income to total segment income is shown below: Quarter Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Net income attributable to Alliance HealthCare Services, Inc. $ 4,011 $ 7,204 $ 8,727 $ 6,994 Income tax expense 2,948 5,098 6,256 5,304 Interest expense and other, net 6,208 6,660 18,570 19,582 Amortization expense 1,961 2,377 5,870 6,907 Depreciation expense 12,743 12,247 42,812 35,952 Share-based payment (included in selling, general and administrative expenses) 407 423 1,117 1,242 Severance and related costs 455 277 2,315 731 Noncontrolling interest in subsidiaries 3,843 5,861 10,928 15,111 Restructuring charges (Note 2) (264 ) 216 2,191 707 Transaction costs 573 432 1,512 1,964 Impairment charges 4 71 240 6,817 Legal settlements (included in selling, general and administrative expenses) 2,000 2,924 3,621 5,827 Other non-cash charges (included in other income and expense, net) 64 22 415 805 Non-cash gain on step acquisition (included in other income and expense, net) — (9,950 ) — (9,950 ) Total segment income $ 34,953 $ 33,862 $ 104,574 $ 97,993 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 Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Net income (loss) Radiology $ 21,096 $ 13,283 $ 58,913 $ 48,217 Radiation Oncology 4,534 10,864 12,602 14,259 Corporate / Other (21,619 ) (16,943 ) (62,788 ) (55,482 ) Total $ 4,011 $ 7,204 $ 8,727 $ 6,994 The following table summarizes the Company’s identifiable assets by segment: As of December 31, 2014 As of September 30, 2015 Identifiable assets Radiology $ 229,141 $ 262,833 Radiation Oncology 182,880 182,630 Corporate / Other 88,864 147,771 Total $ 500,885 $ 593,234 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 3,342 — 22,611 25,953 Impairment charges — — — — Adjustments to goodwill during the period — — — — Balance at September 30, 2015 $ 45,508 $ 21,698 $ 22,611 $ 89,817 Gross goodwill $ 199,850 $ 41,600 $ 22,611 $ 264,061 Accumulated impairment charges (154,342 ) (19,902 ) — (174,244 ) Balance at September 30, 2015 $ 45,508 $ 21,698 $ 22,611 $ 89,817 The following table summarizes the cash used for capital expenditures for the Radiology, Radiation Oncology and Corporate segments: Quarter Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 Cash used for capital expenditures Radiology $ 6,331 $ 10,075 $ 13,159 $ 25,734 Radiation Oncology 3,051 1,183 3,070 10,394 Corporate / Other 556 450 6,965 3,256 |