Segment Information | 16. 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 (Radiology Division, Oncology Division, and Interventional Division) that also qualify as reportable segments under the definition of ASC 280. Prior to 2016, the Company operated in two reportable business segments – Radiology and Oncology Divisions. Effective January 1, 2016, the Interventional Division qualified as an additional reportable business segment. Accordingly, the information contained herein has been revised to reflect this change in presentation. Each of these reportable segments, on a stand-alone basis, provides and makes available their respective medical services in similar settings, and operates within a singular regulatory environment. Further, management assesses the segment operations and each segment’s degree of efficiency and performance based on this structure of financial reporting, and primarily makes operating decisions from these reportable segment results. The radiology segment is comprised of diagnostic imaging services including MRI, PET/CT and other imaging services. The oncology segment is comprised of radiation oncology services. The interventional operating segment is comprised of therapeutic minimally invasive pain management procedures medical management, laboratory testing, and other 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 following table summarizes the Company’s revenue by segment: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenue Radiology $ 87,546 $ 84,994 $ 173,185 $ 166,381 Oncology 25,829 25,330 51,891 49,516 Interventional 11,398 8,167 23,061 12,023 Corporate / Other 544 13 904 13 Total $ 125,317 $ 118,504 $ 249,041 $ 227,933 The following are components of revenue: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenue MRI revenue $ 48,755 $ 45,249 $ 96,325 $ 88,136 PET/CT revenue 32,099 32,594 63,765 64,144 Oncology 25,829 25,330 51,891 49,516 Interventional 11,398 8,167 23,061 12,023 Other radiology 6,692 7,151 13,095 14,101 Corporate / Other 544 13 904 13 Total $ 125,317 $ 118,504 $ 249,041 $ 227,933 Segment income represents net income (loss) before income tax expense (benefit); interest expense and other, net; amortization expense; depreciation expense; share-based payment; severance and related costs; noncontrolling interest in subsidiaries; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; legal matters expense and other non-cash charges. Segment income is the most frequently used measure of each segment’s performance and is commonly used in setting performance goals. The following table summarizes the Company’s segment income: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Segment income Radiology $ 28,802 $ 28,419 $ 55,246 $ 54,793 Oncology 12,559 12,581 24,717 24,344 Interventional 1,787 990 3,042 1,374 Corporate / Other (8,706 ) (7,975 ) (18,191 ) (16,380 ) Total $ 34,442 $ 34,015 $ 64,814 $ 64,131 The reconciliation of net income (loss) to total segment income is shown below: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) attributable to Alliance HealthCare Services, Inc. $ 2,459 $ (1,961 ) $ 1,269 $ (210 ) Income tax expense (benefit) 2,221 (1,366 ) 1,275 206 Interest expense and other, net 8,872 6,904 16,367 12,922 Amortization expense 2,494 2,495 4,937 4,530 Depreciation expense 13,730 12,072 26,778 23,705 Share-based payment (included in selling, general and administrative expenses) 379 430 2,243 819 Severance and related costs 708 195 2,424 454 Noncontrolling interest in subsidiaries 3,729 4,903 8,322 9,250 Restructuring charges (Note 3) 1,120 236 1,351 491 Transaction costs 431 1,113 848 1,532 Shareholder transaction costs 1,498 — 2,507 — Impairment charges — 6,670 — 6,746 Legal matters expense (included in selling, general and administrative expenses) 39 1,543 194 2,903 Other non-cash (gains) charges (included in other (income) and expense, net) (3,238 ) 781 (3,701 ) 783 Total segment income $ 34,442 $ 34,015 $ 64,814 $ 64,131 Net income (loss) for the radiology, oncology and interventional 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: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) Radiology $ 19,173 $ 17,937 $ 34,826 $ 34,934 Oncology 7,334 (1,629 ) 11,521 3,395 Interventional 1,401 253 1,588 422 Corporate / Other (25,449 ) (18,522 ) (46,666 ) (38,961 ) Total $ 2,459 $ (1,961 ) $ 1,269 $ (210 ) The following table summarizes the Company’s identifiable assets by segment: As of June 30, As of December 31, 2016 2015 Identifiable assets Radiology $ 298,655 $ 280,497 Oncology 208,222 213,698 Interventional 82,460 83,480 Corporate / Other 25,240 25,985 Total $ 614,577 $ 603,660 The following table summarizes the Company’s goodwill by segment: Radiology Oncology Interventional Total Balance at December 31, 2014 $ 42,166 $ 21,698 $ — $ 63,864 Goodwill acquired during the period 2,656 5,891 30,371 38,918 Impairment charges — — — — Adjustments to goodwill during the period — — — — Balance at December 31, 2015 $ 44,822 $ 27,589 $ 30,371 $ 102,782 Goodwill acquired during the period 335 1,115 929 2,379 Impairment charges — — — — Adjustments to goodwill during the period — 615 353 968 Balance at June 30, 2016 $ 45,157 $ 29,319 $ 31,653 $ 106,129 Gross goodwill $ 199,499 $ 49,221 $ 31,653 $ 280,373 Accumulated impairment charges (154,342 ) (19,902 ) — (174,244 ) Balance at June 30, 2016 $ 45,157 $ 29,319 $ 31,653 $ 106,129 Capital expenditures in the radiology, oncology, interventional and corporate/other segments were $13,749, $1,954, $20 and $576, respectively for the three months ended June 30, 2016, and $5,865, $3,022, $0 and $2,806, respectively, for the three months ended June 30, 2015. Capital expenditures in the radiology, oncology, interventional and corporate/other segments were $30,675, $2,438, $53 and $809, respectively, for the six months ended June 30, 2016, and $12,695, $3,757, $0 and $2,806 respectively, for the six months ended June 30, 2015. |