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 2015 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. 10. 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 External revenue $ 553,378 $ 84,970 $ 17,450 $ — $ 1,056 $ 656,854 Intercompany revenue — 20,170 5,537 — (25,707 ) — Total revenue 553,378 105,140 22,987 — (24,651 ) 656,854 Direct costs 459,242 50,934 14,066 — (23,965 ) 500,277 Gross profit 94,136 54,206 8,921 — (686 ) 156,577 Selling, general and administrative expense 15,541 9,728 6,064 18,010 — 49,343 Operating income (loss) before sale or disposal of assets 78,595 44,478 2,857 (18,010 ) (686 ) 107,234 Net loss (gain) on sale or disposal of assets 304 1 1 (70 ) — 236 Operating income (loss) $ 78,291 $ 44,477 $ 2,856 $ (17,940 ) $ (686 ) $ 106,998 Depreciation and amortization $ 23,363 $ 2,826 $ 848 $ 679 $ (622 ) $ 27,094 Property and equipment additions $ 24,917 $ 4,953 $ 383 $ 2,794 $ (1,315 ) $ 31,732 Three Months Ended External revenue $ 441,924 $ 84,129 $ 24,544 $ — $ 1,120 $ 551,717 Intercompany revenue — 16,180 6,294 — (22,474 ) — Total revenue 441,924 100,309 30,838 — (21,354 ) 551,717 Direct costs 366,983 48,901 19,077 — (20,910 ) 414,051 Gross profit 74,941 51,408 11,761 — (444 ) 137,666 Selling, general and administrative expense 10,677 9,542 7,660 16,981 — 44,860 Operating income (loss) before charges 64,264 41,866 4,101 (16,981 ) (444 ) 92,806 Business interruption insurance gain — — (4,523 ) — — (4,523 ) Net loss on sale or disposal of assets 175 — 72 3 — 250 Operating income (loss) $ 64,089 $ 41,866 $ 8,552 $ (16,984 ) $ (444 ) $ 97,079 Depreciation and amortization $ 16,520 $ 2,731 $ 1,181 $ 588 $ (549 ) $ 20,471 Property and equipment additions $ 19,429 $ 5,735 $ 127 $ 2,773 $ (1,115 ) $ 26,949 10. Lines of Business, continued Animal Hospital Laboratory All Other Corporate Eliminations Total Nine Months Ended External revenue $ 1,552,377 $ 267,475 $ 50,560 $ — $ 3,370 $ 1,873,782 Intercompany revenue — 56,452 15,237 — (71,689 ) — Total revenue 1,552,377 323,927 65,797 — (68,319 ) 1,873,782 Direct costs 1,290,145 152,458 41,049 — (67,175 ) 1,416,477 Gross profit 262,232 171,469 24,748 — (1,144 ) 457,305 Selling, general and administrative expense 41,903 29,726 17,385 58,647 — 147,661 Operating income (loss) before sale or disposal of assets 220,329 141,743 7,363 (58,647 ) (1,144 ) 309,644 Net loss (gain) on sale or disposal of assets 747 (34 ) 4 (189 ) — 528 Operating income (loss) $ 219,582 $ 141,777 $ 7,359 $ (58,458 ) $ (1,144 ) $ 309,116 Depreciation and amortization $ 62,811 $ 8,446 $ 2,635 $ 1,985 $ (1,805 ) $ 74,072 Property and equipment additions $ 68,947 $ 14,355 $ 2,475 $ 7,981 $ (3,212 ) $ 90,546 Nine Months Ended External revenue $ 1,270,326 $ 252,645 $ 73,895 $ — $ 3,089 $ 1,599,955 Intercompany revenue — 47,858 19,839 — (67,697 ) — Total revenue 1,270,326 300,503 93,734 — (64,608 ) 1,599,955 Direct costs 1,066,516 144,410 59,160 — (62,506 ) 1,207,580 Gross profit 203,810 156,093 34,574 — (2,102 ) 392,375 Selling, general and administrative expense 32,351 27,894 24,088 49,410 — 133,743 Operating income (loss) before charges 171,459 128,199 10,486 (49,410 ) (2,102 ) 258,632 Business interruption insurance gain — — (4,523 ) — — (4,523 ) Net (gain) loss on sale or disposal of assets (445 ) 41 92 78 — (234 ) Operating income (loss) $ 171,904 $ 128,158 $ 14,917 $ (49,488 ) $ (2,102 ) $ 263,389 Depreciation and amortization $ 49,032 $ 7,940 $ 3,509 $ 1,755 $ (1,602 ) $ 60,634 Property and equipment additions $ 45,506 $ 11,813 $ 1,427 $ 5,349 $ (2,625 ) $ 61,470 At September 30, 2016 Total assets $ 2,961,074 $ 329,694 $ 70,923 $ 1,349,186 $ (1,501,815 ) $ 3,209,062 At December 31, 2015 Total assets $ 2,186,959 $ 306,296 $ 73,491 $ 471,112 $ (536,726 ) $ 2,501,132 |