Segment Disclosures

6 Months Ended

Jun. 30, 2011

Segment Disclosures [Abstract]

Segment Disclosures

8. Segment Disclosures

     After an evaluation of the business activities regularly reviewed by our chief operating decision maker for which separate discrete financial information is available, we determined that we have two reporting segments, System One and In-Center. The accounting policies of the reportable segments are the same as those described in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The profitability measure employed by us and our chief operating decision maker for making decisions about allocating resources to segments and assessing segment performance is segment profit (loss), which consists of revenues less cost of revenues, selling and marketing and distribution expenses.

     Our management measures are designed to assess performance of these operating segments, excluding certain items. As a result, certain corporate expenses are excluded from the segment operating performance measures, including research and development expenses and general and administrative expenses, as they are managed centrally.

     Within the System One segment, we derive revenues from the sale and rental of the System One and PureFlow SL equipment and the sale of disposable products in the home and critical care markets. The home market is devoted to the treatment of ESRD patients in the home, while the critical care market is devoted to the treatment of hospital-based patients with acute kidney failure or fluid overload. Within the System One segment, we sell a similar technology platform of the System One with different features to the home and critical care markets. Some of our largest customers in the home market provide outsourced renal dialysis services to some of our customers in the critical care market. Sales of product to both markets are made primarily through dedicated sales forces and distributed directly to the customer, or the patient, with certain products sold through distributors internationally.

     Within the In-Center segment, we sell blood tubing sets and needles for hemodialysis primarily for the treatment of ESRD patients at dialysis centers and needles for apheresis. Nearly all In-Center products are sold through national distributors.

     Our reportable segments consist of the following (in thousands):

	System One			In-Center		Unallocated			Total
Three Months Ended June 30, 2011
Revenues from external customers	$	35,604		$	18,164	$	—		$	53,768
Segment profit (loss)		3,174			1,891		(9,049	)		(3,984	)
Segment assets		89,609			18,987		182,827			291,423
Three Months Ended June 30, 2010
Revenues from external customers	$	27,467		$	16,541	$	—		$	44,008
Segment (loss) profit		(810	)		2,375		(8,845	)		(7,280	)
Segment assets		82,554			14,204		100,624			197,382
Six Months Ended June 30, 2011
Revenues from external customers	$	69,087		$	35,245	$	—		$	104,332
Segment profit (loss)		5,687			4,043		(18,348	)		(8,618	)
Segment assets		89,609			18,987		182,827			291,423
Six Months Ended June 30, 2010
Revenues from external customers	$	52,569		$	31,847	$	—		$	84,416
Segment (loss) profit		(2,089	)		4,039		(16,818	)		(14,868	)
Segment assets		82,554			14,204		100,624			197,382

     Substantially all of our revenues are derived from the sale of the System One and related products, which cannot be used with any other dialysis system, and from needles and blood tubing sets to customers located in the United States.

     The following table summarizes the number of customers who individually comprise greater than 10% of total revenues:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Customer A		21	%		22	%		21	%		22	%
Customer B		13	%		17	%		13	%		17	%
Customer C		14	%		13	%		13	%		13	%

     Sales to Customer A are primarily in the System One segment and sales to Customer B and Customer C are to significant distributors in the In-Center segment. A portion of Customer B’s sales of our products are to Customer A. All of Customer C’s sales of our products are to Customer A.

     The following table presents a reconciliation of the total segment assets to total assets (in thousands):

	June 30,		December 31,
	2011		2010
Total segment assets	$	108,596	$	102,798
Corporate assets:
Cash and cash equivalents		100,426		104,339
Property and equipment, net		12,540		8,290
Intangible assets, net		24,013		25,412
Goodwill		42,698		42,698
Prepaid expenses and other assets		3,150		2,557
Total assets	$	291,423	$	286,094