Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates four operating segments, three of which are reportable segments, as a direct selling company that sells a wide range of products sold primarily by independent sales force members across many countries around the world. During the three months ended September 30, 2016 and September 30, 2015, respectively, approximately $27.7 million or 81.3% and $27.3 million or 74.0% of our revenue was generated in international markets. During the nine months ended September 30, 2016 and September 30, 2015, revenue generated in international markets totaled approximately $86.5 million or 81.1% and $62.2 million or 67.7%, respectively.

The Company has grouped our products into the following four operating segments: gourmet food, nutritional and wellness, home décor and other. Substantially all of our long-lived assets are located in the U.S. Of these four operating segments, gourmet food, home décor, and nutritional and wellness qualify as reportable segments.

The Company has identified three reportable segments as each segment engages in business activities, incurring expenses and producing revenues. The operating results of these segments are regularly reviewed by chief operating decision makers ("CODMs") and there is discrete financial information available for each unit. Also, the reported revenue of each reportable segment, both external and inter-company, is 10% or more of the combined revenue of all of the operating segments.

Gourmet Food - Segment consists of operations related to the production and sale of hand-crafted spices, oils and other food products from around the world. These operations have a presence in many of our markets both in the U.S. and internationally such as in Australia, New Zealand, Canada, and the United Kingdom. The subsidiaries involved in this line of business are Your Inspiration at Home and My Secret Kitchen.

Home Décor - Segment consists of operations related to the production and sale of premium hand-crafted baskets and the selling of products for the home, including pottery, cleaning, health, beauty, outdoor and customizable vinyl expressions for display. These operations are primarily located within the United States and the United Kingdom. The primary subsidiaries involved in this line of business are Kleeneze, Betterware, TLC and Uppercase Living.

Nutritional and Wellness - Segment consists of operations related to the selling of nutritional supplements and skin care products. These operations have a presence in many foreign markets and over 50 countries such as Italy, Russia, Spain, and Thailand. The subsidiary primarily involved in this type of products is Agel.

The Company notes that these three segments exceed 75.0% of the Company's consolidated revenue. Therefore, no further aggregation or disclosures are required for the remaining operating segments.

The Company has included an "other" within the tables below consisting of HCG, Paperly, and Tomboy Tools to provide easier reconciliation to our results found on the condensed consolidated statements of operations and further transparency.

In the tables below the Company presents revenue, gross profit, operating expenses, and other expenses by operating segment. When evaluating performance, our chief operating decision makers look at each segments gross profit to evaluate profitability. The CODMs view our operating expenses as holistic due to many shared expenses that occur at the corporate level. These shared expenses occur when corporate provides services to our operating segments, which is consistent with our post-acquisition integration strategies. None of the reportable segments cross sell to other reportable segments.

Segment information, which includes all operating segments, for the three months ended September 30, 2016 and September 30, 2015 are shown in the tables below (in thousands): 

	Gourmet Food			Home Décor			Nutritional and Wellness			Other			Consolidated
2016
Revenue	$	2,531		$	24,449		$	6,959		$	161		$	34,100
Gross profit	1,289			11,843			6,169			89			19,390
Operating expenses	2,451			15,292			5,625			147			23,515
Gain on sale of marketable securities	—			—			—			(3		)	(3		)
Interest expense	6			552			6			990			1,554
Income (loss) before income tax provision	$	(1,168	)	$	(4,001	)	$	538		$	(1,045	)	$	(5,676	)
2015
Revenue	$	6,543		$	22,433		$	7,667		$	311		$	36,954
Gross profit	3,373			11,787			5,998			231			21,389
Operating expenses	4,062			13,809			6,576			1,343			25,790
Gain on sale of marketable securities	—			—			—			2			2
Interest expense	2			542			15			5			564
Loss before income tax provision	$	(691	)	$	(2,564	)	$	(593	)	$	(1,119	)	$	(4,967	)

Segment information, which includes all operating segments, for the nine months ended September 30, 2016 and September 30, 2015 are shown in the tables below (in thousands): 

	Gourmet Food			Home Décor			Nutritional and Wellness			Other			Consolidated
2016
Revenue	$	9,045		$	76,414		$	20,475		$	655		$	106,589
Gross profit	4,648			37,658			17,263			391			59,960
Operating expenses	6,709			48,212			16,934			3,563			75,418
Gain on sale of marketable securities	—			—			—			(12		)	(12		)
Interest expense	7			1,665			34			1,716			3,422
Income (loss) before income tax provision	$	(2,068	)	$	(12,219	)	$	295		$	(4,876	)	$	(18,868	)
2015
Revenue	$	14,250		$	54,147		$	22,425		$	1,093		$	91,915
Gross profit	7,811			29,453			17,796			729			55,789
Operating expenses	8,807			35,917			19,031			3,164			66,919
Gain on sale of marketable securities	—			—			—			9			9
Interest expense	20			711			46			1,129			1,906
Loss before income tax provision	$	(1,016	)	$	(4,356	)	$	(1,281	)	$	(3,573	)	$	(10,226	)

The following table shows the total assets for each reportable segment as of September 30, 2016 and 2015 (in thousands):

	September 30, 2016		December 31, 2015
Gourmet food	$	1,625	$	2,324
Home décor	45,071		53,887
Nutritional and wellness	9,353		9,686
Other	10,712		16,607
Consolidated total assets	$	66,761	$	82,504

The following table summarizes goodwill for each reportable segment as of September 30, 2016 and 2015 (in thousands):

	September 30, 2016		December 31, 2015
Gourmet food	$	1,214	$	1,161
Home décor	1,924		2,137
Nutritional and wellness	1,938		1,938
Other	—		191
Consolidated goodwill	$	5,076	$	5,427