Segment Information

9 Months Ended

Sep. 30, 2019

11. Segment Information

Operating segments are defined as components of a company that engage in business activities from which it may earn revenues and incur expenses, and for which separate financial information is available and is regularly reviewed by the Company’s chief operating decision makers, to assess the performance of the individual segments and make decisions about resources to be allocated to the segments. The Company operates as a multi-state provider of three distinct but related business segments providing in-home services.

In its personal care segment, the Company provides non-medical assistance with activities of daily living, primarily to persons who are at increased risk of hospitalization or institutionalization, such as the elderly, chronically ill or disabled. In its hospice segment, the Company provides physical, emotional and spiritual care for people who are terminally ill as well as related services for their families. In its home health segment, the Company provides services that are primarily medical in nature to individuals who may require assistance during an illness or after hospitalization and include skilled nursing and physical, occupational and speech therapy.

The tables below set forth information about the Company’s reportable segments for the three and nine months ended September 30, 2019 and 2018 along with the items necessary to reconcile the segment information to the totals reported in the accompanying condensed consolidated financial statements. Segment assets are not reviewed by the company’s chief operating decision maker function and therefore are not disclosed below.

Segment operating income consists of the net service revenues generated by a segment, less the direct costs of service revenues and general and administrative expenses that are incurred directly by the segment. Unallocated general and administrative costs are those costs for functions performed in a centralized manner and therefore not attributable to a particular segment. These costs include accounting, finance, human resources, legal, information technology, corporate office support and facility costs and overall corporate management.

The following tables present revenues disaggregated by revenue source.

	For the Three Months Ended September 30, 2019
	(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total
Net service revenues	$	154,563	$	10,874	$	4,366	$	169,803
Cost of services revenues		115,504		5,495		2,818		123,817
Gross profit		39,059		5,379		1,548		45,986
General and administrative expenses		15,602		1,824		844		18,270
Segment operating income	$	23,457	$	3,555	$	704	$	27,716

	For the Three Months Ended September 30, 2018
	(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total
Net service revenues	$	128,179	$	7,116	$	2,421	$	137,716
Cost of services revenues		95,428		3,777		1,721		100,926
Gross profit		32,751		3,339		700		36,790
General and administrative expenses		10,494		1,475		604		12,573
Segment operating income	$	22,257	$	1,864	$	96	$	24,217

	For the Three Months Ended September 30,
	2019			2018
	(Amounts in Thousands)
Segment Reconciliation:
Total segment operating income	$	27,716		$	24,217

Items not allocated at segment level:
Other general and administrative expenses		17,680			15,694
Depreciation and amortization		2,756			2,535
Interest income		(786	)		(113	)
Interest expense		866			1,543
Income before income taxes	$	7,200		$	4,558

	For the Nine Months Ended September 30, 2019
	(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total
Net service revenues	$	421,458	$	27,228	$	10,063	$	458,749
Cost of services revenues		314,329		13,587		6,803		334,719
Gross profit		107,129		13,641		3,260		124,030
General and administrative expenses		41,373		4,962		2,187		48,522
Segment operating income	$	65,756	$	8,679	$	1,073	$	75,508

	For the Nine Months Ended September 30, 2018
	(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total
Net service revenues	$	362,740	$	11,765	$	3,944	$	378,449
Cost of services revenues		268,815		6,351		2,819		277,985
Gross profit		93,925		5,414		1,125		100,464
General and administrative expenses		29,283		2,329		947		32,559
Segment operating income	$	64,642	$	3,085	$	178	$	67,905

	For the Nine Months Ended September 30,
	2019			2018
	(Amounts in Thousands)
Segment Reconciliation:
Total segment operating income	$	75,508		$	67,905

Items not allocated at segment level:
Other general and administrative expenses		46,907			43,739
Depreciation and amortization		7,365			6,676
Interest income		(1,096	)		(2,468	)
Interest expense		2,164			3,836
Income before income taxes	$	20,168		$	16,122