BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2020

The Company classifies its operations into the following reportable operating segments: (1) home health and hospice services, which includes the Company’s home health, hospice and home care businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. The reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. Our Chief Executive Officer and President, who is our Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. We also report an “all other” category that includes general and administrative expense from our Service Center.

As of June 30, 2020, the Company provided services through 67 affiliated home health, hospice and home care agencies, and 54 affiliated senior living operations. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company’s Service Center provides various services to all lines of business. The Company does not review assets by segment and therefore assets by segment are not disclosed below.

The CODM uses Segment Adjusted EBITDAR from Operations as the primary measure of profit and loss for the Company's reportable segments and to compare the performance of its operations with those of its competitors. Segment Adjusted EBITDAR from Operations is net income attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, and, in order to view the operations performance on a comparable basis from period to period, certain adjustments including: (1) costs at start-up operations, (2) share-based compensation, (3) acquisition related costs, (4) transaction costs, (5) redundant and nonrecurring costs associated with the transition services agreement, (6) operating results of closed operations, (7) net income attributable to noncontrolling interest, and (8) net COVID-19 related costs. General and administrative expenses are not allocated to the reportable segments, and are included as “All Other”, accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

The following table presents certain financial information regarding our reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other” for the three and six months ended June 30, 2020 and 2019:


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended June 30, 2020
Revenue	$	57,984	$	34,756	$	—	$	92,740
Segment Adjusted EBITDAR from Operations	$	11,245	$	13,492	$	(4,112)	$	20,625
Three Months Ended June 30, 2019
Revenue	$	50,208	$	32,526	$	—	$	82,734
Segment Adjusted EBITDAR from Operations	$	8,103	$	12,012	$	(4,758)	$	15,357


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Six Months Ended June 30, 2020
Revenue	$	114,746	$	69,843	$	—	$	184,589
Segment Adjusted EBITDAR from Operations	$	21,151	$	25,989	$	(9,001)	$	38,139
Six Months Ended June 30, 2019
Revenue	$	96,325	$	64,316	$	—	$	160,641
Segment Adjusted EBITDAR from Operations	$	15,374	$	24,129	$	(9,479)	$	30,024

This table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Segment Adjusted EBITDAR from Operations	$	20,625	$	15,357	$	38,139	$	30,024
Less: Depreciation and amortization	1,201		962		2,222		1,772
Rent—cost of services	9,767		8,533		19,473		16,830
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations^(a)	473		81		705		317
Share-based compensation expense^(b)	1,959		508		3,915		1,127
Acquisition related costs^(c)	—		503		—		541
Spin-off related transaction costs^(d)	—		1,658		—		4,648
Transition services costs^(e)	267		—		317		—
Net COVID-19 related costs^(f)	883		—		1,160		—
Add: Net income attributable to noncontrolling interest	—		200		—		350
Condensed Consolidated and Combined Income from Operations	$	6,075	$	3,312	$	10,347	$	5,139


(a)						Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations.
(b)						Share-based compensation expense incurred which is included in cost of services and general and administrative expense.
(c)						Acquisition related costs that are not capitalizable.
(d)						Costs incurred related to the Spin-Off are included in general and administrative expense.
(e)						A portion of the costs incurred under the Transition Services Agreement (as defined in Note 3, Related Party Transactions and Net Parent Investment) identified as redundant or nonrecurring that are included in general and administrative expense. Fees incurred under the Transition Services agreement, net of the Company’s payroll reimbursement, were $1,525 and $2,861 for the three and six months ended June 30, 2020, respectively.
(f)						Represents incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $554 in increased revenue related to the 2% payment increase in Medicare reimbursements for sequestration relief with dates of service from May 1, 2020, through June 30, 2020. The amount reported for the six months ended June 30, 2020 includes net costs of $277 that were incurred in first quarter of 2020.