Segment Disclosures and Concentrations of Risk

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Disclosures and Concentrations of Risk

16. Segment Disclosures and Concentrations of Risk  

Background and Basis of Organization

Following the acquisition of Nutrisystem in March 2019, we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition.  The Healthcare segment derives its revenues from SilverSneakers senior fitness, Prime Fitness and WholeHealth Living.  The Nutrition segment provides weight management products and services and derives its revenues from Nutrisystem and South Beach Diet products. Prior to the acquisition of Nutrisystem, we had one reportable segment.   

Segment Revenues, Profit or Loss, and Assets

Our chief operating decision maker evaluates performance and allocates resources based on each segment’s EBITDA excluding acquisition and integration costs, impairment loss, and restructuring and related charges.  The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.  There are no material intersegment revenues or costs.  Transactions between the segments primarily consist of payments made by one segment on behalf of the other segment, which are recorded as current assets and eliminated in consolidation.  The following table presents information about reported segment revenues and profit or loss, as well as a reconciliation of each such amount to consolidated totals:

(In thousands)
	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019
	Healthcare		Nutrition			Total Segments			Healthcare		Nutrition		Total Segments
Revenues	$	159,692	$	177,963		$	337,655		$	156,527	$	57,567	$	214,094	(1)
Consolidated income (loss) before income taxes						$	(213,252	)					$	9,582
Acquisition and integration costs							2,791							17,052
Impairment loss							199,500							—
CEO transition costs							2,586							—
Restructuring and related charges							742							1,591
Interest expense							21,664							7,666
Depreciation and amortization							14,763							3,582
Adjusted EBITDA	$	30,242	$	(1,448	)	$	28,794		$	26,129	$	13,344	$	39,473

(1) The figure for total segments equals the consolidated figure for such item.

Our total assets by segment were as follows:

(In thousands)	March 31, 2020		December 31, 2019
Healthcare	$	563,027	$	526,013
Nutrition		905,256		1,099,892
Total assets	$	1,468,283	$	1,625,905

Concentrations of Risk

As of March 31, 2020, we were subject to concentration of revenue risk related to the services that we provide.  For the three months ended March 31, 2020, a significant portion (36%) of our consolidated revenues was derived from our SilverSneakers senior fitness offering, in which a meaningful amount of our fees is earned based on member visits to a fitness partner location.  Due to widespread closures of our partner locations beginning in March 2020 related to the COVID-19 pandemic, there was a significant decrease in member participation and the related revenues during March 2020, with visits decreasing sharply by the end of March.  The adverse impact to revenue was somewhat mitigated by a reduction in cost of services as our visit costs decreased in a corresponding manner.