Segments

As of December 31, 2019, our business is organized into five reportable segments:

1.Diagnostic Services

2.Diagnostic Imaging

3.Mobile Healthcare

4.Building and Construction

5.Real Estate and Investments

For discussion purposes, we categorized our Diagnostic Services and Mobile Healthcare reportable segments as “Services,” and our Diagnostic Imaging reportable segment as “Product and Product-Related.”

Diagnostic Services.Through Diagnostic Services, we offer a convenient and economically efficient imaging and monitoring services program as an alternative to purchasing equipment or outsourcing the procedures to another physician or imaging center. For physicians who wish to perform nuclear imaging, echocardiography, vascular or general ultrasound tests, we provide imaging systems, qualified personnel, radiopharmaceuticals, licensing services, and the logistics required to perform imaging in their own offices, and thereby the ability to bill Medicare, Medicaid, or one of the third-party healthcare insurers directly for those services, which are primarily cardiac in nature. We provide imaging services primarily to cardiologists, internal medicine physicians, and family practice doctors who typically enter annual contracts for a set number of days ranging from once per month to five times per week.

Mobile Healthcare. Through Mobile Healthcare, we provide contract diagnostic imaging, including computerized tomography (“CT”), magnetic resonance imaging (“MRI”), positron emission tomography (“PET”), PET/CT, and nuclear medicine and healthcare expertise to hospitals, integrated delivery networks (“IDNs”), and federal institutions on a long-term contract basis, as well as provisional (short-term) services to institutions that are in transition. These services are provided primarily when there is a cost, ease, and efficiency component of providing the services directly rather than owning and operating the related services and equipment directly by our customers.

Diagnostic Imaging. Through Diagnostic Imaging, we sell our internally developed solid-state gamma cameras, imaging systems and camera maintenance contracts. Our imaging systems include nuclear cardiac imaging systems, as well as general purpose nuclear imaging systems. We sell our imaging systems to physician offices and hospitals primarily in the United States, although we have sold a small number of imaging systems internationally.

Building and Construction. ATRM through its wholly-owned subsidiaries KBS, Glenbrook and EdgeBuilder, services residential and commercial construction projects by manufacturing modular housing units, structural wall panels, permanent wood foundation systems, and other engineered wood products, and supplies general contractors with building materials. KBS is a Maine-based manufacturer that started business in 2001 as a manufacturer of modular homes. KBS offers products for both commercial and residential buildings with a focus on customization to suit the project requirements and provide engineering and design expertise. Glenbrook is a retail supplier of lumber, windows, doors, cabinets, drywall, roofing, decking and other building materials and conducts its operations in Oakdale, Minnesota. EdgeBuilder is a manufacturer of structural wall panels, permanent wood foundation systems and other engineered wood products and conducts its operations in Prescott, Wisconsin

Real Estate and Investments. As part of the HoldCo Conversion, Digirad formed a real estate division under a newly formed subsidiary named SRE for the purposes of holding significant real estate assets that Digirad acquires. As an initial transaction to create Digirad’s real estate division under SRE and launch that aspect of the HoldCo Conversion, in April 2019, Digirad funded the initial purchase of three manufacturing facilities in Maine that manufacture modular buildings and leased those three properties. The funding of the assets acquisition was primarily through the revolver loan under our SNB Credit Facility. LSVM which was a wholly owned subsidiary of ATRM on the ATRM Acquisition Date, is a Connecticut based exempt reporting advisor that was acquired by the Company in the ATRM Acquisition. LSVM provides services that include investment advisory services and the servicing of pooled investment vehicles.

Our reporting segments have been determined based on the nature of the products and services offered to customers or the nature of their function in the organization. We evaluate performance based on the gross profit and operating income (loss) excluding litigation reserve expense, goodwill impairment, and transaction and integration costs. The Company does not identify or allocate its assets by operating segments. Accordingly, assets are not being reported by segment because the information is not available by segment and is not reviewed in the evaluation of performance or making decisions in the allocation of resources. Our operating costs included in our shared service functions, which primarily consist of senior executive officers, finance, human resources, legal, and information technology, are allocated to our segments. During the first quarter of 2018, we have classified the results of our MDSS segment as discontinued operations in our consolidated statement of operations for all periods presented. Accordingly, segment results have been recast for all periods presented to reflect MDSS as discontinued operations. As costs of shared service functions previously allocated to MDSS are not allocable to discontinued operations, prior period corporate costs have been reallocated amongst the continuing reportable segments.

Segment information for the years ended December 31, 2019 and 2018 is as follows (in thousands):



	Year ended December 31,
	2019			2018
Revenue by segment:
Diagnostic Services	$	47,723		$	49,256
Diagnostic Imaging	13,872			11,983
Mobile Healthcare	41,251			42,941
Building and Construction	11,257			—
Real Estate and Investments	275			—
Corporate, eliminations and other	(193		)	—
Consolidated revenue	$	114,185		$	104,180
Gross profit by segment:
Diagnostic Services	$	10,237		$	9,447
Diagnostic Imaging	5,135			5,142
Mobile Healthcare	4,956			3,682
Building and Construction	2,013			—
Real Estate and Investments	(33		)	—
Corporate, eliminations and other	(193		)	—
Consolidated gross profit	$	22,115		$	18,271
Income (loss) from operations by segment:
Diagnostic Services	$	6,788		$	4,812
Diagnostic Imaging	3,283			2,752
Mobile Healthcare	1,094			(1,001		)
Building and Construction	307			—
Real Estate and Investments	(312		)	—
Corporate, eliminations and other	(193		)	—
Unallocated corporate and other expenses	(12,221		)	(10,125		)
Segment loss from operations	(1,254		)	(3,562		)
Goodwill impairment ⁽¹⁾	—			(476		)
Merger and finance costs ⁽²⁾	(2,342		)	—
Loss on sale of buildings	(232		)	(507		)
Consolidated loss from operations	$	(3,828	)	$	(4,545	)

Depreciation and amortization by segment:
Diagnostic Services	$	1,277		$	2,127
Diagnostic Imaging	278			313
Mobile Healthcare	5,644			6,266
Building and Construction	711			—
Real Estate and Investments	165			—
Total depreciation and amortization	$	8,075		$	8,706

⁽¹⁾ See Note 8. Goodwill, for further information.

⁽²⁾Reflects legal and other costs related to the ATRM Merger and HoldCo establishment.

Geographic Information. The Company’s sales to customers located outside the United States for the years ended December 31, 2019 and 2018 was $0.3 million and $1.2 million, respectively. All of our long-lived assets are located in the United States.