NOTE P — SEGMENT AND RELATED INFORMATION

We have identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each operating segment’s income from operations. The operating segments are described further below:

Patient Care - This segment consists of (i) our owned and operated patient care clinics, and (ii) our contracting and network management business. The patient care clinics provide services to design and fit O&P devices to patients. These clinics also instruct patients in the use, care and maintenance of the devices. The principal reimbursement sources for our services are:

Commercial private payors and other, which consist of individuals, rehabilitation providers, commercial insurance companies, HMOs, PPOs, hospitals, vocational rehabilitation, workers’ compensation programs and similar sources;

Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in published fee schedules with 10 regional pricing areas for prosthetics and orthotics and by state for durable medical equipment;

Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and

U.S. Department of Veterans Affairs.

Our contract and network management business, known as Linkia, is the only network management company dedicated solely to serving the O&P market and is focused on managing the O&P services of national and regional insurance companies. We partner with healthcare insurance companies by securing a national or regional contract either as a preferred provider or to manage their O&P network of providers.

Products & Services - This segment consists of our distribution services business, which distributes and fabricates O&P products and components to sell to both the O&P industry and our own patient care clinics, and our therapeutic solutions business. The therapeutic solutions business provides and sells rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. This segment also develops emerging neuromuscular technologies for the O&P and rehabilitation markets.

Corporate & Other - This consists of corporate overhead and includes unallocated expense such as personnel costs, professional fees and corporate offices expenses.

The accounting policies of the segments are the same as those described in Note B - “Significant Accounting Policies” in our 2017 Form 10-K.

Intersegment revenue primarily relates to sales of O&P components from the Products & Services segment to the Patient Care segment. The sales are priced at the cost of the related materials plus overhead.

Summarized financial information concerning our reporting segments is shown in the following tables.

Total assets for each of the segments has not materially changed from December 31, 2017.

(in thousands)	Patient Care		Products & Services		Corporate & Other			Consolidating Adjustments			Total
March 31, 2018
Net revenue
Third party	$	188,507	$	45,488	$	—		$	—		$	233,995
Intersegments	—		42,522		—			(42,522		)	—

Total net revenue	188,507		88,010		—			(42,522		)	233,995
Material costs
Third party suppliers	52,175		24,181		—			—			76,356
Intersegments	5,724		36,798		—			(42,522		)	—

Total material costs	57,899		60,979		—			(42,522		)	76,356
Personnel expenses	73,613		12,495		—			—			86,108
Other expenses	35,004		6,155		20,419			—			61,578
Depreciation & amortization	4,898		2,502		1,930			—			9,330

Income (loss) from operations	17,093		5,879		(22,349		)	—			623
Interest expense, net	7,989		3,265		1,009			—			12,263
Loss on extinguishment of debt	—		—		16,998			—			16,998
Non-service defined benefit plan expense	—		—		176			—			176

Income (loss) before income taxes	9,104		2,614		(40,532		)	—			(28,814		)
Benefit for income taxes	—		—		(6,196		)	—			(6,196		)

Net income (loss)	$	9,104	$	2,614	$	(34,336	)	$	—		$	(22,618	)

(in thousands)	Patient Care		Products & Services		Corporate & Other			Consolidating Adjustments			Total
March 31, 2017
Net revenue
Third Party	$	187,637	$	46,044	$	—		$	—		$	233,681
Intersegments	—		41,201		—			(41,201		)	—
Total net revenue	187,637		87,245		—			(41,201		)	233,681
Material costs
Third party suppliers	50,609		23,796		—			—			74,405
Intersegments	5,824		35,377		—			(41,201		)	—
Total material costs	56,433		59,173		—			(41,201		)	74,405
Personnel expenses	75,515		12,440		—			—			87,955
Other expenses	35,717		6,893		28,115			—			70,725
Depreciation & amortization	5,429		2,670		2,038			—			10,137
Income (loss) from operations	14,543		6,069		(30,153		)	—			(9,541		)
Interest expense, net	8,163		3,332		2,514			—			14,009
Loss on extinguishment of debt	—		—		—			—			—
Non-service defined benefit plan expense	—		—		184			—			184
Income (loss) before income taxes	6,380		2,737		(32,851		)	—			(23,734		)
Benefit for income taxes	—		—		(6,000		)	—			(6,000		)
Net income (loss)	$	6,380	$	2,737	$	(26,851	)	$	—		$	(17,734	)