Business Segments

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Business Segments

The company operates in four primary business segments: North America/Home Medical Equipment (NA/HME), Institutional Products Group (IPG), Europe and Asia/Pacific. The NA/HME segment sells each of the three primary product lines, which includes: lifestyle, mobility and seating, and respiratory therapy products. IPG sells, and rented prior to the disposition of the rentals businesses, long-term care medical equipment, health care furnishings and accessory products. Europe and Asia/Pacific sell product lines similar to NA/HME and IPG. The accounting policies of each segment are the same as those described in the summary of significant accounting policies for the company’s consolidated financial statements. Intersegment sales and transfers are based on the costs to manufacture plus a reasonable profit element.

Segment performance is measured and resources are allocated based on a number of factors, with the primary profit or loss measure being segment operating profit (loss). Segment operating profit (loss) represents net sales less cost of products sold less selling general and administrative expenses. Segment operating profit (loss) excludes unallocated corporate general and administrative expenses not allocated to the segments and intersegment sales and profit eliminations, which are included in All Other. In addition, segment operating profit (loss) further excludes charges related to restructuring activities, asset impairments and gain on sale of business (as applicable). The previous performance measure was earnings before income taxes. With the issuance of convertible debt during 2016, this performance measure has not been utilized by the Chief Operating Decision Maker (CODM) as the interest expense incurred by the company is related to the company’s financing decision to issue convertible debt as compared to the operating decisions resulting from allocation of resources and segment operating income performance. In addition, in 2016, the company included an operating income line on the consolidated statement of comprehensive income (loss) to emphasize the CODM’s emphasis on operating income (loss).

As noted, this performance measure, segment operating income (loss), is used by the CODM for purposes of making decisions about allocating resources to a segment and assessing its performance. In addition, this metric is reviewed by the company’s Board of Directors regarding segment performance and is a key metric in the performance management assessment of the company's employees.

The information by segment is as follows (in thousands):

	2017		2016		2015
Revenues from external customers
Europe (1)	$	535,326	$	534,801	$	535,372
NA/HME (1)	320,818		402,914		475,287
Institutional Products Group	59,472		64,413		87,137
Asia/Pacific	50,881		45,346		44,542
Consolidated	$	966,497	$	1,047,474	$	1,142,338
Intersegment revenues
Europe	$	13,815	$	14,182	$	9,958
NA/HME	82,716		96,750		111,321
Institutional Products Group	2,083		2,885		997
Asia/Pacific	15,312		19,366		20,661
Consolidated	$	113,926	$	133,183	$	142,937
Depreciation and amortization
Europe	$	7,446	$	7,038	$	7,176
NA/HME (2)	5,452		5,956		7,556
Institutional Products Group	293		254		1,980
Asia/Pacific	1,420		1,349		1,463
All Other (3)	20		38		29
Consolidated (2)	$	14,631	$	14,635	$	18,204

	2017			2016			2015
Net interest expense (income)
Europe	$	229		$	197		$	(444	)
NA/HME (2)	21,729			15,119			3,305
Institutional Products Group	277			191			1,028
Asia/Pacific	199			103			82
Consolidated (2)	$	22,434		$	15,610		$	3,971
Operating income (loss)
Europe (1)	$	33,160		$	34,122		$	39,869
NA/HME (1)	(42,831		)	(37,876		)	(29,320		)
Institutional Products Group	5,839			5,693			7,834
Asia/Pacific	(27		)	(1,436		)	(3,493		)
All Other (3)	(23,706		)	(20,657		)	(20,712		)
Charge related to restructuring activities	(12,274		)	(2,447		)	(1,971		)
Gains on sale of businesses	—			7,386			24
Asset write-off	(320		)	—			—
Consolidated operating loss	(40,159		)	(15,215		)	(7,769		)
Net gain (loss) on convertible derivatives	(3,657		)	1,268			—
Net Interest expense	(22,434		)	(15,610		)	(3,971		)
Loss from continuing operations before income taxes	$	(66,250	)	$	(29,557	)	$	(11,740	)
Assets
Europe	$	646,085		$	572,427		$	555,867
NA/HME (4)	349,137			265,092			205,724
Institutional Products Group	38,884			38,657			38,730
Asia/Pacific	29,922			25,703			24,421
All Other	2,005			1,864			1,752
Assets Held for Sale (4)	—			—			11,649
Consolidated	$	1,066,033		$	903,743		$	838,143
Long-lived assets
Europe	$	430,998		$	388,692		$	391,505
NA/HME	142,238			70,585			49,169
Institutional Products Group	31,340			30,603			30,278
Asia/Pacific	2,538			2,927			3,140
All Other	2,005			1,864			1,752
Consolidated	$	609,119		$	494,671		$	475,844
Expenditures for assets
Europe	$	5,819		$	5,552		$	5,038
NA/HME	7,702			3,426			1,252
Institutional Products Group	53			58			212
Asia/Pacific	995			1,115			969
All Other	—			—			51
Consolidated	$	14,569		$	10,151		$	7,522

  ________________________

(1) During the first quarter of 2017, a subsidiary, formerly included in the Europe segment, was transferred to the NA/HME segment as the subsidiary is managed by the NA/HME segment manager effective January 1, 2017. This revision increased revenues from external customers by $5,212,000 and $1,091,000 and increased operating loss by $128,000 and $75,000 for the twelve months ended December 31, 2016 and December 31, 2015, respectively, for NA/HME with an offsetting impact on Europe. Other items were also revised by immaterial amounts for 2016 and 2015 to conform with 2017 presentation.

(2) Revised 2015 for reclass of debt fees from depreciation and amortization to net interest expense with adoption of ASU 2015-03.

(3) Consists of un-allocated corporate SG&A costs and intercompany profits, which do not meet the quantitative criteria for determining reportable segments.

(4) Revised 2015 for GCM sale on September 30, 2016 and classified as assets held for sale.

Net sales by product, are as follows (in thousands):

	2017		2016		2015
Europe
Lifestyle	$	266,290	$	274,684	$	275,932
Mobility and Seating	225,909		209,501		207,639
Respiratory Therapy	26,261		35,030		36,373
Other(1)	16,866		15,586		15,428
	$	535,326	$	534,801	$	535,372
NA/HME
Lifestyle	$	126,308	$	173,301	$	222,944
Mobility and Seating	114,087		121,934		118,323
Respiratory Therapy	78,666		104,631		130,349
Other(1)	1,757		3,048		3,671
	$	320,818	$	402,914	$	475,287
Institutional Products Group
Continuing Care	$	59,472	$	64,413	$	87,137
Asia/Pacific
Mobility and Seating	$	29,096	$	25,254	$	25,655
Lifestyle	10,402		10,161		10,277
Continuing Care	3,601		3,521		3,115
Respiratory Therapy	1,640		1,244		807
Other(1)	6,142		5,166		4,688
	$	50,881	$	45,346	$	44,542
Total Consolidated	$	966,497	$	1,047,474	$	1,142,338

  ________________________

(1) Includes various services, including repair services, equipment rentals and external contracting.

No single customer accounted for more than 4.1% of the company’s sales.