2.Segment Data

In the first quarter of 2017, the Company redefined its reporting segments to include a) Home Health (“HH”), formerly Visiting Nurse, b) Other Home-Based Services (“OHBS”), which includes all other home care services outside of Home Health services and c) the Healthcare Innovations (“HCI”) segment. The OHBS segment consists of the historical personal care operations plus hospice services. Prior year segment information was reclassified to conform to the new segment definitions. In management’s opinion, this approach provides investors clarity for the largest segment, Home Health, and best aligns with the Company’s internal decision-making processes as viewed by the chief operating decision maker.

Reportable segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker manages the business and allocates resources, consistent with the criteria in ASC 280, Segment Reporting.

Consistent with information given to the chief operating decision maker, the Company does not allocate certain expenses to the reportable segments. The Company evaluates the performance of its business segments based on operating income. Intercompany and intersegment transactions have been eliminated.

The HH segment provides skilled medical services in patients’ homes largely to enable recipients to reduce or avoid periods of hospitalization and/or nursing home care. Approximately 95% of the HH segment revenues were generated from the Medicare program, while the balance is generated from Medicaid and private insurance programs.

The OHBS segment includes traditional personal care services (generally provided by paraprofessional staff such as home health aides) which are generally of a custodial rather than skilled nature. Personal care revenues are generated on an hourly basis and are primarily from Medicaid (approximately 80% of personal care revenues). Hospice services are largely provided in patients’ homes and generally require specialized hospice nursing skills. Hospice revenues are generated on a per diem basis and are primarily from Medicare (approximately 93% of hospice revenues).

The Company’s HCI business segment is used to report on the Company’s developmental activities outside its HH and OHBS businesses. These activities are intended ultimately, whether directly or indirectly, to benefit the Company’s patients and payors through the enhanced provision of HH and OHBS. The activities all share a common goal of improving patient experiences and quality outcomes, while lowering costs. They include, but are not limited to, items such as: technology, information, population health management, risk-sharing, care-coordination and transitions, clinical advancements, enhanced patient engagement and informed clinical decision and technology enabled in-home clinical assessments.


	Quarter ended				Nine months ended
Consolidated	September 29, 2017		September 30, 2016		September 29, 2017		September 30, 2016

Net service revenues:
Home Health	$	141,434		108,138		440,962		327,899
Other Home-Based Services		46,378		41,975		138,495		121,871
Healthcare Innovations		6,490		10,308		16,890		20,344
		194,302		160,421		596,347		470,114
Operating income before corporate expenses:
Home Health		16,992		12,657		57,087		42,964
Other Home-Based Services		3,579		2,501		11,444		9,223
Healthcare Innovations		812		5,051		796		5,098
		21,383		20,209		69,327		57,285

Corporate expenses		9,329		6,843		27,072		21,277
Deal, transition and other costs		4,467		2,257		17,122		7,455
Operating income		7,587		11,109		25,133		28,553
Interest expense, net (1)		1,668		1,537		5,794		4,684
Net income - noncontrolling interests		561		1,012		2,046		689
Net income before income taxes	$	5,358	$	8,560	$	17,293	$	23,180

(1) Allocation of interest for the quarter ended September 29, 2017 was $643, $204 and $154 to the HH, OHBS and HCI segments, respectively, and $384, $384, and $248 to the HH, OHBS and HCI segments, respectively, for the quarter ended September 30, 2016. Allocation of interest for the nine months ended September 29, 2017 was $2,274, $705 and $508 to the HH, OHBS and HCI segments, respectively, and $1,183, $1,183, and $960 to the HH, OHBS and HCI segments, respectively, for the nine months ended September 30, 2016.