Segment Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. In accordance with ASC 280, “Segment Reporting,” and based on the nature of the financial information that is received by the CODM, the Company operates in two operating segments, which are also its two reportable segments, Imaging and Radiation Oncology, based on similar economic and other characteristics.

The Imaging segment is comprised of diagnostic imaging services including MRI, PET/CT and other imaging services. The Radiation Oncology segment is comprised of radiation oncology services. All intercompany revenues, expenses, payables and receivables are eliminated in consolidation and are not reviewed when evaluating segment performance. Each segment’s performance is evaluated based on Revenue, Segment Income and Net Income. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to the Consolidated Financial Statements on Form 10-K for the year ended December 31, 2013. Additionally, the Company does not consider its wholesale revenue and retail revenue sources to constitute separate operating segments as discrete financial information does not exist and is not provided to the CODM.

The following table summarizes the Company’s revenue by segment:

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2013		2014		2013		2014
Revenue
Imaging	$	93,658	$	86,587	$	280,244	$	258,522
Radiation Oncology	19,717		23,550		57,931		68,218
Total	$	113,375	$	110,137	$	338,175	$	326,740

The following are components of revenue:

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2013		2014		2013		2014
Revenue
MRI revenue	$	46,938	$	45,719	$	140,378	$	135,541
PET/CT revenue	36,089		33,542		110,495		101,089
Radiation Oncology revenue	19,717		23,550		57,931		68,218
Other modalities and other revenue	10,631		7,326		29,371		21,892
Total	$	113,375	$	110,137	$	338,175	$	326,740

Segment income represents net income (loss) before income taxes; interest expense and other, net; amortization expense; depreciation expense; share-based payment; severance and related costs; noncontrolling interest in subsidiaries; restructuring charges; transaction costs; impairment charges, loss on extinguishment of debt, other non recurring charges, and non-cash charges. Segment income is the most frequently used measure of each segment’s performance by the CODM and is commonly used in setting performance goals. The following table summarizes the Company’s segment income:

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2013			2014			2013			2014
Segment income
Imaging	$	39,251		$	32,265		$	112,725		$	96,523
Radiation Oncology	8,871			10,910			25,678			31,400
Corporate / Other	(9,566		)	(8,222		)	(26,101		)	(23,349		)
Total	$	38,556		$	34,953		$	112,302		$	104,574

The reconciliation of Net (loss) income to total segment income is shown below:

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2013			2014			2013			2014
Net (loss) income attributable to Alliance HealthCare Services, Inc.	$	(2,070	)	$	4,011		$	(17,452	)	$	8,727
Income tax (benefit) expense	(2,392		)	2,948			(9,725		)	6,256
Interest expense and other, net	8,156			6,208			31,481			18,570
Amortization expense	2,151			1,961			8,856			5,870
Depreciation expense	16,965			12,743			49,803			42,812
Share-based payment (included in selling, general and administrative expenses)	301			407			1,036			1,117
Severance and related costs	—			455			—			2,315
Noncontrolling interest in subsidiaries	3,402			3,843			9,741			10,928
Restructuring charges (Note 2)	1,809			(264		)	5,172			2,191
Transaction costs	7			573			87			1,512
Impairment charges	4,529			4			9,396			240
Loss on extinguishment of debt	5,132			—			22,201			—
Legal settlements	514			2,000			1,464			3,621
Other non-cash charges (included in other income and expense, net)	52			64			242			415
Total segment income	$	38,556		$	34,953		$	112,302		$	104,574

Net income for the Imaging and Radiation Oncology segments does not include charges for interest expense, net of interest income, income taxes or certain selling, general and administrative expenses. These costs are charged against the Corporate / Other segment. The following table summarizes the Company’s net income (loss) by segment:

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2013			2014			2013			2014
Net (loss) income
Imaging	$	18,612		$	21,096		$	56,358		$	58,913
Radiation Oncology	2,499			4,534			6,530			12,602
Corporate / Other	(23,181		)	(21,619		)	(80,340		)	(62,788		)
Total	$	(2,070	)	$	4,011		$	(17,452	)	$	8,727

The following table summarizes the Company’s identifiable assets by segment:

	As of December 31, 2013		As of September 30, 2014
Identifiable assets
Imaging	$	240,317	$	220,496
Radiation Oncology	158,216		149,587
Corporate / Other	91,314		103,384
Total	$	489,847	$	473,467

The following table summarizes the Company’s goodwill by segment:

	Imaging			Radiation Oncology			Corporate / Other		Total
Balance at January 1, 2013	$	41,684		$	14,809		$	—	$	56,493
Goodwill acquired during the period	—			—			—		—
Impairment charges	—			—			—		—
Adjustments to goodwill during the period	482			—			—		482
Balance at December 31, 2013	$	42,166		$	14,809		$	—	$	56,975
Goodwill acquired during the period	—			—			—		—
Impairment charges	—			—			—		—
Adjustments to goodwill during the period	—			—			—		—
Balance at September 30, 2014	$	42,166		$	14,809		$	—	$	56,975
Gross goodwill	$	196,508		$	34,711		$	—	$	231,219
Accumulated impairment charges	(154,342		)	(19,902		)	—		(174,244		)
Balance at September 30, 2014	$	42,166		$	14,809		$	—	$	56,975

Cash used for capital expenditures for the Imaging, Radiation Oncology and Corporate segments were $6,331, $3,051, and $556, respectively, for the quarter ended September 30, 2014. Capital expenditures in the Imaging, Radiation Oncology and Corporate segments were $8,032, $91 and $616, respectively, for the quarter ended September 30, 2013. Cash used for capital expenditures for the Imaging, Radiation Oncology and Corporate segments were $13,159, $3,070, and $6,965, respectively, for the nine months ended September 30, 2014. Capital expenditures in the Imaging, Radiation Oncology and Corporate segments were $13,513, $762 and $4,821, respectively, for the nine months ended September 30, 2013.