Lines of Business

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Lines of Business

Lines of Business

Our business is divided into four operating segments: Animal Hospital, Laboratory, Medical Technology and Vetstreet. Our operating segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards.

Our reportable segments are aggregated into two reportable segments, "Animal Hospital" and "Laboratory". Our Animal Hospital reportable segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory reportable segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our Medical Technology and Vetstreet operating segments do not meet the quantitative requirements for separate reportable segments and are included in our "All Other" category. Our Medical Technology segment sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet segment provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. We also operate a corporate office that provides general and administrative support services for our segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2012 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

The following is a summary of certain financial data for each of our segments (in thousands):

9.    Lines of Business, continued

	Animal Hospital			Laboratory			All Other		Corporate			Intercompany Eliminations			Total
Three Months Ended June 30, 2013
External revenue	$	365,205		$	77,937		$	22,113	$	—		$	—		$	465,255
Intercompany revenue	—			13,293			5,359		—			(18,652		)	—
Total revenue	365,205			91,230			27,472		—			(18,652		)	465,255
Direct costs	305,092			46,004			18,049		—			(18,184		)	350,961
Gross profit	60,113			45,226			9,423		—			(468		)	114,294
Selling, general and administrative expense	8,720			7,965			8,041		14,297			—			39,023
Operating income (loss) before charges	51,393			37,261			1,382		(14,297		)	(468		)	75,271
Net (gain) loss on sale or disposal of assets	(160		)	(1		)	1		(270		)	—			(430		)
Operating income (loss)	$	51,553		$	37,262		$	1,381	$	(14,027	)	$	(468	)	$	75,701
Depreciation and amortization	$	14,684		$	2,590		$	1,937	$	735		$	(446	)	$	19,500
Property and equipment additions	$	11,326		$	1,818		$	1,039	$	1,306		$	(363	)	$	15,126
Three Months Ended June 30, 2012
External revenue	$	342,282		$	72,452		$	23,638	$	—		$	—		$	438,372
Intercompany revenue	—			14,168			3,780		—			(17,948		)	—
Total revenue	342,282			86,620			27,418		—			(17,948		)	438,372
Direct costs	292,902			44,324			17,624		—			(17,085		)	337,765
Gross profit	49,380			42,296			9,794		—			(863		)	100,607
Selling, general and administrative expense	7,995			7,510			9,029		14,463			—			38,997
Operating income (loss) before charges	41,385			34,786			765		(14,463		)	(863		)	61,610
Net (gain) loss on sale or disposal of assets	(112		)	(7		)	232		(1		)	—			112
Operating income (loss)	$	41,497		$	34,793		$	533	$	(14,462	)	$	(863	)	$	61,498
Depreciation and amortization	$	15,239		$	2,521		$	2,582	$	804		$	(345	)	$	20,801
Property and equipment additions	$	15,297		$	2,282		$	1,048	$	3,008		$	(542	)	$	21,093

9.    Lines of Business, continued

	Animal Hospital		Laboratory			All Other			Corporate			Intercompany Eliminations			Total
Six Months Ended June 30, 2013
External revenue	$	705,820	$	151,576		$	46,465		$	—		$	—		$	903,861
Intercompany revenue	—		26,989			9,530			—			(36,519		)	—
Total revenue	705,820		178,565			55,995			—			(36,519		)	903,861
Direct costs	600,508		90,874			36,938			—			(35,676		)	692,644
Gross profit	105,312		87,691			19,057			—			(843		)	211,217
Selling, general and administrative expense	17,045		15,970			16,955			28,899			—			78,869
Operating income (loss) before charges	88,267		71,721			2,102			(28,899		)	(843		)	132,348
Net loss (gain) on sale or disposal of assets	1,569		(6		)	3			(270		)	—			1,296
Operating income (loss)	$	86,698	$	71,727		$	2,099		$	(28,629	)	$	(843	)	$	131,052
Depreciation and amortization	$	28,071	$	5,097		$	3,902		$	1,554		$	(885	)	$	37,739
Property and equipment additions	$	25,767	$	3,736		$	2,372		$	1,946		$	(726	)	$	33,095
Six Months Ended June 30, 2012
External revenue	$	658,407	$	144,423		$	45,007		$	—		$	—		$	847,837
Intercompany revenue	—		26,927			8,736			—			(35,663		)	—
Total revenue	658,407		171,350			53,743			—			(35,663		)	847,837
Direct costs	563,471		88,503			35,282			—			(33,405		)	653,851
Gross profit	94,936		82,847			18,461			—			(2,258		)	193,986
Selling, general and administrative expense	15,052		15,108			18,312			29,576			—			78,048
Operating income (loss) before charges	79,884		67,739			149			(29,576		)	(2,258		)	115,938
Net loss (gain) on sale or disposal of assets	393		(14		)	240			16			—			635
Operating income (loss)	$	79,491	$	67,753		$	(91	)	$	(29,592	)	$	(2,258	)	$	115,303
Depreciation and amortization	$	26,583	$	5,074		$	4,845		$	1,568		$	(707	)	$	37,363
Property and equipment additions	$	26,063	$	3,349		$	2,770		$	5,991		$	(1,008	)	$	37,165

At June 30, 2013
Total assets	$	1,802,057	$	252,070	$	96,938	$	54,368	$	(29,934	)	$	2,175,499
At December 31, 2012
Total assets	$	1,648,578	$	244,551	$	98,159	$	127,963	$	(27,671	)	$	2,091,580