Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

In the first quarter of 2014, we began to manage our business according to two product segments because many of our Acute Care and Non-Acute Care customers were converging to provide services across the continuum of care. We modified our segment reporting structure to match our operating structure based on how our CODM views the business and allocates resources. The two operating segments, which are the same as our reporting segments, are as follows:

Automation and Analytics

The Automation and Analytics segment is organized around the design, manufacturing, selling and servicing of medication and supply dispensing systems, pharmacy inventory management systems, and related software. Our Automation and Analytics products are designed to enable our customers to enhance and improve the effectiveness of the medication-use process, the efficiency of the medical-surgical supply chain, overall patient care and clinical and financial outcomes of medical facilities. Through modular configuration and upgrades, our systems can be tailored to specific customer needs.

Medication Adherence

The Medication Adherence segment includes primarily the manufacturing and selling of consumable medication blister cards, packaging equipment and ancillary products and services. These products are used to manage medication administration outside of the hospital setting and include medication adherence products sold under the brand name MTS Medication Technologies ("MTS"), Surgichem Limited ("Surgichem"), and under the Omnicell brand, and dispensing systems sold under the Omnicell brand. MTS products consist of proprietary medication packaging systems and related products for use by institutional pharmacies servicing long-term care, and correctional facilities or retail pharmacies serving patients in their local communities.

In the first quarter of 2015, we modified the segment presentation to reflect the changes in how our CODM reviews the segments and the overall business. With the increase in acquisitions in the last two years the CODM changed how the financial information was reviewed to exclude corporate-level costs that are not specific to either of the reporting segments when evaluating the operating results of each segment. Corporate-level costs include expenses related to executive management, finance and accounting, human resources, legal, training and development, and certain administrative expenses.

The historical information presented has been retrospectively adjusted to reflect the enhanced segment reporting. Our CODM allocates resources and evaluates the performance of our segments using information about its revenues, gross profit and income from operations, excluding certain costs which are managed separately at the corporate level. Except for goodwill, as discussed in Note 7, our assets are not discretely identified or allocated by segment.

The following table summarizes the financial performance of our reporting segments, including a reconciliation of income from segment operations to income from total operations:

	Three Months Ended
	March 31, 2015						March 31, 2014
	Automation and Analytics		Medication Adherence		Total		Automation and Analytics		Medication Adherence		Total
	(In thousands)
Revenues	$	92,779	$	23,442	$	116,221	$	81,499	$	20,265	$	101,764
Cost of revenues	38,852		15,684		54,536		34,940		12,329		47,269
Gross profit	53,927		7,758		61,685		46,559		7,936		54,495
Operating expenses	28,589		6,341		34,930		25,102		4,651		29,753
Income from segment operations	$	25,338	$	1,417	$	26,755	$	21,457	$	3,285	$	24,742
Corporate costs					16,376						14,788
Income from operations					$	10,379					$	9,954

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Significant customers

There were no customers that accounted for more than 10% of our total revenues for the three months ended March 31, 2015 and March 31, 2014.