Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

In the first quarter of 2015, we modified the segment presentation to reflect the changes in how our Chief Operating Decision Maker (“CODM”) reviews the segments and the overall business. With the increase in completed acquisitions in the last two years, we changed how the financial information was presented for CODM review to exclude general 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 modified 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. We enhanced our segment reporting structure to match our operating structure based on how our Chief Operating Decision Maker (“CODM”) views the business and allocates resources, beginning in the first quarter of 2015. Our CODM is our Chief Executive Officer. Retrospective adjustments of prior period financial information have been made to conform to the current period presentation.

The two operating segments, which are the same as our reportable 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 and SureMed brands. 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.

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

	Three Months Ended
	September 30, 2015						September 30, 2014
	Automation and Analytics		Medication Adherence		Total		Automation and Analytics		Medication Adherence		Total
	(In thousands)
Revenues	$	102,967	$	22,267	$	125,234	$	89,547	$	22,996	$	112,543
Cost of revenues	45,668		15,863		61,531		38,412		14,585		52,997
Gross profit	57,299		6,404		63,703		51,135		8,411		59,546
Operating expenses	30,628		6,070		36,698		27,420		4,822		32,242
Income from segment operations	$	26,671	$	334	$	27,005	$	23,715	$	3,589	$	27,304
Corporate costs					13,146						13,707
Income from operations					$	13,859					$	13,597

	Nine Months Ended
	September 30, 2015						September 30, 2014
	Automation and Analytics		Medication Adherence		Total		Automation and Analytics		Medication Adherence		Total
	(In thousands)
Revenues	$	284,447	$	69,796	$	354,243	$	255,748	$	63,611	$	319,359
Cost of revenues	123,923		47,470		171,393		109,344		39,934		149,278
Gross profit	160,524		22,326		182,850		146,404		23,677		170,081
Operating expenses	85,195		18,321		103,516		78,566		14,273		92,839
Income from segment operations	$	75,329	$	4,005	$	79,334	$	67,838	$	9,404	$	77,242
Corporate costs					42,672						41,133
Income from operations					$	36,662					$	36,109

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Significant customers

There were no customers that accounted for more than 10% of our total revenues for the three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014.