Segment Information

3 Months Ended

Sep. 30, 2019

(2) Segment Information

Prior to the three months ended December 31, 2018, we had previously determined the software-as-a-service, or SaaS, line of business was not material to our global operations in terms of revenue and profit, and therefore had not been separately reported as a segment. However, following recent acquisitions, we have quantitatively and qualitatively reassessed our segment reporting and determined the SaaS segment is material to the group, and now have two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment.

We evaluate the performance of our segments based on net sales and income from operations. The accounting policies of the segments are the same as those described in note 1 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2019. Segment net sales and segment income from operations do not include inter-segment profits and revenue is allocated to a geographic area based on where the products are shipped to or where the services are performed.

Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include corporate headquarters costs, stock-based compensation, amortization expense from acquired intangibles, acquisition related expenses, interest income, interest expense and other, net. We neither discretely allocate assets to our operating segments, nor does our Chief Operating Decision Maker evaluate the operating segments using discrete asset information.

The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in millions):


	Three Months Ended ‎September 30,
	2019		2018
Revenue by segment
Total Sleep and Respiratory Care	$	594.2	$	540.8

Software as a Service		88.3		47.5
Deferred revenue fair value adjustment		(1.4)		-
Total Software as a Service		86.9		47.5
Total	$	681.1	$	588.3

Net operating profit by segment
Sleep and Respiratory Care	$	198.2	$	175.3
Software as a Service		23.8		15.3
Total	$	222.0	$	190.6

Reconciling items
Corporate costs	$	30.9	$	33.6
Amortization of acquired intangible assets		18.5		12.9
Deferred revenue fair value adjustment		1.4		-
Interest income		(0.4)		(0.9)
Interest expense		11.0		3.7
Loss attributable to equity method investments		6.9		-
Other, net		3.1		2.5
Income before income taxes	$	150.6	$	138.9