Segment Information

6 Months Ended

Dec. 31, 2019

(2) Segment Information

We have quantitatively and qualitatively determined that we operate in 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 thousands):


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018
Revenue by segment
Total Sleep and Respiratory Care	$	649,451	$	587,894	$	1,243,617	$	1,128,708

Software as a Service		87,363		65,235		175,698		112,701
Deferred revenue fair value adjustment		(657)		(2,029)		(2,102)		(2,029)
Total Software as a Service		86,706		63,206		173,596		110,672
Total	$	736,157	$	651,100	$	1,417,213	$	1,239,380

Net operating profit by segment
Sleep and Respiratory Care	$	230,097	$	196,542	$	428,260	$	372,244
Software as a Service		21,339		17,061		45,135		32,384
Total	$	251,436	$	213,603	$	473,395	$	404,628

Reconciling items
Corporate costs	$	32,962	$	32,533	$	63,894	$	66,558
Amortization of acquired intangible assets		20,608		15,840		39,087		28,707
Litigation settlement expenses		(600)		-		(600)		-
Acquisition related expenses		-		6,123		-		6,123
Deferred revenue fair value adjustment		657		2,029		2,102		2,029
Interest income		(202)		(678)		(650)		(1,600)
Interest expense		10,220		7,487		21,212		11,195
Loss attributable to equity method investments		6,924		3,375		13,786		3,375
Other, net		2,115		621		5,225		3,086
Income before income taxes	$	178,752	$	146,273	$	329,339	$	285,155