Segment Information

6 Months Ended

Dec. 31, 2020

Segment Information [Abstract]

Segment Information

(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 revenues and income from operations. The accounting policies of the segments are the same as those described in note 2 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2020. Segment net revenues 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,
	2020		2019		2020		2019
Net revenue by segment
Total Sleep and Respiratory Care	$	708,178	$	649,451	$	1,367,979	$	1,243,617
Software as a Service		91,833		87,363		183,976		175,698
Deferred revenue fair value adjustment (1)		-		(657)		-		(2,102)
Total Software as a Service		91,833		86,706		183,976		173,596
Total	$	800,011	$	736,157	$	1,551,955	$	1,417,213
Depreciation and amortization by segment
Sleep and Respiratory Care	$	13,244	$	14,187	$	26,391	$	28,878
Software as a Service		1,137		841		2,108		1,819
Amortization of acquired intangible assets and corporate assets		26,199		24,095		51,547		46,380
Total	$	40,580	$	39,123	$	80,046	$	77,077
Net operating profit by segment (2)
Sleep and Respiratory Care (2)	$	261,660	$	230,097	$	509,841	$	428,260
Software as a Service (2)		24,291		21,339		47,877		45,135
Total	$	285,951	$	251,436	$	557,718	$	473,395
Reconciling items
Corporate costs	$	36,709	$	32,962	$	71,358	$	63,894
Amortization of acquired intangible assets		18,853		20,608		39,075		39,087
Restructuring expenses		8,673		-		8,673		-
Litigation settlement expenses		-		(600)		-		(600)
Deferred revenue fair value adjustment (1)		-		657		-		2,102
Interest expense (income), net		5,792		10,018		12,517		20,562
Loss attributable to equity method investments		2,640		6,924		4,928		13,786
Other, net		2,692		2,115		(5,279)		5,225
Income before income taxes	$	210,592	$	178,752	$	426,446	$	329,339

(1) The deferred revenue fair value adjustment is a purchase price accounting adjustment related to MatrixCare which was acquired on November 13, 2018.

(2)During the three and six months ended December 31, 2020, we recorded $0.0 million and $2.8 million of impairment for our operating lease right-of-use asset, respectively. The impairment related to leases for office space and was recorded within net operating profit. The impairment for the six months ended December 31, 2020 attributable to Sleep and Respiratory Care was $1.6 million and $1.2 million for SaaS.