Segment Information

9 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

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 fiscal year ended June 30, 2022. 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, net interest expense (income), loss attributable to equity method investments, gains and losses on equity investments, 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.

Additionally, effective in the first quarter of fiscal year 2023, we updated the extent of allocation and method of attribution of certain shared costs that are principally managed at the corporate level as part of our evaluation of segment operating performance. As a result, certain shared administrative costs, including shared IT, legal and other administrative functions, which were previously included in segment operating results, are now reported in Corporate costs within our reconciliation of segment operating profit to income before income taxes. The financial information presented herein reflects the impact of the preceding reporting change for all periods presented.

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

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net revenue by segment
Total Sleep and Respiratory Care	$	980,116	$	763,358	$	2,741,541	$	2,365,697
Software as a Service	136,782		101,142		359,395		297,693
Total	$	1,116,898	$	864,500	$	3,100,936	$	2,663,390
Depreciation and amortization by segment
Sleep and Respiratory Care	$	21,201	$	21,008	$	59,501	$	58,372
Software as a Service	2,375		1,863		6,385		5,421
Amortization of acquired intangible assets and corporate assets	20,780		19,435		52,510		58,405
Total	$	44,356	$	42,306	$	118,396	$	122,198
Net operating profit by segment
Sleep and Respiratory Care	$	390,697	$	315,055	$	1,116,724	$	976,520
Software as a Service	32,201		23,649		85,782		67,892
Total	$	422,898	$	338,704	$	1,202,506	$	1,044,412
Reconciling items
Corporate costs	$	101,717	$	85,727	$	285,045	$	243,077
Amortization of acquired intangible assets	20,510		18,712		51,702		56,446
Acquisition related expenses	—		—		9,157		—
Interest expense (income), net	14,964		5,462		32,436		16,770
Loss attributable to equity method investments	183		2,627		5,037		5,927
(Gain) loss on equity investments	(6,418)		1,735		(11,506)		527
Other, net	2,564		(1,878)		5,773		(729)
Income before income taxes	$	289,378	$	226,319	$	824,862	$	722,394