Segment Information

6 Months Ended

Dec. 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, 2023. 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, restructuring expenses, field safety notification expenses, acquisition related expenses, net interest expense (income), gains and losses 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.

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,
	2023		2022		2023		2022
Net revenue by segment
Sleep and Respiratory Care	$	1,017,855	$	916,981	$	1,980,892	$	1,761,424
Software as a Service	144,946		116,763		284,230		222,614
Total	$	1,162,801	$	1,033,744	$	2,265,122	$	1,984,038
Depreciation and amortization by segment
Sleep and Respiratory Care	$	21,956	$	18,533	$	42,475	$	38,301
Software as a Service	2,725		2,097		5,485		4,009
Amortization of acquired intangible assets and corporate assets	20,103		17,137		41,758		31,730
Total	$	44,784	$	37,767	$	89,718	$	74,040
Net operating profit by segment
Sleep and Respiratory Care	$	426,393	$	373,367	$	816,808	$	726,027
Software as a Service	41,787		28,814		73,045		53,581
Total	$	468,180	$	402,181	$	889,853	$	779,608
Reconciling items
Corporate costs	$	102,673	$	96,707	$	206,052	$	183,326
Amortization of acquired intangible assets	19,834		16,868		41,220		31,193
Restructuring expenses	64,228		—		64,228		—
Masks with magnets field safety notification expenses (1)	6,351		—		6,351		—
Astral field safety notification expenses (2)	—		—		7,911		—
Acquisition related expenses	—		8,412		—		9,157
Interest expense (income), net	13,805		10,338		28,762		17,472
(Gain) Loss attributable to equity method investments	(739)		2,826		3,156		4,853
(Gain) loss on equity investments	1,888		(8,368)		2,491		(5,088)
Other, net	686		1,707		(1,963)		3,211
Income before income taxes	$	259,454	$	273,691	$	531,645	$	535,484

(1)    The masks with magnets field safety notification expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

(2)    The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.