Segment Information

6 Months Ended

Dec. 31, 2024

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 Breathing Health segment and the Residential Care Software 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, 2024. 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.

Effective in the third quarter of fiscal year 2024, we updated the method of attribution of certain costs that are principally managed at the segment level as part of our evaluation of segment operating performance. As a result, certain costs relating to quality and regulatory assurance, commercial legal, operations, sales and marketing, customer service, information technology, and other administrative costs, which were previously included in Corporate costs within our reconciliation of segment operating profit to income before income taxes, are now reported in segment operating results. 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 December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Net revenue by segment
Sleep and Breathing Health	$	1,125,593	$	1,017,855	$	2,193,330	$	1,980,892
Residential Care Software	156,496		144,946		313,268		284,230
Total	$	1,282,089	$	1,162,801	$	2,506,598	$	2,265,122
Depreciation and amortization by segment
Sleep and Breathing Health	$	25,249	$	21,956	$	48,268	$	42,475
Residential Care Software	2,240		2,725		4,608		5,485
Amortization of acquired intangible assets and corporate assets	18,950		20,103		38,293		41,758
Total	$	46,439	$	44,784	$	91,169	$	89,718
Net operating profit by segment
Sleep and Breathing Health	$	488,721	$	409,141	$	949,696	$	783,879
Residential Care Software	48,882		41,787		96,503		73,091
Total	$	537,603	$	450,928	$	1,046,199	$	856,970
Reconciling items
Corporate costs	$	101,679	$	85,421	$	203,890	$	173,169
Amortization of acquired intangible assets	18,681		19,834		37,755		41,220
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
Interest expense (income), net	775		13,805		2,436		28,762
(Gain) Loss attributable to equity method investments	(1,077)		(739)		(2,040)		3,156
Loss on equity investments	1,439		1,888		2,119		2,491
Other, net	(2,216)		686		219		(1,963)
Income before income taxes	$	418,322	$	259,454	$	801,820	$	531,645

(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.