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Geographic and Segment Information | 9 Months Ended
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Sep. 30, 2020
Segment Reporting [Abstract] |
Geographic and Segment Information | Note 15. Geographic and Segment Information We identify operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources, developing and executing our strategy, and assessing performance. We have two reportable segments: Cardiovascular and Neuromodulation. The Cardiovascular segment generates its revenue from the development, production and sale of cardiopulmonary products, heart valves and related products and advanced circulatory support. Cardiopulmonary products include oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. Heart valves include mechanical heart valves, tissue heart valves, related repair products and minimally invasive surgical instruments. Advanced circulatory support includes temporary life support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae. Our Neuromodulation segment generates its revenue from the design, development and marketing of neuromodulation therapy systems for the treatment of drug-resistant epilepsy, difficult-to-treat depression (“DTD”) and obstructive sleep apnea. Neuromodulation products include the VNS Therapy System, which consists of an implantable pulse generator, a lead that connects the generator to the vagus nerve, and other accessories. “Other” includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. Net sales of our reportable segments include revenues from the sale of products they each develop and manufacture or distribute. We define segment income as operating income before merger and integration, restructuring and amortization of intangibles. We operate under three geographic regions: U.S., Europe, and Rest of World. The table below presents net sales by operating segment and geographic region (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Cardiopulmonary |  |  |  |  |  |  |  |
United States |  | $ | 33,549 |  |  | $ | 39,054 |  |  | $ | 96,223 |  |  | $ | 119,580 |
Europe |  | 29,947 |  |  | 30,052 |  |  | 87,475 |  |  | 99,933 |
Rest of World |  | 43,704 |  |  | 50,908 |  |  | 140,925 |  |  | 152,650 |
|  | 107,200 |  |  | 120,014 |  |  | 324,623 |  |  | 372,163 |
Heart Valves |  |  |  |  |  |  |  |
United States |  | 3,129 |  |  | 4,626 |  |  | 8,990 |  |  | 13,660 |
Europe |  | 7,945 |  |  | 9,572 |  |  | 22,822 |  |  | 30,757 |
Rest of World |  | 10,062 |  |  | 14,679 |  |  | 32,001 |  |  | 43,484 |
|  | 21,136 |  |  | 28,877 |  |  | 63,813 |  |  | 87,901 |
Advanced Circulatory Support |  |  |  |  |  |  |  |
United States |  | 12,331 |  |  | 6,313 |  |  | 28,075 |  |  | 22,290 |
Europe |  | 162 |  |  | 186 |  |  | 835 |  |  | 497 |
Rest of World |  | 49 |  |  | 36 |  |  | 136 |  |  | 310 |
|  | 12,542 |  |  | 6,535 |  |  | 29,046 |  |  | 23,097 |
Cardiovascular |  |  |  |  |  |  |  |
United States |  | 49,009 |  |  | 49,993 |  |  | 133,288 |  |  | 155,530 |
Europe |  | 38,054 |  |  | 39,810 |  |  | 111,132 |  |  | 131,187 |
Rest of World |  | 53,815 |  |  | 65,623 |  |  | 173,062 |  |  | 196,444 |
|  | 140,878 |  |  | 155,426 |  |  | 417,482 |  |  | 483,161 |
Neuromodulation |  |  |  |  |  |  |  |
United States |  | 79,854 |  |  | 88,433 |  |  | 197,345 |  |  | 245,870 |
Europe |  | 10,475 |  |  | 10,425 |  |  | 27,474 |  |  | 34,080 |
Rest of World |  | 8,079 |  |  | 13,685 |  |  | 20,458 |  |  | 31,511 |
|  | 98,408 |  |  | 112,543 |  |  | 245,277 |  |  | 311,461 |
Other |  | 797 |  |  | 641 |  |  | 1,927 |  |  | 1,958 |
Totals |  |  |  |  |  |  |  |
United States |  | 128,863 |  |  | 138,426 |  |  | 330,633 |  |  | 401,400 |
Europe (1) |  | 48,529 |  |  | 50,235 |  |  | 138,606 |  |  | 165,267 |
Rest of World |  | 62,691 |  |  | 79,949 |  |  | 195,447 |  |  | 229,913 |
Total (2) |  | $ | 240,083 |  |  | $ | 268,610 |  |  | $ | 664,686 |  |  | $ | 796,580 |
(1)Europe sales include those countries in which we have a direct sales presence, whereas European countries in which we sell through distributors are included in Rest of World. (2)No single customer represented over 10% of our consolidated net sales. No country’s net sales exceeded 10% of our consolidated sales except for the U.S. The table below presents a reconciliation of segment income from continuing operations to consolidated (loss) income from continuing operations before tax (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Cardiovascular |  | $ | (7,311) |  |  | $ | 36,180 |  |  | $ | (8,037) |  |  | $ | 47,289 |
Neuromodulation |  | 21,154 |  |  | 30,010 |  |  | 82,294 |  |  | 52,260 |
Other |  | (10,921) |  |  | (21,869) |  |  | (58,407) |  |  | (75,845) |
Total reportable segment income from continuing operations |  | 2,922 |  |  | 44,321 |  |  | 15,850 |  |  | 23,704 |
Merger and integration expenses |  | 1,094 |  |  | 6,716 |  |  | 6,616 |  |  | 14,345 |
Restructuring expenses |  | (349) |  |  | 698 |  |  | 2,025 |  |  | 4,563 |
Amortization of intangibles |  | 9,685 |  |  | 11,146 |  |  | 29,346 |  |  | 29,690 |
Operating (loss) income from continuing operations |  | (7,508) |  |  | 25,761 |  |  | (22,137) |  |  | (24,894) |
Interest income |  | 47 |  |  | 151 |  |  | 482 |  |  | 624 |
Interest expense |  | (14,673) |  |  | (4,774) |  |  | (25,237) |  |  | (10,490) |
Foreign exchange and other gains (losses) |  | 3,420 |  |  | 327 |  |  | 507 |  |  | (795) |
(Loss) income from continuing operations before tax |  | $ | (18,714) |  |  | $ | 21,465 |  |  | $ | (46,385) |  |  | $ | (35,555) |
Assets by segment are as follows (in thousands):
|  | September 30, 2020 |  | December 31, 2019
Cardiovascular |  | $ | 1,463,523 |  |  | $ | 1,546,520 |
Neuromodulation |  | 668,899 |  |  | 749,069 |
Other |  | 389,326 |  |  | 116,208 |
Total assets |  | $ | 2,521,748 |  |  | $ | 2,411,797 |
Capital expenditures by segment are as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Cardiovascular | $ | 7,040 |  |  | $ | 5,178 |  |  | $ | 17,777 |  |  | $ | 13,564 |
Neuromodulation | 1,210 |  |  | 136 |  |  | 7,285 |  |  | 666 |
Other | 967 |  |  | 691 |  |  | 3,174 |  |  | 2,571 |
Total | $ | 9,217 |  |  | $ | 6,005 |  |  | $ | 28,236 |  |  | $ | 16,801 |
The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2020 were as follows (in thousands):
|  | Neuromodulation |  | Cardiovascular |  | Total
December 31, 2019 |  | $ | 398,754 |  |  | $ | 517,040 |  |  | $ | 915,794 |
Foreign currency adjustments |  | — |  |  | 2,684 |  |  | 2,684 |
September 30, 2020 |  | $ | 398,754 |  |  | $ | 519,724 |  |  | $ | 918,478 |
Property, plant and equipment, net by geography are as follows (in thousands):
|  | September 30, 2020 |  | December 31, 2019
United States |  | $ | 64,620 |  |  | $ | 61,410 |
Europe |  | 116,746 |  |  | 110,270 |
Rest of World |  | 9,143 |  |  | 9,674 |
Total |  | $ | 190,509 |  |  | $ | 181,354 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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