Segment Information

9 Months Ended

Sep. 30, 2017

15. Segment Information

We have two reportable segments organized according to our products and services: Medical Devices and Preservation Services. The Medical Devices segment includes external revenues from product sales of BioGlue® Surgical Adhesive; BioFoam® Surgical Matrix; On-X products, since the acquisition of On-X; CardioGenesis cardiac laser therapy; PerClot; PhotoFix; HeRO Graft, through the second quarter of 2016; and ProCol, through the date of the sale of the ProCol product line in the first quarter of 2016. The Preservation Services segment includes external services revenues from the preservation of cardiac and vascular tissues. There are no intersegment revenues.

The primary measure of segment performance, as viewed by our management, is segment gross margin, or net external revenues less cost of products and preservation services. We do not segregate assets by segment; therefore, asset information is excluded from the segment disclosures below.

The following table summarizes revenues, cost of products and preservation services, and gross margins for our operating segments (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Revenues:
Medical devices	$	27,029	$	28,004	$	84,519	$	85,067
Preservation services		16,970		17,248		52,357		50,284
Total revenues		43,999		45,252		136,876		135,351

Cost of products and preservation services:
Medical devices		6,220		6,598		21,196		21,299
Preservation services		7,917		8,872		23,401		26,348
Total cost of products and preservation services		14,137		15,470		44,597		47,647

Gross margin:
Medical devices		20,809		21,406		63,323		63,768
Preservation services		9,053		8,376		28,956		23,936
Total gross margin	$	29,862	$	29,782	$	92,279	$	87,704

The following table summarizes net revenues by product and service (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Products:
BioGlue and BioFoam	$	15,730	$	15,976	$	48,094	$	47,479
On-X		8,326		8,890		27,048		25,159
CardioGenesis cardiac laser therapy		1,489		1,653		5,130		5,497
PerClot		886		950		2,641		2,983
PhotoFix		598		535		1,606		1,406
HeRO Graft		--		--		--		2,325
ProCol		--		--		--		218
Total products		27,029		28,004		84,519		85,067

Preservation services:
Cardiac tissue		7,932		8,279		23,911		22,255
Vascular tissue		9,038		8,969		28,446		28,029
Total preservation services		16,970		17,248		52,357		50,284

Total revenues	$	43,999	$	45,252	$	136,876	$	135,351