Segment and Geographical Information

The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company’s segments using information about its revenues, gross profit, and income from operations. Such evaluation excludes general corporate-level costs that are not specific to either of the reportable segments and are managed separately at the corporate level. Corporate-level costs include expenses related to executive management, finance and accounting, human resources, legal, training and development, and certain administrative expenses.

The two operating segments, which are the same as the Company’s two reportable segments, are as follows:

•

Automation and Analytics. The Automation and Analytics segment is organized around the design, manufacturing, selling, and servicing of medication and supply dispensing systems; pharmacy inventory management systems; and related software. The Automation and Analytics products are designed to enable the Company’s customers to enhance and improve the effectiveness of the medication-use process, the efficiency of the medical-surgical supply chain, overall patient care, and clinical and financial outcomes of medical facilities. Through modular configuration and upgrades, the Company’s systems can be tailored to specific customer needs. The financial results of InPharmics acquired in the second quarter of 2017 are included in the Automation and Analytics segment.

•

Medication Adherence. The Medication Adherence segment includes solutions to assist patients to remain adherent to their medication regimens. These solutions are comprised of a variety of tools and aids that may be directly used by a pharmacist or a healthcare provider in their direct care for a patient, or the patient themselves, and include software-based systems and medication adherence packaging. Software solutions primarily operate on the Patient Management Access Portal (“PMAP”), a subscription-based software system which provides an environment for patient engagement by clinicians. Services running on PMAP include Time My Meds^® medication synchronization, immunization management, and a number of tools used by clinicians to manage patient engagement workflows. Medication Adherence packaging is designed either for patient use in care environments where there is a caregiver present or for environments where the patient cares for him or herself and includes the manufacturing and selling of consumable medication blister cards, packaging equipment, and ancillary products and services.

The following tables summarize the financial performance of the Company’s reportable segments, including a reconciliation of income from segment operations to income from total operations:



	Three months ended June 30,
	2018							2017
	Automation and Analytics		Medication Adherence			Total		Automation and Analytics		Medication Adherence		Total
	(In thousands)
Revenues:
Product revenues	$	110,262	$	24,374		$	134,636	$	103,557	$	26,648	$	130,205
Services and other revenues	48,103		5,934			54,037		45,027		5,810		50,837
Total revenues	158,365		30,308			188,673		148,584		32,458		181,042
Cost of revenues:
Cost of product revenues	57,045		18,031			75,076		62,185		19,553		81,738
Cost of services and other revenues	21,641		3,173			24,814		18,531		2,641		21,172
Total cost of revenues	78,686		21,204			99,890		80,716		22,194		102,910
Gross profit	79,679		9,104			88,783		67,868		10,264		78,132
Operating expenses	48,167		10,296			58,463		47,508		10,099		57,607
Income from operations	$	31,512	$	(1,192	)	$	30,320	$	20,360	$	165	$	20,525
Corporate costs						22,986						21,226
Income from operations						$	7,334					$	(701	)




	Six months ended June 30,
	2018							2017
	Automation and Analytics		Medication Adherence			Total		Automation and Analytics		Medication Adherence			Total
	(In thousands)
Revenues:
Product revenues	$	215,193	$	50,102		$	265,295	$	182,095	$	46,901		$	228,996
Services and other revenues	94,578		11,419			105,997		88,659		11,940			100,599
Total revenues	309,771		61,521			371,292		270,754		58,841			329,595
Cost of revenues:
Cost of product revenues	113,548		36,945			150,493		111,164		34,162			145,326
Cost of services and other revenues	43,380		6,181			49,561		38,313		5,633			43,946
Total cost of revenues	156,928		43,126			200,054		149,477		39,795			189,272
Gross profit	152,843		18,395			171,238		121,277		19,046			140,323
Operating expenses	96,558		20,495			117,053		95,570		21,295			116,865
Income (loss) from segment operations	$	56,285	$	(2,100	)	$	54,185	$	25,707	$	(2,249	)	$	23,458
Corporate costs						46,218							40,711
Income (loss) from operations						$	7,967						$	(17,253	)

Significant Customers

There were no customers that accounted for more than 10% of the Company’s total revenues for the three and six months ended June 30, 2018 and 2017. Also, there were no customers that accounted for more than 10% of the Company’s accounts receivable as of June 30, 2018 and December 31, 2017.

Geographical Information

Revenues



	Three months ended June 30,
	2018		2017
	(In thousands)
United States	$	163,645	$	153,442
Rest of world ⁽¹⁾	25,028		27,600
Total revenues	$	188,673	$	181,042




	Six months ended June 30,
	2018		2017
	(In thousands)
United States	$	321,847	$	283,721
Rest of world ⁽¹⁾	49,445		45,874
Total revenues	$	371,292	$	329,595

_________________________________________________

⁽¹⁾No individual country represented more than 10% of the respective totals.

Property and Equipment, Net



	June 30, 2018		December 31, 2017
	(In thousands)
United States	$	43,490	$	34,899
Rest of world ⁽¹⁾	7,394		7,696
Total property and equipment, net	$	50,884	$	42,595

_________________________________________________


⁽¹⁾	No individual country represented more than 10% of the respective totals.

Property and equipment, net is attributed to the geographic location in which it is located.