Segment Information

12 Months Ended

Dec. 31, 2018

Reportable Operating Segments

The Company manages and evaluates its operations in two reportable segments: Housekeeping (housekeeping, laundry, linen and other services) and Dietary (dietary department services). Although both segments serve the same client base and share many operational similarities, they are managed separately due to distinct differences in the type of services provided, as well as the specialized expertise required of the professional management personnel responsible for delivering each segment’s services. Such services are rendered pursuant to discrete service agreements, specific to each reportable segment.

The Company’s accounting policies for the segments are generally the same as described in the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and the information in the Consolidated Financial Statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level using other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized in the Consolidated Financial Statements. In addition, most corporate expenses such as corporate salary and benefit costs, certain legal costs, information technology costs, depreciation, amortization of finite-lived intangible assets, share based compensation costs and other corporate-specific costs, are not allocated to the operating segments. There are also allocations for workers’ compensation and general liability expense within the operating segments that differ from the actual expense recorded by the Company under U.S. GAAP. Segment amounts disclosed are prior to elimination entries made in consolidation.

All revenues and net income are earned in the United States.


	Year Ended December 31,
	2018		2017		2016
	(in thousands)
Revenues¹
Housekeeping services	$	973,826	$	979,610	$	957,148
Dietary services	1,034,995		886,521		605,514
Corporate and eliminations	$	—	$	—	$	—
Consolidated	$	2,008,821	$	1,866,131	$	1,562,662

Income before income taxes
Housekeeping services²	$	108,305	$	95,505	$	90,756
Dietary services	60,562		46,008		34,641
Corporate and eliminations³	(68,957)		(8,548)		(5,010)
Consolidated	$	99,910	$	132,965	$	120,387

Depreciation and amortization
Housekeeping services	$	6,315	$	6,547	$	6,535
Dietary services	2,433		1,813		439
Corporate and eliminations	524		526		522
Consolidated	$	9,272	$	8,886	$	7,496

Total assets
Housekeeping services	$	291,117	$	304,303	$	266,464
Dietary services	235,183		242,874		127,187
Corporate and eliminations⁴	166,303		128,826		134,795
Consolidated	$	692,603	$	676,003	$	528,446

Capital expenditures
Housekeeping services	$	3,996	$	4,287	$	4,612
Dietary services	690		663		410
Corporate and eliminations	254		447		420
Consolidated	$	4,940	$	5,397	$	5,442

¹For the years ended December 31, 2018 and 2017, both the Housekeeping and Dietary segments earned revenue from several significant customers, including Genesis. For the years ended December 31, 2018 and 2017, Genesis accounted for $386.7 million or 19.3% and $327.5 million or 17.5% of the Company's consolidated revenues, respectively.

²Includes the impact of the revenues earned and expenses incurred from the Voluntary Benefits Program of the Company's wholly-owned captive insurance subsidiary.

³Represents primarily corporate office cost and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

⁴Primarily consists of cash and cash equivalents, marketable securities, deferred income taxes and other current and noncurrent assets.