12.    Segments and Geographic Information

The Company currently operates in two segments; product and service. The product segment includes supply chain management for CRINONE, the Company’s sole commercialized product. The product segment also includes the royalty stream the Company receives from Allergan for CRINONE sales in the United States as well as the development of new product candidates. The service segment includes pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers as well as characterizing and developing pharmaceutical product candidates for the Company’s internal programs and managing the preclinical and clinical manufacturing of COL-1077 and the Company’s IVR. The Company has consolidated and runs all of its operational functions in one location in Nottingham, United Kingdom. The Company owns certain plant and equipment physically located at third party contractor facilities in the United Kingdom and Switzerland. The Company conducts its advanced formulation, analytical and consulting services through its subsidiary, Juniper Pharma Services.

The Company’s largest customer, Merck KGaA, utilizes a Switzerland-based subsidiary to acquire product from the Company, which it then sells throughout the world excluding the U.S. The Company’s primary domestic customer, Allergan, is responsible for the commercialization and sale of progesterone products in the United States. The following tables show selected information by geographic area:

Revenues:

 

		Year Ended December, 31
		2015				2014				2013
United States		$	7,677			$	10,374			$	5,463
Switzerland			22,410				17,860				21,729
United Kingdom			4,422				2,180				825
Other countries			3,049				2,050				1,949
Subtotal international			29,881				22,090				23,763
Total		$	37,558			$	32,464			$	29,226

Total assets:

 

		December 31,
		2015				2014
United States		$	16,256			$	18,212
Switzerland			1,570				1,661
United Kingdom			33,335				32,140
Other countries			218				195
Total		$	51,379			$	52,208

Long-lived assets:

 

		December 31,
		2015				2014
United States		$	765			$	245
Switzerland			49				529
United Kingdom			13,817				12,361
Other countries			2				2
Total		$	14,633			$	13,137

 

The following summarizes other information by segment for the year ended December 31, 2015 (in thousands):

 

		Product				Service				Total
Revenues
Product revenues		$	22,162			$	—			$	22,162
Service revenues			—				11,651				11,651
Royalties			3,745				—				3,745
Other revenues			—				—				—
Total revenues			25,907				11,651				37,558
Cost of product revenues			13,053				—				13,053
Cost of service revenues			—				8,361				8,361
Total cost of revenues			13,053				8,361				21,414
Gross profit			12,854				3,290				16,144
Total operating expenses											18,655
Total non-operating income											382
(Loss) income before income taxes											(2,129	)

The following summarizes other information by segment for the year ended December 31, 2014 (in thousands):

 

		Product				Service				Total
Revenues
Product revenues		$	17,381			$	—			$	17,381
Service revenues			—				8,770				8,770
Royalties			6,313				—				6,313
Other revenues			—				—				—
Total revenues			23,694				8,770				32,464
Cost of product revenues			10,470				—				10,470
Cost of service revenues			—				7,219				7,219
Total cost of revenues			10,470				7,219				17,689
Gross profit			13,224				1,551				14,775
Total operating expenses											10,960
Total non-operating income											563
Income before income taxes											4,378

 

The following summarizes other information by segment for the year ended December 31, 2013 (in thousands):

 

		Product				Service				Total
Revenues
Product revenues		$	21,336			$	—			$	21,336
Service revenues			—				3,640				3,640
Royalties			3,831				—				3,831
Other revenues			419				—				419
Total revenues			25,586				3,640				29,226
Cost of product revenues			10,903				—				10,903
Cost of service revenues			—				2,347				2,347
Total cost of revenues			10,903				2,347				13,250
Gross profit			14,683				1,293				15,976
Total operating expenses											10,101
Total non-operating income											851
Income before income taxes											6,726

Our chief operating decision maker evaluates the performance of our product and service segments based on revenue and gross profit. Our chief operating decision maker does not review our assets, operating expenses or non-operating income and expenses by business segment at this time. Therefore, such allocations by segment are not provided.

Customer Concentration

The following table presents information about Juniper’s revenues by customer, including product sales, royalty and license revenue and service revenues for each customer accounting for 10% or more of consolidated revenues in any of the three years ended December 31 (in thousands) by segment:

Product

 

		Year Ended December, 31
		2015				2014				2013
Merck KGaA			86	%			73	%			83	%
Allergan			14				17				15
Lil’ Drug Store			—				10				2
Total			100	%			100	%			100	%

Service

Two of our customers in our service segment represented 11% and 10%, respectively, of total service revenue for the year ended December 31, 2014. Three customers in our service segment represented 15%, 13% and 12% of total service revenue for the year ended December 31, 2013. No other customers accounted for 10% or more of total service revenue for the years ended December 31, 2015, 2014 and 2013.

At December 31, 2015 Merck KGaA and Allergan accounted for 58% and 42% of the product segment accounts receivable, respectively. At December 31, 2014 Merck KGaA and Allergan accounted for 54% and 46% of the product segment accounts receivable, respectively. At December 31, 2015 one customer accounted for 18% of total service segment net accounts receivable. At December 31, 2014 two customers accounted for 18% and 11% of total service segment accounts receivable. No other customers accounted for greater than 10% of the product or service segment accounts receivable.

Patent Expiration

Juniper is a pharmaceutical company focused on developing novel intra-vaginal therapeutics that address unmet medical needs in women’s health. All of the Company’s product sales are outside the United States. The patent for CRINONE has expired in all countries other than Argentina. This product accounts for approximately 59% of the Company’s revenues and a higher percentage of gross profit.

Sources of Supply

The major raw materials the Company uses in our products and product candidates are polycarbophil and progesterone. Medical grade, cross-linked polycarbophil, the polymer used in our BDS-based product and product candidate is currently available from only one supplier, Lubrizol. We believe that Lubrizol will supply as much of the material as we require because our product ranks among the highest value-added uses of the polymer. In the event that Lubrizol cannot or will not supply enough polycarbophil to satisfy our needs, however, we will be required to seek alternative sources of supply.

Only one supplier of progesterone for CRINONE is approved by regulatory authorities outside the United States. Juniper has not experienced production delays due to shortages of progesterone. This supplier has notified the Company that it intends to materially increase the price for its progesterone and has requested that Juniper enters into a long-term supply agreement. It is unclear what impact, if any, an increase in the cost of progesterone will have on Juniper’s financial results or Juniper’s demand for CRINONE, or whether the Company would be able to obtain progesterone from an alternate supplier in a timely manner.