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Segment reporting
 3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment reporting

17.

Segment reporting

The Company operates two major divisions, Kidney Care and HCP. The Kidney Care division is comprised of the Company’s U.S. dialysis and related lab services business, various other ancillary services and strategic initiatives, including its international dialysis operations, and the Company’s corporate administrative support. The Company’s U.S. dialysis and related lab services business is its largest line of business, and is a leading provider of kidney dialysis services in the U.S. for patients suffering from chronic kidney failure, also known as ESRD. The Company’s HCP division is a patient- and physician-focused integrated health care delivery and management company with over two decades of providing coordinated outcomes-based medical care in a cost-effective manner.

The Company’s ancillary services and strategic initiatives consist primarily of pharmacy services, disease management services, vascular access services, clinical research programs, physician services, direct primary care and the Company’s international dialysis operations.

The Company’s operating segments have been defined based on the separate financial information that is regularly produced and reviewed by the Company’s chief operating decision maker in making decisions about allocating resources to and assessing the financial performance of the Company’s various operating lines of business. The chief operating decision maker for the Company is its Chief Executive Officer.

The Company’s separate operating segments include its U.S. dialysis and related lab services business, its HCP operations in each region, each of its ancillary services and strategic initiatives, and its international operations in the Asia Pacific, Latin America, and European and Middle Eastern markets, and under the Saudi Ministry of Health charter. The U.S. dialysis and related lab services business and the HCP business each qualify as separately reportable segments, and all of the other ancillary services and strategic initiatives operating segments, including the international operating segments, have been combined and disclosed in the other segments category.

The Company’s operating segment financial information included in this report is prepared on the internal management reporting basis that the chief operating decision maker uses to allocate resources and assess the financial performance of the operating segments. For internal management reporting, segment operations include direct segment operating expenses but exclude corporate administrative support costs, which consist primarily of indirect labor, benefits and long-term incentive based compensation of certain departments which provide support to all of the Company’s various operating lines of business. Corporate administrative support costs are reduced by internal management fees received from the Company’s ancillary lines of businesses.

The following is a summary of segment net revenues, segment operating margin (loss), and a reconciliation of segment operating margin to consolidated income before income taxes:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

Segment net revenues:

 

 

 

 

 

 

 

 

U.S. dialysis and related lab services

 

 

 

 

 

 

 

 

Patient service revenues:

 

 

 

 

 

 

 

 

External sources

 

$

2,313,663

 

 

$

2,154,294

 

Intersegment revenues

 

 

14,308

 

 

 

11,856

 

Total dialysis and related lab services revenues

 

 

2,327,971

 

 

 

2,166,150

 

Less: Provision for uncollectible accounts

 

 

(104,751

)

 

 

(97,477

)

Net dialysis and related lab services patient service

   revenues

 

 

2,223,220

 

 

 

2,068,673

 

Other revenues(1)

 

 

3,973

 

 

 

3,184

 

Total net dialysis and related lab services revenues

 

 

2,227,193

 

 

 

2,071,857

 

HCP

 

 

 

 

 

 

 

 

HCP revenues:

 

 

 

 

 

 

 

 

Capitated revenues

 

 

866,019

 

 

 

832,472

 

Net patient service revenues

 

 

108,238

 

 

 

80,210

 

Other revenues(2)

 

 

14,530

 

 

 

15,053

 

Intersegment capitated and other revenues

 

 

71

 

 

 

37

 

Total revenues

 

 

988,858

 

 

 

927,772

 

Other—Ancillary services and strategic initiatives

 

 

 

 

 

 

 

 

Net patient service revenues

 

 

51,383

 

 

 

35,624

 

Capitated revenues

 

 

21,028

 

 

 

18,043

 

Other external sources

 

 

307,053

 

 

 

246,562

 

Intersegment revenues

 

 

11,827

 

 

 

4,942

 

Total ancillary services and strategic initiatives

   revenues

 

 

391,291

 

 

 

305,171

 

Total net segment revenues

 

 

3,607,342

 

 

 

3,304,800

 

Elimination of intersegment revenues

 

 

(26,206

)

 

 

(16,835

)

Consolidated net revenues

 

$

3,581,136

 

 

$

3,287,965

 

Segment operating margin (loss):

 

 

 

 

 

 

 

 

U.S. dialysis and related lab services

 

$

440,055

 

 

$

(104,489

)

HCP

 

 

(57,145

)

 

 

60,294

 

Other—Ancillary services and strategic initiatives

 

 

(11,100

)

 

 

(13,828

)

Total segment operating margin (loss)

 

 

371,810

 

 

 

(58,023

)

Reconciliation of segment operating margin to

   consolidated income before income taxes:

 

 

 

 

 

 

 

 

Corporate administrative support

 

 

(6,921

)

 

 

(6,133

)

Consolidated operating income

 

 

364,889

 

 

 

(64,156

)

Debt expense

 

 

(102,884

)

 

 

(97,392

)

Debt redemption and refinancing charges

 

 

 

 

 

 

 

 

Other income (loss), net

 

 

2,976

 

 

 

(533

)

Consolidated income (loss) before income taxes

 

$

264,981

 

 

$

(162,081

)

 

(1)

Includes management fees for providing management and administrative services to dialysis centers that are wholly-owned by third parties or centers in which the Company owns a noncontrolling equity investment.

(2)

Includes payments received for medical consulting services and management fees for providing management and administrative services to an unconsolidated joint venture that provides medical services in which the Company owns a 50% interest, as well as revenue related to the maintenance of existing physician networks.

Depreciation and amortization expense by reportable segment is as follows:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

U.S. dialysis and related lab services

 

$

116,537

 

 

$

104,993

 

HCP

 

 

46,263

 

 

 

43,279

 

Ancillary services and strategic initiatives

 

 

6,555

 

 

 

5,517

 

 

 

$

169,355

 

 

$

153,789

 

 

Summary of assets by reportable segment is as follows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Segment assets

 

 

 

 

 

 

 

 

U.S. dialysis and related lab services (including equity

   investments of $30,747 and $29,801, respectively)

 

$

11,049,206

 

 

$

11,591,507

 

HCP (including equity investments of $23,990 and $22,714,

   respectively)

 

 

6,601,110

 

 

 

6,150,666

 

Other—Ancillary services and strategic initiatives (including

   equity investments of $20,322 and $20,853, respectively)

 

 

863,882

 

 

 

772,702

 

Consolidated assets

 

$

18,514,198

 

 

$

18,514,875

 

 

Expenditures for property and equipment by reportable segment is as follows:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

U.S. dialysis and related lab services.

 

$

133,450

 

 

$

105,395

 

HCP

 

 

20,145

 

 

 

5,034

 

Ancillary services and strategic initiatives

 

 

19,592

 

 

 

10,992

 

 

 

$

173,187

 

 

$

121,421