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Segment reporting
 6 Months Ended
Jun. 30, 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

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Segment net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. dialysis and related lab services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patient service revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sources

 

$

2,352,574

 

 

$

2,237,630

 

 

$

4,666,236

 

 

$

4,391,924

 

Intersegment revenues

 

 

14,470

 

 

 

13,591

 

 

 

28,779

 

 

 

25,447

 

Total dialysis and related lab services revenues

 

 

2,367,044

 

 

 

2,251,221

 

 

 

4,695,015

 

 

 

4,417,371

 

Less: Provision for uncollectible accounts

 

 

(106,515

)

 

 

(101,304

)

 

 

(211,266

)

 

 

(198,781

)

Net dialysis and related lab services patient

   service revenues

 

 

2,260,529

 

 

 

2,149,917

 

 

 

4,483,749

 

 

 

4,218,590

 

Other revenues(1)

 

 

4,250

 

 

 

3,540

 

 

 

8,223

 

 

 

6,724

 

Total net dialysis and related lab services

   revenues

 

 

2,264,779

 

 

 

2,153,457

 

 

 

4,491,972

 

 

 

4,225,314

 

HCP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCP revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capitated revenues

 

 

874,119

 

 

 

848,595

 

 

 

1,740,138

 

 

 

1,681,067

 

Net patient service revenues

 

 

156,307

 

 

 

82,236

 

 

 

264,545

 

 

 

162,446

 

Other revenues(2)

 

 

29,095

 

 

 

35,326

 

 

 

43,625

 

 

 

50,379

 

Intersegment capitated and other revenues

 

 

44

 

 

 

185

 

 

 

115

 

 

 

222

 

Total net HCP revenues

 

 

1,059,565

 

 

 

966,342

 

 

 

2,048,423

 

 

 

1,894,114

 

Other—Ancillary services and strategic initiatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net patient service revenues

 

 

56,860

 

 

 

39,052

 

 

 

108,244

 

 

 

74,676

 

Capitated revenues

 

 

23,707

 

 

 

17,595

 

 

 

44,735

 

 

 

35,638

 

Other external sources

 

 

327,254

 

 

 

271,948

 

 

 

634,307

 

 

 

518,510

 

Intersegment revenues

 

 

14,720

 

 

 

5,543

 

 

 

26,546

 

 

 

10,485

 

Total ancillary services and strategic

   initiatives revenues

 

 

422,541

 

 

 

334,138

 

 

 

813,832

 

 

 

639,309

 

Total net segment revenues

 

 

3,746,885

 

 

 

3,453,937

 

 

 

7,354,227

 

 

 

6,758,737

 

Elimination of intersegment revenues

 

 

(29,234

)

 

 

(19,319

)

 

 

(55,440

)

 

 

(36,154

)

Consolidated net revenues

 

$

3,717,651

 

 

$

3,434,618

 

 

$

7,298,787

 

 

$

6,722,583

 

Segment operating margin (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. dialysis and related lab services

 

$

449,190

 

 

$

437,844

 

 

$

889,245

 

 

$

333,355

 

HCP

 

 

(102,059

)

 

 

72,336

 

 

 

(159,204

)

 

 

132,630

 

Other—Ancillary services and strategic initiatives

 

 

(12,644

)

 

 

(26,207

)

 

 

(23,745

)

 

 

(40,035

)

Total segment operating margin

 

 

334,487

 

 

 

483,973

 

 

 

706,296

 

 

 

425,950

 

Reconciliation of segment operating margin to

   consolidated income before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate administrative support

 

 

(5,417

)

 

 

(3,425

)

 

 

(12,337

)

 

 

(9,558

)

Consolidated operating income

 

 

329,070

 

 

 

480,548

 

 

 

693,959

 

 

 

416,392

 

Debt expense

 

 

(102,894

)

 

 

(104,248

)

 

 

(205,778

)

 

 

(201,640

)

Debt redemption and refinancing charges

 

 

—

 

 

 

(48,072

)

 

 

—

 

 

 

(48,072

)

Other income, net

 

 

3,215

 

 

 

2,311

 

 

 

6,191

 

 

 

1,778

 

Consolidated income before income taxes

 

$

229,391

 

 

$

330,539

 

 

$

494,372

 

 

$

168,458

 

 

(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

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

U.S. dialysis and related lab services

 

$

119,350

 

 

$

109,461

 

 

$

235,887

 

 

$

214,453

 

HCP

 

 

54,211

 

 

 

43,088

 

 

 

100,473

 

 

 

86,367

 

Ancillary services and strategic initiatives

 

 

6,820

 

 

 

6,294

 

 

 

13,376

 

 

 

11,812

 

 

 

$

180,381

 

 

$

158,843

 

 

$

349,736

 

 

$

312,632

 

 

Summary of assets by reportable segment is as follows:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Segment assets

 

 

 

 

 

 

 

 

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

   investments of $34,688 and $29,801, respectively)

 

$

11,532,690

 

 

$

11,591,507

 

HCP (including equity investments of $9,796 and $22,714,

   respectively)

 

 

6,239,567

 

 

 

6,150,666

 

Other—Ancillary services and strategic initiatives (including

   equity investments of $19,936 and $20,853, respectively)

 

 

919,373

 

 

 

772,702

 

Consolidated assets

 

$

18,691,630

 

 

$

18,514,875

 

 

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

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

U.S. dialysis and related lab services

 

$

150,932

 

 

$

141,656

 

 

$

284,380

 

 

$

247,051

 

HCP

 

 

18,098

 

 

 

12,951

 

 

 

38,243

 

 

 

17,985

 

Ancillary services and strategic initiatives

 

 

16,410

 

 

 

14,845

 

 

 

36,004

 

 

 

25,837

 

 

 

$

185,440

 

 

$

169,452

 

 

$

358,627

 

 

$

290,873