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Segment Reporting | 6 Months Ended
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Jun. 30, 2017
Segment Reporting [Abstract] |
Segment reporting | Segment reporting The Company operates two major divisions, Kidney Care and DMG. The Kidney Care division is comprised of the Company’s U.S. dialysis and related lab services business, its ancillary services and strategic initiatives, including its international 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 DMG division is a patient- and physician-focused integrated healthcare delivery and management company with over two decades of experience 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 and integrated health 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 DMG operations in each region, each of its ancillary services and strategic initiatives, and its consolidated international kidney care and other healthcare operations in the European and Middle Eastern, Latin America, and Asia Pacific markets, and under the Saudi Ministry of Health charter. The U.S. dialysis and related lab services business and the DMG 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 various operating lines of business. These 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 June 30, |  | Six months ended June 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Segment net revenues: |  |  |  |  |  |  |
U.S. dialysis and related lab services |  |  |  |  |  |  |
Patient service revenues: |  |  |  |  |  |  |
External sources | $ | 2,403,222 |  |  | $ | 2,352,574 |  |  | $ | 4,752,123 |  |  | $ | 4,666,236 |
Intersegment revenues | 26,436 |  |  | 14,470 |  |  | 50,196 |  |  | 28,779 |
Total dialysis and related lab services revenues | 2,429,658 |  |  | 2,367,044 |  |  | 4,802,319 |  |  | 4,695,015 |
Less: Provision for uncollectible accounts | (109,335 | ) |  | (106,515 | ) |  | (216,105 | ) |  | (211,266 | )
Net dialysis and related lab services patient service revenues | 2,320,323 |  |  | 2,260,529 |  |  | 4,586,214 |  |  | 4,483,749 |
Other revenues(1) | 4,891 |  |  | 4,250 |  |  | 10,194 |  |  | 8,223 |
Total net dialysis and related lab services revenues | 2,325,214 |  |  | 2,264,779 |  |  | 4,596,408 |  |  | 4,491,972 |
DMG |  |  |  |  |  |  |
DMG revenues: |  |  |  |  |  |  |
Capitated revenues | 987,420 |  |  | 874,119 |  |  | 1,877,105 |  |  | 1,740,138 |
Net patient service revenues | 189,529 |  |  | 169,167 |  |  | 368,501 |  |  | 281,601 |
Other revenues(2) | 19,070 |  |  | 16,235 |  |  | 37,339 |  |  | 26,569 |
Intersegment capitated and other revenues | 47 |  |  | 44 |  |  | 105 |  |  | 115 |
Total net DMG revenues | 1,196,066 |  |  | 1,059,565 |  |  | 2,283,050 |  |  | 2,048,423 |
Other—Ancillary services and strategic initiatives |  |  |  |  |  |  |
Net patient service revenues | 83,566 |  |  | 56,860 |  |  | 150,858 |  |  | 108,244 |
Capitated revenues | 34,658 |  |  | 25,866 |  |  | 63,009 |  |  | 47,855 |
Other external sources | 264,456 |  |  | 325,095 |  |  | 531,736 |  |  | 631,187 |
Intersegment revenues | 10,913 |  |  | 14,720 |  |  | 26,216 |  |  | 26,546 |
Total ancillary services and strategic initiatives revenues | 393,593 |  |  | 422,541 |  |  | 771,819 |  |  | 813,832 |
Total net segment revenues | 3,914,873 |  |  | 3,746,885 |  |  | 7,651,277 |  |  | 7,354,227 |
Elimination of intersegment revenues | (37,396 | ) |  | (29,234 | ) |  | (76,517 | ) |  | (55,440 | )
Consolidated net revenues | $ | 3,877,477 |  |  | $ | 3,717,651 |  |  | $ | 7,574,760 |  |  | $ | 7,298,787 |
Segment operating margin (loss): |  |  |  |  |  |  |
U.S. dialysis and related lab services(3) | $ | 450,472 |  |  | $ | 449,190 |  |  | $ | 1,395,212 |  |  | $ | 889,245 |
DMG | (12,880 | ) |  | (102,059 | ) |  | (572 | ) |  | (159,204 | )
Other—Ancillary services and strategic initiatives | (48,245 | ) |  | (12,644 | ) |  | (106,466 | ) |  | (23,745 | )
Total segment operating margin | 389,347 |  |  | 334,487 |  |  | 1,288,174 |  |  | 706,296 |
Reconciliation of segment operating margin to consolidated income before income taxes: |  |  |  |  |  |  |
Corporate administrative support | (11,031 | ) |  | (5,417 | ) |  | (21,622 | ) |  | (12,337 | )
Consolidated operating income | 378,316 |  |  | 329,070 |  |  | 1,266,552 |  |  | 693,959 |
Debt expense | (107,962 | ) |  | (102,894 | ) |  | (212,391 | ) |  | (205,778 | )
Other income, net | 5,253 |  |  | 3,215 |  |  | 9,496 |  |  | 6,191 |
Consolidated income before income taxes | $ | 275,607 |  |  | $ | 229,391 |  |  | $ | 1,063,657 |  |  | $ | 494,372 |
(1) | Includes management fees for providing management and administrative services to dialysis centers that are wholly-owned by third parties and legal entities in which the Company owns a noncontrolling equity investment.
(2) | Includes medical consulting service fees and management fees for providing management and administrative services to unconsolidated joint ventures and revenue related to the maintenance of existing physician networks.
(3) | U.S. dialysis and related lab services operating income includes the net gain on the settlement with the VA.
Depreciation and amortization expense by reportable segment is as follows
| Three months ended June 30, |  | Six months ended June 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
U.S. dialysis and related lab services | $ | 130,002 |  |  | $ | 119,350 |  |  | $ | 255,030 |  |  | $ | 235,887 |
DMG | 60,011 |  |  | 54,211 |  |  | 117,334 |  |  | 100,473 |
Ancillary services and strategic initiatives | 10,025 |  |  | 6,820 |  |  | 17,880 |  |  | 13,376 |
| $ | 200,038 |  |  | $ | 180,381 |  |  | $ | 390,244 |  |  | $ | 349,736 |
Subsequent to the issuance of the Company’s fiscal year 2016 consolidated financial statements and their inclusion in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2017 (the “2016 10-K”), the Company determined that it had misstated its disclosure of segment assets at December 31, 2016 in Note 25 to those consolidated financial statements. This misstatement resulted in an overstatement of “U.S. dialysis and related lab services” segment assets of $338,963 and a corresponding understatement of “Other - ancillary services and strategic initiatives” segment assets of the same amount. The Company performed an assessment of the materiality of this misstatement and concluded that this misstatement as originally disclosed was not materially misleading in its 2016 consolidated financial statements taken as a whole. The Company therefore has not amended its financial statements filed on its 2016 10-K to correct this misstatement, but has provided the corrected disclosure here. Summary of assets by reportable segment is as follows:
| June 30, 2017 |  | December 31, 2016
Segment assets |  |  |  |  |
U.S. dialysis and related lab services (including equity investments of $83,102 and $66,924, respectively) | $ | 11,500,974 |  |  | $ | 11,099,137 |
DMG (including equity investments of $13,169 and $10,350, respectively) | 6,282,819 |  |  | 6,213,091 |
Other—Ancillary services and strategic initiatives (including equity investments of $446,197 and $425,115, respectively) | 1,557,991 |  |  | 1,429,029 |
Consolidated assets | $ | 19,341,784 |  |  | $ | 18,741,257 |
Expenditures for property and equipment by reportable segment is as follows:
| Three months ended June 30, |  | Six months ended June 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
U.S. dialysis and related lab services | $ | 152,233 |  |  | $ | 150,932 |  |  | $ | 325,761 |  |  | $ | 284,380 |
DMG | 20,883 |  |  | 18,098 |  |  | 48,671 |  |  | 38,243 |
Ancillary services and strategic initiatives | 11,289 |  |  | 16,410 |  |  | 24,508 |  |  | 36,004 |
| $ | 184,405 |  |  | $ | 185,440 |  |  | $ | 398,940 |  |  | $ | 358,627 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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