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Segment reporting | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment reporting | Segment reporting The Company has consisted of two major divisions, DaVita Kidney Care (Kidney Care) and DMG. The Kidney Care division is comprised of the Company’s U.S. dialysis and related lab services business, various 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 ancillary services and strategic initiatives consist primarily of pharmacy services, disease management services, vascular access services, clinical research programs, physician services, ESRD seamless care organizations and comprehensive care, as well as the Company’s international operations. The Company’s DMG division is a patient- and physician-focused integrated healthcare delivery and management company with over two decades of providing coordinated outcomes-based medical care in a cost-effective manner. In December 2017, the Company entered into an equity purchase agreement to sell its DMG division to Optum, a subsidiary of UnitedHealth Group Inc., subject to receipt of required regulatory approvals and other customary closing conditions. As a result of this pending transaction, the DMG business has been classified as held for sale and its results of operations are reported as discontinued operations for all periods presented in these condensed consolidated financial statements. See Note 16 to these condensed consolidated financial statements for further discussion. 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, each of its ancillary services and strategic initiatives, its consolidated international kidney care operations in each country, its equity method investment in the Asia Pacific joint venture, and its other health operations in Europe and Latin America. The U.S. dialysis and related lab services business qualifies as a separately reportable segment, and all 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 Company's operating segments. For internal management reporting, segment operations include direct segment operating expenses but generally exclude corporate administrative support costs, which consist primarily of indirect labor, benefits and long-term incentive-based compensation expenses of certain departments which provide support to all of the Company’s various operating lines of business, except to the extent that such costs are charged to and borne by certain ancillary services and strategic initiatives via internal management fees. These corporate administrative support costs are reduced by internal management fees received from the Company’s ancillary lines of business. 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 September 30, |  | Nine months ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Segment net revenues: |  |  |  |  |  |  |
U.S. dialysis and related lab services |  |  |  |  |  |  |
Patient service revenues: |  |  |  |  |  |  |
External sources | $ | 2,559,345 |  |  | $ | 2,470,169 |  |  | $ | 7,661,244 |  |  | $ | 7,247,403 |
Intersegment revenues | 25,424 |  |  | 13,475 |  |  | 63,943 |  |  | 38,559 |
U.S. dialysis and related lab services patient service revenues | 2,584,769 |  |  | 2,483,644 |  |  | 7,725,187 |  |  | 7,285,962 |
Provision for uncollectible accounts | (12,900 | ) |  | (117,962 | ) |  | (37,108 | ) |  | (334,031 | )
Net U.S. dialysis and related lab services patient service revenues | 2,571,869 |  |  | 2,365,682 |  |  | 7,688,079 |  |  | 6,951,931 |
Other revenues(1) | 4,932 |  |  | 4,792 |  |  | 14,965 |  |  | 14,951 |
Total U.S. dialysis and related lab services revenues | 2,576,801 |  |  | 2,370,474 |  |  | 7,703,044 |  |  | 6,966,882 |
Other—Ancillary services and strategic initiatives |  |  |  |  |  |  |
Patient service revenues, net | 112,279 |  |  | 90,015 |  |  | 320,204 |  |  | 229,587 |
Other external sources | 183,674 |  |  | 318,057 |  |  | 624,422 |  |  | 937,811 |
Intersegment revenues | 8,361 |  |  | 5,996 |  |  | 27,748 |  |  | 18,488 |
Total ancillary services and strategic initiatives revenues | 304,314 |  |  | 414,068 |  |  | 972,374 |  |  | 1,185,886 |
Total net segment revenues | 2,881,115 |  |  | 2,784,542 |  |  | 8,675,418 |  |  | 8,152,768 |
Elimination of intersegment revenues | (33,785 | ) |  | (19,471 | ) |  | (91,691 | ) |  | (57,047 | )
Consolidated revenues | $ | 2,847,330 |  |  | $ | 2,765,071 |  |  | $ | 8,583,727 |  |  | $ | 8,095,721 |
Segment operating margin: |  |  |  |  |  |  |
U.S. dialysis and related lab services | $ | 390,006 |  |  | $ | 442,777 |  |  | $ | 1,272,828 |  |  | $ | 1,837,989 |
Other—Ancillary services and strategic initiatives | (60,132 | ) |  | (36,518 | ) |  | (64,307 | ) |  | (142,984 | )
Total segment operating margin | 329,874 |  |  | 406,259 |  |  | 1,208,521 |  |  | 1,695,005 |
Reconciliation of segment operating margin to consolidated income from continuing operations before income taxes: |  |  |  |  |  |  |
Corporate administrative support | (40,836 | ) |  | (10,965 | ) |  | (70,605 | ) |  | (32,587 | )
Consolidated operating income | 289,038 |  |  | 395,294 |  |  | 1,137,916 |  |  | 1,662,418 |
Debt expense | (125,927 | ) |  | (109,306 | ) |  | (359,135 | ) |  | (321,637 | )
Other income, net | 4,007 |  |  | 3,396 |  |  | 10,583 |  |  | 12,180 |
Consolidated income from continuing operations before income taxes | $ | 167,118 |  |  | $ | 289,384 |  |  | $ | 789,364 |  |  | $ | 1,352,961 |
(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.
Depreciation and amortization expense by reportable segment was as follows:
| Three months ended September 30, |  | Nine months ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
U.S. dialysis and related lab services | $ | 138,669 |  |  | $ | 132,112 |  |  | $ | 411,697 |  |  | $ | 387,142 |
Other—Ancillary services and strategic initiatives | 7,331 |  |  | 10,522 |  |  | 24,181 |  |  | 28,402 |
| $ | 146,000 |  |  | $ | 142,634 |  |  | $ | 435,878 |  |  | $ | 415,544 |
Assets by reportable segment were as follows:
| September 30, 2018 |  | December 31, 2017
Segment assets |  |  |  |  |
U.S. dialysis and related lab services (including equity investments of $94,144 and $84,866, respectively) | $ | 12,101,111 |  |  | $ | 11,776,042 |
Other—Ancillary services and strategic initiatives (including equity investments of $146,676 and $160,668, respectively) | 1,308,892 |  |  | 1,410,509 |
DMG—Held for sale (including equity investments of $5,060 and $10,321, respectively) | 5,947,786 |  |  | 5,761,642 |
Consolidated assets | $ | 19,357,789 |  |  | $ | 18,948,193 |
Expenditures for property and equipment by reportable segment were as follows:
| Three months ended September 30, |  | Nine months ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
U.S. dialysis and related lab services | $ | 214,728 |  |  | $ | 207,472 |  |  | $ | 603,186 |  |  | $ | 538,620 |
Other—Ancillary services and strategic initiatives | 5,019 |  |  | 9,135 |  |  | 37,191 |  |  | 28,256 |
DMG—Held for sale | 11,935 |  |  | 24,282 |  |  | 65,282 |  |  | 72,953 |
| $ | 231,682 |  |  | $ | 240,889 |  |  | $ | 705,659 |  |  | $ | 639,829 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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