Segment reporting

3 Months Ended

Mar. 31, 2019

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 separate operating segments include its U.S. dialysis and related lab services business, each of its ancillary services and strategic initiatives, its kidney care operations in each foreign sovereign jurisdiction, its other health operations in each foreign sovereign jurisdiction, and its equity method investment in the APAC JV. 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 March 31,
	2019			2018
Segment revenues:
U.S. dialysis and related lab services
Patient service revenues:
External sources	$	2,517,289		$	2,489,165
Intersegment revenues	30,420			18,422
U.S. dialysis and related lab services patient service revenues	2,547,709			2,507,587
Provision for uncollectible accounts	(5,463		)	25,199
Net U.S. dialysis and related lab services patient service revenues	2,542,246			2,532,786
Other revenues⁽¹⁾:
External sources	4,684			5,114
Intersegment revenues	221			—
Total U.S. dialysis and related lab services revenues	$	2,547,151		$	2,537,900
Other—Ancillary services and strategic initiatives
Patient service revenues, net	$	117,863		$	102,255
Other external sources	108,739			227,711
Intersegment revenues	3,336			10,199
Total ancillary services and strategic initiatives revenues	229,938			340,165
Total net segment revenues	2,777,089			2,878,065
Elimination of intersegment revenues	(33,977		)	(28,621		)
Consolidated revenues	$	2,743,112		$	2,849,444
Segment operating margin:
U.S. dialysis and related lab services	$	416,981		$	433,380
Other—Ancillary services and strategic initiatives	(57,630		)	(6,990		)
Total segment operating margin	359,351			426,390
Reconciliation of segment operating margin to consolidated income from continuing operations before income taxes:
Corporate administrative support	(18,844		)	(15,704		)
Consolidated operating income	340,507			410,686
Debt expense	(131,519		)	(113,516		)
Other income, net	6,940			4,582
Consolidated income from continuing operations before income taxes	$	215,928		$	301,752


(1)	Includes management fee revenue from providing management and administrative services to dialysis ventures in which the Company owns a noncontrolling equity investment or which are wholly-owned by third parties.

A summary of assets by reportable segment was as follows:



	March 31, 2019		December 31, 2018
Segment assets
U.S. dialysis and related lab services (including equity investments of $101,173 and $95,290, respectively)	$	15,095,326	$	12,333,641
Other—Ancillary services and strategic initiatives (including equity investments of $125,136 and $129,321, respectively)	1,505,670		1,387,046
DMG—Held for sale (including equity investments of $5,282 and $4,833, respectively)	6,004,948		5,389,565
Consolidated assets	$	22,605,944	$	19,110,252

Depreciation and amortization expense by reportable segment was as follows:



	Three months ended March 31,
	2019		2018
U.S. dialysis and related lab services	$	140,780	$	134,776
Other—Ancillary services and strategic initiatives	7,748		8,023
	$	148,528	$	142,799

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



	Three months ended March 31,
	2019		2018
U.S. dialysis and related lab services	$	170,548	$	191,406
Other—Ancillary services and strategic initiatives	8,578		9,988
DMG—Held for sale	19,752		31,049
	$	198,878	$	232,443