Operating Segments and Related Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

We conduct our operations through three reportable segments:

Recovery Audit Services – Americas represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in the United States of America (“U.S.”), Canada and Latin America.

Recovery Audit Services – Europe/Asia-Pacific represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in Europe, Asia and the Pacific region.

New Services represents Profit Optimization services and Healthcare Claims Recovery Audit services.

Additionally,Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments.

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then further adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), intangible asset impairment charges, certain litigation costs and litigation settlements, certain severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenue. Segment information for the three and nine months ended September 30, 2013 and 2012 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	9,029	$	—		$	53,403
Net earnings												$	4,877
Income tax expense												1,029
Interest expense, net												75
EBIT	$	9,418		$	1,987		$	270	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			496		—			2,034
Amortization of intangible assets	698			323			183		—			1,204
EBITDA	11,530			2,434			949		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—		18			(636		)
Acquisition-related charges	662			—			44		—			706
Transformation severance and related expenses	20			56			85		—			161
Stock-based compensation	—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	1,078	$	(4,372	)	$	10,754

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2012
Revenue	$	33,235		$	11,406		$	7,446		$	—		$	52,087
Net earnings													$	2,565
Income tax expense													505
Interest expense, net													515
EBIT	$	9,964		$	304		$	(651	)	$	(6,032	)	3,585
Depreciation of property and equipment	1,111			90			515			—			1,716
Amortization of intangible assets	767			462			202			—			1,431
EBITDA	11,842			856			66			(6,032		)	6,732
Foreign currency transaction (gains) losses on short-term intercompany balances	(85		)	(266		)	3			—			(348		)
Acquisition-related charges (benefits)	—			(14		)	93			—			79
Transformation severance and related expenses	245			273			—			—			518
Stock-based compensation	—			—			—			1,839			1,839
Adjusted EBITDA	$	12,002		$	849		$	162		$	(4,193	)	$	8,820

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	26,914		$	—		$	148,709
Net earnings												$	6,211
Income tax expense												1,671
Interest income, net												(89		)
EBIT	$	21,643	$	2,354		$	(522	)	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			1,569			—			6,069
Amortization of intangible assets	2,094		1,171			547			—			3,812
EBITDA	27,875		3,887			1,594			(15,682		)	17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	143		(199		)	—			2			(54		)
Acquisition-related charges (benefits)	987		(900		)	144			—			231
Transformation severance and related expenses	100		593			85			—			778
Stock-based compensation	—		—			—			3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	1,823		$	(11,903	)	$	22,406

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2012
Revenue	$	91,640		$	39,122		$	24,632		$	—		$	155,394
Net earnings													$	3,859
Income tax expense													1,586
Interest expense, net													1,548
EBIT	$	21,994		$	3,515		$	(2,270	)	$	(16,246	)	6,993
Depreciation of property and equipment	3,016			217			1,575			—			4,808
Amortization of intangible assets	3,120			1,491			606			—			5,217
EBITDA	28,130			5,223			(89		)	(16,246		)	17,018
Foreign currency transaction (gains) losses on short-term intercompany balances	(77		)	(117		)	4			—			(190		)
Acquisition-related charges (benefits)	—			(485		)	288			—			(197		)
Transformation severance and related expenses	358			351			327			—			1,036
Wage claim costs	577			—			—			—			577
Stock-based compensation	—			—			—			4,479			4,479
Adjusted EBITDA	$	28,988		$	4,972		$	530		$	(11,767	)	$	22,723