Operating Segments and Related Information

6 Months Ended

Jun. 30, 2012

Operating Segments and Related Information [Abstract]

Operating Segments and Related Information

Note D – Operating Segments and Related Information

We conduct our operations through three reportable operating 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 (formerly referred to as analytics and advisory 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 operating segments.

We evaluate the performance of our operating segments based upon revenues 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 transaction costs and acquisition obligations classified as compensation, intangible asset impairment charges, certain litigation costs and litigation settlements, 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 revenues. Segment information for the three and six months ended June 30, 2012 and 2011 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services  – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended June 30, 2012
Revenues	$	29,592		$	13,411		$	8,655		$	—		$	51,658
Net earnings													$	1,002
Income tax expense														584
Interest expense, net														529
EBIT	$	6,469		$	1,554		$	(821	)	$	(5,087	)		2,115
Depreciation of property and equipment		990			87			502			—			1,579
Amortization of intangible assets		767			490			202			—			1,459
EBITDA		8,226			2,131			(117	)		(5,087	)		5,153
Foreign currency transaction losses on short-term intercompany balances		71			406			20			—			497
Acquisition obligations classified as compensation		—			—			94			—			94
Transformation severance and related expenses		23			21			232			—			276
Costs for overtime pay claim		328			—			—			—			328
Stock-based compensation		—			—			—			1,239			1,239
Adjusted EBITDA	$	8,648		$	2,558		$	229		$	(3,848	)	$	7,587
Three Months Ended June 30, 2011
Revenues	$	27,901		$	15,753		$	7,050		$	—		$	50,704
Net earnings													$	710
Income tax expense														784
Interest expense, net														478
EBIT	$	6,326		$	2,268		$	(1,713	)	$	(4,909	)		1,972
Depreciation of property and equipment		769			95			350			—			1,214
Amortization of intangible assets		571			340			218			—			1,129
EBITDA		7,666			2,703			(1,145	)		(4,909	)		4,315
Foreign currency transaction gains on short-term intercompany balances		(14	)		(416	)		(1	)		—			(431	)
Acquisition obligations classified as compensation		—			—			131			—			131
Transformation severance and related expenses		270			—			—			—			270
Stock-based compensation		—			—			—			1,301			1,301
Adjusted EBITDA	$	7,922		$	2,287		$	(1,015	)	$	(3,608	)	$	5,586

	Recovery Audit Services – Americas			Recovery Audit Services  – Europe/Asia- Pacific			New Services			Corporate Support			Total
Six Months Ended June 30, 2012
Revenues	$	58,405		$	27,716		$	17,186		$	—		$	103,307
Net earnings													$	1,294
Income tax expense														1,081
Interest expense, net														1,033
EBIT	$	12,030		$	3,211		$	(1,619	)	$	(10,214	)		3,408
Depreciation of property and equipment		1,905			127			1,060			—			3,092
Amortization of intangible assets		2,353			1,029			404			—			3,786
EBITDA		16,288			4,367			(155	)		(10,214	)		10,286
Foreign currency transaction losses on short-term intercompany balances		8			149			1			—			158
Acquisition obligations classified as compensation		—			—			195			—			195
Transformation severance and related expenses		113			78			327			—			518
Costs for overtime pay claim		577			—			—			—			577
Stock-based compensation		—			—			—			2,640			2,640
Adjusted EBITDA	$	16,986		$	4,594		$	368		$	(7,574	)	$	14,374
	Recovery Audit Services – Americas			Recovery Audit Services  – Europe/Asia- Pacific			New Services			Corporate Support			Total
Six Months Ended June 30, 2011
Revenues	$	57,014		$	30,505		$	13,903		$	—		$	101,422
Net earnings													$	1,082
Income tax expense														1,905
Interest expense, net														825
EBIT	$	12,082		$	4,285		$	(2,983	)	$	(9,572	)		3,812
Depreciation of property and equipment		1,543			183			669			—			2,395
Amortization of intangible assets		1,144			672			434			—			2,250
EBITDA		14,769			5,140			(1,880	)		(9,572	)		8,457
Foreign currency transaction gains on short-term intercompany balances		(23	)		(854	)		(2	)		—			(879	)
Acquisition obligations classified as compensation		—			—			228			—			228
Transformation severance and related expenses		937			160			—			—			1,097
Stock-based compensation		—			—			—			2,202			2,202
Adjusted EBITDA	$	15,683		$	4,446		$	(1,654	)	$	(7,370	)	$	11,105