Note 13 - Segment and Geographical Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

(13)           Segment and Geographical Information

The Company applies the provisions of ASC Topic 280, Segment Reporting, (“ASC 280”). ASC 280, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker (“CODM”) and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined that it operates in four geographic segments: the United States, Canada, the United Kingdom and Australia. The CODM evaluates segment performance based on revenues and segment profit, as defined below. The Company’s corporate costs and assets are all incurred in the United States and are included in the United States segment, as this is consistent with how they are presented and reviewed by the CODM. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

Information relating to the Company’s product groups (IMEs, peer review, bill review, Medicare compliance, case management and other related services) is as follows (in thousands):

Revenues:	For the three months ended September 30,				For the nine months ended September 30,
	2013		2014		2013		2014
IME and other related services (1)	$	139,880	$	174,012	$	421,505	$	501,520
Peer and bill reviews, Medicare compliance services and case management (1)		12,474		30,066		35,700		72,031
Total revenues	$	152,354	$	204,078	$	457,205	$	573,551

(1) Includes the results of certain of the Company’s service centers acquired whose revenues are generated substantially through the indicated product group. Outside of this presentation, other product groups are not tracked within the Company’s financial systems. Additionally, other related services, which include any Medicare compliance services and case management completed at the Company’s historic service centers in the periods presented, are not separately captured within the Company’s financial systems and have been included with IME services in the above presentation as separate presentation is not practicable. With the Company’s acquisition of Gould & Lamb in February of 2014 and Ability Services Network and MedAllocators in June of 2014, Medicare compliance services and case management have been added to the presentation above. None of the individual services within the peer and bill reviews, Medicare compliance services and case management category above represent more than 10% of consolidated revenues.

Information relating to the Company’s geographic segments is as follows (in thousands)(1)(2): 

	United					United
	States			Canada		Kingdom			Australia			Total
Three months ended September 30, 2013
Revenues	$	93,963		$	7,290	$	34,604		$	16,497		$	152,354
Segment profit		12,023			1,238		6,997			3,627			23,885
Depreciation and amortization expense		7,730			3,087		2,751			2,342			15,910
Capital expenditures		(540	)		—		(250	)		(655	)		(1,445	)

	United						United
	States			Canada			Kingdom			Australia			Total
Nine months ended September 30, 2013
Revenues	$	280,634		$	22,986		$	103,645		$	49,940		$	457,205
Segment profit		35,794			3,778			20,495			11,829			71,896
Depreciation and amortization expense		24,608			7,331			8,637			7,482			48,058
Capital expenditures		(2,170	)		(18	)		(1,250	)		(1,320	)		(4,758	)
Total assets (3)		396,503			33,835			207,464			87,352			725,154
Long-lived assets (3)		321,351			26,242			95,344			78,415			521,352

	United						United
	States			Canada			Kingdom			Australia			Total
Three months ended September 30, 2014
Revenues	$	123,112		$	8,075		$	48,865		$	24,026		$	204,078
Segment profit		21,187			842			8,154			5,900			36,083
Depreciation and amortization expense		9,148			685			2,962			2,910			15,705
Capital expenditures		(1,305	)		(3	)		(505	)		(769	)		(2,582	)

	United						United
	States			Canada			Kingdom			Australia			Total
Nine months ended September 30, 2014
Revenues	$	346,504		$	24,160		$	139,583		$	63,304		$	573,551
Segment profit		57,770			3,105			23,613			14,184			98,672
Depreciation and amortization expense		25,037			2,207			9,230			8,431			44,905
Capital expenditures		(4,169	)		(12	)		(1,022	)		(989	)		(6,192	)
Total assets (3)		578,158			27,195			239,533			95,131			940,017
Long-lived assets (3)		482,513			19,522			103,945			80,722			686,702

(1) For segment purposes, the Company defines segment profit as earnings before interest expenses, income taxes, depreciation and amortization, share-based compensation expenses, acquisition related transaction costs and other expenses. A consolidated reconciliation from segment profit to income from operations is included below.

(2) Long-lived assets are noncurrent assets excluding deferred tax assets and deferred financing costs.

(3) Total assets and long-lived assets include goodwill. Goodwill recorded in connection with certain tax benefits to be realized in the Company’s U.S. income tax returns has been reflected in the United States segment.

A reconciliation of segment profit to consolidated income from operations is as follows (in thousands):

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2014			2013			2014
Segment Profit	$	23,885		$	36,083		$	71,896		$	98,672
Depreciation and amortization		(15,910	)		(15,705	)		(48,058	)		(44,905	)
Share-based compensation expense		(3,820	)		(4,680	)		(12,234	)		(14,660	)
Acquisition related transaction costs		(186	)		(871	)		(1,093	)		(2,825	)
Other expenses		24			(585	)		(650	)		(771	)
Income from operations	$	3,993		$	14,242		$	9,861		$	35,511