Note 13 - Segment and Geographical Information

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

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, medical record retrieval, document management and other related services) is as follows (in thousands):

Revenues :	For the three months ended March 31 ,
	2015		2016
IME and other related services (1)	$	167,345	$	182,997
Peer and bill reviews, Medicare compliance, case management, medical record retrieval and document management services (1)		28,971		43,506
Total revenues	$	196,316	$	226,503

(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 services 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 2014 and Ability Services Network and MedAllocators in June 2014, Medicare compliance services and case management services have been added to the presentation above. Additionally, with the acquisition of ABI in January 2016, medical record retrieval and document management services have been added to the presentation above. None of the individual services within the peer and bill reviews, Medicare compliance, case management, medical record retrieval and document management services categories above represent more than 10% of consolidated revenues. 

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

	United						United
	States			Canada			Kingdom			Australia			Total
Three months ended March 31, 2015
Revenues	$	121,718		$	7,949		$	47,444		$	19,205		$	196,316
Segment profit		19,522			634			7,699			4,097			31,952
Depreciation and amortization expense		9,411			582			2,383			2,472			14,848
Capital expenditures		(1,670	)		(114	)		(189	)		(256	)		(2,229	)
Total assets (3)		598,165			22,343			236,186			83,228			939,922
Long-lived assets (2)(3)		471,040			15,613			92,703			68,227			647,583
Three months ended March 31, 2016
Revenues	$	149,440		$	9,454		$	47,933		$	19,676		$	226,503
Segment profit		22,905			968			9,779			3,832			37,484
Depreciation and amortization expense		10,752			56			3,539			2,289			16,636
Capital expenditures		(1,178	)		(27	)		(178	)		(1,354	)		(2,737	)
Total assets (3)		702,747			29,341			295,222			86,450			1,113,760
Long-lived assets (2)(3)		570,681			17,515			133,337			63,192			784,725

(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 March 3 1 ,
	2015			2016
Segment Profit	$	31,952		$	37,484
Depreciation and amortization		(14,848	)		(16,636	)
Share-based compensation expense		(6,136	)		(5,419	)
Acquisition related transaction costs		(559	)		(1,058	)
Other income (expenses)		731			(969	)
Income from operations	$	11,140		$	13,402