Operating Segments and Related Information

6 Months Ended

Jun. 30, 2011

Operating Segments and Related Information [Abstract]

Operating Segments and Related Information

Note D - Operating Segments and Related Information

     The Company is comprised of the following 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 healthcare claims recovery audit services and our business analytics and advisory services.

     Additionally, Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three 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, taxes, depreciation and amortization (“EBITDA”) as adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition obligations classified as compensation, intangible asset impairment charges, litigation settlements, severance charges (including severance charges relating to the transformation of our recovery audit service delivery model, or “transformation severance”) and foreign currency transaction gains and losses on 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, 2011 and 2010 (in thousands) is as follows:

	Recovery			Recovery Audit
	Audit			Services —
	Services —			Europe/Asia —			New			Corporate
	Americas			Pacific			Services			Support			Total
Three Months Ended June 30, 2011
Revenues	$	27,901		$	15,753		$	7,050		$	—		$	50,704
Operating income (loss)	$	6,312		$	1,852		$	(1,714	)	$	(4,909	)	$	1,541
Depreciation and amortization.		1,340			435			568			—			2,343
Foreign currency transaction gains (losses) on intercompany balances		14			416			1			—			431
EBITDA		7,666			2,703			(1,145	)		(4,909	)		4,315
Foreign currency transaction (gains) losses on 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
Three Months Ended June 30, 2010
Revenues	$	29,870		$	12,957		$	2,680		$	—		$	45,507
Operating income (loss)	$	6,812		$	1,440		$	(1,956	)	$	(4,271	)	$	2,025
Depreciation and amortization.		1,477			399			326			—			2,202
Foreign currency transaction gains (losses) on intercompany balances		(78	)		(1,013	)		—			—			(1,091	)
EBITDA		8,211			826			(1,630	)		(4,271	)		3,136
Foreign currency transaction (gains) losses on intercompany balances		78			1,013			—			—			1,091
Acquisition obligations classified as compensation		—			—			158			—			158
Stock-based compensation		—			—			—			1,058			1,058
Adjusted EBITDA	$	8,289		$	1,839		$	(1,472	)	$	(3,213	)	$	5,443

	Recovery			Recovery Audit
	Audit			Services —
	Services —			Europe/Asia —			New			Corporate
	Americas			Pacific			Services			Support			Total
Six Months Ended June 30, 2011
Revenues	$	57,014		$	30,505		$	13,903		$	—		$	101,422
Operating income (loss)	$	12,059		$	3,431		$	(2,985	)	$	(9,572	)	$	2,933
Depreciation and amortization		2,687			855			1,103			—			4,645
Foreign currency transaction gains (losses) on intercompany balances		23			854			2			—			879
EBITDA		14,769			5,140			(1,880	)		(9,572	)		8,457
Foreign currency transaction (gains) losses on 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
Six Months Ended June 30, 2010
Revenues	$	54,844		$	27,695		$	4,297		$	—		$	86,836
Operating income (loss)	$	10,642		$	3,181		$	(3,416	)	$	(8,995	)	$	1,412
Depreciation and amortization		2,957			804			551			—			4,312
Foreign currency transaction gains (losses) on intercompany balances		(71	)		(1,641	)		—			—			(1,712	)
EBITDA		13,528			2,344			(2,865	)		(8,995	)		4,012
Foreign currency transaction (gains) losses on intercompany balances		71			1,641			—			—			1,712
Acquisition obligations classified as compensation		—			—			158			—			158
Stock-based compensation		—			—			—			1,876			1,876
Adjusted EBITDA	$	13,599		$	3,985		$	(2,707	)	$	(7,119	)	$	7,758