10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28000

PRGX Global, Inc.

(Exact name of registrant as specified in its charter)

Georgia	58-2213805
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
600 Galleria Parkway	30339-5986
Suite 100	(Zip Code)
Atlanta, Georgia
(Address of principal executive offices)

Registrant’s telephone number, including area code: (770) 779-3900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

¨  Large accelerated filer	ý	Accelerated filer
¨  Non-accelerated filer     (Do not check if a smaller reporting company)	¨	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

Common shares of the registrant outstanding at October 24, 2014 were 27,251,061.

PRGX GLOBAL, INC.

FORM 10-Q

For the Quarter Ended September 30, 2014

INDEX

	Page No.
Part I. Financial Information
Item 1. Financial Statements (Unaudited)	1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013	1
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2014 and 2013	1
Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	2
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	3
Notes to Condensed Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	25
Part II. Other Information
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3. Defaults Upon Senior Securities	26
Item 4. Mine Safety Disclosures	26
Item 5. Other Information	26
Item 6. Exhibits	27
Signatures	28

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenue	$	42,988		$	53,403		$	122,870		$	148,709
Operating expenses:
Cost of revenue	28,681			31,803			87,457			95,863
Selling, general and administrative expenses	10,492			13,017			31,505			35,226
Depreciation of property and equipment	1,428			2,034			4,696			6,069
Amortization of intangible assets	895			1,204			2,700			3,812
Total operating expenses	41,496			48,058			126,358			140,970
Operating income (loss)	1,492			5,345			(3,488		)	7,739
Foreign currency transaction (gains) losses on short-term intercompany balances	1,221			(636		)	1,073			(54		)
Interest expense (income), net	(44		)	75			(33		)	(89		)
Income (loss) before income taxes	315			5,906			(4,528		)	7,882
Income tax expense	554			1,029			853			1,671
Net income (loss)	$	(239	)	$	4,877		$	(5,381	)	$	6,211
Basic earnings (loss) per common share (Note B)	$	(0.01	)	$	0.17		$	(0.18	)	$	0.21
Diluted earnings (loss) per common share (Note B)	$	(0.01	)	$	0.16		$	(0.18	)	$	0.21
Weighted-average common shares outstanding (Note B):
Basic	27,744			29,396			29,203			29,075
Diluted	27,744			29,815			29,203			29,517

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Foreign currency translation adjustments	(619		)	96		(112		)	(933		)
Comprehensive income (loss)	$	(858	)	$	4,973	$	(5,493	)	$	5,278

See accompanying Notes to Condensed Consolidated Financial Statements.

1

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

	September 30, 2014			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents (Note E)	$	26,293		$	43,700
Restricted cash	121			57
Receivables:
Contract receivables, less allowances of $2,089 in 2014 and $1,996 in 2013:
Billed	30,319			28,175
Unbilled	2,341			9,904
	32,660			38,079
Employee advances and miscellaneous receivables, less allowances of $549 in 2014 and $402 in 2013	1,343			2,242
Total receivables	34,003			40,321
Prepaid expenses and other current assets	4,591			3,917
Total current assets	65,008			87,995
Property and equipment	56,060			58,796
Less accumulated depreciation and amortization	(43,289		)	(44,802		)
Property and equipment, net	12,771			13,994
Goodwill	13,667			13,686
Intangible assets, less accumulated amortization of $35,231 in 2014 and $32,717 in 2013	10,862			13,582
Noncurrent portion of unbilled receivables	1,021			1,379
Other assets	2,500			2,193
Total assets	$	105,829		$	132,829
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	7,720		$	10,809
Accrued payroll and related expenses	14,776			15,415
Refund liabilities	5,611			6,597
Deferred revenue	1,213			1,512
Business acquisition obligations	—			3,156
Total current liabilities	29,320			37,489
Noncurrent refund liabilities	878			950
Other long-term liabilities	526			562
Total liabilities	30,724			39,001
Commitments and contingencies (Note H)
Shareholders’ equity (Note B):
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 27,256,096 shares issued and outstanding as of September 30, 2014 and 29,367,439 shares issued and outstanding as of December 31, 2013	273			294
Additional paid-in capital	591,597			604,806
Accumulated deficit	(518,767		)	(513,386		)
Accumulated other comprehensive income	2,002			2,114
Total shareholders’ equity	75,105			93,828
Total liabilities and shareholders’ equity	$	105,829		$	132,829

See accompanying Notes to Condensed Consolidated Financial Statements.

2

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	(5,381	)	$	6,211
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	7,396			9,881
Amortization of deferred loan costs	67			137
Stock-based compensation expense	3,409			3,777
Deferred income taxes	(933		)	115
Foreign currency transaction (gains) losses on short-term intercompany balances	1,073			(54		)
Changes in operating assets and liabilities:
Restricted cash	(64		)	(62		)
Billed receivables	(2,762		)	1,705
Unbilled receivables	7,921			216
Prepaid expenses and other current assets	541			(139		)
Other assets	15			24
Accounts payable and accrued expenses	(2,871		)	(4,001		)
Accrued payroll and related expenses	(445		)	(5,305		)
Refund liabilities	(1,058		)	(566		)
Deferred revenue	(265		)	(341		)
Noncurrent compensation obligations	414			285
Other long-term liabilities	73			(1,588		)
Net cash provided by operating activities	7,130			10,295
Cash flows from investing activities:
Purchases of property and equipment, net of disposal proceeds	(3,574		)	(4,544		)
Net cash used in investing activities	(3,574		)	(4,544		)
Cash flows from financing activities:
Repayments of long-term debt	—			(2,250		)
Payment of deferred loan costs	(104		)	—
Restricted stock repurchased from employees for withholding taxes	(568		)	(1,241		)
Proceeds from option exercises	2,790			611
Payments of deferred acquisition consideration	(2,208		)	(1,904		)
Net proceeds from issuance of common stock	—			4,118
Repurchase of common stock	(20,000		)	—
Net cash used in financing activities	(20,090		)	(666		)
Effect of exchange rates on cash and cash equivalents	(873		)	(484		)
Net (decrease) increase in cash and cash equivalents	(17,407		)	4,601
Cash and cash equivalents at beginning of period	43,700			37,806
Cash and cash equivalents at end of period	$	26,293		$	42,407
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	80		$	488
Cash paid during the period for income taxes, net of refunds received	$	2,405		$	2,315

See accompanying Notes to Condensed Consolidated Financial Statements.

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PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A – Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2013.

Certain reclassifications have been made to the prior period financial statements, including the notes thereto, to conform to the presentation changes described below.

Beginning with the second quarter of 2014, we reclassified certain information technology expenses within our Recovery Audit Services — Americas segment from Selling, General and Administrative expenses to Cost of Revenue to better reflect the nature of the work performed.

Beginning with the first quarter of 2014, we present the former New Services segment as two separate segments: Adjacent Services, which was formerly referred to as Profit Optimization services, and Healthcare Claims Recovery Audit Services. We have revised the presentation of our operating segments and related information in Note D - Operating Segments and Related Information. Also beginning with the first quarter of 2014, we reclassified certain expenses within the Recovery Audit Services — Europe/Asia-Pacific segment from Cost of Revenue to Selling, General and Administrative expenses to better reflect costs associated with new business development efforts.

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets (Unaudited) related to our Healthcare Claims Recovery Audit Services as of December 31, 2013 as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $5.6 million as of December 31, 2013. There were no unbilled receivables related to the Healthcare Claims Recovery Audit Services segment as of September 30, 2014.

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2014-15. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and related disclosure requirements. ASU 2014-15 is effective for annual periods beginning after December 15, 2016 with early adoption permitted. We do not expect the adoption of ASU 2014-15 to have a material impact on our consolidated financial statements.

FASB ASC Update No. 2014-09. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the transferring entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2016. Early adoption is not permitted. We are currently undergoing an evaluation of the impact of ASU 2014-09 on our consolidated financial statements.

FASB ASC Update No. 2014-08. In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to

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PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted for transactions that have not been disclosed in previously issued financial statements. We adopted ASU 2014-08 in the third quarter of 2014. The Company's disposal of assets on October 1, 2014 (see Note J) did not qualify as a discontinued operation as defined in ASU 2014-08. The impact of ASU 2014-08 on the Company's financial statements with respect to any future transaction will be dependent on whether any such transaction falls within the scope of the new guidance.

Note B – Earnings (Loss) Per Common Share

The following tables set forth the computations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
Basic earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Basic earnings (loss) per common share	$	(0.01	)	$	0.17	$	(0.18	)	$	0.21

	Three Months Ended September 30,					Nine Months Ended September 30,
Diluted earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Incremental shares from stock-based compensation plans	—			419		—			442
Denominator for diluted earnings (loss) per common share	27,744			29,815		29,203			29,517
Diluted earnings (loss) per common share	$	(0.01	)	$	0.16	$	(0.18	)	$	0.21

Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 3.8 million shares and antidilutive Performance Units issuable under the Company's 2006 Management Incentive Plan that totaled less than 0.1 million shares from the computation of diluted earnings (loss) per common share for the three and nine months ended September 30, 2014. Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 1.6 million shares, and there were no antidilutive Performance Units related to the Company's 2006 Management Incentive Plan excluded from the computation of diluted earnings (loss) per common share for the three and nine months ended September 30, 2013. As a result of the net loss for the three and nine months ended September 30, 2014, all shares underlying stock options and Performance Units were considered antidilutive. The number of common shares we used in the basic and diluted earnings (loss) per common share computations include nonvested restricted shares of 0.6 million and 0.7 million for the three and nine months ended September 30, 2014 and 2013, respectively, and nonvested restricted share units that we consider to be participating securities of 0.1 million and 0.2 million for the three and nine months ended September 30, 2014 and 2013, respectively.

On December 11, 2012, we closed a public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the

5

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

underwriters elected to exercise an overallotment option for an additional 687,385 shares, and completed the additional sale on January 8, 2013. The net proceeds to us from the overallotment, after deducting underwriting discounts and commissions and offering expenses, were $4.1 million.

In partial satisfaction of a business acquisition obligation, we issued 187,620 shares of our common stock having a value of $1.3 million in the nine months ended September 30, 2014 and 217,155 shares of our common stock having a value of $1.4 million in the nine months ended September 30, 2013.

We repurchased 1,413,017 shares of our common stock during the three months ended September 30, 2014 for $9.0 million, and 3,117,277 shares of our common stock during the nine months ended September 30, 2014 for $20.0 million. There were no repurchases during the year ended December 31, 2013.

Pursuant to exercises of outstanding stock options, we issued 710,063 shares of our common stock having a value of $2.8 million in the nine months ended September 30, 2014 and 129,976 shares of our common stock having a value of $0.6 million in the nine months ended September 30, 2013. Stock option exercises during the nine-month period ended September 30, 2014 primarily consisted of exercises by former executive officers of the Company.

Note C – Stock-Based Compensation

The Company currently has three stock-based compensation plans under which awards have been granted: (1) the Stock Incentive Plan; (2) the 2006 Management Incentive Plan (“2006 MIP”); and (3) the 2008 Equity Incentive Plan (“2008 EIP”) (collectively, the “Plans”). We describe the Plans in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2013.

2008 EIP Awards

Stock options granted under the 2008 EIP generally have a term of six to seven years and vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes stock option grants during the nine months ended September 30, 2014 and 2013:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45	$	1.89
Employee group (1)	1,480,000	3 years	$	6.99	$	1.81
Employee inducement (2)	270,000	3 years	$	6.64	$	1.71
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (3)	20,000	3 years	$	7.14	$	3.81

(1) The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on September 11, 2016 and $7.24 for the options that vest on September 11, 2017.

(3) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes nonvested stock awards granted during the nine months ended September 30, 2014 and 2013:

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PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45
Employee group	120,000	3 years	$	6.36
Employee inducement (1)	70,000	3 years	$	6.04
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (2)	20,000	3 years	$	7.14

(1) The Company granted nonvested stock awards (restricted stock) outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company.

(2) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

2006 MIP Performance Units

On June 19, 2012, seven senior officers of the Company were granted 154,264 Performance Units under the 2006 MIP, comprising all of the then remaining available awards under the 2006 MIP. The awards had an aggregate grant date fair value of $1.2 million and vest ratably over three years. Upon vesting, the Performance Units will be settled by the issuance of Company common stock equal to 60% of the number of Performance Units being settled and the payment of cash in an amount equal to 40% of the fair market value of that number of shares of common stock equal to the number of Performance Units being settled. During the nine months ended September 30, 2014, an aggregate of 27,546 Performance Units were settled which resulted in the issuance of 16,526 shares of common stock and cash payments totaling $0.1 million. During the nine months ended September 30, 2013, an aggregate of 52,334 Performance Units were settled which resulted in the issuance of 31,399 shares of common stock and cash payments totaling $0.1 million. Since the June 19, 2012 grant date to September 30, 2014, an aggregate of 121,210 Performance Units were settled by three current executive officers and three former executive officers, and 16,524 Performance Units were forfeited by one former executive officer and currently are available to be granted. Such settlements resulted in the issuance of 69,438 shares of common stock and cash payments totaling $0.3 million from the grant date through September 30, 2014. As of September 30, 2014, a total of 16,530 Performance Units were outstanding, none of which were vested.

Selling, general and administrative expenses for the three months ended September 30, 2014 and 2013 include $1.4 million and $1.3 million, respectively, related to stock-based compensation charges. Selling, general and administrative expenses for the nine months ended September 30, 2014 and 2013 include $3.4 million and $3.8 million, respectively, related to stock-based compensation charges. At September 30, 2014, there was $6.7 million of unrecognized stock-based compensation expense related to stock options, restricted stock awards, restricted stock unit awards, and Performance Unit awards which we expect to recognize over a weighted-average period of 2.2 years.

7

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note D – Operating Segments and Related Information

Beginning with the first quarter of 2014, we present the former New Services segment as two separate segments: Adjacent Services, which was formerly referred to as Profit Optimization services, and Healthcare Claims Recovery Audit Services. We now conduct our operations through the following four 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.

Adjacent Services (formerly known as Profit Optimization services) represents data transformation and financial advisory services.

Healthcare Claims Recovery Audit Services represents recovery audit services for healthcare claims, which consist primarily of services provided under subcontracts related to the Medicare Recovery Audit Contractor program.

Additionally, Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the four 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), tangible and 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.

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PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Segment information for the three and nine months ended September 30, 2013 has been revised to reflect the change in reportable segments. Segment information for the three and nine months ended September 30, 2014 and 2013 (in thousands) is as follows:

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Three Months Ended September 30, 2014
Revenue	$	28,550	$	10,708		$	3,586		$	144		$	—		$	42,988
Net income (loss)															$	(239	)
Income tax expense															554
Interest expense (income), net															(44		)
EBIT	$	7,155	$	(151	)	$	(265	)	$	(1,133	)	$	(5,335	)	271
Depreciation of property and equipment	1,111		150			145			22			—			1,428
Amortization of intangible assets	500		299			96			—			—			895
EBITDA	8,766		298			(24		)	(1,111		)	(5,335		)	2,594
Foreign currency transaction (gains) losses on short-term intercompany balances	208		1,192			—			—			(179		)	1,221
Transformation severance and related expenses	44		7			18			26			318			413
Stock-based compensation	—		—			—			—			1,405			1,405
Adjusted EBITDA	$	9,018	$	1,497		$	(6	)	$	(1,085	)	$	(3,791	)	$	5,633

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	3,625		$	5,404	$	—		$	53,403
Net income (loss)															$	4,877
Income tax expense															1,029
Interest expense (income), net															75
EBIT	$	9,418		$	1,987		$	(351	)	$	621	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			167			329		—			2,034
Amortization of intangible assets	698			323			183			—		—			1,204
EBITDA	11,530			2,434			(1		)	950		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—			—		18			(636		)
Acquisition-related charges (benefits)	662			—			44			—		—			706
Transformation severance and related expenses	20			56			81			4		—			161
Stock-based compensation	—			—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	124		$	954	$	(4,372	)	$	10,754

9

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Nine Months Ended September 30, 2014
Revenue	$	80,377	$	32,792	$	8,150		$	1,551		$	—		$	122,870
Net income (loss)														$	(5,381	)
Income tax expense														853
Interest expense (income), net														(33		)
EBIT	$	16,632	$	1,309	$	(3,607	)	$	(4,785	)	$	(14,110	)	(4,561		)
Depreciation of property and equipment	3,612		445		463			176			—			4,696
Amortization of intangible assets	1,501		911		288			—			—			2,700
EBITDA	21,745		2,665		(2,856		)	(4,609		)	(14,110		)	2,835
Foreign currency transaction (gains) losses on short-term intercompany balances	164		1,079		—			—			(170		)	1,073
Acquisition-related charges (benefits)	—		—		249			—			—			249
Transformation severance and related expenses	510		569		396			431			446			2,352
Stock-based compensation	—		—		—			—			3,409			3,409
Adjusted EBITDA	$	22,419	$	4,313	$	(2,211	)	$	(4,178	)	$	(10,425	)	$	9,918

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	10,705		$	16,209	$	—		$	148,709
Net income (loss)														$	6,211
Income tax expense														1,671
Interest expense (income), net														(89		)
EBIT	$	21,643	$	2,354		$	(1,998	)	$	1,476	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			476			1,093		—			6,069
Amortization of intangible assets	2,094		1,171			547			—		—			3,812
EBITDA	27,875		3,887			(975		)	2,569		(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			81			4		—			778
Stock-based compensation	—		—			—			—		3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	(750	)	$	2,573	$	(11,903	)	$	22,406

10

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note E – Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

Our cash and cash equivalents included short-term investments of approximately $12.5 million as of September 30, 2014 and $24.6 million as of December 31, 2013, of which approximately $6.4 million and $4.4 million, respectively, were held at banks outside of the United States, primarily in Brazil and Canada.

Note F – Debt

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust term loan required quarterly principal payments of $0.8 million beginning in March 2010, and a final principal payment of $3.0 million due in January 2014 that we paid in December 2013. The SunTrust credit facility is guaranteed by the Company and all of its material domestic subsidiaries and secured by substantially all of the assets of the Company.

On January 17, 2014, we entered into an amendment to the SunTrust credit facility that increased the committed revolving credit facility from $15.0 million to $25.0 million, lowered the applicable margin to a fixed rate of 1.75%, eliminated the provision limiting availability under the revolving credit facility based on eligible accounts receivable and extended the scheduled maturity of the revolving credit facility to January 16, 2015 (subject to earlier termination as provided therein). As of September 30, 2014, we had no outstanding borrowings under the SunTrust revolver. With the provision of a fixed applicable margin of 1.75% per the amendment of the SunTrust credit facility, the interest rate that would have applied at September 30, 2014 had any borrowings been outstanding was approximately 1.90%. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the SunTrust revolving credit facility.

Prior to the January 2014 amendment to the SunTrust credit facility, amounts available under the SunTrust revolver were based on eligible accounts receivable and other factors. Interest on both the revolver and term loan was payable monthly and accrued at an index rate using the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varied from 2.25% per annum to 3.5% per annum, dependent on our consolidated leverage ratio, and was determined in accordance with a pricing grid under the SunTrust loan agreement.

The SunTrust credit facility, as amended, requires as of the end of each fiscal quarter, the Company to have achieved Consolidated Adjusted EBITDA (as defined in the agreement) of at least $18.0 million for the immediately preceding four quarters. As of June 30, 2014, the Company's Consolidated Adjusted EBITDA for the preceding four quarters was $17.0 million, and therefore the Company was not in compliance with the covenant, although there were no amounts outstanding under the credit facility as of that date. On August 7, 2014, the Company entered into an amendment of the SunTrust credit facility that provided a waiver of the non-compliance with the minimum Consolidated Adjusted EBITDA covenant for the quarter ended June 30, 2014, reduced the minimum Consolidated Adjusted EBITDA requirement to $12.0 million, modified the Fixed Charge Coverage Ratio definition for the quarter ending September 30, 2014 by excluding certain payments, and reduced the maximum borrowing amount under the senior credit facility to $20.0 million. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2014.

Note G – Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled services, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short term maturity of these items.

We repaid the remaining balance of our bank debt in December 2013, and had no debt outstanding as of September 30, 2014. We consider the factors used in determining the fair value of debt to be Level 3 inputs (significant unobservable inputs).

We had no business acquisition obligations as of September 30, 2014 and $3.2 million of business acquisition obligations as of December 31, 2013 representing the fair value of deferred consideration and earn-out payments estimated to be due as of those dates. We determine the estimated fair values based on our projections of future revenue and profits or other factors used

11

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

Note H – Commitments and Contingencies

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

Note I – Income Taxes

Reported income tax expense in each period primarily results from taxes on the income of foreign subsidiaries. The effective tax rates generally differ from the expected tax rate due primarily to the Company’s deferred tax asset valuation allowance on the domestic earnings and taxes on income of foreign subsidiaries.

In the nine months ended September 30, 2013, we partially offset these foreign income taxes by reversing $0.5 million of accruals made in prior years for uncertain tax positions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service in the U.S. and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

Note J – Subsequent Events

On October 1, 2014, the Company sold certain assets related to its Chicago, Illinois-based consulting business that were previously acquired in November 2010 from TJG Holdings LLC to Salo, LLC, a Minnesota limited liability company. The Company received an initial cash payment of $1.1 million in connection with the closing of the transaction and will receive payment for working capital transferred to the buyer. In addition, the Company may receive up to $0.9 million in earn-out payments based on certain revenue recognized by the buyer in relation to the acquired business during the year following the closing date.

On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the Company's stock repurchase program, increasing the total stock repurchase program since its inception to $40.0 million, and extended the duration of the program to December 31, 2015. From the February 2014 announcement of the Company’s current stock repurchase program through September 30, 2014, the Company has repurchased 3.1 million shares, or 10.4% of its common stock outstanding on the date of the announcement, for an aggregate cost of $20.0 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We conduct our operations through four reportable segments: Recovery Audit Services – Americas, Recovery Audit Services – Europe/Asia-Pacific, Adjacent Services and Healthcare Claims Recovery Audit Services. The Recovery Audit Services – Americas segment represents recovery audit services (other than Healthcare Claims Recovery Audit Services) we provide in the U.S., Canada and Latin America. The Recovery Audit Services – Europe/Asia-Pacific segment represents recovery audit services (other than Healthcare Claims Recovery Audit Services) we provide in Europe, Asia and the Pacific region. The Adjacent Services segment, which was formerly referred to as Profit Optimization services, represents data transformation and financial advisory services. The Healthcare Claims Recovery Audit Services segment represents recovery audit services that involve the identification of overpayments and underpayments made by healthcare payers to healthcare providers such as hospitals and physicians’ practices and includes services we provide as a subcontractor to three of the four prime contractors in the Medicare Recovery Audit Contractor program (the “Medicare RAC program”) of the Centers for Medicare and Medicaid Services (“CMS”). We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the four reportable segments in Corporate Support.

Recovery auditing is a business service focused on finding overpayments created by errors in payment transactions, such as missed or inaccurate discounts, allowances and rebates, vendor pricing errors, erroneous coding and duplicate payments. Generally, we earn our recovery audit revenue by identifying overpayments made by our clients, assisting our clients in recovering the overpayments from their vendors, and collecting a specified percentage of the recoveries from our clients as our fee. The fee percentage we earn is based on specific contracts with our clients that generally also specify: (a) time periods covered by the audit; (b) the nature and extent of services we are to provide; and (c) the client’s responsibilities to assist and cooperate with us. Clients generally recover claims by either taking credits against outstanding payables or future purchases from the relevant vendors, or receiving refund checks directly from those vendors. The manner in which a claim is recovered by a client is often dictated by industry practice. In addition, many clients establish client-specific procedural guidelines that we must satisfy prior to submitting claims for client approval. For some services we provide, such as certain of our Adjacent Services, we earn our compensation in the form of a flat fee, a fee per hour, or a fee per other unit of service.

We earn the vast majority of our recovery audit revenue from clients in the retail industry due to many factors, including the high volume of transactions and the complicated pricing and allowance programs typical in this industry. Changes in consumer spending associated with economic fluctuations generally impact our recovery audit revenue to a lesser degree than they affect individual retailers due to several factors, including:

• Diverse client base – our clients include a diverse mix of discounters, grocery, pharmacy, department and other stores that tend to be impacted to varying degrees by general economic fluctuations, and even in opposite directions from each other depending on their position in the market and their market segment;

• Motivation – when our clients experience a downturn, they frequently are more motivated to use our services to recover prior overpayments to make up for relatively weaker financial performance in their own business operations;

• Nature of claims – the relationship between the dollar amount of recovery audit claims identified and client purchases is non-linear. Claim volumes are generally impacted by purchase volumes, but a number of other factors may have an even more significant impact on claim volumes, including new items being purchased, changes in discount, rebate, marketing allowance and similar programs offered by vendors and changes in a client’s or a vendor’s information processing systems; and

• Timing – the client purchase data on which we perform our recovery audit services is historical data that typically reflects transactions between our clients and their vendors that took place 3 to 15 months prior to the data being provided to us for audit. As a result, we generally experience a delayed impact from economic changes that varies by client and the impact may be positive or negative depending on the individual clients’ circumstances.

While the net impact of the economic environment on our recovery audit revenue is difficult to determine or predict, we believe that for the foreseeable future, our revenue will remain at a level that will not have a significant adverse impact on our liquidity, and we have taken steps to mitigate any adverse impact of an economic downturn on our revenue and overall financial health. These steps include devoting substantial efforts to develop a lower cost service delivery model to enable us to more cost effectively serve our clients. Further, we continue to pursue our ongoing growth strategy to expand our business beyond our core recovery audit services to retailers by growing the portion of our business that provides recovery audit services to enterprises other than retailers and growing our Adjacent Services segment.

Despite the factors noted above and the strategies we have employed to mitigate the impact of macroeconomic issues on our business, our revenue was impacted negatively in the first nine months of 2014 by a number of factors. We experienced

13

delays in claim approvals at certain clients and a delayed audit start at a large legacy client, rate reductions, and position changes from the primary or lead auditor to secondary auditor in our core recovery audit business. We also had a weak backlog for our Adjacent Services segment coming into 2014 and the strategic rationalization of certain service offerings led us not to pursue additional projects for such service offerings. Auditing under the current Medicare RAC program contracts continues to remain severely restricted and we anticipate that revenue in our Healthcare Claims Recovery Audit Services segment will continue to decline throughout the remainder of 2014 given this limited audit scope and our withdrawal from the Medicare RAC rebid process earlier this year.

We believe that these challenges will result in a decline in our revenue for the year ending December 31, 2014 compared to our 2013 results. However, we believe that reductions in our operating costs and corporate overhead will offset a portion of these revenue declines.

Non-GAAP Financial Measures

EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of the Company’s performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We include a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA and a calculation of Adjusted EBITDA by segment below in " – Adjusted EBITDA".

Results of Operations

The following table sets forth the percentage of revenue represented by certain items in the Company’s Condensed Consolidated Statements of Operations (Unaudited) for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Cost of revenue	66.7		59.6		71.2		64.5
Selling, general and administrative expenses	24.4		24.3		25.6		23.6
Depreciation of property and equipment	3.3		3.8		3.8		4.1
Amortization of intangible assets	2.1		2.2		2.2		2.6
Total operating expenses	96.5		89.9		102.8		94.8
Operating income (loss)	3.5		10.1		(2.8	)	5.2
Foreign currency transaction (gains) losses on short-term intercompany balances	2.8		(1.1	)	0.9		—
Interest expense (income), net	—		0.1		—		(0.1	)
Income (loss) before income taxes	0.7		11.1		(3.7	)	5.3
Income tax expense	1.3		1.9		0.7		1.1
Net income (loss)	(0.6	)%	9.2	%	(4.4	)%	4.2	%

14

Three and Nine Months Ended September 30, 2014 Compared to the Corresponding Periods of the Prior Year

Revenue. Revenue was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Recovery Audit Services – Americas	$	28,550	$	32,365	$	80,377	$	87,999
Recovery Audit Services – Europe/Asia-Pacific	10,708		12,009		32,792		33,796
Adjacent Services	3,586		3,625		8,150		10,705
Healthcare Claims Recovery Audit Services	144		5,404		1,551		16,209
Total	$	42,988	$	53,403	$	122,870	$	148,709

Total revenue decreased for the three months ended September 30, 2014 by $10.4 million, or 19.5%, compared to the same period in 2013. Total revenue decreased for the nine months ended September 30, 2014 by $25.8 million, or 17.4%, compared to the same period in 2013.

Below is a discussion of our revenue for our four reportable segments.

Recovery Audit Services – Americas revenue decreased by $3.8 million, or 11.8%, for the third quarter of 2014 compared to the third quarter of 2013. For the nine months ended September 30, 2014, revenue decreased by $7.6 million, or 8.7%, compared to the same period in the prior year. One of the factors contributing to changes in our reported revenue is the strength of the U.S. dollar relative to foreign currencies. Changes in the average value of the U.S. dollar relative to foreign currencies negatively impacted our reported revenue. On a constant dollar basis, adjusted for changes in foreign exchange (“FX”) rates, revenue for the third quarter of 2014decreased by 10.7% compared to a decrease of 11.8% as reported and decreased by 7.4% during the first nine months of 2014 compared to a decrease of 8.7% as reported.

In addition to the impact of the change in FX rates, the year over year net constant dollar decreases in our Recovery Audit Services – Americas revenue in the three and nine months ended September 30, 2014 were due to a number of factors. Revenue at our existing clients declined 14.7% in the three-month period and 9.4% in the nine-month period primarily due to lower contingency fee rates at several clients, a change in position from primary or lead auditor to secondary auditor at a large client, and delays in claims conversion at certain clients. Partially offsetting these declines, revenue increased 5.0% and 2.8% in the three and nine-month periods, respectively, due to new clients. Revenue from discontinued clients represented 1.0% and 0.7% of the decrease in revenue for the three and nine months ended September 30, 2014.

Recovery Audit Services – Europe/Asia-Pacific revenue decreased by $1.3 million, or 10.8%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, revenue decreased by $1.0 million, or 3.0%, compared to the same period in the prior year. The changes in the strength of the U.S. dollar relative to foreign currencies in Europe, Asia and the Pacific region positively impacted reported revenue for the first nine months compared to the same period in 2013. On a constant dollar basis, adjusted for changes in foreign exchange (“FX”) rates, revenue for the third quarter of 2014decreased by 11.7% compared to a decrease of 10.8% as reported and decreased by 6.0% during the first nine months of 2014 compared to a decrease of 3.0% as reported.

The 11.7% net decrease on a constant dollar basis for the three-month period included a net decrease in revenue of 6.1% attributable to existing clients, 3.8% attributable to cyclical clients, and 6.6% attributable to discontinued clients and clients that entered administration (similar to bankruptcy), partially offset by net increases of 5.0% attributable to new clients. The 6.0% net decrease on a constant dollar basis for the nine-month period included net decreases in revenue of 2.2% attributable to existing clients, 2.1% attributable to cyclical clients, 4.4% attributable to discontinued clients and clients that entered administration, partially offset by an increase of 2.7% attributable to new clients. Revenue from existing clients in the three and nine-month period declined year over year primarily due to delays in claims conversion at certain clients and client requested audit accelerations that increased revenue in the 2013 periods above normal levels, with no corresponding accelerations in the 2014 periods.

Adjacent Services revenue decreased by less than $0.1 million, or 1.1%, for the three months ended September 30, 2014 compared to the same period in 2013. Adjacent Services revenue decreased by $2.6 million, or 23.9%, for the nine months ended September 30, 2014 compared to the same period in 2013. We generate Adjacent Services revenue from our data transformation and financial advisory services. The decreases in Adjacent Services revenue in the three and nine-month periods are primarily due to a weak backlog of projects at the beginning of 2014 compared to 2013 as well as our decision to strategically wind-down certain service offerings in order to re-focus on other growth opportunities in this segment. We

15

continue to rationalize and refine the remaining service offerings in this segment to ensure that they are aligned with the Company's long-term strategic growth plan. As part of the rationalization of our Adjacent Services offerings, on October 1, 2014 we sold our Chicago, Illinois-based consulting practice.

Healthcare Claims Recovery Audit Services revenue decreased by $5.3 million, or 97.3%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, revenue decreased by $14.7 million, or 90.4%, compared to the same period in 2013. Our Healthcare Claims Recovery Audit Services revenue includes revenue from our participation in the Medicare RAC program. The decreases in revenue in the three and nine-month periods are primarily due to audit limitations imposed on all Medicare RAC program contractors. As disclosed in our Form 10-K for the year ended December 31, 2013, we have withdrawn from the Medicare RAC program rebid process, and auditing under the current Medicare RAC program contracts remains severely restricted. We anticipate that revenue in our Healthcare Claims Recovery Audit Services segment will continue to decline throughout the remainder of 2014 with minimal revenue expected in the fourth quarter of 2014.

Cost of Revenue (“COR”). COR consists principally of commissions and other forms of variable compensation we pay to our auditors based primarily on the level of overpayment recoveries and/or profit margins derived therefrom, fixed auditor salaries, compensation paid to various types of hourly support staff and salaries for operational and client service managers for our recovery audit and our Adjacent Services businesses, as well as certain information technology services and allocated corporate data center costs. COR also includes other direct and indirect costs incurred by these personnel, including office rent, travel and entertainment, telephone, utilities, maintenance and supplies and clerical assistance. A portion of COR is variable and will increase or decrease with increases or decreases in revenue.

COR was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Recovery Audit Services – Americas	$	17,074	$	16,920	$	50,148	$	49,255
Recovery Audit Services – Europe/Asia-Pacific	7,608		8,423		23,698		26,203
Adjacent Services	3,284		2,907		9,168		9,181
Healthcare Claims Recovery Audit Services	715		3,553		4,443		11,224
Total	$	28,681	$	31,803	$	87,457	$	95,863

COR as a percentage of revenue for Recovery Audit Services – Americas was 59.8% and 52.3% for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, COR as a percentage of revenue for Recovery Audit Services – Americas was 62.4% and 56.0%, respectively. The increases in COR as a percentage of revenue for the three and nine months ended September 30, 2014 compared to the same periods in 2013 are primarily due to the fixed portion of our costs not decreasing in proportion to decreases in revenue, and personnel we added to extend our service offerings into new areas, such as Contract Compliance, and expand into new industry segments, such as Oil and Gas.

COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific was 71.0% and 70.1% for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific was 72.3% and 77.5%, respectively. The increase in COR as a percentage of revenue for the three-month period primarily resulted from investments made to service new industries, as well as the revenue decrease in the segment. The decrease in COR as a percentage of revenue for the nine-month period primarily resulted from cost reductions, primarily compensation-related, in our European operations as we continue to implement our service delivery model changes in that geographic region.

The higher COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific (71.0% for the third quarter of 2014 and 72.3% for the nine months ended September 30, 2014) compared to Recovery Audit Services – Americas (59.8% for the third quarter of 2014 and 62.4% for the nine months ended September 30, 2014) is primarily due to differences in service delivery models, scale and geographic fragmentation. The Recovery Audit Services – Europe/Asia-Pacific segment generally serves fewer clients in each geographic market and on average generates lower revenue per client than those served by the Company’s Recovery Audit Services – Americas segment.

COR as a percentage of revenue for Adjacent Services was 91.6% and 80.2% for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, COR as a percentage of revenue for Adjacent Services was 112.5% and 85.8%, respectively. The increases in COR as a percentage of revenue for Adjacent Services

16

are primarily due to the fixed portion of our costs not decreasing in line with the decreases in revenue in this segment. COR increased 13.0% and declined 0.1% in the three and nine months ended September 30, 2014, respectively, compared to the same periods in 2013. The increase in COR for the three-month period is primarily attributable to an increase in billable expenses related to a new advisory project in Europe. The decrease in COR for the nine-month period is primarily attributable to certain cost reduction measures, which we expect will have a greater impact on COR in the remainder of 2014 and 2015. The sale of our Chicago, Illinois-based consulting practice will further reduce COR in future periods.

Healthcare Claims Recovery Audit Services COR includes costs associated with the Medicare RAC program subcontracts. COR exceeded revenue in the three and nine months ended September 30, 2014 by $0.6 million and $2.9 million, respectively. Revenue exceeded COR in the three and nine months ended September 30, 2013 by $1.9 million and $5.0 million, respectively. These changes in COR compared to revenue for Healthcare Claims Recovery Audit Services are primarily due to the significant decrease in revenue in this segment, partially offset by reductions in personnel and related costs.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses of the Recovery Audit Services, Adjacent Services, and Healthcare Claims Recovery Audit Services segments include the expenses of sales and marketing activities, human resources, legal, accounting, administration, foreign currency transaction gains and losses other than those relating to short-term intercompany balances and gains and losses on asset disposals. Corporate Support SG&A represents the unallocated portion of SG&A expenses which are not specifically attributable to our segment activities and include the expenses of certain information technology services, the corporate data center, human resources, legal, accounting, treasury, administration and stock-based compensation charges.

SG&A expenses were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Recovery Audit Services – Americas	$	2,502	$	3,995	$	8,320	$	10,726
Recovery Audit Services – Europe/Asia-Pacific	1,610		1,726		5,350		3,905
Adjacent Services	326		719		1,838		2,499
Healthcare Claims Recovery Audit Services	540		901		1,717		2,416
Subtotal for reportable segments	4,978		7,341		17,225		19,546
Corporate Support	5,514		5,676		14,280		15,680
Total	$	10,492	$	13,017	$	31,505	$	35,226

Recovery Audit Services – Americas SG&A decreased by $1.5 million, or 37.4%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, SG&A decreased$2.4 million, or 22.4%, from the comparable period in 2013. These decreases are primarily due to both cost reduction efforts in 2014 and the 2013 periods and sales commissions for a project that we completed in 2013 with no comparable expenses in the 2014 periods, partially offset by increased severance costs and information technology costs in the 2014 periods.

Recovery Audit Services – Europe/Asia-Pacific SG&A decreased$0.1 million, or 6.7%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, SG&A increased$1.4 million, or 37.0%, from the comparable period in 2013. The nine-month period increase is primarily due to the 2013 period including fair value adjustments recorded to reduce the acquisition-related contingent consideration payable for a prior acquisition and the reversal of provisions for bad debts with no comparable benefits in the 2014 period, as well as higher transformation severance costs we incurred in the 2014 periods to implement the service delivery model changes in Europe.

Adjacent Services SG&A decreased$0.4 million, or 54.7%, in the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, SG&A decreased$0.7 million, or 26.5%, from the comparable period in 2013. The decreases in the three and nine-month periods are primarily due to cost reductions in nearly all expenses other than severance costs. The nine-month 2014 period also included a charge for an adjustment to contingent earn-out consideration related to a prior acquisition.

Healthcare Claims Recovery Audit Services SG&A decreased$0.4 million, or 40.1%, in the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, SG&A decreased$0.7 million, or 28.9%, from the comparable period in 2013. These decreases are primarily due to cost reductions in the 2014 periods, as well as the 2013 nine-month period including costs we incurred in connection with the proposal we submitted in April 2013 for a new contract in the Medicare RAC program, with no similar costs in the 2014 period.

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Corporate Support SG&A decreased$0.2 million, or 2.9%, in the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, Corporate Support SG&A decreased by $1.4 million, or 8.9%, from the comparable period in 2013. The decrease in the nine-month period is primarily due to lower stock-based compensation expense and lower payroll and related expenses in the 2014 period resulting from our cost reduction efforts.

Depreciation of property and equipment. Depreciation of property and equipment was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Recovery Audit Services – Americas	$	1,111	$	1,414	$	3,612	$	4,138
Recovery Audit Services – Europe/Asia-Pacific	150		124		445		362
Adjacent Services	145		167		463		476
Healthcare Claims Recovery Audit Services	22		329		176		1,093
Total	$	1,428	$	2,034	$	4,696	$	6,069

The overall decreases in depreciation relate primarily to lower depreciable asset balances resulting from reduced purchase of depreciable assets in 2014 and the impairment charges we recorded in the fourth quarter of 2013. We expect similar year over year decreases through the remainder of 2014.

Amortization of intangible assets. Amortization of intangible assets was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Recovery Audit Services – Americas	$	500	$	698	$	1,501	$	2,094
Recovery Audit Services – Europe/Asia-Pacific	299		323		911		1,171
Adjacent Services	96		183		288		547
Total	$	895	$	1,204	$	2,700	$	3,812

The decreases in amortization expense are primarily due to the 2013 periods including greater amortization of intangible assets recorded in connection with the acquisitions we completed over the last few years. We expect amortization expense to continue to decline unless we complete additional acquisitions.

Foreign Currency Transaction (Gains) Losses on Short-Term Intercompany Balances. Foreign currency transaction gains and losses on short-term intercompany balances result from fluctuations in the exchange rates for foreign currencies and the U.S. dollar and the impact of these fluctuations, primarily on balances payable by our foreign subsidiaries to their U.S. parent. Substantial changes from period to period in foreign currency exchange rates may significantly impact the amount of such gains and losses. The strengthening of the U.S. dollar relative to other currencies results in recorded losses on short-term intercompany balances receivable from our foreign subsidiaries while the relative weakening of the U.S. dollar results in recorded gains. In the three months ended September 30, 2014, we recorded foreign currency transaction losses of $1.2 million on short-term intercompany balances. In the three months ended September 30, 2013 we recorded foreign currency transaction gains of $0.6 million on short-term intercompany balances. In the nine months ended September 30, 2014, we recorded foreign currency transaction losses of $1.1 million on short-term intercompany balances. In the nine months ended September 30, 2013, we recorded foreign currency transaction gains of $0.1 million on short-term intercompany balances.

Net Interest Expense (Income). Net interest income was less than $0.1 million for the three months ended September 30, 2014 and net interest expense for the three months ended September 30, 2013 was $0.1 million. Net interest income was less than $0.1 million for the nine months ended September 30, 2014 and net interest income for the nine months ended September 30, 2013 was $0.1 million. Net interest income in the nine months ended September 30, 2013 was primarily due to the reversal of $0.8 million of accruals made in prior years for interest on uncertain tax positions. Excluding these accrual reversals, the change in net interest expense in the nine months ended September 30, 2014 is due to lower interest expense associated with business acquisition obligations, lower accruals for interest on uncertain tax positions and lower interest expense on debt outstanding, given no outstanding bank debt in the 2014 period.

Income Tax Expense. Our income tax expense amounts as reported in the accompanying Condensed Consolidated Financial Statements (Unaudited) do not reflect amounts that normally would be expected due to several factors. The most significant of these factors is that for U.S. tax reporting purposes we have net operating loss carryforwards and other tax

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attributes which created deferred tax assets on our balance sheet. We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. Generally, these factors result in our recording no net income tax expense or benefit relating to our operations in the United States. Reported income tax expense for the three and nine months ended September 30, 2014 and 2013 primarily resulted from taxes on the income of certain of our foreign subsidiaries. We also recorded the reversal of $0.5 million of accruals made in previous years for uncertain tax positions in the nine months ended September 30, 2013.

Adjusted EBITDA. 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), tangible and 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.

Reconciliations of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA for the periods included in this report are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net income (loss)	$	(239	)	$	4,877		$	(5,381	)	$	6,211
Income tax expense	554			1,029			853			1,671
Interest expense (income), net	(44		)	75			(33		)	(89		)
EBIT	271			5,981			(4,561		)	7,793
Depreciation of property and equipment	1,428			2,034			4,696			6,069
Amortization of intangible assets	895			1,204			2,700			3,812
EBITDA	2,594			9,219			2,835			17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	1,221			(636		)	1,073			(54		)
Acquisition-related charges	—			706			249			231
Transformation severance and related expenses	413			161			2,352			778
Stock-based compensation	1,405			1,304			3,409			3,777
Adjusted EBITDA	$	5,633		$	10,754		$	9,918		$	22,406

Acquisition-related charges decreased by $0.7 million and increased by less than $0.1 million for the three and nine months ended September 30, 2014, respectively, compared to the same periods in 2013. The decrease in the three-month period is due to the 2013 period including a charge for an adjustment to contingent earn-out consideration related to a prior acquisition, while there were no acquisition-related charges for the 2014 period.

Transformation severance and related expenses increased$0.3 million for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, transformation severance and related expenses increased$1.6 million from the comparable period in 2013. Transformation severance and related expenses fluctuate with the implementation of our business strategy, including our Next-Generation Recovery Audit service delivery model, the wind-down of our Medicare RAC program subcontracts, and the rationalization of certain service offerings in our Adjacent Services segment. We expect to continue to incur these costs through the remainder of 2014.

Stock-based compensation increased$0.1 million, or 7.7%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, stock-based compensation decreased$0.4 million, or 9.7%, from the comparable period in 2013. The decrease in the nine-month period is primarily due to the 2013 period including expenses for stock awards for certain executives that separated from the Company, with lower comparable expenses in the 2014 periods, and the relatively lower fair value of options granted as part of the annual equity grant to employees.

We include a detailed calculation of Adjusted EBITDA by segment in Note D of “Notes to Consolidated Financial Statements” in Item 1 of this Form 10-Q. A summary of Adjusted EBITDA by segment for the three and nine months ended September 30, 2014 and 2013 is as follows (in thousands):

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Recovery Audit Services – Americas	$	9,018		$	12,132		$	22,419		$	29,105
Recovery Audit Services – Europe/Asia-Pacific	1,497			1,916			4,313			3,381
Adjacent Services	(6		)	124			(2,211		)	(750		)
Healthcare Claims Recovery Audit Services	(1,085		)	954			(4,178		)	2,573
Subtotal for reportable segments	9,424			15,126			20,343			34,309
Corporate Support	(3,791		)	(4,372		)	(10,425		)	(11,903		)
Total	$	5,633		$	10,754		$	9,918		$	22,406

Recovery Audit Services – Americas Adjusted EBITDA decreased$3.1 million, or 25.7%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, Recovery Audit Services – Americas Adjusted EBITDA decreased$6.7 million, or 23.0%, from the comparable period in 2013. These decreases resulted primarily from decreases in revenue and increases in COR, partially offset by lower SG&A expenses.

Recovery Audit Services – Europe/Asia-Pacific Adjusted EBITDA decreased by $0.4 million, or 21.9%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, Recovery Audit Services – Europe/Asia-Pacific Adjusted EBITDA increased by $0.9 million, or 27.6%, from the comparable period in 2013. The three-month comparable period decrease resulted primarily from a decline in revenue combined with COR not declining at the same rate due to fixed payroll related costs. The nine-month comparable period increase is due to lower COR as a result of our cost reduction efforts, partially offset by a favorable fair value adjustment for contingent consideration of an acquisition-related liability in the 2013 period.

Adjacent Services Adjusted EBITDA decreased$0.1 million for the three months ended September 30, 2014, compared to the same period in 2013. For the nine months ended September 30, 2014, Adjacent Services Adjusted EBITDA decreased$1.5 million from the comparable period in 2013. These decreases are primarily due to the decreases in revenue in this segment with lower decreases in COR and SG&A expenses.

Healthcare Claims Recovery Audit Services Adjusted EBITDA decreased$2.0 million for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, Healthcare Claims Recovery Audit Services Adjusted EBITDA decreased$6.8 million from the comparable period in 2013. These decreases are primarily due to the decreases in revenue in this segment with lower decreases in COR and SG&A expenses.

Corporate Support Adjusted EBITDA improved by $0.6 million, or 13.3%, for the three months ended September 30, 2014 compared to the same period in 2013. For the nine months ended September 30, 2014, Corporate Support Adjusted EBITDA improved by $1.5 million, or 12.4%, from the comparable period in 2013. These improvements in the three- and nine-month periods are primarily due to lower payroll and related expenses in the 2014 periods.

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Liquidity and Capital Resources

As of September 30, 2014, we had $26.3 million in cash and cash equivalents, with $8.5 million held in the U.S. and the remainder outside of the U.S. We had no borrowings outstanding against the $20.0 million of availability under our revolving credit facility.

Operating Activities. Net cash provided by operating activities was $7.1 million during the nine months ended September 30, 2014. Net cash provided by operating activities was $10.3 million during the nine months ended September 30, 2013. These amounts consist of two components, specifically, net income (loss) adjusted for certain non-cash items (such as depreciation, amortization, stock-based compensation expense, deferred income taxes, and foreign currency transaction gains and losses on short-term intercompany balances) and changes in assets and liabilities, primarily working capital, as follows (in thousands):

	Nine Months Ended September 30,
	2014			2013
Net income (loss)	$	(5,381	)	$	6,211
Adjustments for certain non-cash items	11,012			13,856
	5,631			20,067
Changes in operating assets and liabilities	1,499			(9,772		)
Net cash provided by operating activities	$	7,130		$	10,295

The reduction in net cash provided by operating activities for the 2014 nine-month period compared to the 2013 nine-month period is primarily attributable to the $11.2 million reduction in operating income which was primarily driven by lower revenue. This reduction was significantly offset by changes in operating assets and liabilities, primarily working capital improvements made during the first nine months of 2014. We include an itemization of these changes in our Condensed Consolidated Statements of Cash Flows (Unaudited) in Item 1 of this Form 10-Q.

Investing Activities. Net cash used for property and equipment capital expenditures was $3.6 million and $4.5 million during the nine months ended September 30, 2014 and 2013, respectively. These capital expenditures primarily related to investments we made to upgrade our information technology infrastructure and enhance our Next-Generation Recovery Audit service delivery model.

Capital expenditures are discretionary and we currently expect full year 2014 capital expenditures to be below full year 2013 levels. We may alter our capital expenditure plans should we experience changes in our operating results which cause us to adjust our operating plans.

Financing Activities. Net cash used in financing activities was $20.1 million for the nine months ended September 30, 2014. Net cash used in financing activities was $0.7 million for the nine months ended September 30, 2013. The increase in net cash used in financing activities in the nine months ended September 30, 2014 compared to same period in 2013 is primarily due to the 2013 period including $4.1 million of net proceeds we received from the issuance of common stock in January 2013 with no comparable amount in the 2014 period, and the 2014 period including $20.0 million of repurchases of our common stock as a part of our stock repurchase program. The net proceeds from the 2013 stock issuance related to the exercise of the overallotment option for an additional 685,375 shares by the underwriters of our December 2012 public offering (see Common Stock Offering below). We made mandatory payments of $2.3 million on our term loan in the nine-month period ended September 30, 2013, but had no bank debt outstanding and no required bank debt payments in the nine-month period ended September 30, 2014. Proceeds from stock option exercises were $2.8 million and $0.6 million for the nine months ended September 30, 2014 and 2013, respectively. Payments of deferred acquisition consideration of $2.2 million and $1.9 million during the nine months ended September 30, 2014 and 2013, respectively, include earn-out payments we made relating to the acquisition of Business Strategy, Inc. and deferred compensation relating to the acquisition of Etesius Limited.

Secured Credit Facility

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust term loan required quarterly principal payments of $0.8 million beginning in March 2010, and a final principal payment of $3.0 million due in January 2014 that we paid in December 2013. The SunTrust credit facility is guaranteed by the Company and all of its material domestic subsidiaries and secured by substantially all of the assets of the Company.

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On January 17, 2014, we entered into an amendment of the SunTrust credit facility that increased the committed revolving credit facility from $15.0 million to $25.0 million, lowered the applicable margin to a fixed rate of 1.75%, eliminated the provision limiting availability under the revolving credit facility based on eligible accounts receivable and extended the scheduled maturity of the revolving credit facility to January 16, 2015 (subject to earlier termination as provided therein). As of September 30, 2014, we had no outstanding borrowings under the SunTrust revolver. With the provision of a fixed applicable margin of 1.75% per the amendment of the SunTrust credit facility, the interest rate that would have applied at September 30, 2014 had any borrowings been outstanding was approximately 1.90%. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the $25.0 million SunTrust revolving credit facility.

Prior to the January 2014 amendment to the SunTrust credit facility, amounts available under the SunTrust revolver were based on eligible accounts receivable and other factors. Interest on both the revolver and term loan was payable monthly and accrued at an index rate using the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varied from 2.25% per annum to 3.5% per annum, was dependent on our consolidated leverage ratio, and was determined in accordance with a pricing grid under the SunTrust loan agreement.

The SunTrust credit facility, as amended, requires as of the end of each fiscal quarter, the Company to have achieved Consolidated Adjusted EBITDA (as defined in the agreement) of at least $18.0 million for the immediately preceding four quarters. As of June 30, 2014, the Company's Consolidated Adjusted EBITDA for the preceding four quarters was $17.0 million, and therefore the Company was not in compliance with the covenant, although there were no amounts outstanding under the credit facility as of that date. On August 7, 2014, the Company entered into an amendment of the SunTrust credit facility that provided a waiver of the non-compliance with the minimum Consolidated Adjusted EBITDA covenant for the quarter ended June 30, 2014, reduced the minimum Consolidated Adjusted EBITDA requirement to $12.0 million, modified the Fixed Charge Coverage Ratio definition for the quarter ending September 30, 2014 by excluding certain payments, and reduced the maximum borrowing amount under the senior credit facility to $20.0 million. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2014.

We believe that we will have sufficient borrowing capacity and cash generated from operations to fund our capital and operational needs for at least the next twelve months.

Common Stock Offering

On December 11, 2012, we closed our public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the underwriters elected to exercise an overallotment option for an additional 687,385 shares, and we completed the sale of these additional shares on January 8, 2013. The net proceeds to us from the exercise of the overallotment option, after deducting underwriting discounts and commissions and offering expenses, were $4.1 million.

Stock Repurchase Program

On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we may repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. On March 25, 2014, our Board of Directors authorized a $10.0 million increase to the stock repurchase program. From the February 2014 announcement of the Company’s current stock repurchase program through September 30, 2014, the Company has repurchased 3.1 million shares, or 10.4%, of its common stock outstanding on the date of the announcement, for an aggregate cost of $20.0 million. These shares were retired and accounted for as a reduction to Shareholders' equity in the Condensed Consolidated Balance Sheet (Unaudited). Direct costs incurred to acquire the shares are included in the total cost of the shares.

On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the stock repurchase program, increasing the total stock repurchase program since its inception to $40.0 million, and extended the duration of the program to December 31, 2015. The timing and amount of repurchases, if any, will depend upon the Company’s stock price, the amount of the Company’s excess available cash, regulatory requirements, and other corporate considerations. The Company may initiate, suspend or discontinue purchases under the stock repurchase program at any time.

Off-Balance Sheet Arrangements

As of September 30, 2014, the Company did not have any material off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of the SEC’s Regulation S-K.

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Critical Accounting Policies

We describe the Company’s significant accounting policies in Note 1 of Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. We consider certain of these accounting policies to be “critical” to the portrayal of the Company’s financial position and results of operations, as they require the application of significant judgment by management. As a result, they are subject to an inherent degree of uncertainty. We identify and discuss these “critical” accounting policies in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Management bases its estimates and judgments on historical experience and on various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, management evaluates its estimates and judgments, including those considered “critical”. Management has discussed the development, selection and evaluation of accounting estimates, including those deemed “critical,” and the associated disclosures in this Form 10-Q with the Audit Committee of the Board of Directors.

New and Recent Accounting Pronouncements

For information related to new and recently adopted accounting standards, see Note A – Basis of Presentation, in “Notes to Condensed Consolidated Financial Statements” in Item 1 of this Form 10-Q.

Forward-Looking Statements

Some of the information in this Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which statements involve substantial risks and uncertainties including, without limitation, statements regarding: (1) future results of operations or of the Company’s financial condition, (2) the adequacy of the Company’s current working capital and other available sources of funds, (3) the Company's goals and plans for the future, including its strategic initiatives and growth opportunities, (4) expectations regarding future revenue trends, and (5) the expected impact of the Company’s decision to withdraw from the Medicare RAC program rebid process. All statements that cannot be assessed until the occurrence of a future event or events should be considered forward-looking. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. Risks and uncertainties that may potentially impact these forward-looking statements include, without limitation, those set forth under Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and its other periodic reports filed with the Securities and Exchange Commission. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

There may be events in the future, however, that the Company cannot accurately predict or over which the Company has no control. The risks and uncertainties listed in this section, as well as any cautionary language in this Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of any of the events denoted above as risks and uncertainties and elsewhere in this Form 10-Q could have a material adverse effect on our business, financial condition and results of operations.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Market Risk. Our reporting currency is the U.S. dollar, although we transact business in various foreign locations and currencies. As a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we provide our services. Our operating results are exposed to changes in exchange rates between the U.S. dollar and the currencies of the other countries in which we operate. When the U.S. dollar strengthens against other currencies, the value of foreign functional currency revenue decreases. When the U.S. dollar weakens, the value of the foreign functional currency revenue increases. Overall, we are a net receiver of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar. We therefore are adversely affected by a stronger dollar relative to major currencies worldwide. During the three and nine months ended September 30, 2014, we recognized $3.5 million and $5.7 million, respectively, of operating income from operations located outside the U.S., virtually all of which was originally accounted for in currencies other than the U.S. dollar. Upon translation into U.S. dollars, such operating income would increase or decrease, assuming a hypothetical 10% change in weighted-average foreign currency exchange rates against the U.S. dollar, by approximately $0.4 million and $0.6 million for the three and nine months ended September 30, 2014, respectively. We currently do not have any arrangements in place to hedge our foreign currency risk.

Interest Rate Risk. Our interest income and expense are sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on our cash equivalents as well as interest paid on amounts outstanding under our revolving credit facility, if any. We had $20.0 million of borrowing availability under our revolving credit facility as of September 30, 2014, but had no amounts drawn under the revolving credit facility as of that date. Interest on our revolving credit facility is payable monthly and accrues at an index rate using the one-month LIBOR rate plus an applicable margin of 1.75%. Assuming full utilization of the revolving credit facility, a hypothetical 100 basis point change in interest rates applicable to the revolver would result in an approximate $0.2 million change in annual pre-tax income.

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Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2014.

There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risks facing the Company as described in the Company’s Form 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s current credit facility prohibits the payment of any cash dividends on the Company’s capital stock.

The following table sets forth information regarding the purchases of the Company’s equity securities made by or on behalf of the Company or any affiliated purchaser (as defined in Exchange Act Rule 10b-18) during the three-month period ended September 30, 2014:

2014	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
					(millions of dollars)
July 1 - July 31	532,079	$	6.50	532,079
August 1 - August 31	893,446	$	6.29	880,938
September 1 - September 30	—	$	—	—
	1,425,525	$	6.37	1,413,017	$	20.0

(a) Shares purchased during the quarter include shares surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock and shares from the Company's stock repurchase program.

(b) On February 21, 2014, our Board of Directors authorized a stock repurchase program under which we may repurchase up to $10.0 million of our common stock from time to time through March 31, 2015. On March 25, 2014, our Board of Directors authorized a $10.0 million increase to the stock repurchase program, bringing the total amount of its common stock that the Company may repurchase under the program to $20.0 million. From the February 2014 announcement through September 30, 2014, the Company repurchased a total of 3,117,277 shares under this program for an aggregate purchase price of $20.0 million. On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the stock repurchase program, increasing the total share repurchase program to $40.0 million, and extended the duration of the program to December 31, 2015. The timing and amount of repurchases, if any, will depend upon the Company’s stock price, economic and market conditions, regulatory requirements, and other corporate considerations. The Company may initiate, suspend or discontinue purchases under the stock repurchase program at any time.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

26

Item 6. Exhibits

Exhibit Number	Description
3.1	Restated Articles of Incorporation of the Registrant, as amended and corrected through August 11, 2006 (restated solely for the purpose of filing with the Commission) (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 17, 2006).
3.1.1	Articles of Amendment of the Registrant effective January 20, 2010 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on January 25, 2010).
3.2	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on December 11, 2007).
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-K for the year ended December 31, 2001).
4.2	See Restated Articles of Incorporation and Bylaws of the Registrant, filed as Exhibits 3.1 and 3.2, respectively.
10.1	Separation Agreement between the Registrant and James R. Shand dated August 14, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on August 20, 2014).
10.2	Separation Agreement between the Registrant and Robert B. Lee dated September 11, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on September 14, 2014).
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2014.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2014.
32.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended September 30, 2014.
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRGX GLOBAL, INC.
November 6, 2014	By:	/s/ Ronald E. Stewart
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)
November 6, 2014	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer, Controller and Treasurer (Principal Financial and Accounting Officer)

28

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Ronald E. Stewart, certify that:

1. I have reviewed this Form 10-Q of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 6, 2014	By:	/s/ Ronald E. Stewart
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Robert B. Lee, certify that:

1. I have reviewed this Form 10-Q of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 6, 2014	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer, Controller and Treasurer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PRGX Global, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald E. Stewart, President and Chief Executive Officer of the Company and I, Robert B. Lee, Chief Financial Officer and Treasurer, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of the undersigned’s knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 6, 2014	By:	/s/ Ronald E. Stewart
		Ronald E. Stewart
		President, Chief Executive Officer, Director (Principal Executive Officer)
November 6, 2014	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer, Controller and Treasurer (Principal Financial and Accounting Officer)

XML

Subsequent Events (Details) (USD $)	3 Months Ended	8 Months Ended	9 Months Ended	0 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2014	Oct. 24, 2014 Subsequent event [Member]	Oct. 01, 2014 Subsequent event [Member]	Oct. 01, 2014 Subsequent event [Member] Maximum [Member]
Subsequent Event [Line Items]
Proceeds from divestiture of business					$ 1,100,000	$ 900,000
Stock repurchase program, increase to authorized amount				20,000,000
Stock repurchase program, authorized amount				40,000,000.0
Stock repurchased during period (in shares)	1,413,017	3,100,000	3,117,277
Stock repurchased during period, percentage of outstanding shares		10.40%
Stock repurchased during period, amount	$ 9,000,000	$ 20,000,000	$ 20,000,000

XML

Stock-Based Compensation (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
2008 Equity Incentive Plan [Member] | Director group [Member]
Summary of nonvested stock awards granted
Vesting Period	1 year or less		1 year or less
Weighted Average Grant Date Fair Value (usd per share)	$ 1.89		$ 2.00
2008 Equity Incentive Plan [Member] | Director Group 1 [Member]
Summary of nonvested stock awards granted
Vesting Period			3 years
Weighted Average Grant Date Fair Value (usd per share)			$ 3.76
2008 Equity Incentive Plan [Member] | Employee [Member]
Summary of nonvested stock awards granted
Vesting Period	3 years	[1]	3 years
Weighted Average Grant Date Fair Value (usd per share)	$ 1.81	[1]	$ 2.44
2008 Equity Incentive Plan [Member] | Employee inducement [Member]
Summary of nonvested stock awards granted
Vesting Period	3 years	[2]	3 years	[3]
Weighted Average Grant Date Fair Value (usd per share)	$ 1.71	[2]	$ 3.81	[3]
Restricted Stock and Restricted Stock Units [Member] | Director group [Member]
Summary of nonvested stock awards granted
Vesting Period	1 year
Restricted Stock and Restricted Stock Units [Member] | Employee [Member]
Summary of nonvested stock awards granted
Vesting Period	3 years
Restricted Stock and Restricted Stock Units [Member] | 2008 Equity Incentive Plan [Member] | Director group [Member]
Summary of nonvested stock awards granted
Grantee Type	Director group		Director group
No. of Shares Granted (shares)	51,276		75,490
Vesting Period	1 year or less		1 year or less
Weighted Average Grant Date Fair Value (usd per share)	$ 6.45		$ 5.67
Restricted Stock and Restricted Stock Units [Member] | 2008 Equity Incentive Plan [Member] | Director Group 1 [Member]
Summary of nonvested stock awards granted
Grantee Type			Director group
No. of Shares Granted (shares)			17,092
Vesting Period			3 years
Weighted Average Grant Date Fair Value (usd per share)			$ 6.83
Restricted Stock and Restricted Stock Units [Member] | 2008 Equity Incentive Plan [Member] | Employee [Member]
Summary of nonvested stock awards granted
Grantee Type	Employee group		Employee group
No. of Shares Granted (shares)	120,000		449,875
Vesting Period	3 years		3 years
Weighted Average Grant Date Fair Value (usd per share)	$ 6.36		$ 5.58
Restricted Stock and Restricted Stock Units [Member] | 2008 Equity Incentive Plan [Member] | Employee inducement [Member]
Summary of nonvested stock awards granted
Grantee Type	Employee inducement (1)	[4]	Employee inducement (2)	[5]
No. of Shares Granted (shares)	70,000	[4]	20,000	[5]
Vesting Period	3 years	[4]	3 years	[5]
Weighted Average Grant Date Fair Value (usd per share)	$ 6.04	[4]	$ 7.14	[5]

[1] The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

[2] The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on

[3] The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

[4] The Company granted nonvested stock awards (restricted stock) outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company.

[5] The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

XML

Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company currently has three stock-based compensation plans under which awards have been granted: (1) the Stock Incentive Plan; (2) the 2006 Management Incentive Plan (“2006 MIP”); and (3) the 2008 Equity Incentive Plan (“2008 EIP”) (collectively, the “Plans”). We describe the Plans in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2013.

2008 EIP Awards

Stock options granted under the 2008 EIP generally have a term of six to seven years and vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes stock option grants during the nine months ended September 30, 2014 and 2013:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45	$	1.89
Employee group (1)	1,480,000	3 years	$	6.99	$	1.81
Employee inducement (2)	270,000	3 years	$	6.64	$	1.71
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (3)	20,000	3 years	$	7.14	$	3.81

(1) The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on September 11, 2016 and $7.24 for the options that vest on September 11, 2017.

(3) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes nonvested stock awards granted during the nine months ended September 30, 2014 and 2013:

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45
Employee group	120,000	3 years	$	6.36
Employee inducement (1)	70,000	3 years	$	6.04
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (2)	20,000	3 years	$	7.14

(1) The Company granted nonvested stock awards (restricted stock) outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company.

(2) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

2006 MIP Performance Units

On June 19, 2012, seven senior officers of the Company were granted 154,264 Performance Units under the 2006 MIP, comprising all of the then remaining available awards under the 2006 MIP. The awards had an aggregate grant date fair value of $1.2 million and vest ratably over three years. Upon vesting, the Performance Units will be settled by the issuance of Company common stock equal to 60% of the number of Performance Units being settled and the payment of cash in an amount equal to 40% of the fair market value of that number of shares of common stock equal to the number of Performance Units being settled. During the nine months ended September 30, 2014, an aggregate of 27,546 Performance Units were settled which resulted in the issuance of 16,526 shares of common stock and cash payments totaling $0.1 million. During the nine months ended September 30, 2013, an aggregate of 52,334 Performance Units were settled which resulted in the issuance of 31,399 shares of common stock and cash payments totaling $0.1 million. Since the June 19, 2012 grant date to September 30, 2014, an aggregate of 121,210 Performance Units were settled by three current executive officers and three former executive officers, and 16,524 Performance Units were forfeited by one former executive officer and currently are available to be granted. Such settlements resulted in the issuance of 69,438 shares of common stock and cash payments totaling $0.3 million from the grant date through September 30, 2014. As of September 30, 2014, a total of 16,530 Performance Units were outstanding, none of which were vested.

Selling, general and administrative expenses for the three months ended September 30, 2014 and 2013 include $1.4 million and $1.3 million, respectively, related to stock-based compensation charges. Selling, general and administrative expenses for the nine months ended September 30, 2014 and 2013 include $3.4 million and $3.8 million, respectively, related to stock-based compensation charges. At September 30, 2014, there was $6.7 million of unrecognized stock-based compensation expense related to stock options, restricted stock awards, restricted stock unit awards, and Performance Unit awards which we expect to recognize over a weighted-average period of 2.2 years.

XML

Cash and Cash Equivalents (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Line of Credit Facility [Line Items]
Cash and cash equivalents included short-term investments	$ 12.5	$ 24.6
Foreign Banks [Member]
Line of Credit Facility [Line Items]
Cash and cash equivalents included short-term investments	$ 6.4	$ 4.4

XML

Operating Segments and Related Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Segment information
Revenue	$ 42,988	$ 53,403	$ 122,870	$ 148,709
Net income (loss)	(239)	4,877	(5,381)	6,211
Income tax expense	554	1,029	853	1,671
Interest expense (income), net	(44)	75	(33)	(89)
EBIT	271	5,981	(4,561)	7,793
Depreciation of property and equipment	1,428	2,034	4,696	6,069
Amortization of intangible assets	895	1,204	2,700	3,812
EBITDA	2,594	9,219	2,835	17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	1,221	(636)	1,073	(54)
Acquisition-related charges (benefits)		706	249	231
Transformation severance and related expenses	413	161	2,352	778
Stock-based compensation	1,405	1,304	3,409	3,777
Adjusted EBITDA	5,633	10,754	9,918	22,406
Recovery Audit Services - Americas [Member]
Segment information
Revenue	28,550	32,365	80,377	87,999
EBIT	7,155	9,418	16,632	21,643
Depreciation of property and equipment	1,111	1,414	3,612	4,138
Amortization of intangible assets	500	698	1,501	2,094
EBITDA	8,766	11,530	21,745	27,875
Foreign currency transaction (gains) losses on short-term intercompany balances	208	(80)	164	143
Acquisition-related charges (benefits)		662		987
Transformation severance and related expenses	44	20	510	100
Adjusted EBITDA	9,018	12,132	22,419	29,105
Recovery Audit Services - Europe/Asia-Pacific [Member]
Segment information
Revenue	10,708	12,009	32,792	33,796
EBIT	(151)	1,987	1,309	2,354
Depreciation of property and equipment	150	124	445	362
Amortization of intangible assets	299	323	911	1,171
EBITDA	298	2,434	2,665	3,887
Foreign currency transaction (gains) losses on short-term intercompany balances	1,192	(574)	1,079	(199)
Acquisition-related charges (benefits)		0		(900)
Transformation severance and related expenses	7	56	569	593
Adjusted EBITDA	1,497	1,916	4,313	3,381
Adjacent Services [Member]
Segment information
Revenue	3,586	3,625	8,150	10,705
EBIT	(265)	(351)	(3,607)	(1,998)
Depreciation of property and equipment	145	167	463	476
Amortization of intangible assets	96	183	288	547
EBITDA	(24)	(1)	(2,856)	(975)
Acquisition-related charges (benefits)		44	249	144
Transformation severance and related expenses	18	81	396	81
Adjusted EBITDA	(6)	124	(2,211)	(750)
Healthcare Claims Recovery Audit Services [Member]
Segment information
Revenue	144	5,404	1,551	16,209
EBIT	(1,133)	621	(4,785)	1,476
Depreciation of property and equipment	22	329	176	1,093
EBITDA	(1,111)	950	(4,609)	2,569
Transformation severance and related expenses	26	4	431	4
Adjusted EBITDA	(1,085)	954	(4,178)	2,573
Corporate Support [Member]
Segment information
EBIT	(5,335)	(5,694)	(14,110)	(15,682)
EBITDA	(5,335)	(5,694)	(14,110)	(15,682)
Foreign currency transaction (gains) losses on short-term intercompany balances	(179)	18	(170)	2
Transformation severance and related expenses	318		446
Stock-based compensation	1,405	1,304	3,409	3,777
Adjusted EBITDA	$ (3,791)	$ (4,372)	$ (10,425)	$ (11,903)

XML

Debt (Details Textual) (USD $)	9 Months Ended		9 Months Ended	0 Months Ended	9 Months Ended
	Sep. 30, 2014	Jan. 17, 2014	Sep. 30, 2014 SunTrust Bank [Member]	Jan. 19, 2010 Sun Trust Term Loan [Member]	Sep. 30, 2014 Sun Trust Term Loan [Member]	Sep. 30, 2014 Sun Trust Term Loan [Member] Minimum [Member] LIBOR [Member]	Sep. 30, 2014 Sun Trust Term Loan [Member] Maximum [Member] LIBOR [Member]	Sep. 30, 2014 Sun Trust Revolving Credit Facility [Member]	Aug. 07, 2014 Sun Trust Revolving Credit Facility [Member]	Jun. 30, 2014 Sun Trust Revolving Credit Facility [Member]	Jan. 17, 2014 Sun Trust Revolving Credit Facility [Member]	Jan. 19, 2010 Sun Trust Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Four-year revolving credit and term loan agreement			Jan. 19, 2010
Period of term loan and the revolving credit facility				4 years
Committed revolving credit facility				$ 15,000,000.0					$ 20,000,000		$ 25,000,000.0	$ 15,000,000.0
Committed term loan				15,000,000.0
Frequency of payment			Monthly		Quarterly
Term loan required quarterly principal payments					800,000
First payment on the term loan					Mar. 31, 2010
Term loan final principal payment					3,000,000
Revolving credit facility and term loan interest rate (percent)		1.75%						1.90%
Revolving credit facility outstanding								0
Applicable margin (percent)						2.25%	3.50%	1.75%
Revolving credit facility commitment fee (percent)								0.50%
SunTrust term loan, line of credit facility, frequency of payment			Quarterly
Index rate used as reference for interest rate on revolver and term loan			One-month LIBOR rate
Credit facility, covenant compliance	The SunTrust credit facility, as amended, requires as of the end of each fiscal quarter, the Company to have achieved Consolidated Adjusted EBITDA (as defined in the agreement) of at least $18.0 million for the immediately preceding four quarters. As of June 30, 2014, the Company's Consolidated Adjusted EBITDA for the preceding four quarters was $17.0 million, and therefore the Company was not in compliance with the covenant, although there were no amounts outstanding under the credit facility as of that date. On August 7, 2014, the Company entered into an amendment of the SunTrust credit facility that provided a waiver of the non-compliance with the minimum Consolidated Adjusted EBITDA covenant for the quarter ended June 30, 2014, reduced the minimum Consolidated Adjusted EBITDA requirement to $12.0 million, modified the Fixed Charge Coverage Ratio definition for the quarter ending September 30, 2014 by excluding certain payments, and reduced the maximum borrowing amount under the senior credit facility to $20.0 million. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2014.
Credit facility, covenant for minimum adjusted EBITDA									12,000,000	18,000,000
Credit facility, covenant, adjusted EBITDA, actual										$ 17,000,000

XML

Fair Value of Financial Instruments (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Bank Loan Obligations [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Fair value of long term debt	$ 0
Business Acquisition Obligations [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Fair value of long term debt	$ 0	$ 3,200,000

XML

Earnings (Loss) Per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

Earnings (Loss) Per Common Share

The following tables set forth the computations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
Basic earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Basic earnings (loss) per common share	$	(0.01	)	$	0.17	$	(0.18	)	$	0.21

	Three Months Ended September 30,					Nine Months Ended September 30,
Diluted earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Incremental shares from stock-based compensation plans	—			419		—			442
Denominator for diluted earnings (loss) per common share	27,744			29,815		29,203			29,517
Diluted earnings (loss) per common share	$	(0.01	)	$	0.16	$	(0.18	)	$	0.21

Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 3.8 million shares and antidilutive Performance Units issuable under the Company's 2006 Management Incentive Plan that totaled less than 0.1 million shares from the computation of diluted earnings (loss) per common share for the three and nine months ended September 30, 2014. Weighted-average shares outstanding excludes antidilutive shares underlying options that totaled 1.6 million shares, and there were no antidilutive Performance Units related to the Company's 2006 Management Incentive Plan excluded from the computation of diluted earnings (loss) per common share for the three and nine months ended September 30, 2013. As a result of the net loss for the three and nine months ended September 30, 2014, all shares underlying stock options and Performance Units were considered antidilutive. The number of common shares we used in the basic and diluted earnings (loss) per common share computations include nonvested restricted shares of 0.6 million and 0.7 million for the three and nine months ended September 30, 2014 and 2013, respectively, and nonvested restricted share units that we consider to be participating securities of 0.1 million and 0.2 million for the three and nine months ended September 30, 2014 and 2013, respectively.

On December 11, 2012, we closed a public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the underwriters elected to exercise an overallotment option for an additional 687,385 shares, and completed the additional sale on January 8, 2013. The net proceeds to us from the overallotment, after deducting underwriting discounts and commissions and offering expenses, were $4.1 million.

In partial satisfaction of a business acquisition obligation, we issued 187,620 shares of our common stock having a value of $1.3 million in the nine months ended September 30, 2014 and 217,155 shares of our common stock having a value of $1.4 million in the nine months ended September 30, 2013.

We repurchased 1,413,017 shares of our common stock during the three months ended September 30, 2014 for $9.0 million, and 3,117,277 shares of our common stock during the nine months ended September 30, 2014 for $20.0 million. There were no repurchases during the year ended December 31, 2013.

Pursuant to exercises of outstanding stock options, we issued 710,063 shares of our common stock having a value of $2.8 million in the nine months ended September 30, 2014 and 129,976 shares of our common stock having a value of $0.6 million in the nine months ended September 30, 2013. Stock option exercises during the nine-month period ended September 30, 2014 primarily consisted of exercises by former executive officers of the Company.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Reversed foreign income taxes accruals	$ 0.5

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Revenue	$ 42,988	$ 53,403	$ 122,870	$ 148,709
Operating expenses:
Cost of revenue	28,681	31,803	87,457	95,863
Selling, general and administrative expenses	10,492	13,017	31,505	35,226
Depreciation of property and equipment	1,428	2,034	4,696	6,069
Amortization of intangible assets	895	1,204	2,700	3,812
Total operating expenses	41,496	48,058	126,358	140,970
Operating income (loss)	1,492	5,345	(3,488)	7,739
Foreign currency transaction (gains) losses on short-term intercompany balances	1,221	(636)	1,073	(54)
Interest Income (Expense), Net	44	(75)	33	89
Income (loss) before income taxes	315	5,906	(4,528)	7,882
Income tax expense	554	1,029	853	1,671
Net income (loss)	$ (239)	$ 4,877	$ (5,381)	$ 6,211
Basic earnings (loss) per common share (usd per share)	$ (0.01)	$ 0.17	$ (0.18)	$ 0.21
Diluted earnings (loss) per common share (usd per share)	$ (0.01)	$ 0.16	$ (0.18)	$ 0.21
Weighted-average common shares outstanding:
Basic (shares)	27,744	29,396	29,203	29,075
Diluted (shares)	27,744	29,815	29,203	29,517

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ (5,381)	$ 6,211
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	7,396	9,881
Amortization of deferred loan costs	67	137
Stock-based compensation expense	3,409	3,777
Deferred income taxes	(933)	115
Foreign currency transaction (gains) losses on short-term intercompany balances	1,073	(54)
Changes in operating assets and liabilities:
Restricted cash	(64)	(62)
Billed receivables	(2,762)	1,705
Unbilled receivables	7,921	216
Prepaid expenses and other current assets	541	(139)
Other assets	15	24
Accounts payable and accrued expenses	(2,871)	(4,001)
Accrued payroll and related expenses	(445)	(5,305)
Refund liabilities	(1,058)	(566)
Deferred revenue	(265)	(341)
Noncurrent compensation obligations	414	285
Other long-term liabilities	73	(1,588)
Net cash provided by operating activities	7,130	10,295
Cash flows from investing activities:
Purchases of property and equipment, net of disposal proceeds	(3,574)	(4,544)
Net cash used in investing activities	(3,574)	(4,544)
Cash flows from financing activities:
Repayments of long-term debt	0	(2,250)
Payment of deferred loan costs	(104)	0
Restricted stock repurchased from employees for withholding taxes	(568)	(1,241)
Proceeds from option exercises	2,790	611
Payments of deferred acquisition consideration	(2,208)	(1,904)
Net proceeds from issuance of common stock	0	4,118
Repurchase of common stock	(20,000)	0
Net cash used in financing activities	(20,090)	(666)
Effect of exchange rates on cash and cash equivalents	(873)	(484)
Net (decrease) increase in cash and cash equivalents	(17,407)	4,601
Cash and cash equivalents at beginning of period	43,700	37,806
Cash and cash equivalents at end of period	26,293	42,407
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	80	488
Cash paid during the period for income taxes, net of refunds received	$ 2,405	$ 2,315

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Earnings (Loss) Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator:
Net income (loss)	$ (239)	$ 4,877	$ (5,381)	$ 6,211
Denominator:
Weighted-average common shares outstanding (shares)	27,744	29,396	29,203	29,075
Basic earnings (loss) per common share (in dollars per share)	$ (0.01)	$ 0.17	$ (0.18)	$ 0.21
Numerator:
Net income (loss)	$ (239)	$ 4,877	$ (5,381)	$ 6,211
Denominator:
Weighted-average common shares outstanding (shares)	27,744	29,396	29,203	29,075
Incremental shares from stock-based compensation plans (shares)	0	419	0	442
Denominator for diluted earnings (loss) per common share (shares)	27,744	29,815	29,203	29,517
Diluted earnings (loss) per common share (in dollars per share)	$ (0.01)	$ 0.16	$ (0.18)	$ 0.21

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Stock-Based Compensation (Details) (USD $)	9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
Director group [Member] | Equity Incentive Plan Year [Member]
Summary of stock option grants
Grantee Type	Director group		Director group
No. of Options Granted (shares)	51,276		75,490
Vesting Period	1 year or less		1 year or less
Weighted Average Exercise Price (usd per share)	$ 6.45		$ 5.67
Weighted Average Grant Date Fair Value (usd per share)	$ 1.89		$ 2.00
Director Group 1 [Member] | Equity Incentive Plan Year [Member]
Summary of stock option grants
Grantee Type			Director group
No. of Options Granted (shares)			17,092
Vesting Period			3 years
Weighted Average Exercise Price (usd per share)			$ 6.83
Weighted Average Grant Date Fair Value (usd per share)			$ 3.76
Employee [Member] | Equity Incentive Plan Year [Member]
Summary of stock option grants
Grantee Type	Employee group (1)	[1]	Employee group
No. of Options Granted (shares)	1,480,000	[1]	449,875
Vesting Period	3 years	[1]	3 years
Weighted Average Exercise Price (usd per share)	$ 6.99	[1]	$ 5.58
Weighted Average Grant Date Fair Value (usd per share)	$ 1.81	[1]	$ 2.44
Employee [Member] | Equity Incentive Plan Year [Member] | Year One [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 6.36	[1]
Employee [Member] | Equity Incentive Plan Year [Member] | Year Two [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 6.99	[1]
Employee [Member] | Equity Incentive Plan Year [Member] | Year Three [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 7.63	[1]
Employee [Member] | Employee Inducement [Member] | Year One [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 6.04	[2]
Employee [Member] | Employee Inducement [Member] | Year Two [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 6.64	[2]
Employee [Member] | Employee Inducement [Member] | Year Three [Member]
Summary of stock option grants
Weighted Average Exercise Price (usd per share)	$ 7.24	[2]
Employee inducement [Member] | Equity Incentive Plan Year [Member]
Summary of stock option grants
Grantee Type	Employee inducement (2)	[2]	Employee inducement (3)	[3]
No. of Options Granted (shares)	270,000	[2]	20,000	[3]
Vesting Period	3 years	[2]	3 years	[3]
Weighted Average Exercise Price (usd per share)	$ 6.64	[2]	$ 7.14	[3]
Weighted Average Grant Date Fair Value (usd per share)	$ 1.71	[2]	$ 3.81	[3]

[1] The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

[2] The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on

[3] The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2013.

Certain reclassifications have been made to the prior period financial statements, including the notes thereto, to conform to the presentation changes described below.

Beginning with the second quarter of 2014, we reclassified certain information technology expenses within our Recovery Audit Services — Americas segment from Selling, General and Administrative expenses to Cost of Revenue to better reflect the nature of the work performed.

Beginning with the first quarter of 2014, we present the former New Services segment as two separate segments: Adjacent Services, which was formerly referred to as Profit Optimization services, and Healthcare Claims Recovery Audit Services. We have revised the presentation of our operating segments and related information in Note D - Operating Segments and Related Information. Also beginning with the first quarter of 2014, we reclassified certain expenses within the Recovery Audit Services — Europe/Asia-Pacific segment from Cost of Revenue to Selling, General and Administrative expenses to better reflect costs associated with new business development efforts.

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets (Unaudited) related to our Healthcare Claims Recovery Audit Services as of December 31, 2013 as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $5.6 million as of December 31, 2013. There were no unbilled receivables related to the Healthcare Claims Recovery Audit Services segment as of September 30, 2014.

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2014-15. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and related disclosure requirements. ASU 2014-15 is effective for annual periods beginning after December 15, 2016 with early adoption permitted. We do not expect the adoption of ASU 2014-15 to have a material impact on our consolidated financial statements.

FASB ASC Update No. 2014-09. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the transferring entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2016. Early adoption is not permitted. We are currently undergoing an evaluation of the impact of ASU 2014-09 on our consolidated financial statements.

FASB ASC Update No. 2014-08. In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted for transactions that have not been disclosed in previously issued financial statements. We adopted ASU 2014-08 in the third quarter of 2014. The Company's disposal of assets on October 1, 2014 (see Note J) did not qualify as a discontinued operation as defined in ASU 2014-08. The impact of ASU 2014-08 on the Company's financial statements with respect to any future transaction will be dependent on whether any such transaction falls within the scope of the new guidance.

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income (loss)	$ (239)	$ 4,877	$ (5,381)	$ 6,211
Foreign currency translation adjustments	(619)	96	(112)	(933)
Comprehensive income (loss)	$ (858)	$ 4,973	$ (5,493)	$ 5,278

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2013.

Certain reclassifications have been made to the prior period financial statements, including the notes thereto, to conform to the presentation changes described below.

Beginning with the second quarter of 2014, we reclassified certain information technology expenses within our Recovery Audit Services — Americas segment from Selling, General and Administrative expenses to Cost of Revenue to better reflect the nature of the work performed.

Beginning with the first quarter of 2014, we present the former New Services segment as two separate segments: Adjacent Services, which was formerly referred to as Profit Optimization services, and Healthcare Claims Recovery Audit Services. We have revised the presentation of our operating segments and related information in Note D - Operating Segments and Related Information. Also beginning with the first quarter of 2014, we reclassified certain expenses within the Recovery Audit Services — Europe/Asia-Pacific segment from Cost of Revenue to Selling, General and Administrative expenses to better reflect costs associated with new business development efforts.

Unbilled Receivables

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets (Unaudited) related to our Healthcare Claims Recovery Audit Services as of December 31, 2013 as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $5.6 million as of December 31, 2013. There were no unbilled receivables related to the Healthcare Claims Recovery Audit Services segment as of September 30, 2014.

New Accounting Standards

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2014-15. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and related disclosure requirements. ASU 2014-15 is effective for annual periods beginning after December 15, 2016 with early adoption permitted. We do not expect the adoption of ASU 2014-15 to have a material impact on our consolidated financial statements.

FASB ASC Update No. 2014-09. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the transferring entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2016. Early adoption is not permitted. We are currently undergoing an evaluation of the impact of ASU 2014-09 on our consolidated financial statements.

FASB ASC Update No. 2014-08. In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted for transactions that have not been disclosed in previously issued financial statements. We adopted ASU 2014-08 in the third quarter of 2014. The Company's disposal of assets on October 1, 2014 (see Note J) did not qualify as a discontinued operation as defined in ASU 2014-08. The impact of ASU 2014-08 on the Company's financial statements with respect to any future transaction will be dependent on whether any such transaction falls within the scope of the new guidance.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 24, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	PRGX GLOBAL, INC.
Entity Central Index Key	0001007330
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Current Fiscal Year Focus	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		27,251,061

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Earnings (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Computations of basic and diluted earnings (loss) per common share

The following tables set forth the computations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
Basic earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Basic earnings (loss) per common share	$	(0.01	)	$	0.17	$	(0.18	)	$	0.21

	Three Months Ended September 30,					Nine Months Ended September 30,
Diluted earnings (loss) per common share:	2014			2013		2014			2013
Numerator:
Net income (loss)	$	(239	)	$	4,877	$	(5,381	)	$	6,211
Denominator:
Weighted-average common shares outstanding	27,744			29,396		29,203			29,075
Incremental shares from stock-based compensation plans	—			419		—			442
Denominator for diluted earnings (loss) per common share	27,744			29,815		29,203			29,517
Diluted earnings (loss) per common share	$	(0.01	)	$	0.16	$	(0.18	)	$	0.21

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 26,293	$ 43,700
Restricted cash	121	57
Contract receivables, less allowances of $2,089 in 2014 and $1,996 in 2013:
Billed	30,319	28,175
Unbilled	2,341	9,904
Receivables Net	32,660	38,079
Employee advances and miscellaneous receivables, less allowances of $549 in 2014 and $402 in 2013	1,343	2,242
Total receivables	34,003	40,321
Prepaid expenses and other current assets	4,591	3,917
Total current assets	65,008	87,995
Property and equipment	56,060	58,796
Less accumulated depreciation and amortization	(43,289)	(44,802)
Property and equipment, net	12,771	13,994
Goodwill	13,667	13,686
Intangible assets, less accumulated amortization of $35,231 in 2014 and $32,717 in 2013	10,862	13,582
Noncurrent portion of unbilled receivables	1,021	1,379
Other assets	2,500	2,193
Total assets	105,829	132,829
Current liabilities:
Accounts payable and accrued expenses	7,720	10,809
Accrued payroll and related expenses	14,776	15,415
Refund liabilities	5,611	6,597
Deferred revenue	1,213	1,512
Business acquisition obligations	0	3,156
Total current liabilities	29,320	37,489
Noncurrent refund liabilities	878	950
Other long-term liabilities	526	562
Total liabilities	30,724	39,001
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 27,256,096 shares issued and outstanding as of September 30, 2014 and 29,367,439 shares issued and outstanding as of December 31, 2013	273	294
Additional paid-in capital	591,597	604,806
Accumulated deficit	(518,767)	(513,386)
Accumulated other comprehensive income	2,002	2,114
Total shareholders’ equity	75,105	93,828
Total liabilities and shareholders’ equity	$ 105,829	$ 132,829

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Debt

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt

Debt

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility initially consisted of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust term loan required quarterly principal payments of $0.8 million beginning in March 2010, and a final principal payment of $3.0 million due in January 2014 that we paid in December 2013. The SunTrust credit facility is guaranteed by the Company and all of its material domestic subsidiaries and secured by substantially all of the assets of the Company.

On January 17, 2014, we entered into an amendment to the SunTrust credit facility that increased the committed revolving credit facility from $15.0 million to $25.0 million, lowered the applicable margin to a fixed rate of 1.75%, eliminated the provision limiting availability under the revolving credit facility based on eligible accounts receivable and extended the scheduled maturity of the revolving credit facility to January 16, 2015 (subject to earlier termination as provided therein). As of September 30, 2014, we had no outstanding borrowings under the SunTrust revolver. With the provision of a fixed applicable margin of 1.75% per the amendment of the SunTrust credit facility, the interest rate that would have applied at September 30, 2014 had any borrowings been outstanding was approximately 1.90%. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the SunTrust revolving credit facility.

Prior to the January 2014 amendment to the SunTrust credit facility, amounts available under the SunTrust revolver were based on eligible accounts receivable and other factors. Interest on both the revolver and term loan was payable monthly and accrued at an index rate using the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varied from 2.25% per annum to 3.5% per annum, dependent on our consolidated leverage ratio, and was determined in accordance with a pricing grid under the SunTrust loan agreement.

The SunTrust credit facility, as amended, requires as of the end of each fiscal quarter, the Company to have achieved Consolidated Adjusted EBITDA (as defined in the agreement) of at least $18.0 million for the immediately preceding four quarters. As of June 30, 2014, the Company's Consolidated Adjusted EBITDA for the preceding four quarters was $17.0 million, and therefore the Company was not in compliance with the covenant, although there were no amounts outstanding under the credit facility as of that date. On August 7, 2014, the Company entered into an amendment of the SunTrust credit facility that provided a waiver of the non-compliance with the minimum Consolidated Adjusted EBITDA covenant for the quarter ended June 30, 2014, reduced the minimum Consolidated Adjusted EBITDA requirement to $12.0 million, modified the Fixed Charge Coverage Ratio definition for the quarter ending September 30, 2014 by excluding certain payments, and reduced the maximum borrowing amount under the senior credit facility to $20.0 million. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2014.

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Cash and Cash Equivalents

9 Months Ended

Sep. 30, 2014

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

Our cash and cash equivalents included short-term investments of approximately $12.5 million as of September 30, 2014 and $24.6 million as of December 31, 2013, of which approximately $6.4 million and $4.4 million, respectively, were held at banks outside of the United States, primarily in Brazil and Canada.

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Earnings (Loss) Per Common Share (Details Textual) (USD $)	0 Months Ended		3 Months Ended		8 Months Ended	9 Months Ended
	Jan. 08, 2013	Dec. 11, 2012	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share and Other Significant Changes in Shares [Line Items]
Number of common shares in the basic and diluted earnings per common share (shares)			600,000	700,000		600,000	700,000
Nonvested restricted share (shares)			100,000	200,000		100,000	200,000
Public offering common stock shares (shares)		6,249,234
Public offering by company (shares)		2,500,000
Public offering by selling shareholders (shares)		3,749,234
Public offering, price per share (usd per share)		$ 6.39
Public offering, net proceeds	$ 4,100,000	$ 14,700,000				$ 0	$ 4,118,000
Additional shares, overallotment option (shares)	687,385
Stock Issued During Period, Shares, Other						710,063	129,976
Proceeds from Stock Options Exercised						2,790,000	611,000
Stock repurchased during period (in shares)			1,413,017		3,100,000	3,117,277
Stock repurchased during period, amount			9,000,000		20,000,000	20,000,000
Business Strategy, Inc. [Member]
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share and Other Significant Changes in Shares [Line Items]
Business combination, consideration paid in common stock, shares						187,620	217,155
Business combination, consideration paid in common stock, value						$ 1,300,000	$ 1,400,000
Non-qualified Option [Member]
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share and Other Significant Changes in Shares [Line Items]
Weighted average shares outstanding excludes anti-dilutive shares underlying options (shares) (less than 0.1 million)			3,800,000	1,600,000		3,800,000	1,600,000
Performance Unit [Member]
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share and Other Significant Changes in Shares [Line Items]
Weighted average shares outstanding excludes anti-dilutive shares underlying options (shares) (less than 0.1 million)			100,000	0		100,000	0

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option grants

The following table summarizes stock option grants during the nine months ended September 30, 2014 and 2013:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45	$	1.89
Employee group (1)	1,480,000	3 years	$	6.99	$	1.81
Employee inducement (2)	270,000	3 years	$	6.64	$	1.71
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (3)	20,000	3 years	$	7.14	$	3.81

(1) The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on September 11, 2016 and $7.24 for the options that vest on September 11, 2017.

(3) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

Summary of nonvested stock awards granted

The following table summarizes nonvested stock awards granted during the nine months ended September 30, 2014 and 2013:

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2014
Director group	51,276	1 year or less	$	6.45
Employee group	120,000	3 years	$	6.36
Employee inducement (1)	70,000	3 years	$	6.04
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (2)	20,000	3 years	$	7.14

(1) The Company granted nonvested stock awards (restricted stock) outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company.

(2) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Reported income tax expense in each period primarily results from taxes on the income of foreign subsidiaries. The effective tax rates generally differ from the expected tax rate due primarily to the Company’s deferred tax asset valuation allowance on the domestic earnings and taxes on income of foreign subsidiaries.

In the nine months ended September 30, 2013, we partially offset these foreign income taxes by reversing $0.5 million of accruals made in prior years for uncertain tax positions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service in the U.S. and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled services, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short term maturity of these items.

We repaid the remaining balance of our bank debt in December 2013, and had no debt outstanding as of September 30, 2014. We consider the factors used in determining the fair value of debt to be Level 3 inputs (significant unobservable inputs).

We had no business acquisition obligations as of September 30, 2014 and $3.2 million of business acquisition obligations as of December 31, 2013 representing the fair value of deferred consideration and earn-out payments estimated to be due as of those dates. We determine the estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 1, 2014, the Company sold certain assets related to its Chicago, Illinois-based consulting business that were previously acquired in November 2010 from TJG Holdings LLC to Salo, LLC, a Minnesota limited liability company. The Company received an initial cash payment of $1.1 million in connection with the closing of the transaction and will receive payment for working capital transferred to the buyer. In addition, the Company may receive up to $0.9 million in earn-out payments based on certain revenue recognized by the buyer in relation to the acquired business during the year following the closing date.

On October 24, 2014, our Board of Directors authorized a $20.0 million increase to the Company's stock repurchase program, increasing the total stock repurchase program since its inception to $40.0 million, and extended the duration of the program to December 31, 2015. From the February 2014 announcement of the Company’s current stock repurchase program through September 30, 2014, the Company has repurchased 3.1 million shares, or 10.4% of its common stock outstanding on the date of the announcement, for an aggregate cost of $20.0 million.

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Basis of Presentation (Details) (USD $) In Millions, unless otherwise specified		9 Months Ended
	Dec. 31, 2013 Medicare RAC [Member]	Sep. 30, 2014 New Services [Member] segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of segments		2
Unbilled receivables, net of related reserves	$ 5.6

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Stock-Based Compensation (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended	3 Months Ended		9 Months Ended							3 Months Ended		9 Months Ended				0 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2014 compensation_plan	Sep. 30, 2014 The Plans [Member]	Sep. 30, 2013 The Plans [Member]	Sep. 30, 2014 The Plans [Member]	Sep. 30, 2013 The Plans [Member]	Sep. 30, 2014 Employee Group [Member] 2008 Equity Incentive Plan [Member]		Sep. 30, 2013 Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Director Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Director Group [Member] 2008 Equity Incentive Plan [Member]	Mar. 31, 2013 Employee Inducement [Member] 2008 Equity Incentive Plan [Member] employee		Sep. 30, 2014 Employee Inducement [Member] 2008 Equity Incentive Plan [Member] employee		Sep. 30, 2013 Employee Inducement [Member] 2008 Equity Incentive Plan [Member]		Jun. 19, 2012 Performance Shares [Member] 2006 Management Incentive Plan [Member] officer	Sep. 30, 2014 Performance Shares [Member] 2006 Management Incentive Plan [Member] executive_officer	Jun. 30, 2013 Performance Shares [Member] 2006 Management Incentive Plan [Member]	Sep. 30, 2014 Performance Shares [Member] 2006 Management Incentive Plan [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] Director Group [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] Director Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Restricted Stock and Restricted Stock Units [Member] Director Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Restricted Stock and Restricted Stock Units [Member] Employee Inducement [Member] 2008 Equity Incentive Plan [Member] employee		Sep. 30, 2013 Restricted Stock and Restricted Stock Units [Member] Employee Inducement [Member] 2008 Equity Incentive Plan [Member] employee		Sep. 30, 2014 Stock Options [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2014 Stock Options [Member] 2008 Equity Incentive Plan [Member] Minimum [Member]	Sep. 30, 2014 Stock Options [Member] 2008 Equity Incentive Plan [Member] Maximum [Member]	Sep. 30, 2014 Stock Options [Member] Employee Group [Member]	Sep. 30, 2014 Stock Options [Member] Director Group [Member]	Sep. 30, 2014 Year One [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]		Sep. 30, 2014 Year One [Member] Employee Group [Member] Employee Inducement [Member]		Sep. 30, 2014 Year Two [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]		Sep. 30, 2014 Year Two [Member] Employee Group [Member] Employee Inducement [Member]		Sep. 30, 2014 Year Three [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]		Sep. 30, 2014 Year Three [Member] Employee Group [Member] Employee Inducement [Member]
Stock-Based Compensation (Textual) [Abstract]
Number of shares granted																							120,000	449,875		51,276	75,490	70,000	[1]	20,000	[2]
Number of stock-based compensation plans	3
Stock options expiration period																																	6 years	7 years
Stock options vesting period						3 years	[3]	3 years					3 years	[4]	3 years	[5]	3 years					3 years	3 years	3 years	1 year			3 years	[1]	3 years	[2]				3 years	1 year
Stock options award vesting right																					vest in equal annual increments over the vesting period											vest in equal annual increments over the vesting period
Number of stock options granted (shares)											1	[5]	2	[4]														2	[1]	1	[2]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price						$ 6.99	[3]	$ 5.58	$ 6.45	$ 5.67			$ 6.64	[4]	$ 7.14	[5]																					$ 6.36	[3]	$ 6.04	[4]	$ 6.99	[3]	$ 6.64	[4]	$ 7.63	[3]	$ 7.24	[4]
Number of officers																	7
Total of performance units were outstanding and fully vested (shares)																	154,264	16,530		16,530
Grant date fair value awards																	$ 1.2
Percentage of performance units (percent)																				60.00%
Percentage of fair market value (percent)																				40.00%
Performance units settled in period (shares)																		121,210	52,334	27,546
Common stock issued during period (shares)																		69,438	31,399	16,526
Cash payments for shares settled during period																		0.3	0.1	0.1
Number of executive officers that settled performance units in period (executive officers)																		3
Number of former executive officers that settled performance units in period (executive officers)																		3
Performance units forfeited in period (shares)																		16,524
Number of former executive officers that forfeited performance units in period (executive officer)																		1
Selling, general and administrative expenses		1.4	1.3	3.4	3.8
Unrecognized stock-based compensation expense related to stock options		$ 6.7		$ 6.7
Weighted-average period for recognizing stock compensation expense				2 years 0 months 84 days

[1] The Company granted nonvested stock awards (restricted stock) outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company.

[2] The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

[3] The weighted average exercise price for these options is calculated based on an exercise price of $6.36 for the options that vest on June 27, 2015, $6.99 for the options that vest on June 27, 2016 and $7.63 for the options that vest on June 27, 2017.

[4] The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2014 to two executive officers in connection with the employees joining the Company. The weighted average exercise price for these options is calculated based on an exercise price of $6.04 for the options that vest on September 11, 2015, $6.64 for the options that vest on

[5] The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Allowances for contract receivables	$ 2,089	$ 1,996
Allowances for employee advances and miscellaneous receivables	549	402
Accumulated amortization on intangible assets	$ 35,231	$ 32,717
Common stock, par value (usd per share)	$ 0	$ 0
Common stock, stated value per share (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	50,000,000	50,000,000
Common stock, shares issued (shares)	27,256,096	29,367,439
Common stock, shares outstanding (shares)	27,256,096	29,367,439

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Operating Segments and Related Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

Beginning with the first quarter of 2014, we present the former New Services segment as two separate segments: Adjacent Services, which was formerly referred to as Profit Optimization services, and Healthcare Claims Recovery Audit Services. We now conduct our operations through the following four 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.

Adjacent Services (formerly known as Profit Optimization services) represents data transformation and financial advisory services.

Healthcare Claims Recovery Audit Services represents recovery audit services for healthcare claims, which consist primarily of services provided under subcontracts related to the Medicare Recovery Audit Contractor program.

Additionally, Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the four 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), tangible and 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 has been revised to reflect the change in reportable segments. Segment information for the three and nine months ended September 30, 2014 and 2013 (in thousands) is as follows:

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Three Months Ended September 30, 2014
Revenue	$	28,550	$	10,708		$	3,586		$	144		$	—		$	42,988
Net income (loss)															$	(239	)
Income tax expense															554
Interest expense (income), net															(44		)
EBIT	$	7,155	$	(151	)	$	(265	)	$	(1,133	)	$	(5,335	)	271
Depreciation of property and equipment	1,111		150			145			22			—			1,428
Amortization of intangible assets	500		299			96			—			—			895
EBITDA	8,766		298			(24		)	(1,111		)	(5,335		)	2,594
Foreign currency transaction (gains) losses on short-term intercompany balances	208		1,192			—			—			(179		)	1,221
Transformation severance and related expenses	44		7			18			26			318			413
Stock-based compensation	—		—			—			—			1,405			1,405
Adjusted EBITDA	$	9,018	$	1,497		$	(6	)	$	(1,085	)	$	(3,791	)	$	5,633

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	3,625		$	5,404	$	—		$	53,403
Net income (loss)															$	4,877
Income tax expense															1,029
Interest expense (income), net															75
EBIT	$	9,418		$	1,987		$	(351	)	$	621	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			167			329		—			2,034
Amortization of intangible assets	698			323			183			—		—			1,204
EBITDA	11,530			2,434			(1		)	950		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—			—		18			(636		)
Acquisition-related charges (benefits)	662			—			44			—		—			706
Transformation severance and related expenses	20			56			81			4		—			161
Stock-based compensation	—			—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	124		$	954	$	(4,372	)	$	10,754

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Nine Months Ended September 30, 2014
Revenue	$	80,377	$	32,792	$	8,150		$	1,551		$	—		$	122,870
Net income (loss)														$	(5,381	)
Income tax expense														853
Interest expense (income), net														(33		)
EBIT	$	16,632	$	1,309	$	(3,607	)	$	(4,785	)	$	(14,110	)	(4,561		)
Depreciation of property and equipment	3,612		445		463			176			—			4,696
Amortization of intangible assets	1,501		911		288			—			—			2,700
EBITDA	21,745		2,665		(2,856		)	(4,609		)	(14,110		)	2,835
Foreign currency transaction (gains) losses on short-term intercompany balances	164		1,079		—			—			(170		)	1,073
Acquisition-related charges (benefits)	—		—		249			—			—			249
Transformation severance and related expenses	510		569		396			431			446			2,352
Stock-based compensation	—		—		—			—			3,409			3,409
Adjusted EBITDA	$	22,419	$	4,313	$	(2,211	)	$	(4,178	)	$	(10,425	)	$	9,918

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	10,705		$	16,209	$	—		$	148,709
Net income (loss)														$	6,211
Income tax expense														1,671
Interest expense (income), net														(89		)
EBIT	$	21,643	$	2,354		$	(1,998	)	$	1,476	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			476			1,093		—			6,069
Amortization of intangible assets	2,094		1,171			547			—		—			3,812
EBITDA	27,875		3,887			(975		)	2,569		(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			81			4		—			778
Stock-based compensation	—		—			—			—		3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	(750	)	$	2,573	$	(11,903	)	$	22,406

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Operating Segments and Related Information (Details Textual)	9 Months Ended
	Sep. 30, 2014 segment
Segment Reporting Information [Line Items]
Number of reportable segments	4
New Services [Member]
Segment Reporting Information [Line Items]
Number of reportable segments	2

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Operating Segments and Related Information (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment information

Segment information for the three and nine months ended September 30, 2013 has been revised to reflect the change in reportable segments. Segment information for the three and nine months ended September 30, 2014 and 2013 (in thousands) is as follows:

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Three Months Ended September 30, 2014
Revenue	$	28,550	$	10,708		$	3,586		$	144		$	—		$	42,988
Net income (loss)															$	(239	)
Income tax expense															554
Interest expense (income), net															(44		)
EBIT	$	7,155	$	(151	)	$	(265	)	$	(1,133	)	$	(5,335	)	271
Depreciation of property and equipment	1,111		150			145			22			—			1,428
Amortization of intangible assets	500		299			96			—			—			895
EBITDA	8,766		298			(24		)	(1,111		)	(5,335		)	2,594
Foreign currency transaction (gains) losses on short-term intercompany balances	208		1,192			—			—			(179		)	1,221
Transformation severance and related expenses	44		7			18			26			318			413
Stock-based compensation	—		—			—			—			1,405			1,405
Adjusted EBITDA	$	9,018	$	1,497		$	(6	)	$	(1,085	)	$	(3,791	)	$	5,633

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	3,625		$	5,404	$	—		$	53,403
Net income (loss)															$	4,877
Income tax expense															1,029
Interest expense (income), net															75
EBIT	$	9,418		$	1,987		$	(351	)	$	621	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			167			329		—			2,034
Amortization of intangible assets	698			323			183			—		—			1,204
EBITDA	11,530			2,434			(1		)	950		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—			—		18			(636		)
Acquisition-related charges (benefits)	662			—			44			—		—			706
Transformation severance and related expenses	20			56			81			4		—			161
Stock-based compensation	—			—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	124		$	954	$	(4,372	)	$	10,754

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Healthcare Claims Recovery Audit Services			Corporate Support			Total
Nine Months Ended September 30, 2014
Revenue	$	80,377	$	32,792	$	8,150		$	1,551		$	—		$	122,870
Net income (loss)														$	(5,381	)
Income tax expense														853
Interest expense (income), net														(33		)
EBIT	$	16,632	$	1,309	$	(3,607	)	$	(4,785	)	$	(14,110	)	(4,561		)
Depreciation of property and equipment	3,612		445		463			176			—			4,696
Amortization of intangible assets	1,501		911		288			—			—			2,700
EBITDA	21,745		2,665		(2,856		)	(4,609		)	(14,110		)	2,835
Foreign currency transaction (gains) losses on short-term intercompany balances	164		1,079		—			—			(170		)	1,073
Acquisition-related charges (benefits)	—		—		249			—			—			249
Transformation severance and related expenses	510		569		396			431			446			2,352
Stock-based compensation	—		—		—			—			3,409			3,409
Adjusted EBITDA	$	22,419	$	4,313	$	(2,211	)	$	(4,178	)	$	(10,425	)	$	9,918

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Healthcare Claims Recovery Audit Services		Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	10,705		$	16,209	$	—		$	148,709
Net income (loss)														$	6,211
Income tax expense														1,671
Interest expense (income), net														(89		)
EBIT	$	21,643	$	2,354		$	(1,998	)	$	1,476	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			476			1,093		—			6,069
Amortization of intangible assets	2,094		1,171			547			—		—			3,812
EBITDA	27,875		3,887			(975		)	2,569		(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			81			4		—			778
Stock-based compensation	—		—			—			—		3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	(750	)	$	2,573	$	(11,903	)	$	22,406