Operating Segments and Related Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

We conduct our operations through the following three 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 represents data transformation, spend analytics, PRGX OPTIX^TM,SIM services and associated advisory services.

Additionally, Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments.

During the fourth quarter of 2015, PRGX entered into agreements with third parties to fulfill its Medicare recovery audit contractor ("RAC") program subcontract obligations to audit Medicare payments and provide support for claims appeals and assigned its remaining Medicaid contract to another party. The Company will continue to incur certain expenses while the current Medicare RAC contracts are still in effect. As a result, the Healthcare Claims Recovery Audit services business has been reported as Discontinued Operations in accordance with U.S. GAAP.

Discontinued operations information for the three months ended March 31, 2017 and 2016 is as follows:

Results of Discontinued Operations	Three Months Ended March 31,
(in thousands)	2017			2016
Revenue, net	$	—		$	(11	)
Cost of sales	334			388
Selling, general and administrative expense	—			84
Depreciation and amortization	2			4
Loss from discontinued operations before income taxes	$	(336	)	$	(487	)
Income tax expense	—			—
Net loss from discontinued operations	$	(336	)	$	(487	)

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 months ended March 31, 2017 and 2016 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
Three Months Ended March 31, 2017
Revenue	$	24,383		$	7,831		$	1,355		$	—		$	33,569
Net loss from continuing operations													$	(1,847	)
Income tax expense													627
Interest expense (income), net													37
EBIT	$	5,986		$	410		$	(1,740	)	$	(5,839	)	(1,183		)
Depreciation of property and equipment	910			140			170			—			1,220
Amortization of intangible assets	329			—			393			—			722
EBITDA	$	7,225		$	550		$	(1,177	)	$	(5,839	)	$	759
Other expense (income)	—			—			(199		)	—			(199		)
Foreign currency transaction (gains) losses on short-term intercompany balances	(163		)	(252		)	(3		)	(134		)	(552		)
Transformation severance and related expenses	76			138			—			369			583
Stock-based compensation	—			—			—			1,566			1,566
Adjusted EBITDA	$	7,138		$	436		$	(1,379	)	$	(4,038	)	$	2,157

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
Three Months Ended March 31, 2016
Revenue	$	21,567		$	9,249		$	417		$	—		$	31,233
Net loss from continuing operations													(65		)
Income tax expense													204
Interest expense (income), net													(29		)
EBIT	$	3,997		$	2,254		$	(1,086	)	$	(5,055	)	$	110
Depreciation of property and equipment	992			98			142			—			1,232
Amortization of intangible assets	372			—			22			—			394
EBITDA	$	5,361		$	2,352		$	(922	)	$	(5,055	)	$	1,736
Other expenses (income)							10						10
Foreign currency transaction (gains) losses on short-term intercompany balances	(257		)	(746		)	(1		)	(3		)	(1,007		)
Transformation severance and related expenses	144			71			—			310			525
Stock-based compensation	—			—			—			773			773
Adjusted EBITDA	$	5,248		$	1,677		$	(913	)	$	(3,975	)	$	2,037