Operating Segments and Related Information

6 Months Ended

Jun. 30, 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 GAAP.

Discontinued operations information for the three and six months endedJune 30, 2017 and 2016 is as follows:

Results of Discontinued Operations	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2017			2016			2017			2016
Revenue, net	$	—		$	(4	)	$	—		$	(15	)
Cost of sales	342			451			676			840
Selling, general and administrative expense	5			100			5			184
Depreciation and amortization	2			4			4			7
Loss from discontinued operations before income taxes	$	(349	)	$	(559	)	$	(685	)	$	(1,046	)
Income tax expense	—			—			—			—
Net loss from discontinued operations	$	(349	)	$	(559	)	$	(685	)	$	(1,046	)

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss referred 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 six months ended June 30, 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 June 30, 2017
Revenue	$	26,553		$	10,773		$	1,184		$	—		$	38,510
Net loss from continuing operations													(325		)
Income tax expense													879
Interest expense (income), net													48
EBIT	$	5,586		$	3,057		$	(1,913	)	$	(6,128	)	$	602
Depreciation of property and equipment	779			152			178			—			1,109
Amortization of intangible assets	328			—			394			—			722
EBITDA	$	6,693		$	3,209		$	(1,341	)	$	(6,128	)	$	2,433
Other expense (income)	—			—			5			—			5
Foreign currency transaction (gains) losses on short-term intercompany balances	(78		)	(937		)	(2		)	60			(957		)
Transformation severance and related expenses	187			82			45			1			315
Stock-based compensation	—			—			—			1,688			1,688
Adjusted EBITDA	$	6,802		$	2,354		$	(1,293	)	$	(4,379	)	$	3,484

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		Adjacent Services			Corporate Support			Total
Three Months Ended June 30, 2016
Revenue	$	25,122	$	8,698	$	1,471		$	—		$	35,291
Net loss from continuing operations											(33		)
Income tax expense											460
Interest expense (income), net											(12		)
EBIT	$	5,998	$	505	$	(488	)	$	(5,600	)	$	415
Depreciation of property and equipment	936		140		140			—			1,216
Amortization of intangible assets	373		—		22			—			395
EBITDA	$	7,307	$	645	$	(326	)	$	(5,600	)	$	2,026
Other expense (income)	—		—		18			—			18
Foreign currency transaction (gains) losses on short-term intercompany balances	30		185		7			(26		)	196
Transformation severance and related expenses	276		25		—			(76		)	225
Stock-based compensation	—		—		—			1,035			1,035
Adjusted EBITDA	$	7,613	$	855	$	(301	)	$	(4,667	)	$	3,500

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
Six Months Ended June 30, 2017
Revenue	$	50,936		$	18,604		$	2,539		$	—		$	72,079
Net loss from continuing operations													(2,173		)
Income tax expense													1,506
Interest expense (income), net													85
EBIT	$	11,571		$	3,466		$	(3,655	)	$	(11,964	)	$	(582	)
Depreciation of property and equipment	1,689			292			348			—			2,329
Amortization of intangible assets	657			—			787			—			1,444
EBITDA	$	13,917		$	3,758		$	(2,520	)	$	(11,964	)	$	3,191
Other expense (income)							(193		)	(1		)	(194		)
Foreign currency transaction (gains) losses on short-term intercompany balances	(241		)	(1,189		)	(4		)	(75		)	(1,509		)
Transformation severance and related expenses	264			221			45			369			899
Stock-based compensation	—			—			—			3,254			3,254
Adjusted EBITDA	$	13,940		$	2,790		$	(2,672	)	$	(8,417	)	$	5,641

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Corporate Support			Total
Six Months Ended June 30, 2016
Revenue	$	46,689		$	17,947		$	1,888		$	—		$	66,524
Net loss from continuing operations													(98		)
Income tax expense													664
Interest expense (income), net													(41		)
EBIT	$	9,996		$	2,759		$	(1,574	)	$	(10,656	)	$	525
Depreciation of property and equipment	1,928			238			282			—			2,448
Amortization of intangible assets	745			—			44			—			789
EBITDA	$	12,669		$	2,997		$	(1,248	)	$	(10,656	)	$	3,762
Other expense (income)	—			—			28			—			28
Foreign currency transaction (gains) losses on short-term intercompany balances	(228		)	(561		)	6			(28		)	(811		)
Transformation severance and related expenses	420			96			—			243			759
Stock-based compensation	—			—			—			1,799			1,799
Adjusted EBITDA	$	12,861		$	2,532		$	(1,214	)	$	(8,642	)	$	5,537