Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

(a) Goodwill

We evaluate the recoverability of goodwill in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. These analyses did not result in an impairment charge during the periods presented.

Goodwill by reportable segments during 2017 and 2016 was as follows (in thousands):



	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services		Total
Balance, January 1, 2016	$	10,755	$	813		$	242	$	11,810
Goodwill recorded in connection with business combinations	—		—			2,146		2,146
Foreign currency translation	—		(133		)	—		(133		)
Balance, December 31, 2016	10,755		680			2,388		13,823
Goodwill recorded in connection with business combinations	2,685		869			140		3,694
Foreign currency translation	—		131			—		131
Balance, December 31, 2017	$	13,440	$	1,680		$	2,528	$	17,648

During 2017, we recorded goodwill of $3.6 million in our Recovery Audit Services - Americas and Recovery Audit Services - Europe/Asia-Pacific segments in conjunction with the acquisition of Cost & Compliance Associates, LLC and Cost & Compliance Associates Limited respectively, (collectively "C&CA") on February 23, 2017. C&CA is a commercial recovery audit and contract compliance firm with operations in the U.S. and the UK (refer to Note 12 below).

During 2016, we recorded goodwill of $2.1 million in our Adjacent Services segment in conjunction with our October 31, 2016 acquisition of Lavante. Lavante is a SaaS-based SIM and recovery audit services firm, based in San Jose, California. Lavante’s assets consist primarily of its proprietary software applications and customer contracts.

(b) Intangible Assets

Intangible assets consist principally of amounts we assigned to customer relationships, trademarks, non-compete agreements and trade names in conjunction with business acquisitions. Changes in gross carrying amounts for intangible assets in 2015 related primarily to the divestiture of certain assets from a document service offering ("SDS assets"). Note 12 – Business Acquisitions and Divestitures below includes a more detailed description of the divestiture in 2015 and recent acquisitions. Certain of our intangible assets associated with acquisitions of assets or businesses by our foreign subsidiaries are denominated in the local currency of such subsidiary and therefore are subject to foreign currency ("FX") adjustments. We present the amounts for these transactions in United States dollars utilizing foreign currency exchange rates as of the respective balance sheet dates.

Amortization expense relating to intangible assets was $3.6 million in 2017, $1.8 million in 2016 and $2.5 million in 2015. As of December 31, 2017 and based on our current amortization methods, we project amortization expense relating to intangible assets for the next five years will be $3.4 million in 2018, $3.5 million in 2019, $3.3 million in 2020, $1.7 million in 2021 and $0.9 million in 2022. We use accelerated amortization methods for customer relationships and trade names, and straight-line amortization for non-compete agreements and trademarks.

Changes in noncurrent intangible assets during 2017 and 2016 were as follows (in thousands):



	Customer Relationships			Trademarks			Non- compete Agreements			Software			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2016	$	37,784		$	931		$	1,477		$	—		$	2,200		$	42,392
Acquisition of Lavante Assets	—			—			—			6,178			—			6,178
FX adjustments and other	(1,211		)	(78		)	(155		)	—			—			(1,444		)
Balance, December 31, 2016	36,573			853			1,322			6,178			2,200			47,126
Acquisition of C&CA Assets	9,556			135			1,232			—			—			10,923
FX adjustments and other	777			38			75			—			—			890
Balance, December 31, 2017	$	46,906		$	1,026		$	2,629		$	6,178		$	2,200		$	58,939
Accumulated amortization:
Balance, January 1, 2016	$	(31,246	)	$	(881	)	$	(1,381	)	$	—		$	(2,200	)	$	(35,708	)
Amortization expense	(1,414		)	(50		)	(96		)	(272		)	—			(1,832		)
FX adjustments and other	1,179			78			155			—			—			1,412
Balance, December 31, 2016	(31,481		)	(853		)	(1,322		)	(272		)	(2,200		)	(36,128		)
Amortization expense	(1,796		)	(22		)	(204		)	(1,612		)	—			(3,634		)
FX adjustments and other	(585		)	(38		)	(76		)	—			—			(699		)
Balance, December 31, 2017	$	(33,862	)	$	(913	)	$	(1,602	)	$	(1,884	)	$	(2,200	)	$	(40,461	)
Net carrying amount:
Balance, December 31, 2016	$	5,092		$	—		$	—		$	5,906		$	—		$	10,998
Balance, December 31, 2017	$	13,044		$	113		$	1,027		$	4,294		$	—		$	18,478
Estimated useful life (years)	6-15 years			5 years			1-5 years			4 years			4-5 years

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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