Operating Segments and Related Information

12 Months Ended

Dec. 31, 2011

Operating Segments and Related Information [Abstract]

OPERATING SEGMENTS AND RELATED INFORMATION

(4) OPERATING SEGMENTS AND RELATED INFORMATION

We conduct our operations through three reportable operating segments: Recovery Audit Services – Americas, Recovery Audit Services – Europe/Asia-Pacific and New Services. The Recovery Audit Services – Americas segment includes 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 includes recovery audit services (other than healthcare claims recovery audit services) we provide in Europe, Asia and the Pacific region. The New Services segment includes analytics and advisory services and recovery audit services we provide to organizations in the healthcare industry. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three operating segments in Corporate Support.

We evaluate the performance of our operating segments based upon revenues and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition transaction costs and acquisition obligations classified as compensation, intangible asset impairment charges, litigation settlements, severance charges and foreign currency gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenues. Segment information for the years ended December 31, 2011, 2010 and 2009 and segment asset information as of December 31, 2011 and 2010 (in thousands) is as follows:

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		New Services			Corporate Support			Total
2011
Revenues	$	115,807	$	61,570	$	25,740		$	—		$	203,117
Net earnings											$	2,816
Income tax expense												1,292
Interest expense, net												1,616
EBIT	$	26,280	$	7,484	$	(6,951	)	$	(21,089	)		5,724
Depreciation of property and equipment		3,491		417		1,493			—			5,401
Amortization of intangible assets		2,467		1,665		859			—			4,991
EBITDA		32,238		9,566		(4,599	)		(21,089	)		16,116
Foreign currency transaction losses on short-term intercompany balances		144		272		1			—			417
Acquisition transaction costs and acquisition obligations classified as compensation		—		—		440			360			800
Transformation severance and related expenses		1,465		566		—			—			2,031
Stock-based compensation		—		—		—			5,093			5,093
Adjusted EBITDA	$	33,847	$	10,404	$	(4,158	)	$	(15,636	)	$	24,457
Capital expenditures	$	5,459	$	1,041	$	1,787		$	—		$	8,287

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		New Services			Corporate Support			Total
2011
Allocated assets	$	62,702	$	20,308	$	17,316		$	—		$	100,326
Unallocated assets:
Cash and cash equivalents		—		—		—			20,337			20,337
Restricted cash		—		—		—			64			64
Deferred loan costs		—		—		—			376			376
Deferred income taxes		—		—		—			854			854
Prepaid expenses and other assets		—		—		—			4,456			4,456
Total assets	$	62,702	$	20,308	$	17,316		$	26,087		$	126,413
	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		New Services			Corporate Support			Total
2010
Revenues	$	115,156	$	57,590	$	11,335		$	—		$	184,081
Net earnings											$	3,253
Income tax expense												1,882
Interest expense, net												1,305
Loss on debt extinguishment												1,381
EBIT	$	25,062	$	6,478	$	(6,804	)	$	(16,915	)		7,821
Depreciation of property and equipment		3,442		354		1,107			—			4,903
Amortization of intangible assets		2,427		1,403		301			—			4,131
EBITDA		30,931		8,235		(5,396	)		(16,915	)		16,855
Foreign currency transaction (gains) losses on short-term intercompany balances		33		391		(2	)		—			422
Acquisition transaction costs and acquisition obligations classified as compensation		—		—		371			—			371
Stock-based compensation		—		—		—			3,980			3,980
Adjusted EBITDA	$	30,964	$	8,626	$	(5,027	)	$	(12,935	)	$	21,628
Capital expenditures	$	5,674	$	329	$	931		$	—		$	6,934
Allocated assets	$	57,143	$	17,698	$	9,347		$	—		$	84,188
Unallocated assets:
Cash and cash equivalents		—		—		—			18,448			18,448
Restricted cash		—		—		—			64			64
Deferred loan costs		—		—		—			558			558
Deferred income taxes		—		—		—			439			439
Prepaid expenses and other assets		—		—		—			2,624			2,624
Total assets	$	57,143	$	17,698	$	9,347		$	22,133		$	106,321

	Recovery Audit Services — Americas			Recovery Audit Services — Europe/Asia- Pacific			New Services			Corporate Support			Total
2009
Revenues	$	121,561		$	52,489		$	5,533		$	—		$	179,583
Net earnings													$	15,327
Income tax expense														3,028
Interest expense, net														3,025
EBIT	$	35,914		$	9,239		$	(4,017	)	$	(19,756	)		21,380
Depreciation of property and equipment		2,771			303			431			—			3,505
Amortization of intangible assets		2,027			1,200			—			—			3,227
EBITDA		40,712			10,742			(3,586	)		(19,756	)		28,112
Foreign currency transaction gains on short-term intercompany balances		(360	)		(1,235	)		—			—			(1,595	)
Litigation settlement		—			—			—			650			650
Gain on bargain purchase, net		—			(2,388	)		—			—			(2,388	)
Stock-based compensation		—			—			—			3,345			3,345
Adjusted EBITDA	$	40,352		$	7,119		$	(3,586	)	$	(15,761	)	$	28,124
Capital expenditures	$	4,281		$	266		$	964		$	—		$	5,511

The following table presents revenues by country based on the location of clients served (in thousands):

	Years Ended December 31,
	2011		2010		2009
United States	$	106,241	$	92,574	$	97,141
United Kingdom		36,123		31,422		25,169
Canada		20,200		22,141		20,560
France		13,425		12,231		12,055
Brazil		5,718		5,128		4,320
Mexico		4,836		3,950		3,740
Sweden		2,145		1,460		2,158
Spain		1,901		2,065		2,547
Belgium		1,459		2,705		2,186
Australia		1,299		1,690		1,424
Norway		1,174		279		19
New Zealand		1,111		738		802
Other		7,485		7,698		7,462
	$	203,117	$	184,081	$	179,583

The following table presents long-lived assets by country based on the location of the asset (in thousands):

	December 31,
	2011		2010
United States	$	46,083	$	34,273
United Kingdom		8,792		10,295
All Other		1,073		1,034
	$	55,948	$	45,602