Operating Segments and Related Information

9 Months Ended

Sep. 30, 2012

Operating Segments and Related Information [Abstract]

Operating Segments and Related Information

Note D – Operating Segments and Related Information

We conduct our operations through three reportable operating 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.

New Services represents Profit Optimization services (formerly referred to as analytics and advisory services) and healthcare claims recovery audit services.

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

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 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 transaction costs and acquisition obligations classified as compensation, intangible asset impairment charges, certain litigation costs and litigation settlements, 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 revenues. Segment information for the three and nine months ended September 30, 2012 and 2011 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2012
Revenues	$	33,235		$	11,406		$	7,446		$	—		$	52,087
Net earnings													$	2,565
Income tax expense														505
Interest expense, net														515
EBIT	$	9,964		$	304		$	(651	)	$	(6,032	)		3,585
Depreciation of property and equipment		1,111			90			515			—			1,716
Amortization of intangible assets		767			462			202			—			1,431
EBITDA		11,842			856			66			(6,032	)		6,732
Foreign currency transaction (gains) losses on short-term intercompany balances		(85	)		(266	)		3			—			(348	)
Acquisition obligations classified as compensation		—			—			93			—			93
Transformation severance and related expenses		245			273			—			—			518
Stock-based compensation		—			—			—			1,839			1,839
Adjusted EBITDA	$	12,002		$	863		$	162		$	(4,193	)	$	8,834

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2011
Revenues	$	30,980	$	14,516		$	6,255		$	—		$	51,751
Net earnings												$	422
Income tax expense													593
Interest expense, net													398
EBIT	$	7,869	$	1,123		$	(1,869	)	$	(5,710	)		1,413
Depreciation of property and equipment		963		96			405			—			1,464
Amortization of intangible assets		575		488			214			—			1,277
EBITDA		9,407		1,707			(1,250	)		(5,710	)		4,154
Foreign currency transaction (gains) losses on short-term intercompany balances		177		879			(1	)		—			1,055
Acquisition obligations classified as compensation		—		—			106			—			106
Transformation severance and related expenses		182		(12	)		—			—			170
Stock-based compensation		—		—			—			1,461			1,461
Adjusted EBITDA	$	9,766	$	2,574		$	(1,145	)	$	(4,249	)	$	6,946

	Recovery Audit Services – Americas			Recovery Audit Services  – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2012
Revenues	$	91,640		$	39,122		$	24,632		$	—		$	155,394
Net earnings													$	3,859
Income tax expense														1,586
Interest expense, net														1,548
EBIT	$	21,994		$	3,515		$	(2,270	)	$	(16,246	)		6,993
Depreciation of property and equipment		3,016			217			1,575			—			4,808
Amortization of intangible assets		3,120			1,491			606			—			5,217
EBITDA		28,130			5,223			(89	)		(16,246	)		17,018
Foreign currency transaction (gains) losses on short-term intercompany balances		(77	)		(117	)		4			—			(190	)
Acquisition obligations classified as compensation		—			—			288			—			288
Transformation severance and related expenses		358			351			327			—			1,036
Costs for overtime pay claim		577			—			—			—			577
Stock-based compensation		—			—			—			4,479			4,479
Adjusted EBITDA	$	28,988		$	5,457		$	530		$	(11,767	)	$	23,208

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		New Services			Corporate Support			Total
Nine Months Ended September 30, 2011
Revenues	$	87,994	$	45,021	$	20,158		$	—		$	153,173
Net earnings											$	1,504
Income tax expense												2,498
Interest expense, net												1,223
EBIT	$	19,951	$	5,408	$	(4,852	)	$	(15,282	)		5,225
Depreciation of property and equipment		2,506		279		1,074			—			3,859
Amortization of intangible assets		1,719		1,160		648			—			3,527
EBITDA		24,176		6,847		(3,130	)		(15,282	)		12,611
Foreign currency transaction (gains) losses on short-term intercompany balances		154		25		(3	)		—			176
Acquisition obligations classified as compensation		—		—		334			—			334
Transformation severance and related expenses		1,119		148		—			—			1,267
Stock-based compensation		—		—		—			3,663			3,663
Adjusted EBITDA	$	25,449	$	7,020	$	(2,799	)	$	(11,619	)	$	18,051