Operating Segments and Related Information

3 Months Ended

Mar. 31, 2013

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 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 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 segments.

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 (loss) 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, 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, 2013 and 2012 (in thousands) is as follows:

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific		New Services			Corporate Support			Total
Three Months Ended March 31, 2013
Revenue	$	26,242	$	11,017	$	7,842		$	—		$	45,101
Net earnings (loss)											$	(497	)
Income tax expense												56
Interest expense (income), net												(217	)
EBIT	$	5,454	$	441	$	(1,161	)	$	(5,392	)		(658	)
Depreciation of property and equipment		1,368		112		528			—			2,008
Amortization of intangible assets		698		396		182			—			1,276
EBITDA		7,520		949		(451	)		(5,392	)		2,626
Foreign currency transaction (gains) losses on short-term intercompany balances		52		306		—			(1	)		357
Acquisition obligations classified as compensation		—		—		56			—			56
Stock-based compensation		—		—		—			1,318			1,318
Adjusted EBITDA	$	7,572	$	1,255	$	(395	)	$	(4,075	)	$	4,357

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended March 31, 2012
Revenue	$	28,813		$	14,305		$	8,531		$	—		$	51,649
Net earnings													$	292
Income tax expense														497
Interest expense, net														504
EBIT	$	5,561		$	1,657		$	(798	)	$	(5,127	)		1,293
Depreciation of property and equipment		915			40			558			—			1,513
Amortization of intangible assets		1,586			539			202			—			2,327
EBITDA		8,062			2,236			(38	)		(5,127	)		5,133
Foreign currency transaction gains on short-term intercompany balances		(63	)		(257	)		(19	)		—			(339	)
Acquisition obligations classified as compensation		—			—			101			—			101
Transformation severance and related expenses		90			57			95			—			242
Wage claim costs		249			—			—			—			249
Stock-based compensation		—			—			—			1,401			1,401
Adjusted EBITDA	$	8,338		$	2,036		$	139		$	(3,726	)	$	6,787