Segment Information | Segment Information Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments: Healthcare, Business Advisory, and Education. • Healthcare Our Healthcare segment serves national and regional hospitals, integrated health systems, academic medical centers, community hospitals, and medical groups. Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services; organizational transformation; and digital, technology and analytic solutions. Most healthcare organizations are focused on changing the way care is delivered; establishing a sustainable business model centered around optimal cost structures, reimbursement models and financial strategies; and evolving their digital, technology and analytic capabilities. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry expertise to help clients solve a diverse set of business issues, including, but not limited to, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, evolving organizational culture, and maximizing return on technology investments. • Business Advisory Our Business Advisory segment works with C-suite executives, boards, and business unit and functional leadership across a diverse set of organizations, including healthy, well-capitalized companies to organizations in transition, and across a broad range of industries, including life sciences, financial services, healthcare, education, energy and utilities, industrials and manufacturing, and the public sector. Our Business Advisory professionals have deep industry, functional and technical expertise that they put forward when delivering our digital, technology and analytics, strategy and innovation and corporate finance and restructuring services. In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage. Organizations also recognize the need to adopt technologies, automation and analytics to improve their operations and compete in a rapidly changing environment. Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers in order to evolve their enterprise and business unit strategies, bringing new products to market, and managing through stressed and distressed situations to create a viable path forward for stakeholders. • Education Our Education segment serves public and private colleges and universities, academic medical centers, research institutes and other not-for-profit organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student lifecycle; digital, technology and analytic solutions; and organizational transformation. Our Education segment clients are increasingly faced with financial and/or demographic challenges as well as increased competition. To remain competitive, organizations must challenge traditional operating and financial models and reimagine strategic, operational and research-centered opportunities that advance their mission while strengthening their business models. We collaborate with clients to address these challenges and ensure they have a sustainable future. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; and enhancing the student lifecycle. Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs include costs for corporate office support, certain office facility costs, costs relating to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management. The table below sets forth information about our operating segments for the three and six months ended June 30, 2021 and 2020, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements. Three Months Ended Six Months Ended 2021 2020 2021 2020 Healthcare: Revenues $ 101,357 $ 85,356 $ 181,079 $ 180,934 Operating income $ 27,624 $ 21,171 $ 48,108 $ 45,221 Segment operating income as a percentage of segment revenues 27.3 % 24.8 % 26.6 % 25.0 % Business Advisory: Revenues $ 70,908 $ 70,470 $ 143,775 $ 135,375 Operating income $ 14,315 $ 16,684 $ 27,392 $ 26,526 Segment operating income as a percentage of segment revenues 20.2 % 23.7 % 19.1 % 19.6 % Education: Revenues $ 57,861 $ 62,031 $ 108,485 $ 124,167 Operating income $ 13,770 $ 16,128 $ 22,423 $ 29,244 Segment operating income as a percentage of segment revenues 23.8 % 26.0 % 20.7 % 23.6 % Total Company: Revenues $ 230,126 $ 217,857 $ 433,339 $ 440,476 Reimbursable expenses 3,252 2,970 5,186 22,273 Total revenues and reimbursable expenses $ 233,378 $ 220,827 $ 438,525 $ 462,749 Segment operating income $ 55,709 $ 53,983 $ 97,923 $ 100,991 Items not allocated at the segment level: Other operating expenses 34,325 31,638 63,162 58,784 Litigation and other losses (gains) — — 42 (150) Depreciation and amortization 5,255 6,391 10,350 12,438 Goodwill impairment charges 1 — — — 59,816 Other expense (income), net (122) (1,032) 1,177 6,605 Income (loss) from continuing operations before taxes $ 16,251 $ 16,986 $ 23,192 $ (36,502) (1) The non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance. The following table illustrates the disaggregation of revenues by billing arrangements, employee types, and timing of revenue recognition, including a reconciliation of the disaggregated revenues to revenues from our three operating segments for the three and six months ended June 30, 2021 and 2020. In conjunction with our continuous evaluation of the appropriate level of disaggregation of revenues as our business evolves and in consideration of a group hire of approximately 300 employees in our Healthcare Managed Services solution within our Healthcare segment in the second quarter of 2021, we began assessing our operating performance by the following three employee types: billable consultants, full-time equivalents, and Healthcare Managed Services employees. The disaggregation of revenues by employee type previously reported for the three and six months ended June 30, 2020 was revised below to reflect this change. This change has no impact on our consolidated total revenues or total revenues by segment. Three Months Ended June 30, 2021 Healthcare Business Advisory Education Total Billing Arrangements Fixed-fee $ 55,095 $ 31,350 $ 17,886 $ 104,331 Time and expense 18,039 35,988 33,039 87,066 Performance-based 23,061 1,517 — 24,578 Software support, maintenance and subscriptions 5,162 2,053 6,936 14,151 Total $ 101,357 $ 70,908 $ 57,861 $ 230,126 Employee Type (1) Revenue generated by billable consultants $ 66,810 $ 66,051 $ 49,291 $ 182,152 Revenue generated by full-time equivalents 20,498 4,857 8,570 33,925 Revenue generated by Healthcare Managed Services employees 14,049 — — 14,049 Total $ 101,357 $ 70,908 $ 57,861 $ 230,126 Timing of Revenue Recognition Revenue recognized over time $ 99,884 $ 70,908 $ 57,861 $ 228,653 Revenue recognized at a point in time 1,473 — — 1,473 Total $ 101,357 $ 70,908 $ 57,861 $ 230,126 Six Months Ended June 30, 2021 Healthcare Business Advisory Education Total Billing Arrangements Fixed-fee $ 103,390 $ 61,231 $ 33,145 $ 197,766 Time and expense 29,414 73,621 61,823 164,858 Performance-based 37,730 4,926 — 42,656 Software support, maintenance and subscriptions 10,545 3,997 13,517 28,059 Total $ 181,079 $ 143,775 $ 108,485 $ 433,339 Employee Type (1) Revenue generated by billable consultants $ 118,555 $ 135,898 $ 91,819 $ 346,272 Revenue generated by full-time equivalents 40,727 7,877 16,666 65,270 Revenue generated by Healthcare Managed Services employees 21,797 — — 21,797 Total $ 181,079 $ 143,775 $ 108,485 $ 433,339 Timing of Revenue Recognition Revenue recognized over time $ 178,648 $ 143,775 $ 108,485 $ 430,908 Revenue recognized at a point in time 2,431 — — 2,431 Total $ 181,079 $ 143,775 $ 108,485 $ 433,339 Three Months Ended June 30, 2020 Healthcare Business Advisory Education Total Billing Arrangements Fixed-fee $ 50,803 $ 27,374 $ 11,397 $ 89,574 Time and expense 14,029 40,264 44,568 98,861 Performance-based 14,480 1,586 695 16,761 Software support, maintenance and subscriptions 6,044 1,246 5,371 12,661 Total $ 85,356 $ 70,470 $ 62,031 $ 217,857 Employee Type (1) Revenue generated by billable consultants $ 55,249 $ 67,269 $ 53,187 $ 175,705 Revenue generated by full-time equivalents 22,821 3,201 8,844 34,866 Revenue generated by Healthcare Managed Services employees 7,286 — — 7,286 Total $ 85,356 $ 70,470 $ 62,031 $ 217,857 Timing of Revenue Recognition Revenue recognized over time $ 84,941 $ 70,470 $ 62,030 $ 217,441 Revenue recognized at a point in time 415 — 1 416 Total $ 85,356 $ 70,470 $ 62,031 $ 217,857 Six Months Ended June 30, 2020 Healthcare Business Advisory Education Total Billing Arrangements Fixed-fee $ 106,588 $ 52,767 $ 24,572 $ 183,927 Time and expense 28,762 77,853 88,279 194,894 Performance-based 33,401 2,232 695 36,328 Software support, maintenance and subscriptions 12,183 2,523 10,621 25,327 Total $ 180,934 $ 135,375 $ 124,167 $ 440,476 Employee Type (1) Revenue generated by full-time billable consultants $ 117,115 $ 129,226 $ 106,623 $ 352,964 Revenue generated by full-time equivalents 48,749 6,149 17,544 72,442 Revenue generated by Healthcare Managed Services employees 15,070 — — 15,070 Total $ 180,934 $ 135,375 $ 124,167 $ 440,476 Timing of Revenue Recognition Revenue recognized over time $ 179,400 $ 135,375 $ 124,052 $ 438,827 Revenue recognized at a point in time 1,534 — 115 1,649 Total $ 180,934 $ 135,375 $ 124,167 $ 440,476 (1) Billable consultants consist of our consulting professionals who provide consulting services to our clients and are billable to our clients based on the number of hours worked. Full-time equivalent professionals consist of leadership coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients. Healthcare Managed Services employees manage and provide revenue cycle billing, collections, insurance verification and change integrity services to healthcare clients. At June 30, 2021, one client in our Healthcare segment had a total receivable and unbilled services balance that accounted for 10.4%of our combined balance of receivables from clients, net and unbilled services, net. The outstanding balance for this client is the result of outstanding invoices due in the normal course of the contract payment terms and services performed in advance of the contract billing schedule. At December 31, 2020, no single client accounted for greater than 10% of our combined balance of receivables from clients, net |