Table of Contents







UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10–Q10-Q
 
(Mark One)
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-50976
HURON CONSULTING GROUP INC.HURON CONSULTING GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware
01-0666114
Delaware
01-0666114
(State or other jurisdiction of

incorporation or organization)
(IRS Employer

Identification Number)
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices)
(Zip Code)
(312) 583-8700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareHURNNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý☒    No  o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý☒    No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated Filer☒ýAccelerated Filer☐Accelerated filerNon-accelerated Filer☐o
Smaller Reporting 
Company		☐Emerging Growth Company
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting companyo
Emerging growth companyo☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o☐    No  ý☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of October 26, 2017, 22,129,393April 27, 2021, 22,577,906 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

Table of Contents




Table of Contents




Huron Consulting Group Inc.
HURON CONSULTING GROUP INC.
INDEX

Page
Page
Part I – Financial Information
Item 1.
1
2
3
4
5
Item 2.
2821
Item 3.
5136
Item 4.
5237
Item 1.
5237
Item 1A.
5237
Item 2.
5437
Item 3.
5438
Item 4.
5438
Item 5.
5438
Item 6.
5539
5640




Table of Contents







PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS


HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
September 30,
2017		 December 31,
2016		March 31,
2021		December 31,
2020
Assets   Assets
Current assets:   Current assets:
Cash and cash equivalents$8,660
 $17,027
Cash and cash equivalents$21,623 $67,177 
Receivables from clients, net94,025
 94,246
Unbilled services, net65,432
 51,290
Receivables from clients, net of allowances of $8,464 and $7,680, respectivelyReceivables from clients, net of allowances of $8,464 and $7,680, respectively87,146 87,687 
Unbilled services, net of allowances of $2,969 and $2,603, respectivelyUnbilled services, net of allowances of $2,969 and $2,603, respectively77,080 53,959 
Income tax receivable4,018
 4,211
Income tax receivable4,403 5,121 
Prepaid expenses and other current assets15,106
 13,308
Prepaid expenses and other current assets14,964 16,569 
Total current assets187,241
 180,082
Total current assets205,216 230,513 
Property and equipment, net47,075
 32,434
Property and equipment, net29,710 29,093 
Deferred income taxes, net15,159
 —
Deferred income taxes, net5,303 4,191 
Long-term investment31,937
 34,675
Long-term investmentsLong-term investments64,703 71,030 
Operating lease right-of-use assetsOperating lease right-of-use assets38,207 39,360 
Other non-current assets26,149
 24,814
Other non-current assets62,819 62,068 
Intangible assets, net80,861
 81,348
Intangible assets, net21,232 20,483 
Goodwill689,375
 799,862
Goodwill597,552 594,237 
Total assets$1,077,797
 $1,153,215
Total assets$1,024,742 $1,050,975 
Liabilities and stockholders’ equity   Liabilities and stockholders’ equity
Current liabilities:   Current liabilities:
Accounts payable$10,259
 $7,273
Accounts payable$8,156 $648 
Accrued expenses and other current liabilities22,846
 19,788
Accrued expenses and other current liabilities16,302 14,874 
Accrued payroll and related benefits62,451
 82,669
Accrued payroll and related benefits56,811 133,830 
Accrued contingent consideration for business acquisitions7,743
 1,985
Current maturities of long-term debtCurrent maturities of long-term debt548 499 
Current maturities of operating lease liabilitiesCurrent maturities of operating lease liabilities9,671 8,771 
Deferred revenues25,495
 24,053
Deferred revenues18,686 28,247 
Total current liabilities128,794
 135,768
Total current liabilities110,174 186,869 
Non-current liabilities:   Non-current liabilities:
Deferred compensation and other liabilities20,336
 24,171
Deferred compensation and other liabilities43,947 45,361 
Accrued contingent consideration for business acquisitions, net of current portion14,726
 6,842
Accrued contingent consideration for business acquisitionsAccrued contingent consideration for business acquisitions1,812 1,770 
Long-term debt, net of current portion374,328
 292,065
Long-term debt, net of current portion267,642 202,780 
Deferred lease incentives15,236
 10,703
Operating lease liabilities, net of current portionOperating lease liabilities, net of current portion59,730 61,825 
Deferred income taxes, net—
 35,633
Deferred income taxes, net434 428 
Total non-current liabilities424,626
 369,414
Total non-current liabilities373,565 312,164 
Commitments and contingencies
 
Commitments and contingencies00
Stockholders’ equity   Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,560,468 and 24,126,118 shares issued at September 30, 2017 and December 31, 2016, respectively241
 235
Treasury stock, at cost, 2,428,971 and 2,408,343 shares at September 30, 2017 and December 31, 2016, respectively(121,395) (113,195)
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,294,954 and 25,346,916 shares issued at March 31, 2021 and December 31, 2020, respectivelyCommon stock; $0.01 par value; 500,000,000 shares authorized; 25,294,954 and 25,346,916 shares issued at March 31, 2021 and December 31, 2020, respectively247 246 
Treasury stock, at cost, 2,422,227 and 2,584,119 shares at March 31, 2021 and December 31, 2020, respectivelyTreasury stock, at cost, 2,422,227 and 2,584,119 shares at March 31, 2021 and December 31, 2020, respectively(134,611)(129,886)
Additional paid-in capital431,211
 405,895
Additional paid-in capital445,711 454,512 
Retained earnings210,543
 351,483
Retained earnings219,414 214,009 
Accumulated other comprehensive income3,777
 3,615
Accumulated other comprehensive income10,242 13,061 
Total stockholders’ equity524,377
 648,033
Total stockholders’ equity541,003 551,942 
Total liabilities and stockholders’ equity$1,077,797
 $1,153,215
Total liabilities and stockholders’ equity$1,024,742 $1,050,975 
The accompanying notes are an integral part of the consolidated financial statements.

1
Table of Contents







HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 2016 2017 201620212020
Revenues and reimbursable expenses:       Revenues and reimbursable expenses:
Revenues$176,376
 $183,400
 $546,643
 $548,148
Revenues$203,213 $222,619 
Reimbursable expenses17,982
 19,093
 55,862
 54,636
Reimbursable expenses1,934 19,303 
Total revenues and reimbursable expenses194,358
 202,493
 602,505
 602,784
Total revenues and reimbursable expenses205,147 241,922 
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
       
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs113,775
 108,354
 343,185
 323,310
Direct costs148,115 156,248 
Amortization of intangible assets and software development costs2,657
 4,052
 8,388
 11,278
Amortization of intangible assets and software development costs925 1,301 
Reimbursable expenses18,079
 18,956
 55,901
 54,747
Reimbursable expenses2,003 19,389 
Total direct costs and reimbursable expenses134,511
 131,362
 407,474
 389,335
Total direct costs and reimbursable expenses151,043 176,938 
Operating expenses and other losses (gains), net:       
Operating expenses and other losses (gains), netOperating expenses and other losses (gains), net
Selling, general and administrative expenses41,576
 38,256
 132,137
 119,937
Selling, general and administrative expenses39,766 43,446 
Restructuring charges1,347
 1,049
 5,295
 4,129
Restructuring charges628 1,609 
Other losses (gains), net880
 494
 (222) 494
Litigation and other losses (gains)Litigation and other losses (gains)42 (150)
Depreciation and amortization9,946
 8,092
 28,549
 23,064
Depreciation and amortization5,428 6,114 
Goodwill impairment charge—
 —
 209,600
 —
Goodwill impairment chargesGoodwill impairment charges0 59,816 
Total operating expenses and other losses (gains), net53,749
 47,891
 375,359
 147,624
Total operating expenses and other losses (gains), net45,864 110,835 
Operating income (loss)6,098
 23,240
 (180,328) 65,825
Operating income (loss)8,240 (45,851)
Other income (expense), net:       Other income (expense), net:
Interest expense, net of interest income(4,880) (4,176) (13,811) (12,270)Interest expense, net of interest income(1,719)(2,341)
Other income, net930
 489
 3,204
 1,236
Other income (expense), netOther income (expense), net420 (5,296)
Total other expense, net(3,950) (3,687) (10,607) (11,034)Total other expense, net(1,299)(7,637)
Income (loss) from continuing operations before income tax expense2,148
 19,553
 (190,935) 54,791
Income (loss) from continuing operations before taxesIncome (loss) from continuing operations before taxes6,941 (53,488)
Income tax expense (benefit)(1,984) 7,265
 (49,740) 19,498
Income tax expense (benefit)1,536 (11,215)
Net income (loss) from continuing operations4,132
 12,288
 (141,195) 35,293
Net income (loss) from continuing operations5,405 (42,273)
Income (loss) from discontinued operations, net of tax238
 4
 690
 (1,830)
Loss from discontinued operations, net of taxLoss from discontinued operations, net of tax0 (35)
Net income (loss)$4,370
 $12,292
 $(140,505) $33,463
Net income (loss)$5,405 $(42,308)
Net earnings (loss) per basic share:       Net earnings (loss) per basic share:
Net income (loss) from continuing operations$0.19
 $0.58
 $(6.59) $1.67
Net income (loss) from continuing operations$0.25 $(1.94)
Income (loss) from discontinued operations, net of tax0.01
 —
 0.03
 (0.08)
Loss from discontinued operations, net of taxLoss from discontinued operations, net of tax0 0 
Net income (loss)$0.20
 $0.58
 $(6.56) $1.59
Net income (loss)$0.25 $(1.94)
Net earnings (loss) per diluted share:       Net earnings (loss) per diluted share:
Net income (loss) from continuing operations$0.19
 $0.57
 $(6.59) $1.65
Net income (loss) from continuing operations$0.24 $(1.94)
Income (loss) from discontinued operations, net of tax0.01
 —
 0.03
 (0.09)
Loss from discontinued operations, net of taxLoss from discontinued operations, net of tax0 0 
Net income (loss)$0.20
 $0.57
 $(6.56) $1.56
Net income (loss)$0.24 $(1.94)
Weighted average shares used in calculating earnings per share:       
Weighted average shares used in calculating earnings (loss) per share:Weighted average shares used in calculating earnings (loss) per share:
Basic21,505
 21,076
 21,413
 21,084
Basic21,932 21,827 
Diluted21,622
 21,445
 21,413
 21,427
Diluted22,341 21,827 
Comprehensive income (loss):       Comprehensive income (loss):
Net income (loss)$4,370
 $12,292
 $(140,505) $33,463
Net income (loss)$5,405 $(42,308)
Foreign currency translation adjustments, net of tax609
 50
 1,835
 52
Foreign currency translation adjustments, net of tax400 (779)
Unrealized loss on investment, net of tax(2,200) (2,038) (1,669) (1,163)Unrealized loss on investment, net of tax(4,648)(258)
Unrealized gain (loss) on cash flow hedging instruments, net of tax23
 121
 (4) (27)Unrealized gain (loss) on cash flow hedging instruments, net of tax1,429 (1,685)
Other comprehensive income (loss)(1,568) (1,867) 162
 (1,138)
Other comprehensive lossOther comprehensive loss(2,819)(2,722)
Comprehensive income (loss)$2,802
 $10,425
 $(140,343) $32,325
Comprehensive income (loss)$2,586 $(45,030)
The accompanying notes are an integral part of the consolidated financial statements.

2
Table of Contents







HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
(Unaudited)

Three Months Ended March 31, 2021
Common StockTreasury StockAdditional
Paid-In
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Income		Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 202024,560,855 $246 (2,812,896)$(129,886)$454,512 $214,009 $13,061 $551,942 
Comprehensive income5,405 (2,819)2,586 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations376,731 4 90,100 3,778 (3,782)0 
Exercise of stock options6,631 — 174 174 
Share-based compensation7,988 7,988 
Shares redeemed for employee tax withholdings(165,203)(8,503)(8,503)
Share repurchases(245,718)$(3)$(13,181)(13,184)
Balance at March 31, 202124,698,499 $247 (2,887,999)$(134,611)$445,711 $219,414 $10,242 $541,003 
 Common Stock Treasury Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive
Income
 
Stockholders’
Equity
 Shares Amount Shares Amount    
Balance at December 31, 201623,478,016
 $235
 (2,420,913) $(113,195) $405,895
 $351,483
 $3,615
 $648,033
Comprehensive income (loss)          (140,505) 162
 (140,343)
Issuance of common stock in connection with:               
Restricted stock awards, net of cancellations367,278
 4
 (56,315) (3,750) 3,746
     —
Business acquisition221,558
 2
     9,558
     9,560
Share-based compensation        11,577
     11,577
Shares redeemed for employee tax withholdings    (102,179) (4,450)       (4,450)
Cumulative-effect adjustment from adoption of ASU 2016-09        435
 (435)   —
Balance at September 30, 201724,066,852
 $241
 (2,579,407) $(121,395) $431,211
 $210,543
 $3,777
 $524,377
Three Months Ended March 31, 2020
Common StockTreasury StockAdditional
Paid-In
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Income		Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 201924,603,308 $247 (2,763,302)$(128,348)$460,781 $237,849 $14,936 $585,465 
Comprehensive income(42,308)(2,722)(45,030)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations250,544 2 102,467 7,115 (7,117)0 
Exercise of stock options20,000 — 468 468 
Share-based compensation11,720 11,720 
Shares redeemed for employee tax withholdings(120,000)(7,133)(7,133)
Share repurchases(313,998)(3)(20,878)(20,881)
Balance at March 31, 202024,559,854 $246 (2,780,835)$(128,366)$444,974 $195,541 $12,214 $524,609 
The accompanying notes are an integral part of the consolidated financial statements.


3
Table of Contents







HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 201620212020
Cash flows from operating activities:   Cash flows from operating activities:
Net income (loss)$(140,505) $33,463
Net income (loss)$5,405 $(42,308)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Adjustments to reconcile net income (loss) to cash flows from operating activities:Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization37,881
 34,344
Depreciation and amortization6,567 7,415 
Non-cash lease expenseNon-cash lease expense1,693 1,938 
Share-based compensation11,711
 13,145
Share-based compensation5,625 8,504 
Amortization of debt discount and issuance costs7,604
 7,171
Amortization of debt discount and issuance costs198 198 
Goodwill impairment charge209,600
 —
Allowances for doubtful accounts and unbilled services3,812
 7,107
Goodwill impairment chargesGoodwill impairment charges0 59,816 
Allowances for doubtful accountsAllowances for doubtful accounts0 21 
Deferred income taxes(51,062) 4,980
Deferred income taxes— (14,016)
Gain on sale of business(931) —
Loss on sale of businessLoss on sale of business0 102 
Change in fair value of contingent consideration liabilities

(222) 494
Change in fair value of contingent consideration liabilities42 0 
Changes in operating assets and liabilities, net of acquisitions:   
(Increase) decrease in receivables from clients9,025
 9,442
(Increase) decrease in unbilled services(12,251) (21,492)
Changes in operating assets and liabilities, net of acquisition and divestiture:Changes in operating assets and liabilities, net of acquisition and divestiture:
(Increase) decrease in receivables from clients, net(Increase) decrease in receivables from clients, net1,178 11,698 
(Increase) decrease in unbilled services, net(Increase) decrease in unbilled services, net(23,086)(9,138)
(Increase) decrease in current income tax receivable / payable, net(32) (3,039)(Increase) decrease in current income tax receivable / payable, net573 2,332 
(Increase) decrease in other assets(1,802) 12,669
(Increase) decrease in other assets327 4,304 
Increase (decrease) in accounts payable and accrued liabilities1,850
 (2,860)
Increase (decrease) in accounts payable and other liabilitiesIncrease (decrease) in accounts payable and other liabilities2,566 (3,708)
Increase (decrease) in accrued payroll and related benefits(21,928) (17,707)Increase (decrease) in accrued payroll and related benefits(74,273)(84,910)
Increase (decrease) in deferred revenues(318) 2,028
Increase (decrease) in deferred revenues(9,569)1,606 
Net cash provided by operating activities52,432
 79,745
Net cash used in operating activitiesNet cash used in operating activities(82,754)(56,146)
Cash flows from investing activities:   Cash flows from investing activities:
Purchases of property and equipment, net(20,139) (9,372)Purchases of property and equipment, net(637)(1,001)
Purchases of investment securitiesPurchases of investment securities0 (13,000)
Investment in life insurance policies(1,826) (1,890)Investment in life insurance policies0 (1,472)
Distributions from life insurance policies2,889
 —
Purchases of businesses, net of cash acquired(106,915) (69,133)
Purchases of businessesPurchases of businesses(6,000)0 
Capitalization of internally developed software costs(938) (838)Capitalization of internally developed software costs(1,400)(2,922)
Proceeds from note receivable177
 —
Proceeds from sale of business1,499
 —
Net cash used in investing activities(125,253)
(81,233)Net cash used in investing activities(8,037)(18,395)
Cash flows from financing activities:   Cash flows from financing activities:
Proceeds from exercise of stock options—
 123
Proceeds from exercises of stock optionsProceeds from exercises of stock options174 468 
Shares redeemed for employee tax withholdings(4,450) (4,837)Shares redeemed for employee tax withholdings(8,503)(7,133)
Share repurchases—
 (55,265)Share repurchases(11,454)(22,115)
Proceeds from borrowings under credit facility241,000
 168,000
Repayments of debt(170,082) (156,000)
Payments for debt issuance costs(395) —
Payments of contingent consideration liabilities(1,811) —
Net cash provided by (used in) financing activities64,262
 (47,979)
Proceeds from bank borrowingsProceeds from bank borrowings89,000 281,000 
Repayments of bank borrowingsRepayments of bank borrowings(24,135)(38,131)
Net cash provided by financing activitiesNet cash provided by financing activities45,082 214,089 
Effect of exchange rate changes on cash192
 133
Effect of exchange rate changes on cash155 (143)
Net decrease in cash and cash equivalents(8,367) (49,334)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents(45,554)139,405 
Cash and cash equivalents at beginning of the period17,027
 58,437
Cash and cash equivalents at beginning of the period67,177 11,604 
Cash and cash equivalents at end of the period$8,660
 $9,103
Cash and cash equivalents at end of the period$21,623 $151,009 
Supplemental disclosure of cash flow information:   Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:   Non-cash investing and financing activities:
Property and equipment expenditures included in accounts payable and accrued expenses$4,049
 $2,928
Promissory note assumed for purchase of property and equipment$5,113
 $—
Contingent consideration related to business acquisitions$15,489
 $8,754
Common stock issued related to a business acquisition$9,560
 $—
Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefitsProperty and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits$3,545 $3,716 
Share repurchases included in accounts payableShare repurchases included in accounts payable$1,729 $0 
Deferred payment on business acquisitionDeferred payment on business acquisition$1,000 $0 
The accompanying notes are an integral part of the consolidated financial statements.

4
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)



1. Description of Business
Huron is a global professional services firm committedconsultancy that collaborates with clients to achievingdrive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, Huron creates sustainable results in partnership with its clients. We bring a depth of expertise in strategy, technology, operations, advisory services and analytics to drive lasting and measurable results infor the healthcare, higher education, life sciences and commercial sectors. Through focus, passion, and collaboration, we provide guidance to support organizations as they contend with the changes transforming their industries and businesses.it serves.
2. Basis of Presentation and Significant Accounting Policies
The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 20162020 included in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and June 30, 2017.10-K. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.
During the first quarter of 2021, we identified an error on our previously reported Consolidated Balance Sheet as of December 31, 2020 related to the classification between receivables from clients, unbilled services, and deferred revenues. The Consolidated Balance Sheet as of December 31, 2020 presented herein has been revised to reflect the correction of this error. The results of this correction on the Consolidated Balance Sheet were a decrease in unbilled services of $7.2 million, an increase in receivables from clients of $0.7 million, and a decrease in deferred revenues of $6.5 million. This error had no impact on our Consolidated Statement of Operations and Other Comprehensive Income. This error had no impact on our Consolidated Statement of Cash Flows for the three months ended March 31, 2021 and 2020. The Company evaluated the materiality of this error from both quantitative and qualitative perspectives and concluded that the impact of the error was not material to the financial statements for the year ended December 31, 2020.
Preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related disclosures. The business and economic uncertainty resulting from the coronavirus (COVID-19) pandemic has made such estimates and assumptions more difficult to predict. Accordingly, actual results and outcomes could differ from those estimates.
3. New Accounting Pronouncements
Recently Adopted
In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required us to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. We adopted this ASU in the second quarter of 2017 on a prospective basis and applied the new guidance to our interim goodwill impairment tests performed in the second quarter of 2017. Refer to Note 6 “Goodwill and Intangible Assets” for additional information on our interim goodwill impairment tests performed.
In March 2016,October 2020, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.2020-10, Codification Improvements. ASU 2016-09 simplifies several aspects2020-10 situates all disclosure guidance within the appropriate disclosure section of the accounting for share-based payment transactions, includingCodification and makes other improvements and technical corrections to the accounting for income taxes, classification of excess tax benefits on the statement of cash flows, and forfeitures.Codification. We adopted this guidance in the first quarter of 2017, atASU 2020-10 effective January 1, 2021, which time we began recognizing excess tax benefits and deficiencies as income tax benefit or expense indid not have any impact on our consolidated statements of operations on a prospective basis. We recognized $0.1 million and $1.8 million of net excess tax deficiencies as income tax expense in our consolidated statement of operations for the three and nine months ended September 30, 2017, respectively. Refer to Note 13 "Income Taxes" for additional information on our effective tax rate for the three and nine months ended September 30, 2017. Additionally, upon adoption, we began classifying excess tax benefits as an operating activity on the statement of cash flows on a retrospective basis. As a result, we reclassified $0.9 million of excess tax benefits for the first nine months of 2016 from cash flows from financing activities to cash flows from operating activities on our statement of cash flows. We elected to account for share-based award forfeitures as they occur, and applied this accounting change on a modified retrospective basis as a cumulative-effect adjustment to retained earnings of $0.4 million during the first quarter of 2017.financial statements.
In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. ASU 2016-06 clarifies that in assessing whether an embedded contingent put or call option is clearly and closely related to the debt host, an entity is required to perform only the four-step decision sequence in ASC 815-15-25-42 (as amended by the ASU). The entity does not have to separately assess whether the event that triggers its ability to exercise the contingent option is itself indexed only to interest rates or credit risk. We adopted these amendments in the first quarter of 2017 on a


5
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

4. Goodwill and Intangible Assets
modified retrospective basis. The adoptiontable below sets forth the changes in the carrying amount of these amendmentsgoodwill by reportable segment for the three months ended March 31, 2021.

Healthcare
Business
Advisory		EducationTotal
Balance as of December 31, 2020:
Goodwill$636,810 $308,935 $104,384 $1,050,129 
Accumulated impairment losses(208,081)(247,811)0 (455,892)
Goodwill, net as of December 31, 2020428,729 61,124 104,384 594,237 
Goodwill recorded in connection with a business acquisition (1)
0 3,315 0 3,315 
Goodwill, net as of March 31, 2021$428,729 $64,439 $104,384 $597,552 
(1)On February 1, 2021, we completed the acquisition of Unico Solution, a data strategy and technology consulting firm focused on helping clients use their data to speed business transformation and accelerate cloud adoption. The results of operations of Unico Solution are included in our consolidated financial statements and results of operations of our Business Advisory segment from the date of acquisition. This acquisition is not significant to our consolidated financial statements.
First Quarter 2020 Goodwill Impairment Charges
The worldwide spread of the COVID-19 pandemic in the first quarter of 2020 has created significant volatility, uncertainty and disruption to
the global economy. From the onset of the COVID-19 pandemic, we closely monitored the impact it could have on all aspects of our
business, including how we expect it to negatively impact our clients, employees and business partners. While the COVID-19 pandemic did
not have anya significant impact on our consolidated financial statements.revenues in the first quarter of 2020, we expected it to have an unfavorable impact on
Not Yet Adoptedsales, increase uncertainty in the backlog and negatively impact full year 2020 results. The services provided by our Strategy and Innovation
In August 2017,and Life Sciences reporting units within our Business Advisory segment focus on strategic solutions for healthy, well-capitalized companies to
identify new growth opportunities, which may be considered by our clients to be more discretionary in nature, and the FASB issued ASU 2017-12, Derivativesduration of the projects
within these practices are typically short-term. Therefore, at the onset of the COVID-19 pandemic in the U.S. and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendmentsdue to the guidance improveuncertainty
caused by the pandemic, we were cautious about near-term results for these two reporting units. Based on our internal projections and simplify accounting rules for hedge accounting to better present the economic results
preparation of an entity’s risk management activities in itsour financial statements and improve the disclosures of hedging arrangements. Additionally, ASU 2017-12 simplifies the hedge documentation and effectiveness assessment requirements. The updated guidance is effective for us beginning January 1, 2019. We do not expect this guidance to have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-02, Leases, which supersedes ASC Topic 840, Leases, and sets forth the principles for the recognition, measurement, presentation,quarter ended March 31, 2020, and disclosureconsidering the expected decrease in demand due to the
COVID-19 pandemic, during the first quarter of leases for2020 we believed it was more likely than not that the fair value of these two reporting units no
longer exceeded their carrying values and performed an interim impairment test on both lessees and lessors. ASU 2016-02 requires lessees to classify leasesreporting units as either finance or operating leases and to recordof March 31, 2020.
Based on the balance sheet a right-of-use asset and a lease liability, equal to the present valueestimated fair values of the remaining lease payments, for all leases with a term greater than 12 months regardlessStrategy and Innovation and Life Sciences reporting units, we recorded non-cash pretax goodwill impairment charges of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or a straight-line basis over the term of the lease. ASU 2016-02 will be effective for us beginning January 1, 2019, with early adoption permitted. Entities are required to use a modified retrospective transition method for existing leases. We are currently evaluating the potential impact this guidance will have on our consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition$49.9 million and Measurement of Financial Assets and Financial Liabilities. The amendments to the guidance enhance the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation, and disclosure. The updated guidance is effective for us beginning January 1, 2018. We do not expect this guidance to have a material impact on our consolidated financial statements.
In May 2014, the FASB issued ASU��2014-09, Revenue from Contracts with Customers, as a new Topic, ASC 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In accordance with the new standard, we will adopt ASU 2014-09 on January 1, 2018. Companies may apply the new guidance using either the full retrospective transition method, which requires restating each prior period presented, or the modified retrospective transition method, under which the new guidance is applied to the current period presented$9.9 million, respectively, in the financial statements and a cumulative-effect adjustment is recorded asfirst quarter of the date of adoption. We expect to apply the new guidance using the modified retrospective transition method. We are currently evaluating the potential impact this guidance will have on our consolidated financial statements; most notably the impact on our revenue recognition for performance-based fee billing arrangements. Currently, we recognize revenue under performance-based fee billing arrangements once all related performance criteria are met and the amount to be recognized is fixed or determinable. However, ASC 606 will require us to estimate these amounts and recognize a significant portion of the estimated amounts over the term of the engagement. As a result, we expect to recognize revenue under performance-based fee billing arrangements earlier under ASC 606 than we do under current guidance.
4. Discontinued Operations
On December 31, 2015, we sold our Huron Legal segment to Consilio, Inc. ("Consilio"). Huron Legal provided eDiscovery services, consulting services and contract management services related to law department management, information governance and compliance, legal discovery, litigation management, and legal analytics.
2020. The divestiture of the Huron Legal segment represented a strategic shift that had a major effect on our operations and financial results. As such, the operations of our Huron Legal segment have been classified as discontinued operations in our consolidated statements of operations for all periods presented. As of September 30, 2017 and December 31, 2016, no assets or liabilities of the disposed business remained on our consolidated balance sheet.
For the three and nine months ended September 30, 2017, we recognized income from discontinued operations, net of tax, of $0.2$49.9 million and $0.7 million, respectively, primarily related to updated lease assumptions for vacated office space directlynon-cash pretax charge related to the saleStrategy and Innovation reporting unit reduced the goodwill balance of the Huron Legal segment. Forreporting unit to $37.5 million. The $9.9 million non-cash pretax charge related to the nine months ended September 30, 2016,Life Sciences reporting unit reduced the goodwill balance of the reporting unit to 0.
Our goodwill impairment test was performed by comparing the fair value of each of the Strategy and Innovation and Life Sciences reporting
units with its respective carrying value and recognizing an impairment charge for the amount by which the carrying value exceeded the fair value. To estimate the fair value of each reporting unit, we recognized losses fromrelied on a combination of the income approach and the market approach with a

fifty-fifty weighting.
In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be
generated by each reporting unit and then discounting those cash flows to present value, reflecting the relevant risks associated with each
reporting unit and the time value of money. This approach requires the use of significant estimates and assumptions, including forecasted
revenue growth rates, forecasted EBITDA margins, and discount rates that reflect the risk inherent in the future cash flows. In estimating
future cash flows, we relied on internally generated seven-year forecasts. Our forecasts are based on historical experience, current backlog,
expected market demand, and other industry information.
In the market approach, we utilized the guideline company method, which involved calculating revenue multiples based on operating data
from guideline publicly traded companies. Multiples derived from guideline companies provide an indication of how much a knowledgeable
investor in the marketplace would be willing to pay for a company. These multiples were evaluated and adjusted based on specific
characteristics of the Strategy and Innovation and Life Sciences reporting units relative to the selected guideline companies and applied to
6
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

the reporting units' operating data to arrive at an indication of value.
discontinued operations, net of tax, of $1.8 million, primarily related to obligations for former employees, legal fees, and updated lease assumptions for vacated office space directly related to the sale of the Huron Legal segment.Intangible Assets
In connection with the sale of Huron Legal, we entered into a transition services agreement ("TSA") with Consilio, under which we provided certain post-closing services, support, and facilities to Consilio to facilitate an orderly transfer of the Huron Legal business operations. Billings under the TSA, which we did not consider to be significant, were recorded as a reduction of the costs to provide the respective services, primarily in selling, general and administrative expenses in the consolidated statements of operations. Services under the TSA endedIntangible assets as of June 30, 2017. We have no continuing involvement with the Huron Legal segment.
5. Acquisitions
ADI Strategies, Inc.
On April 1, 2017, we completed our acquisition of the international assets of ADI Strategies, Inc. ("ADI Strategies") in DubaiMarch 31, 2021 and India. We acquired the U.S. assets of ADI Strategies in the second quarter of 2016. ADI Strategies is a leading enterprise performance management, risk management and business intelligence firm. The acquisition strengthens our technology and analytics competencies and expands our global reach. The international results of operations of ADI Strategies have been included in our consolidated financial statements and results of operations of the Business Advisory segment from the date of acquisition.
Pope Woodhead and Associates Limited
On January 9, 2017, we completed our acquisition of Pope Woodhead and Associates Limited ("Pope Woodhead"), a U.K.-based consulting firm providing market access capabilities to assist clients in developing value propositions for innovative medicines and technologies. The acquisition expands our life sciences strategy expertise and strengthens our ability to lead clients through complex payer and regulatory environments. Pope Woodhead's results of operations have been included in our consolidated financial statements and the results of operations of our Business Advisory segment from the date of acquisition.
Pro forma results of operations are not presented for ADI Strategies or Pope Woodhead because these acquisitions were not material in relation to our consolidated financial position or results of operations.
Innosight Holdings, LLC
On March 1, 2017, we acquired 100% of the membership interests of Innosight Holdings, LLC ("Innosight"). Innosight is a growth strategy firm focused on helping companies navigate disruptive change and manage strategic transformation. Together with Innosight, we use our strategic, operational, and technology capabilities to help clients across multiple industries develop pioneering solutions to address disruption and achieve sustained growth.

7
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

The acquisition was accounted for using the acquisition method of accounting. Tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The current fair values of assets acquired and liabilities assumed are considered preliminary and are based on the information that was available as of the date of the acquisition. We believe that the information provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed, but certain items, such as working capital amounts, may be subject to change as additional information is received. Thus, the provisional measurements of fair value and goodwill are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.
The acquisition date fair value of the consideration transferred for Innosight was $113.6 million, whichDecember 31, 2020 consisted of the following:
Fair value of consideration transferred 
Cash$90,725
Common stock9,560
Contingent consideration liability12,050
Net working capital adjustment1,272
Total consideration transferred$113,607
We funded the cash component of the purchase price with cash on hand and borrowings of $89.0 million under our senior secured credit facility. We issued 221,558 shares of our common stock as part of the consideration transferred, with an acquisition date fair value of $9.6 million based on our common stock's closing price of $43.15 on the date of acquisition. The preliminary contingent consideration liability of $12.1 million represents the acquisition date fair value of the contingent consideration arrangement, pursuant to which we may be required to pay additional consideration to the sellers if specific financial performance targets are met over a four-year term. The maximum amount that may be paid is $35.0 million. See Note 11 "Fair Value of Financial Instruments" for additional information on the valuation of contingent consideration liabilities.

8
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

The following table summarizes the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the acquisition date.
 March 1, 2017
Assets acquired: 
Accounts receivable$7,752
Unbilled services1,881
Prepaid expenses and other current assets468
Property and equipment419
Intangible assets18,015
Liabilities assumed: 
Accounts payable531
Accrued expenses and other current liabilities916
Accrued payroll and related benefits883
Deferred revenues30
Total identifiable net assets26,175
Goodwill87,432
Total purchase price$113,607
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the acquisition date.
 Fair Value 
Useful Life in
Years
Customer relationships$9,500
 6
Trade name6,000
 6
Customer contracts1,000
 1
Non-compete agreements1,300
 5
Favorable lease contract215
 1
Total intangible assets subject to amortization$18,015
  
The weighted average amortization period for the identifiable intangible assets shown above is 5.6 years. Customer relationships and customer contracts represent the fair values of the underlying relationships and agreements with Innosight customers. The trade name represents the fair value of the brand and name recognition associated with the marketing of Innosight's service offerings. Non-compete agreements represent the value derived from preventing certain Innosight executives from entering into or starting a similar, competing business. The favorable lease contract represents the difference between the fair value and minimum lease obligations under the current outstanding lease. Goodwill is recognized for the excess of purchase price over the net fair value of assets acquired and liabilities assumed, and largely reflects the expanded market opportunities expected from combining the service offerings of Huron and Innosight, as well as the assembled workforce of Innosight. Goodwill recognized in conjunction with the acquisition of Innosight was recorded in the Business Advisory segment. Goodwill of $87.4 million is expected to be deductible for income tax purposes.
Innosight’s results of operations have been included in our unaudited consolidated statements of operations and results of operations of our Business Advisory segment from the date of acquisition. For the three months ended September 30, 2017, revenues from Innosight were $11.0 million and operating loss was $0.6 million, which included $0.9 million of amortization expense for intangible assets acquired. For the nine months ended September 30, 2017, revenues from Innosight were $27.2 million and operating income was $0.8 million, which included $2.7 million of amortization expense for intangible assets acquired. In connection with the acquisition of Innosight, we incurred $1.7 million of transaction and acquisition-related expenses. Of the $1.7 million of expense, $1.4 million was incurred in the first quarter of 2017 and $0.3 million was incurred in the second quarter in 2017. These costs are recorded in selling, general and administrative expenses.

9
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

The following unaudited supplemental pro forma information summarizes the combined results of operations of Huron and Innosight as though the companies were combined on January 1, 2016.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenues$176,376
 $194,968
 $555,768
 $578,924
Net income (loss) from continuing operations$4,170
 $14,184
 $(137,922) $36,558
Net income (loss) from continuing operations per share - basic$0.19
 $0.67
 $(6.43) $1.72
Net income (loss) from continuing operations per share - diluted$0.19
 $0.65
 $(6.43) $1.69
The historical financial information has been adjusted to give effect to pro forma adjustments consisting of intangible asset amortization expense, acquisition-related costs, interest expense, and the related income tax effects. The unaudited pro forma information above includes adjustments to decrease expense for the three months ended September 30, 2017 by less than $0.1 million and include additional expense of $2.8 million for the three months ended September 30, 2016. We have included additional expense of $0.5 million and $8.4 million, for the nine months ended September 30, 2017 and 2016, respectively. Additionally, the historical financial information has been adjusted to give effect to the shares issued as consideration. All of these adjustments are based upon currently available information and certain assumptions. Therefore, the pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been had it completed the acquisition on January 1, 2016. The historical results included in the pro forma consolidated results do not purport to project future results of operations of the combined companies nor do they reflect the expected realization of any cost savings or revenue synergies associated with the acquisition.

10
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

6. Goodwill and Intangible Assets
The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2017.
 

Healthcare
 Education 

Business
Advisory
 Total
Balance as of December 31, 2016:       
Goodwill$636,802
 $102,906
 $203,137
 $942,845
Accumulated impairment losses—
 —
 (142,983) (142,983)
Goodwill, net as of December 31, 2016636,802
 102,906
 60,154
 799,862
Goodwill recorded in connection with business acquisitions (1)
7
 10,252
 88,286
 98,545
Goodwill impairment charge(209,600) —
 —
 (209,600)
Goodwill reallocation—
 (10,794) 10,794
 —
Goodwill allocated to disposal of business (2)
—
 —
 (568) (568)
Foreign currency translation—
 466
 670
 1,136
Goodwill, net as of September 30, 2017$427,209
 $102,830
 $159,336
 $689,375
(1)Refer to Note 5 "Acquisitions" for additional information on the goodwill recorded in connection with business acquisitions.
(2)On June 16, 2017, we sold our Life Sciences Compliance and Operations practice ("Life Sciences C&O") to a third-party, and allocated a portion of goodwill within the Life Sciences reporting unit to the disposed business based on the relative fair values of Life Sciences C&O and the remaining reporting unit. The allocated goodwill of $0.6 million was written off and included in the gain on sale of Life Sciences C&O. The sale of Life Sciences C&O did not meet the criteria for reporting separately as discontinued operations. In connection with the sale, we recorded a $0.9 million gain which is included in other income, net in our consolidated statements of operations.
Second Quarter 2017 Goodwill Impairment Charge
Since the first quarter of 2016, the Healthcare segment, which is also a reporting unit, has experienced declining revenues, primarily driven by softness in our revenue cycle offering within our performance improvement solution. This softness is attributable to decreased demand for our services, the winding down of some of our larger projects, and a growing trend toward smaller projects, as well as fewer large integrated projects. In light of these challenges, several initiatives have been undertaken to improve the segment's financial performance, including repositioning our solutions to address the most critical needs of our clients, the expansion of our existing services such as those in our Studer Group, strategy, physician and technology offerings, and workforce reductions to better align resources with market demand. While the initiatives undertaken to improve the financial performance of our Healthcare segment are yielding some positive impacts, hospitals and health systems continue to face regulatory and funding uncertainty; therefore, we remain cautious about near-term growth. As we have previously disclosed in prior quarters, if the financial performance of our Healthcare segment continued to decline and did not meet our expectations, we could be required to perform an interim impairment analysis with respect to our carrying value of goodwill for the Healthcare reporting unit prior to our usual annual test. Based on forecasts prepared in the second quarter of 2017 in connection with our quarterly forecasting cycle, we determined that the likely time frame to improve the financial results of this segment would take longer than originally anticipated. As such, we concluded, during the second quarter of 2017, that the fair value of the Healthcare reporting unit may no longer exceed its carrying value. In connection with the preparation of our financial statements for the quarter ended June 30, 2017, we performed an interim impairment test on the Healthcare reporting unit.
Our goodwill impairment test was performed by comparing the fair value of the Healthcare reporting unit with its carrying value and, in accordance with ASU 2017-04 which we adopted in the second quarter of 2017, recognizing an impairment charge for the amount by which the carrying value exceeded the fair value. To estimate the fair value of the Healthcare reporting unit, we relied on a combination of the income approach and the market approach, utilizing the guideline company method, with a fifty-fifty weighting. Based on the estimated fair value of the Healthcare reporting unit, we recorded a $209.6

11
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

million non-cash pretax charge in the second quarter of 2017 to reduce the carrying value of goodwill in our Healthcare reporting unit.
In connection with the goodwill impairment test performed on the Healthcare reporting unit, we performed an impairment test on the long-lived assets allocated to the asset groups within the Healthcare reporting unit. Based on the impairment test performed, we concluded that the long-lived assets allocated to the asset groups within the Healthcare reporting unit were not impaired as of June 30, 2017.
Second Quarter 2017 Goodwill Reallocation
Effective June 1, 2017, we reorganized our internal financial reporting structure, which management uses to assess performance and allocate resources, by moving our Life Sciences practice from the Education and Life Sciences segment to the Business Advisory segment. The remaining Education and Life Sciences segment is now referred to as the Education segment. The Life Sciences practice is a separate reporting unit for purposes of goodwill impairment testing. We continue to operate under three reportable segments: Healthcare, Education, and Business Advisory. These three reportable segments are comprised of the following six reporting units for goodwill impairment testing purposes: Healthcare, Education, Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences. The Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences reporting units comprise our Business Advisory segment. See Note 15 "Segment Information" for additional information on our reportable segments.
As a result of the reorganization, we reallocated $10.8 million of the goodwill balance associated with the previous Education and Life Sciences reporting unit to the new Life Sciences reporting unit based on the relative fair values of the Life Sciences reporting unit and the remaining Education reporting unit. The estimated fair values were determined using a combination of the income approach and the market approach, utilizing the guideline company method, with a fifty-fifty weighting.

In conjunction with the goodwill reallocation, we performed a goodwill impairment test for the goodwill balances within our Education reporting unit and Life Sciences reporting unit as of June 1, 2017. Based on the results of the goodwill impairment test, we determined that the fair values of our Education reporting unit and Life Sciences reporting unit exceeded their carrying values. As such, we concluded that there was no indication of goodwill impairment for either reporting unit.

12
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Intangible Assets
Intangible assets as of September 30, 2017 and December 31, 2016 consisted of the following:
 As of September 30, 2017 As of December 31, 2016As of March 31, 2021As of December 31, 2020
Useful
Life in
Years
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Useful Life 
(in years)		Gross
Carrying
Amount		Accumulated
Amortization		Gross
Carrying
Amount		Accumulated
Amortization
Customer relationships4 to 13 $106,174
 $47,325
 $89,279
 $34,827
Customer relationships3 to 13$77,030 $58,574 $73,629 $56,232 
Trade names2 to 6 29,016
 17,065
 22,930
 11,652
Trade names66,000 4,406 6,130 4,287 
Non-competition agreementsNon-competition agreements52,210 1,560 2,090 1,541 
Technology and softwareTechnology and software55,800 5,474 5,800 5,380 
Customer contracts1 to 4 27,554
 25,919
 26,497
 21,295
Customer contracts2800 594 800 526 
Technology and software3 to 5 9,340
 4,490
 8,970
 2,667
Non-competition agreements1 to 5 5,295
 2,482
 3,685
 1,697
Publishing content3 3,300
 2,888
 3,300
 2,062
Favorable lease contract3 720
 369
 720
 203
In-process technologyIndefinite —
 —
 370
 —
Total $181,399
 $100,538
 $155,751
 $74,403
Total$91,840 $70,608 $88,449 $67,966 
Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships and customer contracts, as well as certain trade names and technology and software, are amortized on an accelerated basis to correspond to the cash flows expected to be derived from the assets. All other intangible assets with finite lives are amortized on a straight-line basis. In connection with the acquisition of MyRounding Solutions, LLC, we acquired in-process technology which was accounted for as an indefinite-lived intangible asset until the development of the technology was complete, which occurred in the first quarter of 2017. Upon completion, we reclassified the technology to definite-lived technology and software, and began amortizing the asset over a five-year useful life on a straight-line basis.
Intangible asset amortization expense was $8.8$2.4 million and $3.2 million for the three months ended both September 30, 2017March 31, 2021 and 2016. Intangible asset amortization expense was $26.4 million and $24.4 million for the nine months ended September 30, 2017 and 2016,2020, respectively. The table below sets forth the estimated annual amortization expense for the year ending December 31, 2017 and each of the five succeeding years for the definite-lived intangible assets recorded as of September 30, 2017.March 31, 2021.
Year Ending December 31, Estimated Amortization Expense
2017 $34,966
2018 $23,936
2019 $17,279
2020 $12,116
2021 $8,070
2022 $6,092
Year Ending December 31,Estimated Amortization Expense
2021$9,059 
2022$6,878 
2023$4,231 
2024$1,384 
2025$566 
Actual future amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, and other factors.
7.5. Revenues
For the three months ended March 31, 2021 and 2020, we recognized revenues of $203.2 million and $222.6 million, respectively. Of the $203.2 million recognized in the first quarter of 2021, we recognized revenues of $4.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $2.5 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments and $2.3 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements. Of the $222.6 million recognized in the first quarter of 2020, we recognized revenues of $7.9 million from obligations satisfied, or partially satisfied, in prior periods, of which $4.8 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $3.1 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments.
As of March 31, 2021, we had $61.0 million of remaining performance obligations under engagements with original expected durations greater than one year. These remaining performance obligations exclude obligations under contracts with an original expected duration of one year or less, variable consideration which has been excluded from the total transaction price due to the constraint, and performance obligations under time-and-expense engagements which are recognized in the amount invoiced. Of the $61.0 million of performance obligations, we expect to recognize approximately $34.8 million as revenue in 2021, $13.9 million in 2022, and the remaining $12.3 million thereafter. Actual revenue recognition could differ from these amounts as a result of changes in the estimated timing of work to be performed, adjustments to estimated variable consideration in performance-based arrangements, or other factors.
7
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Contract Assets and Liabilities
The payment terms and conditions in our customer contracts vary. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenues in the consolidated balance sheets.
Unbilled services include revenues recognized for services performed but not yet billed to clients. Services performed that we are not yet entitled to bill because certain events, such as the completion of the measurement period or client approval in performance-based engagements, must occur are recorded as contract assets and included within unbilled services, net. The contract asset balance as of March 31, 2021 and December 31, 2020 was $16.7 million and $17.3 million, respectively. The $0.6 million decrease primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms.
Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition policy. Our deferred revenues balance as of March 31, 2021 and December 31, 2020, was $18.7 million and $28.2 million, respectively. The $9.5 million decrease primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three months ended March 31, 2021, $20.8 million of revenues recognized were included in the deferred revenue balance as of December 31, 2020.
6. Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, unvested restricted stock units, outstanding common stock options, convertible senior notes, and outstanding warrants, to the extent dilutive. In periods for which we report a net loss from continuing operations, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss from continuing operations per share would be anti-dilutive.

Earnings (loss) per share under the basic and diluted computations are as follows: 
 Three Months Ended
March 31,
 20212020
Net income (loss) from continuing operations$5,405 $(42,273)
Loss from discontinued operations, net of tax0 (35)
Net income (loss)$5,405 $(42,308)
Weighted average common shares outstanding – basic21,932 21,827 
Weighted average common stock equivalents409 0 
Weighted average common shares outstanding – diluted22,341 21,827 
Net earnings (loss) per basic share:
Net income (loss) from continuing operations$0.25 $(1.94)
Loss from discontinued operations, net of tax0 0 
Net income (loss)$0.25 $(1.94)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations$0.24 $(1.94)
Loss from discontinued operations, net of tax0 0 
Net income (loss)$0.24 $(1.94)
The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above were as follows:
13
8
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Earnings (loss) per share under the basic and diluted computations are as follows: 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income (loss) from continuing operations$4,132
 $12,288
 $(141,195) $35,293
Income (loss) from discontinued operations, net of tax238
 4
 690
 (1,830)
Net income (loss)$4,370
 $12,292
 $(140,505) $33,463
        
Weighted average common shares outstanding – basic21,505
 21,076
 21,413
 21,084
Weighted average common stock equivalents117
 369
 —
 343
Weighted average common shares outstanding – diluted21,622
 21,445
 21,413
 21,427
        
Net earnings per basic share:    
 
Net income (loss) from continuing operations$0.19
 $0.58
 $(6.59) $1.67
Income (loss) from discontinued operations, net of tax0.01
 —
 0.03
 (0.08)
Net income (loss)$0.20
 $0.58
 $(6.56) $1.59
        
Net earnings per diluted share:       
Net income (loss) from continuing operations$0.19
 $0.57
 $(6.59) $1.65
Income (loss) from discontinued operations, net of tax0.01
 —
 0.03
 (0.09)
Net income (loss)$0.20
 $0.57
 $(6.56) $1.56
The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above were as follows:
As of September 30, As of March 31,
2017 2016 20212020
Unvested restricted stock awards627
 5
Unvested restricted stock awards21 992 
Outstanding common stock options

194
 —
Outstanding common stock options59 86 
Convertible senior notes3,129
 3,129
Warrants related to the issuance of convertible senior notes3,129
 3,129
Warrants related to the issuance of convertible senior notes0 3,129 
Total anti-dilutive securities7,079
 6,263
Total anti-dilutive securities80 4,207 
See Note 87 “Financing Arrangements” for further information on the convertible senior notes and warrants related to the issuance of convertible notes.
AsIn November 2020, our board of September 30, 2017, we haddirectors authorized a share repurchase program authorized by(the “2020 Share Repurchase Program”) permitting us to
repurchase up to $50 million of our boardcommon stock through December 31, 2021. The 2020 Share Repurchase Program was authorized
subsequent to the expiration of directors, pursuantour prior share repurchase program (the “2015 Share Repurchase Program”) on October 31, 2020. The 2015
Share Repurchase Program permitted us to which we may, from time to time, repurchase up to $125 million of our common stock through October 31, 2017 (the “Share Repurchase Program”). During the fourth quarter of 2017, our board of directors authorized an extension of the Share Repurchase Program through October 31, 2018.2020. The amount and
timing of the repurchases under both share repurchase programs were and will continue to be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. No
Under the 2020 Share Repurchase Program, we repurchased and retired 245,718 shares were repurchased during the first nine months of 2017. Infor $13.2 million in the first quarter of 2016, we2021 of which $1.7 million settled in the second quarter of 2021. The 245,718 shares repurchased and retired 982,192were reflected as a reduction to our basic weighted average shares outstanding for $55.3 million. No shares were repurchased in the second or third quarter ended March 31, 2021 based on the trade date of 2016.the share repurchase. As of September 30, 2017, $35.1March 31, 2021, $31.8 million remainsremained available for share repurchases.


14
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

8.7. Financing Arrangements
A summary of the carrying amounts of our debt follows:
March 31,
2021		December 31,
2020
September 30, 2017 December 31, 2016
1.25% convertible senior notes due 2019$230,834
 $224,065
Senior secured credit facility139,000
 68,000
Senior secured credit facility$265,000 $200,000 
Promissory note due 20244,991
 —
Promissory note due 20243,190 3,279 
Total long-term debt$374,825
 $292,065
Total long-term debt$268,190 $203,279 
Current maturities of debt (1)
(497) —
Current maturities of long-term debtCurrent maturities of long-term debt(548)(499)
Long-term debt, net of current portion$374,328
 $292,065
Long-term debt, net of current portion$267,642 $202,780 
(1)The current maturities of debt are included as a component of accrued expenses and other current liabilities on our consolidated balance sheets.
Below is a summary of the scheduled remaining principal payments of our debt as of September 30, 2017.
March 31, 2021.
 Principal Payments of Long-Term Debt
2017$123
2018$501
2019$250,515
2020$139,529
2021$544
Thereafter$2,779
Convertible Notes
In September 2014, the Company issued $250 million principal amount of 1.25% convertible senior notes due 2019 (the “Convertible Notes”) in a private offering. The Convertible Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as Trustee (the “Indenture”). The Convertible Notes are senior unsecured obligations of the Company and will pay interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25%. The Convertible Notes will mature on October 1, 2019, unless earlier repurchased by the Company or converted in accordance with their terms.
Upon conversion, the Convertible Notes will be settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. Our current intent and policy is to settle conversions with a combination of cash and shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the Indenture.
The initial conversion rate for the Convertible Notes is 12.5170 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equal to an initial conversion price of approximately $79.89 per share of our common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest, except in certain limited circumstances described in the Indenture. Upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture) the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change. Additionally, if the Company undergoes a “fundamental change” (as defined in the Indenture), a holder will have the option to require the Company to repurchase all or a portion of its Convertible Notes for cash at a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and unpaid interest. As discussed below, the convertible note hedge transactions and warrants, which were entered into in connection with the Convertible Notes, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share.

15
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Holders of the Convertible Notes may convert their Convertible Notes at their option at any time prior to July 1, 2019, only under the following circumstances:
during any calendar quarter (and only during such calendar quarter) commencing after December 31, 2014 if, for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock for such trading day is equal to or greater than 130% of the applicable conversion price on such trading day;
during the five consecutive business day period immediately following any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which, for each trading day of the measurement period, the “trading price” (as defined in the Indenture) per $1,000 principal amount of the Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock for such trading day and the applicable conversion rate on such trading day; or
upon the occurrence of specified corporate transactions described in the Indenture.
On or after July 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or a portion of its Convertible Notes, regardless of the foregoing circumstances.
We have separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar liability that does not have an associated convertible feature, assuming our non-convertible debt borrowing rate. The carrying value of the equity component representing the conversion option, which is recognized as a debt discount, was determined by deducting the fair value of the liability component from the proceeds of the Convertible Notes. The debt discount is amortized to interest expense using an effective interest rate of 4.751% over the term of the Convertible Notes. As of September 30, 2017, the remaining life of the Convertible Notes is 2.0 years. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.
The transaction costs related to the issuance of the Convertible Notes were separated into liability and equity components based on their relative values, as determined above. Transaction costs attributable to the liability component are recorded as a deduction to the carrying amount of the liability and amortized to interest expense over the term of the Convertible Notes; and transaction costs attributable to the equity component are netted with the equity component of the Convertible Notes in stockholders’ equity. Total debt issuance costs were approximately $7.3 million, of which $6.2 million was allocated to liability issuance costs and $1.1 million was allocated to equity issuance costs.
As of September 30, 2017 and December 31, 2016, the Convertible Notes consisted of the following:
 September 30, 2017 December 31, 2016
Liability component:   
Proceeds$250,000
 $250,000
Less: debt discount, net of amortization(16,666) (22,520)
Less: debt issuance costs, net of amortization(2,500) (3,415)
Net carrying amount$230,834
 $224,065
Equity component (1)
$39,287
 $39,287
(1)Included in additional paid-in capital on the consolidated balance sheet.

16
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

The following table presents the amount of interest expense recognized related to the Convertible Notes for the periods presented. 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Contractual interest coupon$781
 $781
 $2,344
 $2,344
Amortization of debt discount1,974
 1,883
 5,853
 5,582
Amortization of debt issuance costs306
 302
 915
 900
Total interest expense$3,061
 $2,966
 $9,112
 $8,826
In connection with the issuance of the Convertible Notes, we entered into convertible note hedge transactions and warrant transactions. The convertible note hedge transactions are intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share. For purposes of the computation of diluted earnings per share in accordance with GAAP, dilution will occur when the average share price of our common stock for a given period exceeds the conversion price of the Convertible Notes, which initially is equal to approximately $79.89 per share. The convertible note hedge transactions and warrant transactions are discussed separately below.
Convertible Note Hedge Transactions. In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions whereby the Company has call options to purchase a total of approximately 3.1 million shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the Convertible Notes in full, at a price of approximately $79.89, which corresponds to the initial conversion price of the Convertible Notes, subject to customary anti-dilution adjustments substantially similar to those in the Convertible Notes. The convertible note hedge transactions are exercisable upon conversion of the Convertible Notes and will expire in 2019 if not earlier exercised. We paid an aggregate amount of $42.1 million for the convertible note hedge transactions, which was recorded as additional paid-in capital on the consolidated balance sheets. The convertible note hedge transactions are separate transactions and are not part of the terms of the Convertible Notes.
Warrants. In connection with the issuance of the Convertible Notes, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 3.1 million shares of the Company’s common stock at a strike price of approximately $97.12. The warrants will expire incrementally on 100 different dates from January 6, 2020 to May 28, 2020 and are exercisable at each such expiry date. If the average market value per share of our common stock for the reporting period exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share. We received aggregate proceeds of $23.6 million from the sale of the warrants, which was recorded as additional paid-in capital on the consolidated balance sheets. The warrants are separate transactions and are not part of the terms of the Convertible Notes or the convertible note hedge transactions.
The Company recorded an initial deferred tax liability of $15.4 million in connection with the debt discount associated with the Convertible Notes and recorded an initial deferred tax asset of $16.5 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are included in deferred income taxes, net on the consolidated balance sheets.
Principal Payments of Long-Term Debt
2021$410 
2022$559 
2023$575 
2024$266,646 
Senior Secured Credit Facility
The Company has a $500$600 million five-year senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the "Amended Credit Facility"Agreement"), that becomes due and payable in full upon maturity on March 31, 2020.September 27, 2024. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $100$150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $600$750 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding
9
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.

17
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.25%1.125% per annum and 2.00%1.875% per annum, in the case of LIBOR borrowings, or between 0.25%0.125% per annum and 1.00%0.875% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time.
Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including a requirement to pay all amounts outstanding under the Amended Credit Agreement 90 days prior to the Convertible Indebtedness Maturity Date (as defined in the Amended Credit Agreement) unless (1) the Convertible Indebtedness Maturity Date is waived or extended to a later date, (2) the Company can demonstrate (a) Liquidity (as defined in the Amended Credit Agreement) inupon an amount at least equal to the principal amount due on the Convertible Indebtedness Maturity Date, and (b) financial covenant compliance after giving effect to such payments and any additional indebtedness incurred on a pro forma basis, or (3) this requirement is waived by the Required LendersEvent of Default (as defined in the Amended Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The loans and obligations under the Amended Credit Agreement are secured pursuant to a Second Amended and Restated Security Agreement and a Second Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A. as collateral agent, pursuant to which the Company and the subsidiary guarantors grant Bank of America, N.A., for the ratable benefit of the lenders under the Amended Credit Agreement, a first-priority lien, subject to permitted liens, on substantially all of the personal property assets of the Company and the subsidiary guarantors, and a pledge of 100% of the stock or other equity interests in all domestic subsidiaries and 65% of the stock or other equity interests in each “material first-tier foreign subsidiary” (as defined in the Pledge Agreement).
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) ranging from 3.25of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 to 3.75 to 1.00, depending onupon the measurement period,occurrence of certain transactions, and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.50 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back share-based compensation costs, non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, and pro forma historical EBITDA for businesses acquired.acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio, total debt is on a gross basis and is not netted against our cash balances. At September 30, 2017,March 31, 2021, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of 3.522.64 to 1.00 and a Consolidated Interest Coverage Ratio of 12.6013.00 to 1.00.
Borrowings outstanding under the Amended Credit Agreement at September 30, 2017March 31, 2021 totaled $139.0$265.0 million. These borrowings carried a weighted average interest rate of 3.4%2.4%, including the effect of the interest rate swapswaps described in Note 109 “Derivative Instruments and Hedging Activity." Borrowings outstanding under the Amended Credit Agreement at December 31, 20162020 were $68.0$200.0 million and carried a weighted average interest rate of 2.5%., including the effect of the interest rate swaps outstanding at the time and described in Note 9 “Derivative Instruments and Hedging Activity." The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At September 30, 2017,March 31, 2021, we had outstanding letters of credit totaling $2.7$0.8 million, which are primarily used as security deposits for our office facilities. As of September 30, 2017,March 31, 2021, the unused borrowing capacity under the revolving credit facility was $358.3$334.2 million.
Promissory Note due 2024
On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed, from the sellers of the aircraft, a promissory note with an outstanding principal balance of $5.1 million. The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024, at which time a final payment of $1.5 million, plus any accrued and unpaid interest, will be due. Under the terms of the promissory note, we will pay interest on the outstanding principal amount at a rate of one-monthone month LIBOR plus 1.97% per annum. The obligations under the promissory note are secured pursuant to a Loan and Aircraft Security Agreement with Banc of America Leasing & Capital, LLC, which grants the lender a first priority security interest in the aircraft. At September 30, 2017,March 31, 2021, the outstanding principal amount of the promissory note was $5.0 million. As of September 30, 2017,$3.2 million, and the aircraft had a carrying amount of $6.6$4.3 million. At December 31, 2020, the outstanding principal amount of the promissory note was $3.3 million, and the aircraft had a carrying amount of $4.4 million.

10
18
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

9.8. Restructuring Charges
Restructuring charges for the three and nine months ended September 30, 2017 totaled $1.3March 31, 2021 were $0.6 million and $5.3compared to $1.6 million, respectively. for the three months ended March 31, 2020.
The $1.3$0.6 million restructuring charge incurredrecognized in the thirdfirst quarter of 20172021 primarily related to the accrual of remaining lease obligations,rent and related expenses, net of estimated sublease income, due to relocating our San Francisco office to a smaller space and consolidating our New York offices in the third quarter of 2017, and accelerated depreciation on leasehold improvementsfurniture and fixtures for our San Francisco office. vacated office spaces.
The $5.3$1.6 million of restructuring charges incurredcharge recognized in the first nine monthsquarter of 2017 primarily consisted2020 included a $1.2 million accrual for the termination of $2.5 million related to the accrual of remaining lease obligations, net of estimated sublease income, due to relocating our San Francisco office to a smaller space and consolidating our Chicago and New York offices in the first nine months of 2017, and accelerated depreciation on leasehold improvements for our San Francisco office, $2.0third-party advisor agreement, $0.3 million related to workforce reductions in our Healthcare segment to better align our resources with market demand, and $0.4$0.1 million related to workforce reductions in our corporate operations primarily to adjust our infrastructure to align withoperations.
In the decreased workforce in the Healthcare segment.
Restructuring charges for the three and nine months ended September 30, 2016 totaled $1.0 million and $4.1 million, respectively. The $1.0 million charge incurred in the thirdfourth quarter of 2016 primarily related2020, we announced a restructuring plan to updated lease assumptionsreduce operating costs to address the impact of the COVID-19 pandemic on our Washington, D.C. space vacatedbusiness. The restructuring plan, which was substantially complete in the fourth quarter of 2014. The $4.1 million of restructuring charges incurred2020, provided for a reduction in the first nine months of 2016 primarily consisted of $1.5 million related to updated assumptions for lease accruals for the Washington, D.C. space vacatedcertain leased office spaces and a reduction in the fourth quarter of 2014, $1.2 million related to workforce reductions in our Healthcare segment to better align resources with market demand, $0.9 million related to workforce reductions in our corporate operations as we adjusted our infrastructure to align with our Huron Legal divestiture, and $0.2 million related to the wind down of our foreign consulting operations based in the Middle East.workforce.
The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the ninethree months ended September 30, 2017.March 31, 2021.
Employee CostsOffice Space ReductionsOtherTotal
Balance as of December 31, 2020$2,447 $84 $893 $3,424 
Additions4 0 0 4 
Payments(2,382)(39)(167)(2,588)
Adjustments
10 0 0 10 
Balance as of March 31, 2021$79 $45 $726 $850 
 Employee Costs Office Space Reductions Other Total
Balance as of December 31, 2016$5,182
 $5,773
 $24
 $10,979
Additions (1)
2,889
 2,445
 110
 5,444
Payments(7,226) (2,047) 5
 (9,268)
Adjustments (1)
(117) (1,087) (78) (1,282)
Non-cash items(46) (119) (61) (226)
Balance as of September 30, 2017$682
 $4,965
 $—
 $5,647
(1)Additions and adjustments for the nine months ended September 30, 2017 include a restructuring gain of $1.1 million related to updated lease assumptions for vacated office spaces directly related to discontinued operations. Refer to Note 4 "Discontinued Operations" for additional information on our discontinued operations.
AsThe restructuring charge liability related to employee costs at March 31, 2021 is expected to be paid in the next 12 months and is included as a component of September 30, 2017, ouraccrued payroll and related benefits. The employee related payments made in the first quarter of 2021 primarily related to the fourth quarter 2020 restructuring plan. The restructuring charge liability related to office space reductions at March 31, 2021 is included as a component of $5.0accrued expenses and other current liabilities. The $0.7 million represented the present value of remaining lease payments, net of estimated sublease income, primarily for our vacated office spaces in Washington, D.C., Houston, San Francisco, and Chicago. Thisother restructuring charge liability at March 31, 2021 is related to the termination of a third-party advisor agreement and is expected to be paid over the next 22 months and is included as a component of accrued expenses and other current liabilities and deferred compensation and other liabilities. All of the $0.7 million restructuring charge liability related to employee costs at September 30, 2017 is expected to be paid in the next 12 months. The restructuring charge liability related to employee costs is included as a component of accrued payroll and related benefits.
10.9. Derivative Instruments and Hedging Activity
On April 4, 2013, we entered into a forward amortizing interest rate swap agreement effective March 31, 2014 which ended August 31, 2017. We entered into this derivative instrument to hedge against the interest rate risks of our variable-rate borrowings. The swap had an initial notional amount of $60.0 million and amortized quarterly until April 2016. In April 2016, the notional amount of this interest rate swap increased to $86.0 million and continued to amortize quarterly until it expired in August 2017. Under the terms of the interest rate swap agreement, we received from the counterparty interest on the notional amount based on one-month LIBOR and we paid to the counterparty a fixed rate of 0.985%.

19
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

On June 22, 2017, we entered into a forward interest rate swap agreement effective August 31, 2017 and ending August 31, 2022, with a notional amount of $50.0 million. We entered into this derivative instrument to continue to hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-monthone month LIBOR and we pay to the counterparty a fixed rate of 1.900%.
On January 30, 2020, we entered into a forward interest rate swap agreement effective December 31, 2019 and ending December 31, 2024, with a notional amount of $50.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.500%.
On March 16, 2020, we entered into a forward interest rate swap agreement effective February 28, 2020 and ending February 28, 2025, with a notional amount of $100.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 0.885%.
We recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. We have designated these derivative instruments as cash flow hedges. Therefore, changes in the fair value of the derivative instruments are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified into interest expense upon settlement. The ineffective portion of the change in fair value of the derivative instruments is recognized in interest expense. Our interest rate swap agreement was effective during the three and nine months ended September 30, 2017. As of September 30, 2017,March 31, 2021, it was anticipated that $0.1$1.7 million of the losses, net of tax, currently recorded in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.
11
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The table below sets forth additional information relating to ourthe interest rate swaps designated as a cash flow hedging instrument as of September 30, 2017March 31, 2021 and December 31, 2016.2020.
  Fair Value (Derivative Asset and Liability)
Balance Sheet Location September 30,
2017		 December 31,
2016
Other non-current assets $141
 $—
Accrued expenses $200
 $54
 Fair Value (Derivative Asset and Liability)
Balance Sheet LocationMarch 31,
2021		December 31,
2020
Accrued expenses and other current liabilities$2,168 $2,100 
Deferred compensation and other liabilities$1,260 $3,297 
All of our derivative instruments are transacted under the International Swaps and Derivatives Association (ISDA) master agreements. These agreements permit the net settlement of amounts owed in the event of default and certain other termination events. Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis on our consolidated balance sheet.
We do not use derivative instruments for trading or other speculative purposes. Refer to Note 1211 “Other Comprehensive Income (Loss)” for additional information on our derivative instrument.instruments.

20
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

11.10. Fair Value of Financial Instruments
Certain of our assets and liabilities are measured at fair value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy for inputs used in measuring fair value and requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three levels based on the objectivity of the inputs as follows:
Level 1 InputsQuoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 InputsQuoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 InputsUnobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.
12
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The table below sets forth our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017March 31, 2021 and December 31, 2016.2020.
Level 1Level 2Level 3Total
March 31, 2021
Assets:
Convertible debt investment$0 $0 $58,036 $58,036 
Deferred compensation assets0 34,881 0 34,881 
Total assets$0 $34,881 $58,036 $92,917 
Liabilities:
Interest rate swaps$0 $3,428 $0 $3,428 
Contingent consideration for business acquisition0 0 1,812 1,812 
Total liabilities$0 $3,428 $1,812 $5,240 
December 31, 2020
Assets:
Convertible debt investment$0 $0 $64,364 $64,364 
Deferred compensation assets0 34,056 0 34,056 
Total assets$0 $34,056 $64,364 $98,420 
Liabilities:
Interest rate swaps$0 $5,397 $0 $5,397 
Contingent consideration for business acquisition0 0 1,770 $1,770 
Total liabilities$0 $5,397 $1,770 $7,167 
Interest rate swaps: The fair values of our interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and a discount rate reflecting the risks involved.
Convertible debt investment: In 2014 and 2015, we invested $27.9 million, in the form of zero coupon convertible debt (the "initial convertible
notes"), in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint. In the first quarter of 2020, we invested an additional $13.0 million, in the form of 1.69% convertible debt with a
senior liquidation preference to the initial convertible notes (the "additional convertible note") and amended our initial convertible notes to
extend the maturity date to January 17, 2024, which coincides with the maturity date of the additional convertible note.
To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment to be that of an available-for-sale debt security.
The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive
income. We estimate the fair value of our investment using a scenario-based approach in the form of a hybrid analysis that consists of a Monte Carlo simulation model and an expected return analysis. The conclusion of value for our investment is based on the probability weighted assessment of both scenarios. The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, 2024, the applicable waterfall distribution at the end of the expected holding period based on the rights and privileges of the various instruments, cash flow projections discounted at the risk-adjusted rate of 22.5%, and the concluded equity volatility of 45.0%, all of which are Level 3 inputs. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the investment, which would result in different impacts to our consolidated balance sheet and comprehensive income. Actual results may differ from our estimates. The fair value of the convertible debt investment is recorded in long-term investments on our consolidated balance sheets.
13
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
 Level 1 Level 2 Level 3 Total
September 30, 2017       
Assets:       
Promissory note$—
 $—
 $2,311
 $2,311
Convertible debt investment—
 —
 31,937
 31,937
Deferred compensation assets—
 17,170
 —
 17,170
Total assets$—
 $17,170
 $34,248
 $51,418
Liabilities:       
Interest rate swap$—
 $59
 $—
 $59
Contingent consideration for business acquisitions—
 —
 22,469
 22,469
Total liabilities$—
 $59
 $22,469
 $22,528
December 31, 2016       
Assets:       
Promissory note$—
 $—
 $2,325
 $2,325
Convertible debt investment—
 —
 34,675
 34,675
Deferred compensation assets—
 16,408
 —
 16,408
Total assets$—
 $16,408
 $37,000
 $53,408
Liabilities:       
Interest rate swap$—
 $54
 $—
 $54
Contingent consideration for business acquisitions—
 —
 8,827
 8,827
Total liabilities$—
 $54
 $8,827
 $8,881
The table below sets forth the changes in the balance of the convertible debt investment for the three months ended March 31, 2021.
Convertible Debt Investment
Balance as of December 31, 2020$64,364 
Change in fair value of convertible debt investment(6,328)
Balance as of March 31, 2021$58,036 
Deferred compensation assets: We have a non-qualified deferred compensation plan (the "Plan") for the members of our board of directors and a select group of our employees. The deferred compensation liability is funded by the Plan assets, which consist of life insurance policies maintained within a trust. The cash surrender value of the life insurance policies approximates fair value and is based on third-party broker statements which provide the fair value of the life insurance policies' underlying investments, which are Level 2 inputs. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The Plan assets are included in other non-current assets on our consolidated balance sheet.sheets. Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations.

21
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Interest rate swaps: The fair values of our interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and discount rates reflecting the risks involved.
Promissory note: As part of the consideration received for the sale of our Accounting Advisory practice on December 30, 2011, we received a $3.5 million promissory note payable over four years. During the second quarter of 2014, we agreed to amend and restate the note such that principal payments will be paid to us annually based on the amount of excess cash flows earned each year by the maker of the note until the maturity date of December 31, 2018, at which time the remaining principal balance and any accrued interest is due. The fair value of the note is based on the net present value of the projected cash flows using a discount rate of 17%, which accounts for the risks associated with the note. This fair value measurement is based on significant inputs not observable in the market and thus represent Level 3 inputs. As of September 30, 2017, $0.2 million is recorded in prepaid expenses and other current assets and represents the present value of the payments expected to be received in the next 12 months, and the remaining $2.1 million is recorded in other non-current assets.
The table below sets forth the changes in the balance of the promissory note for the nine months ended September 30, 2017.
  Promissory Note
Balance as of December 31, 2016 $2,325
Interest payments received (140)
Principal payment received (177)
Change in fair value of promissory note 303
Balance as of September 30, 2017 $2,311
Convertible debt investment: In 2014 and 2015, we invested $27.9 million, in the form of zero coupon convertible debt, in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight Education, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint. The notes will mature on July 1, 2020, unless converted earlier.
To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment to be that of an available-for-sale debt security.
The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. We estimated the fair value of our investment using a Monte Carlo simulation model, cash flow projections discounted at a risk-adjusted rate, and certain assumptions related to equity volatility, default probability, and recovery rate, all of which are Level 3 inputs. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the investment, which would result in different impacts to our consolidated balance sheet and comprehensive income. Actual results may differ from our estimates. The fair value of the convertible debt investment is recorded in long-term investment.
The table below sets forth the changes in the balance of the convertible debt investment for the nine months ended September 30, 2017.
  Convertible Debt Investment
Balance as of December 31, 2016 $34,675
Change in fair value of convertible debt investment (2,738)
Balance as of September 30, 2017 $31,937
Contingent consideration for business acquisitions: acquisition: We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted assessment of the specific financial performance targets being achievedmeasured or a Monte Carlo simulation model, as appropriate. These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 inputs. The significant unobservable inputs used in the fair value measurements of our contingent

22
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

consideration are our measures of the estimated payouts based on internally generated financial projections on a probability-weighted basis and a discount rates,rate which typically reflectreflects a risk-free rate.rate, and was 2.41% as of March 31, 2021 and December 31, 2020. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management. Any change in the fair value estimate is recorded in our consolidated statement of operations for that period. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. Actual results may differ from our estimates. Refer to Note 5 “Acquisitions” for information on the acquisitions completed in 2017.
The table below sets forth the changes in the balance of the contingent consideration for business acquisitions for the ninethree months ended September 30, 2017.March 31, 2021.
  Contingent Consideration for Business Acquisitions
Balance as of December 31, 2016 $8,827
Acquisitions 15,489
Payments (1,938)
Remeasurement of contingent consideration for business acquisitions (222)
Unrealized loss due to foreign currency translation 313
Balance as of September 30, 2017 $22,469
Contingent Consideration for Business Acquisitions
Balance as of December 31, 20201,770 
Remeasurement of contingent consideration for business acquisitions42 
Balance as of March 31, 2021$1,812 
Financial assets and liabilities not recorded at fair value are as follows:
Preferred Stock Investment
In the fourth quarter of 2019, we invested $5.0 million, in the form of preferred stock, in Medically Home Group, Inc. ("Medically Home"), a healthcare technology-enabled services company. To determine the appropriate accounting treatment for our investment, we performed a VIE analysis and concluded that Medically Home does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the preferred stock is not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment for our investment in Medically Home to be that of an equity security with no readily determinable fair value. We elected to apply the measurement alternative at the time of the purchase and will continue to do so until the investment does not qualify to be so measured. Under the measurement alternative, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment in Medically Home. On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in consolidated statement of operations. As of March 31, 2021, the carrying amount of our preferred stock investment was $6.7 million.
14
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Senior Secured Credit Facility
The carrying value of our borrowings outstanding under our senior secured credit facility is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the senior secured credit facility bears interest at variable rates based on current market rates as set forth in the Amended Credit Agreement. Refer to Note 87 “Financing Arrangements” for additional information on our senior secured credit facility.
Promissory Note due 2024
The carrying value of our promissory note due 2024 is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the promissory note bears interest at rates based on current market rates as set forth in the terms of the promissory note. Refer to Note 87 “Financing Arrangements” for additional information on our promissory note due 2024.
Convertible Notes
The carrying amountCash and estimated fair value of the Convertible Notes are as follows:
 September 30, 2017 December 31, 2016
 
Carrying
Amount
 
Estimated
Fair Value
 Carrying
Amount		 Estimated
Fair Value
1.25% convertible senior notes due 2019$230,834
 $233,595
 $224,065
 $245,018
The differences between the $250 million principal amount of the Convertible NotesCash Equivalents and the carrying amounts shown above represent the unamortized debt discount and issuance costs. As of September 30, 2017 and December 31, 2016, the carrying value of the equity component of $39.3 million was unchanged from the date of issuance. Refer to Note 8 “Financing Arrangements” for additional information on our Convertible Notes. The estimated fair value of the Convertible Notes was determined based on the quoted bid price of the Convertible Notes in an over-the-counter market, which is a Level 2 input, on the last day of trading for the quarters ended September 30, 2017 and December 31, 2016.
Based on the closing price of our common stock of $34.30 on September 30, 2017, the if-converted value of the Convertible Notes was less than the principal amount.

23
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

Other Financial Instruments
Cash and cash equivalents are stated at cost, which approximates fair market value. The carrying values of all other financial instruments not described above reasonably approximate fair market value due to the nature of the financial instruments and the short-term maturity of these items.
12.11. Other Comprehensive Income (Loss)
The tablestable below setsets forth the components of other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020.
Three Months Ended
March 31, 2021		Three Months Ended
March 31, 2020
Before
Taxes		Tax
(Expense)
Benefit		Net of
Taxes		Before
Taxes		Tax
(Expense)
Benefit		Net of
Taxes
Other comprehensive income (loss):
Foreign currency translation adjustments$400 $0 $400 $(779)$0 $(779)
Unrealized gain (loss) on investment$(6,328)$1,680 $(4,648)$(348)$90 $(258)
Unrealized gain (loss) on cash flow hedges:
Change in fair value$1,189 $(337)$852 $(2,272)$590 $(1,682)
Reclassification adjustments into earnings780 (203)577 (4)1 (3)
Net unrealized gain (loss)$1,969 $(540)$1,429 $(2,276)$591 $(1,685)
Other comprehensive income (loss)$(3,959)$1,140 $(2,819)$(3,403)$681 $(2,722)
 Three Months Ended
September 30, 2017		 Three Months Ended
September 30, 2016
 Before
Taxes		 Tax
(Expense)
Benefit		 Net of
Taxes		 Before
Taxes		 Tax
(Expense)
Benefit		 Net of
Taxes
Other comprehensive income (loss):           
Foreign currency translation adjustments$609
 $—
 $609
 $50
 $—
 $50
Unrealized loss on investment$(3,609) $1,409
 $(2,200) $(3,329) $1,291
 $(2,038)
Unrealized gain (loss) on cash flow hedges:           
Change in fair value$41
 $(16) $25
 $96
 $(35) $61
Reclassification adjustments into earnings(3) 1
 (2) 101
 (41) 60
Net unrealized gain$38
 $(15) $23
 $197
 $(76) $121
Other comprehensive income (loss)$(2,962) $1,394
 $(1,568) $(3,082) $1,215
 $(1,867)
 Nine Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2016
 
Before
Taxes
 
Tax
(Expense)
Benefit
 
Net of
Taxes
 
Before
Taxes
 
Tax
(Expense)
Benefit
 
Net of
Taxes
Other comprehensive income (loss):           
Foreign currency translation adjustments$1,835
 $—
 $1,835
 $52
 $—
 $52
Unrealized loss on investment$(2,738) $1,069
 $(1,669) $(1,899) $736
 $(1,163)
Unrealized gain (loss) on cash flow hedges:           
Change in fair value$(41) $16
 $(25) $(367) $146
 $(221)
Reclassification adjustments into earnings36
 (15) 21
 323
 (129) 194
Net unrealized loss$(5) $1
 $(4) $(44) $17
 $(27)
Other comprehensive income (loss)$(908) $1,070
 $162
 $(1,891) $753
 $(1,138)
The before tax amounts reclassified from accumulated other comprehensive income related to our cash flow hedges are recorded to interest expense, net of interest income.
Accumulated other comprehensive income, net of tax, includes the following components:
Foreign Currency
Translation		Available-for-Sale InvestmentCash Flow HedgesTotal
Balance, December 31, 2020$(218)$17,205 $(3,926)$13,061 
Current period change400 (4,648)1,429 (2,819)
Balance, March 31, 2021$182 $12,557 $(2,497)$10,242 

12. Income Taxes
For the three months ended March 31, 2021, our effective tax rate was 22.1% as we recognized income tax expense from continuing operations of $1.5 million on income from continuing operations of $6.9 million. The effective tax rate of 22.1% was more favorable than the
15
 
Foreign Currency
Translation
 Available-for-Sale Investment Cash Flow Hedges Total
Balance, December 31, 2016$(453) $4,088
 $(20) $3,615
Current period change1,835
 (1,669) (4) 162
Balance, September 30, 2017$1,382
 $2,419
 $(24) $3,777

24
Table of Contents


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

13. Income Taxesstatutory rate, inclusive of state income taxes, of 26.6%, primarily due to a discrete tax benefit for share-based compensation awards that vested during the first quarter of 2021. This favorable item was partially offset by certain nondeductible expense items.
For the three months ended September 30, 2017,March 31, 2020, our effective tax rate was (92.4)%21.0% as we recognized an income tax benefit from continuing operations of $2.0 million on income from continuing operations of $2.1 million. For the third quarter of 2016, our effective tax rate was 37.2% as we recognized income tax expense from continuing operations of $7.3 million on income from continuing operations of $19.6 million. The effective tax rate for the three months ended September 30, 2017 was more favorable than the statutory rate, inclusive of state income taxes, primarily due to recognizing a $2.7 million tax benefit related to a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat one of our wholly-owned foreign subsidiaries as a disregarded entity for U.S federal income tax purposes. This benefit was partially offset by $0.6 million of tax expense recorded in the third quarter of 2017 to correct an error that occurred in the second quarter of 2017. During the third quarter of 2017, we also recorded a $3.1 million adjustment to decrease deferred income taxes, net and increase income tax receivable on our consolidated balance sheet to correct an error that occurred in the second quarter of 2017. These errors have no impact on full year 2017 results, and we concluded that the impact of both errors was not material to the second and third quarter financial statements. The effective tax rate for the three months ended September 30, 2016 was lower than the statutory rate, inclusive of state income taxes, primarily due to non-taxable income, valuation allowance reductions, and certain credits and deductions, partially offset by non-deductible business expenses.
For the nine months ended September 30, 2017, our effective tax rate was 26.1% as we recognized income tax benefit from continuing operations of $49.7$11.2 million on a loss from continuing operations of $190.9 million. For the nine months ended September 30, 2016, our effective tax rate was 35.6% as we recognized income tax expense of $19.5 million on income from continuing operations of $54.8$53.5 million. The effective tax rate for the nine months ended September 30, 2017of 21.0% was less favorable than the statutory rate, inclusive of state income taxes, of 26.0% primarily due to certain nondeductible expense items, non-deductible losses on our investments used to fund our deferred compensation liability, and the $61.2 million non-deductiblenondeductible portion of the goodwill impairment chargecharges recorded induring the secondfirst quarter of 2017, as well as $1.8 million of discrete tax expense for share-based compensation related to the adoption of ASU 2016-09 Improvements to Employee Share-Based Payment Accounting. Refer to Note 3 "New Accounting Pronouncements" for additional information on the adoption of ASU 2016-09.2020. These unfavorable discrete items were partially offset by a $2.7 milliondiscrete tax benefit recordedfor share-based compensation awards that vested during the quarter and the discrete tax benefit for the remeasurement of a portion of our income tax receivable as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in the thirdfirst quarter of 2017 related to a previously unrecognized tax benefit from our 2014 "check-the-box" election. 2020.
The effective tax rate for the nine months ended September 30, 2016CARES Act, which was lower than the statutory rate, inclusive of state income taxes, primarily duesigned into law on March 27, 2020, is an approximately $2 trillion emergency economic stimulus package in response to the year-to-date impactCOVID-19 outbreak, which among other items, includes income tax provisions relating to net operating loss carryback periods and technical corrections to tax depreciation methods for qualified improvement property. During 2020, as a result of the CARES Act, we recognized a discrete favorable adjustment to our state tax rate in the second quarter of 2016, non-taxable income, valuation allowance reductions, certain credits and deductions, and a discrete$1.5 million tax benefit related to share-based compensation, partially offset by non-deductible business expenses.the remeasurement of a portion of our income tax receivable for the federal net operating loss incurred in 2018 and the expected federal net operating loss in 2020 that will be carried back to prior year income, both for a refund at the higher, prior year tax rate.
As of September 30, 2017, we had $0.8 million of unrecognized tax benefits which would affect the effective tax rate of continuing operations if recognized.
14.13. Commitments, Contingencies and Guarantees
Litigation
Oaktree
On November 9, 2018, Huron was engaged by Oaktree Medical Centre LLC, a management services organization (“Oaktree”) to perform interim management and financial advisory services. As part of the services, a Huron employee was appointed by Oaktree’s board of directors to serve as Chief Restructuring Officer of Oaktree. The engagement letter through which Oaktree retained Huron’s services states that all disputes or claims are subject to binding arbitration, disclaims special, consequential, incidental or exemplary damages or loss and caps liability to the fees paid for the portion of the engagement giving rise to any liability. On September 19, 2019, Oaktree filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of North Carolina, with the case subsequently transferred to the District of South Carolina. As a result of the bankruptcy filing, a Chapter 7 trustee was appointed to oversee the bankruptcy estate, at which time Huron’s services for Oaktree wound down.
In April 2021, Trustee’s counsel communicated in writing to Huron its intent to pursue various claims against Huron, among others, on behalf of the bankruptcy estate related to the services carried out by Huron during the engagement. The allegations suggest that Huron did not develop and implement a Chapter 11 restructuring plan on a timely basis and that its failure to do so led to significant damages. We believe the Trustee’s allegations with respect to Huron are without merit and will vigorously defend ourselves should any claim arising out of these alleged facts and circumstances be asserted against us by the Trustee.
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.
Guarantees
Guarantees in the form of letters of credit totaling $2.7$0.8 million and $4.8$1.6 million were outstanding at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively, primarily to support certain office lease obligations.
In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the total estimated fair value of our outstanding contingent consideration liabilitiesliability was $22.5 million and $8.8 million, respectively.$1.8 million.
To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys’ fees, incurred in connection with civil or criminal

25
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

action or proceedings, as it relates to their services to us if such person acted in good faith. Although there is no limit on the amount of indemnification, we may have recourse against our insurance carrier for certain payments made.
16
15.
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
14. 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 three3 operating segments, which are our reportable segments: Healthcare, Education, and Business Advisory.
During the second quarter of 2017, we reorganized our internal financial reporting structure, which management uses to assess performance and allocate resources, by moving our Life Sciences practice from the Education and Life Sciences segment to the Business Advisory, segment. The remaining Education and Life Sciences segment is now referred to as the Education segment. While our consolidated results have not been impacted, we have restated our historical segment information for consistent presentation.Education.
•Healthcare
Our Healthcare segment provides advisory services - from strategy setting through implementation - in the areas of organizational and resource alignment, clinical transformation, financial and operational performance, patient and caregiver engagement, and technology implementation and optimization. We serveserves national and regional hospitals, and 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 evolve and adapt to thethis rapidly changing healthcare environment to become a more agile, efficient and achieve growth, optimizeconsumer-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, enhance profitability, improve qualityimproving care delivery and clinical outcomes, and driveincreasing physician, patient and employee engagement across the enterprise.satisfaction, evolving organizational culture, and maximizing return on technology investments.
Education
Our Education segment provides management consulting and technology solutions to higher education institutions and academic medical centers. We partner with clients to address challenges relating to business and technology strategy, financial management, operational and organizational effectiveness, research administration, and regulatory compliance. Our institutional strategy, market research, budgeting and financial management, business operations and student lifecycle management solutions align missions with business priorities, improve quality and reduce costs institution-wide. Our technology strategy, enterprise applications, and analytic solutions transform and optimize operations, deliver time and cost savings, and enhance the student experience. Our research enterprise solutions assist clients in identifying and implementing institutional research strategy, optimizing clinical research operations, improving financial management and cost reimbursement, improving service to faculty, and mitigating risk compliance.
•Business Advisory
Our Business Advisory segment provides services to middle marketworks with C-suite executives, boards, and largebusiness unit and functional leadership across a diverse set of organizations, not-for-profit organizations, lending institutions, law firms, investment banks, and private equity firms. We assist clients in a broad range of industries and across the spectrum fromincluding healthy, well-capitalized companies to organizations in transition, as well as creditors, equity owners, and other key constituents.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 resolve complexhave 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 issueschallenges, including, but not limited to, embedding technology and enhance clientanalytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers in order to evolve their enterprise valueand business unit strategies, bringing new products to market, and managing through stressed and distressed situations to create a suiteviable 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 servicesexpertise in strategy and innovation; business operations, including capital advisory, transaction advisory, operational improvement, restructuringthe research enterprise and turnaround, valuation, and dispute advisory. Our Enterprise Solutions and Analytics professionals deliverstudent lifecycle; digital, technology and analytic solutionssolutions; 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 enable organizations to manage and optimizeadvance their financial performance, operational efficiency, and client or stakeholder experience. Our expertise in full-service enterprise performance management (EPM), enterprise resource planning (ERP),mission while strengthening their business intelligence and analytics, customer relationship management (CRM), and data management services helps clients identify and execute on business and technology strategies to drive results and gain a competitive advantage. Our Strategy and Innovation professionalsmodels. We collaborate with clients acrossto address these challenges and ensure they have a range of industries to identify new growth opportunities, build new venturessustainable future. We combine our deep industry, functional and capabilities, and accelerate organizational change. Our Life Sciences professionals providestrategic

26
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

solutionstechnical expertise to help pharmaceutical, medical device,clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology; strengthening research strategies and biotechnology companies deliver more value to patients, payers,support services; evolving their organizational strategy; optimizing financial and providersoperational performance; and comply with regulations.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-widecompany-wide business development functions, as well as costs related to overall corporate management.
17
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The table below sets forth information about our operating segments for the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.
Three Months Ended
March 31,
20212020
Healthcare:
Revenues$79,722 $95,578 
Operating income$20,484 $24,050 
Segment operating income as a percentage of segment revenues25.7 %25.2 %
Business Advisory:
Revenues$72,867 $64,905 
Operating income$13,077 $9,842 
Segment operating income as a percentage of segment revenues17.9 %15.2 %
Education:
Revenues$50,624 $62,136 
Operating income$8,653 $13,116 
Segment operating income as a percentage of segment revenues17.1 %21.1 %
Total Company:
Revenues$203,213 $222,619 
Reimbursable expenses1,934 19,303 
Total revenues and reimbursable expenses$205,147 $241,922 
Segment operating income$42,214 $47,008 
Items not allocated at the segment level:
Other operating expenses28,837 27,146 
Litigation and other gains42 (150)
Depreciation and amortization5,095 6,047 
Goodwill impairment charges1
0 59,816 
Other expense, net1,299 7,637 
Income (loss) from continuing operations before taxes$6,941 $(53,488)
(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.


18
Table of Contents

HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Healthcare:       
Revenues$79,582
 $103,425
 $261,261
 $323,531
Operating income$25,778
 $38,824
 $83,580
 $119,229
Segment operating income as a percentage of segment revenues32.4% 37.5% 32.0% 36.9%
Education:       
Revenues$41,422
 $38,621
 $127,629
 $111,816
Operating income$7,762
 $10,896
 $31,772
 $31,474
Segment operating income as a percentage of segment revenues18.7% 28.2% 24.9% 28.1%
Business Advisory:       
Revenues$55,372
 $41,354
 $157,753
 $112,801
Operating income$12,832
 $8,608
 $34,890
 $23,275
Segment operating income as a percentage of segment revenues23.2% 20.8% 22.1% 20.6%
Total Company:       
Revenues$176,376
 $183,400
 $546,643
 $548,148
Reimbursable expenses17,982
 19,093
 55,862
 54,636
Total revenues and reimbursable expenses$194,358
 $202,493
 $602,505
 $602,784

       
Segment operating income$46,372
 $58,328
 $150,242
 $173,978
Items not allocated at the segment level:       
Other operating expenses29,448
 26,502
 92,643
 84,595
Other losses (gains), net880
 494
 (222) 494
Depreciation and amortization9,946
 8,092
 28,549
 23,064
Goodwill impairment charge (1)
—
 —
 209,600
 —
Other expense, net3,950
 3,687
 10,607
 11,034
Income (loss) from continuing operations before income tax expense$2,148
 $19,553
 $(190,935) $54,791
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 3 operating segments for the three months ended March 31, 2021 and 2020.
Three Months Ended March 31, 2021
HealthcareBusiness AdvisoryEducationTotal
Billing Arrangements
Fixed-fee$48,295 $29,881 $15,259 $93,435 
Time and expense11,375 37,633 28,784 77,792 
Performance-based14,669 3,409 0 18,078 
Software support, maintenance and subscriptions5,383 1,944 6,581 13,908 
Total$79,722 $72,867 $50,624 $203,213 
Employee Type (1)
Revenue generated by billable consultants$59,569 $69,847 $42,528 $171,944 
Revenue generated by full-time equivalents20,153 3,020 8,096 31,269 
Total$79,722 $72,867 $50,624 $203,213 
Timing of Revenue Recognition
Revenue recognized over time$78,764 $72,867 $50,624 $202,255 
Revenue recognized at a point in time958 0 0 958 
Total$79,722 $72,867 $50,624 $203,213 
(1)The goodwill impairment charge is 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.
Three Months Ended March 31, 2020
HealthcareBusiness AdvisoryEducationTotal
Billing Arrangements
Fixed-fee$55,785 $25,393 $13,175 $94,353 
Time and expense14,733 37,589 43,711 96,033 
Performance-based18,921 646 0 19,567 
Software support, maintenance and subscriptions6,139 1,277 5,250 12,666 
Total$95,578 $64,905 $62,136 $222,619 
Employee Type (1)
Revenue generated by billable consultants$65,445 $61,957 $53,436 $180,838 
Revenue generated by full-time equivalents30,133 2,948 8,700 41,781 
Total$95,578 $64,905 $62,136 $222,619 
Timing of Revenue Recognition
Revenue recognized over time$94,459 $64,905 $62,022 $221,386 
Revenue recognized at a point in time1,119 0 114 1,233 
Total$95,578 $64,905 $62,136 $222,619 
(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.
At September 30, 2017March 31, 2021 and December 31, 2016,2020, no single client accounted for greater than 10% of our combined balance of receivables from
clients, net and unbilled services, balances.net. During the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, no single client generated greater than 10% of our consolidated revenues.

19
27
Table of Contents



HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)



15. Subsequent Event
Healthcare Group Hiring
On April 5, 2021, we hired approximately 300 full-time equivalent professionals within our Healthcare operating segment. These additional professionals will expand our capacity to provide revenue cycle billing, collections, insurance verification and charge integrity services to our healthcare clients. These professionals will serve new and existing clients in our Healthcare managed services solution, including serving under a short-term contract with an existing client which we entered into in connection with this group hire. The hiring of these professionals is not significant to our consolidated financial statements.


20
Table of Contents



ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Huron,” “Company,” “we,” “us” and “our” refer to Huron Consulting Group Inc. and its subsidiaries.
Statements in this Quarterly Report on Form 10-Q that are not historical in nature, including those concerning the Company’s current expectations about its future requirements and needs,results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook,” or similar expressions. These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; failure to achieve expected utilization rates, billing rates, and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under Item 1A. "Risk“Risk Factors,"” in our Annual Report on Form 10-K for the year ended December 31, 2016 and under Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q,2020 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.
OVERVIEW
Our Business
Huron is a global professional services firm committedconsultancy that collaborates with clients to achievingdrive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results in partnership with clients. We bring a depth of expertise in strategy, technology, operations, advisory services, and analytics to drive lasting and measurable results infor the healthcare, higher education, life sciences and commercial sectors. Through focus, passion and collaboration,organizations we provide guidance and solutions to support organizations as they contend with the changes transforming their industries and businesses.serve.
We provide professional services through three operating segments: Healthcare, Education,Business Advisory, and Business Advisory.Education.
•Healthcare
Our Healthcare segment provides advisory services - from strategy setting through implementation - in the areas of organizational and resource alignment, clinical transformation, financial and operational performance, patient and caregiver engagement, and technology implementation and optimization. We serveserves national and regional hospitals, and 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 evolve and adapt to thethis rapidly changing healthcare environment to become a more agile, efficient and achieve growth, optimizeconsumer-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, enhance profitability, improve qualityimproving care delivery and clinical outcomes, and driveincreasing physician, patient and employee engagement across the enterprise.satisfaction, evolving organizational culture, and maximizing return on technology investments.
Education
Our Education segment provides management consulting and technology solutions to higher education institutions and academic medical centers. We partner with clients to address challenges relating to business and technology strategy, financial management, operational and organizational effectiveness, research administration, and regulatory compliance. Our institutional strategy, market research, budgeting and financial management, business operations and student lifecycle management solutions align missions with business priorities, improve quality and reduce costs institution-wide. Our technology strategy, enterprise applications, and analytic solutions transform and optimize operations, deliver time and cost savings, and enhance the student experience. Our research enterprise solutions assist clients in identifying and implementing institutional research strategy, optimizing clinical research operations, improving financial management and cost reimbursement, improving service to faculty, and mitigating risk compliance.

28
Table of Contents




•Business Advisory
Our Business Advisory segment provides services to middle marketworks with C-suite executives, boards, and largebusiness unit and functional leadership across a diverse set of organizations, not-for-profit organizations, lending institutions, law firms, investment banks, and private equity firms. We assist clients in a broad range of industries and across the spectrum fromincluding healthy, well-capitalized companies to organizations in transition, as well as creditors, equity owners, and other key constituents.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 resolve complexhave 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 issueschallenges, including, but not limited to, embedding technology and enhance clientanalytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers in order to evolve their enterprise valueand business unit strategies, bringing new products to market, and managing through stressed and distressed situations to create a suiteviable path forward for stakeholders.
21
Table of servicesContents



•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 capital advisory, transaction advisory, operational improvement, restructuringthe research enterprise and turnaround, valuation, and dispute advisory. Our Enterprise Solutions and Analytics professionals deliverstudent lifecycle; digital, technology and analytic solutionssolutions; 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 enable organizations to manage and optimizeadvance their financial performance, operational efficiency, and client or stakeholder experience. Our expertise in full-service enterprise performance management (EPM), enterprise resource planning (ERP),mission while strengthening their business intelligence and analytics, customer relationship management (CRM), and data management services helps clients identify and execute on business and technology strategies to drive results and gain a competitive advantage. Our Strategy and Innovation professionalsmodels. We collaborate with clients acrossto address these challenges and ensure they have a range of industries to identify new growth opportunities, build new venturessustainable future. We combine our deep industry, functional and capabilities, and accelerate organizational change. Our Life Sciences professionals providestrategic solutionstechnical expertise to help pharmaceutical, medical device,clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology; strengthening research strategies and biotechnology companies deliver more valuesupport services; evolving their organizational strategy; optimizing financial and operational performance; and enhancing the student lifecycle.
Huron is an Oracle partner, a Gold-level consulting partner with Salesforce.com and a Premium Partner with Salesforce.org, a Workday Services and Software Partner, an Amazon Web Services consulting partner, a Silver-level system integrator with Informatica and an SAP Concur implementation partner.
Coronavirus (COVID-19)
The worldwide spread of COVID-19 beginning in 2020 has created significant volatility, uncertainty and disruption to patients, payers,the global economy. This pandemic has had an unfavorable impact on aspects of our business, operations, and providersfinancial results, and comply with regulations.
Segment Reorganization
Duringhas caused us to significantly change the secondway we operate. Near the end of the first quarter of 2017,2020, we reorganizedsuspended almost all business travel and our internal financial reporting structure, which management usesemployees began working from their homes. While traditionally a majority of the work performed by our revenue-generating professionals occurred at client sites, the nature of the services we provide and enhanced available technology allows our revenue-generating professionals to assess performanceeffectively serve clients in a remote work environment. As state and allocate resources,local governments ease their restrictions, we continue to refine our comprehensive plan to return to our offices and client sites with our people’s safety and the needs of our clients guiding how we implement our phased transition. As of March 31, 2021, our employees continue to primarily work from their homes.
In each of our operating segments, we are working closely with our clients to support them and their ongoing business needs and provide relevant services to address their needs caused by movingthe COVID-19 pandemic. However, as some clients reprioritized and delayed projects as a result of the pandemic, demand for certain offerings has been negatively impacted, particularly within our Life Sciences practice fromHealthcare and Education segments. Total revenues in the Education and Life Sciences segmentfirst quarter of 2021 decreased 8.7% compared to the Business Advisory segment. The remainingfirst quarter of 2020, which was not significantly impacted by the pandemic. In addition to the impact on first quarter 2021 revenues, the COVID-19 pandemic negatively impacted sales and elongated the sales cycle for new opportunities for certain services, particularly within our Healthcare and Education and Life Sciences segment is now referred to assegments. Given the Education segment. While our consolidated results have not been impacted, we have restated our historical segment information for consistent presentation.
Acquisitions
ADI Strategies, Inc. (International)
On April 1, 2017, we completed our acquisitionuncertainties around the duration of the international assetsCOVID-19 pandemic, we continue to remain cautious about revenue growth for the first half of ADI Strategies, Inc. ("ADI Strategies") in Dubai and India. We acquired2021 when compared to the U.S. assetsfirst half of ADI Strategies in the second quarter of 2016. ADI Strategies is a leading enterprise performance management, risk management and business intelligence firm. 2020.
The acquisition strengthensCOVID-19 pandemic has strengthened demand for other services we provide, such as our cloud-based technology and analytics competencies and expands our global reach. The international results of operations of ADI Strategies have been included in our consolidated financial statements and results of operations ofsolutions within our Business Advisory segment from the date of acquisition.
Innosight Holdings, LLC
On March 1, 2017, we completedand our acquisition of Innosight Holdings, LLC ("Innosight"), a growth strategy firm focused on helping companies navigate disruptive change, enable innovation,restructuring and manage strategic transformation. Together with Innosight, we use our strategic, operational, and technology capabilitiescapital advisory solutions provided to help clients across multiple industries develop pioneering solutions to address disruption and achieve sustained growth. Innosight's results of operations have been includedorganizations in our consolidated financial statements and results of operations oftransition also within our Business Advisory segment fromsegment.
In order to support our liquidity during the dateCOVID-19 pandemic, we took proactive measures to increase available cash on hand including, but not limited to, borrowing under our senior secured credit facility in the first quarter of acquisition.
Pope Woodhead2020 and Associates Limited
On January 9, 2017,reducing discretionary operating and capital spending. In the second, third and fourth quarters of 2020, we completedmade repayments on our acquisition of Pope Woodhead and Associates Limited ("Pope Woodhead"), a U.K.-based consulting firm providing market access capabilitiesborrowings to assist clients in developing value propositions for innovative medicines and technologies. The acquisition expandsreduce our life sciences strategy expertise and strengthenstotal debt outstanding to pre-pandemic levels due to our ability to lead clients through complex payermaintain adequate cash flows from operations and regulatory environments. Pope Woodhead's resultsimproved clarity around access to capital resources. In the first quarter of operations have been included in2021, we borrowed under our consolidated financial statements and results of operationscredit facility primarily to fund our annual performance bonus payment. To further support our liquidity during the COVID-19 pandemic, we elected to defer the deposit of our Business Advisory segment fromemployer portion of social security taxes beginning in April 2020 and through December 31, 2020, which we expect to pay in equal installments in the datefourth quarters of acquisition.2021 and 2022, as provided for under CARES Act. See the “Liquidity and Capital Resources” section below for additional information on these items.
See Note 5 "Acquisitions" within our consolidated financial statements for further information regarding our recent acquisitions.Enterprise Resource Planning System Implementation
Divestiture
Life Sciences Compliance and Operations
DuringIn the secondfourth quarter of 2017,2019, we divested our Life Sciences Compliance and Operations practice ("Life Sciences C&O"began the implementation of a new cloud-based enterprise resource planning (“ERP”), which was part system designed to improve the efficiency of our broader Life Sciences practice withininternal finance, human resources, resource planning, and administrative operations. In January 2021, we successfully went live with the Business Advisory segment.new ERP system, and we continue to progress with additional functionality and integrations as scheduled. The saleimplementation progressed on schedule and has not been significantly impacted by the COVID-19 pandemic due to the ability of Life Sciences C&O did not meetour implementation team to work and collaborate remotely and the criteria forenhanced technology and cloud-based nature of our new ERP system. We believe our investment in this new system will position our teams to drive efficiencies and provide more robust management reporting separately as discontinued operations.

and data analytics to support future growth and the goals and vision of the company.
29
22
Table of Contents







How We Generate Revenues
A large portion of our revenues is generated by our full-timebillable consultants who provide consulting services to our clients and are billable to our clients based on the number of hours worked. A smaller portion of our revenues is generated by our other professionals, also referred to as full-time equivalents, some of whom work variable schedules as needed by our clients. Full-time equivalent professionals consist of our cultural transformation consultants from our Studer Group solution, which include coaches and their support staff specialized financefrom our Culture and operationalOrganizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and our employees who provide software support and maintenance services to our clients. We translate the hours that these other professionals work on client engagements into a full-time equivalent measure that we use to manage our business. We refer to our full-timebillable consultants and other professionals collectively as revenue-generating professionals.
Revenues generated by our full-timebillable consultants are primarily driven by the number of consultants we employ and their utilization rates, as well as the billing rates we charge our clients. Revenues generated by our other professionals, or full-time equivalents, are largely dependent on the number of consultants we employ, their hours worked, and billing rates charged. Revenues generated by our coaches are largely dependent on the number of coaches we employ and the total value, scope, and terms of the consulting contracts under which they provide services, which are primarily fixed-fee contracts. Revenues generated by our healthcare managed services solution are dependent on the total value, scope and terms of the related contracts.
We generate our revenues from providing professional services under four types of billing arrangements: fixed-fee (including software license revenue), time-and-expense, performance-based,; time-and-expense; performance-based; and software support, and maintenance and subscriptions.
In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. In these engagements, itIt is the client’s expectation in these engagements that the pre-established fee will not be exceeded except in mutually agreed upon circumstances. We generally recognize revenues under fixed-fee billing arrangements using a proportionate performance approach, which is based on work completed to dateto-date versus our estimates of the total services to be provided under the engagement. Contracts within our Studer GroupCulture and Organizational Excellence solution areinclude fixed-fee partner contracts with multiple deliverables,performance obligations (“Partner Contracts”), which primarily consist of coaching services, as well as speaking engagements, conferences, materialspublications and software products (“Partner Contracts”).products. Revenues for coaching services and software products are generally recognized on a straight-line basis over the length of the contract. All other revenues under Partner Contracts, including speaking engagements, conferences and publications, are recognized at the time the service isgoods or services are provided.
Fixed-fee arrangements also include software licenses for our revenue cycle management software and research administration and compliance software. Licenses for our revenue cycle management software are sold only as a component of our consulting projects, and the services we provide are essential to the functionality of the software. Therefore, revenues from these software licenses are recognized over the term of the related consulting services contract. License revenue from our research administration and compliance software is generally recognized in the month in which the software is delivered.
Fixed-fee engagements represented 46.5%46.0% and 44.5%42.4% of our revenues for the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and 45.9% and 48.5% of our revenues for the nine months ended September 30, 2017 and 2016,2020, respectively.
Time-and-expense billing arrangements require the client to pay based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include certain speaking engagements, conferences and publications purchased by our clients outside of Partner Contracts within our Studer GroupCulture and Organizational Excellence solution. We recognize revenues under time-and-expense billing arrangements as the related services or publications are provided. Time-and-expense engagements represented 43.9%38.3% and 42.2%43.1% of our revenues for the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and 44.4% and 37.6% of our revenues for the nine months ended September 30, 2017 and 2016,2020, respectively.
In performance-based fee billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we have performance-based engagements in which we earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our time-and-expense or fixed-fee engagements. We do not recognize revenues under performance-based billing arrangements until all relatedby estimating the amount of variable consideration that is probable of being earned and recognizing that estimate over the length of the contract using a proportionate performance criteria are met.approach. Performance-based fee revenues represented 4.0%8.9% and 8.2%8.8% of our revenues for the three months ended September 30, 2017March 31, 2021 and 2016, respectively,2020, respectively. The level of performance-based fees earned may vary based on our clients' risk sharing preferences and 4.4% and 9.1%the mix of our revenues for the nine months ended September 30, 2017 and 2016, respectively. Performance-based fee engagements may cause significant variations in quarterly revenues and operating results depending on the timing of achieving the performance-based criteria.services we provide.
Clients that have purchased one of our software licenses can pay an annual fee for software support and maintenance. We also generate subscription revenue from our cloud-based analytic tools and solutions. Software support, and maintenance and subscription revenues are recognized ratably over the support or subscription period, which ranges from one to three years.period. These fees are generally billed in advance and included in deferred revenues until recognized. Software support, and maintenance and subscription revenues represented

30
Table of Contents




5.6% 6.8% and 5.1%5.7% of our revenues for the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and 5.3% and 4.8%2020, respectively.
23
Table of our revenues for the nine months ended September 30, 2017 and 2016, respectively.Contents



Our quarterly results are impacted principally by our full-timebillable consultants’ utilization rate, the bill rates we charge our clients, and the number of our revenue-generating professionals who are available to work, and the amount of performance-based fees recognized, which often vary significantly between quarters.work. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. For example, during the third and fourth quarters of the year, vacations taken by our clients can result in the deferral of activity on existing and new engagements, which would negatively affect our utilization rate. The number of business work days is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period.
Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing. Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts. The volume of work performed for any particular client can vary widely from period to period.
Business Strategy, Opportunities and Challenges
Our primary strategy is to meet the needs of our clients by providing a balanced portfolio of service offerings and capabilities so that we can adapt quickly and effectively to emerging opportunities in the marketplace. To achieve this, we continue to hire highly qualified professionals and have entered into select acquisitions of complementary businesses.
To expand our business, we will remain focused on growing our existing relationships and developing new relationships, executing our managing director compensation plan to attract and retain senior practitioners, continuing to promote and provide an integrated approach to service delivery, broadening the scope of our existing services, and acquiring complementary businesses. We will regularly evaluate the performance of our practices to ensure our investments meet these objectives. Furthermore, we intend to enhance our visibility in the marketplace by refining our overarching messaging and value propositions for the organization as well as each practice. We will continue to focus on reaching our client base through clear, concise, and endorsed messages.

24
31
Table of Contents







RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected segment and consolidated operating results and other operating data.
Segment and Consolidated Operating Results
(in thousands, except per share amounts):		Three Months Ended
March 31,
20212020
Healthcare:
Revenues$79,722 $95,578 
Operating income$20,484 $24,050 
Segment operating income as a percentage of segment revenues25.7 %25.2 %
Business Advisory:
Revenues$72,867 $64,905 
Operating income$13,077 $9,842 
Segment operating income as a percentage of segment revenues17.9 %15.2 %
Education:
Revenues$50,624 $62,136 
Operating income$8,653 $13,116 
Segment operating income as a percentage of segment revenues17.1 %21.1 %
Total Company:
Revenues$203,213 $222,619 
Reimbursable expenses1,934 19,303 
Total revenues and reimbursable expenses$205,147 $241,922 
Statements of Operations reconciliation:
Segment operating income$42,214 $47,008 
Items not allocated at the segment level:
Other operating expenses28,837 27,146 
Litigation and other losses (gains)42 (150)
Depreciation and amortization5,095 6,047 
Goodwill impairment charges (1)
— 59,816 
Operating income (loss)8,240 (45,851)
Other expense, net(1,299)(7,637)
Income (loss) from continuing operations before taxes6,941 (53,488)
Income tax expense (benefit)1,536 (11,215)
Net income (loss) from continuing operations$5,405 $(42,273)
Earnings (loss) per share from continuing operations:
Basic$0.25 $(1.94)
Diluted$0.24 $(1.94)
25
Table of Contents



Three Months Ended
March 31,
Other Operating Data:20212020
Number of billable consultants (at period end) (2):
Healthcare821 892 
Business Advisory1,107 916 
Education726 791 
Total2,654 2,599 
Average number of billable consultants (for the period) (2):
Healthcare822 897 
Business Advisory1,080 920 
Education731 778 
Total2,633 2,595 
Billable consultant utilization rate (3):
Healthcare67.9 %71.6 %
Business Advisory68.7 %71.5 %
Education70.1 %76.2 %
Total68.8 %72.9 %
Billable consultant average billing rate per hour (4):
Healthcare$236 $228 
Business Advisory (5)
$203 $198 
Education$174 $188 
Total (5)
$205 $204 
Revenue per billable consultant (in thousands):
Healthcare$73 $73 
Business Advisory$63 $67 
Education$59 $69 
Total$65 $70 
Average number of full-time equivalents (for the period) (6):
Healthcare258 278 
Business Advisory34 20 
Education36 60 
Total328 358 
Revenue per full-time equivalent (in thousands):
Healthcare$78 $108 
Business Advisory$89 $149 
Education$227 $144 
Total$95 $117 
(1)The resultsnon-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of operations for acquired businesses have been includedour     corporate investment in the segments. We do not include the impact of goodwill impairment charges in our resultsevaluation of segment performance.
(2)Consists of our consulting professionals who provide consulting services and generate revenues based on the number of hours worked.
(3)Utilization rate for our billable consultants is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.
(4)Average billing rate per hour for our billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.
(5)The Business Advisory segment includes operations sinceof Huron Eurasia India. Absent the dateimpact of their respective acquisition.
DuringHuron Eurasia India, the second quarter of 2017, we reorganized our internal financial reporting structure by moving our Life Sciences practice from the Education and Life Sciences segment toaverage billing rate per hour for the Business Advisory segment. The remaining Educationsegment would have been $221 and Life Sciences$224 for the three months ended March 31, 2021 and 2020, respectively.
Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $212 and $213 for the three months ended March 31, 2021 and 2020, respectively.
(6)Consists of coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, is now referredand full-time employees who provide software support and maintenance services to as the Education segment. While our consolidated results have not been impacted, we have restated our historical segment information for consistent presentation.clients.
26
Segment and Consolidated Operating Results
(in thousands, except per share amounts):
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Healthcare:        
Revenues $79,582
 $103,425
 $261,261
 $323,531
Operating income $25,778
 $38,824
 $83,580
 $119,229
Segment operating income as a percentage of segment revenues 32.4% 37.5% 32.0% 36.9%
Education:        
Revenues $41,422
 $38,621
 $127,629
 $111,816
Operating income $7,762
 $10,896
 $31,772
 $31,474
Segment operating income as a percentage of segment revenues 18.7% 28.2% 24.9% 28.1%
Business Advisory:        
Revenues $55,372
 $41,354
 $157,753
 $112,801
Operating income $12,832
 $8,608
 $34,890
 $23,275
Segment operating income as a percentage of segment revenues 23.2% 20.8% 22.1% 20.6%
Total Company:        
Revenues $176,376
 $183,400
 $546,643
 $548,148
Reimbursable expenses 17,982
 19,093
 55,862
 54,636
Total revenues and reimbursable expenses $194,358
 $202,493
 $602,505
 $602,784
         
Segment operating income $46,372
 $58,328
 $150,242
 $173,978
Items not allocated at the segment level:        
Other operating expenses 29,448
 26,502
 92,643
 84,595
Other losses (gains), net 880
 494
 (222) 494
Depreciation and amortization 9,946
 8,092
 28,549
 23,064
Goodwill impairment charge (1)
 —
 —
 209,600
 —
Total operating income (loss) 6,098
 23,240
 (180,328) 65,825
Other expense, net (3,950) (3,687) (10,607) (11,034)
Income (loss) from continuing operations before income tax expense 2,148
 19,553
 (190,935) 54,791
Income tax expense (benefit) (1,984) 7,265
 (49,740) 19,498
Net income (loss) from continuing operations $4,132
 $12,288
 $(141,195) $35,293
Earnings (loss) per share from continuing operations:        
Basic $0.19
 $0.58
 $(6.59) $1.67
Diluted $0.19
 $0.57
 $(6.59) $1.65



32
Table of Contents







  Three Months Ended
September 30,		 Nine Months Ended
September 30,
Other Operating Data: 2017 2016 2017 2016
Number of full-time billable consultants (at period end) (2):
        
Healthcare 761
 1,010
 761
 1,010
Education 536
 466
 536
 466
Business Advisory 830
 545
 830
 545
Total 2,127
 2,021
 2,127
 2,021
Average number of full-time billable consultants (for the period) (2):
        
Healthcare 741
 984
 805
 1,005
Education 527
 447
 497
 425
Business Advisory 779
 530
 710
 465
Total 2,047
 1,961
 2,012
 1,895
Full-time billable consultant utilization rate (3):
        
Healthcare 80.3% 77.0% 76.6% 78.6%
Education 70.9% 68.0% 73.6% 71.2%
Business Advisory 72.9% 73.5% 73.4% 72.4%
Total 75.0% 73.9% 74.7% 75.3%
Full-time billable consultant average billing rate per hour (4):
        
Healthcare $190
 $203
 $200
 $209
Education $210
 $220
 $215
 $217
Business Advisory $197
 $203
 $195
 $216
Total $197
 $207
 $202
 $212
Revenue per full-time billable consultant (in thousands):        
Healthcare $69
 $73
 $211
 $231
Education $69
 $72
 $226
 $224
Business Advisory $67
 $72
 $212
 $229
Total $68
 $72
 $215
 $229
Average number of full-time equivalents (for the period) (5):
        
Healthcare 214
 204
 215
 201
Education 35
 40
 36
 37
Business Advisory 26
 25
 21
 19
Total 275
 269
 272
 257
Revenue per full-time equivalent (in thousands):        
Healthcare $134
 $156
 $427
 $456
Education $138
 $158
 $419
 $436
Business Advisory $108
 $126
 $342
 $335
Total $132
 $154
 $420
 $444
(1)The non-cash goodwill impairment charge is 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.
(2)Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked.
(3)Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.
(4)Average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.
(5)Consists of cultural transformation consultants within our Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients.


33
Table of Contents




Non-GAAP Measures
We also assess our results of operations using certain non-GAAP financial measures. These non-GAAP financial measures differ from GAAP because the non-GAAP financial measures we calculate to measure earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income (loss) from continuing operations, and adjusted diluted earnings (loss) per share from continuing operations exclude a number of items required by GAAP, each discussed below. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows, or liquidity prepared in accordance with GAAP. Our non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-GAAP financial measures.
Our management uses the non-GAAP financial measures to gain an understanding of our comparative operating performance, for example when comparing such results with previous periods or forecasts. These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results.
The reconciliations of these financial measures from GAAP to non-GAAP are as follows (in thousands, except per share amounts):
 Three Months Ended
March 31,
 20212020
Revenues$203,213 $222,619 
Net income (loss) from continuing operations$5,405 $(42,273)
Add back:
Income tax expense (benefit)1,536 (11,215)
Interest expense, net of interest income1,719 2,341 
Depreciation and amortization6,551 7,415 
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)15,211 (43,732)
Add back:
Restructuring and other charges628 2,458 
Litigation and other losses (gains)42 (150)
Goodwill impairment charges— 59,816 
Loss on sale of business— 102 
Transaction-related expenses170 — 
Foreign currency transaction losses (gains), net403 520 
Adjusted EBITDA$16,454 $19,014 
Adjusted EBITDA as a percentage of revenues8.1 %8.5 %
27
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenues$176,376
 $183,400
 $546,643
 $548,148
Net income (loss) from continuing operations$4,132
 $12,288
 $(141,195) $35,293
Add back:       
Income tax expense (benefit)(1,984) 7,265
 (49,740) 19,498
Interest expense, net of interest income4,880
 4,176
 13,811
 12,270
Depreciation and amortization12,603
 12,144
 36,937
 34,342
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)19,631
 35,873

(140,187) 101,403
Add back:       
Restructuring charges1,347
 1,049
 5,295
 4,129
Other losses (gains), net880
 494
 (222) 494
Goodwill impairment charge—
 —
 209,600
 —
Gain on sale of business—
 —
 (931) —
Foreign currency transaction losses (gains), net(385) 84
 (449) (270)
Adjusted EBITDA$21,473
 $37,500

$73,106
 $105,756
Adjusted EBITDA as a percentage of revenues12.2% 20.4%
13.4% 19.3%

34
Table of Contents







Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 2016 2017 2016 20212020
Net income (loss) from continuing operations$4,132
 $12,288
 $(141,195) $35,293
Net income (loss) from continuing operations$5,405 $(42,273)
Weighted average shares - diluted21,622
 21,445
 21,413
 21,427
Weighted average shares - diluted22,341 21,827 
Diluted earnings (loss) per share from continuing operations$0.19
 $0.57
 $(6.59) $1.65
Diluted earnings (loss) per share from continuing operations$0.24 $(1.94)
Add back:       Add back:
Amortization of intangible assets8,834
 8,771
 26,432
 24,369
Amortization of intangible assets2,399 3,209 
Restructuring charges1,347
 1,049
 5,295
 4,129
Other losses (gains), net880
 494
 (222) 494
Goodwill impairment charge—
 —
 209,600
 —
Non-cash interest on convertible notes1,974
 1,883
 5,853
 5,582
Gain on sale of business—
 —
 (931) —
Tax effect(5,100) (4,794) (70,362) (13,588)
Tax benefit related to "check-the-box" election(2,748) —
 (2,748) —
Restructuring and other chargesRestructuring and other charges628 2,458 
Litigation and other losses (gains)Litigation and other losses (gains)42 (150)
Goodwill impairment chargesGoodwill impairment charges— 59,816 
Loss on sale of businessLoss on sale of business— 102 
Transaction-related expensesTransaction-related expenses170 — 
Tax effect of adjustmentsTax effect of adjustments(858)(13,409)
Total adjustments, net of tax5,187
 7,403

172,917
 20,986
Total adjustments, net of tax2,381 52,026 
Adjusted net income from continuing operations$9,319
 $19,691

$31,722
 $56,279
Adjusted net income from continuing operations$7,786 $9,753 
Adjusted weighted average shares - diluted21,622
 21,445
 21,585
 21,427
Adjusted weighted average shares - diluted22,341 22,329 
Adjusted diluted earnings per share from continuing operations$0.43
 $0.92

$1.47
 $2.63
Adjusted diluted earnings per share from continuing operations$0.35 $0.44 
These non-GAAP financial measures include adjustments for the following items:
Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from the calculation of adjusted net income from continuing operations presented above. Amortization of intangiblesintangible assets is inconsistent in its amount and frequency and is significantly affected by the timing and size of our acquisitions.
Restructuring and other charges: We have incurred charges due to the restructuring of various parts of our business. These restructuring charges have primarily consisted of costs associated with office space consolidations, including thelease impairment charges and accelerated depreciation of certain leasehold improvements,on lease-related property and equipment, and severance charges. Additionally, we have excluded the effect of a $0.8 million one-time charge incurred during the first quarter of 2020, related to redundant administrative costs in our corporate operations which is recorded within selling, general and administrative expenses on our consolidated statement of operations. We have excluded the effect of the restructuring and other charges from our non-GAAP measures because the amount of each restructuring charge is significantly affected by the timing and size of the restructured business or component of a business.
Other losses (gains), net: We have excluded the effects of remeasurement losses and gains related to contingent acquisition liabilities to permit comparability with periods that were not impacted by these items.
Litigation and other losses (gains): We have excluded the effect of a loss in the first quarter of 2021 from an increase in the estimated fair value of our liability for contingent consideration payments related to a business acquisition and a litigation settlement gain recognized in the first quarter of 2020 to permit comparability with periods that were not impacted by these items.
Goodwill impairment charge:charges: We have excluded the effect of the goodwill impairment charge that occurredcharges recognized in the secondfirst quarter of 20172020 as this is anthese are infrequent eventevents and itstheir exclusion permits comparability with periods that were not impacted by such charge.charges.
Non-cash interestLoss on convertible notes:sale of business: We incur non-cash interest expense relating toexcluded the implied valueeffect of the equity conversion componentloss on sale of a software-based solution within our Convertible Notes. The valueBusiness Advisory segment in the first quarter of the equity conversion component is treated as a debt discount2020. Divestitures of businesses are infrequent and amortized to interest expense over the life of the Convertible Notes using the effective interest rate method. We exclude this non-cash interest expense that does not represent cash interest payments from the calculation of adjusted net income from continuing operations as management believes that this non-cash expense isare not indicative of the ongoing performance of our business.
Gain on sale of business: We haveTransaction-related expenses: To permit comparability with prior periods, we excluded the effectimpact of third-party legal and accounting fees incurred in the gain on the salefirst quarter of Life Sciences C&O, as management believes that this one-time gain2021 related to the divestitureacquisition of a business is not indicative of the ongoing performance of our business.Unico Solution, Inc. and ForceIQ, Inc., which closed effective February 1, 2021 and November 1, 2020, respectively.
Foreign currency transaction losses (gains), net: We have excluded the effect of foreign currency transaction losses and gains from the calculation of adjusted EBITDA because the amount of each loss or gain is significantly affected by timing and changes in foreign exchange rates.
Tax effect:effect of adjustments: The non-GAAP income tax adjustment reflects the incremental tax impact applicable to the non-GAAP adjustments.
Tax benefit related to "check-the-box" election: We have excluded the effect of a tax benefit, recorded in the third quarter of 2017, from recognizing a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat one of our wholly-owned foreign subsidiaries as a disregarded entity for U.S. federal income tax purposes. The exclusion of this discrete tax benefit permits comparability with periods that were not impacted by this item. Refer to Note 13 “Income Taxes” within the notes to the consolidated financial statements for additional information.

35
Table of Contents




Income tax expense, Interest expense, net of interest income, Depreciation and amortization: We have excluded the effects of income tax expense, interest expense, net of interest income, and depreciation and amortization in the calculation of EBITDA, as these are customary exclusions as defined by the calculation of EBITDA to arrive at meaningful earnings from core operations excluding the effect of such items. Included within the depreciation and amortization adjustment is the amortization of capitalized implementation costs of our ERP and other related software, which is included within Selling, general and administrative expenses on our consolidated statement of operations.
Adjusted weighted average shares - diluted:As we reported a net loss for the ninefirst three months ended September 30, 2017,of 2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. For the nine months ended September 30, 2017, theThe non-GAAP adjustments described above resulted in an adjusted net income from continuing operations.operations for the first three months of 2020. Therefore, we included the dilutive common stock equivalents in the calculation of adjusted diluted weighted average shares outstanding for that period.
28
Table of Contents



Three Months Ended September 30, 2017March 31, 2021 Compared to Three Months Ended September 30, 2016March 31, 2020
Revenues
Revenues decreased $7.0$19.4 million, or 3.8%8.7%, to $176.4$203.2 million for the thirdfirst quarter of 20172021 from $183.4$222.6 million for the thirdfirst quarter of 2016. Third quarter 2017 revenues included $13.4 million from our acquisitions of Innosight and Pope Woodhead, which were completed subsequent to2020. Revenues in the thirdfirst quarter of 2016,2021 were negatively impacted by COVID-19 as wellsome clients have reprioritized and delayed projects as revenues from our acquisitiona result of the international assets of ADI Strategies, which was also completed subsequent topandemic, particularly within our Healthcare and Education segments, whereas revenues in the thirdfirst quarter of 20162020 were not significantly impacted by the pandemic. Conversely, the COVID-19 pandemic has strengthened demand for other services we provide, such as our cloud-based technology and has since been fully integrated into theanalytics solutions within our Business Advisory segment. Third quarter 2017 revenues also included an incremental $1.7 million of revenue fromsegment and our acquisition of Healthcare Services Management, Inc. ("HSM Consulting"), which was completed mid-third quarter 2016.restructuring and capital advisory solutions provided to organizations in transition in our Business Advisory segment.
Of the overall $7.0$19.4 million decrease in revenues, $5.3$10.5 million was attributable to a decrease in revenues from our full-time equivalents and $1.7$8.9 million was attributable to a decrease in revenues from our full-time billable consultants.
The decrease in full-time equivalent revenues was primarily attributable to a decrease in revenue from our Studer Group solution within our Healthcare segment and a decrease in license revenuefull-time equivalent revenues in our EducationHealthcare segment, as discussed below in Segment Results. The decrease in full-time equivalent revenues reflected overall decreases in revenue per full-time equivalent and the average number of full-time equivalents in the first quarter of 2021 compared to the same prior year period.
The decrease in full-time billable consultant revenues reflected a decrease in the average billing ratedemand for the third quarter of 2017,services in our Education and Healthcare segments, partially offset by increasesa strengthened demand for services in our Business Advisory segment, as discussed below in Segment Results. The decrease in billable consultant revenues was primarily attributable to overall decreases in the consultant utilization rate, partially offset by an overall increase in the average number of billable consultants for the first quarter of 2021 compared to the same prior year period.
In most of 2020 and consultant utilization rate. As discussed belowthe first quarter of 2021, the COVID-19 pandemic negatively impacted sales and elongated the sales cycle for new opportunities for certain services, particularly within our Healthcare and Education segments where some clients reprioritized or delayed certain projects. Given the uncertainties around the duration of the COVID-19 pandemic, we continue to remain cautious about revenue growth for the first half of 2021 when compared to the first half of 2020.
The COVID-19 pandemic has caused the need for many companies to accelerate their digital transformation to drive operational efficiencies, better engage with their customers, and make better data-driven decisions. This has resulted in Segment Results, this decrease in revenue attributable to our full-time billable consultants reflected decreasedstrong demand for our servicesdigital, technology and analytic offerings, particularly within our Business Advisory segment. Indicative of our expectations for future growth in the Healthcarethis segment, largely offset by revenues fromwe continue to make investments in these offerings, both organically and through strategic acquisitions, such as our acquisitions of InnosightForceIQ in November 2020 and Pope Woodhead, as well as strengthened demand for our servicesUnico Solutions in February 2021, and the Business Advisoryaddition of new offerings and Education segments.capabilities within this segment where we see strategic opportunities.
Total Direct Costs
Our total directDirect costs, includingexcluding amortization of intangible assets and software development costs, increased $4.0decreased $8.1 million, or 3.6%5.2%, to $116.4$148.1 million infor the three months ended September 30, 2017,March 31, 2021, from $112.4$156.2 million infor the three months ended September 30, 2016.March 31, 2020. The $4.0$8.1 million increasedecrease primarily related to a $2.1$3.0 million increasedecrease in salaries and related expenses for our revenue-generating professionals, which was largely driven by increased headcount from acquisitions and our ongoing cloud-based enterprise resource planning (ERP) investment, partially offset by a $1.3 million decrease in salaries and related expenses in our Healthcare segment as a result of headcount reductions. Additional increases included a $1.1 million increase in contractorshare-based compensation expense a $0.9 million increase in signing and retention bonuses for our revenue-generating professionals, a $0.6$1.3 million increasedecrease in performance bonus expense for our revenue-generating professionals, and a $0.5 million increase in share-based compensation expense for our revenue-generating professionals. All of these increases were partially offset by a $1.4$1.3 million decrease in amortization of intangible assets.contractor expense. As a percentage of revenues, our total direct costs increased to 66.0%72.9% during the thirdfirst quarter of 20172021 compared to 61.3%70.2% during the thirdfirst quarter of 2016,2020, primarily due to the items described above.decrease in revenues.
Total direct costs for the three months ended September 30, 2017March 31, 2021 included $2.7$0.9 million of amortization expense for intangible assets, primarily representing customer contracts and software acquired in business combinations, and internal software development costs and intangible assets, compared to $4.1$1.3 million of amortization expense for the same prior year period. The $1.4 million decrease inIntangible asset amortization expense wasincluded within direct costs for the three months ended March 31, 2021 and 2020 primarily attributablerelated to the decreasing amortization expense oftechnology and software, certain customer relationships and customer contracts acquired in connection with our Studer Group acquisition, due to the accelerated basis of amortization.business acquisitions. See Note 5 "Acquisitions" and Note 64 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information abouton our intangible assets.

36
Table of Contents




Operating Expenses and Other Gains,Losses (Gains), Net
Selling, general and administrative expenses increased $3.3decreased by $3.7 million, or 8.7%8.5%, to $41.6$39.8 million in the thirdfirst quarter of 20172021 from $38.3$43.4 million in the thirdfirst quarter of 2016. Selling, general and administrative expenses for the third quarter of 2017 included $3.9 million from Innosight and Pope Woodhead.2020. The overall $3.3$3.7 million increasedecrease primarily related to a $1.9$4.2 million increasedecrease in practice administration and meetings expenses; $2.5 million decrease in promotion and marketing expenses; a $1.4 million decrease in share-based compensation expense for our support personnel; a $0.7 million decrease in training expenses; and a $0.7 million decrease in salaries and related expenses for our support personnel, a $0.9 million increase in facilities and other office-related expenses, a $0.7 million increase in third-party consulting expenses, and a $0.5 million increase in travel related expenses,personnel. These decreases were partially offset by a $1.1$5.5 million increase in deferred compensation expense attributable to the change in the market value of our deferred compensation liability. During the first quarter of 2021, the market value of our deferred compensation liability increased by $0.8 million, compared to a $4.7 million decrease in the first quarter of 2020. This $5.5 million increase in expense is offset by a $5.5 million increase in the gain recognized for the change in the market value of investments that are used to fund our deferred compensation liability and recognized in other income (expense), net. The decreases in practice administration and meetings expenses.expenses, promotion and marketing expenses, and training expenses primarily relate to the cancellation or delay of in-person meetings and events and business travel due to the COVID-19 pandemic. The decrease in share-based compensation expense primarily related to a decrease in the expected funding of performance-based share awards for our
29
Table of Contents



executive officers recorded in the first quarter of 2021. As a percentage of revenues, selling, general and administrative expenses increased to 23.6%19.6% during the thirdfirst quarter of 20172021 compared to 20.9%19.5% during the thirdfirst quarter of 2016,2020. This increase was primarily dueattributable to the items described above.change in the market value of our deferred compensation liability and the decrease in revenues, mostly offset by the decreases in practice administration and meetings expenses and promotion and marketing expenses.
Restructuring charges for the thirdfirst quarter of 2017 totaled $1.32021 were $0.6 million, compared to $1.0$1.6 million for the thirdfirst quarter of 2016.2020. The $1.3$0.6 million charge incurredrecognized in the thirdfirst quarter of 20172021 primarily related to the accrual of remaining lease obligations,rent and related expenses, net of estimated sublease income, due to relocating our San Francisco office to a smaller space and consolidating our New York offices in the third quarter of 2017, and accelerated depreciation on leasehold improvementsfurniture and fixtures for our San Francisco office.vacated office spaces. The $1.0$1.6 million charge incurredrecognized in the thirdfirst quarter of 20162020 primarily related to updated lease assumptionsa $1.2 million accrual for the termination of a third-party advisor agreement; $0.3 million related to workforce reductions to better align resources with market demand; and $0.1 million related to workforce reductions in our Washington, D.C. space vacated in the fourth quarter of 2014.corporate operations. See Note 98 "Restructuring Charges" within the notes to our consolidated financial statements for further discussion of our restructuring expenses.
Other losses, net totaled $0.9 million for the three months ended September 30, 2017, and represents losses due to the increase in the fair value of the liability for future expected contingent consideration payments related to acquisitions. In the third quarter of 2016, we recognized $0.5 million of remeasurement losses for the increase in the fair value of the contingent consideration liability. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. See Note 11 "Fair Value of Financial Instruments" within the notes to our consolidated financial statements for additional information on our restructuring charges.
Litigation and other gains totaled $0.2 million for the fair valuefirst quarter of contingent consideration liabilities.2020, which consisted of a litigation settlement gain for the resolution of a claim that was settled in the first quarter of 2020.
Depreciation and amortization expense increased by $1.9decreased $0.7 million, or 11.2%, to $9.9$5.4 million infor the three months ended September 30, 2017 from $8.1March 31, 2021 compared to $6.1 million infor the three months ended September 30, 2016.March 31, 2020. The increase$0.7 million decrease in depreciation and amortization expense was primarily attributable to an increase indecreasing amortization expense for intangible assetscustomer relationships acquired in the Innosight and Pope Woodheadbusiness acquisitions which were completed subsequentdue to the third quarteraccelerated basis of 2016,amortization in prior periods, including the customer relationships acquired in our Studer Group acquisition; and an increasecustomer relationships acquired in amortizationother business acquisitions that were fully amortized in prior periods; as well as a decrease in depreciation expense for a customer-related intangible asset acquired in the Studer Group acquisition.leasehold improvements and furniture and fixtures related to vacated office spaces. Intangible asset amortization expense included within operating expenses primarily relatesrelated to certain customer relationships, trade names, and non-competition agreements and trade names acquired in connection with our business acquisitions. See Note 5 "Acquisitions" and Note 64 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information abouton our intangible assets.
During the first quarter of 2020, we recorded $59.8 million of non-cash pretax goodwill impairment charges related to our Strategy and Innovation and Life Sciences reporting units within our Business Advisory segment; primarily related to the expected decline in sales, increased uncertainty in the backlog and a decrease in the demand for the services these reporting units provide, as a result of the COVID-19 pandemic. These charges were non-cash in nature and did not affect our liquidity or debt covenants. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the charges.
Operating Income
Operating income decreased $17.1increased $54.1 million to $6.1income of $8.2 million in the thirdfirst quarter of 20172021 from $23.2a loss of $45.9 million in the thirdfirst quarter of 2016.2020. This increase is primarily attributable to the $59.8 million of non-cash pretax goodwill impairment charges related to our Business Advisory segment that were recognized in the first quarter of 2020. Operating margin, which is defined as operating income expressed as a percentage of revenues, decreased to 3.5% inwas 4.1% for the three months ended September 30, 2017,March 31, 2021, compared to 12.7% in(20.6)% for the three months ended September 30, 2016.March 31, 2020. The decreaseincrease in operating margin in the first quarter of 2021 was primarily attributable to increasesthe goodwill impairment charges recognized in salaries and related expenses for both our revenue-generating professionals and support personnel, contractor expense, facilities and other office-related expenses, signing and retention bonuses for our revenue-generating professionals, and performance bonus expense for our revenue-generating professionals for the thirdfirst quarter of 20172020, as well as the decreases in practice administration and meetings expenses and promotion and marketing expenses in the first quarter of 2021 compared to the same prior year period. These increases to the operating margin were partially offset by the decrease in revenues and the change in the market value of our deferred compensation liability. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the non-cash goodwill impairment charges.
Total Other Expense,Income (Expense), Net
Total otherInterest expense, net increased by $0.3of interest income decreased $0.6 million to $4.0$1.7 million in the thirdfirst quarter of 20172021 from $3.7$2.3 million in the thirdfirst quarter of 2016.2020. The increasedecrease in totalinterest expense was primarily attributable to lower levels of borrowing under our credit facility during the first quarter of 2021 compared to the same prior year period. See Note 7 "Financing Arrangements" within the notes to our consolidated financial statements for additional information about our senior secured credit facility.
Other expense, net decreased $5.7 million to a net gain of $0.4 million in the first quarter of 2021 from a net loss of $5.3 million in the first quarter of 2020. The decrease in other expense, net was primarily attributable to a $0.7$0.8 million increasegain recognized in interestthe first quarter of 2021 for the market value of our investments that are used to fund our deferred compensation liability, compared to a $4.7 million loss in the first quarter of 2020. Additionally, other expense, net of interest income, which was due to higher levels of borrowings and higher interest rates under our credit facility during the third quarter of 2017 compared to the third quarter of 2016. This increase was partially offset byincludes $0.4 million of net foreign currency transaction gains in the third quarter of 2017 compared to $0.1 million of net foreign currency transaction losses in the thirdfirst quarter of 2016.2021 compared to $0.5 million of foreign currency transaction losses recognized in the first quarter of 2020.
Income Tax Expense (Benefit)
For the three months ended September 30, 2017,March 31, 2021, our effective tax rate was (92.4)% as we recognized income tax benefit from continuing operations of $2.0 million on income from continuing operations of $2.1 million. For the third quarter of 2016, our effective tax rate was 37.2%22.1% as we recognized income tax expense from continuing operations of $7.3$1.5 million on income from continuing operations of $19.6$6.9 million. The effective tax rate for the three months ended September 30, 2017of 22.1% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6%, primarily due to recognizing a $2.7 milliondiscrete tax benefit related to a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat onefor share-based compensation awards that vested during the first quarter of our wholly-owned foreign subsidiaries as a

37
Table of Contents




disregarded entity for U.S federal income tax purposes.2021. This benefitfavorable item was partially offset by $0.6 millioncertain nondeductible expense items.
30
Table of Contents



For the three months ended March 31, 2020, our effective tax expense recorded in the third quarter of 2017 to correctrate was 21.0% as we recognized an error that occurred in the second quarter of 2017. During the third quarter of 2017, we also recorded a $3.1 million adjustment to decrease deferred income taxes, net and increase income tax receivablebenefit from continuing operations of $11.2 million on our consolidated balance sheet to correct an error that occurred in the second quartera loss from continuing operations of 2017. These errors have no impact on full year 2017 results, and we concluded that the impact of both errors was not material to the second and third quarter financial statements.$53.5 million. The effective tax rate for the three months ended September 30, 2016of 21.0% was lowerless favorable than the statutory rate, inclusive of state income taxes, of 26.0% primarily due to non-taxable income, valuation allowance reductions,certain nondeductible expense items, non-deductible losses on our investments used to fund our deferred compensation liability, and certain credits and deductions,the nondeductible portion of the goodwill impairment charges recorded during the first quarter of 2020. These unfavorable items were partially offset by non-deductible business expenses.a discrete tax benefit for share-based compensation awards that vested during the quarter and the discrete tax benefit for the remeasurement of a portion of our income tax receivable as a result of the enactment of the CARES Act in the first quarter of 2020.
The CARES Act, which was signed into law on March 27, 2020, is an approximately $2 trillion emergency economic stimulus package in response to the COVID-19 outbreak, which among other items, includes income tax provisions relating to net operating loss carryback periods and technical corrections to tax depreciation methods for qualified improvement property. During 2020, as a result of the CARES Act, we recognized a $1.5 million tax benefit related to the remeasurement of a portion of our income tax receivable for the federal net operating loss incurred in 2018 and the expected federal net operating loss in 2020 that will be carried back to prior year income, both for a refund at the higher, prior year tax rate.
See Note 12 "Income Taxes" within the notes to our consolidated financial statements for additional information on our income tax expense.
Net Income from Continuing Operations and Earnings per Share
Net income from continuing operations decreased by $8.2increased $47.7 million to $4.1$5.4 million for the three months ended September 30, 2017,March 31, 2021 from $12.3a net loss from continuing operations of $42.3 million for the same period last year. This increase is primarily attributable to the $59.8 million of non-cash pretax goodwill impairment charges related to our Business Advisory segment recognized in the first quarter of 2020 . As a result of the decreaseincrease in net income from continuing operations, diluted earnings per share from continuing operations for the thirdfirst quarter of 20172021 was $0.19$0.24 compared to $0.57a loss per share from continuing operations of $1.94 for the thirdfirst quarter of 2016.2020. The non-cash goodwill impairment charges had a $2.19 unfavorable impact on diluted earnings per share from continuing operations for the first quarter of 2020.
Discontinued OperationsEBITDA and Adjusted EBITDA
Net income from discontinued operations was $0.2EBITDA increased $58.9 million to earnings of $15.2 million for the three months ended September 30, 2017 and related to updated lease assumptions for vacated office space directly related to the saleMarch 31, 2021 from a loss of the Huron Legal segment. See Note 4 "Discontinued Operations" within the notes to our consolidated financial statements for additional information about our discontinued operations.
EBITDA and Adjusted EBITDA
EBITDA decreased $16.2 million to $19.6$43.7 million for the three months ended September 30, 2017 from $35.9 million for the three months ended September 30, 2016.March 31, 2020. Adjusted EBITDA decreased $16.0$2.6 million to $21.5$16.5 million in the thirdfirst quarter of 20172021 from $37.5$19.0 million in the thirdfirst quarter of 2016.2020. The increase in EBITDA was primarily attributable to the non-cash goodwill impairment charges of $59.8 million recognized in the first quarter of 2020. The decrease in EBITDA and adjusted EBITDA was primarily dueattributable to the decrease in segment operating income, as discussed below in Segment Results, as well as an increase in corporate expenses primarily due to our acquisitions of Innosight and Pope Woodhead.Results.
Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share
Adjusted net income from continuing operations decreased $10.4$2.0 million to $9.3$7.8 million in the thirdfirst quarter of 20172021 compared to $19.7$9.8 million in the thirdfirst quarter of 2016.2020. As a result of the decrease in adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations was $0.43$0.35 for the thirdfirst quarter of 2017,2021, compared to $0.92$0.44 for the thirdfirst quarter of 2016.2020.
Segment Results
Healthcare
Revenues
Healthcare segment revenues decreased $23.8$15.9 million, or 23.1%16.6%, to $79.6$79.7 million for the thirdfirst quarter of 20172021 from $103.4$95.6 million for the thirdfirst quarter of 2016. Revenues2020, primarily due to the negative impact of the COVID-19 pandemic on demand for our services within this segment, as some clients reprioritized and delayed certain projects as a result of the third quarter of 2017 included an incremental $1.7 million from our acquisition of HSM Consulting, which was completed mid-third quarter 2016.uncertainties surrounding the pandemic.
During the three months ended September 30, 2017,March 31, 2021, revenues from fixed-fee engagements,engagements; time-and-expense engagements,engagements; performance-based arrangements,arrangements; and software support, and maintenance and subscription arrangements represented 68.5%60.5%, 16.6%14.3%, 6.7%18.4%, and 8.2%6.8% of this segment’s revenues, respectively, compared to 67.0%58.4%, 13.4%15.4%, 13.4%19.8%, and 6.2%6.4% of this segment’s revenues, respectively, for the same prior year period.
Of the overall $23.8 million decrease in revenues, $20.4 million was attributable to a decrease in revenue from our full-time billable consultants and $3.4 million was attributable to a decrease in revenue generated by our full-time equivalents.
The decrease in revenue attributable to our full-time billable consultants reflected decreases in the average number of full-time billable consultants and the average billing rate, partially offset by an increase in the consultant utilization rate. This decrease in revenue was primarily driven by a decreased demand for our performance improvement solution. Performance-based fee revenue was $5.3$14.7 million duringfor the thirdfirst quarter of 20172021 compared to $13.8$18.9 million duringfor the thirdfirst quarter of 2016.2020. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide. Performance-based fee arrangements may also cause significant variations
Of the overall $15.9 million decrease in revenues, operating results,$10.0 million was attributable to a decrease in revenues from our full-time equivalents and average billing rates due$5.9 million was attributable to a decrease in revenues from our level of execution and the timing of achievement of the performance-based criteria.

38
Table of Contents




billable consultants. The decrease in revenue attributable to our full-time equivalents was primarily driven by a decreased demand for our Studer Group solution andequivalent revenues reflected a decreasedecreases in revenue per full-time equivalent and the average number of full-time equivalents in the first quarter of 2021 compared to the same prior year period. The decrease in revenues attributable to our billable consultants reflected decreases in the average number of billable consultants and the consultant utilization rate, partially offset by an increase in the average numberbilling rate in the first quarter of full-time equivalents.2021 compared to the same prior year period.
31
Table of Contents



Operating Income
Healthcare segment operating income decreased $13.0$3.6 million, or 33.6%14.8%, to $25.8$20.5 million for the three months ended September 30, 2017March 31, 2021 from $38.8$24.1 million for the three months ended September 30, 2016.March 31, 2020. The Healthcare segment operating margin, defined as segment operating income expressed as a percentage of segment revenues, increased to 25.7% for the first quarter of 2021 from 25.2% in the same period last year. The increase in this segment’s operating margin was primarily attributable to decreases in practice administration and meetings expenses, performance bonus and share-based compensation expense for our revenue-generating professionals, product and event costs, and promotion and marketing expenses, largely offset by an increase in salaries and related expenses for our revenue-generating professionals as a percentage of revenues.
Business Advisory
Revenues
Business Advisory segment revenues increased $8.0 million, or 12.3%, to $72.9 million for the first quarter of 2021 from $64.9 million for the first quarter of 2020, primarily related to strengthened demand for our cloud-based technology and analytics solutions, our strategy and innovation solutions, and our restructuring and capital advisory solutions provided to organizations in transition.
During the three months ended March 31, 2021, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 41.0%, 51.6%, 4.7%, and 2.7% of this segment’s revenues, respectively, compared to 39.1%, 57.9%, 1.0%, and 2.0% of this segment's revenues, respectively, for the same prior year period. Performance-based fee revenue was $3.4 million for the first quarter of 2021 compared to $0.6 million for the first quarter of 2020. The level of performance-based fees earned may vary based on our clients’ preferences, the mix of services we provide, and the timing of transactions or milestones.
Of the overall $8.0 million increase in revenues, $7.9 million was attributable to an increase in revenues from our billable consultants and $0.1 million was attributable to an increase in revenues from our full-time equivalents. The increase in revenues from our billable consultants reflected increases in the average number of billable consultants and the average billing rate, partially offset by a decrease in the consultant utilization rate in the first quarter of 2021 compared to the same prior year period. The slight increase in revenues generated by our full-time equivalents reflected an increase in the average number of full-time equivalents, largely offset by a decrease in revenue per full-time equivalent in the first quarter of 2021 compared to the same prior year period.
Operating Income
Business Advisory segment operating income increased by $3.2 million, or 32.9%, to $13.1 million for the three months ended March 31, 2021 from $9.8 million for the three months ended March 31, 2020. The Business Advisory segment operating margin increased to 17.9% for the first quarter of 2021 from 15.2% in the same period last year. The increase in this segment’s operating margin was primarily attributable to decreases in restructuring charges and promotion and marketing expenses, partially offset by an increase in performance bonus expense for our revenue-generating professionals.
Education
Revenues
Education segment revenues decreased $11.5 million, or 18.5%, to $50.6 million for the first quarter of 2021 from $62.1 million for the first quarter of 2020. The decrease in revenues was related to the negative impact of the COVID-19 pandemic on demand for this segment's services as some clients reprioritized and delayed certain projects as a result of the uncertainties surrounding the pandemic.
During the three months ended March 31, 2021, revenues from fixed-fee engagements; time-and-expense engagements; and software support, maintenance and subscription arrangements represented 30.1%, 56.9%, and 13.0% of this segment’s revenues, respectively, compared to 21.2%, 70.3%, and 8.5% of this segment’s revenues, respectively, for the same prior year period.
Of the overall $11.5 million decrease in revenues, $10.9 million was attributable to a decrease in revenues from our billable consultants and $0.6 million was attributable to a decrease in revenues from our full-time equivalents. The decrease in revenues attributable to our billable consultants reflected decreases in the consultant utilization rate, average billing rate, and average number of billable consultants in the first quarter of 2021 compared to the same prior year period. The decrease in revenues from our full-time equivalents was primarily driven by a decreased use of contractors and project consultants. The overall decrease in full-time equivalent revenues reflected a decrease in the average number of full-time equivalents, partially offset by an increase in revenue per full-time equivalent in the first quarter of 2021 compared to the same prior year period.
32
Table of Contents



Operating Income
Education segment operating income decreased $4.5 million, or 34.0% to $8.7 million for the three months ended March 31, 2021 from $13.1 million for the three months ended March 31, 2020. The Education segment operating margin decreased to 32.4%17.1% for the thirdfirst quarter of 20172021 from 37.5%21.1% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to an increase in salaries and related expenses for our revenue-generating and supportrevenue generating professionals as a percentage of revenues, as well as increases in contractor expenses, product and event costs, and signing and retention bonus expense for our revenue-generating professionals. These decreases to the operating margin arerevenues; partially offset by decreases in contractor expense, promotion and marketing expenses, and performance bonus expense for our revenue-generating professionals, practice administration and meetings expenses, and intangible asset amortization expense, all as a percentage of revenues.professionals.
Education
Revenues
Education segment revenues increased $2.8 million, or 7.3%, to $41.4 million for the third quarter of 2017 from $38.6 million for the third quarter of 2016.
During the three months ended September 30, 2017, revenues from fixed-fee engagements, time-and-expense engagements, and software support and maintenance and subscription arrangements represented 16.2%, 78.1%, and 5.7% of this segment’s revenues, respectively. During the three months ended September 30, 2016, revenues from fixed-fee engagements, time-and-expense engagements, performance-based arrangements, and software support and maintenance and subscription arrangements represented 12.2%, 80.4%, 1.6%, and 5.8% of this segment’s revenues, respectively.
Of the overall $2.8 million increase in revenues, $4.3 million was attributable to our full-time billable consultants, which was partially offset by a $1.5 million decrease in revenue attributable to our full-time equivalents. The increase in revenue attributable to our full-time billable consultants reflected increases in the average number of full-time billable consultants and the consultant utilization rate, partially offset by a decrease in the average billing rate. The decrease in revenue from our full-time equivalents was largely driven by a decrease in license revenues, and reflected decreases in both revenue per full-time equivalent and the average number of full-time equivalents in the third quarter of 2017 compared to the same prior year period.
Operating Income
Education segment operating income decreased $3.1 million, or 28.8%, to $7.8 million for the three months ended September 30, 2017 from $10.9 million for the three months ended September 30, 2016. Segment operating margin decreased to 18.7% for the third quarter of 2017 from 28.2% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to increases in performance bonus expense and salaries and related expenses for our revenue-generating professionals, as well as an increase in performance bonus expense for our support personnel, all as a percentage of revenues. The increase in bonus expense was primarily the result of a significant performance bonus adjustment in the third quarter of 2017 to increase our year-to-date performance bonus accrual due to a revised full year forecast. These increases were partially offset by decreases in training expenses and practice administration and meetings expenses.
Business Advisory
Revenues
Business Advisory segment revenues increased $14.0 million, or 33.9%, to $55.4 million for the third quarter of 2017 from $41.4 million for the third quarter of 2016. Revenues for the third quarter of 2017 included $13.4 million from our acquisitions of Innosight and Pope Woodhead, which were completed subsequent to the third quarter of 2016. Third quarter 2017 revenues also included revenues from our acquisition of the international assets of ADI Strategies, which was completed in April 2017 and has since been fully integrated into the Business Advisory segment.
During the three months ended September 30, 2017, revenues from fixed-fee engagements, time-and-expense engagements, performance-based arrangements, and software support and maintenance and subscription arrangements represented 37.5%, 57.7%, 3.0%, and 1.8% of this segment’s revenues, respectively, compared to 18.5%, 78.2%, 1.7%, and 1.6% of this segment’s revenues, respectively, for the same prior year period. Performance-based fee revenue was $1.7 million for the third quarter of 2017, compared to $0.7 million for the same prior year period. The level of performance-based fees earned may vary based on our clients’ preferences

39
Table of Contents




and the mix of services we provide. Performance-based fee arrangements may also cause significant variations in revenues, operating results, and average billing rates due to our level of execution and the timing of achievement of the performance-based criteria.
Of the overall $14.0 million increase in revenues, $14.4 million was attributable to our full-time billable consultants, which was partially offset by a $0.4 million decrease in revenues attributable to our full-time equivalents. The increase in revenue from our full-time billable consultants was primarily driven by our acquisitions of Innosight, Pope Woodhead, and the international assets of ADI Strategies, and reflected an increase in the average number of full-time billable consultants, partially offset by decreases in the average billing rate and consultant utilization rate. The decrease in revenue from our full-time equivalents reflected a decrease in revenue per full-time equivalent, partially offset by an increase in the average number of full-time equivalents in the third quarter of 2017 compared to the same prior year period.
Operating Income
Business Advisory segment operating income increased by $4.2 million, or 49.1%, to $12.8 million for the three months ended September 30, 2017 from $8.6 million for the three months ended September 30, 2016. Segment operating margin increased to 23.2% for the third quarter of 2017 from 20.8% in the same period last year. The increase in this segment’s operating margin was primarily attributable to revenue growth that outpaced increases in performance bonus expense for our revenue-generating professionals, salaries and related expenses for our revenue-generating professionals and our support personnel, and contractor expenses. These increases to segment operating margin were partially offset by increases in travel related costs, signing and retention bonuses for our revenue-generating professionals, and third-party consulting expenses, all as a percentage of revenues.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Revenues
Revenues decreased $1.5 million, or 0.3%, to $546.6 million for the first nine months of 2017 from $548.1 million for the first nine months of 2016. Revenues for the first nine months of 2017 included $34.1 million from our acquisitions of Innosight and Pope Woodhead, which were completed subsequent to the third quarter of 2016, and $13.9 million of incremental revenues due to the full period impact of our acquisition of MyRounding Solutions, LLC ("MyRounding") and HSM Consulting, which we completed mid-first quarter 2016 and mid-third quarter 2016, respectively. Revenues for the first nine months of 2017 also included a full period impact of our acquisition of the U.S. assets of ADI Strategies and revenues from our acquisition of the international assets of ADI Strategies. These acquisitions were completed in May 2016 and April 2017, respectively, and have since been fully integrated into the Business Advisory segment.
The overall $1.5 million decrease in revenues was primarily attributable to our full-time billable consultants. The decrease in full-time billable consultant revenues reflected decreases in the average billing rate and consultant utilization rate, mostly offset by an increase in the average number of billable consultants. As discussed below in Segment Results, this decrease in revenue was largely driven by decreased demand for services in our Healthcare segment, mostly offset by revenues from our acquisitions of Innosight and Pope Woodhead, as well as strengthened demand for services in our Business Advisory and Education segments.
Total Direct Costs
Our total direct costs, including amortization of intangible assets and software development costs, increased $17.0 million, or 5.1%, to $351.6 million for the nine months ended September 30, 2017, from $334.6 million for the nine months ended September 30, 2016. The overall $17.0 million increase primarily related to a $14.3 million increase in salaries and related expenses for our revenue-generating professionals, which was largely driven by increased headcount from acquisitions and our ongoing cloud-based ERP investment, partially offset by a decrease in salaries and related expenses in our Healthcare segment as a result of headcount reductions. Additional increases included a $2.8 million increase in contractor expense, a $2.1 million increase in signing and retention bonus expense for our revenue-generating professionals, a $0.8 million increase in product and event costs, a $0.5 million increase in project costs, and a $0.5 million increase in technology expenses. These increases were partially offset by a $2.9 million decrease in intangible asset amortization expense and a $0.5 million decrease in performance bonus expense for our revenue-generating professionals. As a percentage of revenues, our total direct costs increased to 64.3% during the first nine months of 2017 compared to 61.0% during the first nine months of 2016 primarily due to the items described above.
Total direct costs for the nine months ended September 30, 2017 included $8.4 million of amortization expense for intangible assets, primarily representing customer contracts and software acquired in business combinations and internal software development costs, compared to $11.3 million of amortization expense for the same prior year period. The $2.9 million decrease in amortization expense was primarily attributable to the decreasing amortization expense of customer contracts acquired in our Studer Group acquisition, due to the accelerated basis of amortization, partially offset by the amortization of intangible assets acquired in the Innosight acquisition, which we completed in the first quarter of 2017. See Note 5 "Acquisitions" and Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.

40
Table of Contents




Operating Expenses and Other Gains, Net
Selling, general and administrative expenses increased $12.2 million, or 10.2%, to $132.1 million in the nine months ended September 30, 2017, from $119.9 million in the nine months ended September 30, 2016. Selling, general and administrative expenses for the first nine months of 2017 included $9.8 million from Innosight and Pope Woodhead. The overall $12.2 million increase was primarily related to an $8.5 million increase in salaries and related expenses for our support personnel, a $2.2 million increase in facilities and other office-related expenses, a $1.4 million increase in travel related costs, a $1.2 million increase in third-party consulting expenses, a $1.0 million increase in promotion and sponsorship expenses, and a $0.7 million increase in signing and retention bonus expense for our support personnel. These increases were partially offset by a $2.5 million decrease in performance bonus expense for our support personnel and a $0.8 million decrease in share-based compensation expense for our support personnel. As a percentage of revenues, selling, general and administrative expenses increased to 24.2% during the first nine months of 2017 compared to 21.9% during the first nine months of 2016 primarily due to the items described above.
Restructuring charges for the first nine months of 2017 totaled $5.3 million, compared to $4.1 million for the first nine months of 2016. The charges for the first nine months of 2017 primarily consisted of $2.5 million related to the accrual of remaining lease obligations, net of estimated sublease income, due to relocating our San Francisco office to a smaller space and consolidating our Chicago and New York offices in the first nine months of 2017, and accelerated depreciation on leasehold improvements for our San Francisco office, $2.0 million related to workforce reductions in our Healthcare segment to better align our resources with market demand, and $0.4 million related to workforce reductions in our corporate operations primarily to adjust our infrastructure to align with the decreased workforce in the Healthcare segment. The charges for the first nine months of 2016 primarily consisted of $1.5 million related to updated assumptions for lease accruals for our Washington, D.C. space vacated in the fourth quarter of 2014, $1.2 million related to workforce reductions in our Healthcare segment to better align resources with market demand, $0.9 million related to workforce reductions in our corporate operations as we adjusted our infrastructure to align with our Huron Legal divestiture, and $0.2 million related to the wind down of our foreign consulting operations based in the Middle East.
Other gains, net totaled $0.2 million for the nine months ended September 30, 2017, and represents gains due to the decrease in the fair value of the liability for future expected contingent consideration payments related to acquisitions. In the first nine months of 2016, we recognized $0.5 million of remeasurement losses for the increase in the fair value of the contingent consideration liability. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. See Note 11 "Fair Value of Financial Instruments" within the notes to our consolidated financial statements for additional information on the fair value of contingent consideration liabilities.
Depreciation and amortization expense increased by $5.5 million to $28.5 million in the nine months ended September 30, 2017, from $23.1 million in the nine months ended September 30, 2016. The increase was primarily attributable to amortization expense for intangible assets acquired in the Innosight, ADI Strategies, Pope Woodhead, and HSM Consulting acquisitions, and an increase in amortization expense for a customer-related intangible asset acquired in the Studer Group acquisition. Intangible asset amortization included within operating expenses primarily relates to certain customer relationships, trade names, and non-competition agreements acquired in connection with our business acquisitions. See Note 5 "Acquisitions" and Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.
During the quarter ended June 30, 2017, we recorded a $209.6 million non-cash pretax goodwill impairment charge related to our Healthcare reporting unit. This charge is non-cash in nature and does not affect our liquidity or debt covenants. See the "Critical Accounting Policies" section below and Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for further discussion of this charge.
Operating Income (Loss)
Operating income decreased $246.2 million, to a loss of $180.3 million in the first nine months of 2017 from income of $65.8 million in the first nine months of 2016. This decrease is primarily attributable to the $209.6 million non-cash pretax goodwill impairment charge recorded in the second quarter of 2017 related to our Healthcare segment. See the "Critical Accounting Policies" section below and Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the non-cash goodwill impairment charge. Operating margin decreased to (33.0)% for the nine months ended September 30, 2017, compared to 12.0% for the nine months ended September 30, 2016. The decrease in operating margin was primarily attributable to the goodwill impairment charge, as well as increases in salaries and related expenses for both our revenue-generating professionals and support personnel, contractor expenses, and signing and retention bonuses for our revenue-generating professionals during the first nine months of 2017 compared to the same prior year period.

41
Table of Contents




Other Expense, Net
Total other expense, net decreased by $0.4 million to $10.6 million in the first nine months of 2017 from $11.0 million in the first nine months of 2016. The decrease was primarily attributable to a $0.9 million gain on sale of our Life Sciences Compliance and Operations solution within our Business Advisory segment in the second quarter of 2017. See Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the sale. The decrease in total other expense, net was also attributable to a $1.8 million gain in the market value of our investments that are used to fund our deferred compensation liability, compared to a $1.0 million gain in the first nine months of 2016. These decreases were partially offset by a $1.5 million increase in interest expense, net of interest income in the first nine months of 2017 compared to the same prior year period. The increase in interest expense was due to higher levels of borrowings and higher interest rates under our credit facility during the first nine months of 2017 compared to the first nine months of 2016.
Income Tax Expense (Benefit)
For the nine months ended September 30, 2017, our effective tax rate was 26.1% as we recognized income tax benefit from continuing operations of $49.7 million on a loss from continuing operations of $190.9 million. For the nine months ended September 30, 2016, our effective tax rate was 35.6% as we recognized income tax expense of $19.5 million on income from continuing operations of $54.8 million. The effective tax rate for the nine months ended September 30, 2017 was less favorable than the statutory rate, inclusive of state income taxes, primarily due to the $61.2 million non-deductible portion of the goodwill impairment charge recorded in the second quarter of 2017, as well as $1.8 million of discrete tax expense for share-based compensation related to the adoption of ASU 2016-09 Improvements to Employee Share-Based Payment Accounting. Refer to Note 3 "New Accounting Pronouncements" for additional information on the adoption of ASU 2016-09. These unfavorable discrete items were partially offset by a $2.7 million tax benefit recorded in the third quarter of 2017 related to a previously unrecognized tax benefit from our 2014 "check-the-box" election. The effective tax rate for the nine months ended September 30, 2016 was lower than the statutory rate, inclusive of state income taxes, primarily due to the year-to-date impact of a discrete favorable adjustment to our state tax rate in the second quarter of 2016, non-taxable income, valuation allowance reductions, certain credits and deductions, and a discrete tax benefit related to share-based compensation, partially offset by non-deductible business expenses.
Net Income (Loss) from Continuing Operations
Net income from continuing operations decreased by $176.5 million, to a net loss from continuing operations of $141.2 million for the nine months ended September 30, 2017, from net income from continuing operations of $35.3 million for the same prior year period. This decrease is primarily attributable to the $209.6 million non-cash pretax goodwill impairment charge related to our Healthcare segment. As a result of the decrease in net income from continuing operations, diluted loss per share from continuing operations for the first nine months of 2017 was $6.59 compared to diluted earnings per share from continuing operations of $1.65 for the first nine months of 2016. The non-cash goodwill impairment charge had a $7.16 unfavorable impact on diluted earnings per share from continuing operations for the first nine months of 2017.
Discontinued Operations
Net income from discontinued operations for the nine months ended September 30, 2017 was $0.7 million and primarily related to updated lease assumptions for vacated office space directly related to the sale of the Huron Legal segment. Net loss from discontinued operations for the nine months ended September 30, 2016 was $1.8 million and primarily related to obligations for former employees, legal fees, and updated lease assumptions for vacated office space directly related to the sale of the Huron Legal segment. See Note 4 "Discontinued Operations" within the notes to our consolidated financial statements for additional information about our discontinued operations.
EBITDA and Adjusted EBITDA
EBITDA decreased $241.6 million to a loss of $140.2 million for the nine months ended September 30, 2017, from earnings of $101.4 million for the nine months ended September 30, 2016. Adjusted EBITDA decreased $32.7 million to $73.1 million in the first nine months of 2017 from $105.8 million in the first nine months of 2016. The decrease in EBITDA was primarily attributable to the non-cash goodwill impairment charge of $209.6 million recorded in the second quarter of 2017. The decrease in adjusted EBITDA was primarily due to the decrease in segment operating income, as discussed below in Segment Results, as well as an increase in corporate expenses primarily due to our acquisitions of Innosight and Pope Woodhead.
Adjusted Net Income from Continuing Operations
Adjusted net income from continuing operations decreased $24.6 million to $31.7 million in the first nine months of 2017 compared to $56.3 million in the first nine months of 2016. As a result of the decrease in adjusted net income from continuing operations, adjusted

42
Table of Contents




diluted earnings per share from continuing operations for the first nine months of 2017 was $1.47 compared to $2.63 for the first nine months of 2016.
Segment Results
Healthcare
Revenues
Healthcare segment revenues decreased $62.3 million, or 19.2%, to $261.3 million for the first nine months of 2017 from $323.5 million for the first nine months of 2016. Revenues for the first nine months of 2017 included $13.9 million of incremental revenues due to the full period impact of our acquisitions of HSM Consulting and MyRounding, which we completed mid-first quarter 2016 and mid-third quarter 2016, respectively.
During the nine months ended September 30, 2017, revenues from fixed-fee engagements, time-and-expense engagements, performance-based arrangements, and software support and maintenance and subscription arrangements represented 67.4%, 16.8%, 8.3%, and 7.5% of this segment’s revenues, respectively, compared to 70.4%, 10.7%, 13.1%, and 5.8% of this segment’s revenues, respectively, for the same prior year period.
The overall $62.3 million decrease in revenues was primarily attributable to a decrease in revenue from our full-time billable consultants. The decrease in revenue attributable to our full-time billable consultants was primarily driven by a decreased demand for our performance improvement solution and reflected decreases in the average number of full-time billable consultants, average billing rate, and consultant utilization rate. Performance-based fee revenue was $21.6 million during the first nine months of 2017 compared to $42.5 million during the first nine months of 2016. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide. Performance-based fee arrangements may also cause significant variations in revenues, operating results, and average billing rates due to our level of execution and the timing of achievement of the performance-based criteria.
Operating Income
Healthcare segment operating income decreased $35.6 million, or 29.9%, to $83.6 million for the nine months ended September 30, 2017, from $119.2 million for the nine months ended September 30, 2016. The Healthcare segment operating margin decreased to 32.0% for the first nine months of 2017 from 36.9% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to an increase in salaries and related expenses for our revenue-generating professionals as a percentage of revenues, as well as increases in salaries and related expenses for our support personnel, contractor expenses, product and event costs, and restructuring charges, partially offset by decreases in performance bonus expense for our revenue-generating professionals and support personnel as a percentage of revenues.
The non-cash goodwill impairment charge discussed above within the consolidated results is 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. See the "Critical Accounting Policies" section below and Note 6 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for further discussion of this charge. We will continue to evaluate goodwill for impairment during future periods. Any future significant decline in the performance of the Healthcare segment compared to our internal forecasts could result in another non-cash goodwill impairment charge.
Education
Revenues
Education segment revenues increased $15.8 million, or 14.1%, to $127.6 million for the first nine months of 2017 from $111.8 million for the first nine months of 2016.
For the nine months ended September 30, 2017, revenues from fixed-fee engagements, time-and-expense engagements, performance-based arrangements, and software support and maintenance and subscription arrangements represented 15.8%, 78.5%, 0.3%, and 5.4% of this segment’s revenues, respectively, compared to 14.5%, 78.6%, 0.9%, and 6.0% of this segment's revenues, respectively, during the same prior year period.
Of the overall $15.8 million increase in revenues, $16.9 million was attributable to our full-time billable consultants, which was partially offset by a $1.1 million decrease in revenues attributable to our full-time equivalents. The increase in revenue from our full-time billable consultants reflected increases in the average number of full-time billable consultants and consultant utilization rate, partially offset by a decrease in the average billing rate. The decrease in revenue from our full-time equivalents was largely driven by

43
Table of Contents




a decrease in license revenues, and reflected decreases in both revenue per full-time equivalent and the average number of full-time equivalents in the first nine months of 2017 compared to the same prior year period.
Operating Income
Education segment operating income increased $0.3 million, or 0.9%, to $31.8 million for the nine months ended September 30, 2017, from $31.5 million for the nine months ended September 30, 2016. The Education segment operating margin decreased to 24.9% for the first nine months of 2017 from 28.1% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to increases in performance bonus expense for both our revenue-generating professionals and support personnel, as well as an increase in salaries and related expenses for our revenue-generating professionals, all as a percentage of revenues, partially offset by decreases in training expenses and practice administration and meetings expenses.
Business Advisory
Revenues
Business Advisory segment revenues increased $45.0 million, or 39.9%, to $157.8 million for the first nine months of 2017 from $112.8 million for the first nine months of 2016. Revenues for the first nine months of 2017 included $34.1 million from our acquisitions of Innosight and Pope Woodhead, which were completed subsequent to the third quarter of 2016. Revenues for the first nine months of 2017 also included a full period impact of our acquisition of the U.S. assets of ADI Strategies and revenues from our acquisition of the international assets of ADI Strategies. These acquisitions were completed in May 2016 and April 2017, respectively, and have since been fully integrated into the Business Advisory segment.
During the first nine months of 2017, revenues from fixed-fee engagements, time-and-expense engagements, performance-based arrangements, and software support and maintenance and subscription arrangements represented 34.7%, 62.6%, 1.2%, and 1.5% of this segment’s revenues, respectively, compared to 19.5%, 74.0%, 5.4%, and 1.1% of this segment’s revenues, respectively, during the same prior year period. Performance-based fee revenue was $1.9 million for the first nine months of 2017 compared to $6.2 million for the same prior year period. The level of performance-based fees earned may vary based on our clients’ preferences and the mix of services we provide. Performance-based fee arrangements may also cause significant variations in revenues, operating results, and average billing rates due to our level of execution and the timing of achievement of the performance-based criteria.
Of the overall $45.0 million increase in revenues, $44.1 million was attributable to our full-time billable consultants and $0.9 million was attributable to our full-time equivalents. The increase in revenue from our full-time billable consultants was primarily driven by our acquisitions of Innosight, ADI Strategies, and Pope Woodhead, and reflected increases in the average number of full-time billable consultants and consultant utilization rate, partially offset by a decrease in the average billing rate. The increase in revenue from our full-time equivalents reflected increases in the average number of full-time equivalents and revenue per full-time equivalent.
Operating Income
Business Advisory segment operating income increased by $11.6 million, or 49.9%, to $34.9 million for the nine months ended September 30, 2017, from $23.3 million for the nine months ended September 30, 2016. The Business Advisory segment operating margin increased to 22.1% for the first nine months of 2017 from 20.6% in the same period last year. The increase in this segment’s operating margin was primarily attributable to a decrease in performance bonus expense for our revenue-generating professionals, as a percentage of revenues, as well as decreases in share-based compensation expense for our revenue-generating professionals and contractor expense, partially offset by increases, as a percentage of revenues, in salaries and related expenses for our revenue-generating professionals, third-party consulting expenses, signing and retention bonuses for our revenue-generating professionals, and travel related costs.

44
Table of Contents




LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $8.4$45.6 million to $21.6 million at March 31, 2021 from $17.0$67.2 million at December 31, 2016 to $8.7 million at September 30, 2017.2020. As of September 30, 2017,March 31, 2021, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility.
 Nine Months Ended
September 30,		 Three Months Ended
March 31,
Cash Flows (in thousands): 2017 2016Cash Flows (in thousands):20212020
Net cash provided by operating activities $52,432
 $79,745
Net cash used in operating activitiesNet cash used in operating activities$(82,754)$(56,146)
Net cash used in investing activities (125,253) (81,233)Net cash used in investing activities(8,037)(18,395)
Net cash provided by (used in) financing activities 64,262
 (47,979)
Net cash provided by financing activitiesNet cash provided by financing activities45,082 214,089 
Effect of exchange rate changes on cash 192
 133
Effect of exchange rate changes on cash155 (143)
Net decrease in cash and cash equivalents $(8,367) $(49,334)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents$(45,554)$139,405 
Operating Activities
Net cash provided byused in operating activities totaled $52.4$82.8 million for the ninethree months ended September 30, 2017 and $79.7March 31, 2021, compared to $56.1 million for the same period last year.three months ended March 31, 2020. Our operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable and accrued expenses, accrued payroll and related benefits, and deferred revenues. The volume of services rendered and the related billings and timing of collections on those billings, as well as payments of our accounts payable and salaries, bonuses, and related benefits to employees affect these account balances.
The decreaseincrease in cash provided by operationsused in operating activities for the first ninethree months of 20172021 compared to the same prior year period was primarily attributable to lower net income,a decrease in cash collections, partially offset by a decrease in the collection of a settlement receivableamount paid for annual performance bonuses in the first quarter of 20162021 compared to the first quarter of 2020, a decrease in payments to employees for salaries and related benefits, and a decrease in cash collections from clients inselling, general and administrative expenses during the first ninethree months of 2017, partially offset by decreased vendor and tax payments.2021 compared to the first three months of 2020.
Investing Activities
Net cash used in investing activities was $125.3$8.0 million and $18.4 million for the ninethree months ended September 30, 2017March 31, 2021 and $81.2 million for the same period last year.2020, respectively.
The use of cash in the first ninethree months of 20172021 primarily consisted of $106.9$6.0 million for the purchasespurchase of businessesa business; $1.4 million for payments related to internally developed software; and $20.1$0.6 million for purchases of property and equipment, primarily related to purchases of leasehold improvements for certain office spaces and computers and related equipment.
The use of cash in the first three months of 2020 primarily consisted of $13.0 million for the purchase of an additional convertible debt investment in
Shorelight Holdings, LLC; $2.9 million for payments related to internally developed software; $1.5 million for contributions to our life insurance policies which fund our deferred compensation plan; and $1.0 million for purchases of property and equipment, primarily related to purchases of furniture and fixturesleasehold improvements for new office spaces in certain locations.
The use of cash in the first nine months of 2016 primarily consisted of $69.1 million for the purchases of businesses and $9.4 million for purchases of property and equipment.
We estimate that cash utilized for purchases of property and equipment and software development in 20172021 will betotal approximately $25.0$12 million to $18 million; primarily consisting of leasehold improvements furniture and fixtures,for certain office locations, software development costs, and information technology related equipment to support our corporate infrastructure.equipment.
Financing Activities
Net cash provided by financing activities was $64.3$45.1 million and $214.1 million for the ninethree months ended September 30, 2017. March 31, 2021 and March 31, 2020, respectively.
During the first ninethree months of 2017,2021, we borrowed $241.0$89.0 million, under our credit facility, primarily to fund our acquisitions of Innosight and Pope Woodhead and our annual performance bonus payment, and made repayments on our credit facilityborrowings of $170.0$24.1 million.
Net cash used in financing activities was $48.0 million for the nine months ended September 30, 2016. During Additionally, during the first ninethree months of 2016,2021, we repurchased and retired $55.3$11.5 million of our common stock under our 2020 Share Repurchase Program, as defined below.
33
Table of Contents



During the first three months of 2020, we borrowed $281.0 million under our credit facility, including $125.0 million prior to March 31, 2020 to maintain excess cash and support liquidity during the period of uncertainty created by the COVID-19 pandemic, as well as to fund our annual performance bonus payment. During the first quarter of 2020, we made repayments on our borrowings of $38.1 million. Additionally, we repurchased and retired $20.9 million of our common stock under our 2015 Share Repurchase Program, as defined below, and had net borrowingssettled $1.2 million of $12.0 million under our credit facility, primarily to fund the acquisitionsshare repurchases that were accrued as of HSM Consulting and the U.S. assets of ADI Strategies and our annual performance bonus payment.December 31, 2019.
Share Repurchase Program
AsIn November 2020, our board of September 30, 2017, we haddirectors authorized a share repurchase program (the “2020 Share Repurchase Program”) permitting us to
repurchase up to $50 million of our common stock through December 31, 2021. The 2020 Share Repurchase Program was authorized
subsequent to the expiration of our prior share repurchase program (the “2015 Share Repurchase Program”) on October 31, 2020. The 2015
Share Repurchase Program permitted us to repurchase up to $125 million of our common stock through October 31, 2017 (the "Share 2020. The 2020 Share
Repurchase Program"). DuringProgram and 2015 Share Repurchase Program are collectively known as the fourth quarter“Share Repurchase Programs.” The amount and
timing of 2017, our board of directors authorized an extension ofrepurchases under the Share Repurchase Program through October 31, 2018. The amountPrograms were and timing of the repurchases will continue to be determined by management and will depend on a
variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions,
and applicable legal requirements. During
Under the first nine months of 2016,2020 Share Repurchase Program, we

45
Table of Contents




repurchased and retired 982,192245,718 shares for $55.3 million. No shares were repurchased$13.2 million in the first nine monthsquarter of 2017.2021 of which $1.7 million settled in the second quarter of 2021. As of September 30, 2017, $35.1March 31, 2021, $31.8 million remainsremained available for share repurchases.
Financing Arrangements
At September 30, 2017,March 31, 2021, we had $250.0 million principal amount of our 1.25% convertible senior notes outstanding, $139.0$265.0 million outstanding under our senior secured credit facility and $5.0$3.2 million outstanding under a promissory note, as discussed below.
1.25% Convertible Senior Notes
In September 2014, we issued $250.0 million principal amount of the Convertible Notes in a private offering. The Convertible Notes are senior unsecured obligations of the Company and will pay interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25%. The Convertible Notes will mature on October 1, 2019, unless earlier repurchased by the Company or converted in accordance with their terms.
Upon conversion, the Convertible Notes will be settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. Our current intent and policy is to settle conversions with a combination of cash and shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the Indenture.
The initial conversion rate for the Convertible Notes is 12.5170 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equal to an initial conversion price of approximately $79.89 per share of our common stock.
In connection with the issuance of the Convertible Notes, we entered into convertible note hedge transactions and warrant transactions. The convertible note hedge transactions are intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share.
For further information, see Note 8 “Financing Arrangements” within the notes to our consolidated financial statements.
Senior Secured Credit Facility
The Company has a $500$600 million senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the "Amended Credit Facility"Agreement"), that becomes due and payable in full upon maturity on March 31, 2020.September 27, 2024. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $100$150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $600$750 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowingsBorrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.
Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.25%1.125% per annum and 2.00%1.875% per annum, in the case of LIBOR borrowings, or between 0.25%0.125% per annum and 1.00%0.875% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time.
Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including a requirement to pay all amounts outstanding under the Amended Credit Agreement 90 days prior to the Convertible Indebtedness Maturity Date (as defined in the Amended Credit Agreement) unless (1) the Convertible Indebtedness Maturity Date is waived or extended to a later date, (2) the Company can demonstrate (a) Liquidity (as defined in the Amended Credit Agreement) in an amount at least equal to the principal amount due on the Convertible Indebtedness Maturity Date, and (b) financial covenant compliance after giving effect to such payments and any additional indebtedness incurred on a pro forma basis, or (3) this requirement is waived by the Required Lenders (as defined in the Amended Credit Agreement).circumstances. In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) ranging from 3.25of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 to 3.75 to 1.00, depending onupon the measurement period,occurrence of certain transactions, and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.50 to 1.00. Consolidated EBITDA for purposes of the financial

46
Table of Contents




covenants is calculated on a continuing operations basis and includes adjustments to add back share-based compensation costs, non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, and pro forma historical EBITDA for businesses acquired.acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio, total debt is on a gross basis and is not netted against our cash balances. At September 30, 2017,March 31, 2021 and December 31, 2020, we were in compliance with these financial covenants with acovenants. Our Consolidated Leverage Ratio as of 3.52March 31, 2021 was 2.64 to 1.00, and acompared to 1.94 to 1.00 as of December 31, 2020. Our Consolidated Interest Coverage Ratio as of 12.60March 31, 2021 was 13.00 to 1.00.1.00, compared to 12.51 to 1.00 as of December 31, 2020.
The Amended Credit Agreement contains restricted payment provisions, including a potential limit on the amount of dividends we may pay. Pursuant to the terms of the Amended Credit Agreement, if our Consolidated Leverage Ratio is greater than 3.00,3.25, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $50 million plus 50%$25 million.
34
Table of cumulative consolidated net income (as defined in the Amended Credit Agreement) from the closing date of the Amended Credit Agreement plus 50% of the net cash proceeds from equity issuances after the closing date of the Amended Credit Agreement.Contents
Borrowings


Principal borrowings outstanding under the Amended Credit Agreement at September 30, 2017March 31, 2021 and December 31, 2020 totaled $139.0 million.$265.0 million and $200.0 million, respectively. These borrowings carried a weighted average interest rate of 3.4%,2.4% at March 31, 2021 and 2.5% at December 31, 2020, including the impact of the interest rate swap in effect as of September 30, 2017 andswaps described in Note 109 “Derivative Instruments and Hedging Activity” within the notes to the consolidated financial statements. Borrowings outstanding under the Amended Credit Agreement at December 31, 2016 were $68.0 million and carried a weighted average interest rate of 2.5%. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At September 30, 2017,March 31, 2021, we had outstanding letters of credit totaling $2.7$0.8 million, which are primarily used as security deposits for our office facilities. As of September 30, 2017,March 31, 2021, the unused borrowing capacity under the revolving credit facility was $358.3$334.2 million.
Promissory Note due 2024
On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed, from the sellers of the aircraft, a promissory note with an outstanding principal balance of $5.1 million. The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024, at which time a final payment of $1.5 million, plus any accrued and unpaid interest, will be due. Under the terms of the promissory note, we will pay interest on the outstanding principal amount at a rate of one-month LIBOR plus 1.97% per annum. The obligations under the promissory note are secured pursuant to a Loan and Aircraft Security Agreement with Banc of America Leasing & Capital, LLC, which grants the lender a first priority security interest in the aircraft. At September 30, 2017,March 31, 2021, the outstanding principal amount of the promissory note was $5.0 million. As of September 30, 2017,$3.2 million, and the aircraft had a carrying amount of $6.6$4.3 million. At December 31, 2020, the outstanding principal amount of the promissory note was $3.3 million, and the aircraft had a carrying amount of $4.4 million.
For further information, see Note 87 “Financing Arrangements” within the notes to the consolidated financial statements.
Future Financing Needs
Our current primary financing need is to support our operations during the COVID-19 pandemic. The pandemic has created significant
volatility and uncertainty in the economy, which could limit our access to capital resources and could increase our borrowing costs. In order to
support our liquidity during the pandemic, we took proactive measures to increase available cash on hand, including, but not limited to,
borrowing under our senior secured credit facility in the first quarter of 2020 and reducing discretionary operating and capital expenses. To
further support our liquidity, we elected to defer the deposit of our employer portion of social security taxes beginning in April 2020 and
through December 2020, which we expect to pay in equal installments in the fourth quarters of 2021 and 2022, as provided for under the
CARES Act. Our long-term financing need has been to fund our growth. Our growth strategy is to expand our service offerings, which may
require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related
capital expenditures. We believe our internally generated liquidity, together with our available cash, and the borrowing capacity available
under our revolving credit facility and access to external capital resources will be adequate to fundsupport our current financing needs and long-term growth and capital needs arising from cash commitments and debt service obligations.strategy. Our ability to secure short-term and long-term
additional financing, if needed, in the future will depend on several factors, including our future profitability, the quality of our accounts
receivable and unbilled services, our relative levels of debt and equity, and the overall condition of the credit markets.
CONTRACTUAL OBLIGATIONS
For a summary of our commitments to make future payments under contractual obligations, see “ItemItem 7. Management’s"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations”Obligations" in our Annual Report on Form 10-K for the year ended December 31, 2016.
In connection with certain business acquisitions completed during the first nine months of 2017, we entered into contingent consideration arrangements, under which we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. The aggregate fair value of these contingent consideration liabilities on the dates of acquisition was $15.5 million. Refer to Note 5 “Acquisitions” within the notes to the consolidated financial statements for additional information on the businesses acquired during the first nine months of 2017. At September 30, 2017, the aggregate fair value of all contingent consideration liabilities outstanding was $22.5 million.
2020. As discussed above in "Liquidity and Capital Resources," on June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed, from the sellers of the aircraft, a promissory note with an outstanding principal balance of $5.1 million. The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024,31, 2021, borrowings outstanding under our senior secured credit facility totaled $265.0 million compared to $200.0 million at which time a final payment of $1.5 million, plus any accrued and unpaid interest will be due. UnderDecember 31, 2020. See the terms of the promissory note, we will pay interest on the outstanding principal amount at a rate of one-month LIBOR plus 1.97% per annum.

47
Table of Contents




Refer to "Liquidity and Capital Resources" section above and Note 87 "Financing Arrangements" within the notes to theour consolidated financial statements for additional information on our outstanding borrowings including the schedule of monthly principal payments.
The following table provides the scheduled future payments of the contingent consideration arrangements and promissory note described above as of September 30, 2017:
   Payments Due by Period
 Total 
Less than
1 Year
 1-3 Years 3-5 Years 
More than
5 Years
Contingent consideration$22,469
 $7,743
 $13,126
 $1,600
 $—
Promissory note—principal and interest$5,682
 $650
 $1,293
 $1,283
 $2,456
March 31, 2021. There have been no other material changes to our contractual obligations since December 31, 2016.2020.
OFF-BALANCE SHEET ARRANGEMENTS
We are not a party to any material off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
Management’s discussion and analysis of financial condition and results of operations areis based upon our consolidated financial statements, which have been prepared in accordance with GAAP.accounting principles generally accepted in the United States of America ("GAAP"). We regularly review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate information relative to the current economic and business environment. The preparation of financial statements in conformity with GAAP requires management to make assessments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those policies that we believe present the most complex or subjective measurements and have the most potential to impact our financial position and operating results. While all decisions regarding accounting policies are important, we believe there are five accounting policies that could be considered critical: revenue recognition, allowances for doubtful accounts and unbilled services, business combinations, carrying values of goodwill and other intangible assets, and accounting for income taxes. For a detailed discussion of these critical accounting policies, see “ItemItem 7. Management’s"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies”
35
Table of Contents



Policies" in our Annual Report on Form 10-K for the year ended December 31, 2016. Below is an update to our critical accounting policy related to the carrying value of goodwill and other intangible assets.2020. There have been no material changes to our other critical accounting policies during the first ninethree months of 2017.2021.
Carrying Values of Goodwill and Other Intangible Assets
Acquisition of Innosight
On March 1, 2017, we completed our acquisition of Innosight, a growth strategy firm focused on helping companies navigate disruptive change, enable innovation, and manage strategic transformation. Innosight's results of operations have been included in our consolidated financial statements and results of operations of our Business Advisory segment from the date of acquisition. The goodwill recorded as part of the allocation of the purchase price of Innosight has been assigned to Innosight as a separate reporting unit, which is referred to as Strategy and Innovation.
Adoption of ASU 2017-04
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminated Step 2 of the goodwill impairment test, which required us to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. We adopted this guidance in the second quarter of 2017 on a prospective basis and applied the new guidance to our goodwill impairment tests described below.
Second Quarter 2017 Goodwill Reallocation
Effective June 1, 2017, we reorganized our internal financial reporting structure, which management uses to assess performance and allocate resources, by moving our Life Sciences practice from the Education and Life Sciences reporting unit and segment to its own reporting unit within the Business Advisory segment. The remaining Education and Life Sciences segment is now referred to as the Education segment. We will continue to operate under three reportable segments: Healthcare, Education, and Business Advisory.

48
Table of Contents




These three reportable segments will be comprised of the following six reporting units for goodwill impairment testing purpose: Healthcare, Education, Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences. The Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences reporting units comprise our Business Advisory segment.
As a result of the reorganization, we reallocated $10.8 million of the goodwill balance associated with the previous Education and Life Sciences reporting unit to the new Life Sciences reporting unit based on the relative fair values of the Life Sciences reporting unit and the remaining Education reporting unit. The estimated fair values were determined using a combination of the income approach and the market approach, utilizing the guideline company method, with a fifty-fifty weighting.
In conjunction with the goodwill reallocation, we performed a goodwill impairment test for the goodwill balances within our Education reporting unit and Life Sciences reporting unit as of June 1, 2017. Based on the results of the goodwill impairment test, we determined that the fair values of our Education reporting unit and Life Sciences reporting unit exceeded their carrying values. As such, we concluded there was no indication of goodwill impairment for either reporting unit.
Second Quarter 2017 Goodwill Impairment Analysis
Since the first quarter of 2016, the Healthcare segment, which is also a reporting unit, has experienced declining revenues, primarily driven by softness in our revenue cycle offering within our performance improvement solution. This softness is attributable to decreased demand for our services, the winding down of some of our larger projects and a growing trend toward smaller projects, as well as fewer large integrated projects. In light of these challenges, several initiatives have been undertaken to improve the segment's financial performance, including repositioning our solutions to address the most critical needs of our clients, the expansion of our existing services such as those in our Studer Group, strategy, physician and technology offerings, and workforce reductions to better align resources with market demand. While the initiatives undertaken to improve the financial performance of our Healthcare segment are yielding some positive impacts, hospitals and health systems continue to face regulatory and funding uncertainty; therefore, we remain cautious about near-term growth. As we have previously disclosed in prior quarters, if the financial performance of our Healthcare segment continued to decline and did not meet our expectations, we could be required to perform an interim impairment analysis with respect to our carrying value of goodwill for the Healthcare reporting unit prior to our usual annual test. Based on forecasts prepared in connection with our quarterly forecasting cycle during the second quarter of 2017, we determined that the likely time frame to improve the financial results of this segment will take longer than originally anticipated. As such, we concluded, during the second quarter of 2017, that the fair value of the Healthcare reporting unit may no longer exceed its carrying value. In connection with the preparation of our financial statements for the quarter ended June 30, 2017, we performed an interim impairment test on the Healthcare reporting unit.
Based on the estimated fair value of the Healthcare reporting unit described below, we recorded a $209.6 million non-cash pretax charge in the second quarter of 2017 to reduce the carrying value of goodwill in our Healthcare reporting unit.
Our goodwill impairment test was performed by comparing the fair value of the Healthcare reporting unit with its carrying value and, in accordance with ASU 2017-04, which we adopted in the second quarter of 2017, recognizing an impairment charge for the amount by which the carrying value exceeded the fair value. To estimate the fair value of the Healthcare reporting unit, we relied on a combination of the income approach and the market approach, with a fifty-fifty weighting.
In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by the reporting unit and then discounting those cash flows to present value reflecting the relevant risks associated with the reporting unit and the time value of money. This approach requires the use of significant estimates and assumptions, including long-term projections of future cash flows, market conditions, and a discount rate that reflects the risk inherent in the future cash flows. In estimating future cash flows, we relied on an internally generated 11-year forecast. For periods after the 11-year forecast, we assumed a long-term annual revenue growth rate of 3.5%. Our forecast is based on historical experience, current backlog, expected market demand, and other industry information. Our discounted cash flow analysis assumed a 10.0% weighted average cost of capital discount rate.
In the market approach, we utilized the guideline company method, which involved calculating valuation multiples based on operating data from guideline publicly traded companies. Multiples derived from guideline companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. These multiples are evaluated and adjusted based on specific characteristics of the Healthcare reporting unit relative to the selected guideline companies and applied to the reporting unit's operating data to arrive at an indication of value.
Determining the fair value of any reporting unit requires us to make significant judgments, estimates, and assumptions. While we believe that the estimates and assumptions underlying our valuation of the Healthcare reporting unit are reasonable, these estimates and assumptions could have a significant impact on whether or not another non-cash impairment charge is recognized in the future and also the magnitude of any such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the

49
Table of Contents




actual future earnings or cash flows of our Healthcare reporting unit will be consistent with our projections. We will monitor any changes to our assumptions and will evaluate goodwill as part of our annual goodwill impairment testing in the fourth quarter of 2017, or on an interim basis, if required. Any future significant decline in our operations compared to our internal forecast could result in another non-cash goodwill impairment charge, which could be material.
As discussed above, as of September 30, 2017, we have six reporting units with goodwill balances: our Healthcare and Education segments, and our Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences practices, which together make up our Business Advisory operating segment.
The carrying values of goodwill for each of our reporting units as of September 30, 2017 are as follows (in thousands):
Reporting Unit 
Carrying Value
of Goodwill
Healthcare $427,209
Education 102,830
Business Advisory 16,094
Enterprise Solutions and Analytics 45,119
Strategy and Innovation 87,432
Life Sciences 10,691
Total $689,375
Three of our reporting units have been established primarily or entirely through recent business acquisitions: Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences. Our Enterprise Solutions and Analytics reporting unit was established with the acquisition of Blue Stone International, LLC in October 2013. Since that time, we have completed five additional business acquisitions within the reporting unit, most recently the acquisitions of the U.S. assets and international assets of ADI Strategies in May 2016 and April 2017, respectively. Our Strategy and Innovation reporting unit was established with the acquisition of Innosight in March 2017. Our Life Sciences reporting unit is primarily comprised of two recent acquisitions: The Frankel Group Associates LLC in January 2014 and Pope Woodhead in January 2017.
We record the assets acquired and liabilities assumed in business combinations, including identifiable intangible assets, at their estimated fair values as of the acquisition date, and goodwill is recorded as the excess of the fair value of consideration transferred, including any contingent consideration, over the fair value of the net assets acquired. Therefore, the initial accounting for an acquisition results in no headroom, as its fair value equals its carrying value.
Our most recent goodwill impairment test for the Enterprise Solutions and Analytics reporting unit was performed as of November 30, 2016, as part of our annual goodwill impairment test, pursuant to our policy, and based on the results of the first step of that analysis, the reporting unit’s fair value exceeded its carrying value by 11%.

Our most recent goodwill impairment test for the Life Sciences reporting unit was performed as of June 1, 2017, as part of the reorganization of our internal financial reporting structure, as discussed above under the section titled Second Quarter 2017 Goodwill Reallocation. Based on the results of that analysis, the reporting unit’s fair value exceeded its carrying value by 16%.

We have not yet performed a goodwill impairment test for the Strategy and Innovation reporting unit, as the reporting unit was established during the current year with the acquisition of Innosight in March 2017 and there have been no triggering events requiring an interim goodwill impairment test to date.

Since the date of the most recent goodwill impairment tests for the Enterprise Solutions and Analytics and Life Sciences reporting units, and since the inception of the Strategy and Innovation reporting unit, the performance of these three reporting units has continued to reasonably meet our expectations such that no triggering event for an interim goodwill impairment analysis was identified. We will monitor any changes to our assumptions and will evaluate goodwill as part of our annual goodwill impairment testing in the fourth quarter of 2017, or on an interim basis, if required. Any future significant decline in our operations compared to our internal forecast could result in a non-cash goodwill impairment charge as a result of any such test.

For further discussion of our 2016 annual goodwill impairment test, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our Annual Report on Form 10-K for the year ended December 31, 2016.

50
Table of Contents




NEW ACCOUNTING PRONOUNCEMENTS
Refer to Note 3 “New"New Accounting Pronouncements”Pronouncements" within the notes to the consolidated financial statements for information on new accounting pronouncements.
SUBSEQUENT EVENTS
Healthcare Group Hiring
On April 5, 2021, we hired approximately 300 full-time equivalent professionals within our Healthcare operating segment. These additional professionals will expand our capacity to provide revenue cycle billing, collections, insurance verification and charge integrity services to our healthcare clients. These professionals will serve new and existing clients in our Healthcare managed services solution, including serving under a short-term contract with an existing client which we entered into in connection with this group hire. The hiring of these professionals is not significant to our consolidated financial statements.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risks primarily from changes in interest rates and changes in the market value of our investments.
Market Risk and Interest Rate Risk
The value of our Convertible Notes is exposed to interest rate risk. Generally, the fair value of our fixed interest rate Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of our Convertible Notes is affected by our stock price. The carrying value of our Convertible Notes was $230.8 million as of September 30, 2017, which represents the liability component of the $250.0 million principal balance. The estimated fair value of our Convertible Notes at September 30, 2017 was $233.6 million, and was determined based on the quoted bid price of the Convertible Notes in an over-the-counter market as of the last day of trading for the quarter ended September 30, 2017, which was $93.438 per $100 principal amount.
Concurrent with the issuance of the Convertible Notes, we entered into separate convertible note hedge and warrant transactions. The convertible note hedge transactions are intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share. Under the convertible note hedge transactions, we have the option to purchase a total of approximately 3.1 million shares of our common stock, which is the number of shares initially issuable upon conversion of the Convertible Notes in full, at a price of approximately $79.89, which corresponds to the initial conversion price of the Convertible Notes, subject to customary anti-dilution adjustments substantially similar to those in the Convertible Notes. Under the warrant transactions, the holders of the warrants have the option to purchase a total of approximately 3.1 million shares of our common stock at a price of approximately $97.12. If the average market value per share of our common stock for the reporting period exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share.
We have exposure to changes in interest rates associated with borrowings under our bank credit facility, which has variable interest rates tied to LIBOR or an alternate base rate, at our option. At September 30, 2017,March 31, 2021, we had borrowings outstanding under the credit facility totaling $139.0$265.0 million that carried a weighted average interest rate of 3.4%2.4%, including the impact of the interest rate swapswaps described below. A hypothetical 100 basis point change in thisthe interest rate would have a $0.9$0.7 million effect on our pretax income on an annualized basis, including the effect of the interest rate swap.swaps outstanding at March 31, 2021. At December 31, 2016, our2020, we had borrowings outstanding under the credit facility totaled $68.0totaling $200.0 million andthat carried a weighted average interest rate of 2.5%, including the effectimpact of the interest rate swapswaps described below. The outstanding borrowings atAs of December 31, 20162020, these variable rate borrowings were fully hedged against changes in interest rates by ourthe interest rate swap,swaps, which hadhave a notional amount of $68.0 million at December 31, 2016.
On April 4, 2013, we entered into a forward amortizing interest rate swap agreement effective March 31, 2014 and ending August 31, 2017. We entered into this derivative instrument to hedge against$200.0 million. A hypothetical 100 basis point change in the interest rate risks ofwould have had no impact on our variable-rate borrowings. The swap hadpretax income, on an initial notional amount of $60.0 million and amortized quarterly until April 2016. In April 2016,annualized basis, including the notional amount of this interest rate swap increased to $86.0 million and continued to amortize quarterly until it expired in August 2017. Under the termseffect of the interest rate swap agreement, we received from the counterparty interest on the notional amount based on one-month LIBOR and we paid to the counterparty a fixed rate of 0.985%.swaps.
On June 22, 2017, we entered into a forward interest rate swap agreement effective August 31, 2017 and ending August 31, 2022, with a notional amount of $50.0 million. We entered into this derivative instrument to continue to hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and we pay to the counterparty a fixed rate of 1.900%.
On January 30, 2020, we entered into a forward interest rate swap agreement effective December 31, 2019 and ending December 31, 2024, with a notional amount of $50.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.500%.
On March 16, 2020, we entered into a forward interest rate swap agreement effective February 28, 2020 and ending February 28, 2025, with a notional amount of $100.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 0.885%.
We also have exposure to changes in interest rates associated with the promissory note assumed on June 30, 2017 in connection with our purchase of an aircraft, which has variable interest rates tied to LIBOR. At September 30, 2017,March 31, 2021, the outstanding principal amount of the promissory note was $5.0$3.2 million and carried an interest rate of 3.2%2.1%. A hypothetical 100 basis point change in this interest rate would not have a $0.1 millionmaterial effect on our pretax income,income. At December 31, 2020, the outstanding principal amount of the promissory note was $3.3 million and carried an interest rate of 2.1%. A hypothetical 100 basis point change in the interest rate as of December 31, 2020 would not have had a material effect on an annualized basis.our pretax income.
We do not use derivative instruments for trading or other speculative purposes. From time to time, we invest excess cash in short-term marketable securities. These investments principally consist of overnight sweep accounts. Due to the short maturity of these investments, we have concluded that we do not have material market risk exposure.

51
Table of Contents




We have a non-interest bearingan investment in the form of 1.69% convertible debt investment in Shorelight Holdings, LLC, a privately-held company, which we account for as an available-for-sale debt security. As such, the investment is carried at fair value with unrealized holding gains and losses excluded from earnings and
36
Table of Contents



reported in other comprehensive income. As of September 30, 2017,March 31, 2021, the fair value of the investment was $31.9$58.0 million, with a total cost basis of $27.9$40.9 million. At December 31, 2020, the fair value of the investment was $64.4 million, with a total cost basis of $40.9 million.
We have a preferred stock investment in Medically Home Group, Inc., a privately-held company, which we account for as an equity security without a readily determinable fair value using the measurement alternative. As such, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment. Any unrealized holding gains and losses resulting from observable price changes are recorded in our consolidated statement of operations. As of March 31, 2021 and December 31, 2020, the carrying value of the investment was $6.7 million, with a total cost basis of $5.0 million. Following our purchase, we have not identified any impairment of our investment.
See Note 10 “Fair Value of Financial Instruments” for further information on our long-term investments in Shorelight Holdings, LLC and Medically Home Group, Inc.
ITEM 4.CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act")) as of September 30, 2017.March 31, 2021. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that, as of September 30, 2017,March 31, 2021, our disclosure controls and procedures were effective in
recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or
submit under the Exchange Act, and such information is accumulated and communicated to management as appropriate to allow timely
decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There has been no changeDuring the quarter ended March 31, 2021, we completed the implementation of a new cloud-based enterprise resource planning (“ERP”) system which replaced much of our existing core financial, operating, and human resource systems. The ERP system is designed to accurately maintain our financial records, enhance the flow of financial information, improve data management, and provide timely information to our management team. As a result of this implementation, we modified certain existing internal controls over financial reporting as well as implemented new controls and procedures related to the new ERP system.
The implementation of the ERP system and related changes described above are changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three monthsquarter ended September 30, 2017March 31, 2021, that hashave materially affected, or isare reasonably likely to materially affect our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS.
The information required by this Item is incorporated by reference from Note 14 "Commitments, Contingencies and Guarantees" included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.
ITEM 1A.RISK FACTORS.
The following information updates, and should be read in conjunction with, the information disclosed inSee Part 1, Item 1A, “Risk
Factors” ofin our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2020, which was filed with the Securities and
Exchange Commission on February 23, 2017.
Our goodwill and other intangible assets represent2021, for a substantial amount of our total assets, and we may be required to recognize a non-cash impairment charge for these assets if the performance of one or more of our reporting units falls below our expectations.
Our total assets reflect a substantial amount of intangible assets, primarily goodwill. At December 31, 2016, goodwill and other intangible assets totaled $881.2 million, or 76%, of our total assets. During the second quarter of 2017, we wrote off $209.6 million of goodwill related to our Healthcare segment as discussed below. At September 30, 2017, goodwill and other intangible assets totaled $770.2 million, or 71%, of our total assets. The goodwill results from our acquisitions, representing the excesscomplete description of the fair value of consideration transferred over the fair value of the net assets acquired. We test goodwill for impairment, at the reporting unit level, annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.material risks we face.
Since the first quarter of 2016, the Healthcare segment, which is also a reporting unit, has experienced declining revenues, primarily driven by softness in our revenue cycle offering within our performance improvement solution. This softness is attributable to decreased demand for our services, the winding down of some of our larger projects and a growing trend toward smaller projects, as well as fewer large integrated projects. In light of these challenges, several initiatives have been undertaken to improve the segment's financial performance, including repositioning our solutions to address the most critical needs of our clients, the expansion of our existing services such as those in our Studer Group, strategy, physician and technology offerings, and workforce reductions to better align resources with market demand. While the initiatives undertaken to improve the financial performance of our Healthcare segment are yielding some positive impacts, hospitals and health systems continue to face regulatory and funding uncertainty; therefore, we

52
Table of Contents




remain cautious about near-term growth. As we have previously disclosed in prior quarters, if the financial performance of our Healthcare segment continued to decline and did not meet our expectations, we could be required to perform an interim impairment analysis with respect to our carrying value of goodwill for the Healthcare reporting unit prior to our usual annual test. Based on forecasts prepared in connection with our quarterly forecasting cycle during the second quarter of 2017, we determined that the likely time frame to improve the financial results of this segment will take longer than originally anticipated. As such, we concluded, during the second quarter of 2017, that the fair value of the Healthcare reporting unit may no longer exceed its carrying value. In connection with the preparation of our financial statements for the quarter ended June 30, 2017, we performed an interim impairment test on the Healthcare reporting unit. Based on the estimated fair value of the Healthcare reporting unit, we recorded a $209.6 million non-cash pretax charge in the second quarter of 2017 to reduce the carrying value of goodwill in our Healthcare reporting unit.
Determining the fair value of any reporting unit requires us to make significant judgments, estimates, and assumptions. While we believe that the estimates and assumptions underlying our valuation of the Healthcare reporting unit are reasonable, these estimates and assumptions could have a significant impact on whether or not another non-cash impairment charge is recognized in the future and also the magnitude of any such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of our Healthcare reporting unit will be consistent with our projections. We will monitor any changes to our assumptions and will evaluate goodwill as part of our annual goodwill impairment testing in the fourth quarter of 2017, or on an interim basis, if required. Any future significant decline in our operations compared to our internal forecast could result in another non-cash goodwill impairment charge, which could be material.
Three of our reporting units have been established primarily or entirely through recent business acquisitions: Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences. Our Enterprise Solutions and Analytics reporting unit was established with the acquisition of Blue Stone International, LLC in October 2013. Since that time, we have completed five additional business acquisitions within the reporting unit, most recently the acquisitions of the U.S. assets and international assets of ADI Strategies in May 2016 and April 2017, respectively. Our Strategy and Innovation reporting unit was established with the acquisition of Innosight in March 2017. Our Life Sciences reporting unit is primarily comprised of two recent acquisitions: The Frankel Group Associates LLC in January 2014 and Pope Woodhead in January 2017.
We record the assets acquired and liabilities assumed in business combinations, including identifiable intangible assets, at their estimated fair values as of the acquisition date, and goodwill is recorded as the excess of the fair value of consideration transferred, including any contingent consideration, over the fair value of the net assets acquired. Therefore, the initial accounting for an acquisition results in no headroom, as its fair value equals its carrying value.
Our most recent goodwill impairment test for the Enterprise Solutions and Analytics reporting unit was performed as of November 30, 2016, as part of our annual goodwill impairment test, pursuant to our policy, and based on the results of the first step of that analysis, the reporting unit’s fair value exceeded its carrying value by 11%.
Our most recent goodwill impairment test for the Life Sciences reporting unit was performed as of June 1, 2017, as part of the reorganization of our internal financial reporting structure, as discussed in the "Critical Accounting Policies" section within Part I - Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations." Based on the results of that analysis, the reporting unit’s fair value exceeded its carrying value by 16%.
We have not yet performed a goodwill impairment test for the Strategy and Innovation reporting unit, as the reporting unit was established during the current year with the acquisition of Innosight in March 2017 and there have been no triggering events requiring an interim goodwill impairment test to date.
Since the date of the most recent goodwill impairment tests for the Enterprise Solutions and Analytics and Life Sciences reporting units, and since the inception of the Strategy and Innovation reporting unit, the performance of these three reporting units has continued to reasonably meet our expectations such that no triggering event for an interim goodwill impairment analysis was identified. We will monitor any changes to our assumptions and will evaluate goodwill as part of our annual goodwill impairment testing in the fourth quarter of 2017, or on an interim basis, if required. Any future significant decline in our operations compared to our internal forecast could result in a non-cash goodwill impairment charge as a result of any such test.
Refer to “Critical Accounting Policies” within Part I - Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 6 “Goodwill and Intangible Assets” within the notes to our consolidated financial statements for further discussion of business combinations, goodwill, intangible assets, and impairment tests performed in 2017.


53
Table of Contents




ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Our Stock Ownership Participation Program, 2012 Omnibus Incentive Plan, and 2004 Omnibus Stock Plan, which was replaced by the 2012 Omnibus Incentive Plan, permit the netting of common stock upon vesting of restricted stock awards to satisfy individual tax withholding requirements. During the quarter ended September 30, 2017,March 31, 2021, we reacquired 4,798165,203 shares of common stock with a weighted average fair market value of $39.78$51.47 as a result of such tax withholdings.
Our board of directors authorizedWe currently have a share repurchase program pursuantpermitting us to which we may, from time to time, repurchase up to $125$50 million of our common stock through OctoberDecember 31, 20172021 (the "Share"2020 Share Repurchase Program"). During the fourth quarter of 2017, our board of directors authorized an extension of the Share Repurchase Program through October 31, 2018. The amount and timing of the repurchases will be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our line of credit, general market and business conditions, and applicable
37
Table of Contents



legal requirements.
The following table provides information with respect to purchases we made of our common stock during the quarter ended September 30, 2017.March 31, 2021.
Period
Total Number of Shares Purchased (1)
Average Price
Paid per Share		Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Dollar Value of Shares
that may yet be
Purchased under the
Plans or Programs (2)
January 1, 2021 - January 31, 202110,479 $58.94 — $44,974,137 
February 1, 2021 - February 28, 202195 $58.95 — $44,974,137 
March 1, 2021 - March 31, 2021400,347 $52.59 245,718 $31,791,094 
Total410,921 $52.76 245,718 
(1)The number of shares repurchased included 10,479 shares in January 2021, 95 shares in February 2021, and 154,629 shares in March 2021 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the 2020 Share Repurchase Program.
(2)As of the end of the period.
Period 
Total Number of Shares Purchased (1)
 
Average Price
Paid per Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
 
Dollar Value of Shares
that may yet be
Purchased under the
Plans or Programs (2)
July 1, 2017 - July 31, 2017 3,194
 $43.08
 —
 $35,143,546
August 1, 2017 - August 31, 2017 796
 $35.47
 —
 $35,143,546
September 1, 2017 - September 30, 2017 808
 $30.95
 —
 $35,143,546
Total 4,798
 $39.78
 —
  
(1)The number of shares repurchased for each period represents shares to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the Share Repurchase Program.
(2)As of the end of the period.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.OTHER INFORMATION.
None.

38
54
Table of Contents







ITEM 6.EXHIBITS.
(a) The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
    Incorporated by Reference
Exhibit
Number		Exhibit DescriptionFiled
herewith		Furnished
herewith		FormPeriod
Ending		ExhibitFiling
Date
10.18-K10.14/16/2021
31.1X
31.2X
32.1X
32.2X
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)X

39
Incorporated by Reference
Exhibit
Number
Exhibit Description
Filed
herewith
Furnished
herewith
Form
Period
Ending
Exhibit
Filing
Date
10.1
Amendment No. 2 of the Credit Agreement, dated as of October 24, 2017, by and among Huron Consulting Group Inc., as Borrower, certain subsidiaries, as Guarantors, and Bank of America, N.A., as Administrative Agent for and on behalf of the Lenders.
X
31.1
Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1
Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2
Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INSXBRL Instance DocumentX
101.SCHXBRL Taxonomy Extension Schema DocumentX
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.LABXBRL Taxonomy Extension Label Linkbase DocumentX
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX


55
Table of Contents







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Huron Consulting Group Inc.
(Registrant)
Date:November 1, 2017May 4, 2021
/S/    JOHN D. KELLY
John D. Kelly
Executive Vice President,

Chief Financial Officer and Treasurer



56
40