UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


☐			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.

(Exact name of registrant as specified in its charter)


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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HURN	NASDAQ 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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 Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting
Company

☐

Emerging Growth Company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~July 22, 2021, 22,445,893~~April 26, 2022, 21,261,900 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

Table of Contents


Huron Consulting Group Inc.

HURON CONSULTING GROUP INC.

INDEX

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)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	12,982	$	67,177	Cash and cash equivalents	$	9,748	$	20,781
Receivables from clients, net of allowances of $8,809 and $7,680, respectively		116,091		87,687
Unbilled services, net of allowances of $3,214 and $2,603, respectively		90,119		53,959
Receivables from clients, net of allowances of $7,125 and $8,827, respectively						Receivables from clients, net of allowances of $7,125 and $8,827, respectively	116,527		122,316
Unbilled services, net of allowances of $2,673 and $2,637, respectively						Unbilled services, net of allowances of $2,673 and $2,637, respectively	125,791		91,285
Income tax receivable	Income tax receivable	1,811		5,121		Income tax receivable	4,997		8,071
Prepaid expenses and other current assets	Prepaid expenses and other current assets	14,642		16,569		Prepaid expenses and other current assets	17,134		15,229
Total current assets	Total current assets	235,645		230,513		Total current assets	274,197		257,682
Property and equipment, net	Property and equipment, net	31,271		29,093		Property and equipment, net	26,836		31,004
Deferred income taxes, net	Deferred income taxes, net	4,745		4,191		Deferred income taxes, net	1,791		1,804
Long-term investments	Long-term investments	66,639		71,030		Long-term investments	95,930		72,584
Operating lease right-of-use assets	Operating lease right-of-use assets	36,575		39,360		Operating lease right-of-use assets	33,737		35,311
Other non-current assets	Other non-current assets	64,488		62,068		Other non-current assets	69,764		68,191
Intangible assets, net	Intangible assets, net	18,957		20,483		Intangible assets, net	31,089		31,894
Goodwill	Goodwill	597,552		594,237		Goodwill	623,841		620,879
Total assets	Total assets	$	1,055,872	$	1,050,975	Total assets	$	1,157,185	$	1,119,349
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	6,318	$	648	Accounts payable	$	12,364	$	13,621
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	19,822		14,874		Accrued expenses and other current liabilities	19,470		22,519
Accrued payroll and related benefits	Accrued payroll and related benefits	90,158		133,830		Accrued payroll and related benefits	64,169		139,131

Current maturities of long-term debt	Current maturities of long-term debt	551		499		Current maturities of long-term debt	—		559
Current maturities of operating lease liabilities	Current maturities of operating lease liabilities	9,598		8,771		Current maturities of operating lease liabilities	10,213		10,142
Deferred revenues	Deferred revenues	19,182		28,247		Deferred revenues	21,632		19,212
Total current liabilities	Total current liabilities	145,629		186,869		Total current liabilities	127,848		205,184
Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Deferred compensation and other liabilities	Deferred compensation and other liabilities	46,843		47,131		Deferred compensation and other liabilities	40,296		43,458

Long-term debt, net of current portion	Long-term debt, net of current portion	267,502		202,780		Long-term debt, net of current portion	335,000		232,221
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	57,324		61,825		Operating lease liabilities, net of current portion	51,756		54,313
Deferred income taxes, net	Deferred income taxes, net	436		428		Deferred income taxes, net	20,003		12,273
Total non-current liabilities	Total non-current liabilities	372,105		312,164		Total non-current liabilities	447,055		342,265
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,877,563 and 25,346,916 shares issued at June 30, 2021 and December 31, 2020, respectively		243		246
Treasury stock, at cost, 2,445,818 and 2,584,119 shares at June 30, 2021 and December 31, 2020, respectively		(135,364)		(129,886)
Common stock; $0.01 par value; 500,000,000 shares authorized; 23,976,090 and 24,364,814 shares issued, respectively						Common stock; $0.01 par value; 500,000,000 shares authorized; 23,976,090 and 24,364,814 shares issued, respectively	237		239
Treasury stock, at cost, 2,645,999 and 2,495,172 shares, respectively						Treasury stock, at cost, 2,645,999 and 2,495,172 shares, respectively	(135,367)		(135,969)
Additional paid-in capital	Additional paid-in capital	429,084		454,512		Additional paid-in capital	395,103		413,794
Retained earnings	Retained earnings	232,211		214,009		Retained earnings	303,848		276,996
Accumulated other comprehensive income	Accumulated other comprehensive income	11,964		13,061		Accumulated other comprehensive income	18,461		16,840
Total stockholders’ equity	Total stockholders’ equity	538,138		551,942		Total stockholders’ equity	582,282		571,900
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,055,872	$	1,050,975	Total liabilities and stockholders’ equity	$	1,157,185	$	1,119,349

The accompanying notes are an integral part of the consolidated financial statements.

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
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Revenues and reimbursable expenses:
Revenues $ 230,126 $ 217,857 $ 433,339 $ 440,476
Reimbursable expenses 3,252 2,970 5,186 22,273
Total revenues and reimbursable expenses 233,378 220,827 438,525 462,749
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs 161,526 149,514 309,641 305,762
Amortization of intangible assets and software development costs 910 1,334 1,835 2,635
Reimbursable expenses 3,316 2,866 5,319 22,255
Total direct costs and reimbursable expenses 165,752 153,714 316,795 330,652
Operating expenses and other losses (gains), net
Selling, general and administrative expenses 45,190 44,857 84,956 88,303
Restructuring charges 861 109 1,489 1,718
Litigation and other losses (gains) 0 0 42 (150)
Depreciation and amortization 5,446 6,193 10,874 12,307
Goodwill impairment charges 0 0 0 59,816
Total operating expenses and other losses (gains), net 51,497 51,159 97,361 161,994
Operating income (loss) 16,129 15,954 24,369 (29,897)
Other income (expense), net:
Interest expense, net of interest income (2,029) (2,916) (3,748) (5,257)
Other income (expense), net 2,151 3,948 2,571 (1,348)
Total other income (expense), net 122 1,032 (1,177) (6,605)
Income (loss) from continuing operations before taxes 16,251 16,986 23,192 (36,502)
Income tax expense (benefit) 3,454 3,414 4,990 (7,801)
Net income (loss) from continuing operations 12,797 13,572 18,202 (28,701)
Loss from discontinued operations, net of tax 0 (25) 0 (60)
Net income (loss) $ 12,797 $ 13,547 $ 18,202 $ (28,761)
Net earnings (loss) per basic share:
Net income (loss) from continuing operations $ 0.59 $ 0.62 $ 0.84 $ (1.31)
Loss from discontinued operations, net of tax 0 0 0 (0.01)
Net income (loss) $ 0.59 $ 0.62 $ 0.84 $ (1.32)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations $ 0.59 $ 0.61 $ 0.82 $ (1.31)
Loss from discontinued operations, net of tax 0 0 0 (0.01)
Net income (loss) $ 0.59 $ 0.61 $ 0.82 $ (1.32)
Weighted average shares used in calculating earnings (loss) per share:
Basic 21,555 21,869 21,743 21,848
Diluted 21,871 22,116 22,105 21,848
Comprehensive income (loss):
Net income (loss) $ 12,797 $ 13,547 $ 18,202 $ (28,761)
Foreign currency translation adjustments, net of tax 82 104 482 (675)
Unrealized gain (loss) on investment, net of tax 1,422 (5,678) (3,226) (5,936)
Unrealized gain (loss) on cash flow hedging instruments, net of tax 218 (1,705) 1,647 (3,390)
Other comprehensive income (loss) 1,722 (7,279) (1,097) (10,001)
Comprehensive income (loss) $ 14,519 $ 6,268 $ 17,105 $ (38,762)


	Three Months Ended March 31,
		2022		2021
Revenues and reimbursable expenses:
Revenues		$	260,049	$	203,213
Reimbursable expenses		4,726		1,934
Total revenues and reimbursable expenses		264,775		205,147
Operating expenses:
Direct costs (exclusive of depreciation and amortization included below)		187,247		148,115
Reimbursable expenses		4,756		2,003
Selling, general and administrative expenses		48,395		39,808
Restructuring charges		1,555		628
Depreciation and amortization		6,864		6,353

Total operating expenses		248,817		196,907
Operating income		15,958		8,240
Other income (expense), net:
Interest expense, net of interest income		(2,196)		(1,719)
Other income, net		24,365		420
Total other income (expense), net		22,169		(1,299)
Income before taxes		38,127		6,941
Income tax expense		11,275		1,536


Net income		$	26,852	$	5,405



Earnings per share:
Net income per basic share		$	1.29	$	0.25



Net income per diluted share		$	1.27	$	0.24
Weighted average shares used in calculating earnings per share:
Basic		20,850		21,932
Diluted		21,167		22,341
Comprehensive income (loss):
Net income		$	26,852	$	5,405
Foreign currency translation adjustments, net of tax		(43)		400
Unrealized loss on investment, net of tax		(2,661)		(4,648)
Unrealized gain on cash flow hedging instruments, net of tax		4,325		1,429
Other comprehensive income (loss)		1,621		(2,819)
Comprehensive income		$	28,473	$	2,586

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)


		Three Months Ended June 30,
		Common Stock			Treasury Stock			Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive Income				Stockholders’ Equity				Common Stock						Treasury Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Stockholders’ Equity
		Shares	Amount		Shares	Amount								Shares								Amount			Shares			Amount
Balance at March 31, 2021		24,698,499	$	247	(2,887,999)	$	(134,611)			$	445,711						$	219,414			$	10,242		$	541,003
Balance at December 31, 2021																						Balance at December 31, 2021	23,868,918			$	239		(2,908,849)	$	(135,969)		$	413,794		$	276,996		$	16,840		$	571,900
Comprehensive income	Comprehensive income											12,797			1,722				14,519			Comprehensive income													26,852			1,621			28,473
Issuance of common stock in connection with:	Issuance of common stock in connection with:																					Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	Restricted stock awards, net of cancellations	21,820	0		(9,091)	(605)		605											0			Restricted stock awards, net of cancellations	277,629			3			130,240	7,486		(7,489)									—
Exercise of stock options	Exercise of stock options	6,772	—					248											248			Exercise of stock options	16,805			—						647									647
Share-based compensation	Share-based compensation							4,575											4,575			Share-based compensation										12,051									12,051
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings				(2,843)	(148)													(148)			Shares redeemed for employee tax withholdings							(139,491)	(6,884)											(6,884)

Share repurchases	Share repurchases	(405,363)	(4)					(22,055)											(22,059)			Share repurchases	(523,399)			(5)						(23,900)									(23,905)
Balance at June 30, 2021		24,321,728	$	243	(2,899,933)	$	(135,364)	$	429,084			$	232,211		$	11,964			$	538,138
Balance at March 31, 2022																						Balance at March 31, 2022	23,639,953			$	237		(2,918,100)	$	(135,367)	$	395,103		$	303,848		$	18,461		$	582,282

Balance at March 31, 2020		24,559,854	$	246	(2,780,835)	$	(128,366)	$	444,974			$	195,541		$	12,214			524,609
Balance at December 31, 2020																						Balance at December 31, 2020	24,560,855			$	246		(2,812,896)	$	(129,886)	$	454,512		$	214,009		$	13,061		551,942
Comprehensive income	Comprehensive income											13,547			(7,279)				6,268			Comprehensive income													5,405			(2,819)			2,586
Issuance of common stock in connection with:	Issuance of common stock in connection with:																					Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	Restricted stock awards, net of cancellations	19,582	0		(4,157)	(196)		196											0			Restricted stock awards, net of cancellations	376,731			4			90,100	3,778		(3,782)									—
Exercise of stock options	Exercise of stock options	6,800	—					178											178			Exercise of stock options	6,631			—						174									174
Share-based compensation	Share-based compensation							5,043											5,043			Share-based compensation										7,988									7,988
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings				(1,806)	(84)													(84)			Shares redeemed for employee tax withholdings							(165,203)	(8,503)											(8,503)
Balance at June 30, 2020		24,586,236	$	246	(2,786,798)	$	(128,646)	$	450,391			$	209,088		$	4,935			$	536,014
Share repurchases																						Share repurchases	(245,718)			(3)						(13,181)									(13,184)
Balance at March 31, 2021																						Balance at March 31, 2021	24,698,499			$	247		(2,887,999)	$	(134,611)	$	445,711		$	219,414		$	10,242		$	541,003

Six Months Ended June 30,
Common Stock Treasury Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other
Comprehensive
Income Stockholders’
Equity
Shares Amount Shares Amount
Balance at December 31, 2020 24,560,855 $ 246 (2,812,896) $ (129,886) $ 454,512 $ 214,009 $ 13,061 $ 551,942
Comprehensive income 18,202 (1,097) 17,105
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations 398,551 4 81,009 3,173 (3,177) 0
Exercise of stock options 13,403 — 422 422
Share-based compensation 12,563 12,563
Shares redeemed for employee tax withholdings (168,046) (8,651) (8,651)
Share repurchases (651,081) (7) (35,236) (35,243)
Balance at June 30, 2021 24,321,728 $ 243 (2,899,933) $ (135,364) $ 429,084 $ 232,211 $ 11,964 $ 538,138
Balance at December 31, 2019 24,603,308 $ 247 (2,763,302) $ (128,348) $ 460,781 $ 237,849 $ 14,936 $ 585,465
Comprehensive income (28,761) (10,001) (38,762)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations 270,126 2 98,310 6,919 (6,921) 0
Exercise of stock options 26,800 — 646 646
Share-based compensation 16,763 16,763
Shares redeemed for employee tax withholdings (121,806) (7,217) (7,217)
Share repurchases (313,998) (3) (20,878) (20,881)
Balance at June 30, 2020 24,586,236 $ 246 (2,786,798) $ (128,646) $ 450,391 $ 209,088 $ 4,935 $ 536,014

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	18,202	$	(28,761)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Net income						Net income	$	26,852	$	5,405
Adjustments to reconcile net income to cash flows from operating activities:						Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	12,923		14,942		Depreciation and amortization	6,864		6,567
Non-cash lease expense	Non-cash lease expense	3,301		3,880		Non-cash lease expense	1,640		1,693

Share-based compensation	Share-based compensation	11,566		14,527		Share-based compensation	7,935		5,625
Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	397		397		Amortization of debt discount and issuance costs	198		198
Goodwill impairment charges		0		59,816

Allowances for doubtful accounts	Allowances for doubtful accounts	0		512		Allowances for doubtful accounts	28		—
Deferred income taxes	Deferred income taxes	(48)		(15,515)		Deferred income taxes	7,129		—
Loss on sale of business		0		102
Gain on sale of property and equipment, excluding transaction costs						Gain on sale of property and equipment, excluding transaction costs	(1,067)		—

Change in fair value of contingent consideration liabilities	Change in fair value of contingent consideration liabilities	42		0		Change in fair value of contingent consideration liabilities	12		42
Other, net		(236)		0
Changes in operating assets and liabilities, net of acquisition and divestiture:
Change in fair value of preferred stock investment						Change in fair value of preferred stock investment	(26,964)		—

Changes in operating assets and liabilities, net of acquisitions and divestiture:						Changes in operating assets and liabilities, net of acquisitions and divestiture:
(Increase) decrease in receivables from clients, net	(Increase) decrease in receivables from clients, net	(27,749)		(339)		(Increase) decrease in receivables from clients, net	5,791		1,178
(Increase) decrease in unbilled services, net	(Increase) decrease in unbilled services, net	(36,088)		(3,059)		(Increase) decrease in unbilled services, net	(35,239)		(23,086)
(Increase) decrease in current income tax receivable / payable, net	(Increase) decrease in current income tax receivable / payable, net	3,366		6,546		(Increase) decrease in current income tax receivable / payable, net	3,266		573
(Increase) decrease in other assets	(Increase) decrease in other assets	(1,117)		(1,674)		(Increase) decrease in other assets	1,361		327
Increase (decrease) in accounts payable and other liabilities	Increase (decrease) in accounts payable and other liabilities	5,038		(2,787)		Increase (decrease) in accounts payable and other liabilities	(7,044)		2,566
Increase (decrease) in accrued payroll and related benefits	Increase (decrease) in accrued payroll and related benefits	(42,487)		(53,420)		Increase (decrease) in accrued payroll and related benefits	(70,689)		(74,273)
Increase (decrease) in deferred revenues	Increase (decrease) in deferred revenues	(9,080)		6,638		Increase (decrease) in deferred revenues	828		(9,569)
Net cash provided by (used in) operating activities		(61,970)		1,805
Net cash used in operating activities						Net cash used in operating activities	(79,099)		(82,754)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment, net		(5,439)		(4,417)
Purchase of investment securities		0		(13,000)
Investment in life insurance policies		(77)		(1,540)
Purchases of property and equipment						Purchases of property and equipment	(3,924)		(637)

Purchase of business		(5,886)		0

Purchases of business, net of cash acquired						Purchases of business, net of cash acquired	(2,289)		(6,000)
Capitalization of internally developed software costs	Capitalization of internally developed software costs	(2,508)		(5,184)		Capitalization of internally developed software costs	(2,060)		(1,400)

Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	158		0		Proceeds from sale of property and equipment	4,750		—

Divestiture of business						Divestiture of business	207		—
Net cash used in investing activities	Net cash used in investing activities	(13,752)		(24,141)		Net cash used in investing activities	(3,316)		(8,037)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from exercises of stock options	Proceeds from exercises of stock options	422		646		Proceeds from exercises of stock options	648		174
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings	(8,651)		(7,217)		Shares redeemed for employee tax withholdings	(6,884)		(8,503)
Share repurchases	Share repurchases	(35,243)		(22,115)		Share repurchases	(24,097)		(11,454)
Proceeds from bank borrowings	Proceeds from bank borrowings	139,000		283,000		Proceeds from bank borrowings	150,000		89,000
Repayments of bank borrowings	Repayments of bank borrowings	(74,270)		(160,263)		Repayments of bank borrowings	(47,780)		(24,135)

Deferred payment on business acquisition						Deferred payment on business acquisition	(500)		—
Net cash provided by financing activities	Net cash provided by financing activities	21,258		94,051		Net cash provided by financing activities	71,387		45,082
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	269		(107)		Effect of exchange rate changes on cash	(5)		155
Net increase (decrease) in cash and cash equivalents		(54,195)		71,608
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(11,033)		(45,554)
Cash and cash equivalents at beginning of the period	Cash and cash equivalents at beginning of the period	67,177		11,604		Cash and cash equivalents at beginning of the period	20,781		67,177
Cash and cash equivalents at end of the period	Cash and cash equivalents at end of the period	$	12,982	$	83,212	Cash and cash equivalents at end of the period	$	9,748	$	21,623
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits	Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits	$	3,315	$	2,070	Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits	$	2,682	$	3,545
Operating lease right-of-use asset obtained in exchange for operating lease liability	Operating lease right-of-use asset obtained in exchange for operating lease liability	$	0	$	1,397	Operating lease right-of-use asset obtained in exchange for operating lease liability	$	102	$	—

Contingent consideration related to purchase of business						Contingent consideration related to purchase of business	$	869	$	—
Share repurchases included in accounts payable						Share repurchases included in accounts payable	$	—	$	1,729
Deferred payment on business acquisition						Deferred payment on business acquisition	$	—	$	1,000

The accompanying notes are an integral part of the consolidated financial statements.

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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 ~~consultancy~~professional services firm that collaborates with clients to ~~drive strategic growth, ignite innovation~~put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and ~~navigate constant change. Through a combination of strategy, expertise~~empowering businesses and ~~creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need~~their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, ~~Huron creates~~we create sustainable results for the organizations ~~it serves.~~we serve.

We provide our services and manage our business under 3 operating segments: Healthcare, Education and Commercial. See Note 14 “Segment Information” for a discussion of our 3 segments.

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following 3 industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business.

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 six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("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") 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, ~~2020~~2021 included in our Annual Report on Form ~~10-K and our Quarterly Report on Form 10-Q for the period ended March 31, 2021.~~10-K. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.

~~During~~In order to better align with industry standards, in the first quarter of ~~2021,~~2022, we ~~identified an error on our previously reported consolidated balance sheet as~~revised the presentation of ~~December 31, 2020~~

~~related to the classification between receivables from clients, unbilled services, and deferred revenues. Our 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 our~~

~~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 (loss) to present depreciation and amortization expense inclusive of amortization of intangible assets and software development costs previously presented within total direct costs and reimbursable expenses. We also aggregated immaterial line items within selling, general and administrative expenses. The change in presentation has no effect on our consolidated results, and our historical consolidated statements of ~~cash flows~~operations and other comprehensive income (loss) were revised for any current or prior period. We 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.consistent presentation.

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 October 2020, the FASB issued ASU 2020-10,~~ ~~Codification Improvements.~~ ASU 2020-10 situates all disclosure guidance within the appropriate disclosure section of the Codification and makes other improvements and technical corrections to the Codification. We adopted ASU 2020-10 effective January 1, 2021, which did not have any impact on our consolidated financial statements.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

3. New Accounting Pronouncements

Not Yet Adopted

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, Reference Rate Reform (Topic 848): Scope. Together, these ASUs provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting under GAAP. This standard is optional and may be applied by entities after March 12, 2020, but no later than December 31, 2022. Our senior secured credit facility and related interest rate swaps are indexed to LIBOR; as such, we are currently evaluating the potential impact this guidance will have on our consolidated financial statements.

4. Goodwill and Intangible Assets

The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the ~~six~~three months ended ~~June 30, 2021.~~

Healthcare
Business
Advisory Education Total
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, 2020 428,729 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 June 30, 2021 $ 428,729 $ 64,439 $ 104,384 $ 597,552
March 31, 2022.


	Healthcare		Education		Commercial(1)		Total
Balance as of December 31, 2021:
Goodwill	$	642,951	$	121,570	$	312,250	$	1,076,771
Accumulated impairment losses	(208,081)		—		(247,811)		(455,892)
Goodwill, net as of December 31, 2021	434,870		121,570		64,439		620,879
Goodwill reallocation(1)	18,057		(1,417)		(16,640)		—
Goodwill recorded in connection with business acquisitions (2)(3)	162		2,082		718		2,962

Goodwill, net as of March 31, 2022	$	453,089	$	122,235	$	48,517	$	623,841

(1)The goodwill balance as of December 31, 2021 shown within the Commercial segment related to our Business Advisory segment prior to the modification of our operating model. Effective January 1, 2022, we reallocated a portion of the goodwill within our Business Advisory segment to our Healthcare and Education segments. The remaining goodwill was allocated to our new Commercial segment.

(2)On ~~February 1, 2021,~~January 18, 2022, we completed the acquisition of ~~Unico Solution, a data strategy~~AIMDATA, LLC ("AIMDATA"), an advisory and ~~technology~~implementation consulting services firm focused on ~~helping clients use their data to speed~~strategy, technology and business ~~transformation and accelerate cloud adoption.~~transformation. The results of operations of ~~Unico Solution~~AIMDATA are included within our consolidated financial statements as of the acquisition date and allocated among our 3 operating industries, which are our reportable segments, based on the engagements delivered by the business. The acquisition of AIMDATA is not significant to our consolidated financial statements.

(3)In the first quarter of 2022, we finalized the measurement of assets acquired, including goodwill, and liabilities assumed in the acquisition of Whiteboard Communications Ltd. ("Whiteboard"), a student enrollment advisory firm that helps colleges and universities with recruitment initiatives and financial aid strategies that we acquired in December 2021. The results of operations of Whiteboard are included in our consolidated financial statements and results of operations of our ~~Business Advisory~~Education segment from the date of acquisition. ~~This acquisition is not significant to our consolidated financial statements.~~

First Quarter ~~2020~~2022 Goodwill ~~Impairment Charges~~Reallocation

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following 3 industries, which are our reportable segments: Healthcare, Education and Commercial. The ~~worldwide spread~~Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the ~~COVID-19 pandemic~~new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the ~~first quarter of 2020 created significant volatility, uncertainty~~respective segments' industries. The new Healthcare 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~~Education segments include some revenue and ~~business partners. While the COVID-19 pandemic did~~

~~not have a significant impact on our consolidated revenues~~costs historically reported in the ~~first quarter of 2020, we expected it to have an unfavorable impact on~~

~~sales, increase uncertainty in the backlog and negatively impact full year 2020 results. The services provided by our Strategy and Innovation~~

~~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 ~~duration of the projects~~

~~within these practices are typically short-term. Therefore, at the onset of the COVID-19 pandemic~~Healthcare segment includes some revenue and costs historically reported in the ~~U.S. and due to the uncertainty~~

~~caused by the pandemic, we were cautious about near-term results for these two reporting units. Based on our internal projections and the~~

~~preparation of our financial statements for the quarter ended March 31, 2020, and considering the expected decrease in demand due to the~~

~~COVID-19 pandemic, during the first quarter of 2020 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 reporting units as of March 31, 2020.~~

Based on the estimated fair values of the Strategy and Innovation and Life Sciences reporting units, we recorded non-cash pretax goodwill impairment charges of $49.9 million and $9.9 million, respectively, in the first quarter of 2020. The $49.9 million non-cash pretax charge related to the Strategy and Innovation reporting unit reduced the goodwill balance of the reporting unit to $37.5 million. The $9.9 million non-cash pretax charge related to the 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 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 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~~Education segment.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

The 3 reportable segments of Healthcare, Education and Commercial are also our reporting units for goodwill impairment testing purposes. As a result of the reorganization, we reallocated the goodwill balances of our historical reporting units to our new reporting units based on the relative estimated fair values of each component of the historical reporting units to be allocated to the new reporting units. Additionally, we performed a goodwill impairment test on the goodwill balances of each of our reporting units as of January 1, 2022 by comparing the fair value of the reporting ~~units' operating data~~unit to ~~arrive at an~~its carrying value, including the reallocated goodwill. Based on the results of the goodwill impairment test, we determined the fair values of the Healthcare, Education, and Commercial reporting units exceeded their carrying values by 37%, 199%, and 105%, respectively. As such, we concluded that there was no indication of ~~value.~~goodwill impairment for all 3 reporting units as of January 1, 2022.

We relied on the income approach to estimate the fair value of the reporting units for both the goodwill reallocation and the goodwill impairment test. The income approach utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by each business 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 ten-year forecasts. Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information.

Intangible Assets

Intangible assets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of the following:


			As of June 30, 2021				As of December 31, 2020						As of March 31, 2022				As of December 31, 2021
		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 relationships	Customer relationships	3 to 13	$	71,465	$	54,833	$	73,629	$	56,232	Customer relationships	3 to 13	$	77,763	$	55,340	$	75,908	$	53,421
Trade names	Trade names	6	6,000		4,653		6,130		4,287		Trade names	6	6,000		5,338		6,000		5,148
Technology and software	Technology and software	5	5,800		5,509		5,800		5,380		Technology and software	2 to 5	13,330		6,199		13,330		5,607
Non-competition agreements	Non-competition agreements	5	1,880		1,330		2,090		1,541		Non-competition agreements	2 to 5	920		153		2,020		1,347
Customer contracts	Customer contracts	2	800		663		800		526		Customer contracts	1	260		154		260		101
Total	Total		$	85,945	$	66,988	$	88,449	$	67,966	Total		$	98,273	$	67,184	$	97,518	$	65,624

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.

Intangible asset amortization expense was ~~$2.3~~$2.9 million and ~~$3.2~~$2.4 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively; and $4.7 million and $6.4 million for the six months ended June 30, 2021 and 2020.~~respectively. The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of ~~June 30, 2021.~~March 31, 2022.


Year Ending December 31,	Year Ending December 31,	Estimated Amortization Expense		Year Ending December 31,	Estimated Amortization Expense(1)
2021		$	9,059
2022	2022	$	6,878	2022	$	11,198
2023	2023	$	4,231	2023	$	7,904
2024	2024	$	1,384	2024	$	4,514
2025	2025	$	566	2025	$	3,386
2026				2026	$	2,435

Actual future amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, and other factors.

~~5. Revenues~~

For the three months ended June 30, 2021 and 2020, we recognized revenues of $230.1 million and $217.9 million, respectively. Of the $230.1 million recognized in the second quarter of 2021, we recognized revenues of $15.7 million from obligations satisfied, or partially satisfied, in prior periods, of which $13.5 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $2.2 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments. Of the $217.9 million recognized in the second quarter of 2020, we recognized revenues of $5.6 million from obligations satisfied, or partially satisfied, in prior periods, of which $4.0 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments and $1.6 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements.

For the six months ended June 30, 2021 and 2020, we recognized revenues of $433.3 million and $440.5 million, respectively. Of the $433.3 million recognized in the first six months of 2021, we recognized revenues of $20.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $13.9 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $6.9 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments. Of the $440.5 million recognized in the first six months of 2020, we recognized revenues of $10.0 million from obligations satisfied, or partially satisfied, in prior periods, of which $6.2 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $3.8 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

5. Revenues

For the three months ended March 31, 2022 and 2021, we recognized revenues of $260.0 million and $203.2 million, respectively. Of the $260.0 million recognized in the first quarter of 2022, we recognized revenues of $1.9 million from obligations satisfied, or partially satisfied, in prior periods, of which $1.0 million was primarily due to the release of allowances on receivables from clients and unbilled services, and $0.9 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements. 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 receivables from clients and unbilled services, and $2.3 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements.

As of ~~June 30, 2021,~~March 31, 2022, we had ~~$66.7~~$89.8 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 ~~$66.7~~$89.8 million of performance obligations, we expect to recognize approximately ~~$29.2~~$35.6 million as revenue in ~~2021, $23.1~~2022, $28.5 million in ~~2022,~~2023, and the remaining ~~$14.4~~$25.7 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.

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$25.8~~$33.1 million and ~~$17.3~~$23.7 million, respectively. The ~~$8.5~~$9.4 million increase 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, was ~~$19.2~~$21.6 million and ~~$28.2~~$19.2 million, respectively. The ~~$9.0~~$2.4 million ~~decrease~~increase primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three ~~and six~~ months ended ~~June 30, 2021, $5.2 million and $26.0~~March 31, 2022, $13.1 million of revenues recognized were included in the deferred ~~revenue~~revenues balance as of December 31, ~~2020.~~2021.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

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, and outstanding common stock options, 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
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Net income (loss) from continuing operations $ 12,797 $ 13,572 $ 18,202 $ (28,701)
Loss from discontinued operations, net of tax 0 (25) 0 (60)
Net income (loss) $ 12,797 $ 13,547 $ 18,202 $ (28,761)
Weighted average common shares outstanding – basic 21,555 21,869 21,743 21,848
Weighted average common stock equivalents 316 247 362 0
Weighted average common shares outstanding – diluted 21,871 22,116 22,105 21,848
Net earnings (loss) per basic share:
Net income (loss) from continuing operations $ 0.59 $ 0.62 $ 0.84 $ (1.31)
Loss from discontinued operations, net of tax 0 0 0 (0.01)
Net income (loss) $ 0.59 $ 0.62 $ 0.84 $ (1.32)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations $ 0.59 $ 0.61 $ 0.82 $ (1.31)
Loss from discontinued operations, net of tax 0 0 0 (0.01)
Net income (loss) $ 0.59 $ 0.61 $ 0.82 $ (1.32)


	Three Months Ended March 31,
		2022		2021
Net income		$	26,852	$	5,405

Weighted average common shares outstanding – basic		20,850		21,932
Weighted average common stock equivalents		317		409
Weighted average common shares outstanding – diluted		21,167		22,341

Net income per basic share		$	1.29	$	0.25
Net income per diluted share		$	1.27	$	0.24

The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above for the three months ended March 31, 2022 and 2021 were ~~as follows:~~

As of June 30,
2021 2020
Unvested restricted stock awards 27 58
Total anti-dilutive securities 27 58
0.4 million shares and less than 0.1 million shares, respectively, and related to unvested restricted stock and outstanding common stock options.

In November 2020, our board of directors 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, 2020.~~ During the third quarter of 2021, our board of directors authorized an extension of the ~~2020 Share Repurchase Program~~share repurchase program through December 31, 2022 and increased the authorized amount ~~from $50 million~~ to $100 ~~million.The~~million. During the first quarter of 2022, our board of directors authorized a further extension through December 31, 2023 and increased the authorized amount to $200 million. The amount and timing of repurchases under ~~both~~the share repurchase ~~programs~~program were and will continue to be determined by management and 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. All shares repurchased and retired are reflected as a reduction to our basic weighted average shares outstanding based on the trade date of the share repurchase.

In the three months ended March 31, 2022, we repurchased and retired 523,399 shares for $23.9 million, and settled the repurchase of 3,820 shares for $0.2 million that were accrued as of December 31, 2021. In the three months ended March 31, 2021, we repurchased and retired 245,718 shares for $13.2 million, of which $1.7 million settled in the second quarter of 2021. As of March 31, 2022, $106.3 million remained available for share repurchases under our share repurchase program.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

In the three and six months ended June 30, 2021, we repurchased and retired 405,363 and 651,081 shares for $22.1 million and $35.2 million, respectively, under the 2020 Share Repurchase Program. In the first quarter of 2020, we repurchased 313,998 shares for $20.9 million under the 2015 Share Repurchase Program. Additionally, in the first quarter of 2020, we settled the repurchase of 18,000 shares for $1.2 million that were accrued as of December 31, 2019. No shares were repurchased in the second quarter of 2020. As of June 30, 2021, $9.7 million remained available for share repurchases under our 2020 Share Repurchase Program.

7. Financing Arrangements

A summary of the carrying amounts of our debt follows:

June 30,
2021 December 31,
2020
Senior secured credit facility $ 265,000 $ 200,000
Promissory note due 2024 3,053 3,279
Total long-term debt $ 268,053 $ 203,279
Current maturities of long-term debt (551) (499)
Long-term debt, net of current portion $ 267,502 $ 202,780

~~Below is a summary of the scheduled remaining principal payments of our debt as of June 30, 2021.~~

Principal Payments of Long-Term Debt
2021 $ 273
2022 $ 559
2023 $ 575
2024 $ 266,646


	March 31, 2022		December 31, 2021
Senior secured credit facility	$	335,000	$	230,000
Promissory note due 2024	—		2,780
Total long-term debt	335,000		232,780
Current maturities of long-term debt	—		(559)
Long-term debt, net of current portion	$	335,000	$	232,221

Senior Secured Credit Facility

The Company has a $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 Agreement"), that becomes due and payable in full upon maturity on 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 $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 $750 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding 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.

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 1.125% per annum and 1.875% per annum, in the case of LIBOR borrowings, or between 0.125% per annum and 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 upon an Event 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

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

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) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 upon the 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 non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses 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 ~~June 30, 2021,~~March 31, 2022, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of ~~2.80~~2.24 to 1.00 and a Consolidated Interest Coverage Ratio of ~~13.83~~19.08 to 1.00.

Borrowings outstanding under the Amended Credit Agreement at ~~June 30, 2021~~March 31, 2022 totaled ~~$265.0~~$335.0 million. These borrowings carried a weighted average interest rate of ~~2.4%~~2.1%, including the effect of the interest rate swaps described in Note 9 “Derivative Instruments and Hedging Activity."” Borrowings outstanding under the Amended Credit Agreement at December 31, ~~2020~~2021 were ~~$200.0~~$230.0 million and carried a weighted average interest rate of ~~2.5%~~2.7%, including the effect of the interest rate swaps. 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 ~~June 30, 2021,~~March 31, 2022, we

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

had outstanding letters of credit totaling $0.7 million, which are used as security deposits for our office facilities. As of ~~June 30, 2021,~~March 31, 2022, the unused borrowing capacity under the revolving credit facility was ~~$334.3~~$264.3 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~~In the first quarter of 2022, we completed the sale of the aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on the promissory note. Prior to the repayment of the promissory note, the principal balance of the promissory note iswas 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.~~2024. Under the terms of the promissory note, we ~~pay~~paid 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 ~~June 30,~~December 31, 2021, the outstanding principal amount of the promissory note was ~~$3.1~~$2.8 million, and the aircraft had a carrying amount of ~~$4.1~~$3.7 million. ~~At December 31, 2020, the outstanding principal amount~~As a result of the ~~promissory note was $3.3~~sale, we recognized a gain of $1.0 million and ~~the aircraft had a carrying amount of $4.4 million.~~we no longer own any aircraft.

8. Restructuring Charges

Restructuring charges for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 were $1.6 million, compared to $0.6 million for the three months ended March 31, 2021. The $1.6 million of restructuring charges recognized in the first quarter of 2022 included $0.6 million of rent and related expenses, net of sublease income, for previously vacated office spaces, $0.5 million of employee-related expenses, $0.3 million of accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use, and $0.1 million for third-party transaction expenses related to the modification of our operating model. The $0.6 million of restructuring charges recognized in the first quarter of 2021 ~~were $0.9 million and $1.5 million, respectively, and~~ primarily related to rent and related expenses, net of sublease income, and accelerated depreciation on furniture and fixtures for vacated office spaces.

Restructuring charges for the three and six months ended June 30, 2020 were $0.1 million and $1.7 million, respectively. Restructuring charges recognized in the first six months of 2020 include a $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 corporate operations.

In the fourth quarter of 2020, we announced a restructuring plan to reduce operating costs to address the impact of the COVID-19 pandemic on our business. The restructuring plan, which was substantially complete in the fourth quarter of 2020, provided for a reduction in certain leased office spaces and a reduction in workforce.

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.


	Employee Costs		Other		Total
Balance as of December 31, 2021	$	573	$	567	$	1,140
Additions	500		95		595
Payments	(324)		(121)		(445)
Adjustments	7		—		7
Balance as of March 31, 2022	$	756	$	541	$	1,297

Employee Costs Office Space Reductions Other Total
Balance as of December 31, 2020 $ 2,447 $ 84 $ 893 $ 3,424
Additions 4 0 200 204
Payments (2,438) (67) (266) (2,771)
Adjustments
(3) 0 0 (3)
Balance as of June 30, 2021 $ 10 $ 17 $ 827 $ 854

~~The~~All of the $0.8 million restructuring charge liability related to employee costs at ~~June 30, 2021~~March 31, 2022 is expected to be paid in the next 12 months and is included as a component of accrued payroll and related ~~benefits. The employee related payments made~~benefits in our consolidated balance sheet. All of the first six months of 2021 primarily related to the fourth quarter 2020 restructuring plan. The restructuring charge liability related to office space reductions at June 30, 2021 is included as a component of accrued expenses and other current liabilities. The $0.8$0.5 million other restructuring charge liability at ~~June 30, 2021 is primarily related to the termination of a third-party advisor agreement and~~March 31, 2022 is expected to be paid over the next 1912 months and is included as a component of accrued expenses and other current liabilities ~~and deferred compensation and other liabilities.~~in our consolidated balance sheet.

9. Derivative Instruments and Hedging Activity

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 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%.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

We recognize all derivative instruments as either assets or liabilities at fair value onin the consolidated 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, net of interest income upon settlement. As of ~~June 30, 2021,~~March 31, 2022, it was anticipated that ~~$1.7~~$0.6 million of the ~~losses,~~gains, net of tax, currently recorded in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.

The table below sets forth additional information relating to the interest rate swaps designated as a cash flow hedging instrument as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

Fair Value (Derivative Asset and Liability)
Balance Sheet Location June 30,
2021 December 31,
2020
Accrued expenses and other current liabilities $ 2,046 $ 2,100
Deferred compensation and other liabilities $ 1,086 $ 3,297
2021.


	Fair Value (Derivative Asset and Liability)
Balance Sheet Location	March 31, 2022		December 31, 2021
Prepaid expenses and other current assets	$	1,019	$	—
Other non-current assets	$	4,501	$	1,210
Accrued expenses and other current liabilities	$	183	$	1,604
Deferred compensation and other liabilities	$	—	$	149

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 onin our consolidated balance sheet.

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

We do not use derivative instruments for trading or other speculative purposes. Refer to Note 11 “Other Comprehensive Income (Loss)” for additional information on our derivative instruments.

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 Inputs						Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs						Quoted 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 Inputs						Unobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.

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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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

Level 1 Level 2 Level 3 Total
June 30, 2021
Assets:
Convertible debt investment $ 0 $ 0 $ 59,972 $ 59,972
Deferred compensation assets 0 37,047 0 37,047
Total assets $ 0 $ 37,047 $ 59,972 $ 97,019
Liabilities:
Interest rate swaps $ 0 $ 3,132 $ 0 $ 3,132
Contingent consideration for business acquisition 0 0 1,812 1,812
Total liabilities $ 0 $ 3,132 $ 1,812 $ 4,944
December 31, 2020
Assets:
Convertible debt investment $ 0 $ 0 $ 64,364 $ 64,364
Deferred compensation assets 0 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 acquisition 0 0 1,770 $ 1,770
Total liabilities $ 0 $ 5,397 $ 1,770 $ 7,167
2021.


	Level 1		Level 2		Level 3		Total
March 31, 2022
Assets:
Interest rate swap	$	—	$	5,520	$	—	$	5,520
Convertible debt investment	—		—		62,301		62,301
Deferred compensation assets	—		36,913		—		36,913
Total assets	$	—	$	42,433	$	62,301	$	104,734
Liabilities:
Interest rate swaps	$	—	$	183	$	—	$	183
Contingent consideration for business acquisitions	—		—		4,620		4,620
Total liabilities	$	—	$	183	$	4,620	$	4,803
December 31, 2021
Assets:
Interest rate swap	$	—	$	627	$	—	$	627
Convertible debt investment	—		—		65,918		65,918
Deferred compensation assets	—		39,430		—		39,430
Total assets	$	—	$	40,057	$	65,918	$	105,975
Liabilities:
Interest rate swaps	$	—	$	1,170	$	—	$	1,170
Contingent consideration for business acquisition	—		—		3,743		3,743
Total liabilities	$	—	$	1,170	$	3,743	$	4,913

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. Refer to Note 9 “Derivative Instruments and Hedging Activity” for additional information on our interest rate swaps.

Convertible debt investment: InSince 2014, ~~and 2015,~~ we have invested ~~$27.9~~$40.9 million in the form of ~~zero coupon~~1.69% 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~~

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

~~senior liquidation preference to the initial~~The convertible notes ~~(the "additional convertible note") and amended our initial convertible notes to~~

~~extend the maturity date to~~will mature on January 17, 2024, ~~which coincides with the maturity date of the additional convertible note.~~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 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~~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,~~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 24.0%~~ as of ~~June 30, 2021~~both March 31, 2022 and December 31, ~~2020, respectively;~~2021; and the concluded equity volatility of 40.0% and 45.0% as of ~~both June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, 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 onin our consolidated balance sheets.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

The table below sets forth the changes in the balance of the convertible debt investment for the ~~six~~three months ended ~~June 30, 2021.~~

March 31, 2022.


	Convertible Debt Investment
Balance as of December 31, ~~2020~~2021	$	~~64,364~~65,918

Change in fair value ~~of convertible debt investment~~	~~(4,392)~~(3,617)
Balance as of ~~June 30, 2021~~March 31, 2022	$	~~59,972~~62,301

Deferred compensation assets: We have a non-qualified deferred compensation plan (the ~~"Plan"~~“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 onin our consolidated balance sheets. Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations.

Contingent consideration for business ~~acquisition:~~acquisitions: We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted assessment of the specific financial performance targets being measured 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 consideration are our measures of the estimated payouts based on internally generated financial projections on a probability-weighted basis and a discount rate which ~~typically reflects a risk-free rate, and~~ was ~~2.39% and 2.41%~~2.6% as of ~~June 30, 2021 and~~March 31, 2022. As of December 31, ~~2020, respectively.~~2021, the discount rate used in the fair value measurements of our contingent consideration was in a range of 2.4% to 5.1% with a weighted average of 3.7%. 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.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

The table below sets forth the changes in the balance of the contingent consideration for business acquisitions for the ~~six~~three months ended ~~June 30, 2021.~~

March 31, 2022.


	Contingent Consideration for Business Acquisitions
Balance as of December 31, ~~2020~~2021	~~1,770~~ $	3,743
Acquisition	869
Payment	(4)
Change in fair value ~~of contingent consideration for business acquisition~~	4212
Balance as of ~~June 30, 2021~~March 31, 2022	$	~~1,812~~4,620

Financial assets and liabilities not recorded at fair value on a recurring basis are as follows:

Medically Home Preferred Stock Investment

In the fourth quarter of 2019, we invested $5.0 million in Medically Home Group, Inc. (“Medically Home”), a hospital-at-home company. The investment was made in the form of preferred ~~stock, in Medically Home Group, Inc. ("Medically Home"), a healthcare technology-enabled services company.~~stock. To determine the appropriate accounting treatment for our preferred stock 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 to the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in consolidated statement of operations. ~~During the six months ended June 30, 2021, there has been no impairment, nor any observable price change related to our investment.~~

As of ~~June 30,~~December 31, 2021, the carrying amount of our preferred stock investment was $6.7 million. During the first quarter of 2022, we recognized an unrealized gain of $27.0 million to increase the carrying amount of our preferred stock investment to $33.6 million, based on an observable price change of preferred stock issued by Medically Home with similar rights and preferences to our preferred stock investment. This observable price change is a Level 2 input. The $27.0 million unrealized gain is recorded to other income (expense), net in our consolidated statement of operations. Since our initial investment, we have recognized cumulative unrealized gains of $28.6 million. We have not identified any impairments of our investment.

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 7 “Financing Arrangements” for additional information on our senior secured credit facility.

Promissory Note due 2024

In the first quarter of 2022, we completed the sale of our aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on our promissory note due 2024. The carrying value of our promissory note due 2024 iswas stated at cost. ~~Our~~The carrying value ~~approximates~~approximated fair value, using Level 2 inputs, as the promissory note ~~bears~~bore interest at rates based on ~~current~~then-current market rates as set forth in the terms of the promissory note. Refer to Note 7 “Financing Arrangements” for additional information on our promissory note due 2024.

Cash and Cash Equivalents and 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.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

11. Other Comprehensive Income (Loss)

The table below sets forth the components of other comprehensive income (loss), net of tax, for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	Before Taxes		Tax (Expense) Benefit		Net of Taxes		Before Taxes		Tax (Expense) Benefit		Net of Taxes
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(43)	$	—	$	(43)	$	400	$	—	$	400
Unrealized gain (loss) on investment	$	(3,617)	$	956	$	(2,661)	$	(6,328)	$	1,680	$	(4,648)
Unrealized gain (loss) on cash flow hedges:
Change in fair value	$	5,668	$	(1,499)	$	4,169	$	1,189	$	(337)	$	852
Reclassification adjustments into earnings	212		(56)		156		780		(203)		577
Net unrealized gain (loss)	$	5,880	$	(1,555)	$	4,325	$	1,969	$	(540)	$	1,429
Other comprehensive income (loss)	$	2,220	$	(599)	$	1,621	$	(3,959)	$	1,140	$	(2,819)

Three Months Ended
June 30, 2021 Three Months Ended
June 30, 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 $ 82 $ 0 $ 82 $ 104 $ 0 $ 104
Unrealized gain (loss) on investment $ 1,936 $ (514) $ 1,422 $ (7,670) $ 1,992 $ (5,678)
Unrealized gain (loss) on cash flow hedges:
Change in fair value $ (305) $ 78 $ (227) $ (2,640) $ 686 $ (1,954)
Reclassification adjustments into earnings 601 (156) 445 337 (88) 249
Net unrealized gain (loss) $ 296 $ (78) $ 218 $ (2,303) $ 598 $ (1,705)
Other comprehensive income (loss) $ 2,314 $ (592) $ 1,722 $ (9,869) $ 2,590 $ (7,279)

Six Months Ended
June 30, 2021 Six Months Ended
June 30, 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 $ 482 $ 0 $ 482 $ (675) $ 0 $ (675)
Unrealized gain (loss) on investment $ (4,392) $ 1,166 $ (3,226) $ (8,018) $ 2,082 $ (5,936)
Unrealized gain (loss) on cash flow hedges:
Change in fair value $ 884 $ (259) $ 625 $ (4,912) $ 1,276 $ (3,636)
Reclassification adjustments into earnings 1,381 (359) 1,022 333 (87) 246
Net unrealized gain (loss) $ 2,265 $ (618) $ 1,647 $ (4,579) $ 1,189 $ (3,390)
Other comprehensive income (loss) $ (1,645) $ 548 $ (1,097) $ (13,272) $ 3,271 $ (10,001)

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 Investment Cash Flow Hedges Total
Balance, December 31, 2020 $ (218) $ 17,205 $ (3,926) $ 13,061
Current period change 482 (3,226) 1,647 (1,097)
Balance, June 30, 2021 $ 264 $ 13,979 $ (2,279) $ 11,964


	Foreign Currency Translation		Available-for-Sale Investment		Cash Flow Hedges		Total
Balance, December 31, 2021	$	(1,143)	$	18,374	$	(391)	$	16,840
Current period change	(43)		(2,661)		4,325		1,621
Balance, March 31, 2022	$	(1,186)	$	15,713	$	3,934	$	18,461

12. Income Taxes

For the three months ended ~~June 30,~~March 31, 2022, our effective tax rate was 29.6% as we recognized income tax expense of $11.3 million on income of $38.1 million. The effective tax rate of 29.6% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4%, primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.

For the three months ended March 31, 2021, our effective tax rate was ~~21.3%~~22.1% as we recognized income tax expense ~~from continuing operations~~ of ~~$3.5~~$1.5 million on income ~~from continuing operations~~ of ~~$16.3~~$6.9 million. The effective tax rate of ~~21.3%~~22.1% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6%, primarily due to a discrete tax benefit ~~related to electing~~for share-based compensation awards that vested during the Global Intangible Low- Taxed Income (“GILTI”) high-tax exclusion retroactively for the 2018 tax year. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allow certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from their GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available.first quarter of 2021. This favorable item was partially offset by certain nondeductible expense ~~items.~~items

~~Table~~As of ~~Contents~~

~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

~~For~~March 31, 2022, we had $0.7 million of unrecognized tax benefits which would affect the three months ended June 30, 2020, our effective tax rate was 20.1% as we recognized an income tax expense from continuing operations of $3.4 million on income from continuing operations of $17.0 million. The effective tax rate of ~~20.1% was more favorable than~~continuing operations if recognized. It is reasonably possible that approximately $0.1 million of the ~~statutory rate, inclusive of state income taxes, of 26.0%, primarily~~liability for unrecognized tax benefits could decrease in the next twelve months due to the ~~current year-to-date pre-tax losses and the impact during the quarter~~expiration of ~~certain nondeductible expense items, including the nondeductible portion~~statutes of the goodwill impairment charges, based on the attribution of those expenses to the quarter in accordance with the allocation of income tax expense on a current year-to-date basis. The effective tax rate also reflected the positive impact of certain federal tax credits.

For the six months ended June 30, 2020, our effective tax rate was 21.4% as we recognized an income tax benefit from continuing operations of $7.8 million on a loss from continuing operations of $36.5 million. The effective tax rate of 21.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to certain nondeductible expense items and the nondeductible portion of the goodwill impairment charges recorded during the first quarter of 2020. These unfavorable items were partially offset by a discrete tax benefit for share-based compensation awards that vested during the first 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 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. As a result of electing the retroactive GILTI high-tax exclusion during 2021, we recognized a $1.0 million tax benefit of which $0.4 million related to carrying back our increased 2018 federal net operating loss to prior year income for a refund at the higher, prior year tax rate.limitations.

13. Commitments, Contingencies and Guarantees

Litigation

Oaktree

On November 9, 2018, Huron Consulting Services LLC, a wholly owned subsidiary of 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 ~~"CRO"~~“CRO”). The engagement letter through which Oaktree retained Huron’s services (the ~~"Engagement Letter"~~“Engagement Letter”) states that all disputes or claims arising

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

thereunder are subject to binding arbitration, disclaims special, consequential, incidental and exemplary damages and losses and caps liability to the fees paid for the portion of the engagement giving rise to any liability. On September 19, 2019, Oaktree and certain of its affiliates filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of North Carolina, with the cases 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 estates, at which time Huron’s services for Oaktree concluded.

In April 2021, Trustee’s counsel communicated in writing to Huron its intent to pursue various claims against Huron and the CRO, among others, on behalf of the bankruptcy estates related to the services carried out by Huron and the CRO during the engagement. ~~Trustee's counsel has subsequently asserted that certain provisions~~

On September 17, 2021, the Trustee filed a complaint in the ~~Engagement Letter are unenforceable and/or inapplicable~~Bankruptcy Court for the District of South Carolina against Huron and the CRO, among others (the “Complaint”), alleging breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, negligence, violations of the South Carolina Unfair Trade Practices Act, fraud, civil conspiracy, unjust enrichment, and recovery of avoided transfers under sections 547, 548 and 550 of the Bankruptcy Code. On December 7, 2021, the Trustee filed an amended version of the Complaint (the “Amended Complaint”), generally alleging the same claims asserted in the initial Complaint but (i) removing the claim for a violation of the South Carolina Unfair Trade Practices Act and (ii) adding a claim for breach of contract.

In the Amended Complaint, the Trustee asserted that Huron and the CRO, among others, did not develop and implement a Chapter 11 restructuring plan on a timely basis and that their failure to do so led to significant damages. The Trustee sought an unspecified amount of monetary damages in the Amended Complaint. We believe the Trustee’s allegations with respect to Huron and the CRO are without ~~merit~~merit. On December 21, 2021, we filed a motion to dismiss all of the claims in the Amended Complaint. On April 19, 2022, the bankruptcy court entered an order staying all of the Trustee’s claims against Huron and ~~will vigorously defend ourselves should any claim arising out of these alleged facts~~the CRO after (i) finding that the state law claims were subject to arbitration and ~~circumstances be asserted against us by~~(ii) exercising its discretion to stay the ~~Trustee.~~ non-state-law claims pending the arbitration proceeding. The Trustee has until May 3, 2022 to appeal the court’s order.Notwithstanding the foregoing, given the inherent risk and uncertainty associated with all litigation, we cannot estimate the potential liability with respect to such allegations at this time.

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

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 or subject to any claim that, in the current opinion of management, could reasonably be expected to 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 $0.7 million ~~and $1.6 million~~ were outstanding at ~~June 30, 2021~~both March 31, 2022 and December 31, ~~2020, respectively,~~2021, 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the total estimated fair value of our outstanding contingent consideration liability was ~~$1.8 million.~~$4.6 million and $3.7 million, respectively.

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 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.

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 3 operating segments, which are our reportable segments: Healthcare, Education and Commercial.

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and ~~Education.~~the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business. While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation.

•Healthcare

Our Healthcare segment serves acute care providers, including national and regional ~~hospitals, integrated~~ health systems, academic ~~medical centers,~~health systems, community health systems, and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical ~~groups.~~groups, payors, and long-term care or post-acute providers. Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services; digital solutions; organizational transformation; financial advisory and ~~digital, technology~~strategy and ~~analytic solutions.~~innovation. Most healthcare organizations are focused on ~~changing the way care is delivered;~~ establishing a sustainable long-term strategy and business model centered around optimal cost structures, reimbursement models and financial strategies; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital ~~technology and analytic capabilities.~~capabilities to more effectively manage their business. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry, functional and technical expertise to help clients solve a diverse set of business issues, including, but not limited to, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, ~~evolving organizational culture,~~ and maximizing return on technology investments.

•~~Business Advisory~~Education

Our ~~Business Advisory~~Education segment ~~works~~serves public and private colleges and universities, research institutes and other education-related organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student and alumni lifecycle; digital solutions; and organizational transformation. Our Education segment clients are increasingly faced with ~~C-suite executives, boards,~~strategic, financial and/or enrollment challenges as well as increased competition. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business ~~unit~~operations with technology; strengthening research strategies and ~~functional leadership across~~support services; evolving their organizational strategy; optimizing financial and operational performance; applying innovative enrollment strategies; and enhancing the student lifecycle.

•Commercial

Our Commercial segment is focused on serving industries and organizations facing significant disruption and regulatory change by helping them adapt to rapidly changing environments and accelerate business transformation. Our Commercial professionals work primarily with six primary buyers: the chief executive officer, the chief financial officer, the chief strategy officer, the chief human resources officer, the chief operating officer, and organizational advisors, including lenders and law firms. We have a ~~diverse set of organizations, including healthy, well-capitalized companies to~~deep focus on serving organizations in ~~transition, and across a broad range of industries, including life sciences,~~the financial services, ~~healthcare, education,~~ energy and utilities, industrials and manufacturing industries and the public ~~sector.~~sector while opportunistically serving the commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit. Our ~~Business Advisory~~Commercial professionals have deep industry, functional and technical expertise that they put forward when delivering our digital, ~~technology and analytics,~~ strategy and innovation and financial advisory (special situation advisory and corporate finance ~~and restructuring~~advisory) services. In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage. ~~Organizations also recognize the need to adopt technologies, automation and analytics to improve their operations and compete in a rapidly changing environment.~~ Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers in order to evolve their enterprise and business unit strategies, bringing new products to market, ~~and~~ managing through stressed and distressed situations to create a viable path forward for ~~stakeholders.~~stakeholders and executing mergers and acquisitions, finance offerings and risk mitigation strategies.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

•~~Education~~

Our Education segment serves public and private colleges and universities, academic medical centers, research institutes and other not-for-profit organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student lifecycle; digital, technology and analytic solutions; and organizational transformation. Our Education segment clients are increasingly faced with financial and/or demographic challenges as well as increased competition. To remain competitive, organizations must challenge traditional operating and financial models and reimagine strategic, operational and research-centered opportunities that advance their mission while strengthening their business models. We collaborate with clients to address these challenges and ensure they have a sustainable future. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; and enhancing the student lifecycle.

Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs include costs for corporate office support, certain office facility costs, costs relating to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management. Our chief operating decision maker does not evaluate segments using asset information.

The table below sets forth information about our operating segments for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.


	Three Months Ended March 31,
		2022			2021
Healthcare:
Revenues		$	121,876		$	95,975
Operating income		$	28,032		$	23,827
Segment operating income as a percentage of segment revenues		23.0		%	24.8		%
Education:
Revenues		$	80,662		$	51,342
Operating income		$	14,306		$	8,537
Segment operating income as a percentage of segment revenues		17.7		%	16.6		%
Commercial:
Revenues		$	57,511		$	55,896
Operating income		$	12,214		$	9,850
Segment operating income as a percentage of segment revenues		21.2		%	17.6		%
Total Huron:
Revenues		$	260,049		$	203,213
Reimbursable expenses		4,726			1,934
Total revenues and reimbursable expenses		$	264,775		$	205,147

Segment operating income		$	54,552		$	42,214
Items not allocated at the segment level:
Other operating expenses		33,548			28,879
Depreciation and amortization		5,046			5,095

Operating income		15,958			8,240
Other income (expense), net		22,169			(1,299)
Income before taxes		$	38,127		$	6,941

The following table illustrates the disaggregation of revenues by capability, including a reconciliation of the disaggregated revenues to revenues from our 3 operating segments for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31, 2022
	Healthcare		Education		Commercial		Total
Capability
Consulting and Managed Services	$	83,759	$	44,181	$	22,644	$	150,584
Digital	38,117		36,481		34,867		109,465
Total	$	121,876	$	80,662	$	57,511	$	260,049


	Three Months Ended March 31, 2021
	Healthcare		Education		Commercial		Total
Capability
Consulting and Managed Services	$	66,929	$	28,033	$	27,589	$	122,551
Digital	29,046		23,309		28,307		80,662
Total	$	95,975	$	51,342	$	55,896	$	203,213

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Healthcare:
Revenues $ 101,357 $ 85,356 $ 181,079 $ 180,934
Operating income $ 27,624 $ 21,171 $ 48,108 $ 45,221
Segment operating income as a percentage of segment revenues 27.3 % 24.8 % 26.6 % 25.0 %
Business Advisory:
Revenues $ 70,908 $ 70,470 $ 143,775 $ 135,375
Operating income $ 14,315 $ 16,684 $ 27,392 $ 26,526
Segment operating income as a percentage of segment revenues 20.2 % 23.7 % 19.1 % 19.6 %
Education:
Revenues $ 57,861 $ 62,031 $ 108,485 $ 124,167
Operating income $ 13,770 $ 16,128 $ 22,423 $ 29,244
Segment operating income as a percentage of segment revenues 23.8 % 26.0 % 20.7 % 23.6 %
Total Company:
Revenues $ 230,126 $ 217,857 $ 433,339 $ 440,476
Reimbursable expenses 3,252 2,970 5,186 22,273
Total revenues and reimbursable expenses $ 233,378 $ 220,827 $ 438,525 $ 462,749
Segment operating income $ 55,709 $ 53,983 $ 97,923 $ 100,991
Items not allocated at the segment level:
Other operating expenses 34,325 31,638 63,162 58,784
Litigation and other losses (gains) 0 0 42 (150)
Depreciation and amortization 5,255 6,391 10,350 12,438
Goodwill impairment charges1
0 0 0 59,816
Other expense (income), net (122) (1,032) 1,177 6,605
Income (loss) from continuing operations before taxes $ 16,251 $ 16,986 $ 23,192 $ (36,502)

~~(1) The non-cash goodwill impairment charges are not allocated at~~For the ~~segment level because the underlying goodwill asset is reflective~~three months ended March 31, 2022 and 2021, substantially all of our ~~corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.~~

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

~~The following table illustrates the disaggregation of~~ revenues ~~by billing arrangements, employee types,~~were recognized over time. At March 31, 2022 and ~~timing of revenue recognition, including a reconciliation of the disaggregated revenues to revenues from our 3 operating segments for the three and six months ended June 30, 2021 and 2020.~~

In conjunction with our continuous evaluation of the appropriate level of disaggregation of revenues as our business evolves and in consideration of a group hire of approximately 300 employees in our Healthcare Managed Services solution within our Healthcare segment in the second quarter of 2021, we began assessing our operating performance by the following three employee types: billable consultants, full-time equivalents, and Healthcare Managed Services employees. The disaggregation of revenues by employee type previously reported for the three and six months ended June 30, 2020 was revised below to reflect this change. This change has no impact on our consolidated total revenues or total revenues by segment.
Three Months Ended June 30, 2021
Healthcare Business Advisory Education Total
Billing Arrangements
Fixed-fee $ 55,095 $ 31,350 $ 17,886 $ 104,331
Time and expense 18,039 35,988 33,039 87,066
Performance-based 23,061 1,517 0 24,578
Software support, maintenance and subscriptions 5,162 2,053 6,936 14,151
Total $ 101,357 $ 70,908 $ 57,861 $ 230,126
Employee Type (1)
Revenue generated by billable consultants $ 66,810 $ 66,051 $ 49,291 $ 182,152
Revenue generated by full-time equivalents 20,498 4,857 8,570 33,925
Revenue generated by Healthcare Managed Services employees 14,049 — — 14,049
Total $ 101,357 $ 70,908 $ 57,861 $ 230,126
Timing of Revenue Recognition
Revenue recognized over time $ 99,884 $ 70,908 $ 57,861 $ 228,653
Revenue recognized at a point in time 1,473 0 0 1,473
Total $ 101,357 $ 70,908 $ 57,861 $ 230,126

Six Months Ended June 30, 2021
Healthcare Business Advisory Education Total
Billing Arrangements
Fixed-fee $ 103,390 $ 61,231 $ 33,145 $ 197,766
Time and expense 29,414 73,621 61,823 164,858
Performance-based 37,730 4,926 0 42,656
Software support, maintenance and subscriptions 10,545 3,997 13,517 28,059
Total $ 181,079 $ 143,775 $ 108,485 $ 433,339
Employee Type (1)
Revenue generated by billable consultants $ 118,555 $ 135,898 $ 91,819 $ 346,272
Revenue generated by full-time equivalents 40,727 7,877 16,666 65,270
Revenue generated by Healthcare Managed Services employees 21,797 — — 21,797
Total $ 181,079 $ 143,775 $ 108,485 $ 433,339
Timing of Revenue Recognition
Revenue recognized over time $ 178,648 $ 143,775 $ 108,485 $ 430,908
Revenue recognized at a point in time 2,431 0 0 2,431
Total $ 181,079 $ 143,775 $ 108,485 $ 433,339

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

Three Months Ended June 30, 2020
Healthcare Business Advisory Education Total
Billing Arrangements
Fixed-fee $ 50,803 $ 27,374 $ 11,397 $ 89,574
Time and expense 14,029 40,264 44,568 98,861
Performance-based 14,480 1,586 695 16,761
Software support, maintenance and subscriptions 6,044 1,246 5,371 12,661
Total $ 85,356 $ 70,470 $ 62,031 $ 217,857
Employee Type (1)
Revenue generated by billable consultants $ 55,249 $ 67,269 $ 53,187 $ 175,705
Revenue generated by full-time equivalents 22,821 3,201 8,844 34,866
Revenue generated by Healthcare Managed Services employees 7,286 — — 7,286
Total $ 85,356 $ 70,470 $ 62,031 $ 217,857
Timing of Revenue Recognition
Revenue recognized over time $ 84,941 $ 70,470 $ 62,030 $ 217,441
Revenue recognized at a point in time 415 0 1 416
Total $ 85,356 $ 70,470 $ 62,031 $ 217,857

Six Months Ended June 30, 2020
Healthcare Business Advisory Education Total
Billing Arrangements
Fixed-fee $ 106,588 $ 52,767 $ 24,572 $ 183,927
Time and expense 28,762 77,853 88,279 194,894
Performance-based 33,401 2,232 695 36,328
Software support, maintenance and subscriptions 12,183 2,523 10,621 25,327
Total $ 180,934 $ 135,375 $ 124,167 $ 440,476
Employee Type (1)
Revenue generated by full-time billable consultants $ 117,115 $ 129,226 $ 106,623 $ 352,964
Revenue generated by full-time equivalents 48,749 6,149 17,544 72,442
Revenue generated by Healthcare Managed Services employees 15,070 — — 15,070
Total $ 180,934 $ 135,375 $ 124,167 $ 440,476
Timing of Revenue Recognition
Revenue recognized over time $ 179,400 $ 135,375 $ 124,052 $ 438,827
Revenue recognized at a point in time 1,534 0 115 1,649
Total $ 180,934 $ 135,375 $ 124,167 $ 440,476

(1) Billable consultants consist of our consulting professionals who provide consulting services to our clients and are billable to our clients based on the number of hours worked. Full-time equivalent professionals consist of leadership coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients. Healthcare Managed Services employees manage and provide revenue cycle billing, collections, insurance verification and change integrity services to healthcare clients.

At June 30, 2021, one client in our Healthcare segment had a total receivable and unbilled services balance that accounted for 10.4%of our combined balance of receivables from clients, net and unbilled services, net. The outstanding balance for this client is the result of outstanding invoices due in the normal course of the contract payment terms and services performed in advance of the contract billing schedule. At December 31, ~~2020,~~2021, no single client accounted for greater than 10% of our combined balance of receivables from clients, net

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular amounts in thousands, except per share amounts)~~

~~(Unaudited)~~

and unbilled services, net. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ no single client generated greater than 10% of our consolidated revenues.

2320

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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 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,” “goals,” “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,~~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 Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 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 ~~consultancy~~professional services firm that collaborates with clients to ~~drive strategic growth, ignite innovation~~put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and ~~navigate constant change. Through a combination of strategy, expertise~~empowering businesses and ~~creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need~~their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business. While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation. See below for additional information on our operating industries and principal capabilities.

Operating Industries

We provide ~~professional~~our services ~~through~~and manage our business under three operating industries, which are also our operating segments: Healthcare, ~~Business Advisory,~~Education and ~~Education.~~Commercial.

•Healthcare

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evolving their digital ~~technology and analytic capabilities.~~capabilities to more effectively manage their business. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry, functional and technical expertise to help clients solve a diverse set of business issues, including, but not limited to, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, ~~evolving organizational culture,~~ and maximizing return on technology investments.

•~~Business Advisory~~Education

•Commercial

Capabilities

~~Table~~Within each of ~~Contents~~

our reportable segments, we provide services under two principal capabilities: i) Consulting and Managed Services and ii) Digital.

•~~Education~~Consulting and Managed Services

Our ~~Education segment serves public~~Consulting and ~~private colleges~~Managed Services capabilities represent all of our management consulting services, managed services (excluding technology-related managed services) and ~~universities, academic medical centers, research institutes~~outsourcing services delivered across industries. Our Consulting and ~~other not-for-profit organizations.~~ Managed Services experts help our clients address a variety of strategic, operational, financial, people and organizational-related challenges.

•Digital

Our ~~Education professionals have a depth~~Digital capabilities represent all of ~~expertise in strategy and innovation; business operations, including the research enterprise and student lifecycle; digital,~~our technology and ~~analytic solutions;~~analytics services, including technology-related managed services, and ~~organizational transformation.~~software products revenue delivered across industries. Our ~~Education segment~~Digital experts help our clients are increasingly faced with financial and/or demographic challenges as well as increased competition. To remain competitive, organizations must challenge traditional operating and financial models and reimagine strategic, operational and research-centered opportunities that advance their mission while strengthening theiraddress a variety of business models. We collaborate with clients to address these challenges and ensure they have a sustainable future. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, ~~transforming business operations~~designing and implementing technologies to accelerate transformation, facilitate data-driven decision making and improve customer and employee experiences.

We have expanded our ecosystem to work with ~~technology; strengthening research strategies~~more than 25 technology partners, and ~~support services; evolving their organizational strategy; optimizing financial and operational performance; and enhancing the student lifecycle.~~

~~Huron is~~we are 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)~~Business Strategy, Opportunities and Challenges

~~The worldwide spread~~Our primary strategy is to be the premier transformation partner to our clients, meeting their needs by providing a balanced portfolio of ~~COVID-19 beginning~~service and product offerings so that we can adapt quickly and effectively to emerging opportunities in ~~2020 has created significant volatility, uncertainty and disruption to~~ the ~~global economy. This pandemic has had an unfavorable impact on aspects of~~marketplace. To achieve our ~~business, operations,~~strategic and financial ~~results,~~objectives, we remain focused on accelerating growth in healthcare and ~~has caused us to significantly change the way we operate. Near the end of the first quarter of 2020, we suspended almost all business travel and~~education, growing our employees 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 effectively serve clients in a remote work environment. As state and 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 June 30, 2021, our employees continue to primarily work from their homes; however, most of our offices are open and we are providing our employees the flexibility to choose to work remotely, from our offices, or from client sites as needed and in accordance with recommended public health guidelines.

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 the COVID-19 pandemic. However, since the beginning of the pandemic, some clients reprioritized and delayed projects which negatively impacted demand for certain offerings, particularly within our Healthcare and Education segments. Conversely, the COVID-19 pandemic strengthened demand for other services we provide, such as our cloud-based technology and analytics solutions within our Business Advisory segment and our restructuring and capital advisory solutions provided to organizations in transition also within our Business Advisory segment.

~~In the second quarter of 2021, we saw strengthened demand for services in our Healthcare and Business Advisory segments. As a result, while total revenues~~presence in the ~~first six months~~commercial industries, advancing our integrated digital platform, building a more sustainable base of 2021 decreased 1.6% compared to the first six months of 2020, total revenues in the second quarter of 2021 increased 5.6% compared to the second quarter of 2020 and increased 13.2% from the first quarter of 2021, and we expect continued revenue ~~growth in the second half of 2021 compared to the second half of 2020.~~

In order to support our liquidity during the COVID-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 2020 and reducing discretionary operating and capital spending. In the second, third and fourth quarters of 2020, we made repayments on our borrowings to reduce our total debt outstanding to pre-pandemic levels due to our ability to maintain adequate cash flows from operations and improved clarity around access to capital resources. In the first six months of 2021, we borrowed under our credit 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 employer portion of social security taxes beginning in April 2020 and through December 31, 2020, as provided for under the CARES Act. These deferred payments are due in equal installments in the fourth quarters of 2021 and 2022. See the “Liquidity and Capital Resources” section below for additional information on these items.

~~Enterprise Resource Planning System Implementation~~

In the fourth quarter of 2019, we began the implementation of a new cloud-based enterprise resource planning (“ERP”) system designed to improve the efficiency of our internal finance, human resources, resource planning, and administrative operations. In January 2021, we successfully went live with the new ERP system, and we continue to progress with additional functionality and integrations as scheduled. The implementation progressed on schedule and was not significantly impacted by the COVID-19 pandemic due to the ability of our implementation team to work and collaborate remotely and the enhanced 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~~more consistent growth, strategically deploying capital to accelerate our strategy and ~~provide more robust management reporting~~return capital to shareholders, and ~~data analytics to support future growth~~investing in and ~~the goals~~growing our talented team, including attracting and ~~vision of the company.~~retaining our

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~~How~~managing directors, our senior most practitioners that lead our revenue generation efforts. We ~~Generate Revenues~~

~~A large portion~~regularly evaluate the performance of our businesses to ensure our investments meet these objectives.

COMPONENTS OF OPERATING RESULTS

Revenues

Our revenues isare primarily generated by our ~~billable consultants~~employees who provide consulting and other professional 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 coaches and their support staff from our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, and our employees who provide software support and maintenanceworked, 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. Another portion of our revenue is generated by our Healthcare Managed Services employees within our Healthcare segment. Our Healthcare Managed Services employees manage and provide revenue cycle billing, collections, insurance verification and change integrity services to clients.provided, or achieved outcomes. We refer to ~~our billable consultants, full-time equivalents and Healthcare Managed Services~~these employees as our revenue-generating professionals.

Revenues ~~generated by our billable consultants~~ are primarily driven by the number of ~~consultants~~revenue-generating professionals 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~~services. We also engage independent contractors to supplement our ~~Healthcare Managed Services employees are largely dependent~~revenue-generating professionals on ~~the number of Healthcare Managed Services employees we employ and the total value, scope and terms of the related contracts.~~client engagements as needed.

We generate our revenues from providing professional services and software products under the following four types of billing arrangements: fixed-fee (including software license revenue); time-and-expense; performance-based; and software support, maintenance and subscriptions.

•Fixed-fee (including software license revenue):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. It 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-date versus our estimates of the total services to be provided under the engagement. Contracts within our Culture and Organizational Excellence solution include fixed-fee partner contracts with multiple performance obligations (“Partner Contracts”), which primarily consist of coaching services, as well as speaking engagements, conferences, publications and software 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 goods 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 45.3% and 41.1% of our revenues for the three months ended June 30, 2021 and 2020, respectively, and 45.6% and 41.8% of our revenues for the six months ended June 30, 2021 and 2020, respectively.

~~Time-and-expense~~•Time-and-expense: Under time-and-expense billing arrangements, we 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 Culture and Organizational Excellence solution and the portion of our Healthcare Managed Services contracts that are billed under time-and-expense arrangements. We recognize revenues under time-and-expense billing arrangements as the related services or publications are provided. Time-and-expense engagements represented 37.8% and 45.4% of our revenues for the three months ended June 30, 2021 and 2020, respectively, and 38.0% and 44.2% of our revenues for the six months ended June 30, 2021 and 2020, respectively.clients.

•Performance-based: 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 recognize revenues under performance-based billing arrangements by 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 approach. Performance-based fee revenues represented 10.7% and 7.7% of our revenues for the three months ended June 30, 2021 and 2020, respectively, and 9.9% and 8.3% of our revenues for the six months ended June 30, 2021 and 2020, respectively. The level of performance-based fees earned may vary based on our ~~clients'~~clients’ risk sharing preferences and the mix of services we provide.

•Software support, maintenance and subscriptions: 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, maintenance and subscription revenues are recognized ratably over the support or subscription period. These fees are generally billed in advance and included in deferred revenues until recognized.

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~~Software support, maintenance~~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 ~~subscription~~ revenues ~~represented 6.2%~~ and ~~5.8%~~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 ~~our revenues~~work performed for ~~the three months ended June 30, 2021 and 2020, respectively, and 6.5% and 5.7% of our revenues for the six months ended June 30, 2021 and 2020, respectively.~~any particular client can vary widely from period to period.

Our quarterly results are impacted principally by the total value, scope, and terms of our ~~billable consultants’ utilization rate, the bill rates we charge our clients, and~~client contracts, the number of our revenue-generating professionals who are available to ~~work.~~work, our revenue-generating professionals' utilization rate, and the bill rates we charge our clients. 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~~Reimbursable Expenses

Reimbursable expenses that are billed to clients, primarily relating to travel and out-of-pocket expenses incurred in connection with client engagements, are included in total revenues and reimbursable expenses. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Subcontractors that are billed to clients at cost are also included in reimbursable expenses. When billings do not ~~provide us with a high degree~~specifically identify reimbursable expenses, we allocate the portion of ~~predictability as~~the billings equivalent to ~~performance in future periods. Unexpected changes in~~these expenses to reimbursable expenses.

We manage our business on the ~~demand for~~basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services ~~can result in significant variations in utilization and revenues and present a challenge~~because it eliminates the effect of reimbursable expenses that we bill 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.at cost.

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~~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
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Healthcare:
Revenues $ 101,357 $ 85,356 $ 181,079 $ 180,934
Operating income $ 27,624 $ 21,171 $ 48,108 $ 45,221
Segment operating income as a percentage of segment revenues 27.3 % 24.8 % 26.6 % 25.0 %
Business Advisory:
Revenues $ 70,908 $ 70,470 $ 143,775 $ 135,375
Operating income $ 14,315 $ 16,684 $ 27,392 $ 26,526
Segment operating income as a percentage of segment revenues 20.2 % 23.7 % 19.1 % 19.6 %
Education:
Revenues $ 57,861 $ 62,031 $ 108,485 $ 124,167
Operating income $ 13,770 $ 16,128 $ 22,423 $ 29,244
Segment operating income as a percentage of segment revenues 23.8 % 26.0 % 20.7 % 23.6 %
Total Company:
Revenues $ 230,126 $ 217,857 $ 433,339 $ 440,476
Reimbursable expenses 3,252 2,970 5,186 22,273
Total revenues and reimbursable expenses $ 233,378 $ 220,827 $ 438,525 $ 462,749
Statements of Operations reconciliation:
Segment operating income $ 55,709 $ 53,983 $ 97,923 $ 100,991
Items not allocated at the segment level:
Other operating expenses 34,325 31,638 63,162 58,784
Litigation and other losses (gains) — — 42 (150)
Depreciation and amortization 5,255 6,391 10,350 12,438
Goodwill impairment charges (1)
— — — 59,816
Operating income (loss) 16,129 15,954 24,369 (29,897)
Other income (expense), net 122 1,032 (1,177) (6,605)
Income (loss) from continuing operations before taxes 16,251 16,986 23,192 (36,502)
Income tax expense (benefit) 3,454 3,414 4,990 (7,801)
Net income (loss) from continuing operations $ 12,797 $ 13,572 $ 18,202 $ (28,701)
Earnings (loss) per share from continuing operations:
Basic $ 0.59 $ 0.62 $ 0.84 $ (1.31)
Diluted $ 0.59 $ 0.61 $ 0.82 $ (1.31)

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Three Months Ended
June 30, Six Months Ended
June 30,
Other Operating Data: 2021 2020 2021 2020
Number of billable consultants (at period end) (2):
Healthcare 779 855 779 855
Business Advisory 1,093 943 1,093 943
Education 746 780 746 780
Total 2,618 2,578 2,618 2,578
Average number of billable consultants (for the period) (2):
Healthcare 798 876 808 887
Business Advisory 1,094 925 1,087 922
Education 736 787 734 782
Total 2,628 2,588 2,629 2,591
Billable consultant utilization rate (3):
Healthcare 75.7 % 67.6 % 71.7 % 69.6 %
Business Advisory 70.4 % 75.8 % 69.5 % 73.7 %
Education 75.2 % 73.4 % 72.7 % 74.8 %
Total 73.3 % 72.4 % 71.1 % 72.7 %
Billable consultant average billing rate per hour (4):
Healthcare $ 251 $ 208 $ 233 $ 212
Business Advisory (5)
$ 185 $ 201 $ 194 $ 199
Education $ 189 $ 191 $ 182 $ 189
Total (5)
$ 206 $ 200 $ 202 $ 200
Revenue per billable consultant (in thousands):
Healthcare $ 84 $ 63 $ 147 $ 132
Business Advisory $ 60 $ 73 $ 125 $ 140
Education $ 67 $ 68 $ 125 $ 136
Total $ 69 $ 68 $ 132 $ 136
Average number of full-time equivalents (for the period) (6):
Healthcare 162 186 158 187
Business Advisory 55 25 45 22
Education 40 60 38 60
Total 257 271 241 269
Revenue per full-time equivalent (in thousands):
Healthcare $ 127 $ 123 $ 257 $ 261
Business Advisory $ 88 $ 128 $ 176 $ 275
Education $ 214 $ 147 $ 441 $ 292
Total $ 132 $ 129 $ 271 $ 269
Healthcare Managed Services Employees(7):
Total revenues (in thousands) $ 14,049 $ 7,285 $ 21,797 $ 15,069
Average number of Healthcare Managed Services employees (for the period) 431 94 270 93

~~(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.

~~(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 of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $201 and $220 for the three months ended June 30, 2021 and 2020, respectively; and $211 and $222 for the six months ended June 30, 2021 and 2020, respectively.

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~~Absent~~Operating Expenses

Our most significant expenses are costs classified as direct costs. Direct costs primarily consist of payroll costs which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes, and benefits for our revenue-generating professionals. Direct costs also include fees paid to independent contractors that we retain to supplement our revenue-generating professionals, typically on an as-needed basis for specific client engagements, and technology costs, product and event costs, and commissions. Direct costs exclude amortization of intangible assets and software development costs and reimbursable expenses, both of which are separately presented in our consolidated statements of operations.

Selling, general and administrative expenses consist primarily of salaries, performance bonuses, payroll taxes, benefits, and share-based compensation for our support personnel. Also included in selling, general and administrative expenses is third-party professional fees, software licenses and hosting expenses, rent and other office related expenses, sales and marketing related expenses, recruiting and training expenses, and practice administration and meetings expenses.

Other operating expenses include restructuring charges, depreciation expense, and amortization expense related to internally developed software costs and intangible assets acquired in business combinations. In the ~~impact~~first quarter of ~~Huron Eurasia India, Huron's~~2022, we began presenting depreciation and amortization expense inclusive of amortization of intangible assets and software development costs previously presented within total direct costs and reimbursable expenses. We have recast our historical presentation of our consolidated ~~average billing rate per hour would have been $213~~statement of operations for consistent presentation.

Segment Results

Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated costs include corporate 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 corporate office support costs, office facility costs, costs related to accounting and ~~$207 for the three months ended June 30, 2021~~finance, human resources, legal, marketing, information technology, and ~~2020, respectively; and $209 and $208 for the six months ended June 30, 2021 and 2020, respectively.~~

~~(6)Consists of coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules~~company-wide business development functions, as ~~needed by our clients, and full-time employees who provide software support and maintenance services~~well as costs related to ~~our clients.~~

~~(7)Consists of employees who manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients.~~overall corporate management.

Non-GAAP Measures

We also assess our results of operations using ~~certain~~the following non-GAAP financial ~~measures. These non-GAAP financial measures differ from GAAP because the non-GAAP financial measures we calculate to measure~~measures: earnings before interest, taxes, depreciation and amortization ~~("EBITDA"~~(“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, ~~from continuing operations,~~ and adjusted diluted earnings per share ("EPS"). These non-GAAP financial measures differ from ~~continuing operations~~GAAP because they 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
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Revenues $ 230,126 $ 217,857 $ 433,339 $ 440,476
Net income (loss) from continuing operations $ 12,797 $ 13,572 $ 18,202 $ (28,701)
Add back:
Income tax expense (benefit) 3,454 3,414 4,990 (7,801)
Interest expense, net of interest income 2,029 2,916 3,748 5,257
Depreciation and amortization 6,555 7,527 13,106 14,942
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) 24,835 27,429 40,046 (16,303)
Add back:
Restructuring and other charges 861 109 1,489 2,567
Litigation and other losses (gains) — — 42 (150)
Goodwill impairment charges — — — 59,816
Loss on sale of business — — — 102
Transaction-related expenses (29) — 141 —
Foreign currency transaction losses (gains), net (48) (81) 355 439
Adjusted EBITDA $ 25,619 $ 27,457 $ 42,073 $ 46,471
Adjusted EBITDA as a percentage of revenues 11.1 % 12.6 % 9.7 % 10.6 %

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Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Net income (loss) from continuing operations $ 12,797 $ 13,572 $ 18,202 $ (28,701)
Weighted average shares - diluted 21,871 22,116 22,105 21,848
Diluted earnings (loss) per share from continuing operations $ 0.59 $ 0.61 $ 0.82 $ (1.31)
Add back:
Amortization of intangible assets 2,289 3,194 4,688 6,403
Restructuring and other charges 861 109 1,489 2,567
Litigation and other losses (gains) — — 42 (150)
Goodwill impairment charges — — — 59,816
Loss on sale of business — — — 102
Transaction-related expenses (29) — 141 —
Tax effect of adjustments (827) (1,940) (1,685) (15,349)
Total adjustments, net of tax 2,294 1,363 4,675 53,389
Adjusted net income from continuing operations $ 15,091 $ 14,935 $ 22,877 $ 24,688
Adjusted weighted average shares - diluted 21,871 22,116 22,105 22,223
Adjusted diluted earnings per share from continuing operations $ 0.69 $ 0.68 $ 1.03 $ 1.11

These non-GAAP financial measures include adjustments for the following items:

Amortization of intangible assets: We ~~have excluded~~exclude the effect of amortization of intangible assets from the calculation of adjusted net income, ~~from continuing operations presented above. Amortization of intangible assets~~as it 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 lease impairment charges and accelerated depreciation 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~~exclude the effect of the restructuring ~~and other~~ charges from our non-GAAP measures to permit comparability with periods that ~~were~~are not impacted by these items.

~~Litigation and other~~Other losses (gains): We ~~have excluded~~exclude the effect of ~~a loss in the first quarter of 2021 from an increase~~other losses (gains), which primarily relate to changes in the estimated fair value of our ~~liability~~liabilities for contingent consideration ~~payments~~ related to a business ~~acquisition and a litigation settlement gain recognized in the first quarter of 2020~~acquisitions, to permit comparability with periods that ~~were~~are not impacted by these items.

~~Goodwill impairment charges:~~ We have excluded the effect of the goodwill impairment charges recognized in the first quarter of 2020 as these charges are infrequent events and their exclusion permits comparability with periods that were not impacted by such charges.

~~Loss on sale of business:~~ We excluded the effect of the loss on sale of a software-based solution within our Business Advisory segment in the first quarter of 2020. Divestitures of businesses are infrequent and are not indicative of the ongoing performance of our business.

Transaction-related expenses: To permit comparability with prior periods, we ~~excluded~~exclude the impact of third-party legal and accounting fees incurred related to business acquisitions.

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Unrealized gain on preferred stock investment: We exclude the effect of unrealized gains related to changes in the ~~first and second quarters~~fair value of ~~2021 related to the acquisition of Unico Solution,~~our preferred stock investment in Medically Home Group, Inc. ~~and ForceIQ, Inc.~~(“Medically Home”), which ~~closed effective February 1, 2021~~are recognized when an observable price change occurs. These unrealized gains are included as a component of other income (expense), net. We believe that these unrealized gains are not indicative of the ongoing performance of our business and ~~November 1, 2020, respectively.~~their exclusion permits comparability with prior periods.

Foreign currency transaction losses (gains), net: We ~~have excluded~~exclude 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 changes in foreign exchange rates.

Tax effect of adjustments: The non-GAAP income tax adjustment reflects the incremental tax impact applicable to the non-GAAP adjustments.

Income tax expense, Interest expense, net of interest income, Depreciation and amortization: We ~~have excluded~~exclude 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~~We include, 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,~~selling, general and administrative expenses on our consolidated statement of operations.

Revenue-Generating Professionals

Our revenue-generating professionals consist of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients.

Utilization Rate

The utilization rate of our revenue-generating professionals 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 billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

RESULTS OF OPERATIONS

Executive Highlights

Highlights from the first quarter of 2022 include:

~~Adjusted weighted average shares - diluted:~~ •~~As we reported a net loss~~Revenues increased 28.0% to $260.0 million for the first ~~six months~~quarter of ~~2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments described above resulted in adjusted net income~~2022 from ~~continuing operations~~$203.2 million for the first ~~six months~~quarter of ~~2020. Therefore, we included the dilutive common stock equivalents~~2021

•Revenues within our Digital capability increased 35.7% in the ~~calculation~~first quarter of ~~adjusted diluted weighted average shares outstanding for that period.~~

~~Table~~2022, compared to the first quarter of ~~Contents~~2021

•Operating margin increased to 6.1% for the first quarter of 2022, compared to 4.1% for the first quarter of 2021

•Diluted EPS increased to $1.27 for the first quarter of 2022, compared to $0.24 for the first quarter of 2021

•Adjusted diluted EPS increased to $0.49 for the first quarter of 2022, compared to $0.35 for the first quarter of 2021

~~Three Months Ended June 30, 2021 Compared~~•Returned $24.1 million to ~~Three Months Ended June 30, 2020~~

~~Revenues~~shareholders through share repurchases in the first quarter of 2022

Revenues increased ~~$12.3~~$56.8 million, or ~~5.6%~~28.0%, to ~~$230.1~~$260.0 million for the ~~second~~first quarter of ~~2021~~2022 from ~~$217.9~~$203.2 million for the ~~second~~first quarter of ~~2020.~~2021. The increase in revenues ~~is primarily related to~~reflects strengthened demand for services in all of our ~~Healthcare and Business Advisory~~ segments, as well as the favorable comparison against results for the ~~second~~first quarter of ~~2020 for the~~2021 in our Healthcare ~~segment,~~and Education segments which ~~was~~were more significantly impacted by the COVID-19 pandemic as some clients reprioritized and delayed certain projects as a result of the uncertainties surrounding the pandemic.The increase in revenues is partially offset by a decrease in demand for services in our Education segment during the second quarter of 2021 compared to the second quarter of 2020 as Education segment revenues were not significantly impacted by the COVID-19 pandemic until the second half of 2020.

Of the $12.3 million increase in revenues, $6.8 million was attributable to an increase in revenues generated by our Healthcare Managed Services employees and $6.4 million was attributable to an increase in revenues generated by our billable consultants, partially offset by a $0.9 million decrease in revenues generated by our full-time equivalents.

The increase in Healthcare Managed Services revenues was primarily attributable to an increase in demand for these services, which led to an increase in the average number of managed services employeespandemic. Beginning in the second quarter of 2021, we saw strengthened demand for our services and an increase in our pipeline that continued through 2021 and into 2022. Revenues for the first quarter of 2022 increased 4.7% compared to the ~~same prior year period. In the beginning of the second~~fourth quarter of ~~2021, we hired approximately 300 employees to expand~~2021.

In our ~~capacity to manage~~Consulting and ~~provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients. These employees are serving 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 increase in billable consultant~~capability, revenues reflected strengthened demand for services in our Healthcare segment, partially offset by decreases in demand for services in our Education and Business Advisory segments, as discussed below in Segment Results. The overall increase in billable consultant revenues was primarily attributable to overall increases in the average billing rate, the average number of billable consultants, and the consultant utilization rate for the ~~second~~first quarter of ~~2021~~2022 increased 22.9% compared to ~~the same prior year period.~~

The decrease in full-time equivalent revenues was primarily attributable to a decrease in full-time equivalent revenues in our Healthcare segment, partially offset by an increase in full-time equivalent revenues in our Business Advisory segment, as discussed below in Segment Results. The overall decrease in full-time equivalent revenues reflected an overall decrease in the average number of full-time equivalents, partially offset by an overall increase in revenue per full-time equivalent in the second quarter of 2021 compared to the same prior year period.

~~In most of 2020 and~~ the first quarter of 2021, and reflected strengthened demand in our Healthcare and Education segments. The utilization rate within our Consulting capability increased to 71.4% in the ~~COVID-19 pandemic negatively impacted sales~~first quarter of 2022, compared to 66.4% in the first quarter of 2021.

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Revenues within our Digital capability increased 35.7% in the first quarter of 2022 compared to the first quarter of 2021, and ~~elongated~~reflected strengthened demand in all of our segments. The utilization rate within our Digital capability increased to 72.4% in the ~~sales cycle~~first quarter of 2022, compared to 71.3% in the first quarter of 2021.

The total number of revenue-generating professionals increased to 4,023 as of March 31, 2022, compared to 3,116 as of March 31, 2021, as a result of the overall increase in demand for ~~new opportunities for certain~~our services, particularly within our Healthcare and Education segments, as ~~some clients reprioritized or delayed certain projects. During~~well as headcount increases in connection with business acquisitions. We proactively plan and manage the ~~first half~~size and composition of ~~2021, we saw an increase~~our workforce and take actions as needed to address changes in ~~our sales pipeline and~~ the ~~pace of signings in our Healthcare and Education businesses. As the overall~~anticipated demand for our services ~~strengthened in~~as payroll costs are the ~~second quarter~~most significant portion of our operating expenses.

Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 6.1% for the three months ended March 31, 2022 compared to 4.1% for the three months ended March 31, 2021, ~~we expect continued~~driven by strong revenue growth that outpaced increases in ~~the second half of 2021 compared~~operating expenses.

Net income increased $21.4 million to ~~the second half of 2020.~~

~~Total Direct Costs~~

~~Direct costs, excluding amortization of intangible assets and software development costs, increased $12.0 million, or 8.0%, to $161.5~~$26.9 million for the three months ended March 31, 2022 from $5.4 million for the same period last year. The increase in net income was primarily attributable to a $19.8 million unrealized gain, net of tax, related to the increase in the fair value of our preferred stock investment in Medically Home. As a result of the increase in net income, diluted earnings per share for the first quarter of 2022 was $1.27 compared to $0.24 for the first quarter of 2021. Adjusted diluted earnings per share was $0.49 for the first quarter of 2022, compared to $0.35 for the first quarter of 2021.

During the first quarter of 2022, we repurchased 523,399 shares for $23.9 million and settled the repurchase of 3,820 shares for $0.2 million that were accrued as of December 31, 2021 for a total repurchase of 527,219 shares for $24.1 million.

Summary of Results

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business. While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation.

The following table sets forth, for the periods indicated, selected segment and consolidated operating results and other operating data, including non-GAAP measures.


Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended March 31,
		2022			2021
Healthcare:
Revenues		$	121,876		$	95,975
Operating income		$	28,032		$	23,827
Segment operating income as a percentage of segment revenues		23.0		%	24.8		%
Education:
Revenues		$	80,662		$	51,342
Operating income		$	14,306		$	8,537
Segment operating income as a percentage of segment revenues		17.7		%	16.6		%
Commercial:
Revenues		$	57,511		$	55,896
Operating income		$	12,214		$	9,850
Segment operating income as a percentage of segment revenues		21.2		%	17.6		%
Total Huron:
Revenues		$	260,049		$	203,213
Reimbursable expenses		4,726			1,934
Total revenues and reimbursable expenses		$	264,775		$	205,147

Segment operating income		$	54,552		$	42,214

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Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended March 31,
		2022			2021
Items not allocated at the segment level:
Other operating expenses		33,548			28,879
Depreciation and amortization		5,046			5,095
Operating income		15,958			8,240
Other income (expense), net		22,169			(1,299)
Income before taxes		38,127			6,941
Income tax expense		11,275			1,536
Net income		$	26,852		$	5,405
Earnings per share:
Basic		$	1.29		$	0.25
Diluted		$	1.27		$	0.24

Other Operating Data:
Number of revenue-generating professionals by segment (at period end)(5):
Healthcare		1,647			1,130
Education		1,231			871
Commercial (1)		1,145			1,115
Total		4,023			3,116

Revenue by capability:
Consulting and Managed Services (2)		$	150,584		$	122,551
Digital		109,465			80,662
Total		$	260,049		$	203,213

Number of revenue-generating professionals by capability (at period end):
Consulting and Managed Services (3)		2,003			1,376
Digital		2,020			1,740
Total		4,023			3,116

Utilization rate by capability(4):
Consulting		71.4		%	66.4		%
Digital		72.4		%	71.3		%

(1)The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education.

(2)Managed Services capability revenue within our Healthcare segment for the three months ended March 31, 2022 and March 31, 2021 was $13.8 million and $7.7 million, respectively.

Managed Services capability revenue within our Education segment for the three months ended March 31, 2022 and March 31, 2021 was $3.4 million and $2.2 million, respectively.

(3)The number of Managed Services revenue-generating professionals within our Healthcare segment as of March 31, 2022 and March 31, 2021 was 543 and 114, respectively.

The number of Managed Services revenue-generating professionals within our Education segment as of March 31, 2022 and March 31, 2021 was 92 and 52, respectively.

(4)Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

(5)During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation.

The number of revenue-generating professionals within our Healthcare segment at December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021 were 1,117; 1,130; 1,443; 1,575; and 1,596, respectively.

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The number of revenue-generating professional within our Education segment at December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021 were 873; 871; 885; 958; and 1,050, respectively.

The number of revenue-generating professional within our Commercial segment at December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021 were 1,059; 1,115; 1,131; 1,191; and 1,130, respectively.

Non-GAAP Measures


	Three Months Ended March 31,
		2022			2021
Revenues		$	260,049		$	203,213
Net income		$	26,852		$	5,405
Add back:
Income tax expense		11,275			1,536
Interest expense, net of interest income		2,196			1,719
Depreciation and amortization		7,122			6,551
Earnings before interest, taxes, depreciation and amortization (EBITDA)		47,445			15,211
Add back:
Restructuring charges		1,555			628
Other losses		12			42


Transaction-related expenses		50			170
Unrealized gain on preferred stock investment		(26,964)			—
Foreign currency transaction losses, net		19			403
Adjusted EBITDA		$	22,117		$	16,454
Adjusted EBITDA as a percentage of revenues		8.5		%	8.1		%


	Three Months Ended March 31,
		2022		2021
Net income		$	26,852	$	5,405
Weighted average shares - diluted		21,167		22,341
Diluted earnings per share		$	1.27	$	0.24
Add back:
Amortization of intangible assets		2,860		2,399
Restructuring and other charges		1,555		628
Other losses		12		42


Transaction-related expenses		50		170
Unrealized gain on preferred stock investment		(26,964)		—
Tax effect of adjustments		5,959		(858)


Total adjustments, net of tax		(16,528)		2,381
Adjusted net income		$	10,324	$	7,786
Adjusted weighted average shares - diluted		21,167		22,341
Adjusted diluted earnings per share		$	0.49	$	0.35

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Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Revenues

Revenues by segment and capability for the three months ended March 31, 2022 and 2021 were as follows:


Revenues (in thousands)	Three Months Ended March 31,				Percent Increase (Decrease)
	2022		2021
Segment:
Healthcare	$	121,876	$	95,975	27.0	%
Education	80,662		51,342		57.1	%
Commercial	57,511		55,896		2.9	%
Total revenues	$	260,049	$	203,213	28.0	%

Capability:
Consulting and Managed Services	$	150,584	$	122,551	22.9	%
Digital	109,465		80,662		35.7	%
Total revenues	$	260,049	$	203,213	28.0	%

Revenues increased $56.8 million, or 28.0%, to $260.0 million for the first quarter of 2022 from ~~$149.5~~$203.2 million for the first quarter of 2021. The increase in revenues reflects strengthened demand for services in all of our segments, as well as the favorable comparison against results for the first quarter of 2021 in our Healthcare and Education segments which were more significantly impacted by the COVID-19 pandemic as some clients reprioritized and delayed certain projects as a result of the uncertainties surrounding the pandemic. Additional information on our revenues by segment follows.

•Healthcare revenues increased $25.9 million, or 27.0%, driven by strengthened demand for our performance improvement and revenue cycle managed services solutions within our Consulting and Managed Services capability, as well as strengthened demand for our technology and analytics services within our Digital capability. Revenues in the first quarter of 2022 included $0.6 million of incremental revenues from our acquisition of Perception Health, Inc., which was completed in December 2021.

The number of revenue-generating professionals within our Healthcare segment grew 45.8% to 1,647 as of March 31, 2022, compared to 1,130 as of March 31, 2021, including an increase of 429 revenue-generating professionals within our Managed Services capability.

•Education revenues increased $29.3 million, or 57.1%, driven by strengthened demand for our research, strategy and operations, and student solutions within our Consulting and Managed Services capability, as well as strengthened demand for our technology and analytics services within our Digital capability. Revenues in the first quarter of 2022 included $2.3 million of incremental revenues from our acquisition of Whiteboard Communications Ltd., which was completed in December 2021.

The number of revenue-generating professionals within our Education segment grew 41.3% to 1,231 as of March 31, 2022, compared to 871 as of March 31, 2021.

•Commercial revenues increased $1.6 million, or 2.9%, driven by strengthened demand for our technology and analytics services within our Digital capability, partially offset by a decrease in revenues due to the divestiture of our Life Sciences business in the fourth quarter of 2021 as well as a decrease in demand for our financial advisory solutions within the Consulting and Managed Services capability. The Life Sciences business generated $4.7 million of revenues in the first quarter of 2021. Revenues in the first quarter of 2022 included $1.0 million of incremental revenues from our acquisitions of Unico Solution, Inc. and AIMDATA, LLC, which were completed in February 2021 and January 2022, respectively.

The number of revenue-generating professionals within our Commercial segment grew 2.7% to 1,145 as of March 31, 2022, compared to 1,115 as of March 31, 2021. This increase includes the impact of the divestiture of our Life Sciences business, which employed 73 revenue-generating professionals as of March 31, 2021.

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Operating Expenses

Operating expenses for the first quarter of 2022 increased $51.9 million, or 26.4%, over the first quarter of 2021.

Operating expenses and operating expenses as a percentage of revenues were as follows:


Operating Expenses (in thousands, except amounts as a percentage of revenues)	Three Months Ended March 31,						Increase / (Decrease)
	2022			2021
Direct costs	$	187,247	72.0%	$	148,115	72.9%	$	39,132
Reimbursable expenses	4,756		1.8%	2,003		1.0%	2,753
Selling, general and administrative expenses	48,395		18.6%	39,808		19.6%	8,587
Restructuring charges	1,555		0.6%	628		0.3%	927
Depreciation and amortization	6,864		2.7%	6,353		3.1%	511
Total operating expenses	$	248,817	95.7%	$	196,907	96.9%	$	51,910

Direct Costs

Direct costs increased $39.1 million, or 26.4%, to $187.2 million for the three months ended ~~June 30, 2020.~~March 31, 2022 from $148.1 million for the three months ended March 31, 2021. The ~~$12.0~~$39.1 million increase primarily related to ~~an $9.2~~a $33.0 million increase in ~~salaries and related expenses~~payroll costs for our revenue-generating professionals, ~~a $1.8 million increase~~driven by increased headcount, annual salary increases that went into effect in ~~signing, retention~~the first quarter of 2022, and ~~other bonus expense for our revenue-generating professionals, and a $1.7 million~~an increase in performance bonus ~~expense for our revenue-generating professionals. These increases in direct costs were partially offset by~~expense; as well as a ~~$1.0~~$4.6 million ~~decrease~~increase in contractor ~~expense.~~expense and a $1.5 million increase in technology costs. As a percentage of revenues, direct costs ~~increased~~decreased to ~~70.2%~~72.0% during the ~~second~~first quarter of 2022, compared to 72.9% during the first quarter of 2021, ~~compared to 68.6% during the second quarter of 2020,~~ primarily due to revenue growth that outpaced the ~~increases~~increase in ~~salaries and related expenses and signing, retention and other bonus expense~~payroll costs for our revenue-generating professionals, ~~as percentages of revenues,~~ partially offset by the ~~decrease~~increase in contractor ~~expense.~~expense, as a percentage of revenues.

~~Total direct costs for the three months ended June 30, 2021 included $0.9 million of amortization expense for internal software development costs~~Reimbursable Expenses

Reimbursable expenses are billed to clients at cost and ~~intangible assets, compared~~primarily relate to ~~$1.3 million of amortization expense for the same prior year period. Intangible asset amortization included within direct costs for the three months ended June 30, 2021~~travel and ~~2020 primarily related to technology and software, certain customer relationships and customer contracts acquired~~out-of-pocket expenses incurred in connection with client engagements. These expenses are also included in total revenues and reimbursable expenses. We manage our business ~~acquisitions. See Note 4 "Goodwill~~on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that are also included as a component of operating expenses.

Selling, General and ~~Intangible Assets" within the notes to our consolidated financial statements for additional information on our intangible assets.~~

~~Operating~~Administrative Expenses ~~and Other Losses (Gains), Net~~

Selling, general and administrative expenses increased by ~~$0.3~~$8.6 million, or ~~0.7%~~21.6%, to ~~$45.2~~$48.4 million in the ~~second~~first quarter of ~~2021~~2022 from ~~$44.9~~$39.8 million in the ~~second~~first quarter of ~~2020.~~2021. The ~~overall $0.3~~$8.6 million increase primarily related to a ~~$1.0~~$5.1 million increase in ~~legal expenses, a $0.9 million~~payroll costs for our support personnel, driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2022, and increases in performance bonus expense ~~for our support personnel,~~ and ~~a $0.6 million increase in software and data hosting expenses. These increases were largely~~share-based compensation expense, partially offset by a ~~$1.8~~$3.4 million decrease in deferred compensation expense attributable to the change in the market value of our deferred compensation ~~liability, and a $0.7 million~~liability. The decrease in ~~share-based~~deferred compensation expense ~~for our support personnel. During the second quarter of~~

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~~2021, the market value of our deferred compensation liability increased by $2.1 million, compared to a $3.9 million increase in the second quarter of 2020. This $1.8 million decrease in expense~~ is fully offset by a ~~$1.8 million~~ decrease 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 ~~decrease~~overall increase in ~~share-based compensation expense primarily related~~selling, general and administrative expenses also includes a $3.5 million increase in non-payroll costs which includes a $0.9 million increase in software and data hosting expenses, a $0.9 million increase in legal fees, and a $0.8 million increase in promotion and marketing expenses. These increases to non-payroll costs were partially offset by a ~~decrease in~~$1.0 million gain recognized on the ~~expected funding~~sale of ~~performance-based share awards for~~ our ~~executive officers recorded~~aircraft in the first quarter of ~~2021.~~2022. As a percentage of revenues, selling, general and administrative expenses decreased to 18.6% during the first quarter of 2022, compared to 19.6% during the ~~second~~first quarter of ~~2021 compared to 20.6% during the second quarter of 2020.~~2021. This decrease was primarily attributable to the decrease in deferred compensation ~~expense.~~expense in the first quarter of 2022 compared to the first quarter of 2021.

Restructuring Charges

Restructuring charges for the ~~second~~first quarter of ~~2021~~2022 were ~~$0.9~~$1.6 million, compared to ~~$0.1~~$0.6 million for the ~~second~~first quarter of ~~2020.~~2021. The ~~$0.9~~$1.6 million of restructuring charges ~~recognized~~incurred in the ~~second~~first quarter of 2022 included $0.6 million for rent and related expenses, net of sublease income, for previously vacated office spaces, $0.5 million of employee-related expenses, $0.3 million of accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use, and $0.1 million for third-party transaction expenses related to the modification of our operating model. The $0.6 million of restructuring charges incurred in the first quarter of 2021 primarily related to rent and related expenses, net of sublease income, and accelerated depreciation on furniture and fixtures for vacated office spaces. ~~See Note 8 "Restructuring Charges" within the notes to our consolidated financial statements for additional information on our restructuring charges.~~

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Depreciation and Amortization

Depreciation and amortization expense, ~~decreased $0.7~~which includes amortization of intangible assets and software development costs previously presented separately, increased $0.5 million, or ~~12.1%~~8.0%, to ~~$5.4~~$6.9 million for the three months ended ~~June 30, 2021~~March 31, 2022, compared to ~~$6.2~~$6.4 million for the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~$0.7~~$0.5 million ~~decrease~~increase in depreciation and amortization expense was primarily attributable to ~~decreasing~~an increase in amortization ~~expense for customer relationships~~of intangible assets acquired in business acquisitions ~~due~~completed subsequent to the ~~accelerated basis~~first quarter of amortization in prior periods, including the customer relationships acquired in our Studer Group acquisition; and customer relationships acquired in other business acquisitions that were fully amortized in prior periods; as well as a decrease in depreciation expense for leasehold improvements and furniture and fixtures related to vacated office spaces. Intangible asset amortization expense included within operating expenses primarily related to certain customer relationships, trade names, and non-competition agreements acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on our intangible assets.2021.

Operating Income and Operating Margin

Operating income increased ~~$0.2~~$7.7 million to ~~$16.1 million in the second quarter of 2021 from~~ $16.0 million in the ~~second~~first quarter of ~~2020 as~~2022 from $8.2 million in the ~~increase in revenues was largely offset by the increases in direct costs and selling, general and administrative expenses previously discussed.~~first quarter of 2021. Operating margin, which is defined as operating income expressed as a percentage of revenues, ~~was 7.0%~~increased to 6.1% for the three months ended ~~June 30, 2021~~March 31, 2022, compared to ~~7.3%~~4.1% for the three months ended ~~June 30, 2020. The decrease in~~March 31, 2021.

Operating income and operating margin ~~was~~for each of our segments is as follows. See the Segment and Consolidated Operating Results table above for a reconciliation of our total segment operating income to consolidated Huron operating income.


Segment Operating Income (in thousands, except operating margin percentages)	Three Months Ended March 31,								Increase / (Decrease)
	2022				2021
Healthcare	$	28,032	23.0	%	$	23,827	24.8	%	$	4,205
Education	14,306		17.7	%	8,537		16.6	%	5,769
Commercial	12,214		21.2	%	9,850		17.6	%	2,364
Total segment operating income	$	54,552			$	42,214			$	12,338

•Healthcare operating income increased primarily ~~attributable~~due to the increase in revenues, partially offset by an increase in payroll costs for our revenue-generating professionals. The increase in payroll costs was driven by an increase in headcount, annual salary increases that went into effect in ~~salaries~~the first quarter of 2022, and ~~related expenses~~an increase in performance bonus expense. Healthcare operating margin decreased primarily due to the increased payroll costs for our revenue-generating professionals, as a percentage of revenues.

•Education operating income increased primarily due to the increase in revenues, partially offset by an increase in payroll costs for our revenue-generating professionals and ~~signing, retention~~an increase in contractor expense. The increase in payroll costs was driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2022, and ~~other~~an increase in performance bonus ~~expense~~expense. Education operating margin increased due to revenue growth that outpaced the increase in payroll costs, partially offset by the increase in contractor expenses, as a percentage of revenues.

•Commercial operating income increased primarily due to the increase in revenues and a decrease in payroll costs for our revenue-generating professionals, partially offset by an increase in contractor expense. The decrease in payroll costs for our revenue-generating professionals was primarily driven by the divestiture of our Life Sciences business in the fourth quarter of 2021, partially offset by an increase in performance bonus expense. Commercial operating margin increased due to the decrease in ~~deferred compensation expense attributable to the change in the market value of~~payroll costs for our ~~deferred compensation liability and the decrease~~revenue-generating professionals, partially offset by increases in contractor ~~expense.~~expense and payroll costs for our support personnel, as percentages of revenues.

~~Total~~ Other Income (Expense), Net

Interest expense, net of interest income ~~decreased $0.9~~increased $0.5 million to ~~$2.0~~$2.2 million in the ~~second~~first quarter of 2022 from $1.7 million in the first quarter of 2021 ~~from $2.9 million in the second quarter of 2020. The decrease in interest expense was~~ primarily attributable to ~~lower~~higher levels of borrowing under our credit facility during the ~~second~~first quarter of ~~2021~~2022 compared to the ~~same prior year period.~~first quarter of 2021. See “Liquidity and Capital Resources” below and Note 7 ~~"Financing Arrangements"~~“Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.

Other income, net ~~decreased $1.8~~increased $23.9 million to ~~$2.2~~$24.4 million in the ~~second~~first quarter of ~~2021~~2022 from ~~$3.9~~$0.4 million in the ~~second~~first quarter of ~~2020.~~2021. The ~~decrease~~increase in other income, net was primarily attributable to a $27.0 million unrealized gain related to the ~~$1.8~~increase in the fair value of our preferred stock investment in Medically Home. See Note 10 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our preferred stock investment in Medically Home. This increase was partially offset by the $3.4 million decrease in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability. During the ~~second~~first quarter of ~~2021,~~2022, we recognized a ~~$2.1~~$2.6 million ~~gain~~loss for the market value of our deferred compensation investments compared to a ~~$3.9~~$0.8 million gain recognized in the ~~second~~first quarter of ~~2020.~~2021.

Income Tax Expense

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tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.

For the three months ended March 31, 2021, our effective tax rate was ~~21.3%~~22.1% as we recognized income tax expense ~~from continuing operations~~ of ~~$3.5~~$1.5 million on income ~~from continuing operations~~ of ~~$16.3~~$6.9 million. The effective tax rate of ~~21.3%~~22.1% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6%, primarily due to a discrete tax benefit ~~related to electing~~for share-based compensation awards that vested during the Global Intangible Low-Taxed Income ("GILTI") high-tax exclusion retroactively for the 2018 tax year. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allow certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from their GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available.first quarter of 2021. This favorable item was partially offset by certain nondeductible expense items.

For the three months ended June 30, 2020, our effective tax rate was 20.1% as we recognized income tax expense from continuing operations of $3.4 million on income from continuing operations of $17.0 million. The effective tax rate of 20.1% was more favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to the year-to-date pre-tax losses and the impact during the quarter of certain nondeductible expense items, including the nondeductible portion of the goodwill impairment charges, based on the attribution of those expenses to the quarter in accordance with the allocation of income tax expense on a current year-to-date basis. The effective tax rate also reflected the positive impact of certain federal tax credits. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the goodwill impairment charges recognized in the first quarter of 2020.

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~~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 $0.8~~increased $21.4 million to ~~$12.8~~$26.9 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$13.6~~$5.4 million for the same period last year. The increase in net income was primarily attributable to a $19.8 million unrealized gain, net of tax, related to the increase in the fair value of our preferred stock investment in Medically Home. As a result of the ~~decrease~~increase in net income, ~~from continuing operations,~~ diluted earnings per share ~~from continuing operations~~ for the ~~second~~first quarter of ~~2021~~2022 was ~~$0.59~~$1.27 compared to ~~$0.61~~$0.24 for the ~~second~~first quarter of ~~2020.~~2021.

EBITDA and Adjusted EBITDA

EBITDA ~~decreased $2.6~~increased $32.2 million to ~~$24.8~~$47.4 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$27.4~~$15.2 million for the three months ended ~~June 30, 2020. Adjusted EBITDA decreased $1.8 million to $25.6 million in the second quarter of 2021 from $27.5 million in the second quarter of 2020.~~March 31, 2021. The ~~decrease~~increase in EBITDA was primarily attributable to anthe $27.0 million unrealized gain related to the increase in ~~corporate expenses~~the fair value of our preferred stock investment as well as the increase in segment operating income, partially offset by an increase in ~~segment operating income.~~corporate expenses.

Adjusted EBITDA increased $5.7 million to $22.1 million in the first quarter of 2022 from $16.5 million in the first quarter of 2021. The ~~decrease~~increase in adjusted EBITDA was primarily attributable to the increase in segment operating income, partially offset by an increase in corporate expenses, excluding the impact of restructuring charges ~~not allocated at the segment level, partially offset by an increase in segment operating income. See "Segment Results" below for additional information~~ on ~~segment operating income.~~these items.

Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share

Adjusted net income ~~from continuing operations~~ increased ~~$0.2~~$2.5 million to ~~$15.1~~$10.3 million in the ~~second~~first quarter of ~~2021~~2022 compared to ~~$14.9~~$7.8 million in the ~~second~~first quarter of ~~2020.~~2021. As a result of the increase in adjusted net income, ~~from continuing operations,~~ adjusted diluted earnings per share ~~from continuing operations~~ was ~~$0.69~~$0.49 for ~~the second quarter of 2021, compared to $0.68 for the second quarter of 2020.~~

~~Segment Results~~

~~Healthcare~~

~~Revenues~~

Healthcare segment revenues increased $16.0 million, or 18.7%, to $101.4 million for the second quarter of 2021 from $85.4 million for the second quarter of 2020 due to strengthened demand for services in this segment in the second quarter of 2021 as well as the favorable comparison against the second quarter of 2020, which was more significantly impacted by the COVID-19 pandemic as some clients reprioritized and delayed certain projects as a result of the uncertainties surrounding the pandemic.

During the three months ended June 30, 2021, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 54.3%, 17.8%, 22.8%, and 5.1% of this segment’s revenues, respectively, compared to 59.5%, 16.4%, 17.0%, and 7.1% of this segment’s revenues, respectively, for the same prior year period. Performance-based fee revenue was $23.1 million for the second quarter of 2021 compared to $14.5 million for the second quarter of 2020. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.

Of the overall $16.0 million increase in revenues, $11.5 million was attributable to an increase in revenues from our billable consultants and $6.8 million was attributable to an increase in revenues from our Healthcare Managed Services employees, partially offset by a $2.3 million decrease in revenues from our full-time equivalents.

The increase in revenues attributable to our billable consultants reflected increases in the average billing rate and the consultant utilization rate, partially offset by a decrease in the average number of billable consultants in the second quarter of 2021 compared to the same prior year period. The increase in Healthcare Managed Services revenues was primarily attributable to an increase in demand for these services, which led to an increase in the average number of managed services employees in the second quarter of 2021 compared to the same prior year period. In the beginning of the second quarter of 2021, we hired approximately 300 employees to expand our capacity to manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients. These employees are serving 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 decrease in revenues from our full-time equivalents was primarily driven by a decrease in demand for certain services and a decreased use of contractors and project consultants; and reflected a decrease in the average number of full-time equivalents, partially offset by an increase in revenue per full-time equivalent in the second quarter of 2021 compared to the same prior year period.

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~~Operating Income~~

Healthcare segment operating income increased $6.5 million, or 30.5%, to $27.6 million for the three months ended June 30, 2021 from $21.2 million for the three months ended June 30, 2020. The Healthcare segment operating margin, defined as segment operating income expressed as a percentage of segment revenues, increased to 27.3% for the second quarter of 2021 from 24.8% in the same period last year. The increase in this segment’s operating margin was primarily attributable to revenue growth that outpaced an increase in salaries and related expenses for our revenue-generating professionals as well as decreases in salaries and related expenses for our support personnel, contractor expense, technology expenses, and amortization of intangible assets included in direct costs. These increases to the operating margin were offset by increases in performance bonus expense for our revenue-generating professionals and signing, retention and other bonus expense for our revenue-generating professionals, as percentages of revenues.

~~Business Advisory~~

~~Revenues~~

Business Advisory segment revenues increased $0.4 million, or 0.6%, to $70.9 million for the second quarter of 2021 from $70.5 million for the second quarter of 2020, primarily related to strengthened demand for our cloud-based technology and analytics solutions and our strategy and innovation solutions. Revenues for the second quarter of 2021 included $4.3 million from our acquisitions of ForceIQ and Unico Solutions, which were completed in November 2020 and February 2021, respectively.

During the three months ended June 30, 2021, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 44.2%, 50.8%, 2.1%, and 2.9% of this segment’s revenues, respectively, compared to 38.8%, 57.1%, 2.3%, and 1.8% of this segment's revenues, respectively, for the same prior year period. Performance-based fee revenue was $1.5 million for the second quarter of 2021 compared to $1.6 million for the second 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 $0.4 million increase in revenues, $1.6 million was attributable to an increase in revenues from our full-time equivalents, partially offset by a $1.2 million decrease in revenues from our billable consultants. The increase in revenues generated by our full-time equivalents was primarily driven by an increased use of contractors and project consultants; and reflected an increase in the average number of full-time equivalents, partially offset by a decrease in revenue per full-time equivalent in the second quarter of 2021 compared to the same prior year period. The decrease in revenues from our billable consultants reflected decreases in the average billing rate and the consultant utilization rate, partially offset by an increase in the average number of billable consultants in the second quarter of 2021 compared to the same prior year period.

~~Operating Income~~

Business Advisory segment operating income decreased by $2.4 million, or 14.2%, to $14.3 million for the three months ended June 30, 2021 from $16.7 million for the three months ended June 30, 2020. The Business Advisory segment operating margin decreased to 20.2% for the second quarter of 2021 from 23.7% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to increases in salaries and related expenses for our revenue-generating professionals and contractor expense, as percentages of revenues, partially offset by a decrease in performance bonus expense for our revenue-generating professionals.

~~Education~~

~~Revenues~~

Education segment revenues decreased $4.2 million, or 6.7%, to $57.9 million for the second quarter of 2021 from $62.0 million for the second quarter of 2020. The decrease in revenues was related to the continued 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 beginning in the second half of 2020, and is also reflective of the difficult second quarter comparison driven by the strong growth we experienced in this segment in the first half of 2020 prior to the impact of the pandemic on this segment.

During the three months ended June 30, 2021, revenues from fixed-fee engagements; time-and-expense engagements; and software support, maintenance and subscription arrangements represented 30.9%, 57.1%, and 12.0% of this segment’s revenues, respectively. During the three months ended June 30, 2020, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 18.4%, 71.8%, 1.1%, and 8.7% of this segment’s revenues, respectively.

Of the overall $4.2 million decrease in revenues, $3.9 million was attributable to a decrease in revenues from our billable consultants and $0.3 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 average number of billable consultants and the average billing rate, partially offset by an increase in the consultant utilization rate in the second 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, partially offset by an increase in software subscriptions, software support and maintenance, and data hosting revenues. 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 second quarter of 2021 compared to the same prior year period.

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~~Operating Income~~

Education segment operating income decreased $2.4 million, or 14.6% to $13.8 million for the three months ended June 30, 2021 from $16.1 million for the three months ended June 30, 2020. The Education segment operating margin decreased to 23.8% for the second quarter of 2021 from 26.0% 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 and increases in performance bonus expense for our revenue-generating professionals, signing, retention and other bonus expense for our revenue-generating professionals and technology expenses. These decreases to the operating margin were partially offset by decreases in contractor expense and promotion and marketing expenses, as percentages of revenues.

~~Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020~~

~~Revenues~~

Revenues decreased $7.1 million, or 1.6%, to $433.3 million for the first six months of 2021 from $440.5 million for the first six months of 2020. Revenues in the first half of 2021, and particularly in the first quarter of 2021, were negatively impacted by the COVID-19 pandemic as some clients reprioritized and delayed projects, specifically in our Healthcare and Education segments. However, in the second quarter of 2021, we saw strengthened demand for certain of our services within the Healthcare and Business Advisory segments, which partially offset the overall decrease in revenues in the first six months of 20212022, compared to ~~the first six months of 2020.~~

Of the overall $7.1 million decrease in revenues, $7.1 million was attributable to a decrease in revenues from our full-time equivalents and $6.7 million was attributable to a decrease in revenues from our our billable consultants, partially offset by a $6.7 million increase in revenues from our Healthcare Managed Services employees.

The decrease in full-time equivalent revenues was primarily attributable to decreases in full-time equivalent revenues in our Healthcare segment, partially offset by an increase in full-time equivalent revenues in our Business Advisory segment, as discussed below in Segment Results; and reflected an overall decrease in the average number of full-time equivalents, partially offset by an overall increase in revenue per full-time equivalent during the first six months of 2021 compared to the first six months of 2020.

~~The decrease in billable consultant revenues was attributable to a decrease in demand~~$0.35 for services in our Education segment, partially offset by an increase in demand for services in our Business Advisory and Healthcare segments, as discussed below in Segment Results. The overall decrease in billable consultant revenues reflected an overall decrease in the consultant utilization rate, partially offset by overall increases in the average number of billable consultants and the average billing rate during the first six months of 2021 compared to the same prior year period.

The increase in Healthcare Managed Services revenues was primarily attributable to an increase in demand for these services, which led to an increase in the average number of Healthcare Managed Services employees in the first half of 2021 compared to the same prior year period driven by the hiring of approximately 300 employees in the beginning of the second quarter of 2021 to expand our capacity to manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients.

~~In most of 2020 and~~ the 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 as some clients reprioritized or delayed certain projects. During the first half of 2021, we saw an increase in our sales pipeline and the pace of signings in our Healthcare and Education businesses. While overall demand for our services in the first quarter of 2021 was negatively impacted by the COVID-19 pandemic, the overall demand for our services strengthened in the second quarter of 2021 and we expect continued revenue growth in the second half of 2021 compared to the second 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 strong demand for our digital, technology and analytic offerings, particularly within our Business Advisory segment. Indicative of our expectations for future growth in this segment, we continue to make investments in these offerings, both organically and through strategic acquisitions, such as our acquisitions of ForceIQ in November 2020 and Unico Solutions in February 2021, and the addition of new offerings and capabilities within this segment where we see strategic opportunities.

~~Total Direct Costs~~

Direct costs, excluding amortization of intangible assets and software development costs, increased $3.9 million, or 1.3%, to $309.6 million for the six months ended June 30, 2021, from $305.8 million for the six months ended June 30, 2020. The overall $3.9 million increase primarily related to a $6.3 million increase in salaries and related expenses for our revenue-generating professionals and a $1.4 million increase in signing, retention and other bonus expense for our revenue-generating professionals, partially offset by a $2.6 million decrease in contractor expense and a $1.1 million decrease in share-based compensation expense for our revenue-generating professionals. As a percentage of revenues, our direct costs increased to 71.5% during the first six months of 2021 compared to 69.4% during the first six months of 2020 primarily due to the increase in salaries and related expenses for our revenue-generating professionals, partially offset by the decrease in contractor expense as a percentage of revenues.

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Total direct costs for the six months ended June 30, 2021 included $1.8 million of amortization expense for internal software development costs and intangible assets, compared to $2.6 million of amortization expense for the same prior year period. Intangible asset amortization included within direct costs for the six months ended June 30, 2021 and 2020 related to technology and software, certain customer relationships and customer contracts acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.

~~Operating Expenses and Other Losses (Gains), Net~~

Selling, general and administrative expenses decreased $3.3 million, or 3.8%, to $85.0 million in the six months ended June 30, 2021 from $88.3 million in the six months ended June 30, 2020. The $3.3 million decrease primarily related to a $4.3 million decrease in practice administration and meetings expenses, a $2.1 million decrease in promotion and marketing expenses, and a $2.1 million decrease in share-based compensation expense for our support professionals. The decreases in practice administration and meetings expenses and promotion and marketing 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 executive officers recorded in the first quarter of~~ 2021. These decreases were partially offset by a $3.7 million increase in deferred compensation expense attributable to the change in the market value of our deferred compensation liability. During the first six months of 2021, the market value of our deferred compensation liability increased by $2.9 million, compared to a $0.8 million decrease in the first six months of 2020. This $3.7 million increase in expense is offset by a $3.7 million decrease in the loss 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. Additional increases in selling, general and administrative expenses include a $1.4 million increase in performance bonus expense for our support personnel and a $0.9 million increase in legal expenses. As a percentage of revenues, selling, general and administrative expenses decreased to 19.6% during the first six months of 2021 compared to 20.0% during the first six months of 2020. This decrease was primarily attributable to the decreases in practice administration and meetings expenses, promotion and marketing expenses, and share-based compensation expense for our support personnel, as percentages of revenues, partially offset by the increase in deferred compensation expense.

Restructuring charges for the first six months of 2021 totaled $1.5 million, compared to $1.7 million for the first six months of 2020. The $1.5 million restructuring charge incurred in the first six months of 2021 primarily related to rent and related expenses, net of sublease income, and accelerated depreciation on furniture and fixtures for vacated office spaces. The $1.7 million restructuring charge incurred in the first six months of 2020 primarily related to a $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 corporate operations. See Note 8 "Restructuring Charges" 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 six months ended June 30, 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 decreased by $1.4 million, or 11.6%, to $10.9 million for the six months ended June 30, 2021, from $12.3 million for the six months ended June 30, 2020. The $1.4 million decrease was primarily attributable to decreasing amortization expense for customer relationships acquired in business acquisitions due to the accelerated basis of amortization in prior periods, including the customer relationships acquired in our Studer Group acquisition; and customer relationships acquired in other business acquisitions that were fully amortized in prior periods; as well as a decrease in depreciation expense for leasehold improvements and furniture and fixtures related to vacated office spaces. Intangible asset amortization expense included within operating expenses primarily related to certain customer relationships, trade names, and non-competition agreements acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on 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 (Loss)~~

Operating income increased $54.3 million to income of $24.4 million in the first six months of 2021 from a loss of $29.9 million in the first six months of 2020. This increase is primarily attributable to the $59.8 million of non-cash pretax goodwill impairment charges recognized in the first quarter of 2020 related to our Business Advisory segment. Operating margin, which is defined as operating income (loss) expressed as a percentage of revenues, was 5.6% for the six months ended June 30, 2021, compared to (6.8)% for the six months ended June 30, 2020. The increase in operating margin was primarily attributable to the goodwill impairment charges recognized in the first quarter of 2020, as well as the decrease in practice administration and meetings expenses as a percentage of revenues. These increases to the operating margin were partially offset by the increases in salaries and related expenses for our revenue-generating professionals and deferred compensation expense.

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~~Total Other Income (Expense), Net~~

Interest expense, net of interest income decreased $1.5 million to $3.7 million in the first six months of 2021 from $5.3 million in the first six months of 2020, primarily attributable to lower levels of borrowing under our credit facility during the first six months 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 income (expense), net increased by $3.9 million to a net gain of $2.6 million in the first six months of 2021 from a net loss of $1.3 million in the first six months of 2020. The increase in total other income, net was primarily attributable to the $2.9 million gain recognized during the first six months of 2021 for the market value of our investments that are used to fund our deferred compensation liability, compared to a $0.8 million loss recognized during the first six months of 2020.

~~Income Tax Expense (Benefit)~~

For the six months ended June 30, 2021, our effective tax rate was 21.5% as we recognized income tax expense from continuing operations of $5.0 million on income from continuing operations of $23.2 million. The effective tax rate of 21.5% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to a discrete tax benefit related to electing the Global Intangible Low-Taxed Income (“GILTI”) high-tax exclusion retroactively for the 2018 tax year and a discrete tax benefit for share-based compensation awards that vested during the first quarter. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allow certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from their GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available. These favorable items were partially offset by certain nondeductible expense items.

~~of state income taxes, of 26.0%, primarily due to certain nondeductible business expenses and the nondeductible portion of the goodwill impairment~~

~~charges recorded during the first quarter of 2020. These unfavorable items were partially offset by a discrete tax benefit for share-based~~

~~compensation awards that vested during the first quarter and a discrete tax benefit for the remeasurement 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 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. As a result of electing the retroactive GILTI high-tax exclusion during 2021, we recognized a $1.0 million tax benefit of which $0.4 million related to carrying back our increased 2018 federal net operating loss to prior year income 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 (Loss) from Continuing Operations and Earnings (Loss) Per Share~~

Net income from continuing operations increased by $46.9 million to net income from continuing operations of $18.2 million for the six months ended June 30, 2021, from a net loss from continuing operations of $28.7 million for the same prior year period. This increase is primarily attributable to the $59.8 million of non-cash pretax goodwill impairment charges recognized in the first quarter of 2020 related to our Business Advisory segment. As a result of the increase in net income from continuing operations, diluted earnings per share from continuing operations for the first six months of 2021 was $0.82 compared to a loss per share from continuing operations of $1.31 for the first six months of 2020. The non-cash goodwill impairment charges had a $2.14 unfavorable impact on diluted earnings per share from continuing operations for the first six months of 2020.

~~EBITDA and Adjusted EBITDA~~

EBITDA increased $56.3 million to earnings of $40.0 million for the six months ended June 30, 2021, from a loss of $16.3 million for the six months ended June 30, 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. Adjusted EBITDA decreased $4.4 million to $42.1 million in the first six months of 2021 from $46.5 million in the first six months of 2020. The decrease in adjusted EBITDA was primarily attributable to the overall decrease in segment operating income discussed below in Segment Results, excluding depreciation and amortization and restructuring charges allocated at the segment level.

~~Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share~~

Adjusted net income from continuing operations decreased $1.8 million to $22.9 million in the first six months of 2021 compared to $24.7 million in the first six months of 2020. As a result of the decrease in adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations for the first six months of 2021 was $1.03 compared to $1.11 for the first six months of 2020.

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~~Segment Results~~

~~Healthcare~~

~~Revenues~~

Healthcare segment revenues increased $0.1 million to $181.1 million for the first six months of 2021 from $180.9 million for the first six months of 2020. The overall increase was primarily due to strengthened demand for this segment's services in the second quarter of 2021, largely offset by the negative impact of the COVID-19 pandemic on demand for this segment's services through the first quarter of 2021.

During the six months ended June 30, 2021, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 57.1%, 16.2%, 20.9%, and 5.8% of this segment’s revenues, respectively, compared to 58.9%, 15.9%, 18.5%, and 6.7% of this segment’s revenues, respectively, for the same prior year period. Performance-based fee revenue was $37.7 million during the first six months of 2021, compared to $33.4 million during the first six months of 2020. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.

Of the overall $0.1 million increase in revenues, $6.7 million was attributable to an increase in revenues from our Healthcare Managed Services employees and $1.4 million was attributable to an increase in revenues from our billable consultants, largely offset by an $8.0 million decrease in revenues from our full-time equivalents.

The increase in revenues attributable to our Healthcare Managed Services employees was primarily attributable to an increase in demand for these services, which led to an increase in the average number of managed services employees in the first half of 2021 compared to the same prior year period driven by the hiring of approximately 300 employees in the beginning of the second quarter to expand our capacity to manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients. These employees are serving 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 increase in revenues attributable to our billable consultants reflected a decrease in the average number of billable consultants, partially offset by increases in the average billing rate and the consultant utilization rate during the first six months of 2021 compared to the same prior year period. The decrease in full-time equivalent revenues was primarily driven by a decrease in demand for certain services and a decreased use of contractors and project consultants; and reflected decreases in the average number of full-time equivalents and revenue per full-time equivalent in the first six months of 2021 compared to the same prior year period.

~~Operating Income~~

Healthcare segment operating income increased $2.9 million, or 6.4%, to $48.1 million for the six months ended June 30, 2021, from $45.2 million for the six months ended June 30, 2020. The Healthcare segment operating margin increased to 26.6% for the first six months of 2021 from 25.0% 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, contractor expenses, salaries and related expenses for our support personnel, salaries and related expenses for our revenue-generating professionals, share-based compensation expense for our revenue-generating professionals, and product and event costs. These increases to the segment operating margin were partially offset by increases in performance bonus expense for our revenue-generating professionals and signing, retention and other bonus expense for our revenue-generating professionals, both as percentages of revenues.

~~Business Advisory~~

~~Revenues~~

Business Advisory segment revenues increased $8.4 million, or 6.2%, to $143.8 million for the first six months of 2021 from $135.4 million for the first six months of 2020, primarily related to strengthened demand for our cloud-based technology and analytics solutions and our strategy and innovation solutions. Revenues for the first six months of 2021 included $7.3 million from our acquisitions of ForceIQ and Unico Solutions, which were completed in November 2020 and February 2021, respectively.

During the first six months of 2021, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 42.6%, 51.2%, 3.4%, and 2.8% of this segment’s revenues, respectively, compared to 39.0%, 57.5%, 1.6%, and 1.9% of this segment’s revenues, respectively, during the same prior year period. Performance-based fee revenue was $4.9 million for the first six months of 2021, compared to $2.2 million for the first six months of 2020. The level of performance-based fees earned may vary based on our clients’ preferences and the mix of services we provide.

Of the overall $8.4 million increase in revenues, $6.7 million was attributable to revenues generated by our billable consultants and $1.7 million was attributable to our full-time equivalents. The increase in revenues from our billable consultants was primarily driven by an increase in the average number of billable consultants, partially offset by decreases in consultant utilization rate and the average billing rate in the first six months of 2021 compared to the same prior year period. The increase in revenues from our full-time equivalents was driven by an increased use of contractors and project consultants; and reflected an increase in the average number of full-time equivalents, partially offset by a decrease in revenue per full-time equivalent in the first six months of 2021 compared to the same prior year period.

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~~Operating Income~~

Business Advisory segment operating income increased by $0.9 million, or 3.3%, to $27.4 million for the six months ended June 30, 2021, from $26.5 million for the six months ended June 30, 2020. The Business Advisory segment operating margin decreased to 19.1% for the first six months of 2021 from 19.6% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to increases in salaries and related expenses for our revenue-generating professionals, contractor expense, and salaries and related expenses for our support personnel, as percentages of revenues; largely offset by decreases in performance bonus expense for our revenue-generating professionals, restructuring charges, promotion and marketing expenses, bad debt expense, and signing, retention and other bonus expense for our revenue-generating professionals.

The first quarter 2020 non-cash goodwill impairment charges related to the Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment, which are discussed above within consolidated results, are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segment. We do not include the impact of goodwill impairment charges in our evaluation of segment performance. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on the goodwill impairment charges recorded in the first quarter of 2020 and our goodwill balances.

~~Education~~

~~Revenues~~

Education segment revenues decreased $15.7 million, or 12.6%, to $108.5 million for the first six months of 2021 from $124.2 million. The decrease in revenues was related to the negative impact of the COVID-19 pandemic on demand for this segment's services beginning in the second half of 2020 as some clients reprioritized and delayed certain projects as a result of the uncertainties surrounding the pandemic, and is also reflective of the difficult first half comparison driven by the strong growth we experienced in this segment in the first half of 2020 prior to the impact of the pandemic on this segment.

For the six months ended June 30, 2021, revenues from fixed-fee engagements; time-and-expense engagements; and software support, maintenance and subscription arrangements represented 30.5%, 57.0%, and 12.5% of this segment's revenues, respectively. During the same prior year period, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 19.8%, 71.1%, 0.6% and 8.5% of this segment’s revenues, respectively.

Of the overall $15.7 million decrease in revenues, $14.8 million was attributable to a decrease in revenues generated by our full-time billable consultants and $0.9 million was attributable to a decrease in revenues generated by our full-time equivalents. The decrease in revenues from our full-time billable consultants reflected decreases in the average number of billable consultants, the average billing rate and the consultant utilization rate in the first six months 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, partially offset by an increase in software subscriptions, software support and maintenance, and data hosting revenues. 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 six months of 2021 compared to the same prior year period.

~~Operating Income~~

Education segment operating income decreased $6.8 million, or 23.3%, to $22.4 million for the six months ended June 30, 2021, from $29.2 million for the six months ended June 30, 2020. The Education segment operating margin decreased to 20.7% for the first six months of 2021 from 23.6% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to increases in salaries and related expenses for our revenue-generating professionals as a percentage of revenues and an increase in technology expenses, partially offset by decreases in contractor expense and promotion and marketing expenses, as percentages of revenues.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents ~~decreased $54.2~~were $9.7 million ~~to $13.0~~and $20.8 million at ~~June 30, 2021 from $67.2 million at~~March 31, 2022 and December 31, ~~2020.~~2021. As of ~~June 30, 2021,~~March 31, 2022, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility.

Six Months Ended
June 30,
Cash Flows (in thousands): 2021 2020
Net cash provided by (used in) operating activities $ (61,970) $ 1,805
Net cash used in investing activities (13,752) (24,141)
Net cash provided by financing activities 21,258 94,051
Effect of exchange rate changes on cash 269 (107)
Net increase (decrease) in cash and cash equivalents $ (54,195) $ 71,608

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	Three Months Ended March 31,
Cash Flows (in thousands):	2022		2021
Net cash used in operating activities	$	(79,099)	$	(82,754)
Net cash used in investing activities	(3,316)		(8,037)
Net cash provided by financing activities	71,387		45,082
Effect of exchange rate changes on cash	(5)		155
Net decrease in cash and cash equivalents	$	(11,033)	$	(45,554)

Operating Activities

Net cash used in operating activities totaled $62.0 million for the six months ended June 30, 2021, compared to net cash provided by operating activities of $1.8 million for the six months ended June 30, 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, operating lease obligations 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. Our purchase obligations primarily consist of payments for software and other information technology products to support our business and corporate infrastructure.

~~The increase in~~Net cash used in operating activities decreased $3.7 million to $79.1 million for the three months ended March 31, 2022 from $82.8 million for the three months ended March 31, 2021. The decrease in net cash used in operating activities was primarily related to an increase in cash collections in the first ~~six~~three months of ~~2021~~2022 compared to the same prior year period, ~~was primarily attributable to a decrease in cash collections, partially~~largely offset by ~~a decrease~~an increase in salaries and related expenses for our employees and an increase in the amount paid for annual performance bonuses in the first quarter of ~~2021~~2022 compared to the first quarter of ~~2020 and a decrease in selling, general and administrative expenses during the first six months of 2021 compared to the first six months of 2020.~~2021.

Investing Activities

~~Net cash used in~~Our investing activities ~~was $13.8 million~~primarily consist of purchases of complementary businesses; purchases of property and ~~$24.1 million~~equipment, primarily related to computers and related equipment for ~~the six months ended June 30, 2021~~our employees and ~~2020, respectively.~~leasehold improvements and furniture for office spaces; payments related to internally

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developed cloud-based software sold to our clients; and investments. Our investments include a convertible note investment in Shorelight Holdings, LLC, a preferred stock investment in Medically Home, and investments in life insurance policies that are used to fund our deferred compensation liability.

The use of cash in the first ~~six~~three months of ~~2021~~2022 primarily consisted of ~~$5.9~~$3.9 million for purchases of property and equipment, primarily related to purchases of leasehold improvements and furniture for certain office spaces and computers and related equipment; $2.3 million for the purchase of a business; ~~$5.4~~and $2.1 million for payments related to internally developed software. These uses of cash for investing activities were partially offset by $4.8 million of cash received for the sale of our aircraft in the first quarter of 2022.

The use of cash in the first three months of 2021 primarily consisted of $6.0 million for the purchase of a business; $1.4 million for payments related to internally developed software; and $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; and $2.5 million for payments related to internally developed software.~~

~~The use of cash in the first six months of 2020 primarily consisted of $13.0 million for the purchase of an additional convertible debt investment in~~

Shorelight Holdings, LLC; $5.2 million for payments related to internally developed software; $4.4 million for purchases of property and equipment, primarily related to purchases of furniture and leasehold improvements for certain office spaces and computers and related equipment; and $1.5 million for contributions to our life insurance policies which fund our deferred compensation plan.equipment.

We estimate that cash utilized for purchases of property and equipment and software development in ~~2021~~2022 will total approximately ~~$13~~$20 million to ~~$17~~$25 million; primarily consisting of software development costs, leasehold improvements and furniture and fixtures for certain office locations, ~~software development costs,~~ and information technology ~~equipment.~~related equipment to support our corporate infrastructure.

Financing Activities

Our financing activities primarily consist of borrowings and repayments under our senior secured credit facility, share repurchases, shares redeemed for employee tax withholdings upon vesting of share-based compensation, and payments for contingent consideration liabilities related to business acquisitions. See “Financing Arrangements” below for additional information on our senior secured credit facility.

Net cash provided by financing activities ~~was $21.3~~increased by $26.3 million ~~and $94.1~~to $71.4 million for the ~~six~~three months ended ~~June 30, 2021 and June 30, 2020, respectively.~~March 31, 2022 from $45.1 million for the three months ended March 31, 2021.

During the ~~first six~~three months ~~of 2021,~~ended March 31, 2022, we borrowed ~~$139.0~~$150.0 million under our credit facility, primarily to fund our operations, including our annual performance bonus payment in the first quarter of ~~2021,~~2022, and made repayments on our borrowings of ~~$74.3~~$47.8 million. These repayments on our borrowings included the repayment of the outstanding principal of our promissory note due 2024 of $2.7 million from the proceeds received for the sale of our aircraft. Additionally, during the first ~~six~~three months of ~~2021,~~2022, we repurchased and retired ~~$35.2~~$23.9 million of our common stock under our ~~2020 Share Repurchase Program, as defined below.~~

During the first six months of 2020, we borrowed $283.0 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 six months of 2020, we made repayments on our borrowings of $160.3 million, including a $120.0 million payment in the second quarter of 2020 to repay a portion of the additional borrowings made in the first quarter of 2020 due to our ability to maintain adequate cash flows from operations and improved clarity around access to capital resources. Additionally, we repurchased and retired $20.9 million of our common stock under our 2015 Share Repurchase Program, as definedshare repurchase program discussed below, and settled ~~$1.2~~$0.2 million of share repurchases that were accrued as of December 31, ~~2019.~~2021. We also reacquired $6.9 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

During the three months ended March 31, 2021, we borrowed $89.0 million primarily to fund our annual performance bonus payment and made repayments on our borrowings of $24.1 million. Additionally, during the first three months of 2021, we repurchased and retired $11.5 million of our common stock under our share repurchase program. We also reacquired $8.5 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

Share Repurchase Program

In November 2020, our board of directors 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, 2020. The 2020 Share Repurchase Program and 2015 Share Repurchase Program are collectively known as the “Share Repurchase Programs.”

Under the 2020 Share Repurchase Program, we repurchased and retired 651,081 shares for $35.2 million, during the six months ended June 30, 2021. Under the 2015 Share Repurchase Program, we repurchased and retired 313,998 shares for $20.9 million, during the six months ended June 30, 2020. Additionally, in the first quarter of 2020, we settled the repurchase of 18,000 shares for $1.2 million that were accrued as of December 31, 2019. As of June 30, 2021, $9.7 million remained available for share repurchases under the 2020 Share Repurchase Program.

During the third quarter of 2021, our board of directors authorized an extension of the ~~2020 Share Repurchase Program~~share repurchase program through December 31, 2022 and increased the authorized amount ~~from $50 million~~ to $100 million. During the first quarter of 2022, our board of directors authorized a further extension through December 31, 2023 and increased the authorized amount to $200 million. The amount and timing of repurchases under the ~~Share Repurchase~~

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~~Programs~~share repurchase program were and will continue to be determined by management and 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. As of March 31, 2022, $106.3 million remained available for share repurchases under our share repurchase program.

Financing Arrangements

At ~~June 30, 2021,~~March 31, 2022, we had ~~$265.0~~$335.0 million outstanding under our senior secured credit facility, ~~and $3.1 million outstanding under a promissory note,~~ as discussed below.

~~Senior Secured Credit Facility~~

The Company has a $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 Agreement"), that becomes due and payable in full upon maturity on 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 $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 $750 million. Borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.

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plus the applicable margin. The applicable margin will fluctuate between 1.125% per annum and 1.875% per annum, in the case of LIBOR borrowings, or between 0.125% per annum and 0.875% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time. Fees and interest on borrowings is paid on a monthly basis.

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. 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) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 upon the 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 non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we were in compliance with these financial covenants. Our Consolidated Leverage Ratio as of ~~June 30, 2021~~March 31, 2022 was ~~2.80~~2.24 to 1.00, compared to ~~1.94~~1.73 to 1.00 as of December 31, ~~2020.~~2021. Our Consolidated Interest Coverage Ratio as of ~~June 30, 2021~~March 31, 2022 was ~~13.83~~19.08 to 1.00, compared to ~~12.51~~18.43 to 1.00 as of December 31, ~~2020.~~2021.

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 3.25, 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 $25 million.

Principal borrowings outstanding under the Amended Credit Agreement at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 totaled ~~$265.0~~$335.0 million and ~~$200.0~~$230.0 million, respectively. These borrowings carried a weighted average interest rate of ~~2.4%~~2.1% at ~~June 30, 2021~~March 31, 2022 and ~~2.5%~~2.7% at December 31, ~~2020,~~2021, including the impact of the interest rate swaps described in Note 9 “Derivative Instruments and Hedging Activity” within the notes to the consolidated financial statements. 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 ~~June 30, 2021,~~March 31, 2022, we had outstanding letters of credit totaling $0.7 million, which are primarily used as security deposits for our office facilities. As of ~~June 30, 2021,~~March 31, 2022, the unused borrowing capacity under the revolving credit facility was ~~$334.3~~$264.3 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 June 30, 2021, the outstanding principal amount of the promissory note was $3.1 million, and the aircraft had a carrying amount of $4.1 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.

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For further information, see Note 7 “Financing Arrangements” within the notes to the consolidated financial statements.

Future Financing Needs

~~Our current~~Throughout 2021, our primary financing need iswas to support our operations and maintain our liquidity 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,As such, 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~~expenses, and electing to defer the deposit of our employer portion of social security taxes ~~beginning in April 2020 and through December 2020,~~ as provided for under the CARES Act. ~~These deferred payments are due in equal installments in the fourth quarters of 2021~~

Given improved visibility to our project backlog and ~~2022. Our long-term~~access to capital resources, our primary financing need has ~~been~~returned to ~~fund~~funding our long-term 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 will be adequate to support our current financing needs and long-term growth strategy. Our ability to secure 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 Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations" in our Annual Report on Form 10-K for the year ended December 31, 2020. As of June 30, 2021, borrowings outstanding under our senior secured credit facility totaled $265.0 million compared to $200.0 million at December 31, 2020. See the "Liquidity and Capital Resources" section above and Note 7 "Financing Arrangements" within the notes to our consolidated financial statements for additional information on our outstanding borrowings as of June 30, 2021. There have been no other material changes to our contractual obligations since December 31, 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 is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ~~("GAAP"~~(“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

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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 Item 7. ~~"Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting ~~Policies"~~Policies” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Below is an update to our critical accounting policy related to the carrying values of goodwill and other intangible assets. There have been no material changes to our other critical accounting policies during the first ~~six~~three months of ~~2021.~~2022.

Carrying Values of Goodwill and Other Intangible Assets

First Quarter 2022 Goodwill Reallocation

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment.

The three reportable segments of Healthcare, Education and Commercial are also our reporting units for goodwill impairment testing purposes. As a result of the reorganization, we reallocated the goodwill balances of our historical reporting units to our new reporting units based on the relative estimated fair values of each component of the historical reporting units to be allocated to the new reporting units. Additionally, we performed a goodwill impairment test on the goodwill balances of each of our reporting units as of January 1, 2022 by comparing the fair value of the reporting unit to its carrying value, including the reallocated goodwill. Based on the results of the goodwill impairment test, we determined the fair values of the Healthcare, Education, and Commercial reporting units exceeded their carrying values by 37%, 199%, and 105%, respectively. As such, we concluded that there was no indication of goodwill impairment for all three reporting units as of January 1, 2022.

NEW ACCOUNTING PRONOUNCEMENTS

~~Refer to~~See Note 3 ~~"New~~“New Accounting ~~Pronouncements"~~Pronouncements” within the notes to the consolidated financial statements for information on new accounting pronouncements.


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

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 ~~June 30, 2021,~~March 31, 2022, we had borrowings outstanding under the credit facility totaling ~~$265.0~~$335.0 million that carried a weighted average interest rate of ~~2.4%~~2.1%, including the impact of the interest rate swaps described below. A hypothetical 100 basis point change in the interest rate would have a ~~$0.7~~$1.4 million effect on our pretax income on an annualized basis, including the effect of the interest rate

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swaps. At December 31, ~~2020,~~2021, we had borrowings outstanding under the credit facility totaling ~~$200.0~~$230.0 million that carried a weighted average interest rate of ~~2.5%~~2.7% including the impact of the interest rate swaps. ~~As of December 31, 2020, these variable rate borrowings were fully hedged against changes in interest rates by the interest rate swaps, which have a notional amount of $200.0 million.~~ A hypothetical 100 basis point change in the interest rate would have had ~~no impact~~a $0.3 million effect on our pretax income on an annualized basis, including the effect of the interest rate 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 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%.

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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%.

~~We also have exposure~~In 2017, the Financial Conduct Authority (FCA) in the U.K. announced that it would phase out LIBOR as a benchmark rate by the end of 2021. In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain LIBOR tenors (including all U.S. Dollar LIBOR tenors other than one-week and two-month U.S. Dollar LIBOR tenors) to ~~changes in interest rates associated with the promissory note assumed on~~ June 30, ~~2017 in connection with our purchase of an aircraft,~~2023, after which ~~has variable interest~~LIBOR reference rates ~~tied~~will cease to ~~LIBOR. At June 30, 2021, the outstanding principal amount of the promissory note was $3.1 million~~be provided. Our Amended Credit Agreement and ~~carried an~~ interest rate ~~of 2.1%. A hypothetical 100 basis point change in this interest~~swap agreements provide for any transitions away from LIBOR to a successor rate ~~would not have a material effect~~to be based on our pretax 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 our pretax income.prevailing or equivalent standards.

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.

We have ~~an investment in the form of~~a 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 reported in other comprehensive income. As of ~~June 30, 2021,~~March 31, 2022, the fair value of the investment was ~~$60.0~~$62.3 million, with a total cost basis of $40.9 million. At December 31, ~~2020,~~2021, the fair value of the investment was ~~$64.4~~$65.9 million, with a total cost basis of $40.9 million.

We have a preferred stock investment in Medically Home Group, Inc. ("Medically Home"), 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 ~~June 30, 2021 and~~March 31, 2022, the carrying value of the investment was $33.6 million, with a total cost basis of $5.0 million. As of December 31, ~~2020,~~2021, the carrying value of the investment was $6.7 million, with a total cost basis of $5.0 million. During the first quarter of 2022, we recognized an unrealized gain of $27.0 million on our preferred stock investment resulting from an observable price change of preferred stock with similar rights and preferences to our preferred stock investment issued by Medically Home. 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 ~~June 30, 2021.~~March 31, 2022. Based on this evaluation, our Chief Executive Officer

and Chief Financial Officer have concluded that, as of ~~June 30, 2021,~~March 31, 2022, 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 change 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) during the three months ended ~~June 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal

control over financial reporting.

~~Table of Contents~~

PART II—OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS.

The information required by this ~~Item~~item is incorporated by reference from Note 13 ~~"Commitments,~~“Commitments, Contingencies and ~~Guarantees"~~Guarantees” included in Part I, Item 1 of this 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.

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ITEM 1A.			RISK FACTORS.

See Part 1, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, which was filed with the Securities and Exchange Commission on February ~~23, 2021,~~24, 2022, for a complete description of the material risks we face.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On December 1, 2021, as partial consideration for our acquisition of Whiteboard Communications Ltd., we issued 74,671 shares of our common stock, par value $0.01 per share, with an aggregate value of $3.3 million. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.

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 ~~June 30, 2021,~~March 31, 2022, we reacquired ~~2,843~~139,491 shares of common stock with a weighted average fair market value of ~~$52.09~~$49.35 as a result of such tax withholdings.

AsIn November 2020, our board of ~~June 30, 2021, we have~~directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, ~~2021 (the "2020 Share Repurchase Program").~~2021. During the third quarter of 2021, our board of directors authorized an extension of the ~~2020 Share Repurchase Program~~share repurchase program through December 31, 2022 and increased the authorized amount from $50 million to $100 million. During the first quarter of 2022, our board of directors authorized a further extension of the share repurchase program through December 31, 2023 and increased the authorized amount to $200 million. The amount and timing of repurchases under the ~~repurchases~~share repurchase program 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 ~~line of~~ credit facility, general market and business conditions, and applicable legal requirements.

The following table provides information with respect to purchases we made of our common stock during the quarter ended ~~June 30, 2021.~~March 31, 2022.

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)
April 1, 2021 - April 30, 2021 367,116 $ 54.11 365,994 $ 11,972,407
May 1, 2021 - May 31, 2021 39,369 $ 56.89 39,369 $ 9,731,354
June 1, 2021 - June 30, 2021 1,721 $ 53.21 — $ 9,731,354
Total 408,206 $ 54.37 405,363


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 2022 - January 31, 2022	179,975	$	46.29	169,656	$	22,349,716
February 1, 2022 - February 28, 2022	353,751	$	45.44	353,743	$	6,266,001
March 1, 2022 - March 31, 2022	129,164	$	49.31	—	$	106,266,001
Total	662,890	$	46.42	523,399

(1)The number of shares repurchased included ~~1,122~~10,319 shares in ~~April 2021 and 1,721~~January 2022, 8 shares in ~~June 2021~~February 2022, and 129,164 shares in March 2022 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the ~~2020 Share Repurchase Program.~~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.

4537

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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 Description

Filed
herewith

Furnished
herewith

Form

Period
Ending

Exhibit

Filing
Date

~~10.1~~

~~Amendment to the Huron Consulting Group Inc. Amended and Restated 2012 Omnibus Incentive Plan, effective May 7, 2021.~~

~~DEF 14A~~

~~Appendix A~~

~~3/26/2021~~

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.

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.

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.

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.

101.INS

Inline 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.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

4638

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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:

~~July 29, 2021~~May 3, 2022

/S/ JOHN D. KELLY

John D. Kelly

Executive Vice President,
Chief Financial Officer and Treasurer

4739


		Page
Part I – Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Other Comprehensive Income	2
	Consolidated Statements of Stockholders’ Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2421

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4335

Item 4.	Controls and Procedures	4436

Part II – Other Information

Item 1.	Legal Proceedings	4536

Item 1A.	Risk Factors	4537

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4537

Item 3.	Defaults Upon Senior Securities	4537

Item 4.	Mine Safety Disclosures	4537

Item 5.	Other Information	4537

Item 6.	Exhibits	4638

Signature		4739


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues and reimbursable expenses:
Revenues	$	230,126	$	217,857	$	433,339	$	440,476
Reimbursable expenses	3,252		2,970		5,186		22,273
Total revenues and reimbursable expenses	233,378		220,827		438,525		462,749
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs	161,526		149,514		309,641		305,762
Amortization of intangible assets and software development costs	910		1,334		1,835		2,635
Reimbursable expenses	3,316		2,866		5,319		22,255
Total direct costs and reimbursable expenses	165,752		153,714		316,795		330,652
Operating expenses and other losses (gains), net
Selling, general and administrative expenses	45,190		44,857		84,956		88,303
Restructuring charges	861		109		1,489		1,718
Litigation and other losses (gains)	0		0		42		(150)
Depreciation and amortization	5,446		6,193		10,874		12,307
Goodwill impairment charges	0		0		0		59,816
Total operating expenses and other losses (gains), net	51,497		51,159		97,361		161,994
Operating income (loss)	16,129		15,954		24,369		(29,897)
Other income (expense), net:
Interest expense, net of interest income	(2,029)		(2,916)		(3,748)		(5,257)
Other income (expense), net	2,151		3,948		2,571		(1,348)
Total other income (expense), net	122		1,032		(1,177)		(6,605)
Income (loss) from continuing operations before taxes	16,251		16,986		23,192		(36,502)
Income tax expense (benefit)	3,454		3,414		4,990		(7,801)
Net income (loss) from continuing operations	12,797		13,572		18,202		(28,701)
Loss from discontinued operations, net of tax	0		(25)		0		(60)
Net income (loss)	$	12,797	$	13,547	$	18,202	$	(28,761)
Net earnings (loss) per basic share:
Net income (loss) from continuing operations	$	0.59	$	0.62	$	0.84	$	(1.31)
Loss from discontinued operations, net of tax	0		0		0		(0.01)
Net income (loss)	$	0.59	$	0.62	$	0.84	$	(1.32)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations	$	0.59	$	0.61	$	0.82	$	(1.31)
Loss from discontinued operations, net of tax	0		0		0		(0.01)
Net income (loss)	$	0.59	$	0.61	$	0.82	$	(1.32)
Weighted average shares used in calculating earnings (loss) per share:
Basic	21,555		21,869		21,743		21,848
Diluted	21,871		22,116		22,105		21,848
Comprehensive income (loss):
Net income (loss)	$	12,797	$	13,547	$	18,202	$	(28,761)
Foreign currency translation adjustments, net of tax	82		104		482		(675)
Unrealized gain (loss) on investment, net of tax	1,422		(5,678)		(3,226)		(5,936)
Unrealized gain (loss) on cash flow hedging instruments, net of tax	218		(1,705)		1,647		(3,390)
Other comprehensive income (loss)	1,722		(7,279)		(1,097)		(10,001)
Comprehensive income (loss)	$	14,519	$	6,268	$	17,105	$	(38,762)


	Six Months Ended June 30,
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	24,560,855	$	246	(2,812,896)	$	(129,886)	$	454,512	$	214,009	$	13,061	$	551,942
Comprehensive income									18,202		(1,097)		17,105
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	398,551	4		81,009	3,173		(3,177)						0
Exercise of stock options	13,403	—					422						422
Share-based compensation							12,563						12,563
Shares redeemed for employee tax withholdings				(168,046)	(8,651)								(8,651)
Share repurchases	(651,081)	(7)					(35,236)						(35,243)
Balance at June 30, 2021	24,321,728	$	243	(2,899,933)	$	(135,364)	$	429,084	$	232,211	$	11,964	$	538,138

Balance at December 31, 2019	24,603,308	$	247	(2,763,302)	$	(128,348)	$	460,781	$	237,849	$	14,936	$	585,465
Comprehensive income									(28,761)		(10,001)		(38,762)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	270,126	2		98,310	6,919		(6,921)						0
Exercise of stock options	26,800	—					646						646
Share-based compensation							16,763						16,763
Shares redeemed for employee tax withholdings				(121,806)	(7,217)								(7,217)
Share repurchases	(313,998)	(3)					(20,878)						(20,881)
Balance at June 30, 2020	24,586,236	$	246	(2,786,798)	$	(128,646)	$	450,391	$	209,088	$	4,935	$	536,014


	Healthcare		Business Advisory		Education		Total
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, 2020	428,729		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 June 30, 2021	$	428,729	$	64,439	$	104,384	$	597,552


	As of June 30,
	2021	2020
Unvested restricted stock awards	27	58


Total anti-dilutive securities	27	58


	Principal Payments of Long-Term Debt
2021	$	273
2022	$	559
2023	$	575
2024	$	266,646


	Employee Costs		Office Space Reductions		Other		Total
Balance as of December 31, 2020	$	2,447	$	84	$	893	$	3,424
Additions	4		0		200		204
Payments	(2,438)		(67)		(266)		(2,771)
Adjustments	(3)		0		0		(3)
Balance as of June 30, 2021	$	10	$	17	$	827	$	854


	Three Months Ended June 30, 2021						Three Months Ended June 30, 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	$	82	$	0	$	82	$	104	$	0	$	104
Unrealized gain (loss) on investment	$	1,936	$	(514)	$	1,422	$	(7,670)	$	1,992	$	(5,678)
Unrealized gain (loss) on cash flow hedges:
Change in fair value	$	(305)	$	78	$	(227)	$	(2,640)	$	686	$	(1,954)
Reclassification adjustments into earnings	601		(156)		445		337		(88)		249
Net unrealized gain (loss)	$	296	$	(78)	$	218	$	(2,303)	$	598	$	(1,705)
Other comprehensive income (loss)	$	2,314	$	(592)	$	1,722	$	(9,869)	$	2,590	$	(7,279)


	Six Months Ended June 30, 2021						Six Months Ended June 30, 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	$	482	$	0	$	482	$	(675)	$	0	$	(675)
Unrealized gain (loss) on investment	$	(4,392)	$	1,166	$	(3,226)	$	(8,018)	$	2,082	$	(5,936)
Unrealized gain (loss) on cash flow hedges:
Change in fair value	$	884	$	(259)	$	625	$	(4,912)	$	1,276	$	(3,636)
Reclassification adjustments into earnings	1,381		(359)		1,022		333		(87)		246
Net unrealized gain (loss)	$	2,265	$	(618)	$	1,647	$	(4,579)	$	1,189	$	(3,390)
Other comprehensive income (loss)	$	(1,645)	$	548	$	(1,097)	$	(13,272)	$	3,271	$	(10,001)


	Three Months Ended June 30, 2021
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	55,095	$	31,350	$	17,886	$	104,331
Time and expense	18,039		35,988		33,039		87,066
Performance-based	23,061		1,517		0		24,578
Software support, maintenance and subscriptions	5,162		2,053		6,936		14,151
Total	$	101,357	$	70,908	$	57,861	$	230,126

Employee Type (1)
Revenue generated by billable consultants	$	66,810	$	66,051	$	49,291	$	182,152
Revenue generated by full-time equivalents	20,498		4,857		8,570		33,925
Revenue generated by Healthcare Managed Services employees	14,049		—		—		14,049
Total	$	101,357	$	70,908	$	57,861	$	230,126

Timing of Revenue Recognition
Revenue recognized over time	$	99,884	$	70,908	$	57,861	$	228,653
Revenue recognized at a point in time	1,473		0		0		1,473
Total	$	101,357	$	70,908	$	57,861	$	230,126


	Six Months Ended June 30, 2021
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	103,390	$	61,231	$	33,145	$	197,766
Time and expense	29,414		73,621		61,823		164,858
Performance-based	37,730		4,926		0		42,656
Software support, maintenance and subscriptions	10,545		3,997		13,517		28,059
Total	$	181,079	$	143,775	$	108,485	$	433,339

Employee Type (1)
Revenue generated by billable consultants	$	118,555	$	135,898	$	91,819	$	346,272
Revenue generated by full-time equivalents	40,727		7,877		16,666		65,270
Revenue generated by Healthcare Managed Services employees	21,797		—		—		21,797
Total	$	181,079	$	143,775	$	108,485	$	433,339

Timing of Revenue Recognition
Revenue recognized over time	$	178,648	$	143,775	$	108,485	$	430,908
Revenue recognized at a point in time	2,431		0		0		2,431
Total	$	181,079	$	143,775	$	108,485	$	433,339


	Three Months Ended June 30, 2020
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	50,803	$	27,374	$	11,397	$	89,574
Time and expense	14,029		40,264		44,568		98,861
Performance-based	14,480		1,586		695		16,761
Software support, maintenance and subscriptions	6,044		1,246		5,371		12,661
Total	$	85,356	$	70,470	$	62,031	$	217,857

Employee Type (1)
Revenue generated by billable consultants	$	55,249	$	67,269	$	53,187	$	175,705
Revenue generated by full-time equivalents	22,821		3,201		8,844		34,866
Revenue generated by Healthcare Managed Services employees	7,286		—		—		7,286
Total	$	85,356	$	70,470	$	62,031	$	217,857

Timing of Revenue Recognition
Revenue recognized over time	$	84,941	$	70,470	$	62,030	$	217,441
Revenue recognized at a point in time	415		0		1		416
Total	$	85,356	$	70,470	$	62,031	$	217,857


	Six Months Ended June 30, 2020
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	106,588	$	52,767	$	24,572	$	183,927
Time and expense	28,762		77,853		88,279		194,894
Performance-based	33,401		2,232		695		36,328
Software support, maintenance and subscriptions	12,183		2,523		10,621		25,327
Total	$	180,934	$	135,375	$	124,167	$	440,476

Employee Type (1)
Revenue generated by full-time billable consultants	$	117,115	$	129,226	$	106,623	$	352,964
Revenue generated by full-time equivalents	48,749		6,149		17,544		72,442
Revenue generated by Healthcare Managed Services employees	15,070		—		—		15,070
Total	$	180,934	$	135,375	$	124,167	$	440,476

Timing of Revenue Recognition
Revenue recognized over time	$	179,400	$	135,375	$	124,052	$	438,827
Revenue recognized at a point in time	1,534		0		115		1,649
Total	$	180,934	$	135,375	$	124,167	$	440,476