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 ~~September 30, 2023~~March 31, 2024


☐			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~~“emerging growth ~~company"~~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 ~~October 26, 2023, 18,747,865~~April 23, 2024, 18,005,790 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)


		September 30, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
Assets	Assets
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	9,398	$	11,834
Receivables from clients, net of allowances of $16,011 and $10,600, respectively		166,330		147,852
Unbilled services, net of allowances of $4,779 and $3,850, respectively		192,853		141,781
Cash and cash equivalents
Cash and cash equivalents
Receivables from clients, net of allowances of $18,233 and $17,284, respectively
Unbilled services, net of allowances of $4,675 and $5,984, respectively
Income tax receivable	Income tax receivable	4,500		960
Prepaid expenses and other current assets	Prepaid expenses and other current assets	32,450		26,057
Total current assets	Total current assets	405,531		328,484
Property and equipment, net	Property and equipment, net	22,919		26,107
Deferred income taxes, net	Deferred income taxes, net	1,735		1,554
Long-term investments	Long-term investments	95,387		91,194
Operating lease right-of-use assets	Operating lease right-of-use assets	23,441		30,304
Other non-current assets	Other non-current assets	87,486		73,039
Intangible assets, net	Intangible assets, net	20,090		23,392
Goodwill	Goodwill	625,711		624,966
Total assets	Total assets	$	1,282,300	$	1,199,040
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	11,987	$	14,254
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	31,591		27,268
Accrued payroll and related benefits	Accrued payroll and related benefits	183,872		171,723

Current maturities of long-term debt
Current maturities of long-term debt
Current maturities of long-term debt
Current maturities of operating lease liabilities	Current maturities of operating lease liabilities	11,116		10,530
Deferred revenues	Deferred revenues	26,217		21,909
Total current liabilities	Total current liabilities	264,783		245,684
Non-current liabilities:	Non-current liabilities:
Deferred compensation and other liabilities	Deferred compensation and other liabilities	32,700		33,614
Deferred compensation and other liabilities
Deferred compensation and other liabilities

Long-term debt		358,000		290,000
Long-term debt, net of current portion
Long-term debt, net of current portion
Long-term debt, net of current portion
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	39,207		45,556
Deferred income taxes, net	Deferred income taxes, net	34,256		32,146
Total non-current liabilities	Total non-current liabilities	464,163		401,316
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ equity	Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,597,274 and 22,507,159 shares issued, respectively		215		223
Treasury stock, at cost, 2,848,126 and 2,711,712 shares, respectively		(141,729)		(137,556)
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,237,828 and 21,316,441 shares issued, respectively
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,237,828 and 21,316,441 shares issued, respectively
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,237,828 and 21,316,441 shares issued, respectively
Treasury stock, at cost, 3,061,291 and 2,852,296 shares, respectively
Additional paid-in capital	Additional paid-in capital	261,995		318,706
Retained earnings	Retained earnings	412,195		352,548
Accumulated other comprehensive income	Accumulated other comprehensive income	20,678		18,119
Total stockholders’ equity	Total stockholders’ equity	553,354		552,040
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,282,300	$	1,199,040

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

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HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Revenues and reimbursable expenses:	Revenues and reimbursable expenses:
Revenues
Revenues
Revenues	Revenues	$	358,178	$	285,370		$	1,022,832	$	818,744
Reimbursable expenses	Reimbursable expenses	9,288		6,816			25,918		19,034
Total revenues and reimbursable expenses	Total revenues and reimbursable expenses	367,466		292,186			1,048,750		837,778
Operating expenses:	Operating expenses:
Direct costs (exclusive of depreciation and amortization included below)
Direct costs (exclusive of depreciation and amortization included below)
Direct costs (exclusive of depreciation and amortization included below)	Direct costs (exclusive of depreciation and amortization included below)	244,774		193,368			708,355		569,848
Reimbursable expenses	Reimbursable expenses	9,497		6,917			26,242		19,249
Selling, general and administrative expenses	Selling, general and administrative expenses	64,347		54,458			190,655		148,886
Restructuring charges	Restructuring charges	5,402		1,332			9,385		4,956
Depreciation and amortization	Depreciation and amortization	6,104		6,812			18,621		20,578

Total operating expenses	Total operating expenses	330,124		262,887			953,258		763,517
Total operating expenses
Total operating expenses
Operating income	Operating income	37,342		29,299			95,492		74,261
Other income (expense), net:	Other income (expense), net:
Interest expense, net of interest income	Interest expense, net of interest income	(5,047)		(3,111)			(15,146)		(7,753)
Other income (expense), net		(1,000)		(785)			1,781		18,699
Total other income (expense), net		(6,047)		(3,896)			(13,365)		10,946
Interest expense, net of interest income
Interest expense, net of interest income
Other income, net
Total other expense, net
Income before taxes	Income before taxes	31,295		25,403			82,127		85,207
Income tax expense		9,779		7,662			22,480		26,739
Income tax expense (benefit)

Net income

Net income

Net income	Net income	$	21,516	$	17,741		$	59,647	$	58,468

Earnings per share:	Earnings per share:

Earnings per share:

Earnings per share:
Net income per basic share
Net income per basic share
Net income per basic share	Net income per basic share	$	1.15	$	0.88		$	3.15	$	2.85

Net income per diluted share	Net income per diluted share	$	1.10	$	0.86		$	3.05	$	2.80

Net income per diluted share

Net income per diluted share
Weighted average shares used in calculating earnings per share:	Weighted average shares used in calculating earnings per share:
Basic
Basic
Basic	Basic	18,770		20,109			18,941		20,511
Diluted	Diluted	19,475		20,615			19,578		20,899
Comprehensive income (loss):	Comprehensive income (loss):
Net income
Net income
Net income	Net income	$	21,516	$	17,741		$	59,647	$	58,468
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	(662)		(1,034)			(283)		(1,733)
Unrealized gain (loss) on investment, net of tax	Unrealized gain (loss) on investment, net of tax	(1,350)		(830)			3,076		(2,718)
Unrealized gain (loss) on cash flow hedging instruments, net of tax	Unrealized gain (loss) on cash flow hedging instruments, net of tax	(368)		3,762			(234)		9,058
Other comprehensive income (loss)	Other comprehensive income (loss)	(2,380)		1,898			2,559		4,607
Comprehensive income	Comprehensive income	$	19,136	$	19,639		$	62,206	$	63,075

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 September 30,
Common Stock Treasury Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other
Comprehensive
Income Stockholders’
Equity
Shares Amount Shares Amount
Balance at June 30, 2023 21,732,924 $ 218 (2,969,196) $ (141,407) $ 279,070 $ 390,679 $ 23,058 $ 551,618
Comprehensive income (loss) 21,516 (2,380) 19,136
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations 16,511 — 385 — — —
Purchase of business 16,337 — 1,646 1,646
Share-based compensation 10,063 10,063
Shares redeemed for employee tax withholdings (3,820) (322) (322)
Share repurchases (290,288) (3) (28,784) (28,787)
Balance at September 30, 2023 21,475,484 $ 215 (2,972,631) $ (141,729) $ 261,995 $ 412,195 $ 20,678 $ 553,354
Balance at June 30, 2022 23,183,446 $ 232 (2,935,799) $ (136,425) $ 374,280 $ 317,723 $ 19,549 $ 575,359
Comprehensive income 17,741 1,898 19,639
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations 36,251 — (835) (46) 46 —
Exercise of stock options 6,000 — 236 236
Share-based compensation 7,160 7,160
Shares redeemed for employee tax withholdings (8,020) (529) (529)
Share repurchases (685,641) (7) (45,597) (45,604)
Balance at September 30, 2022 22,540,056 $ 225 (2,944,654) $ (137,000) $ 336,125 $ 335,464 $ 21,447 $ 556,261


		Nine Months Ended September 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, 2022		22,231,593	$	223	(2,953,147)	$	(137,556)			$	318,706			$	352,548	$	18,119	$	552,040
	Three Months Ended March 31,																						Three Months Ended March 31,
	Common Stock																			Common Stock	Treasury Stock	Additional Paid-In Capital		Retained Earnings	Accumulated Other Comprehensive Income	Stockholders’ Equity
	Shares
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Comprehensive income	Comprehensive income											59,647		2,559		62,206
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
Restricted stock awards, net of cancellations	Restricted stock awards, net of cancellations	322,775	3		122,220	5,877		(5,880)								—
Exercise of stock options	Exercise of stock options	21,609	—					987								987
Purchase of business	Purchase of business	16,337	—					1,646								1,646
Share-based compensation	Share-based compensation							34,958								34,958
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings				(141,704)	(10,050)										(10,050)
Share repurchases	Share repurchases	(1,116,830)	(11)					(88,422)								(88,433)
Balance at September 30, 2023		21,475,484	$	215	(2,972,631)	$	(141,729)	$	261,995			$	412,195	$	20,678	$	553,354
Balance at March 31, 2024

Balance at December 31, 2021		23,868,918	$	239	(2,908,849)	$	(135,969)	$	413,794			$	276,996	$	16,840	$	571,900
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Comprehensive income	Comprehensive income											58,468		4,607		63,075
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
Restricted stock awards, net of cancellations	Restricted stock awards, net of cancellations	341,189	3		114,290	6,509		(6,512)								—
Exercise of stock options	Exercise of stock options	36,536	—					1,421								1,421
Share-based compensation	Share-based compensation							25,260								25,260
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings				(150,095)	(7,540)										(7,540)
Share repurchases	Share repurchases	(1,706,587)	(17)					(97,838)								(97,855)
Balance at September 30, 2022		22,540,056	$	225	(2,944,654)	$	(137,000)	$	336,125			$	335,464	$	21,447	$	556,261
Balance at March 31, 2023

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)


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Cash flows from operating activities:	Cash flows from operating activities:
Net income	Net income	$	59,647	$	58,468
Net income
Net income
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
Depreciation and amortization	Depreciation and amortization	18,653		20,578
Non-cash lease expense	Non-cash lease expense	4,840		4,768
Lease-related impairment charges	Lease-related impairment charges	5,584		—

Share-based compensation	Share-based compensation	35,398		23,083
Share-based compensation
Share-based compensation
Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	577		595

Allowances for doubtful accounts	Allowances for doubtful accounts	53		47
Allowances for doubtful accounts
Allowances for doubtful accounts
Deferred income taxes	Deferred income taxes	890		7,133
Gain on sale of property and equipment, excluding transaction costs		(61)		(1,117)
(Gain) loss on sale of property and equipment, excluding transaction costs

Change in fair value of contingent consideration liabilities	Change in fair value of contingent consideration liabilities	(251)		(34)
Change in fair value of preferred stock investment		—		(26,964)
Other, net		—		6
Change in fair value of contingent consideration liabilities
Change in fair value of contingent consideration liabilities

Changes in operating assets and liabilities, net of acquisitions and divestiture:	Changes in operating assets and liabilities, net of acquisitions and divestiture:

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
(Increase) decrease in receivables from clients, net	(Increase) decrease in receivables from clients, net	(18,508)		(44,759)
(Increase) decrease in unbilled services, net	(Increase) decrease in unbilled services, net	(51,092)		(31,937)
(Increase) decrease in current income tax receivable / payable, net	(Increase) decrease in current income tax receivable / payable, net	(4,365)		14,704
(Increase) decrease in other assets	(Increase) decrease in other assets	(6,243)		3,468
Increase (decrease) in accounts payable and other liabilities	Increase (decrease) in accounts payable and other liabilities	(5,361)		(14,538)
Increase (decrease) in accrued payroll and related benefits	Increase (decrease) in accrued payroll and related benefits	10,805		(18,883)
Increase (decrease) in deferred revenues	Increase (decrease) in deferred revenues	4,328		(397)
Net cash provided by (used in) operating activities		54,894		(5,779)
Net cash used in operating activities
Cash flows from investing activities:	Cash flows from investing activities:
Purchases of property and equipment
Purchases of property and equipment
Purchases of property and equipment	Purchases of property and equipment	(5,147)		(9,768)

Investment in life insurance policies	Investment in life insurance policies	(2,601)		(283)
Distributions from life insurance policies		2,956		2,958
Investment in life insurance policies
Investment in life insurance policies

Purchases of businesses
Purchases of businesses
Purchases of businesses	Purchases of businesses	(1,613)		(1,948)
Capitalization of internally developed software costs	Capitalization of internally developed software costs	(19,610)		(6,855)
Proceeds from note receivable	Proceeds from note receivable	154		157
Proceeds from sale of property and equipment		62		4,753
Divestiture of business		—		207

Net cash used in investing activities

Net cash used in investing activities

Net cash used in investing activities	Net cash used in investing activities	(25,799)		(10,779)
Cash flows from financing activities:	Cash flows from financing activities:
Proceeds from exercises of stock options
Proceeds from exercises of stock options
Proceeds from exercises of stock options	Proceeds from exercises of stock options	987		1,421
Shares redeemed for employee tax withholdings	Shares redeemed for employee tax withholdings	(10,050)		(7,540)
Share repurchases	Share repurchases	(88,897)		(95,474)
Proceeds from bank borrowings	Proceeds from bank borrowings	292,000		287,000
Repayments of bank borrowings	Repayments of bank borrowings	(224,000)		(178,780)
Payments for debt issuance costs	Payments for debt issuance costs	(58)		—
Deferred payments on business acquisition	Deferred payments on business acquisition	(1,500)		(1,875)
Net cash provided by (used in) financing activities		(31,518)		4,752
Net cash provided by financing activities
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(13)		(144)
Net decrease in cash and cash equivalents		(2,436)		(11,950)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period	Cash and cash equivalents at beginning of the period	11,834		20,781
Cash and cash equivalents at end of the period	Cash and cash equivalents at end of the period	$	9,398	$	8,831
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:
Non-cash investing and financing activities:
Property and equipment expenditures and capitalized software included in current liabilities
Property and equipment expenditures and capitalized software included in current liabilities
Property and equipment expenditures and capitalized software included in current liabilities	Property and equipment expenditures and capitalized software included in current liabilities	$	5,308	$	3,474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	2,320	$	1,908
Common stock issued related to purchase of business	Common stock issued related to purchase of business	$	1,646	$	—
Contingent consideration accrued related to purchases of businesses	Contingent consideration accrued related to purchases of businesses	$	374	$	869
Share repurchases included in current liabilities	Share repurchases included in current liabilities	$	—	$	2,572
Excise tax on net share repurchases included in current liabilities		$	643	$	—
Excise tax on net share repurchases included in current and non-current liabilities

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 professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation, including using an enterprise portfolio of technology, data and analytics solutions, to empower clients to own their future. By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.

We provide our services and products and manage our business ~~through~~under three operating segments: Healthcare, Education, and ~~Commercial.~~ Commercial, which align our business by industry. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital, which are methods by which we deliver our services and products.

See Note 1314 “Segment Information” for more information.

2. Basis of Presentation and Significant Accounting Policies

The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ~~("SEC"~~(“SEC”) for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ~~("GAAP"~~(“GAAP”) for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2022 and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30,~~ 2023. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.

3. New Accounting Pronouncements

Not Yet Adopted

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates the segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis. ASU 2023-07 will be effective for our annual reporting periods beginning with the current fiscal year ending December 31, 2024 and for interim reporting periods beginning in fiscal year 2025, with early adoption permitted, and is required to be applied retrospectively. We are currently evaluating the impact this guidance will have on our disclosures within our consolidated financial statements.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which updates annual income tax disclosures by requiring disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 will be effective for our annual reporting periods beginning with the fiscal year ending December 31, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We are currently evaluating the impact this guidance will have on our disclosures within our consolidated financial statements.

On March 6, 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements will be effective for our annual reporting periods beginning with the fiscal year ending December 31, 2025, subject to any delay which may result from the current administrative stay issued by the SEC. We are currently evaluating the impact this guidance will have on our disclosures within 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)

4. Goodwill and Intangible Assets

Goodwill

The table below sets forth the changes in the carrying value of goodwill by reportable segment for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.

Healthcare Education Commercial Total
Balance as of December 31, 2022:
Goodwill $ 644,238 $ 123,652 $ 312,968 $ 1,080,858
Accumulated impairment losses (190,024) (1,417) (264,451) (455,892)
Goodwill, net as of December 31, 2022 $ 454,214 $ 122,235 $ 48,517 $ 624,966
Goodwill recorded in connection with business acquisition(1)
745 — — 745
Goodwill, net as of September 30, 2023 $ 454,959 $ 122,235 $ 48,517 $ 625,711


	Healthcare		Education		Commercial		Total
Balance as of December 31, 2023:
Goodwill	$	644,983	$	123,652	$	312,968	$	1,081,603
Accumulated impairment losses	(190,024)		(1,417)		(264,451)		(455,892)
Goodwill, net as of December 31, 2023	$	454,959	$	122,235	$	48,517	$	625,711
Goodwill recorded in connection with business acquisitions	—		21,313		76		21,389

Goodwill, net as of March 31, 2024	$	454,959	$	143,548	$	48,593	$	647,100

~~(1)~~First Quarter 2024 Acquisitions

On ~~September~~January 1, ~~2023,~~2024, we completed the acquisition of ~~Roundtable Analytics,~~the data analytics services team of Vlamis Software Solutions, Inc. ~~("Roundtable"~~(“Vlamis”)~~, a healthcare analytics company.~~. The results of operations of ~~Roundtable~~Vlamis are included within our consolidated financial statements as of the acquisition date and allocated among our Education and Commercial segments based on the engagements delivered by the business.

On March 1, 2024, we completed the acquisition of Grenzebach Glier and Associates, Inc. (“GG+A”), a philanthropic management consulting firm that helps education institutions and other nonprofit organizations build and accelerate the philanthropic programs that support their mission. The results of operations of GG+A are included within our consolidated financial statements and results of operations of our ~~Healthcare~~Education segment as of the acquisition date.

The ~~acquisition~~acquisitions of ~~Roundtable is~~Vlamis and GG+A are not significant to our consolidated financial ~~statements.~~statements individually or in the aggregate as of and for the three months ended March 31, 2024. These acquisitions were accounted for using the acquisition method of accounting. Contract assets and contract liabilities are recorded at their carrying value under Topic 606: Revenue from Contracts with Customers.

The current acquisition date values of assets acquired and liabilities assumed of the GG+A acquisition are considered preliminary and are based on the information that was available as of the date of the acquisition. We believe that the information provides a reasonable basis for estimating the preliminary values of assets acquired and liabilities assumed but certain items, such as the valuations of the intangible assets and the working capital adjustments, among other things, may be subject to change as additional information is received. Thus, the provisional measurements of assets acquired, including goodwill, and liabilities assumed related to the GG+A acquisition are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

Intangible Assets

Intangible assets as of March 31, 2024 and December 31, 2023 consisted of the following:


		As of March 31, 2024				As of December 31, 2023
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	5 to 10	$	26,536	$	7,477	$	60,636	$	48,928
Technology and software	2 to 5	16,230		10,839		16,230		10,195
Trade names	6	6,000		6,000		6,000		6,000
Non-competition agreements	3 to 5	950		432		720		389
Customer contracts	1 to 3	735		54		—		—
Total		$	50,451	$	24,802	$	83,586	$	65,512

Identifiable intangible assets with finite lives are amortized over their estimated useful lives using either an accelerated or straight-line basis to correspond to the cash flows expected to be derived from the assets.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

Intangible ~~Assets~~

~~Intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following:~~

As of September 30, 2023 As of December 31, 2022
Useful Life
(in years) Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization
Customer relationships 5 to 13 $ 65,083 $ 52,003 $ 74,583 $ 57,219
Technology and software 2 to 5 16,230 9,613 13,330 7,975
Trade names 6 6,000 6,000 6,000 5,907
Non-competition agreements 2 to 5 920 527 920 340
Total $ 88,233 $ 68,143 $ 94,833 $ 71,441

Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships 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 ~~$2.0~~$1.7 million and ~~$2.8~~$2.2 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively; and $6.2 million and $8.5 million for the nine months ended September 30, 2023 and 2022,~~ respectively. The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of ~~September 30, 2023.~~March 31, 2024.


Year Ending December 31,	Year Ending December 31,	Estimated Amortization Expense		Year Ending December 31,	Estimated Amortization Expense
2023		$	8,219
2024	2024	$	5,554
2025	2025	$	4,344
2026	2026	$	3,112
2027	2027	$	2,127
2028

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

4.5. Revenues

For the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, we recognized revenues of $358.2 million and $285.4 million, respectively. Of the $358.2 million recognized in the third quarter of~~ 2023, we recognized revenues of ~~$9.6~~$356.0 million and $317.9 million, respectively. Of the $356.0 million recognized in the first quarter of 2024, we recognized revenues of $8.3 million from obligations satisfied, or partially satisfied, in prior periods, of which ~~$7.1~~$7.5 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and ~~$2.5~~$0.8 million was due to the release of allowances on receivables from clients and unbilled services. Of the ~~$285.4~~$317.9 million recognized in the ~~third~~first quarter of ~~2022,~~2023, we recognized revenues of ~~$3.5~~$1.2 million from obligations satisfied, or partially satisfied, in prior periods ~~which was primarily~~ due to the release of allowances on receivables from clients and unbilled services.

~~For the nine months ended September 30, 2023 and 2022, we recognized revenues of $1.02 billion and $818.7 million, respectively. Of the $1.02 billion recognized in~~ During the first ~~nine months~~quarter of 2023, we also recognized ~~revenues of $10.4~~a $2.5 million ~~from obligations satisfied, or partially satisfied, in prior periods, of which $9.1 million was~~decrease to revenues due to changes in the estimates of our variable consideration under performance-based billing arrangements and $1.3 million was primarily due to the release of allowances on receivables from clients and unbilled services. Of the $818.7 million recognized in the first nine months of 2022, we recognized revenues of $4.7 million from obligations satisfied, or partially satisfied, in prior periods, of which $2.5 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 receivables from clients and unbilled services.arrangements.

As of ~~September 30, 2023,~~March 31, 2024, we had ~~$228.4~~$221.3 million of remaining performance obligations under engagements with original expected durations greater than one year. These remaining performance obligations exclude 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 ~~$228.4~~$221.3 million of performance obligations, we expect to recognize ~~$25.8~~$65.7 million as revenue in ~~2023, $72.6~~2024, $58.6 million in ~~2024,~~2025, and the remaining ~~$130.0~~$97.0 million thereafter. Actual revenue recognition could differ from these amounts as a result of changes in the

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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, net balance as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~$58.0~~$56.6 million and ~~$50.2~~$70.1 million, respectively. The ~~$7.8~~$13.5 million ~~increase~~decrease primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms.

Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition accounting policy. Our deferred revenues balance as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~$26.2~~$24.7 million and ~~$21.9~~$22.5 million, respectively. The ~~$4.3~~$2.2 million increase ~~primarily~~ reflects the deferred revenue assumed in the acquisition of GG+A, partially offset by timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three ~~and nine~~ months ended ~~September 30, 2023, $0.9 million and $21.2~~March 31, 2024, $15.4 million of revenues recognized were included in the deferred revenue balance as of December 31, ~~2022, respectively.~~2023.

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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, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss per share would be anti-dilutive.

Earnings per share under the basic and diluted computations are as follows:




		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2023		2022		2023		2022			2024	2023
Net income	Net income	$	21,516	$	17,741	$	59,647	$	58,468

Weighted average common shares outstanding – basic	Weighted average common shares outstanding – basic	18,770		20,109		18,941		20,511
Weighted average common shares outstanding – basic
Weighted average common shares outstanding – basic
Weighted average common stock equivalents	Weighted average common stock equivalents	705		506		637		388
Weighted average common shares outstanding – diluted	Weighted average common shares outstanding – diluted	19,475		20,615		19,578		20,899

Net income per basic share	Net income per basic share	$	1.15	$	0.88	$	3.15	$	2.85
Net income per basic share
Net income per basic share
Net income per diluted share	Net income per diluted share	$	1.10	$	0.86	$	3.05	$	2.80

~~The number of anti-dilutive securities~~Less than 0.1 million shares related to unvested restricted stock and outstanding common stock options were excluded from the computation of the weighted average common stock equivalents presented above for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 ~~and 2022~~as they were ~~less than 0.1 million shares and related to unvested restricted stock and outstanding common stock options.~~anti-dilutive. There were no anti-dilutive securities for the three months ended March 31, 2024.

In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, ~~2021. Subsequent to the initial authorization, our board of directors authorized extensions of the~~2021.The share repurchase program ~~through December 31, 2023~~has been subsequently extended and increased, ~~the authorized amount to $300 million. In~~most recently in the fourth quarter of ~~2023, our board of directors authorized a further extension of~~2023. The current authorization extends the share repurchase program through December 31, 2024 ~~and increased the authorized~~with a repurchase amount ~~under the share repurchase program from $300 million to~~of $400 million. The amount and timing of repurchases under the 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. ~~All~~

In the three months ended March 31, 2024, we repurchased and retired 624,698 shares for $62.3 million, which includes 23,000 shares for $2.2 million which settled in the second quarter of 2024 and a $0.1 million accrual for excise taxes on the net share repurchases. Additionally, in the three months ended March 31, 2024 we settled the repurchase of 10,000 shares for $1.0 million which were accrued as of December 31, 2023.

In the three months ended March 31, 2023, we repurchased and retired 632,894 shares for $44.3 million, which includes a $0.2 million accrual for excise taxes on the net share repurchases. Additionally, in the three months ended March 31, 2023 we settled the repurchase of 15,200 shares for $1.1 million which were accrued as of December 31, 2022.

As of March 31, 2024, $24.0 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)

~~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 and nine months ended September 30, 2023, we repurchased and retired 290,288 and 1,116,830 shares for $28.8 million and $88.4 million, respectively. Additionally, in the first quarter of 2023, we settled the repurchase of 15,200 shares for $1.1 million which were accrued as of December 31, 2022. In the three and nine months ended September 30, 2022, we repurchased and retired 685,641 and 1,706,587 shares for $45.6 million and $97.9 million, respectively, including 38,568 shares for $2.6 million which were settled in the fourth quarter of 2022. Additionally in the first quarter of 2022, we settled the repurchase of 3,820 shares for $0.2 million that were accrued as of December 31, 2021. As of September 30, 2023, $21.1 million remained available for share repurchases under our share repurchase program.

6.7. Financing Arrangements

The Company has a $600 million ~~five-year~~ senior secured revolving credit facility (the “Revolver”) and a $275 million senior secured term loan facility (the “Term Loan”), subject to the terms of athe Third Amended and Restated Credit Agreement dated as of November 15, 2022 (as amended, the ~~"Amended~~“Amended Credit ~~Agreement"~~Agreement”) ~~that becomes due and payable in full upon maturity~~, both of which fully mature on November 15, 2027. The Term Loan was established in February 2024 with the execution of Amendment No. 2 to the Third Amended and Restated Credit Agreement. The Term Loan is subject to scheduled quarterly amortization payments of $3.4 million beginning June 30, 2024 through the maturity date of November 15, 2027, at which time the outstanding principal balance and all accrued interest will be due.

As of March 31, 2024, we had total borrowings outstanding under our Amended Credit Agreement of $574.0 million, consisting of $299.0 million outstanding under the Revolver and $275.0 million outstanding under the Term Loan. A summary of the scheduled maturities of those borrowings follows:


	Scheduled Maturities of Long-Term Debt
2024	$	10,312
2025	$	13,750
2026	$	13,750
2027	$	536,188

The initial borrowings under the Revolver were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Revolver may be used for working capital, capital expenditures, share repurchases, permitted acquisitions, and other general corporate purposes. The proceeds of the Term Loan were used to reduce borrowings under the Revolver.

The Amended Credit Agreement provides the option to increase the revolving credit facility or establish additional term loan facilities in an aggregate amount up to $250 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 ~~$850 million. The initial~~$1.13 billion.

Fees and interest on 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, share repurchases, permitted acquisitions, and other 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, these borrowings ~~under the Amended Credit Agreement~~ will bear interest at one, three or six month Term SOFR or, in the case of the Revolver, an alternate base rate, in each case plus the applicable margin. The applicable margin for borrowings under the Revolver will fluctuate between 1.125% per annum and 1.875% per annum, in the case of Term SOFR 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.

~~In April 2023,~~ The applicable margin for the ~~Company~~outstanding principal under the Term Loan will range between 1.625% per annum and ~~PNC Capital Markets, LLC, as Sustainability Structuring Agent, with~~2.375% per annum based upon our Consolidated Leverage Ratio at such time. The fees and interest are subject to further adjustment based upon the ~~consent of the Required Lenders (as defined in the Amended Credit Agreement), entered into the first amendment to the Amended Credit Agreement (the "First Amendment") to incorporate~~Company's performance against specified key performance indicators ~~with respect~~related to certain environmental, social and governance targets of the Company. Based upon the performance of the Company against those key performance indicators in each Reference Year (as defined in the ~~First Amendment)~~Amended Credit Agreement), certain adjustments to the otherwise applicable rates for interest, commitment fees and letter of credit fees will be made. These annual adjustments will not exceed an increase or decrease of 0.01% in the aggregate for all key performance indicators in the case of the commitment fee rate or an increase or decrease of 0.05% in the aggregate for all key performance indicators in the case of the Term SOFR borrowings, base rate borrowings or letter of credit fee rate.

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 Third Amended and Restated Security Agreement and a Third Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A. as collateral agent, pursuant to which the Company and the subsidiary guarantors grant Bank of America, N.A., for the ratable benefit of the lenders under the Amended Credit Agreement, a first-priority lien, subject to permitted liens, on substantially all of the personal property assets of the Company and the subsidiary guarantors, and a pledge of 100% of the stock or other equity interests in all domestic subsidiaries and 65% of the stock or other equity interests in each “material first-tier foreign subsidiary” (as defined in the Pledge Agreement) entitled to vote and 100% of the stock or other equity interests in each material first-tier foreign subsidiary not entitled to vote.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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 ~~September 30, 2023,~~March 31, 2024, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of ~~1.82~~2.74 to 1.00 and a Consolidated Interest Coverage Ratio of ~~10.86~~10.65 to 1.00.

A summary of the carrying amounts of our debt follows:


	March 31, 2024		December 31, 2023
Revolver	$	299,000	$	324,000
Term Loan	275,000		—
Unamortized debt issuance costs - Term Loan1	(1,353)		—
Total long-term debt	572,647		324,000
Current maturities of long-term debt	(13,750)		—
Long-term debt, net of current portion	$	558,897	$	324,000

(1)In connection with establishing the Term Loan, we incurred $1.4 million of debt issuance costs which were recognized as a discount to the Term Loan. These debt issuance costs are amortized to interest expense using an effective interest rate of 7.34% over the term of the Term Loan. Unamortized debt issuance costs related to the Revolver are included as a component of other non-current assets and amortized to interest expense using the straight-line method over the term of the Revolver.

Borrowings outstanding under the Amended Credit Agreement ~~at September 30,~~as of March 31, 2024 and December 31, 2023 ~~totaled $358.0 million and are classified as long-term debt in our consolidated balance sheet. These borrowings~~ carried a weighted average interest rate of ~~4.4%~~5.4% and 4.2%, respectively, including the effect of the interest rate swaps described in Note 89 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Amended Credit Agreement at December 31, 2022 were $290.0 million and carried a weighted average interest rate of 3.8%, including the effect of the interest rate swaps in effect at that time.

The borrowing capacity under the ~~revolving credit facility~~Revolver is reduced by any outstanding borrowings under the ~~revolving credit facility~~Revolver and outstanding letters of credit. At ~~September 30, 2023,~~March 31, 2024, we had outstanding letters of credit totaling $0.6 million, which are used as security deposits for our office facilities. As of ~~September 30, 2023,~~March 31, 2024, the unused borrowing capacity under the ~~revolving credit facility~~Revolver was ~~$241.4~~$300.4 million.

7.8. Restructuring Charges

Restructuring charges were $2.3 million for the three months ended ~~September 30, 2023 were $5.4 million. In the third quarter of 2023, we exited our office space in Lexington, Massachusetts~~March 31, 2024, which resulted in a $3.5 million non-cash impairment charge on the related right of use operating lease asset and fixed assets of that office space. Additionally, in the third quarter of 2023, we recognized $1.2included $1.0 million of ~~employee-related expenses~~severance-related expenses; $0.8 million related to non-cash lease impairment charges driven by updated sublease assumptions for our previously vacated office spaces; and ~~$0.7~~$0.5 million of rent and related expenses, net of sublease income, for previously vacated office spaces.

Restructuring charges were $2.3 million for the ~~nine~~three months ended ~~September 30, 2023 were $9.4 million.~~March 31, 2023. In the first ~~nine months~~quarter of 2023, we exited our office ~~spaces~~space in Hillsboro, Oregon ~~and Lexington, Massachusetts, resulting~~which resulted in a $1.9 million non-cash impairment ~~charges of $1.9 million~~charge on the related fixed assets and ~~$3.5 million, respectively, related to the~~ right-of-use operating lease ~~assets and fixed assets.~~asset of that office space. Additionally, in the first ~~nine months~~quarter of 2023, we recognized ~~$2.2~~$0.4 million of ~~employee-related expenses; $1.3 million~~additional restructuring expense for rent and related expenses, net of sublease income, for previously vacated office ~~spaces; $0.3 million related to the abandonment~~spaces.

Table of ~~a capitalized software development project; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces.~~Contents

~~Restructuring charges for the three and nine months ended September 30, 2022 were $1.3 million and $5.0 million, respectively. The $1.3 million of restructuring charges recognized~~

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in the third quarter of 2022 included $0.7 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.5 million for the early termination of a contract; and $0.1 million of employee-related expenses. The $5.0 million of restructuring charges incurred in the first nine months of 2022 included $1.7 million of employee-related expenses; $1.7 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.6 million for third-party transaction expenses related to the modification of our operating model; $0.5 million for the early termination of a contract; $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 related to the divestiture of our Life Sciences business in the fourth quarter of 2021.thousands, except per share amounts)

(Unaudited)

The table below sets forth the changes in the carrying value of our restructuring charge liability by restructuring type for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.


		Employee Costs		Other		Total
Balance as of December 31, 2022		$	3,751	$	568	$	4,319
		Employee Costs
		Employee Costs
		Employee Costs						Other	Total
Balance as of December 31, 2023
Additions	Additions	2,185		—		2,185
Payments	Payments	(4,289)		(74)		(4,363)
Adjustments	Adjustments	—		41		41
Balance as of September 30, 2023		$	1,647	$	535	$	2,182
Balance as of March 31, 2024

All of the ~~$1.6~~$1.5 million restructuring charge liability related to employee costs at ~~September 30, 2023~~March 31, 2024 is expected to be paid in the next 12 months and is included as a component of accrued payroll and related benefits in our consolidated balance sheet. All of the $0.5 million other restructuring charge liability at ~~September 30, 2023,~~March 31, 2024, which primarily relates to the early termination of a contract, ~~in 2022,~~ is expected to be paid in the next 12 months and is included as a component of accrued expenses and other current liabilities in 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)~~

8.9. Derivative Instruments and Hedging Activity

In the normal course of business, we use forward interest rate swaps to manage the interest rate risk associated with our variable-rate borrowings under our senior secured credit facility and we use non-deliverable foreign exchange forward contracts to manage the foreign currency exchange rate risk related to our Indian Rupee-denominated expenses of our operations in India. From time to time, we may enter into additional forward interest rate swaps or non-deliverable foreign exchange forward contracts to further hedge against our interest rate risk and foreign currency exchange rate risk. We do not use derivative instruments for trading or other speculative purposes.

We have designated all of our derivative instruments as cash flow hedges. Therefore, changes in the fair value of the interest rate swaps and foreign exchange forward contracts are recorded to other comprehensive income to the extent effective and reclassified to earnings upon settlement.

Interest Rate Swaps

We are party to forward interest rate swap agreements with aggregate notional amounts of ~~$250.0~~$300.0 million and ~~$200.0~~$250.0 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Under the terms of the interest rate swap agreements, we receive from the counterparty interest on the notional amount based on one month Term SOFR and we pay to the counterparty a stated, fixed rate. The forward interest rate swap agreements have staggered maturities through ~~February 29, 2028.~~January 31, 2029.

As of ~~September 30, 2023,~~March 31, 2024, it was anticipated that ~~$6.4~~$5.7 million of the gains, net of tax, related to interest rate swaps currently recorded in accumulated other comprehensive income will be reclassified into interest expense, net of interest income in our consolidated statement of operations within the next 12 months.

Foreign Exchange Forward Contracts

We are party to non-deliverable foreign exchange forward contracts that are scheduled to mature monthly through ~~August~~December 31, 2024. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the aggregate notional amounts of these contracts were INR ~~1,371.2~~878.0 million, or ~~$16.5~~$10.5 million, and INR ~~657.9~~1,375.7 million, or ~~$8.0~~$16.6 million, respectively, based on the exchange rates in effect as of each period end.

As of ~~September 30, 2023,~~March 31, 2024, it was anticipated that ~~all of~~ the less than $0.1 million of losses, net of tax, related to foreign exchange forward contracts currently recorded in accumulated other comprehensive income will be reclassified into ~~direct costs~~earnings in our consolidated statement of operations within the next 12 months.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

The table below sets forth additional information relating to our derivative instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

Derivative Instrument

Balance Sheet Location

September 30,
2023

December 31,
2022

Derivative Instrument

Balance Sheet Location

March 31,
2024

December 31,
2023

Interest rate swaps

Prepaid expenses and other current assets

8,218

7,108

Interest rate swaps

Other non-current assets

3,748

5,131

Foreign exchange forward contracts

Prepaid expenses and other current assets

—

Total Assets

11,982

12,239

Interest rate swaps

Foreign exchange forward contracts

Accrued expenses and other current liabilities

180

120

Total Liabilities

180

120

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 in our consolidated balance sheet. Refer to Note 1011 “Other Comprehensive Income (Loss)” for additional information on our derivative instruments.

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

9.10. 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 ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.


			Level 1		Level 2		Level 3		Total
September 30, 2023
		Level 1									Level 1	Level 2	Level 3	Total
March 31, 2024
Assets:	Assets:
Assets:
Assets:
Interest rate swaps
Interest rate swaps
Interest rate swaps	Interest rate swaps		$	—	$	11,966	$	—	$	11,966
Convertible debt investment	Convertible debt investment		—		—		61,756		61,756
Foreign exchange forward contracts	Foreign exchange forward contracts		—		16		—		16
Deferred compensation assets	Deferred compensation assets		—		31,311		—		31,311
Total assets	Total assets		$	—	$	43,293	$	61,756	$	105,049
Liabilities:	Liabilities:

Interest rate swaps
Interest rate swaps
Interest rate swaps
Foreign exchange forward contracts	Foreign exchange forward contracts		$	—	$	180	$	—	$	180
Contingent consideration for business acquisitions	Contingent consideration for business acquisitions		—		—		2,313		2,313
Total liabilities	Total liabilities		$	—	$	180	$	2,313	$	2,493
December 31, 2022
December 31, 2023
Assets:	Assets:
Assets:
Assets:
Interest rate swaps
Interest rate swaps
Interest rate swaps	Interest rate swaps		$	—	$	12,239	$	—	$	12,239
Convertible debt investment	Convertible debt investment		—		—		57,563		57,563
Deferred compensation assets	Deferred compensation assets		—		29,875		—		29,875
Total assets	Total assets		$	—	$	42,114	$	57,563	$	99,677
Liabilities:	Liabilities:
Interest rate swaps
Interest rate swaps
Interest rate swaps
Foreign exchange forward contracts	Foreign exchange forward contracts		$	—	$	120	$	—	$	120
Contingent consideration for business acquisitions	Contingent consideration for business acquisitions		—		—		3,190		3,190
Total liabilities	Total liabilities		$	—	$	120	$	3,190	$	3,310

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 89 “Derivative Instruments and Hedging Activity” for additional information on our interest rate swaps.

Foreign exchange forward contracts: The fair values of our foreign exchange forward contracts were derived using estimates to settle the foreign exchange forward contracts agreements, which are based on the net present value of expected future cash flows on each contract

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

utilizing market-based inputs, including both forward and spot prices, and a discount rate reflecting the risks involved. Refer to Note 89 “Derivative Instruments and Hedging Activity” for additional information on our foreign exchange forward contracts.

Deferred compensation assets: We have a non-qualified deferred compensation plan (the “Plan”) for the members of our board of directors and a select group of our employees. The deferred compensation liability is funded by the Plan assets, which consist of life insurance policies maintained within a trust. The cash surrender value of the life insurance policies approximates fair value and is based on third-party broker statements which provide the fair value of the life insurance policies' underlying investments, which are Level 2 inputs. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The Plan assets are included in other non-current assets in 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.

Convertible debt investment: Since 2014, we have invested $40.9 million in the form of 1.69% convertible debt 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. The convertible notes will mature on January 17, 2027, unless converted earlier.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

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. We continue to monitor the key factors of our VIE analysis and the terms of the convertible notes to ensure our accounting treatment is appropriate. We have not identified any changes to Shorelight or our investment that would change our classification of the investment as 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. The carrying value is recorded in long-term investments in our consolidated balance sheets. We estimate the fair value of our investment using a scenario-based approach in the form of a hybrid analysis that consists of a Monte Carlo simulation model and an expected return analysis. The conclusion of value for our investment is based on the probability-weighted assessment of both scenarios. The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, ~~2027;~~2027 for the valuations performed as of March 31, 2024 and December 31, 2023; 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 24.5% ~~and 24.0%~~ as of ~~September 30, 2023~~both March 31, 2024 and December 31, ~~2022, respectively;~~2023; and the concluded equity volatility of ~~35.0%~~40.0% and ~~40.0%~~35.0% as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 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 table below sets forth the changes in the balance of the convertible debt investment for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.


	Convertible Debt Investment
Balance as of December 31, ~~2022~~2023	$	~~57,563~~68,046

Change in fair value	~~4,193~~ (1,947)
Balance as of ~~September 30, 2023~~March 31, 2024	$	~~61,756~~66,099

Contingent consideration for business 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 was ~~6.2%~~6.3% as of ~~September 30, 2023~~both March 31, 2024 and ~~5.5% as of~~ December 31, ~~2022.~~2023. 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 to selling, general and administrative expenses 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 ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.


	Contingent Consideration for Business Acquisitions
Balance as of December 31, ~~2022~~2023	$	~~3,190~~2,074
Acquisition	~~374~~36
~~Payment~~	~~(1,000)~~
Change in fair value	~~(251)~~516
Balance as of ~~September 30, 2023~~March 31, 2024	$	~~2,313~~2,626

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. To determine the appropriate accounting treatment for our preferred stock investment, we performed a VIE analysis and concluded that ~~Medically Home~~the company 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,

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

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 an identical or similar investment in ~~Medically Home.~~the same company. 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~~or if factors indicate that a significant decrease in value has occurred. We remeasure to the fair value of the preferred stock using such identified ~~transactions,~~information with changes in the fair value recorded ~~to other income (expense), net~~ in our consolidated statement of operations. ~~The carrying value of the preferred stock investment is recorded in long-term investments in our consolidated balance sheets.~~

During the first ~~quarter~~three months of ~~2022, we recognized a pre-tax unrealized gain of $27.0 million based on an observable price change of preferred stock issued by Medically Home with similar rights~~2024 and ~~preferences to our preferred stock investment, a Level 2 input. There~~2023, there were no observable price changes ~~for the remainder~~or impairments of ~~2022 or in the first nine months of 2023.~~our preferred stock investment. Since our initial investment, we have recognized cumulative ~~pre-tax~~ unrealized gains of $28.6 million ~~which were recorded to other income (expense), net in our consolidated statement~~and cumulative unrealized losses of ~~operations, and we have not identified any impairments of our investment.~~$26.3 million. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of our preferred stock investment was ~~$33.6~~$7.4 million.

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

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)~~

~~10.~~11. Other Comprehensive Income (Loss)

The table below sets forth the components of other comprehensive income (loss), net of tax, for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.
Three Months Ended
September 30, 2023 Three Months Ended
September 30, 2022
Before
Taxes Tax
(Expense)
Benefit Net of
Taxes Before
Taxes Tax
(Expense)
Benefit Net of
Taxes
Foreign currency translation adjustments $ (662) $ — $ (662) $ (1,034) $ — $ (1,034)
Unrealized gain (loss) on investment $ (1,840) $ 490 $ (1,350) $ (1,128) $ 298 $ (830)
Interest rate swaps:
Change in fair value $ 1,849 $ (492) $ 1,357 $ 5,302 $ (1,402) $ 3,900
Reclassification adjustments into earnings (2,107) 560 (1,547) (89) 24 (65)
Net unrealized gain (loss) on interest rate swaps $ (258) $ 68 $ (190) $ 5,213 $ (1,378) $ 3,835
Foreign exchange forward contracts:
Change in fair value $ (223) $ 59 $ (164) $ (98) $ 26 $ (72)
Reclassification adjustments into earnings (19) 5 (14) (1) — (1)
Net unrealized gain (loss) on foreign exchange forward contracts $ (242) $ 64 $ (178) $ (99) $ 26 $ (73)
Other comprehensive income (loss) $ (3,002) $ 622 $ (2,380) $ 2,952 $ (1,054) $ 1,898
Nine Months Ended
September 30, 2023 Nine Months Ended
September 30, 2022
Before
Taxes Tax
(Expense)
Benefit Net of
Taxes Before
Taxes Tax
(Expense)
Benefit Net of
Taxes
Foreign currency translation adjustments $ (283) $ — $ (283) $ (1,733) $ — $ (1,733)
Unrealized gain (loss) on investment $ 4,193 $ (1,117) $ 3,076 $ (3,694) $ 976 $ (2,718)
Interest rate swaps:
Change in fair value $ 5,307 $ (1,411) $ 3,896 $ 11,994 $ (3,172) $ 8,822
Reclassification adjustments into earnings (5,580) 1,483 (4,097) 420 (111) 309
Net unrealized gain (loss) on interest rate swaps $ (273) $ 72 $ (201) $ 12,414 $ (3,283) $ 9,131
Foreign exchange forward contracts:
Change in fair value $ (23) $ 6 $ (17) $ (98) $ 26 $ (72)
Reclassification adjustments into earnings (21) 5 (16) (1) — (1)
Net unrealized gain (loss) on foreign exchange forward contracts $ (44) $ 11 $ (33) $ (99) $ 26 $ (73)
Other comprehensive income (loss) $ 3,593 $ (1,034) $ 2,559 $ 6,888 $ (2,281) $ 4,607


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Before Taxes		Tax (Expense) Benefit		Net of Taxes		Before Taxes		Tax (Expense) Benefit		Net of Taxes
Foreign currency translation adjustments	$	(722)	$	—	$	(722)	$	52	$	—	$	52
Unrealized gain (loss) on investment	$	(1,947)	$	500	$	(1,447)	$	5,279	$	(1,406)	$	3,873
Interest rate swaps:
Change in fair value	$	3,678	$	(960)	$	2,718	$	(1,807)	$	481	$	(1,326)
Reclassification adjustments into earnings	(2,285)		596		(1,689)		(1,532)		407		(1,125)
Net unrealized gain (loss) on interest rate swaps	$	1,393	$	(364)	$	1,029	$	(3,339)	$	888	$	(2,451)
Foreign exchange forward contracts:
Change in fair value	$	46	$	(12)	$	34	$	154	$	(41)	$	113
Reclassification adjustments into earnings	14		(4)		10		12		(3)		9
Net unrealized gain (loss) on foreign exchange forward contracts	$	60	$	(16)	$	44	$	166	$	(44)	$	122
Other comprehensive income (loss)	$	(1,216)	$	120	$	(1,096)	$	2,158	$	(562)	$	1,596

The before tax amounts reclassified from accumulated other comprehensive income related to our interest rate swaps and foreign exchange forward contracts are recorded to interest expense, net of interest income and direct costs, ~~respectively.~~respectively, on our consolidated statement of operations. The related tax amounts reclassified from accumulated other comprehensive income are recorded to income tax expense (benefit) on our consolidated statement of operations. Refer to Note 89 “Derivative Instruments and Hedging Activity” for additional information on our derivative instruments.

1415

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

Accumulated other comprehensive income, net of tax, includes the following components:

Cash Flow Hedges
Foreign Currency Translation Available-for-Sale Investment Interest Rate Swaps Foreign Exchange Forward Contracts Total
Balance as of December 31, 2022 $ (3,033) $ 12,228 $ 9,012 $ (88) $ 18,119
Current period change (283) 3,076 (201) (33) 2,559
Balance as of September 30, 2023 $ (3,316) $ 15,304 $ 8,811 $ (121) $ 20,678


					Cash Flow Hedges
	Foreign Currency Translation		Available-for-Sale Investment		Interest Rate Swaps		Foreign Exchange Forward Contracts		Total
Balance as of December 31, 2023	$	(2,521)	$	20,039	$	5,361	$	(52)	$	22,827
Current period change	(722)		(1,447)		1,029		44		(1,096)
Balance as of March 31, 2024	$	(3,243)	$	18,592	$	6,390	$	(8)	$	21,731

~~11.~~12. Income Taxes

For the three months ended ~~September 30, 2023,~~March 31, 2024, our effective tax rate was ~~31.2%~~(2.5)% as we recognized an income tax ~~expense~~benefit of ~~$9.8~~$0.4 million on income of ~~$31.3~~$17.6 million. The effective tax rate of ~~31.2%~~(2.5)% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of ~~26.6%~~26.1%, 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 September 30, 2022, our effective tax rate was 30.2% as we recognized income tax expense of $7.7 million on income of $25.4 million. The effective tax rate of 30.2% 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 nine months ended September 30, 2023, our effective tax rate was 27.4% as we recognized income tax expense of $22.5 million on income of $82.1 million. The effective tax rate of 27.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to certain nondeductible expense items. These unfavorable items were partially offset by a discrete tax benefit for share-based compensation awards that vested during the ~~year.~~quarter.

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, our effective tax rate was ~~31.4%~~15.3% as we recognized income tax expense of ~~$26.7~~$2.4 million on income of ~~$85.2~~$15.8 million. The effective tax rate of ~~31.4%~~15.3% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of ~~26.4%~~26.6%, primarily due to a discrete tax ~~expense~~benefit for share-based compensation awards that vested during the quarter and a tax benefit related to ~~nondeductible losses~~non-taxable gains on our investments used to fund our deferred compensation ~~liability and~~liability. These favorable items were partially offset by certain nondeductible expense items.

As of September 30, 2023, we had $0.6 million of unrecognized tax benefits which would affect the effective tax rate if recognized. It is reasonably possible that approximately $0.6 million of the liability for unrecognized tax benefits could decrease in the next twelve months due to the expiration of statutes of limitations.

~~12.~~13. Commitments, Contingencies and Guarantees

Litigation

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 $0.6 million and ~~$0.7~~$0.5 million were outstanding at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, to support certain office lease obligations.

In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the total estimated fair value of our outstanding contingent consideration liability was ~~$2.3~~$2.6 million and ~~$3.2~~$2.1 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,

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~~HURON CONSULTING GROUP INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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.

~~13.~~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 three operating segments, which are our reportable segments: Healthcare, Education, and Commercial.

•Healthcare

Our Healthcare segment serves acute care providers, including national and regional health systems; academic health systems; community health systems; the federal health system; and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical 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, spanning technology and analytic-related services and a portfolio of software products; organizational transformation; financial advisory and strategy and innovation. Healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around growth, optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital 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, identifying new opportunities for growth, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, and maximizing return on technology investments.

•~~Education~~

Our Education segment 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, spanning technology and analytic-related services and Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance; and organizational transformation. Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition, and a need to modernize their businesses using technology to advance their missions. 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 and analytics; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; applying innovative enrollment strategies; and enhancing the student lifecycle.

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HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(Unaudited)

providers, including physician practices and medical groups; payors; and long-term care or post-acute providers. Our healthcare-focused services and products include financial and operational performance improvement consulting, which spans revenue cycle, cost and care delivery transformation; digital offerings, spanning technology and analytic-related services, including enterprise health record (“EHR”), enterprise resource planning (“ERP”) and enterprise performance management (“EPM”), customer relationship management (“CRM”), data management and technology managed services, and a portfolio of software products; organizational transformation; revenue cycle managed services and outsourcing; financial and capital advisory consulting; and strategy and innovation consulting.

•Education

Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations. Our education and research-focused services and products include our digital offerings, spanning technology and analytic-related services, including student information systems, ERP and EPM, CRM, data management and technology managed services and our Huron Research Suite product suite (the leading software suite designed to facilitate and improve research administration service delivery and compliance); our research-focused consulting and managed services; and our strategy and operations consulting services, which span finance, accounting, operations and philanthropy functions, organization and talent strategy, and student and academic strategy.

•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 deep focus on serving organizations in the financial services, energy and utilities, industrials and manufacturing industries and the public sector while opportunistically serving commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit. Our Commercial professionals use their deep industry, functional and technical expertise to deliver our digital services and software products, ~~strategy and innovation, and~~ financial advisory (special situation advisory and corporate finance advisory) ~~services. In today’s disruptive environment, organizations must reimagine their historical strategies~~services, and ~~financial~~strategy and operating models to sustain and advance their competitive advantage. 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 analytics and insights to identify the needs of tomorrow’s customers, evolving their strategies, and bringing new products to market; managing through stressed and distressed situations to create a viable path forward for stakeholders; and providing financial, risk and regulatory advisory offerings.innovation consulting services.

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 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.

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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 information about our operating segments for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.


		Three Months Ended September 30,							Nine Months Ended September 30,
		2023			2022				2023			2022
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
								2024												2024	2023
Healthcare:	Healthcare:
Revenues
Revenues
Revenues	Revenues	$	179,177		$	131,319			$	501,994		$	381,669
Operating income	Operating income	$	46,888		$	33,045			$	128,294		$	91,441
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	26.2		%	25.2		%		25.6		%	24.0		%	Segment operating income as a percentage of segment revenues	23.6	%	21.6	%
Education:	Education:
Revenues	Revenues	$	111,043		$	94,347			$	325,884		$	263,234
Revenues
Revenues
Operating income	Operating income	$	26,550		$	22,851			$	77,112		$	58,848
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	23.9		%	24.2		%		23.7		%	22.4		%	Segment operating income as a percentage of segment revenues	19.7	%	22.2	%
Commercial:	Commercial:
Revenues
Revenues
Revenues	Revenues	$	67,958		$	59,704			$	194,954		$	173,841
Operating income	Operating income	$	15,432		$	14,153			$	39,971		$	38,282
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	22.7		%	23.7		%		20.5		%	22.0		%	Segment operating income as a percentage of segment revenues	22.1	%	21.7	%
Total Huron:	Total Huron:
Revenues	Revenues	$	358,178		$	285,370			$	1,022,832		$	818,744
Revenues
Revenues
Reimbursable expenses	Reimbursable expenses	9,288			6,816				25,918			19,034
Total revenues and reimbursable expenses	Total revenues and reimbursable expenses	$	367,466		$	292,186			$	1,048,750		$	837,778

Segment operating income	Segment operating income	$	88,870		$	70,049			$	245,377		$	188,571
Segment operating income
Segment operating income
Items not allocated at the segment level:	Items not allocated at the segment level:
Other operating expenses
Other operating expenses
Other operating expenses	Other operating expenses	43,086			34,875				129,563			96,376
Restructuring charges	Restructuring charges	4,095			804				6,881			2,763
Depreciation and amortization	Depreciation and amortization	4,347			5,071				13,441			15,171

Operating income	Operating income	37,342			29,299				95,492			74,261
Total other income (expense), net		(6,047)			(3,896)				(13,365)			10,946
Operating income
Operating income
Other expense, net
Income before taxes	Income before taxes	$	31,295		$	25,403			$	82,127		$	85,207

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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 our two principal capabilities: i) Consulting and Managed Services and ii) Digital, and includes a reconciliation of the disaggregated revenues to revenues from our three operating segments for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
Revenues by Capability	Revenues by Capability	2023		2022		2023		2022		Revenues by Capability	2024	2023
Healthcare:	Healthcare:
Consulting and Managed Services
Consulting and Managed Services
Consulting and Managed Services	Consulting and Managed Services	$	130,548	$	88,626	$	357,228	$	256,340
Digital	Digital	48,629		42,693		144,766		125,329
Total revenues	Total revenues	$	179,177	$	131,319	$	501,994	$	381,669
Education:	Education:
Consulting and Managed Services	Consulting and Managed Services	$	55,837	$	49,363	$	162,490	$	142,823
Consulting and Managed Services
Consulting and Managed Services
Digital	Digital	55,206		44,984		163,394		120,411
Total revenues	Total revenues	$	111,043	$	94,347	$	325,884	$	263,234
Commercial:	Commercial:
Consulting and Managed Services
Consulting and Managed Services
Consulting and Managed Services	Consulting and Managed Services	$	28,303	$	17,912	$	69,419	$	55,193��
Digital	Digital	39,655		41,792		125,535		118,648
Total revenues	Total revenues	$	67,958	$	59,704	$	194,954	$	173,841
Total Huron:	Total Huron:
Consulting and Managed Services	Consulting and Managed Services	$	214,688	$	155,901	$	589,137	$	454,356
Consulting and Managed Services
Consulting and Managed Services
Digital	Digital	143,490		129,469		433,695		364,388
Total revenues	Total revenues	$	358,178	$	285,370	$	1,022,832	$	818,744

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ substantially all of our revenues were recognized over time. During the three months ended March 31, 2024 and 2023, no single client generated greater than 10% of our consolidated revenues. At ~~September 30, 2023~~March 31, 2024, one client in our Healthcare segment accounted for 11.9% of our combined receivable from clients, net and unbilled services, net balance as a result of outstanding invoices due in the normal course of the contract payment terms. At December 31, ~~2022,~~2023, no single client accounted for greater than 10% of our combined balance of receivables from clients, net and unbilled services, net. ~~During the three and nine months ended September 30, 2023 and 2022, no single client generated greater than 10% of our consolidated revenues.~~

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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: failure to achieve expected utilization rates, billing rates, and the necessary 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, ~~2022~~2023 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~~

OUR STRATEGY

The combination of our deep industry expertise and breadth of our offerings is the foundation of our growth strategy and why our clients choose Huron as their trusted advisor. Key focus areas of our growth strategy include:

•Accelerating Growth in Healthcare and Education: Huron has leading market positions in healthcare and education, providing comprehensive offerings to the largest health systems, academic medical centers, colleges and universities, and research institutes in the United States.

•Growing Presence in Commercial Industries: Huron’s commercial industry focus has increased the diversification of the Company’s portfolio and end markets while expanding the range of capabilities it can deliver to clients, providing new avenues for growth and an important balance to its healthcare and education focus.

•Rapidly Growing Global Digital Capability: Huron’s ability to provide a broad portfolio of digital offerings that support the strategic and operational needs of its clients is at the foundation of the Company’s strategy. Huron will continue to advance its integrated digital platform to support its strong growth trajectory.

•Solid Foundation for Margin Expansion: The Company is well-positioned to achieve consistent margin expansion as well as strong annual adjusted diluted earnings per share growth. We are committed to operating income margin expansion by growing the areas of the business that provide the most attractive returns, improving the operational efficiency of our delivery for clients, and scaling our selling, general, and administrative expenses as we grow.

•Strong Balance Sheet and Cash Flows: Strong free cash flows have and will continue to be a hallmark of Huron’s financial strength and business model. The Company is committed to deploying capital in a strategic and balanced way, including returning capital to shareholders and executing strategic, tuck-in acquisitions.

OUR SERVICES AND PRODUCTS

We provide our services and products and manage our business under three operating 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. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) ~~Digital.~~

~~Capabilities~~

~~Within each of~~Digital, which are methods by which we deliver our ~~reportable segments, we provide services under two principal capabilities: i) Consulting and Managed Services and ii) Digital.~~

•~~Consulting and Managed Services~~

Our Consulting and Managed Services capabilities represent our management consulting services, managed services (excluding technology-related managed services) and outsourcing services delivered across industries. Our Consulting and Managed Services experts help our clients address a variety of strategic, operational, financial, people and organizational-related challenges. These services are often combined with technology, analytic and data-driven solutions powered by our Digital capability to support long-term relationships with our clients and drive lasting impact. Examples include the areas of revenue cycle management and research administration at our healthcare and education clients, where our consulting and managed services projects are often coupled with our digital services and ~~product offerings.~~

•~~Digital~~

Our Digital capabilities represent our technology and analytics services, including technology-related managed services, and software products delivered across industries. Our Digital experts help clients address a variety of business challenges, including, but not limited to, 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 more than 25 technology partners. We are a Leading Modern Oracle Network Partner; a Summit-level consulting partner with Salesforce.com and a Premium Partner with Salesforce.org; a Workday Services, Preferred Channel, Extend, and Application Management Services Partner; an Amazon Web Services consulting partner; an Informatica Platinum Partner; an SAP Concur implementation partner; and a Boomi Elite Partner.products.

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We have also grown our proprietary software product portfolio to address our clients' challenges with solutions that expand our base of recurring revenue and further differentiate our consulting, digital and managed services offerings. Our product portfolio bundles our deep industry expertise and unique intellectual property together to serve our clients outside of our traditional consulting offerings. Our product portfolio includes, among others: Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance; Huron Intelligence™ Rounding, the #1 ranked Digital Rounding solution in the 2023 Best in KLAS® report; and Huron Intelligence™ Analytic Suite in Healthcare, a predictive analytics suite to improve care delivery while lowering costs.

Operating Industries

~~We provide our services and products and manage our business under three operating industries, which are our operating segments: Healthcare, Education, and Commercial.~~

•Healthcare

Our Healthcare segment serves acute care providers, including national and regional health systems; academic health systems; community health systems; the federal health system; and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical groups; payors; and long-term care or post-acute providers. Our ~~Healthcare professionals have a depth of expertise in business operations, including~~healthcare-focused services and products include financial and operational performance improvement ~~care transformation, and~~consulting, which spans revenue cycle, ~~managed services;~~cost and care delivery transformation; digital ~~solutions,~~offerings, spanning technology and analytic-related services, including enterprise health record (“EHR”), enterprise resource planning (“ERP”) and enterprise performance management (“EPM”), customer relationship management (“CRM”), data management and technology managed services, and a portfolio of software products; organizational transformation; revenue cycle managed services and outsourcing; financial and capital advisory consulting; and strategy and innovation. Healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around growth, optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital 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, identifying new opportunities for growth, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, and maximizing return on technology investments.innovation consulting.

To best serve our clients, we continue to diversify our portfolio of offerings. For example, we have broadened our capabilities beyond our leading profit and loss-focused offerings (e.g., revenue cycle, cost transformation) into offerings dedicated to optimizing our clients' financial positions through financial advisory and transaction-related services; transforming care delivery models through virtual health, health equity and social determinants of health models; and evolving organizations by supporting change management and developing the next generation of leaders by applying our best practices (e.g., revenue cycle leadership).

•Education

Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations. Our ~~Education professionals have a depth of expertise in strategy~~education and ~~innovation; business operations, including the research enterprise~~research-focused services and ~~student and alumni lifecycle;~~products include our digital ~~solutions,~~offerings, spanning technology and analytic-related services, including student information systems, ERP and EPM, CRM, data management and technology managed services and our Huron Research Suite ~~the~~product suite (the leading software suite designed to facilitate and improve research administration service delivery and ~~compliance;~~compliance); our research-focused consulting and ~~organizational transformation. Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition,~~managed services; and ~~a need to modernize their businesses using technology to advance their missions. We combine~~ our ~~deep industry, functional~~strategy and ~~technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business~~ operations ~~with technology~~consulting services, which span finance, accounting, operations and ~~analytics; strengthening research strategies~~philanthropy functions, organization and ~~support services; evolving their organizational strategy; optimizing financial~~talent strategy, and ~~operational performance; applying innovative enrollment strategies;~~student and ~~enhancing the student lifecycle.~~academic strategy. We continue to broaden our offerings into new ~~areas; for example,~~areas. Most recently, we expanded our research managed services, advancement, campus health and well-being, and ~~athletics.~~athletics offerings.

•Commercial

Capabilities

Within each of our operating segments, we provide our offerings under two principal capabilities: i) Consulting and Managed Services and ii) Digital.

•Consulting and Managed Services

Our Consulting and Managed Services capabilities represent our management consulting services, managed services (excluding technology-related managed services) and outsourcing services delivered across industries. Our Consulting and Managed Services experts help our clients address a variety of strategic, operational, financial, people and ~~operating models~~organizational-related challenges. These services are often combined with technology, analytic and data-driven solutions powered by our Digital capability to support long-term relationships with our clients and drive lasting impact. Examples include the areas of revenue cycle management and research administration managed services and outsourcing at our healthcare and education and research-focused clients, where our projects are often coupled with our digital services and product offerings and management consulting services to sustain improved performance.

•Digital

Our Digital capabilities represent our technology and ~~advance their competitive advantage.~~analytics services, including technology-related managed services and software products delivered across industries. Our Digital experts help ~~organizations across industries with~~clients address a variety of business challenges, including, but not limited to, designing and implementing technologies to accelerate transformation, facilitate data-driven decision making and improve customer and employee experiences. We have invested organically and inorganically to expand our Digital offerings, which now span beyond traditional ERP implementations into a broader set of administrative systems, industry-specific systems of record and systems of engagement that act

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~~embedding technology and analytics throughout their internal and customer-facing operations; developing~~as the “digital front door” to an organization. We also have grown our data, analytics and ~~insights~~automation offerings to ~~identify the needs~~deliver a unified and actionable technology ecosystem for our clients.

We have also grown our proprietary software product portfolio to address our clients' challenges with solutions that expand our base of ~~tomorrow’s customers, evolving their strategies,~~recurring revenue and ~~bringing new products to market; managing through stressed and distressed situations to create a viable path forward for stakeholders; and providing financial, risk and regulatory advisory offerings.~~

~~Business Strategy, Opportunities and Challenges~~

~~Our strategy is to be the premier transformation partner to~~further differentiate our ~~clients by helping them address a variety of strategic, operational, financial, people, and organizational challenges through an array of industry-differentiated~~ consulting, digital and managed services ~~offerings that meet their~~offerings. Our product portfolio bundles our deep industry expertise and unique ~~needs. To achieve~~intellectual property together to serve our ~~strategic and financial objectives that will drive increased shareholder value, we remain focused on:~~

•~~Extending our leading market positions and accelerating growth in healthcare and education,~~

•~~Growing our presence in commercial industries,~~

•~~Advancing our integrated, global digital platform,~~

•~~Building a more sustainable base of revenue and executing on our margin levers to drive more consistent growth and improved profitability,~~

•~~Strategically deploying capital to accelerate our strategy and return capital to shareholders, and~~

•~~Investing in and growing our talented team, including attracting and retaining our managing directors - the senior most practitioners that lead our revenue generation efforts.~~

~~We regularly evaluate the performance~~clients outside of our ~~businesses~~traditional consulting offerings. Our product portfolio includes, among others: Huron Research Suite, the leading software suite designed to ~~ensure our investments meet these objectives.~~facilitate and improve research administration service delivery and compliance; Huron Intelligence™ Rounding, the #1 ranked Digital Rounding solution in the 2023 Best in KLAS® report; and Huron Intelligence™ Analytic Suite in Healthcare, a predictive analytics suite to improve care delivery while lowering costs.

COMPONENTS OF OPERATING RESULTS

Revenues

Our revenues are primarily generated by our employees who provide consulting and other professional services to our clients and are billable to our clients based on the number of hours worked, services provided, or achieved outcomes. We refer to these employees as our revenue-generating professionals. Revenues are primarily driven by the number of revenue-generating professionals we employ as well as the total value, scope, and terms of the consulting contracts under which they provide services. We also engage independent contractors to supplement our revenue-generating professionals on 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. Fixed-fee arrangements also include software licenses for ~~certain digital products.~~our revenue cycle management software and research administration and compliance software.

•Time-and-expense: Under time-and-expense billing arrangements, we ~~require the client to pay~~invoice our clients based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include speaking engagements, conferences and publications purchased by our 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 earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our ~~time-and-expense~~fixed-fee or ~~fixed-fee~~time-and-expense engagements. The level of performance-based fees earned may vary based on our 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 ~~certain~~our cloud-based ~~digital products.~~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.

Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing. Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts. The volume of work performed for any particular client can vary widely from period to period.

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Our quarterly results are impacted principally by the total value, scope, and terms of our client contracts, the number of our revenue-generating professionals who are available to 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

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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.

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. We manage our business 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 we bill to our clients at cost.

Operating Expenses

Our most significant expenses are costs classified as direct costs. Direct costs primarily consist of compensation costs for our revenue-generating professionals, which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes and benefits. 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 compensation costs for our support personnel. Also included in selling, general and administrative expenses are third-party professional fees, software licenses and data 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, amortization expense related to internally developed software costs and amortization of intangible assets acquired in business combinations.

Segment Results

Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Other operating expenses not allocated at the segment level 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 finance, human resources, legal, marketing, information technology, and company-wide business development functions, and costs related to overall corporate management.

Non-GAAP Measures

We also assess our results of operations using the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per ~~share (“EPS”).~~share. These non-GAAP financial measures differ from 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.

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

Amortization of intangible assets: We exclude the effect of amortization of intangible assets from the calculation of adjusted net income, as it is inconsistent in its amount and frequency and is significantly affected by the timing and size of our acquisitions.

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Restructuring charges: We have incurred charges due to restructuring 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 employee severance charges. We exclude the effect of the restructuring charges from our non-GAAP measures to permit comparability with periods that ~~are~~were not impacted by these items. We do not include normal, recurring, cash operating expenses in our restructuring charges.

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Other losses (gains):, net: We exclude the effects of other losses ~~(gains),~~and gains, which primarily relate to changes in the estimated fair value of our liabilities for contingent consideration related to business acquisitions and litigation settlement losses and gains, to permit comparability with periods that are not impacted by these items.

Transaction-related expenses: To permit comparability with prior periods, we exclude the impact of third-party advisory, legal, and accounting fees and other corporate costs incurred directly related to the evaluation and/or consummation of business acquisitions.

~~Unrealized gain on preferred stock investment:~~ We exclude the effect of unrealized gains related to changes in the fair value of our preferred stock investment in Medically Home Group, Inc. (“Medically Home”), which 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 their exclusion permits comparability with prior periods.

Foreign currency transaction losses (gains), net: We 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 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. We include, within the depreciation and amortization adjustment, the amortization of capitalized implementation costs of our ~~enterprise resource planning ("ERP")~~ERP and other related software, which is included within selling, general and administrative expenses in our consolidated statements 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 working 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 ~~third~~first quarter of ~~2023~~2024 include:

•Total revenues increased ~~25.5%~~12.0% to ~~$358.2~~$356.0 million for the ~~third~~first quarter of ~~2023~~2024 from ~~$285.4~~$317.9 million for the ~~third~~first quarter of ~~2022.~~2023.

•For the first ~~nine~~three months of ~~2023,~~2024, Healthcare segment revenues increased ~~31.5%~~21.3% compared to the first ~~nine~~three months of ~~2022.~~

•~~For the first nine months of 2023, adjusted EBITDA as a percentage of revenues increased 110 basis points to 12.3% from 11.2% for the first nine months of 2022.~~2023.

•Diluted EPS increased ~~27.9%~~39.7% to ~~$1.10~~$0.95 for the ~~third~~first quarter of ~~2023,~~2024, compared to ~~$0.86~~$0.68 for the ~~third~~first quarter of ~~2022.~~2023.

•Adjusted diluted EPS increased ~~37.6%~~41.4% to ~~$1.39~~$1.23 for the ~~third~~first quarter of 2024, compared to $0.87 for the first quarter of 2023.

•Returned $62.3 million to shareholders in the first three months of 2024 by repurchasing 624,698 shares of our common stock.

•On March 1, 2024, we completed the acquisition of GG+A, a philanthropic management consulting firm that helps education institutions and other nonprofit organizations build and accelerate the philanthropic programs that support their mission.

Total revenues increased $38.1 million, or 12.0%, to $356.0 million for the first quarter of 2024 from $317.9 million for the first quarter of 2023. The increase in revenues was driven by continued strength in demand for Healthcare's Consulting and Managed Services and Digital capabilities, as well as an increase in demand for Education's Digital capability. These increases in revenues reflect our focus on accelerating growth in our healthcare and education industries.

In our Consulting and Managed Services capability, revenues for the first quarter of 2024 increased 13.8%, compared to the first quarter of 2023, and reflected strengthened demand in our Healthcare and Education segments. The utilization rate within our Consulting capability decreased to 70.2% in the first quarter of 2024, compared to ~~$1.01 for~~76.3% in the ~~third~~first quarter of ~~2022.~~2023.

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•~~Net cash provided by operating activities increased 54.7% to $68.8 million for the third quarter of 2023, compared to $44.5 million for the third quarter of 2022.~~

•~~Returned $88.4 million to shareholders in the first nine months of 2023 by repurchasing 1,116,830 shares of our common stock.~~

Total revenues increased $72.8 million, or 25.5%, to $358.2 million for the third quarter of 2023 from $285.4 million for the third quarter of 2022. The increase in revenues reflects continued strength in demand for our Consulting and Managed Services capability across all segments, as well as continued strength in demand for our Digital capability services within our Education and Healthcare segments. These increases in revenue reflect our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries. Additional information on our revenues by segment follows.

In our Consulting and Managed Services capability, revenues for the third quarter of 2023 increased 37.7%, compared to the third quarter of 2022, and reflected strengthened demand in all of our segments. The utilization rate within our Consulting capability increased to 77.3% in the third quarter of 2023, compared to 72.5% in the third quarter of 2022.

Revenues within our Digital capability increased ~~10.8%~~9.7% in the ~~third~~first quarter of ~~2023,~~2024, compared to the ~~third~~first quarter of ~~2022,~~2023, and reflected strengthened demand in our Healthcare and Education and ~~Healthcare~~ segments. The utilization rate within our Digital capability increased to ~~75.4%~~74.3% in the ~~third~~first quarter of ~~2023,~~2024, compared to ~~70.1%~~71.0% in the ~~third~~first quarter of ~~2022.~~2023.

The total number of revenue-generating professionals increased 15.8% to ~~5,341~~5,803 as of ~~September 30, 2023,~~March 31, 2024, compared to ~~4,571~~5,013 as of ~~September 30, 2022,~~March 31, 2023, as a result of hiring to support the overall increase in demand for our services, ~~within all~~and includes approximately 70 hires as a result of our ~~segments.~~acquisition of GG+A. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services as employee compensation costs are the most significant portion of our operating expenses.

Net income increased ~~$3.8~~$4.6 million, or 34.2%, to ~~$21.5~~$18.0 million for the three months ended ~~September 30, 2023~~March 31, 2024 from ~~$17.7~~$13.4 million for the same period last year. As a result of the increase in net income, ~~and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan,~~ diluted earnings per share for the ~~third~~first quarter of ~~2023 increased 27.9%~~ 2024 increased 39.7% to ~~$1.10,~~$0.95, compared to ~~$0.86~~$0.68 for the ~~third~~first quarter of ~~2022.~~2023. Adjusted diluted earnings per share increased ~~37.6%~~41.4% to ~~$1.39~~$1.23 for the ~~third~~first quarter of ~~2023,~~2024, compared to ~~$1.01~~$0.87 for the ~~third~~first quarter of ~~2022.~~

Net cash provided by operating activities increased 54.6% to $68.8 million for the third quarter of 2023, compared to $44.5 million for the third quarter of 2022. The increase in net cash provided by operating activities was primarily related to an increase in cash collections in the third quarter of 2023, compared to the third quarter of 2022; partially offset by increases in salaries and related expenses for our revenue-generating professionals and payments for selling, general and administrative expenses in the third quarter of 2023, compared to the third quarter of 2022.2023.

In the first ~~nine~~three months of ~~2023,~~2024, we deployed ~~$88.4~~$62.3 million of capital to repurchase ~~1,116,830~~624,698 shares of our common stock, representing ~~5.6%~~3.4% of our common stock outstanding as of December 31, ~~2022.~~2023.

On March 1, 2024, we completed the acquisition of GG+A, a philanthropic management consulting firm that helps education institutions and other nonprofit organizations build and accelerate the philanthropic programs that support their mission.

Summary of Results

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):	Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Segment and Consolidated Operating Results (in thousands, except per share amounts):															Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended March 31,
																	2024			2023
Healthcare:	Healthcare:
Revenues
Revenues
Revenues	Revenues	$	179,177		$	131,319		$	501,994		$	381,669
Operating income	Operating income	$	46,888		$	33,045		$	128,294		$	91,441
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	26.2		%	25.2		%	25.6		%	24.0		%	Segment operating income as a percentage of segment revenues				23.6	%		21.6	%
Education:	Education:
Revenues	Revenues	$	111,043		$	94,347		$	325,884		$	263,234
Revenues
Revenues
Operating income	Operating income	$	26,550		$	22,851		$	77,112		$	58,848
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	23.9		%	24.2		%	23.7		%	22.4		%	Segment operating income as a percentage of segment revenues				19.7	%		22.2	%
Commercial:	Commercial:
Revenues
Revenues
Revenues	Revenues	$	67,958		$	59,704		$	194,954		$	173,841
Operating income	Operating income	$	15,432		$	14,153		$	39,971		$	38,282
Segment operating income as a percentage of segment revenues	Segment operating income as a percentage of segment revenues	22.7		%	23.7		%	20.5		%	22.0		%	Segment operating income as a percentage of segment revenues				22.1	%		21.7	%
Total Huron:	Total Huron:
Revenues	Revenues	$	358,178		$	285,370		$	1,022,832		$	818,744
Revenues
Revenues
Reimbursable expenses	Reimbursable expenses	9,288			6,816			25,918			19,034
Total revenues and reimbursable expenses	Total revenues and reimbursable expenses	$	367,466		$	292,186		$	1,048,750		$	837,778

Segment operating income
Segment operating income
Segment operating income
Items not allocated at the segment level:
Other operating expenses
Other operating expenses
Other operating expenses
Restructuring charges
Depreciation and amortization
Operating income
Other expense, net
Income before taxes
Income tax expense (benefit)
Net income
Earnings per share:
Basic
Basic
Basic
Diluted

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Segment and Consolidated Operating Results
(in thousands, except per share amounts): Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Segment operating income $ 88,870 $ 70,049 $ 245,377 $ 188,571
Items not allocated at the segment level:
Other operating expenses 43,086 34,875 129,563 96,376
Restructuring charges 4,095 804 6,881 2,763
Depreciation and amortization 4,347 5,071 13,441 15,171
Operating income 37,342 29,299 95,492 74,261
Total other income (expense), net (6,047) (3,896) (13,365) 10,946
Income before taxes 31,295 25,403 82,127 85,207
Income tax expense 9,779 7,662 22,480 26,739
Net income $ 21,516 $ 17,741 $ 59,647 $ 58,468
Earnings per share:
Basic $ 1.15 $ 0.88 $ 3.15 $ 2.85
Diluted $ 1.10 $ 0.86 $ 3.05 $ 2.80
Other Operating Data:
Number of revenue-generating professionals by segment (at period end):
Healthcare 2,083 1,686 2,083 1,686
Education 1,799 1,543 1,799 1,543
Commercial (1)
1,459 1,342 1,459 1,342
Total 5,341 4,571 5,341 4,571
Revenue by capability:
Consulting and Managed Services (2)
$ 214,688 $ 155,901 $ 589,137 $ 454,356
Digital 143,490 129,469 433,695 364,388
Total $ 358,178 $ 285,370 $ 1,022,832 $ 818,744
Number of revenue-generating professionals by capability (at period end):
Consulting and Managed Services (3)
2,483 2,098 2,483 2,098
Digital 2,858 2,473 2,858 2,473
Total 5,341 4,571 5,341 4,571
Utilization rate by capability (4):
Consulting 77.3 % 72.5 % 76.5 % 73.0 %
Digital 75.4 % 70.1 % 73.7 % 71.6 %


Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended March 31,
		2024			2023
Other Operating Data:
Number of revenue-generating professionals by segment (at period end)(1):
Healthcare		2,279			1,780
Education		1,231			1,069
Commercial (2)		2,293			2,164
Total		5,803			5,013

Revenue by capability:
Consulting and Managed Services (3)(4)		$	201,559		$	177,194
Digital		154,402			140,701
Total		$	355,961		$	317,895

Number of revenue-generating professionals by capability (at period end):
Consulting and Managed Services (3)(5)		2,891			2,360
Digital		2,912			2,653
Total		5,803			5,013

Utilization rate by capability (6):
Consulting		70.2		%	76.3		%
Digital		74.3		%	71.0		%

(1)During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries. This reclassification did not impact the total Digital capability headcount for any period. The prior period headcount has been revised for consistent presentation.

(2)The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and ~~education.~~education, and the related costs of these professionals are allocated to each of the segments.

~~(2)~~(3)During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively.

This reclassification did not impact the aggregate revenues or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues and headcount in the following footnotes have been revised for consistent presentation.

(4)Managed Services capability revenues within our Healthcare segment was ~~$16.7~~$17.5 million and ~~$17.6~~$19.8 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively; and $53.8 million and $47.5 million for the nine months ended September 30, 2023 and 2022,~~ respectively.

Managed Services capability revenues within our Education segment was ~~$5.0~~$7.4 million ~~and $4.1 million~~ for both the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, respectively; and $14.6 million and $11.3 million for the nine months ended September 30, 2023 and 2022, respectively.~~2023.

~~(3)~~(5)The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,087 and 726 as of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022 was 757 and 547,~~ respectively.

The number of Managed Services revenue-generating professionals within our Education segment was 132 and 125 as of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022 was 105 and 97,~~ respectively.

~~(4)~~(6)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.

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Non-GAAP Measures

Reconciliation of Net Income to EBITDA and Adjusted EBITDA


		Three Months Ended September 30,						Nine Months Ended September 30,
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
		2023			2022			2023			2022				2024		2023
Revenues	Revenues	$	358,178		$	285,370		$	1,022,832		$	818,744
Net income	Net income	$	21,516		$	17,741		$	59,647		$	58,468
Add back:	Add back:
Income tax expense		9,779			7,662			22,480			26,739
Income tax expense (benefit)
Income tax expense (benefit)
Income tax expense (benefit)
Interest expense, net of interest income	Interest expense, net of interest income	5,047			3,111			15,146			7,753
Depreciation and amortization	Depreciation and amortization	6,300			7,019			19,183			21,238
EBITDA	EBITDA	42,642			35,533			116,456			114,198
Add back:	Add back:
Restructuring charges	Restructuring charges	5,402			1,332			9,385			4,956
Other gains, net		(14)			(67)			(202)			(34)
Restructuring charges
Restructuring charges
Other losses

Transaction-related expenses	Transaction-related expenses	302			—			302			50
Unrealized gain on preferred stock investment		—			—			—			(26,964)

Transaction-related expenses

Transaction-related expenses

Foreign currency transaction losses (gains), net
Foreign currency transaction losses (gains), net
Foreign currency transaction losses (gains), net	Foreign currency transaction losses (gains), net	(332)			(328)			36			(409)
Adjusted EBITDA	Adjusted EBITDA	$	48,000		$	36,470		$	125,977		$	91,797
Adjusted EBITDA as a percentage of revenues	Adjusted EBITDA as a percentage of revenues	13.4		%	12.8		%	12.3		%	11.2		%	Adjusted EBITDA as a percentage of revenues	9.5	%	9.3	%

Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted Earnings per Share


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		2023		2022		2023		2022		2024	2023
Net income	Net income	$	21,516	$	17,741	$	59,647	$	58,468
Weighted average shares - diluted	Weighted average shares - diluted	19,475		20,615		19,578		20,899
Diluted earnings per share	Diluted earnings per share	$	1.10	$	0.86	$	3.05	$	2.80
Add back:	Add back:
Amortization of intangible assets	Amortization of intangible assets	1,997		2,818		6,202		8,496
Amortization of intangible assets
Amortization of intangible assets
Restructuring charges	Restructuring charges	5,402		1,332		9,385		4,956
Other gains, net		(14)		(67)		(202)		(34)
Other losses

Transaction-related expenses	Transaction-related expenses	302		—		302		50
Unrealized gain on preferred stock investment		—		—		—		(26,964)

Transaction-related expenses

Transaction-related expenses

Tax effect of adjustments
Tax effect of adjustments
Tax effect of adjustments	Tax effect of adjustments	(2,037)		(1,082)		(4,157)		3,576

Total adjustments, net of tax

Total adjustments, net of tax

Total adjustments, net of tax	Total adjustments, net of tax	5,650		3,001		11,530		(9,920)
Adjusted net income	Adjusted net income	$	27,166	$	20,742	$	71,177	$	48,548
Adjusted weighted average shares - diluted	Adjusted weighted average shares - diluted	19,475		20,615		19,578		20,899
Adjusted diluted earnings per share	Adjusted diluted earnings per share	$	1.39	$	1.01	$	3.64	$	2.32

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Three Months Ended ~~September 30, 2023~~March 31, 2024 Compared to Three Months Ended ~~September 30, 2022~~March 31, 2023

Revenues

Revenues by segment and capability for the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ were as follows:


Revenues (in thousands)	Revenues (in thousands)	Three Months Ended September 30,				Increase / (Decrease)				Revenues (in thousands)			Three Months Ended March 31,											Increase / (Decrease)
		2023		2022		$		%					2024						2023								$						%
Segment:	Segment:
Healthcare
Healthcare
Healthcare	Healthcare	$	179,177	$	131,319	$	47,858	36.4	%		$	180,742			$		$	149,049			$				$	31,693			21.3			21.3		%
Education	Education	111,043		94,347		16,696		17.7	%	Education			111,583			104,147				104,147			7,436						7,436		7.1				7.1	%
Commercial	Commercial	67,958		59,704		8,254		13.8	%	Commercial			63,636			64,699				64,699			(1,063)						(1,063)		(1.6)				(1.6)	%
Total revenues	Total revenues	$	358,178	$	285,370	$	72,808	25.5	%	Total revenues			$	355,961		$			$	317,895		$					$	38,066		12.0				12.0	%

Capability:	Capability:
Capability:
Capability:
Consulting and Managed Services
Consulting and Managed Services
Consulting and Managed Services	Consulting and Managed Services	$	214,688	$	155,901	$	58,787	37.7	%		$	201,559			$		$	177,194			$				$	24,365			13.8			13.8		%
Digital	Digital	143,490		129,469		14,021		10.8	%	Digital			154,402			140,701				140,701			13,701						13,701		9.7				9.7	%
Total revenues	Total revenues	$	358,178	$	285,370	$	72,808	25.5	%	Total revenues			$	355,961		$			$	317,895		$					$	38,066		12.0				12.0	%

Revenues increased ~~$72.8~~$38.1 million, or ~~25.5%~~12.0%, to ~~$358.2~~$356.0 million for the ~~third~~first quarter of ~~2023~~2024 from ~~$285.4~~$317.9 million for the ~~third~~first quarter of ~~2022.~~2023. The ~~overall~~ increase in revenues ~~reflects~~was driven by continued strength in demand for ~~our~~Healthcare's Consulting and Managed Services ~~capability across all segments,~~and Digital capabilities, as well as ~~continued strength~~an increase in demand for ~~our~~Education's Digital ~~capability services within our Education and Healthcare segments.~~capability. These increases in ~~revenue~~revenues reflect our focus on accelerating growth in our healthcare and education ~~industries and growing our presence in commercial~~ industries. Additional information on our revenues by segment follows.

•Healthcare revenues increased ~~$47.9~~$31.7 million, or ~~36.4%~~21.3%, driven by strengthened demand for our performance improvement, strategy and innovation, and financial advisory solutions within our Consulting and Managed Services capability, as well as strengthened demand for our technology and analytics services within our Digital capability. These increases in demand were partially offset by a decrease in demand for our ~~culture and organization excellence~~revenue cycle managed services solution within our Consulting and Managed Services capability. Revenues in the ~~third~~first quarter of ~~2023~~2024 included ~~$0.1~~$0.2 million of incremental revenues from our ~~acquisitions~~acquisition of ~~Customer Evolution, LLC and~~ Roundtable Analytics, Inc, which ~~were~~was completed in ~~December 2022 and~~ September ~~2023, respectively.~~2023.

The number of revenue-generating professionals within our Healthcare segment grew ~~23.5%~~28.0% to ~~2,083~~2,279 as of ~~September 30, 2023,~~March 31, 2024, compared to ~~1,686~~1,780 as of ~~September 30, 2022.~~March 31, 2023.

•Education revenues increased ~~$16.7~~$7.4 million, or ~~17.7%~~7.1%, driven by ~~strengthened~~an increase in demand for our technology and analytics services and software products within our Digital capability, as well as ~~strengthened demand for~~$1.3 million of incremental revenues from our ~~strategy and operations and research solutions within our Consulting and Managed Services capability.~~acquisition of GG+A completed in March 2024.

The number of revenue-generating professionals within our Education segment grew ~~16.6%~~15.2% to ~~1,799~~1,231 as of ~~September 30, 2023,~~March 31, 2024, compared to ~~1,543~~1,069 as of ~~September 30, 2022.~~March 31, 2023, which includes approximately 70 hires from our acquisition of GG+A.

•Commercial revenues ~~increased $8.3~~decreased $1.1 million, or ~~13.8%~~1.6%, ~~driven by strengthened demand for our financial advisory solutions within our Consulting and Managed Services capability, partially offset by~~primarily due to decreases in demand for our strategy and innovation solution within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability. These decreases were partially offset by an increase in demand for our financial advisory solutions within our Consulting and Managed Services capability.

The number of revenue-generating professionals within our Commercial segment grew ~~8.7%~~6.0% to ~~1,459~~2,293 as of ~~September 30, 2023,~~March 31, 2024, compared to ~~1,342~~2,164 as of ~~September 30, 2022.~~March 31, 2023.

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Operating Expenses

Operating expenses for the ~~third~~first quarter of ~~2023~~2024 increased ~~$67.2~~$35.5 million, or ~~25.6%~~11.5%, over the ~~third~~first quarter of ~~2022.~~2023.

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


Operating Expenses (in thousands, except amounts as a percentage of revenues)	Operating Expenses (in thousands, except amounts as a percentage of revenues)	Three Months Ended September 30,						Increase / (Decrease)		Operating Expenses (in thousands, except amounts as a percentage of revenues)	Three Months Ended March 31,	Increase / (Decrease)
		2023			2022
Direct costs
Direct costs
Direct costs	Direct costs	$	244,774	68.3%	$	193,368	67.8%	$	51,406
Reimbursable expenses	Reimbursable expenses	9,497		2.7%	6,917		2.4%	2,580
Selling, general and administrative expenses	Selling, general and administrative expenses	64,347		18.0%	54,458		19.1%	9,889
Restructuring charges	Restructuring charges	5,402		1.5%	1,332		0.5%	4,070
Depreciation and amortization	Depreciation and amortization	6,104		1.7%	6,812		2.3%	(708)
Total operating expenses	Total operating expenses	$	330,124	92.2%	$	262,887	92.1%	$	67,237

Direct Costs

Direct costs increased ~~$51.4~~$24.9 million, or ~~26.6%~~10.9%, to ~~$244.8~~$253.3 million for the ~~third~~first quarter of ~~2023~~2024 from ~~$193.4~~$228.4 million for the ~~third~~first quarter of ~~2022.~~2023. The ~~$51.4~~$24.9 million increase primarily related to a ~~$48.1~~$23.5 million increase in compensation costs for our revenue-generating professionals as we continue to invest in and grow our talented team to meet increased market ~~demand. Specifically, the~~demand and a $1.2 million increase in technology costs. The increase in compensation costs is primarily attributable to a ~~$25.1 million increase in performance bonus expense, a $21.0~~$20.4 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of ~~2023,~~2024, a $2.3 million increase in performance bonus expense, and a ~~$1.3~~$1.1 million increase in share-based compensation expense. ~~Additional increases in direct costs include a $1.9 million increase in technology costs and a $1.3 million increase in contractor expenses.~~ As a percentage of revenues, direct costs ~~increased~~decreased to ~~68.3%~~71.2% during the ~~third~~first quarter of ~~2023,~~2024, compared to ~~67.8%~~71.9% during the ~~third~~first quarter of ~~2022.~~2023. This ~~increase~~decrease was primarily due to ~~an increase in performance bonus expense for our revenue-generating professionals, as a percentage of revenue; partially offset by~~ revenue growth that outpaced the ~~increase~~increases in ~~salaries and related expenses~~compensation costs for our revenue-generating professionals.

Reimbursable Expenses

Reimbursable expenses are billed to clients at cost and primarily relate to travel and 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 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 Administrative Expenses

Selling, general and administrative expenses increased by ~~$9.9~~$12.0 million, or ~~18.2%~~19.2%, to ~~$64.3~~$74.3 million in the ~~third~~first quarter of ~~2023~~2024 from ~~$54.5~~$62.3 million in the ~~third~~first quarter of ~~2022.~~2023. The ~~$9.9~~$12.0 million increase primarily related to a ~~$8.9~~$8.8 million increase in non-payroll costs, driven by a $3.6 million increase in legal expenses and a $2.5 million increase in practice administration and meetings expenses. The increase in legal expenses is driven by professional fees for a legal matter for which Huron is the plaintiff as well as professional fees for acquisition activity. Additionally, compensation costs for our support personnel increased $3.3 million, driven by a ~~$4.5~~$3.3 million increase in salaries and related expenses and a ~~$3.0 million increase in performance bonus expense, a $1.6~~$1.0 million increase in share-based compensation ~~expense, and a $1.4 million increase in legal expenses. These increases were~~expense; partially offset by a ~~$1.1~~$1.2 million decrease in ~~practice administration and meetings expenses.~~performance bonus expense. As a percentage of revenues, selling, general and administrative expenses ~~decreased~~increased to ~~18.0%~~20.9% during the ~~third~~first quarter of ~~2023,~~2024, compared to ~~19.1%~~19.6% during the ~~third~~first quarter of ~~2022.~~2023. This ~~decrease~~increase was primarily attributable to ~~decreases~~increases in legal expenses and practice administration and meetings expenses, ~~and third-party professional expenses,~~ as ~~well as~~percentages of revenues; partially offset by revenue growth that outpaced the ~~increase~~increases in ~~salaries and related expenses~~compensation costs for our support ~~personnel; partially offset by an increase in performance bonus expense, as a percentage of revenues.~~personnel.

Restructuring Charges

Restructuring charges were $2.3 million for both the ~~third~~three months ended March 31, 2024 and 2023. The $2.3 million of restructuring charges recognized in the first quarter of 2023 were $5.4 million, compared to $1.3 million for the third quarter of 2022. In the third quarter of 2023, we exited our office space in Lexington, Massachusetts which resulted in a $3.5 million non-cash impairment charge on the related right-of-use operating lease asset and fixed assets of that office space. Restructuring charges for the third quarter of 2023 also2024 included ~~$1.2~~$1.0 million of ~~employee-related expenses~~severance-related expenses; $0.8 million related to non-cash lease impairment charges driven by updated sublease assumptions for our previously vacated office spaces; and ~~$0.7~~$0.5 million of rent and related expenses, net of sublease income, for previously vacated office spaces.

~~The $1.3~~In the first quarter of 2023, we exited our office space in Hillsboro, Oregon which resulted in a $1.9 million non-cash impairment charge on the related fixed assets and right-of-use operating lease asset of that office space. Additionally, in the first quarter of 2023, we recognized $0.4 million of additional restructuring ~~charges recognized in the third quarter of 2022 included $0.7 million of~~expense for rent and related expenses, net of sublease income, for previously vacated office ~~spaces; $0.5 million for the early termination of a contract; and $0.1 million of employee-related expenses.~~spaces.

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Depreciation and Amortization

Depreciation and amortization expense decreased ~~$0.7~~$0.4 million, or ~~10.4%~~6.3%, to ~~$6.1~~$6.0 million in the ~~third~~first quarter of ~~2023,~~2024, compared to ~~$6.8~~$6.4 million in the ~~third~~first quarter of ~~2022.~~2023. The ~~$0.7~~$0.4 million decrease in depreciation and amortization expense was primarily attributable to intangible assets acquired in business acquisitions that were fully amortized in prior periods and a decrease in amortization of intangible assets acquired in business acquisitions due to the accelerated basis of amortization in prior ~~periods.~~periods, partially offset by an an increase in amortization of intangible assets acquired in business acquisitions completed subsequent to the first quarter of 2023.

Operating Income and Operating Margin

Operating income increased ~~$8.0~~$1.5 million, or ~~27.5%~~8.1%, to ~~$37.3~~$19.9 million in the ~~third~~first quarter of ~~2023~~2024 from ~~$29.3~~$18.4 million in the ~~third~~first quarter of ~~2022.~~2023. Operating margin, which is defined as operating income expressed as a percentage of revenues ~~increased to 10.4%~~was 5.6% for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~10.3%~~5.8% for the three months ended ~~September 30, 2022.~~March 31, 2023.


Segment Operating Income (in thousands, except operating margin percentages)	Segment Operating Income (in thousands, except operating margin percentages)	Three Months Ended September 30,						Increase / (Decrease)		Segment Operating Income (in thousands, except operating margin percentages)	Three Months Ended March 31,	Increase / (Decrease)
		2023			2022
Healthcare	Healthcare	$	46,888	26.2%	$	33,045	25.2%	$	13,843
Healthcare
Healthcare
Education	Education	26,550		23.9%	22,851		24.2%	3,699
Commercial	Commercial	15,432		22.7%	14,153		23.7%	1,279
Total segment operating income	Total segment operating income	$	88,870		$	70,049		$	18,821

•Healthcare operating income increased ~~$13.8~~$10.4 million, or ~~41.9%~~32.4%, primarily due to the increase in ~~revenues as well as a decrease in practice administration and meetings expenses;~~revenues; partially offset by increases in compensation costs for our revenue-generating professionals, ~~contractor~~practice administration and meetings expenses, and ~~compensation costs for our support personnel.~~contractor expenses. The increases in compensation costs for our revenue-generating professionals ~~and support personnel~~ were primarily driven by ~~an increase in performance bonus expense,~~ an increase in headcount, annual salary increases that went into effect in the first quarter of ~~2023,~~2024, and ~~an increase~~increases in performance bonus expense and share-based compensation expense. Healthcare operating margin increased to ~~26.2%~~23.6% from ~~25.2%~~21.6% primarily ~~driven by a decrease in practice administration and meetings expenses and~~due to the revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals; partially offset by an increase in ~~contractor~~practice administration and meetings expenses, as a percentage of revenues.

•Education operating income ~~increased $3.7~~decreased $1.2 million, or ~~16.2%~~5.2%, primarily due to ~~the increase in revenues as well as a decrease in contractor expenses, partially offset by~~ increases in compensation costs for our revenue-generating professionals and ~~technology~~support personnel; partially offset by the increase in revenues and a decrease in contractor expenses. The increase in compensation costs for our revenue-generating professionals and support personnel was primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of ~~2023, and an increase in performance bonus expense.~~2024. Education operating margin decreased to ~~23.9%~~19.7% from ~~24.2%~~22.2% primarily driven by ~~increases~~an increase in compensation costs for our revenue-generating professionals, ~~and technology expenses,~~ as ~~percentages~~a percentage of revenue; partially offset by athe decrease in contractor expenses.

•Commercial operating income ~~increased $1.3~~was $14.0 million ~~or 9.0%, primarily due~~in the first quarter of 2024 compared to $14.1 million in the ~~increase~~first quarter of 2023, as the decrease in revenues ~~as well as~~was offset by a decrease ~~in contractor expenses, partially offset by increases~~ in compensation costs for our revenue-generating professionals. Commercial operating margin ~~decreased~~increased to ~~22.7%~~22.1% from ~~23.7%~~21.7% primarily ~~driven by increases~~due to the decrease in compensation costs for our revenue-generating professionals, ~~and support personnel,~~ as ~~percentages~~a percentage of ~~revenues; partially offset by a decrease in contractor expenses.~~revenues.

Other Income (Expense), Net

Interest expense, net of interest income increased ~~$1.9~~$0.8 million to ~~$5.0~~$5.1 million in the ~~third~~first quarter of ~~2023~~2024 from ~~$3.1~~$4.3 million in the ~~third~~first quarter of ~~2022,~~2023, which was primarily attributable to higher ~~interest rates and higher~~ levels of borrowing under our senior secured credit facility and higher interest rates during the ~~third~~first quarter of ~~2023~~2024 compared to the ~~third~~first quarter of ~~2022.~~2023. See “Liquidity and Capital Resources” below and Note 67 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.

Other ~~expense,~~income, net ~~decreased $0.2~~increased $1.1 million to ~~$1.0~~$2.8 million in the ~~third~~first quarter of ~~2023~~2024 from ~~$0.8~~$1.7 million in the ~~third~~first quarter of ~~2022.~~2023. The ~~decrease~~increase in other expense, net includes ~~the decrease~~a $0.5 million increase in the ~~loss~~gain recognized for the market value of our investments that are used to fund our deferred compensation ~~liability.~~liability and a $0.5 million increase in foreign currency transaction gains. During the first quarter of 2024 we recognized a $2.3 million gain for the market value of our deferred compensation investments compared to a $1.8 million gain recognized in the first quarter of 2023.

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Income Tax Expense

For the three months ended ~~September 30, 2023,~~March 31, 2024, our effective tax rate was ~~31.2%~~(2.5)% as we recognized an income tax ~~expense~~benefit of ~~$9.8~~$0.4 million on income of ~~$31.3~~$17.6 million. The effective tax rate of ~~31.2%~~(2.5)% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of ~~26.6%~~26.1%, primarily due to a discrete tax ~~expense related to nondeductible losses on our investments used to fund our deferred~~benefit for share-based compensation ~~liability and certain nondeductible expense items.~~awards that vested during the quarter.

For the three months ended ~~September 30, 2022,~~March 31, 2023, our effective tax rate was ~~30.2%~~15.3% as we recognized income tax expense of ~~$7.7~~$2.4 million on income of ~~$25.4~~$15.8 million. The effective tax rate of ~~30.2%~~15.3% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of ~~26.4%~~26.6%, primarily due to a discrete tax ~~expense~~benefit for share-based compensation awards that vested during the quarter and a tax benefit related to ~~nondeductible losses~~non-taxable gains on our investments used to fund our deferred compensation ~~liability and~~liability. These favorable items were partially offset by certain nondeductible expense items.

Net Income and Earnings per Share

Net income increased ~~$3.8~~$4.6 million, or 34.2%, to ~~$21.5~~$18.0 million for the three months ended ~~September 30, 2023~~March 31, 2024 from ~~$17.7~~$13.4 million for the same period last year. ~~Diluted~~As a result of the increase in net income, diluted earnings per share for the ~~third~~first quarter of ~~2023 increased to $1.10~~2024 was $0.95 compared to ~~$0.86~~$0.68 for the ~~third~~first quarter of ~~2022, driven by the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.~~2023.

EBITDA and Adjusted EBITDA

EBITDA increased ~~$7.1~~$2.2 million to ~~$42.6~~$28.9 million for the ~~third~~first quarter of ~~2023~~2024 from ~~$35.5~~$26.7 million for the ~~third~~first quarter of ~~2022.~~2023. The increase in EBITDA was primarily attributable to the increase in segment operating income, partially offset by the increase in corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability.

Adjusted EBITDA increased ~~$11.5~~$4.3 million to ~~$48.0~~$33.8 million in the third quarter of 2023 from $36.5 million in the third quarter of 2022. The increase in adjusted EBITDA was primarily attributable to the increase in segment operating income, excluding the impact of segment restructuring charges, partially offset by the increase in corporate expenses.

~~Adjusted Net Income and Adjusted Earnings per Share~~

Adjusted net income increased $6.4 million to $27.2 million in the third quarter of 2023, compared to $20.7 million in the third quarter of 2022. Adjusted diluted earnings per share increased to $1.39 for the third quarter of 2023, compared to $1.01 for the third quarter of 2022, driven by the increase in adjusted net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.

~~Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022~~

~~Revenues~~

~~Revenues by segment and capability for the nine months ended September 30, 2023 and 2022 were as follows:~~
Revenues (in thousands) Nine Months Ended
September 30, Increase / (Decrease)
2023 2022 $ %
Segment:
Healthcare $ 501,994 $ 381,669 $ 120,325 31.5 %
Education 325,884 263,234 62,650 23.8 %
Commercial 194,954 173,841 21,113 12.1 %
Total revenues $ 1,022,832 $ 818,744 $ 204,088 24.9 %
Capability:
Consulting and Managed Services $ 589,137 $ 454,356 $ 134,781 29.7 %
Digital 433,695 364,388 69,307 19.0 %
Total revenues $ 1,022,832 $ 818,744 $ 204,088 24.9 %

Revenues increased $204.1 million, or 24.9%, to $1.02 billion for the first nine months of 2023 from $818.7 million for the first nine months of 2022. The overall increase in revenues reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability across all segments, which reflects our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries. Additional information on our revenues by segment follows.

~~Table of Contents~~

•~~Healthcare~~ revenues increased $120.3 million, or 31.5%, primarily driven by strong results in our performance improvement solution due to strengthened demand and exceeding performance expectations on certain performance-based arrangements. The increase in Healthcare revenue was also attributable to strengthened demand for our technology and analytics services within our Digital capability, as well as strengthened demand for our financial advisory, revenue cycle managed services, and strategy and innovation solutions within our Consulting and Managed Services capability. Revenues in the first nine months of 2023 included $0.6 million of incremental revenues from our acquisitions of Customer Evolution, LLC and Roundtable Analytics, Inc, which were completed in December 2022 and September 2023, respectively.

~~The number of revenue-generating professionals within our Healthcare segment grew 23.5% to 2,083 as of September 30, 2023, compared to 1,686 as of September 30, 2022.~~

•~~Education~~ revenues increased $62.7 million, or 23.8%, driven by strengthened demand for our technology and analytics services and software products within our Digital capability, as well as strengthened demand for our strategy and operations and research solutions within our Consulting and Managed Services capability.

~~The number of revenue-generating professionals within our Education segment grew 16.6% to 1,799 as of September 30, 2023, compared to 1,543 as of September 30, 2022.~~

•~~Commercial~~ revenues increased $21.1 million, or 12.1%, driven by strengthened demand for our financial advisory solutions within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability, partially offset by a decrease in demand for our strategy and innovation solution within our Consulting and Managed Services capability.

~~The number of revenue-generating professionals within our Commercial segment grew 8.7% to 1,459 as of September 30, 2023, compared to 1,342 as of September 30, 2022.~~

~~Operating Expenses~~

~~Operating expenses for the first nine months of 2023 increased $189.7 million, or 24.9%, over the first nine months of 2022.~~

~~Operating expenses and operating expenses as a percentage of revenues were as follows:~~
Operating Expenses (in thousands, except amounts as a percentage of revenues) Nine Months Ended September 30, Increase / (Decrease)
2023 2022
Direct costs $ 708,355 69.3% $ 569,848 69.6% $ 138,507
Reimbursable expenses 26,242 2.6% 19,249 2.4% 6,993
Selling, general and administrative expenses 190,655 18.6% 148,886 18.2% 41,769
Restructuring charges 9,385 0.9% 4,956 0.6% 4,429
Depreciation and amortization 18,621 1.8% 20,578 2.5% (1,957)
Total operating expenses $ 953,258 93.2% $ 763,517 93.3% $ 189,741

~~Direct Costs~~

Direct costs increased $138.5 million, or 24.3%, to $708.4 million for the first nine months of 2023 from $569.8 million for the first nine months of 2022. The $138.5 million increase primarily related to a $124.6 million increase in compensation costs for our revenue-generating professionals as we continue to invest in and grow our talented team to meet increased market demand. Specifically, the increase in compensation costs is primarily attributable to a $71.3 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of ~~2023, a $48.1~~2024 from $29.5 million increase in performance bonus expense, and a $4.9 million increase in share-based compensation expense. Additional increases in direct costs include a $6.0 million increase in contractor expenses, a $4.6 million increase in technology costs, and a $1.2 million increase in project costs. As a percentage of revenues, direct costs decreased to 69.3% during the first nine months of 2023, compared to 69.6% during the first nine months of 2022. The decrease was primarily due to revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals; partially offset by an increase in performance bonus expense, as a percentage of revenue.

~~Reimbursable Expenses~~

~~Table of Contents~~

~~Selling, General and Administrative Expenses~~

Selling, general and administrative expenses increased by $41.8 million, or 28.1%, to $190.7 million in the first nine months of 2023 from $148.9 million in the first nine months of 2022. The $41.8 million increase primarily related to a $32.2 million increase in compensation costs for our support personnel driven by a $10.9 million increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, a $10.2 million increase in salaries and related expenses, a $6.3 million increase in performance bonus expense, and a $4.9 million increase in share-based compensation expense. The increase in deferred compensation expense is offset by an increase in the gain recognized for the change in the market value of investments that are used to fund our deferred compensation liability and recognized in other income, net. Additionally, selling, general and administrative expenses increased $9.5 million for non-payroll costs driven by a $3.2 million increase in promotion and marketing expenses, a $2.1 million increase in software and data hosting expenses, a $1.3 million increase in practice administration and meetings expenses, and a $1.1 million increase in legal expenses. As a percentage of revenues, selling, general and administrative expenses increased to 18.6% during the first nine months of 2023, compared to 18.2% during the first nine months of 2022. This increase was primarily attributable to an increase in deferred compensation expense, as a percentage of revenues; partially offset by revenue growth that outpaced the increase in other salaries and related expenses for our support personnel.

~~Restructuring Charges~~

Restructuring charges for the first nine months of 2023 were $9.4 million, compared to $5.0 million for the first nine months of 2022. In the first nine months of 2023, we exited our office spaces in Hillsboro, Oregon and Lexington, Massachusetts, resulting in non-cash impairment charges of $1.9 million and $3.5 million, respectively, on the related right-of-use operating lease assets and fixed assets. Additionally, in the first nine months of 2023, we recognized, $2.2 million of employee-related expenses; $1.3 million for rent and related expenses, net of sublease income, for previously vacated office spaces; $0.3 million related to the abandonment of a capitalized software development project; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces.

The $5.0 million of restructuring charges incurred in the first nine months of 2022 included $1.7 million of employee-related expenses; $1.7 million for rent and related expenses, net of sublease income, for previously vacated office spaces; $0.6 million for third-party transaction expenses related to the modification of our operating model; $0.5 million for the early termination of a contract; $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 related to the divestiture of our Life Sciences business in the fourth quarter of 2021.

~~Depreciation and Amortization~~

Depreciation and amortization expense decreased $2.0 million, or 9.5%, to $18.6 million for the first nine months of 2023, compared to $20.6 million for first nine months of 2022. The $2.0 million decrease in depreciation and amortization expense was primarily attributable to intangible assets acquired in business acquisitions that were fully amortized in prior periods and a decrease in the amortization of intangible assets acquired in business acquisitions due to the accelerated basis of amortization in prior periods.

~~Operating Income and Operating Margin~~

Operating income increased $21.2 million to $95.5 million in the first nine months of 2023 from $74.3 million in the first nine months of 2022. Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 9.3% for the first nine months of 2023, compared to 9.1% for the first nine months of 2022.

Operating income and operating margin 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) Nine Months Ended September 30, Increase / (Decrease)
2023 2022
Healthcare $ 128,294 25.6% $ 91,441 24.0% $ 36,853
Education 77,112 23.7% 58,848 22.4% 18,264
Commercial 39,971 20.5% 38,282 22.0% 1,689
Total segment operating income $ 245,377 $ 188,571 $ 56,806

•~~Healthcare~~ operating income increased $36.9 million, or 40.3%, primarily due to the increase in revenues; partially offset by increases in compensation costs for our revenue-generating professionals, contractor expenses, and compensation costs for our support personnel. The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2023, an increase in performance bonus expense, and an increase in share-based compensation expense. Healthcare operating margin increased to 25.6% from 24.0% primarily due to the revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals; partially offset by an increase in contractor expenses, as a percentage of revenues.

~~Table of Contents~~

•~~Education~~ operating income increased $18.3 million, or 31.0%, primarily due to the increase in revenues as well as a decrease in contractor expenses; partially offset by increases in compensation costs for our revenue-generating professionals, data hosting expenses, promotion and marketing expenses, practice administration and meetings expenses and compensation costs for our support personnel. The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2023, and an increase in performance bonus expense. Education operating margin increased to 23.7% from 22.4% primarily driven by the decrease in contractor expenses; partially offset by increases in compensation costs for our revenue-generating professionals and data hosting expenses, as percentages of revenue.

•~~Commercial~~ operating income increased $1.7 million, or 4.4%, primarily due to the increase in revenues, largely offset by increases in compensation costs for our revenue-generating professionals and contractor expenses. The increase in compensation costs for our revenue-generating professionals was primarily driven by an increase in performance bonus expense, an increase in headcount, and annual salary increases that went into effect in the first quarter of 2023. Commercial operating margin decreased to 20.5% from 22.0% primarily driven by an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues; partially offset by decreases in contractor expenses and compensation costs for our support personnel.

~~Other Income (Expense), Net~~

Interest expense, net of interest income increased $7.4 million to $15.1 million in the first nine months of 2023 from $7.8 million in the first nine months of 2022, which was primarily attributable to higher interest rates and higher levels of borrowing under our credit facility during the first nine months of 2023 compared to the first nine months of 2022. See “Liquidity and Capital Resources” below and Note 6 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.

Other income, net decreased $16.9 million to $1.8 million in the first nine months of 2023 from $18.7 million in the first nine months of 2022. The decrease in other income, net was primarily attributable to a $27.0 million unrealized gain recognized in the first quarter of 2022 related to the increase in the fair value of our preferred stock investment in Medically Home. See Note 9 “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 decrease in other income, net was partially offset by a $10.9 million increase in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability. During the first nine months of 2023, we recognized a $1.8 million gain for the market value of our deferred compensation investments compared to a $9.1 million loss recognized in the first nine months of 2022.

~~Income Tax Expense~~

For the nine months ended September 30, 2022, our effective tax rate was 31.4% as we recognized income tax expense of $26.7 million on income of $85.2 million. The effective tax rate of 31.4% 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.

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

Net income increased $1.2 million to $59.6 million for the nine months ended September 30, 2023 from $58.5 million for the same period last year. Diluted earnings per share for the nine months ended September 30, 2023 increased to $3.05 compared to $2.80 for the nine months ended September 30, 2022, driven by a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan and the increase in net income.

~~EBITDA and Adjusted EBITDA~~

EBITDA increased $2.3 million to $116.5 million for the nine months ended September 30, 2023 from $114.2 million for the nine months ended September 30, 2022. The increase in EBITDA was primarily attributable to the increase in segment operating income; largely offset by the $27.0 million unrealized gain recognized in the first quarter of 2022 related to the increase in the fair value of our preferred stock investment and the increase in corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability.

~~Adjusted EBITDA increased $34.2 million to $126.0 million in the first nine months of 2023 from $91.8 million in the first nine months of 2022.~~ The increase in adjusted EBITDA was primarily attributable to the increase in segment operating income, excluding the impact of segment restructuring charges; partially offset by the increase in corporate expenses, excluding the impacts of the corporate restructuring charges, transaction-related expenses and the change in the market value of our deferred compensation ~~liability and corporate restructuring charges.~~

~~Table of Contents~~

liability.

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

Adjusted net income increased ~~$22.6~~$6.2 million, or 36.3%, to ~~$71.2~~$23.3 million in the first ~~nine months~~quarter of ~~2023~~2024, compared to ~~$48.5~~$17.1 million in the first ~~nine months~~quarter of ~~2022. Adjusted diluted earnings per share increased to $3.64 for the nine months ended September 30, 2023, compared to $2.32 for the nine months ended September 30, 2022, driven by~~2023. As a result of the increase in adjusted net income, ~~and a reduction in~~adjusted diluted ~~shares outstanding resulting from~~earnings per share ~~repurchases made under our share repurchase plan.~~was $1.23 for the first quarter of 2024, compared to $0.87 for the first quarter of 2023 .

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were ~~$9.4~~$18.6 million and ~~$11.8~~$12.1 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. As of ~~September 30, 2023,~~March 31, 2024, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility.


		Nine Months Ended September 30,					Three Months Ended March 31,
Cash Flows (in thousands):	Cash Flows (in thousands):	2023		2022		Cash Flows (in thousands):	2024	2023
Net cash provided by (used in) operating activities		$	54,894	$	(5,779)
Net cash used in operating activities
Net cash used in investing activities	Net cash used in investing activities	(25,799)		(10,779)
Net cash provided by (used in) financing activities		(31,518)		4,752
Net cash provided by financing activities
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(13)		(144)
Net decrease in cash and cash equivalents		$	(2,436)	$	(11,950)
Net increase in cash and cash equivalents

Operating Activities

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.

Net cash ~~provided by~~used in operating activities ~~totaled $54.9~~increased by $38.6 million to $130.7 million for the ~~nine~~three months ended ~~September 30, 2023, compared to~~March 31, 2024 from $92.1 million for the three months ended March 31, 2023. The increase in net cash used in operating activities ~~of $5.8 million for the nine months ended September 30, 2022. The increase in net operating cash flows~~ was primarily related to an increase in cash collections in the first nine months of 2023 compared to the same prior year period; partially offset by an increase in salaries and related expenses for our revenue-generating professionals, an increase in payments for selling, general and administrative expenses for the first nine months of 2023 compared to the same prior year period, and an increase in the amount paid for annual performance bonuses in the first quarter of ~~2023~~2024 compared to the first quarter of ~~2022.~~

~~Additionally,~~2023, as well as increases in payments for salaries and related expenses for our revenue-generating professionals and selling, general and administrative expenses; partially offset by an increase in cash collections in the first ~~nine~~three months of ~~2023, our unbilled receivables increased partially driven by certain large Healthcare and Education engagements where our services performed and revenue recognized exceeded~~2024 compared to the ~~amounts billed to clients in accordance with the contractual billing terms. In the future, we may enter into additional client engagements with similar deferred billing terms.~~same prior year period.

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Investing Activities

Our investing activities primarily consist of purchases of complementary businesses; purchases of property and equipment, primarily related to computers and related equipment for our employees and leasehold improvements and furniture and fixtures for office spaces; payments related to internally 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 Group, Inc.,~~a hospital-at-home company, and investments in life insurance policies that are used to fund our deferred compensation liability.

Net cash used in investing activities was ~~$25.8~~$30.6 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024, which primarily consisted of ~~$19.6~~$21.2 million for the purchase of businesses; $7.6 million for payments related to internally developed software to advance our Healthcare and Education software products; ~~$5.1~~$1.2 million for purchases of property and equipment, primarily related to leasehold improvements for certain office spaces and purchases of computers and related equipment; and $0.8 million for contributions to our life insurance policies.

Net cash used in investing activities was $10.2 million for the three months ended March 31, 2023, which primarily consisted of $6.6 million for payments related to internally developed software to advance our Healthcare and Education software products; $2.0 million for purchases of property and equipment, primarily related to purchases of computers and related ~~equipment~~equipment; and ~~leasehold improvements for certain office spaces; $2.6~~$1.8 million for contributions to our life insurance policies; and $1.6 million for the purchase of a business. These uses of cash for investing activities were partially offset by $3.0 million of cash received for distributions from our life insurance policies that are used to fund our deferred compensation liability.

Net cash used in investing activities was $10.8 million for the nine months ended September 30, 2022 which primarily consisted of $9.8 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements and furniture for certain office spaces; $6.9 million for payments related to internally developed software; and $1.9 million for the purchase of a business. 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 and $3.0 million of cash received for a distribution from our life insurance policies that are used to fund our deferred compensation liability.polices.

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We estimate that cash utilized for purchases of property and equipment and software development in ~~2023~~2024 will total approximately $35 million to $40 million; primarily consisting of software development costs, ~~information technology related equipment to support our corporate infrastructure, and~~ leasehold improvements and furniture and fixtures for certain office ~~locations.~~locations, and information technology 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 ~~used in~~provided by financing activities was ~~$31.5~~$167.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2024. During the three months ended March 31, 2024, we borrowed $566.0 million and made repayments on our borrowings of $316.0 million. The borrowings and repayments during the first three months of 2024 include the $275.0 million Term Loan proceeds which were used to repay borrowings under the Revolver. The net borrowings of $250.0 million were primarily used to fund our operations, including our annual performance bonus payments in the first quarter of 2024. Additionally, during the first three months of 2024, we paid $61.0 million for the settlement of share repurchases and we reacquired $20.9 million of common stock as a result of tax withholdings upon vesting of share-based compensation. We also made payments of $1.4 million for debt issuance costs related to the Term Loan. These uses of cash for financing activities were partially offset by $1.2 million of cash received from stock option exercises in the first quarter of 2024.

Net cash provided by financing activities was $102.4 million for the three months ended March 31, 2023. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023, we borrowed ~~$292.0~~$201.0 million primarily to fund our operations, including our annual performance bonus payment in the first quarter of 2023, and made repayments on our borrowings of ~~$224.0~~$44.0 million. Additionally, during the first ~~nine~~three months of 2023, we paid ~~$88.9~~$45.1 million for ~~share repurchases, including $1.1 million related to~~ the settlement of share repurchases ~~that were accrued as of December 31, 2022,~~ and we reacquired ~~$10.1~~$9.5 million of common stock as a result of tax withholdings upon vesting of share-based compensation. We also made deferred acquisition payments of $1.5 million to the sellers of certain businesses we acquired. These payments were primarily the result of achieving specified financial performance targets in accordance with the related purchase agreements.

Net cash provided by financing activities was $4.8 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, we borrowed $287.0 million under our credit facility primarily to fund our operations, including our annual performance bonus payment in the first quarter of 2022, and made repayments on our borrowings of $178.8 million. The 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 nine months of 2022, we repurchased and retired $97.9 million of our common stock under our share repurchase program, of which $2.6 million settled in the fourth quarter of 2022, and settled $0.2 million of share repurchases that were accrued as of December 31, 2021. In the first nine months of 2022, we reacquired $7.5 million of common stock as a result of tax withholdings upon vesting of share-based compensation. We also made deferred acquisition payments of $1.9 million to the sellers of certain businesses we acquired. These payments were primarily the result of achieving specified financial performance targets in accordance with the related purchase agreements.

Share Repurchase Program

In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, ~~2021. Subsequent to the initial authorization, our board of directors authorized extensions of the~~2021.The share repurchase program ~~through December 31, 2023~~has been subsequently extended and increased, ~~the authorized amount to $300 million. In~~most recently in the fourth quarter of ~~2023, our board of directors authorized a further extension of~~2023. The current authorization extends the share repurchase program through December 31, 2024 ~~and increased the authorized~~with a repurchase amount ~~under the share repurchase program from $300~~of $400 million, ~~to $400 million.~~of which $24.0 million remains available as of March 31, 2024. The amount and timing of repurchases under the 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 September 30, 2023, $21.1 million remained available for share repurchases under our share repurchase program.~~

Financing Arrangements

At ~~September 30, 2023,~~March 31, 2024, we had ~~$358.0~~$574.0 million outstanding under our ~~senior secured credit facility,~~Amended Credit Agreement, as discussed below.

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The Company has a $600 million ~~five-year~~ senior secured revolving credit facility (the “Revolver”) and a $275 million senior secured term loan facility (the “Term Loan”), subject to the terms of athe Third Amended and Restated Credit Agreement dated as of November 15, 2022 (as amended, the ~~"Amended~~“Amended Credit ~~Agreement"~~Agreement”) ~~that becomes due and payable in full upon maturity~~, both of which fully mature on November 15, 2027. The Term Loan was established in February 2024 with the execution of Amendment No. 2 to the Third Amended and Restated Credit ~~Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount up to $250 million,~~Agreement. The Term Loan is subject to ~~customary conditions~~scheduled quarterly amortization payments of $3.4 million beginning June 30, 2024 through the maturity date of November 15, 2027, at which time the outstanding principal balance and ~~the approval of any lender whose commitment would~~all accrued interest will be ~~increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $850 million. The initial~~due.

~~In April 2023,~~subject to further adjustment based upon the Company and PNC Capital Markets, LLC, as Sustainability Structuring Agent, with the consent of the Required Lenders (as defined in the Amended Credit Agreement), entered into the first amendment to the Amended Credit Agreement (the "First Amendment") to incorporateCompany's performance against specified key performance indicators ~~with respect~~related to certain environmental, social and governance targets of the Company. Based upon the performance of the Company against those key performance indicators in each Reference Year (as defined in the ~~First Amendment)~~Amended Credit Agreement), certain adjustments to the otherwise applicable rates for interest, commitment fees and letter of credit fees will be made. These annual adjustments will not

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exceed an increase or decrease of 0.01% in the aggregate for all key performance indicators in the case of the commitment fee rate or an increase or decrease of 0.05% in the aggregate for all key performance indicators in the case of the Term SOFR borrowings, base rate borrowings or letter of credit fee rate.

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 4.25 to 1.00 upon the occurrence of a Qualified Acquisition (as defined in the Amended Credit Agreement), and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.00 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 ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we were in compliance with these financial covenants. Our Consolidated Leverage Ratio as of ~~September 30, 2023~~March 31, 2024 was ~~1.82~~2.74 to 1.00, compared to ~~1.92~~1.59 to 1.00 as of December 31, ~~2022.~~2023. Our Consolidated Interest Coverage Ratio as of ~~September 30, 2023~~March 31, 2024 was ~~10.86~~10.65 to 1.00, compared to ~~14.04~~10.85 to 1.00 as of December 31, ~~2022.~~2023.

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 3.50, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $50 million.

~~Principal borrowings~~Borrowings outstanding under the Amended Credit Agreement at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 totaled ~~$358.0~~$574.0 million and ~~$290.0~~$324.0 million, respectively. Of the $574.0 million outstanding as of March 31, 2024, $299.0 million was outstanding under the Revolver and $275.0 million was outstanding under the Term Loan. There were no borrowings outstanding under the Term Loan at December 31, 2023. These borrowings carried a weighted average interest rate of ~~4.4%~~5.4% at ~~September 30, 2023~~March 31, 2024 and ~~3.8%~~4.2% at December 31, ~~2022,~~2023, including the impact of the interest rate swaps described in Note 89 “Derivative Instruments and Hedging Activity” within the notes to the consolidated financial statements.

Refer to Note 7 “Financing Arrangements” for additional information on our senior secured credit facility ~~was $241.4 million.~~within the notes to the consolidated financial statements.

Future Financing Needs

Our primary financing need is to fund 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~~senior secured credit facility will be adequate to support our current financing needs and long-term growth strategy. Our ability to secure additional financing in the future,

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if needed, 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.

OFF-BALANCE SHEET ARRANGEMENTS

We are not a party to any material off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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”). 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 and estimates are those policies and estimates that we believe present the most complex or subjective measurements and have the most potential to impact our financial position and operating results. While all decisions regarding accounting policies and estimates are important, we believe that there are five accounting policies and estimates 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 Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. There have been no material changes to our critical accounting policies during the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.

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NEW ACCOUNTING PRONOUNCEMENTS

~~No new accounting pronouncements or changes in accounting pronouncements have been issued or adopted that are material~~See Note 3 “New Accounting Pronouncements” within the notes to ~~our~~the consolidated financial statements ~~since those included in our Annual Report~~for information on ~~Form 10-K for the year ended December 31, 2022.~~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 foreign currency exchange rates and changes in the market value of our investments. We use certain derivative instruments to hedge a portion of the interest rate and foreign currency exchange rate risks.

Interest Rate Risk

We have exposure to changes in interest rates associated with borrowings under our bank credit ~~facility, which have variable~~facility. At our option, these borrowings bear interest ~~rates tied to~~at one, three or six month Term SOFR or, in the case of the Revolver, an alternate base ~~rate, at our option.~~rate. At ~~September 30, 2023,~~March 31, 2024, we had borrowings outstanding under the credit facility totaling ~~$358.0~~$574.0 million that carried a weighted average interest rate of ~~4.4%~~5.4%, including the impact of the interest rate swaps described below. A hypothetical 100 basis point change in the interest rate would have a ~~$1.1~~$2.7 million effect on our pretax income on an annualized basis, including the effect of the interest rate swaps. At December 31, ~~2022,~~2023, we had borrowings outstanding under the credit facility totaling ~~$290.0~~$324.0 million that carried a weighted average interest rate of ~~3.8%~~4.2% including the impact of the interest rate swaps described below. A hypothetical 100 basis point change in the interest rate would have had a ~~$0.9~~$0.7 million effect on our pretax income on an annualized basis, including the effect of the interest rate swaps.

We enter into forward interest rate swap agreements 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 Term SOFR and we pay to the counterparty a stated, fixed rate. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the aggregate notional amount of our forward interest rate swap agreements was ~~$250.0~~$300.0 million and ~~$200.0~~$250.0 million, respectively. The outstanding interest rate swap agreements as of ~~September 30, 2023~~March 31, 2024 are scheduled to mature on a staggered basis through ~~February 29, 2028.~~January 31, 2029.

Foreign Currency Risk

We have exposure to changes in foreign currency exchange rates between the U.S. Dollar (USD) and the Indian Rupee (INR) related to our operations in India. We hedge a portion of our cash flow exposure related to our INR-denominated intercompany expenses by entering into non-deliverable foreign exchange forward contracts. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the aggregate notional amounts of these contracts were INR ~~1,371.2~~878.0 million, or ~~$16.5~~$10.5 million, and INR ~~657.9~~1,375.7 million, or ~~$8.0~~$16.6 million, respectively, based on the exchange rates in effect as of each period end. The outstanding foreign exchange forward contracts as of ~~September 30, 2023~~March 31, 2024 are scheduled to mature monthly through ~~August~~December 31, 2024.

We use a sensitivity analysis to determine the effects that market foreign currency exchange rate fluctuations may have on the fair value of our foreign currency exchange rate hedge portfolio. The sensitivity of the hedge portfolio is computed based on the market value of future cash flows as affected by changes in exchange rates. This sensitivity analysis represents the hypothetical changes in value of the hedge position and does not

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reflect the offsetting gain or loss on the underlying exposure. A hypothetical 100 basis point change in the foreign currency exchange rate between the USD and INR would have an immaterial impact on the fair value of our hedge instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

Market Risk

We have 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 ~~September 30, 2023,~~March 31, 2024, the fair value of the investment was ~~$61.8~~$66.1 million, with a total cost basis of $40.9 million. At December 31, ~~2022,~~2023, the fair value of the investment was ~~$57.6~~$68.0 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 hospital-at-home 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 ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of the investment was ~~$33.6~~$7.4 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.

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. Refer to Note 89 “Derivative Instruments and Hedging Activity” within the notes to our consolidated financial statements for additional information on our derivative instruments.

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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”) as of ~~September 30, 2023.~~March 31, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~September 30, 2023,~~March 31, 2024, 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 ~~September 30, 2023~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS.


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, ~~2022,~~2023, which was filed with the Securities and Exchange Commission on February ~~28, 2023,~~27, 2024, for a complete description of the material risks we face.


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

On ~~September~~March 1, ~~2023,~~2024, as partial consideration for our acquisition of ~~Roundtable Analytics, Inc.,~~GG+A, we issued ~~16,337~~86,913 shares of our common stock, par value $0.01 per share, with an aggregate value of ~~$1.6~~$8.6 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 and 2012 Omnibus Incentive Plan permit the netting of common stock upon vesting of restricted stock awards to satisfy individual tax withholding requirements. During the quarter ended ~~September 30, 2023,~~March 31, 2024, we reacquired ~~3,820~~212,745 shares of common stock with a weighted average fair market value of ~~$84.43~~$98.37 as a result of such tax withholdings.

In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock

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through December 31, 2021. ~~Subsequent to the initial authorization, our board of directors authorized extensions of the~~The share repurchase program ~~through December 31, 2023~~has been subsequently extended and increased, ~~the authorized amount to $300 million. In~~most recently in the fourth quarter of ~~2023, our board of directors authorized a further extension of~~2023. The current authorization extends the share repurchase program through December 31, 2024 ~~and increased the authorized~~with a repurchase amount ~~under the share repurchase program from $300~~of $400 million, ~~to $400 million. The~~of which $24.0 million remains available as of March 31, 2024.The amount and timing of repurchases under the 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 September 30, 2023, $21.1 million remained available for share repurchases under our share repurchase program.~~

The following table provides information with respect to purchases we made of our common stock during the quarter ended ~~September 30, 2023.~~March 31, 2024.

Period
Total Number of Shares Purchased (1)
Average Price
Paid per Share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Dollar Value of Shares
that may yet be
Purchased under the
Plans or Programs (2)
July 1, 2023 - July 31 2023 9,811 $ 80.79 6,100 $ 49,121,613
August 1, 2023 - August 31, 2023 211,895 $ 98.26 211,786 $ 28,305,510
September 1, 2023 - September 30, 2023 72,402 $ 99.87 72,402 $ 21,072,842
Total 294,108 $ 98.07 290,288

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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, 2024 - January 31, 2024	208,723	$	102.31	197,918	$	65,932,781
February 1, 2024 - February 29, 2024	100,243	$	101.39	100,243	$	55,766,594
March 1, 2024 - March 31, 2024	528,477	$	97.61	326,537	$	23,987,379
Total	837,443	$	99.24	624,698

(1)The number of shares repurchased included ~~3,711~~10,805 shares in ~~July 2023~~January 2024 and ~~109~~201,940 shares in ~~August 2023~~March 2024 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the share repurchase program.

(2)As of the end of the period.


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.			MINE SAFETY DISCLOSURES.

Not applicable.


ITEM 5.			OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

~~The following table describes~~During the first quarter of 2024, none of our executive officers or directors adopted or terminated contracts, instructions or written plans for the sale or purchase of our securities ~~adopted by our executive officers and/or directors during the third quarter of 2023, each of which is~~ intended to satisfy the affirmative defense ~~conditions~~condition of Rule 10b5-1(c)~~, referred to as Rule 10b5-1 trading plans.~~

~~Name and Title~~

~~Action~~

~~Date of Rule 10b5-1 Trading Plan Action~~

~~Scheduled Expiration Date of Rule 10b5-1 Trading Plan~~

~~Aggregate Number of Shares to be Sold~~

~~John McCartney - Non-Executive Chairman of the Board~~

~~Adoption~~

~~8/2/2023~~

~~7/31/2024~~

~~5,400~~

~~C. Mark Hussey - President, Chief Executive Officer and Director~~

~~Adoption~~

~~8/29/2023~~

~~8/28/2024~~

~~51,628~~

~~During the third quarter of 2023, none of our executive officers or directors terminated a Rule 10b5-1 trading plan~~ or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

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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

~~3.1~~10.1*

~~Restated Certificate of Incorporation filed with the Secretary of State of Delaware on July 28, 2023.~~Amendment to Senior Management Agreement by and between Huron Consulting Group Inc. and James H. Roth

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 Link base 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)



*						Indicates the exhibit is a management contract or compensatory plan or arrangement.

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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:

~~November 2, 2023~~April 30, 2024

/s/ JOHN D. KELLY

John D. Kelly

Executive Vice President,
Chief Financial Officer and Treasurer

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		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	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3834

Item 4.	Controls and Procedures	3935

Part II – Other Information

Item 1.	Legal Proceedings	3935

Item 1A.	Risk Factors	3935

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3935

Item 3.	Defaults Upon Senior Securities	4036

Item 4.	Mine Safety Disclosures	4036

Item 5.	Other Information	4036

Item 6.	Exhibits	4137

Signature		4238


		As of September 30, 2023				As of December 31, 2022
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	5 to 13	$	65,083	$	52,003	$	74,583	$	57,219
Technology and software	2 to 5	16,230		9,613		13,330		7,975
Trade names	6	6,000		6,000		6,000		5,907
Non-competition agreements	2 to 5	920		527		920		340

Total		$	88,233	$	68,143	$	94,833	$	71,441


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Before Taxes		Tax (Expense) Benefit		Net of Taxes		Before Taxes		Tax (Expense) Benefit		Net of Taxes
Foreign currency translation adjustments	$	(662)	$	—	$	(662)	$	(1,034)	$	—	$	(1,034)
Unrealized gain (loss) on investment	$	(1,840)	$	490	$	(1,350)	$	(1,128)	$	298	$	(830)
Interest rate swaps:
Change in fair value	$	1,849	$	(492)	$	1,357	$	5,302	$	(1,402)	$	3,900
Reclassification adjustments into earnings	(2,107)		560		(1,547)		(89)		24		(65)
Net unrealized gain (loss) on interest rate swaps	$	(258)	$	68	$	(190)	$	5,213	$	(1,378)	$	3,835
Foreign exchange forward contracts:
Change in fair value	$	(223)	$	59	$	(164)	$	(98)	$	26	$	(72)
Reclassification adjustments into earnings	(19)		5		(14)		(1)		—		(1)
Net unrealized gain (loss) on foreign exchange forward contracts	$	(242)	$	64	$	(178)	$	(99)	$	26	$	(73)
Other comprehensive income (loss)	$	(3,002)	$	622	$	(2,380)	$	2,952	$	(1,054)	$	1,898



	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Before Taxes		Tax (Expense) Benefit		Net of Taxes		Before Taxes		Tax (Expense) Benefit		Net of Taxes
Foreign currency translation adjustments	$	(283)	$	—	$	(283)	$	(1,733)	$	—	$	(1,733)
Unrealized gain (loss) on investment	$	4,193	$	(1,117)	$	3,076	$	(3,694)	$	976	$	(2,718)
Interest rate swaps:
Change in fair value	$	5,307	$	(1,411)	$	3,896	$	11,994	$	(3,172)	$	8,822
Reclassification adjustments into earnings	(5,580)		1,483		(4,097)		420		(111)		309
Net unrealized gain (loss) on interest rate swaps	$	(273)	$	72	$	(201)	$	12,414	$	(3,283)	$	9,131
Foreign exchange forward contracts:
Change in fair value	$	(23)	$	6	$	(17)	$	(98)	$	26	$	(72)
Reclassification adjustments into earnings	(21)		5		(16)		(1)		—		(1)
Net unrealized gain (loss) on foreign exchange forward contracts	$	(44)	$	11	$	(33)	$	(99)	$	26	$	(73)
Other comprehensive income (loss)	$	3,593	$	(1,034)	$	2,559	$	6,888	$	(2,281)	$	4,607