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Huron Announces Fourth Quarter and Full Year 2022 Financial Results, and Provides 2023 Guidance

FOURTH QUARTER 2022 HIGHLIGHTS

  • Total revenues increased $65.4 million, or 26.3%, to $313.7 million in Q4 2022 from $248.3 million in Q4 2021.
  • Revenues within the Digital capability increased 37.0% to $130.1 million in Q4 2022 compared to $95.0 million Q4 2021.
  • Net income was $17.1 million in Q4 2022 compared to $31.1 million in Q4 2021. Results for Q4 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $9.7 million, or 33.1%, to $39.0 million in Q4 2022 from $29.3 million in Q4 2021.
  • Diluted earnings per share was $0.85 in Q4 2022 compared to $1.45 in Q4 2021.
  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.32, or 40.0%, to $1.12 in Q4 2022 from $0.80 in Q4 2021.
  • Huron repurchased 0.3 million shares of the company's common stock for $23.5 million in Q4 2022.
  • Net cash provided by operating activities was $91.2 million in Q4 2022.
  • Huron refinanced its $600 million credit facility; including extending the maturity date to 2027 and transitioning to SOFR, while maintaining favorable pricing and flexibility.

FULL YEAR 2022 HIGHLIGHTS AND 2023 GUIDANCE

  • Total revenues increased $226.8 million, or 25.0%, to $1.132 billion for full year 2022 compared to $905.6 million for full year 2021.
  • Revenues within the Digital capability increased 41.4% to $494.5 million for full year 2022 compared to $349.7 million for full year 2021.
  • Net income increased $12.6 million, or 19.9%, to $75.6 million for full year 2022 compared to $63.0 million for full year 2021. Results for full year 2022 include an unrealized gain of $19.8 million, net of tax, recognized in Q1 2022 on the company's investment in a hospital-at-home company. Results for full year 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $33.0 million, or 33.8%, to $130.8 million for full year 2022 from $97.8 million for full year 2021.
  • Diluted earnings per share increased $0.75, or 26.0%, to $3.64 for full year 2022 from $2.89 for full year 2021.
  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.82, or 31.4%, to $3.43 for full year 2022 from $2.61 for full year 2021.
  • Huron repurchased 2.0 million shares of the company's common stock for $121.3 million in 2022.
  • Huron provides full year 2023 guidance, including revenue expectations in a range of $1.22 billion to $1.28 billion.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the fourth quarter and full year ended December 31, 2022.

“We achieved record revenues in the fourth quarter and full year 2022, growing revenues 26% and 25%, respectively. Revenue growth for both the fourth quarter and the full year was strong across all three operating segments and bolstered by continued growth in our Digital capability, which increased 41% in 2022. Our full year adjusted EBITDA margins improved 80 basis points over the prior year, reflecting solid progress toward our objective of returning to mid-teen EBITDA margins by 2025,” said Mark Hussey, chief executive officer and president of Huron.

“Going forward, our business trajectory and financial strength position us to continue creating long-term shareholder value. With our leading market positions in healthcare and education, our growing presence in commercial industries, our rapidly growing Digital capability, and the ongoing market demand for our offerings, we believe we have established a solid foundation for continued growth and increased profitability in 2023,” added Hussey.

FOURTH QUARTER 2022 RESULTS

Revenues increased $65.4 million, or 26.3%, to $313.7 million for the fourth quarter of 2022, compared to $248.3 million for the fourth quarter of 2021. This revenue growth was highlighted by 37.0% growth in the Digital capability and 19.8% growth in the Consulting and Managed Services capability in the aggregate across all industries during the fourth quarter of 2022 compared to the same prior year period.

Net income was $17.1 million for the fourth quarter of 2022 compared to $31.1 million for the same quarter last year. Diluted earnings per share was $0.85 for the fourth quarter of 2022 compared to $1.45 for the fourth quarter of 2021. Results for the fourth quarter of 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

Fourth quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) was $34.5 million, compared to $50.0 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Three Months Ended

December 31,

 

 

2022

 

 

 

2021

 

Amortization of intangible assets

$

2,702

 

 

$

2,328

 

Restructuring charges

$

4,953

 

 

$

9,235

 

Other losses (gains)

$

(159

)

 

$

100

 

Transaction-related expenses

$

 

 

$

1,447

 

Gain on sale of business

$

 

 

$

(31,510

)

Tax effect of adjustments

$

(1,986

)

 

$

4,530

 

Foreign currency transaction losses (gains), net

$

(246

)

 

$

21

 

Adjusted EBITDA(7) increased $9.7 million, or 33.1%, to $39.0 million, or 12.4% of revenues, in the fourth quarter of 2022, compared to $29.3 million, or 11.8% of revenues, in the same quarter last year. Adjusted net income(7) increased $5.4 million, or 31.5%, to $22.6 million, or $1.12 per diluted share, for the fourth quarter of 2022, compared to $17.2 million, or $0.80 per diluted share, for the same quarter in 2021.

The number of revenue-generating professionals(1) increased 28.0% to 4,832 as of December 31, 2022 from 3,776 as of December 31, 2021. The utilization rate(5) of the company's Consulting capability increased to 80.6% during the fourth quarter 2022, compared to 69.9% during the same period last year. The utilization rate(5) for the company's Digital capability decreased to 69.4% during the fourth quarter 2022, compared to 71.2% during the same period last year.

Additionally, in the fourth quarter of 2022, Huron repurchased 331,165 shares of the company's common stock for $23.5 million.

FULL YEAR 2022 RESULTS

Revenues increased $226.8 million, or 25.0%, to $1.132 billion for full year 2022, compared to $905.6 million for full year 2021. This revenue growth was highlighted by 41.4% growth from the Digital capability in the aggregate across all industries and growth in the Education and Healthcare segments' Consulting and Managed Services capabilities of 46.4% and 11.8%, respectively, for full year 2022 compared to the same prior year period.

Net income increased $12.6 million, or 19.9%, to $75.6 million for full year 2022, compared to $63.0 million for full year 2021. Diluted earnings per share increased $0.75, or 26.0%, to $3.64 for full year 2022, compared to $2.89 for the same period last year. Results for full year 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company. Results for full year 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

EBITDA(7) for full year 2022 increased $34.2 million, or 29.8%, to $148.7 million, compared to $114.5 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

Amortization of intangible assets

$

11,198

 

 

$

9,251

 

Restructuring charges

$

9,909

 

 

$

12,401

 

Other losses (gains)

$

(193

)

 

$

198

 

Transaction-related expenses

$

50

 

 

$

1,782

 

Unrealized gain on preferred stock investment

$

(26,964

)

 

$

 

Gain on sale of business

$

 

 

$

(31,510

)

Tax effect of adjustments

$

1,590

 

 

$

1,742

 

Foreign currency transaction losses (gains), net

$

(655

)

 

$

419

 

Adjusted EBITDA(7) increased $33.0 million, or 33.8%, to $130.8 million, or 11.6% of revenues, for full year 2022, compared to $97.8 million, or 10.8% of revenues, for the same period last year. Adjusted net income(7) increased $14.3 million, or 25.1%, to $71.1 million, or $3.43 per diluted share, for full year 2022, compared to $56.9 million, or $2.61 per diluted share, for full year 2021.

The number of revenue-generating professionals(1) increased 28.0% to 4,832 as of December 31, 2022 from 3,776 as of December 31, 2021. The utilization rate(5) of the company's Consulting capability increased to 75.2% for full year 2022, compared to 70.6% during the same period last year. The utilization rate(5) for the company's Digital capability decreased to 71.0% for full year 2022, compared to 72.5% during the same period last year.

Additionally, in 2022, Huron repurchased 2,037,752 shares of the company's common stock for $121.3 million, representing 9.3% of the common stock outstanding as of December 31, 2021.

OPERATING INDUSTRIES

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s full year 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Annual Report on Form 10-K filing for the year ended December 31, 2022.

OUTLOOK FOR 2023

Based on currently available information, the company provided guidance for full year 2023 revenues before reimbursable expenses in a range of $1.22 billion to $1.28 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per share in a range of $3.75 to $4.25.

Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast.

FOURTH QUARTER 2022 WEBCAST

The company will host a webcast to discuss its financial results today, February 28, 2023, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES(7)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (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 the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes 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, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These 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 accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com.

Statements in this press release 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, 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 the company's current expectations about 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 Huron's Annual Report on Form 10-K for the year ended December 31, 2022 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. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

313,711

 

 

$

248,294

 

 

$

1,132,455

 

 

$

905,640

 

Reimbursable expenses

 

7,472

 

 

 

12,442

 

 

 

26,506

 

 

 

21,318

 

Total revenues and reimbursable expenses

 

321,183

 

 

 

260,736

 

 

 

1,158,961

 

 

 

926,958

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

216,033

 

 

 

173,233

 

 

 

785,881

 

 

 

636,776

 

Reimbursable expenses

 

7,422

 

 

 

12,136

 

 

 

26,671

 

 

 

21,369

 

Selling, general and administrative expenses

 

60,495

 

 

 

49,510

 

 

 

209,381

 

 

 

178,084

 

Restructuring charges

 

4,953

 

 

 

9,235

 

 

 

9,909

 

 

 

12,401

 

Depreciation and amortization

 

6,781

 

 

 

6,458

 

 

 

27,359

 

 

 

25,489

 

Total operating expenses

 

295,684

 

 

 

250,572

 

 

 

1,059,201

 

 

 

874,119

 

Operating income

 

25,499

 

 

 

10,164

 

 

 

99,760

 

 

 

52,839

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(4,130

)

 

 

(2,185

)

 

 

(11,883

)

 

 

(8,150

)

Other income, net

 

2,001

 

 

 

33,170

 

 

 

20,700

 

 

 

35,347

 

Total other income (expense), net

 

(2,129

)

 

 

30,985

 

 

 

8,817

 

 

 

27,197

 

Income before taxes

 

23,370

 

 

 

41,149

 

 

 

108,577

 

 

 

80,036

 

Income tax expense

 

6,286

 

 

 

10,091

 

 

 

33,025

 

 

 

17,049

 

Net income

$

17,084

 

 

$

31,058

 

 

$

75,552

 

 

$

62,987

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

0.88

 

 

$

1.48

 

 

$

3.73

 

 

$

2.94

 

Net income per diluted share

$

0.85

 

 

$

1.45

 

 

$

3.64

 

 

$

2.89

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

19,470

 

 

 

21,039

 

 

 

20,249

 

 

 

21,439

 

Diluted

 

20,159

 

 

 

21,466

 

 

 

20,746

 

 

 

21,809

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

17,084

 

 

$

31,058

 

 

$

75,552

 

 

$

62,987

 

Foreign currency translation adjustments, net of tax

 

(157

)

 

 

(1,161

)

 

 

(1,890

)

 

 

(925

)

Unrealized gain (loss) on investment, net of tax

 

(3,428

)

 

 

3,237

 

 

 

(6,146

)

 

 

1,169

 

Unrealized gain on cash flow hedging instruments, net of tax

 

257

 

 

 

1,579

 

 

 

9,315

 

 

 

3,535

 

Other comprehensive income (loss)

 

(3,328

)

 

 

3,655

 

 

 

1,279

 

 

 

3,779

 

Comprehensive income

$

13,756

 

 

$

34,713

 

 

$

76,831

 

 

$

66,766

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

December 31,

2022

 

December 31,

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

11,834

 

 

$

20,781

 

Receivables from clients, net

 

147,852

 

 

 

122,316

 

Unbilled services, net

 

141,781

 

 

 

91,285

 

Income tax receivable

 

960

 

 

 

8,071

 

Prepaid expenses and other current assets

 

26,057

 

 

 

15,229

 

Total current assets

 

328,484

 

 

 

257,682

 

Property and equipment, net

 

26,107

 

 

 

31,004

 

Deferred income taxes, net

 

1,554

 

 

 

1,804

 

Long-term investments

 

91,194

 

 

 

72,584

 

Operating lease right-of-use assets

 

30,304

 

 

 

35,311

 

Other non-current assets

 

73,039

 

 

 

68,191

 

Intangible assets, net

 

23,392

 

 

 

31,894

 

Goodwill

 

624,966

 

 

 

620,879

 

Total assets

$

1,199,040

 

 

$

1,119,349

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

14,254

 

 

$

13,621

 

Accrued expenses and other current liabilities

 

27,268

 

 

 

22,519

 

Accrued payroll and related benefits

 

171,723

 

 

 

139,131

 

Current maturities of long-term debt

 

 

 

 

559

 

Current maturities of operating lease liabilities

 

10,530

 

 

 

10,142

 

Deferred revenues

 

21,909

 

 

 

19,212

 

Total current liabilities

 

245,684

 

 

 

205,184

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

33,614

 

 

 

43,458

 

Long-term debt, net of current portion

 

290,000

 

 

 

232,221

 

Operating lease liabilities, net of current portion

 

45,556

 

 

 

54,313

 

Deferred income taxes, net

 

32,146

 

 

 

12,273

 

Total non-current liabilities

 

401,316

 

 

 

342,265

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 22,507,159 and 24,364,814 shares issued, respectively

 

223

 

 

 

239

 

Treasury stock, at cost, 2,711,712 and 2,495,172 shares, respectively

 

(137,556

)

 

 

(135,969

)

Additional paid-in capital

 

318,706

 

 

 

413,794

 

Retained earnings

 

352,548

 

 

 

276,996

 

Accumulated other comprehensive income

 

18,119

 

 

 

16,840

 

Total stockholders’ equity

 

552,040

 

 

 

571,900

 

Total liabilities and stockholders’ equity

$

1,199,040

 

 

$

1,119,349

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net income

$

75,552

 

 

$

62,987

 

Adjustments to reconcile net income to cash flows provided by operating activities:

 

 

 

Depreciation and amortization

 

27,359

 

 

 

25,978

 

Non-cash lease expense

 

6,369

 

 

 

6,967

 

Lease-related impairment charges

 

211

 

 

 

 

Share-based compensation

 

30,971

 

 

 

25,857

 

Amortization of debt discount and issuance costs

 

1,169

 

 

 

794

 

Allowances for doubtful accounts

 

141

 

 

 

13

 

Deferred income taxes

 

18,784

 

 

 

12,480

 

Gain on sale of property and equipment, excluding transaction costs

 

(1,111

)

 

 

(343

)

Gain on sale of business, excluding transaction costs

 

 

 

 

(32,824

)

Change in fair value of contingent consideration liabilities

 

(359

)

 

 

173

 

Change in fair value of preferred stock investment

 

(26,964

)

 

 

 

Other, net

 

6

 

 

 

(78

)

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

 

 

 

(Increase) decrease in receivables from clients, net

 

(25,847

)

 

 

(39,845

)

(Increase) decrease in unbilled services, net

 

(51,359

)

 

 

(38,820

)

(Increase) decrease in current income tax receivable / payable, net

 

7,673

 

 

 

(2,723

)

(Increase) decrease in other assets

 

2,532

 

 

 

(2,670

)

Increase (decrease) in accounts payable and other liabilities

 

(13,466

)

 

 

10,394

 

Increase (decrease) in accrued payroll and related benefits

 

32,770

 

 

 

(2,636

)

Increase (decrease) in deferred revenues

 

969

 

 

 

(7,717

)

Net cash provided by operating activities

 

85,400

 

 

 

17,987

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(12,547

)

 

 

(10,871

)

Investments in life insurance policies

 

(872

)

 

 

(1,245

)

Distributions from life insurance policies

 

3,377

 

 

 

 

Purchases of businesses, net of cash acquired

 

(3,448

)

 

 

(44,819

)

Capitalization of internally developed software costs

 

(11,752

)

 

 

(4,889

)

Proceeds from note receivable

 

154

 

 

 

 

Proceeds from sale of property and equipment

 

4,753

 

 

 

408

 

Divestiture of business

 

207

 

 

 

41,273

 

Net cash used in investing activities

 

(20,128

)

 

 

(20,143

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

1,421

 

 

 

804

 

Shares redeemed for employee tax withholdings

 

(7,795

)

 

 

(10,103

)

Share repurchases

 

(120,393

)

 

 

(64,612

)

Proceeds from bank borrowings

 

314,000

 

 

 

235,000

 

Repayments of bank borrowings

 

(256,780

)

 

 

(205,499

)

Payments for debt issuance costs

 

(2,686

)

 

 

 

Deferred payments on business acquisitions

 

(1,875

)

 

 

 

Net cash used in financing activities

 

(74,108

)

 

 

(44,410

)

Effect of exchange rate changes on cash

 

(111

)

 

 

170

 

Net decrease in cash and cash equivalents

 

(8,947

)

 

 

(46,396

)

Cash and cash equivalents at beginning of the period

 

20,781

 

 

 

67,177

 

Cash and cash equivalents at end of the period

$

11,834

 

 

$

20,781

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Percent

Increase

(Decrease)

 

Twelve Months Ended

December 31,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2022

 

 

 

2021

 

 

 

 

2022

 

 

 

2021

 

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

153,330

 

 

$

129,422

 

 

18.5

%

 

$

534,999

 

 

$

444,767

 

 

20.3

%

Operating income

 

$

39,786

 

 

$

31,813

 

 

25.1

%

 

$

131,227

 

 

$

118,324

 

 

10.9

%

Segment operating margin

 

 

25.9

%

 

 

24.6

%

 

 

 

 

24.5

%

 

 

26.6

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

96,601

 

 

$

67,313

 

 

43.5

%

 

$

359,835

 

 

$

242,374

 

 

48.5

%

Operating income

 

$

20,076

 

 

$

15,203

 

 

32.1

%

 

$

78,924

 

 

$

52,398

 

 

50.6

%

Segment operating margin

 

 

20.8

%

 

 

22.6

%

 

 

 

 

21.9

%

 

 

21.6

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

63,780

 

 

$

51,559

 

 

23.7

%

 

$

237,621

 

 

$

218,499

 

 

8.8

%

Operating income

 

$

11,743

 

 

$

5,144

 

 

128.3

%

 

$

50,025

 

 

$

34,296

 

 

45.9

%

Segment operating margin

 

 

18.4

%

 

 

10.0

%

 

 

 

 

21.1

%

 

 

15.7

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

313,711

 

 

$

248,294

 

 

26.3

%

 

$

1,132,455

 

 

$

905,640

 

 

25.0

%

Reimbursable expenses

 

 

7,472

 

 

 

12,442

 

 

(39.9

)%

 

 

26,506

 

 

 

21,318

 

 

24.3

%

Total revenues and reimbursable expenses

 

$

321,183

 

 

$

260,736

 

 

23.2

%

 

$

1,158,961

 

 

$

926,958

 

 

25.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

71,605

 

 

$

52,160

 

 

37.3

%

 

$

260,176

 

 

$

205,018

 

 

26.9

%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

41,006

 

 

 

36,911

 

 

11.1

%

 

 

140,145

 

 

 

131,545

 

 

6.5

%

Depreciation and amortization

 

 

5,100

 

 

 

5,085

 

 

0.3

%

 

 

20,271

 

 

 

20,634

 

 

(1.8

)%

Total operating income

 

 

25,499

 

 

 

10,164

 

 

150.9

%

 

 

99,760

 

 

 

52,839

 

 

88.8

%

Other income (expense), net

 

 

(2,129

)

 

 

30,985

 

 

(106.9

)%

 

 

8,817

 

 

 

27,197

 

 

(67.6

)%

Income before taxes

 

$

23,370

 

 

$

41,149

 

 

(43.2

)%

 

$

108,577

 

 

$

80,036

 

 

35.7

%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (1)(6):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

1,890

 

 

 

1,596

 

 

18.4

%

 

 

1,890

 

 

 

1,596

 

 

18.4

%

Education

 

 

1,579

 

 

 

1,050

 

 

50.4

%

 

 

1,579

 

 

 

1,050

 

 

50.4

%

Commercial (2)

 

 

1,363

 

 

 

1,130

 

 

20.6

%

 

 

1,363

 

 

 

1,130

 

 

20.6

%

Total

 

 

4,832

 

 

 

3,776

 

 

28.0

%

 

 

4,832

 

 

 

3,776

 

 

28.0

%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (3)

 

$

183,638

 

 

$

153,339

 

 

19.8

%

 

$

637,994

 

 

$

555,915

 

 

14.8

%

Digital

 

 

130,073

 

 

 

94,955

 

 

37.0

%

 

 

494,461

 

 

 

349,725

 

 

41.4

%

Total

 

$

313,711

 

 

$

248,294

 

 

26.3

%

 

$

1,132,455

 

 

$

905,640

 

 

25.0

%

Number of revenue-generating professionals by capability (at period end)(1):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)

 

 

2,294

 

 

 

1,838

 

 

24.8

%

 

 

2,294

 

 

 

1,838

 

 

24.8

%

Digital

 

 

2,538

 

 

 

1,938

 

 

31.0

%

 

 

2,538

 

 

 

1,938

 

 

31.0

%

Total

 

 

4,832

 

 

 

3,776

 

 

28.0

%

 

 

4,832

 

 

 

3,776

 

 

28.0

%

Utilization rate by capability (5):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

80.6

%

 

 

69.9

%

 

 

 

 

75.2

%

 

 

70.6

%

 

 

Digital

 

 

69.4

%

 

 

71.2

%

 

 

 

 

71.0

%

 

 

72.5

%

 

 

(1)

Consists 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.

 
(2)

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

 
(3)

Managed Services capability revenues within our Healthcare segment was $20.1 million and $12.3 million for the three months ended December 31, 2022 and 2021, respectively; and $67.6 million and $47.7 million for the year ended December 31, 2022 and 2021, respectively.

 

Managed Services capability revenues within our Education segment was $4.4 million and $2.3 million for the three months ended December 31, 2022 and 2021, respectively; and $15.7 million and $9.1 million for the year ended December 31, 2022 and 2021, respectively.

 
(4)

The number of Managed Services revenue-generating professionals within our Healthcare segment as of December 31, 2022 and 2021 was 715 and 509, respectively.

 

The number of Managed Services revenue-generating professionals within our Education segment as of December 31, 2022 and 2021 was 106 and 72, respectively.

 
(5)

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

 
(6)

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

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

$

313,711

 

 

$

248,294

 

 

$

1,132,455

 

 

$

905,640

 

Net income

$

17,084

 

 

$

31,058

 

 

$

75,552

 

 

$

62,987

 

Add back:

 

 

 

 

 

 

 

Income tax expense

 

6,286

 

 

 

10,091

 

 

 

33,025

 

 

 

17,049

 

Interest expense, net of interest income

 

4,130

 

 

 

2,185

 

 

 

11,883

 

 

 

8,150

 

Depreciation and amortization

 

6,995

 

 

 

6,707

 

 

 

28,233

 

 

 

26,347

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)

 

34,495

 

 

 

50,041

 

 

 

148,693

 

 

 

114,533

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

4,953

 

 

 

9,235

 

 

 

9,909

 

 

 

12,401

 

Other losses (gains)

 

(159

)

 

 

100

 

 

 

(193

)

 

 

198

 

Transaction-related expenses

 

 

 

 

1,447

 

 

 

50

 

 

 

1,782

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Gain on sale of business

 

 

 

 

(31,510

)

 

 

 

 

 

(31,510

)

Foreign currency transaction losses (gains), net

 

(246

)

 

 

21

 

 

 

(655

)

 

 

419

 

Adjusted EBITDA (7)

$

39,043

 

 

$

29,334

 

 

$

130,840

 

 

$

97,823

 

Adjusted EBITDA as a percentage of revenues (7)

 

12.4

%

 

 

11.8

%

 

 

11.6

%

 

 

10.8

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income

$

17,084

 

 

$

31,058

 

 

$

75,552

 

 

$

62,987

 

Weighted average shares - diluted

 

20,159

 

 

 

21,466

 

 

 

20,746

 

 

 

21,809

 

Diluted earnings per share

$

0.85

 

 

$

1.45

 

 

$

3.64

 

 

$

2.89

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,702

 

 

 

2,328

 

 

 

11,198

 

 

 

9,251

 

Restructuring charges

 

4,953

 

 

 

9,235

 

 

 

9,909

 

 

 

12,401

 

Other losses (gains)

 

(159

)

 

 

100

 

 

 

(193

)

 

 

198

 

Transaction-related expenses

 

 

 

 

1,447

 

 

 

50

 

 

 

1,782

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Gain on sale of business

 

 

 

 

(31,510

)

 

 

 

 

 

(31,510

)

Tax effect of adjustments

 

(1,986

)

 

 

4,530

 

 

 

1,590

 

 

 

1,742

 

Total adjustments, net of tax

 

5,510

 

 

 

(13,870

)

 

 

(4,410

)

 

 

(6,136

)

Adjusted net income (7)

$

22,594

 

 

$

17,188

 

 

$

71,142

 

 

$

56,851

 

Adjusted weighted average shares - diluted

 

20,159

 

 

 

21,466

 

 

 

20,746

 

 

 

21,809

 

Adjusted diluted earnings per share (7)

$

1.12

 

 

$

0.80

 

 

$

3.43

 

 

$

2.61

 

(7)

In evaluating the company’s financial performance and outlook, management uses 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, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (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 the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes 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, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These 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 accounting principles generally accepted in the United States.

 

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