What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-23 · 74 added, 49 removed, 313 unchanged (28% of the section changed)

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Our results of operations have been adversely affected and, in the future, could be materially adversely impacted by the coronavirus (COVID-19) pandemic.

The worldwide spread of the COVID-19 pandemic has created significant volatility, uncertainty and disruption to the global economy.

The pandemic is adversely impacting and, in the future, could materially adversely impact our business, operations and financial results.

The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:

The continuing impact of the COVID-19 pandemic has created significant volatility, uncertainty and disruption to the global economy.

The pandemic has adversely impacted and, in the future, could materially adversely impact our business, operations and financial results.

The extent to which the COVID-19 pandemic continues to impact our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:

• the duration of the pandemic;

• the effective distribution of vaccines or treatments for COVID-19 and the willingness of the population to take the vaccines;

• the long-term efficacy of vaccines or treatments for COVID-19, including against new variants and the willingness of the population to take the vaccines;

• governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic, including quarantines, social distancing and other risk mitigating measures taken to prevent the spread of COVID-19;

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Given the highly specialized nature of our services, the senior management team must have a thorough understanding of our service offerings as well as the skills and experience necessary to manage an organization consisting of a diverse group of professionals.

In addition, we rely on our senior management team and other managing directors to generate and market our business.

In addition, we rely on our senior management team and other managing directors to generate revenues and market our business.

Further, our senior management’s and other managing directors’ personal reputations and relationships with our clients are a critical element in obtaining and maintaining client engagements.

Members of our senior management team and our other managing directors

could choose to leave or join one of our competitors and some of our clients could choose to use the services of that competitor instead of our services.

Members of our senior management team and our other managing directors could choose to leave or join one of our competitors and some of our clients could choose to use the services of that competitor instead of our services.

If one or more members of our senior management team or our other managing directors leave and we cannot replace them with a suitable candidate quickly, we could experience difficulty in securing and successfully completing engagements and managing our business properly, which could harm our business prospects and results of operations.

Our inability to hire and retain talented people in an industry where there is great competition for talent could have a serious negative effect on our prospects and results of operations.

If we are unable to hire and retain talented people in an industry where there is great competition for talent it could have a serious negative effect on our prospects and results of operations.

Our business involves the delivery of professional services and is highly labor-intensive.

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Our principal competition for talent comes from other consulting firms and accounting firms, as well as from organizations seeking to staff their internal professional positions.

Many of these competitors may be able to offer greater compensation and benefits or more attractive lifestyle choices, career paths, or geographic locations than we do.

Many of these competitors may be able to offer greater compensation and benefits or more attractive lifestyle choices, career paths, or geographic locations than we can offer.

Therefore, we may not be successful in attracting and retaining the skilled consultants we require to conduct and expand our operations successfully.

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We have grown significantly since we commenced operations and have increased the number of our full-time professionals from 249 in 2002 to 4,609 as of December 31, 2021.

Additionally, our considerable growth has placed demands on our management and our internal systems, procedures, and controls and will continue to do so in the near future.

Additionally, our considerable growth has placed demands on our management and our internal systems, procedures, and controls and will continue to do so in the future.

To successfully manage growth, we must periodically adjust and strengthen our operating, financial, accounting, and other systems, procedures, and controls, which may increase our total costs and may adversely affect our gross profits and our ability to sustain profitability if we do not generate increased revenues to offset the costs.

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If we cannot manage the risks associated with new service offerings or new locations effectively, we are unlikely to be successful in these efforts, which could harm our ability to sustain profitability and our business prospects.

Additional hiring, departures, business acquisitions and dispositions could disrupt our operations, increase our costs or otherwise harm our business.

The Company has significant operations in India, which presents additional risks.

We have significant operations in India, including more than 900 employees, which subjects the Company to various country-specific risks.

For example, from time to time, India has experienced instances of civil unrest, terrorism and hostilities among neighboring countries.

Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influence the Indian economy and our operations by disrupting operations and communications and making travel within India more difficult and less desirable.

As such, our operations and employees in India may be adversely affected by social and political uncertainties or change, military activity, health-related risks or acts of terrorism.

Additionally, India’s reputation for potential corruption and the challenges presented by India’s complex business environment may increase our risk of violating applicable anti-corruption and anti-bribery laws.

We face the risk that we, our employees or any third parties we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws in any jurisdiction in which we conduct business, including the Foreign Corrupt Practices Act, India’s Prevention of Money Laundering Act, 2002 and Indian Penal Code.

If we violate applicable anti-corruption laws or our internal policies designed to ensure ethical business practices, we could face financial penalties and/or reputational harm that would negatively impact our financial condition and results of operations.

Further, India has experienced natural disasters such as earthquakes, tsunamis, floods, landslides and drought in the past few years.

The extent and severity of these natural disasters determines their impact on the Indian economy.

Such future disasters could have a negative impact on the Indian economy and the Company’s India-based employees, causing our business to suffer.

Additionally, since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector.

Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and there is no assurance that such liberalization policies will continue.

A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties could adversely affect business and economic conditions in India generally and our business and employees in particular.

Lastly, unfavorable fluctuations in the currency exchange rate between the U.S.

dollar and Indian rupee could have a material adverse effect on our results of operations.

As we continue to grow our operations in India, more of our expenses will be incurred in the Indian rupee.

An increase in the value of the Indian rupee against the U.S.

dollar, in which our revenue is primarily recorded, could increase costs for delivery of services and decrease the profitability of our engagements that utilize our employees in India.

Additional hiring, departures, and business acquisitions and dispositions, as well as other organizational changes could disrupt our operations, increase our costs or otherwise harm our business.

Our business strategy is dependent in part upon our ability to grow by hiring individuals or groups of individuals and by acquiring complementary businesses.

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Dispositions may also involve continued financial involvement, as we may be required to retain responsibility for, or agree to indemnify buyers against, liabilities related to a business sold.

Our ability to maintain and attract new business depends upon our reputation, the professional reputation of our revenue-generating employees, and the quality of our services.

As a professional services firm, our ability to secure new engagements depends heavily upon our reputation and the individual reputations of our professionals.

Any factor that diminishes our reputation or that of our employees, including not meeting client expectations or misconduct by our employees, could make it substantially more difficult for us to attract new engagements and clients.

Similarly, because we obtain many of our new engagements from former or current clients or from referrals by those clients or by law firms that we have worked with in the past, any client that questions the quality of our work or that of our consultants could impair our ability to secure additional new engagements and clients.

The consulting services industry is highly competitive and we may not be able to compete effectively.

The consulting services industry in which we operate includes a large number of participants and is intensely competitive.

We face competition from other business operations and financial consulting firms, general management consulting firms, the consulting practices of major accounting firms, technical and economic advisory firms, regional and specialty consulting firms, consulting divisions of our technology partners, and the internal professional resources of organizations.

In addition, because there are relatively low barriers to entry, we expect to continue to face additional competition from new entrants into the business operations and financial consulting industries.

Competition in

several of the sectors in which we operate is particularly intense as many of our competitors are seeking to expand their market share in these sectors.

Many of our competitors have a greater national and international presence, as well as have a significantly greater number of personnel, financial, technical, and marketing resources.

In addition, these competitors may generate greater revenues and have greater name recognition than we do.

Some of our competitors may also have lower overhead and other costs and, therefore, may be able to more effectively compete through lower cost service offerings.

Our ability to compete also depends in part on the ability of our competitors to hire, retain, and motivate skilled professionals, the price at which others offer comparable services, the ability of our competitors to offer new and valuable products and services to clients, and our competitors’ responsiveness to their clients.

If we are unable to compete successfully with our existing competitors or with any new competitors, our financial results will be adversely affected.

Risks Related to Industry and Customer Concentration

Additionally, effective January 1, 2022, we modified our operating model to report under three industries, which are our new reportable segments.

The new operating model was designed to strengthen Huron's go-to-market strategy and support our growth.

If we do not successfully implement this change to our operating model, our business and results of operation may be negatively impacted.

The healthcare and education industries are areas of significant focus for our business, and factors that adversely affect the financial condition of these industries could consequently affect our business.

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healthcare system at both the federal and state level, such as the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, and continue to consider further significant reforms.

Due to the significant implementation issues arising under these laws and potential new legislation, it is unclear what long-term effects they will have on the healthcare industry and in turn on our business, financial condition, and results of operations.

Due to the significant

implementation issues arising under these laws and potential new legislation, it is unclear what long-term effects they will have on the healthcare industry and in turn on our business, financial condition, and results of operations.

Our failure to accurately anticipate the application of new laws and regulations, or our failure to comply with such laws and regulations, could create liability for us, result in adverse publicity and negatively affect our business.

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If the tax-exempt status of any of our clients is revoked or compromised by new legislation or interpretation of existing legislation, that client’s financial health could be adversely affected, which could adversely impact demand for our services, our sales, revenue, financial condition, and results of operations.

A significant portion of our revenues is derived from a limited number of clients, and our engagement agreements, including those related to our largest clients, can be terminated by our clients with little or no notice and without penalty, which may cause our operating results to be unpredictable and may result in unexpected declines in our utilization and revenues.

As a consulting firm, we have derived, and expect to continue to derive, a significant portion of our revenues from a limited number of clients.

Our clients typically retain us on an engagement-by-engagement basis, rather than under fixed-term contracts.

Many of our client contracts are short-term in duration and may be terminated by our clients with little or no notice and without penalty, which may cause our operating results to be unpredictable and may result in unexpected declines in our utilization and revenues.

Our clients typically retain us on an engagement-by-engagement basis, rather than under fixed-term contracts, and many of our client contracts are 12 months or less in duration.

The volume of work performed for any particular client is likely to vary from year to year, and a major client in one fiscal period may not require or may decide not to use our services in any subsequent fiscal period.

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Accordingly, the failure to obtain new large engagements or multiple engagements from existing or new clients could have a material adverse effect on the amount of revenues we generate.

In addition, almost all of our engagement agreements can be terminated by our clients with little or no notice and without penalty.

In addition, a large portion of our engagement agreements can be terminated by our clients with little or no notice and without penalty.

In client engagements that involve multiple engagements or stages, there is a risk that a client may choose not to retain us for additional stages of an engagement or that a client will cancel or delay additional planned engagements.

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In addition, our clients’ ability to terminate engagements with little or no notice and without penalty makes it difficult to predict our operating results in any particular fiscal period.

Our ability to maintain and attract new business depends upon our reputation, the professional reputation of our revenue-generating employees, and the quality of our services.

As a professional services firm, our ability to secure new engagements depends heavily upon our reputation and the individual reputations of our professionals.

The consulting services industry is highly competitive and we may not be able to compete effectively.

The consulting services industry in which we operate includes a large number of participants and is intensely competitive.

Competition in several of the sectors in which we operate is particularly intense as many of our competitors are seeking to expand their market share in these sectors.

Many of our competitors have a greater national and international presence, as well as have a significantly greater number of personnel, financial, technical, and marketing resources.

In addition, these competitors may generate greater revenues and have greater name recognition than we do.

Some of our competitors may also have lower overhead and other costs and, therefore, may be able to more

effectively compete through lower cost service offerings.

If we are unable to compete successfully with our existing competitors or with any new competitors, our financial results will be adversely affected.

Risks Related to Information Technology

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We could experience system failures, service interruptions, or security breaches that could negatively impact our business.

Our organization is comprised of employees who work on matters throughout the United States and overseas.

Our organization is comprised of employees who work on matters throughout the United States and overseas around the world.

Our technology platform is a “virtual office” from which we all operate.

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In addition, despite the implementation of security measures, our infrastructure and operating systems, including the internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, or other attacks by third parties seeking to disrupt operations or misappropriate information or similar physical or electronic breaches of security.

While we have taken and are taking reasonable steps to prevent and mitigate the damage of such events, including implementation of system security measures, information backup, and disaster recovery processes, those steps may not be effective and there can be no assurance that any such steps can be effective against all possible risks.

While we have taken and are taking reasonable steps to prevent and mitigate the damage of such events, including implementation of system security measures, information backup, and disaster recovery processes, and where possible, obtaining insurance against such events, those steps may not be effective and there can be no assurance that any such steps can be effective against all possible risks.

We will need to continue to invest in technology in order to achieve redundancies necessary to prevent service interruptions.

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We rely on information technology systems to process, transmit, and store electronic information and to communicate among our locations around the world and with our clients, partners, and employees.

These locations include Canada, the United Kingdom, Switzerland, Singapore, and India, all of which have their own either recently updated or potential new data protection laws.

The breadth and complexity of

this infrastructure increases the potential risk of security breaches which could lead to potential unauthorized disclosure of confidential information.

These locations include India, Canada, Switzerland, Singapore, and the United Kingdom, all of which have their own either recently updated or potential new data protection laws.

The breadth and complexity of this infrastructure increases the potential risk of security breaches which could lead to potential unauthorized disclosure of confidential information.

In providing services to clients, we may manage, utilize, and store sensitive or confidential client or employee data, including personal data and protected health information.

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jurisdictions have adopted, proposed or are considering adopting or proposing, additional data security and/or data privacy statutes or regulations.

Continued governmental focus on data security and privacy may lead to additional legislative and regulatory action, which could increase the complexity of doing business.

governmental focus on data security and privacy may lead to additional legislative and regulatory action, which could increase the complexity of doing business.

The increased emphasis on information security and the requirements to comply with applicable U.S.

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Entry into new or expanded lines of business may also subject us to new laws and regulations with which we are not familiar and may lead to increased litigation and regulatory risk.

For example, our recently launched Huron Managed Services business provides revenue cycle managed services to hospitals and health systems.

For example, our recently launched Huron Managed Services business within the Healthcare industry provides revenue cycle managed services to hospitals and health systems.

These services include the coding, preparation, submission and collection of claims for medical service to payers for reimbursement.

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federal or state government investigations and possible penalties may be imposed upon us, false claims actions may have to be defended and private payers may file claims against us.

Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our business, results of operations and financial condition.

Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our reputation, business, results of operations and financial condition.

Our intellectual property rights in our “Huron Consulting Group” name are important, and any inability to use that name could negatively impact our ability to build brand identity.

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Starting in 2020 and in response to the proliferation of the coronavirus, substantially all of our services were delivered remotely.

consultants are unable to continue delivering services remotely or if we are out of step with a general market return to in person service delivery, our business could be materially adversely affected.

If our consultants are unable to continue delivering services remotely or if we are out of step with a general market return to in person service delivery, our business could be materially adversely affected.

Our quarterly results of operations have fluctuated in the past and may continue to fluctuate in the future as a result of certain factors, some of which may be outside of our control.

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As a consequence, the commencement date of a client engagement often cannot be accurately forecasted.

As discussed below, certain of our client contracts contain terms that result in revenue that is deferred and cannot be recognized until the occurrence of certain events.

As discussed below, certain of our client contracts contain terms that result in

revenue that is deferred and cannot be recognized until the occurrence of certain events.

As a result, the period of time between contract signing and recognition of associated revenue may be lengthy, and we are not able to predict with certainty the period in which revenue will be recognized.

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These estimates reflect our best judgment regarding the efficiencies of our methodologies and consultants as we plan to deploy them on engagements.

Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control, could make these contracts less profitable or unprofitable, which would have an adverse effect on our

profit margin.

For the years ended December 31, 2021, 2020, and 2019, fixed-fee engagements represented 44.2%, 41.4%, and 45.8%, of our revenues, respectively.

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announced that it would phase out LIBOR as a benchmark rate by the end of 2021.

It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021, or whether different benchmark rates will develop.

If LIBOR ceases to exist, the method and rates used to calculate our interest rates and/or payments on our debt may result in interest rates and/or payments that are higher than, or that do not otherwise correlate over time with, the interest rates and/or payments that would have been applicable to our obligations if LIBOR was available in its current form, which could have a material adverse effect on our financial condition and results of operations.

In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain LIBOR tenors (including all U.S.

Dollar LIBOR tenors other than one-week and two-month U.S.

Dollar LIBOR tenors) to June 30, 2023, after which LIBOR reference rates will cease to be provided.

Despite this deferral, the LIBOR administrator has advised that no new contracts using U.S.

Dollar LIBOR should be entered into after December 31, 2021.

As a result of the discontinuance of LIBOR, the future method and rates used to calculate our interest rates and/or payments on our debt may result in interest rates and/or payments that are higher than, or that do not otherwise correlate over time with, the interest rates and/or payments that would have been applicable to our obligations if LIBOR was available in its current form, which could have a material adverse effect on our financial condition and results of operations.

While we continue to take steps to mitigate the impact of the phase-out or replacement of LIBOR, such efforts may not prove successful.

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Intangible assets other than goodwill represent purchased assets that lack physical substance but can be distinguished from goodwill.

Our intangible assets primarily consist of customer relationships, trade names, customer contracts, technology and software, and non-competition agreements, all of which were acquired through business combinations.

Our intangible assets primarily

consist of customer relationships, trade names, technology and software, non-competition agreements, and customer contracts, all of which were acquired through business combinations.

We evaluate our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

During the year ended December 31, 2020, we recorded non-cash goodwill impairment charges totaling $59.8 million related to the Company’s Business Advisory segment.

During the year ended December 31, 2020, we recorded non-cash goodwill impairment charges totaling $59.8 million related to the Business Advisory segment.

During 2021 and 2019, we did not record any non-cash goodwill impairment charges.

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Any significant decline in our operations could result in additional non-cash goodwill impairment charges.

Refer to “Critical Accounting Policies” within Part I - Item 7.

Refer to “Critical Accounting Policies and Estimates” within Part I - Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 4 “Goodwill and Intangible Assets” within the notes to our consolidated financial statements for further discussion of our business combinations, goodwill, intangible assets, and impairment tests performed.

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• changes in laws and regulations;

• political unrest, war, terrorism, geopolitical uncertainties, trade policies and sanctions, including the repercussions of an attack by Russia on Ukraine;

• other economic factors and general business conditions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors