What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-24 compared with 2021-02-23 · 452 added, 451 removed, 1370 unchanged (40% of the section changed)

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OTHER INFORMATION.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors, Executive Officers, Promoters and Control Persons

The information required by this item is incorporated by reference from portions of our definitive proxy statement for our annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A by April 30, 2021 (the “Proxy Statement”) under “Nominees to Board of Directors,” “Directors Not Standing For Election” and “Executive Officers.”

The information required by this item is incorporated by reference from portions of our definitive proxy statement for our annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A by May 2, 2022 (the “Proxy Statement”) under “Nominees to Board of Directors,” “Directors Not Standing For Election” and “Executive Officers.”

Compliance with Section 16(a) of the Exchange Act

Not applicable.

The information required by this item is incorporated by reference from a portion of the Proxy Statement under “Delinquent Section 16(a) Reports.”

Code of Business Conduct and Ethics

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Stock Ownership Participation Program (3)

— $ — 347,941

— N/A 283,206

Equity compensation plans not approved by shareholders N/A N/A N/A

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8-K 10.3 1/6/2017

10.7* Senior Management Agreement by and between Huron Consulting Group Inc.

8-K 10.4 1/6/2017

10.8* Transitional Retirement Agreement by and between Huron Consulting Group Inc.

8-K 10.1 9/16/2019

10.7 First Amendment to Lease by and between Huron Consulting Services LLC and Union Tower, LLC, dated August 23, 2004.

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10-K 12/31/2012 10.18 2/21/2013

Number Exhibit Description Filed

herewith Furnished

herewith Incorporated by Reference

Ending Exhibit Filing Date

10.9 Third Amendment to Lease by and between Huron Consulting Services LLC and Union Tower, LLC, dated April 2, 2010.

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8-K 10.1 1/4/2013

Number Exhibit Description Filed

herewith Furnished

herewith Incorporated by Reference

Ending Exhibit Filing Date

Fifth Amendment to Lease by and between Huron Consulting Services LLC and Union Tower, LLC, dated December 1, 2013.

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10.20* Huron Consulting Group Inc.

Stock Ownership Participation Program.

DEF 14A Appendix A 3/20/2015

10.23* Huron Consulting Group Inc.

Stock Ownership Participation Program, as amended effective December 1, 2020.

10.24* Huron Consulting Group Inc.

2012 Omnibus Incentive Plan, as amended and restated effective May 1, 2017.

DEF 14A Appendix A 3/27/2017

10.25* Amendment to the Huron Consulting Group Inc.

Amended and Restated 2012 Omnibus Incentive Plan.

DEF 14A Appendix A 3/22/2019

10-K 12/31/2020 10.23 2/23/2021

10.21* Huron Consulting Group Inc.

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8-K 10.1 3/6/2017

Number Exhibit Description Filed

herewith Furnished

herewith Incorporated by Reference

Ending Exhibit Filing Date

10.23 Amendment No.

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8-K 10.1 3/29/2018

Number Exhibit Description Filed

herewith Furnished

herewith Incorporated by Reference

Ending Exhibit Filing Date

10.25 Amendment No.

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DEF 14A Appendix A 3/26/2020

10.28* Form of Retention Bonus Agreement

8-K 10.1 4/14/2021

10.29* Amendment to the Huron Consulting Group Inc.

Stock Ownership Participation Program.

DEF 14A Appendix B 3/26/2020

2012 Omnibus Incentive Plan.

DEF 14A Appendix A 3/26/2021

10.30* Form of the Huron Consulting Group Inc.

2012 Omnibus Incentive Plan Restricted Stock Unit Agreement

10-Q 9/30/2021 10.1 11/2/2021

21.1 List of Subsidiaries of Huron Consulting Group Inc.

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CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets at December 31, 2021 and 2020 F-4

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of January 1, 2019.

Basis for Opinions

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Fixed-Fee and Healthcare Performance-Based Billing Arrangements

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Variable consideration is estimated based on a probability-weighted assessment of the fees to be earned, net of a constraint to limit the amount that could be reversed when the uncertainty is resolved.

The principal considerations for our determination that performing procedures relating to revenue recognition under fixed-fee and Healthcare performance-based billing arrangements is a critical audit matter are the significant judgment by management when developing the estimates of revenue to be recognized for these billing arrangements, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions related to work completed to date versus management’s estimates of the total services to be provided for fixed-fee and performance-based billing arrangements and the probability of attaining contractually defined objectives in performance-based billing arrangements.

The principal considerations for our determination that performing procedures relating to revenue recognition under fixed-fee and Healthcare performance-based billing arrangements is a critical audit matter are the significant judgments by management when developing the estimates of revenue to be recognized for these billing arrangements, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions related to work completed to date versus management’s estimates of the total services to be provided for fixed-fee and performance-based billing arrangements and the probability of attaining contractually defined objectives in performance-based billing arrangements.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

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Additionally, for performance-based billing arrangements, procedures included, among others (i) evaluating the reasonableness of management’s assumption of the probability of attaining the contractually defined objectives by inquiring with the Company’s employees regarding the expected remaining efforts and the probability weighting of variable consideration to be earned for a sample of engagements and by evaluating trends in past performance, (ii) evaluating the necessity of applying a constraint based upon consideration of the initial forecasts developed during project procurement, and (iii) evaluating performance to date towards the attainment of contractually defined objectives.

Goodwill Impairment Assessments - Strategy and Innovation and Life Sciences Reporting Units

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s consolidated goodwill balance was $594.2 million as of December 31, 2020, of which $37.5 million and $0.0 million are attributed to the Strategy and Innovation and Life Sciences reporting units, respectively.

Management performs its annual goodwill impairment test as of November 30, or when events or circumstances indicate the fair value of a reporting unit may be below its carrying value.

Fair value is estimated using a combination of the income approach, utilizing a discounted cash flow analysis, and the market approach, utilizing the guideline company method, with a fifty-fifty weighting.

As disclosed by management, the determination of fair value using the income approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins and discount rates.

The determination of fair value using the market approach requires the use of revenue and EBITDA multiples, as applicable, based on operating data from guideline publicly traded companies.

If the fair value of the reporting unit is less than its carrying value, a non-cash impairment charge is recorded in an amount equal to that difference with the loss not to exceed the total amount of goodwill allocated to the reporting unit.

Based on internal projections and considering the expected decrease in demand due to the COVID-19 pandemic, during the first quarter of 2020 management believed it was more likely than not that the fair value of the Strategy and Innovation and Life Sciences reporting units no longer exceeded their carrying values and performed an interim impairment test on both reporting units as of March 31, 2020.

As a result of the first quarter impairment tests, management recorded a partial impairment charge of $49.9 million for the Strategy and Innovation reporting unit and a full impairment charge of $9.9 million for the Life Sciences reporting unit.

As a result of the annual impairment assessment for the Strategy and Innovation reporting unit, management concluded that there is no indication of goodwill impairment.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Strategy and Innovation and Life Sciences reporting units is a critical audit matter are the significant judgment by management when developing the fair value measurements of the reporting units, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management's significant assumptions related to forecasted revenue growth rates, forecasted EBITDA margins, discount rates, and revenue and EBITDA multiples, as applicable.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the determination of the fair value of the Strategy and Innovation and Life Sciences reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates of the reporting units, (ii) evaluating the allocation of assets and liabilities to the reporting units, (iii) evaluating the appropriateness of the income and market approaches, (iv) testing the completeness and accuracy of the underlying data used in the income and market approaches, and (v) evaluating the significant assumptions used by management related to forecasted revenue growth rates, forecasted EBITDA margins, discount rates, and revenue and EBITDA multiples, as applicable.

Evaluating management’s assumptions related to forecasted revenue growth rates and forecasted EBITDA margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the actions necessary to achieve future forecasts, (iii) the consistency with external market data, and (iv) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the income approach and the discount rates, as well as the selection and calculation of revenue and EBITDA multiples, as applicable.

/s/ PricewaterhouseCoopers LLP

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Receivables from clients, net of allowances of $ 8,827 and $ 7,680 , respectively

122,316 87,687

Unbilled services, net of allowances of $ 2,637 and $ 2,603 , respectively

91,285 53,959

Income tax receivable 8,071 5,121

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Deferred compensation and other liabilities 43,458 47,131

Accrued contingent consideration for business acquisitions 1,770 —

Long-term debt, net of current portion 232,221 202,780

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500,000,000 shares authorized;

25,346,916 and 25,144,764 shares issued at December 31, 2020 and December 31, 2019, respectively 246 247

Treasury stock, at cost, 2,584,119 and 2,425,430 shares at December 31, 2020 and December 31, 2019, respectively ( 129,886 ) ( 128,348 )

24,364,814 and 25,346,916 shares issued, respectively

Treasury stock, at cost, 2,495,172 and 2,584,119 shares, respectively

( 135,969 ) ( 129,886 )

Additional paid-in capital 413,794 454,512

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Restructuring charges 12,401 20,525 1,855

Litigation and other gains, net ( 150 ) ( 1,196 ) ( 2,019 )

Litigation and other losses (gains) 198 ( 150 ) ( 1,196 )

Depreciation and amortization 21,686 24,277 28,365

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Interest expense, net of interest income ( 8,150 ) ( 9,292 ) ( 15,648 )

Other income (expense), net 4,271 4,433 ( 7,862 )

Total other expense, net ( 5,021 ) ( 11,215 ) ( 26,875 )

Other income, net 35,347 4,271 4,433

Total other income (expense), net 27,197 ( 5,021 ) ( 11,215 )

Income (loss) from continuing operations before taxes 80,036 ( 33,873 ) 52,491

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Balance at December 31, 2018 24,418,252 $ 244 ( 2,671,962 ) $ ( 124,794 ) $ 452,573 $ 196,106 $ 16,495 $ 540,624

Comprehensive income 13,646 6,125 19,771

Comprehensive income (loss) 41,743 ( 1,559 ) 40,184

Issuance of common stock in connection with:

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Shares redeemed for employee tax withholdings ( 111,511 ) ( 5,382 ) ( 5,382 )

Cumulative-effect adjustment from adoption of ASU 2014-09 2,017 2,017

Other capital contributions 160 160

Share repurchases ( 210,437 ) ( 2 ) ( 14,217 ) ( 14,219 )

Balance at December 31, 2019 24,603,308 $ 247 ( 2,763,302 ) $ ( 128,348 ) $ 460,781 $ 237,849 $ 14,936 $ 585,465

Comprehensive income 41,743 ( 1,559 ) 40,184

Comprehensive loss ( 23,840 ) ( 1,875 ) ( 25,715 )

Issuance of common stock in connection with:

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Shares redeemed for employee tax withholdings ( 136,749 ) ( 7,903 ) ( 7,903 )

Other capital contributions 160 160

Share repurchases ( 425,164 ) ( 4 ) ( 25,902 ) ( 25,906 )

Balance at December 31, 2020 24,560,855 $ 246 ( 2,812,896 ) $ ( 129,886 ) $ 454,512 $ 214,009 $ 13,061 $ 551,942

Comprehensive loss ( 23,840 ) ( 1,875 ) ( 25,715 )

Comprehensive income 62,987 3,779 66,766

Issuance of common stock in connection with:

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Exercise of stock options 23,403 — 804 804

Purchase of business 74,671 1 3,322 3,323

Share-based compensation 23,971 23,971

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Goodwill impairment charges — 59,816 —

Allowances for doubtful accounts and unbilled services 1,050 250 657

Allowances for doubtful accounts 13 1,050 250

Deferred income taxes 12,480 ( 9,859 ) 8,795

Losses on sales of businesses 1,603 — 5,807

(Gain) loss on sales of businesses, excluding transaction costs ( 32,824 ) 1,603 —

Change in fair value of contingent consideration liabilities 173 — ( 1,506 )

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

(Increase) decrease in receivables from clients 33,051 ( 10,123 ) ( 10,509 )

(Increase) decrease in unbilled services 18,876 ( 10,269 ) ( 11,094 )

(Increase) decrease in receivables from clients, net ( 39,845 ) 33,051 ( 10,123 )

(Increase) decrease in unbilled services, net ( 38,820 ) 18,876 ( 10,269 )

(Increase) decrease in current income tax receivable / payable, net ( 2,723 ) ( 3,662 ) 4,442

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Cash flows from investing activities:

Purchases of property and equipment, net ( 8,125 ) ( 13,240 ) ( 8,936 )

Purchases of property and equipment ( 10,871 ) ( 8,125 ) ( 13,240 )

Investment in life insurance policies ( 1,245 ) ( 2,462 ) ( 4,703 )

Purchases of businesses, net of cash acquired ( 44,819 ) ( 8,701 ) ( 2,500 )

Purchase of investment securities ( 13,000 ) ( 5,000 ) —

Purchases of investment securities — ( 13,000 ) ( 5,000 )

Capitalization of internally developed software ( 4,889 ) ( 8,272 ) ( 10,312 )

Proceeds from note receivable — — 1,040

Proceeds from sale of property and equipment 408 25 753

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Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits $ 4,733 $ 1,178 $ 2,600

Contingent consideration related to business acquisitions $ 1,770 $ — $ 212

Contingent consideration related to purchases of businesses $ 1,800 $ 1,770 $ —

Common stock issued related to purchase of business $ 3,323 $ — $ —

Share repurchases included in accounts payable $ 191 $ — $ 1,234

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Huron is a global consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change.

Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future.

By embracing diverse perspectives, encouraging new ideas and challenging the status quo, Huron creates sustainable results for the organizations it serves.

Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change our clients need to own their future.

By embracing diverse perspectives, encouraging new ideas and challenging the status quo, Huron delivers sustainable results for the organizations it serves.

We provide our services and manage our business under three operating segments:

Healthcare, Business Advisory, and Education.

See Note 19 “Segment Information” for a discussion of our three segments.

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities.

The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we will begin reporting under the following three industries, which will be our reportable segments:

Healthcare, Education and Commercial.

The Commercial segment will include all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities.

In the new reporting structure, each segment will include all revenue and costs associated with engagements delivered in the respective industry segments.

The new Healthcare and Education segments will include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment will include some revenue and costs historically reported in the Education segment.

We will also provide revenue reporting across two principal capabilities:

i) Consulting and Managed Services and ii) Digital.

These changes will create greater transparency for investors by improving visibility into the core drivers of our business.

While our consolidated results will not be impacted, we will recast our historical segment information during 2022 for consistent presentation.

Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

On January 1, 2019, we adopted Accounting Standard Update (“ASU”) 2016-02, Leases , as a new Topic, ASC 842, which superseded ASC Topic 840, Leases , and sets forth the principles for the recognition, measurement, presentation, and disclosure of leases for lessees and lessors.

ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record on the balance sheet a right-of-use asset and a lease liability, equal to the present value of the remaining lease payments, for all leases with a term greater than 12 months regardless of the lease classification.

The lease classification will determine whether the lease expense is recognized using an effective interest rate method or on a straight-line basis over the term of the lease.

In July 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements , which provided an optional transition method that allowed entities to initially apply ASC 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings on the adoption date.

We adopted ASC 842 effective January 1, 2019 on a modified retrospective basis for existing leases using the transition method allowed by ASU 2018-11, which had no impact on our consolidated financial statements in the prior periods presented.

Upon adoption, we recorded $ 56.5 million of operating lease right-of-use assets on our consolidated balance sheet, with an off-setting $ 56.5 million net increase in total liabilities on our consolidated balance sheet.

The adoption of ASU 2016-02 had no impact on our consolidated statement of operations.

Refer to our leases policy below for additional information.

During the first quarter of 2021, we identified an error on our previously reported consolidated balance sheet as of December 31, 2020

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

Our consolidated balance sheet as

of December 31, 2020 has been revised to reflect the correction of this error.

The results of this correction on our consolidated balance sheet were a decrease in unbilled services of $ 7.2 million, an increase in receivables from clients of $ 0.7 million, and a decrease in deferred revenues of $ 6.5 million.

This error had no impact on our consolidated statement of operations and other comprehensive income and consolidated statements of cash flows for any current or prior period.

We evaluated the materiality of this error from both quantitative and qualitative perspectives and concluded that the impact of the error was not material to the financial statements for the year ended December 31, 2020.

Use of Estimates

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We generate substantially all of our revenues from providing professional services to our clients.

We also generate revenues from software licenses;

We also generate revenues from software

software support and maintenance and subscriptions to our cloud-based analytic tools and solutions;

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A single contract could include one or multiple performance obligations.

For those contracts that have multiple performance obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price, which is determined based on our overall pricing objectives, taking into consideration market conditions and other factors.

For those contracts that have multiple

performance obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price,

which is determined based on our overall pricing objectives, taking into consideration market conditions and other factors.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Revenue is recognized when control of the goods and services provided are transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services using the following steps:

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and software support, maintenance and subscriptions.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a predetermined set of professional services.

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Estimates of total engagement revenues and cost of services are monitored regularly during the term of the engagement.

If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable.

We also generate revenues from software licenses for our revenue cycle management software and research administration and compliance software.

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Time-and-expense billing arrangements require the client to pay based on the number of hours worked by our revenue-generating professionals at agreed upon rates.

Time-and-expense arrangements also include certain speaking engagements, conferences, and publications purchased by our clients outside of Partner Contracts within our Culture and Organizational Excellence solution and the portion of our Healthcare Managed Services contracts that are billed under time-and-expense arrangements.

We recognize revenues under time-and-expense arrangements as the related services or publications are provided, using the right to invoice practical expedient which allows us to recognize revenue in the amount that we have a right to invoice based on the number of hours worked and the agreed upon hourly rates or the value of the speaking engagements, conferences or publications purchased by our clients.

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Under fixed-fee billing arrangements, we estimate the total amount of reimbursable expenses to be incurred over the course of the engagement and recognize the estimated amount as revenue using a proportionate performance approach, which is based on work completed to-date versus our estimates of the total services to be provided under the engagement.

Under time-and-expense billing arrangements we recognize reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient.

Under time-and-expense billing arrangements we recognize reimbursable

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

expenses as revenue as the related services are provided, using the right to invoice practical expedient.

Reimbursable expenses are recognized as expenses in the period in which the expense is incurred.

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Client prepayments and retainers are classified as deferred revenues and recognized over future periods as earned in accordance with the applicable engagement agreement.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Capitalized Sales Commissions

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However, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Long-term Investments

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We classified the preferred stock investment in Medically Home as an equity security without a readily determinable value at the time of purchase and reevaluate such classification as of each balance sheet date.

We elected to apply the measurement alternative at the time of

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

purchase and will continue to do so until the investment does not qualify to be so measured.

We elected to apply the measurement alternative at the time of 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.

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See Note 5 “Leases” for additional information on our leases, including the lease impairment charges recorded in 2020 and 2019.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Software Development Costs

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We did not capitalize any development costs for this type of software during 2021 or 2020.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

We classify capitalized software development costs, which primarily relate to cloud computing applications and software for internal use, as other non-current assets on our consolidated balance sheet.

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We capitalize certain costs associated with the implementation of the cloud computing arrangements, including employee payroll and related benefits and third party consulting costs, incurred during the application development stage of a project.

These costs are amortized on a straight-line basis over the term of the hosting service contracts, including renewal periods we are reasonably certain to exercise.

As of December 31, 2020, capitalized implementation costs incurred in a cloud computing arrangement were $ 5.4 million and related to the ongoing implementation of a new enterprise resource planning (“ERP”) system during 2020.

These costs are included as a component of prepaid expenses and other current assets and other non-current assets, and are expected to begin amortizing on January 1, 2021 when the ERP system is placed in service.

In 2019, we capitalized an immaterial amount of costs to implement cloud computing arrangements that are service contracts.

These costs are amortized on a straight-line basis over the term of the hosting service contracts, including renewal periods we are reasonably certain to exercise, and recognized as a component of selling, general and administrative expenses on our consolidated statement of operations.

As of December 31, 2021 gross capitalized implementation costs incurred in a cloud computing arrangement and related accumulated amortization were $ 6.5 million and $ 0.9 million, respectively.

As of December 31, 2020, gross capitalized implementation costs incurred in a cloud computing arrangement were $ 5.4 million, which began amortizing in January 2021.

Our capitalized implementation costs primarily relate to the implementation of a new enterprise resource planning (“ERP”) system during 2020 and 2021.

In January 2021, we successfully went live with the new ERP system, and we continue to progress with additional functionality and integrations as scheduled.

These capitalized costs are included as a component of prepaid expenses and other current assets and other non-current assets on our consolidated balance sheet.

Intangible Assets Other Than Goodwill

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We assign goodwill to reporting units based on our integration plans and the expected synergies resulting from the acquisition.

We have six reporting units:

Healthcare, Education, Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences.

The Business Advisory, Enterprise Solutions and Analytics, Strategy and Innovation, and Life Sciences reporting units make up our Business Advisory operating segment.

As of December 31, 2021, we have five reporting units:

Healthcare, Education, Business Advisory, Enterprise Solutions and Analytics, and Strategy and Innovation.

The Business Advisory, Enterprise Solutions and

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Analytics, and Strategy and Innovation reporting units make up our Business Advisory operating segment.

During the fourth quarter of 2021, we completed the divestiture of our Life Sciences business, which was a reporting unit within the Business Advisory segment.

We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have

We perform our annual goodwill impairment test as of November 30 and monitor for interim triggering events on an ongoing basis.

Pursuant to our policy, we performed the annual goodwill impairment test as of November 30, 2021 and determined that no impairment of goodwill existed as of that date.

Further, we evaluated whether any events have occurred, or any circumstances have changed since November 30, 2021 that would indicate goodwill may have become impaired since our annual impairment test.

Based on our evaluation as of December 31, 2021, we determined that no indications of impairment have arisen since our annual goodwill impairment test.

In 2020, we performed two goodwill impairment tests:

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We did not identify any additional impairments during our annual impairment test performed in the fourth quarter of 2020.

No goodwill impairment charges were recorded in 2019 or 2018.

No goodwill impairment charges were recorded in 2019.

See Note 4 “Goodwill and Intangible Assets” for additional information on our interim and annual goodwill impairment tests, and the non-cash goodwill impairment charges recorded in 2020.

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The purchase price is equivalent to the fair value of consideration transferred.

Tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Goodwill is recognized for the excess of purchase price over the net fair value of tangible and intangible assets acquired and liabilities assumed.

Upon our adoption of Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which we retrospectively applied to all acquisitions in 2021, contract assets and contract liabilities acquired are recorded at their carrying value under Topic 606:

Revenue from Contracts with Customers .

Prior to adoption of ASU 2021-08, contract assets and contract liabilities were recognized at their estimated fair values as of the acquisition date.

All other assets tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.

Goodwill is recognized for the excess of purchase price over the net value of tangible and intangible assets acquired and liabilities assumed.

Contingent consideration, which is primarily based on the business achieving certain performance targets, is recognized at its fair value on the acquisition date, and changes in fair value are recognized in earnings until settled.

Refer to Note 3 “Acquisitions” for additional information on our business acquisitions and refer to Note 13 “Fair Value of Financial Instruments” for additional information regarding our contingent acquisition liability balances.

Refer to Note 3 “Acquisitions and Divestitures” for additional information on our business acquisitions and refer to Note 13 “Fair Value of Financial Instruments” for additional information regarding our contingent acquisition liability balances.

Current tax liabilities and assets are recognized for the estimated taxes payable or refundable, respectively, on the tax returns for the current year.

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Such expenses for the years ended December 31, 2021, 2020, and 2019 totaled $ 4.3 million, $ 4.1 million, and $ 8.4 million, respectively, and are a component of selling, general and administrative expenses on our consolidated statement of operations.

Convertible Senior Notes

In September 2014, we issued $ 250 million principal amount of 1.25 % convertible senior notes due 2019 (the “Convertible Notes”) in a private offering.

The Convertible Notes matured on October 1, 2019, and the outstanding principal and accrued interest were paid in full at that time.

At issuance, we separated the Convertible Notes into liability and equity components.

The carrying amount of the liability component was determined by measuring the fair value of a similar liability that does not have an associated convertible feature.

The carrying value of the equity component representing the conversion option, which was recognized as a debt discount, was determined by deducting the fair value of the liability component from the proceeds of the Convertible Notes.

The debt discount was amortized to interest expense using the effective interest method over the term of the Convertible Notes.

The equity component was not remeasured as it continued to meet the conditions for equity classification.

Refer to Note 7 “Financing Arrangements” for further information regarding the Convertible Notes.

Debt Issuance Costs

We amortize the costs we incur to obtain debt financing over the contractual life of the related debt using the effective interest method for non-revolving debt and the straight-line method for revolving debt.

The amortization expense is included in interest expense, net of interest income in our statement of operations.

The amortization expense is included in interest expense, net of interest

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income in our statement of operations.

Unamortized debt issuance costs attributable to our revolving credit facility are included as a component of other non-current assets.

Unamortized debt issuance costs attributable to our Convertible Notes were recorded as a deduction from the carrying amount of the debt liability.

Foreign Currency

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Foreign currency transaction gains and losses are included in other income, net on the consolidated statement of operations.

We recognized less than $ 0.1 million of foreign currency transaction gains in 2020, $ 0.2 million of foreign currency transaction losses in 2019, and $ 0.5 million of foreign currency transaction losses in 2018.

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We recognized $ 0.4 million of foreign currency transaction losses in 2021, less than $ 0.1 million of foreign currency transaction gains in 2020, and $ 0.2 million of foreign currency transaction losses in 2019.

Segment Reporting

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 manages the business under three operating segments, which are our reportable segments:

As of December 31, 2021, our chief operating decision maker manages the business under three operating segments, which are our reportable segments:

Healthcare, Business Advisory, and Education.

See Note 19 "Segment Information" for additional information on the segment reorganization effective in the first quarter of 2022.

New Accounting Pronouncements

Recently Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments which provides a new current expected credit loss model to account for credit losses on certain financial assets, including trade receivables.

That model requires an entity to estimate lifetime credit losses based on relevant historical information, adjusted for current conditions and reasonable and supportable forecasts that could affect the collectability of the reported amount.

The ASU also makes targeted amendments to the current impairment model for available-for-sale debt securities, which includes requiring the recognition of an allowance rather than a direct write-down of the investment, which may be reversed in the event that the credit of an issuer improves.

We adopted ASU 2016-13 effective January 1, 2020, which did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies certain disclosure requirements related to fair value measurements.

We adopted ASU 2018-13 effective January 1, 2020, which had no impact on the amounts reported on our consolidated financial statements.

We updated our disclosures within the notes to our consolidated financial statements as required by ASU 2018-13.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes , related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new guidance also simplifies other aspects of the accounting for franchise taxes and enacted changes in tax laws or tax rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

On January 1, 2020, we elected to early adopt ASU 2019-12 on a modified retrospective basis for those amendments that are not applied on a prospective basis.

The adoption of ASU 2019-12 did not have a material impact on our consolidated financial statements.

During 2019 and 2018, we completed no acquisitions that were significant to our consolidated financial statements individually or in the aggregate.

Below is a summary of the acquisitions completed in 2020.

In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-01 , Investments - Equity Securities (Topic 321) - Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 .

ASU 2020-01 clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purpose of applying the measurement alternative in accordance with Topic 321.

We elected to early adopt ASU 2020-10 effective January 1, 2021, which did not have any impact on our consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

ASU 2020-10 situates all disclosure guidance within the appropriate disclosure section of the Codification and makes other improvements and technical corrections to the Codification.

We adopted ASU 2020-10 effective January 1, 2021, which did not have any impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The amendments of this ASU require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination.

We elected to early adopt ASU 2021-08 in the fourth quarter of 2021 on a retrospective basis for all 2021 acquisitions, which had no impact on our consolidated financial statements.

Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, Reference Rate Reform (Topic 848):

Together, these ASUs provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting under GAAP.

This standard is optional and may be applied by entities after March 12, 2020, but no later than December 31, 2022.

We have certain debt instruments and related interest rate swaps that are indexed to LIBOR;

as such, we are currently evaluating the potential impact this guidance will have on our consolidated financial statements.

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Acquisitions and Divestitures

Unico Solution, Inc.

On February 1, 2021, we completed the acquisition of Unico Solution, Inc.

(“Unico Solutions”), a data strategy and technology consulting firm focused on helping clients enhance the use of their data to speed business transformation and accelerate cloud adoption.

The acquisition expands our cloud-based technology offerings within the Business Advisory segment.

The results of operations of Unico Solutions are included in our consolidated financial statements and results of operations of our Business Advisory segment from the date of acquisition.

Bad Rabbit, Inc.

On October 1, 2021 we completed the acquisition of the research administration software services team of Bad Rabbit, Inc.

(“Bad Rabbit”).

The results of operations of Bad Rabbit are included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition.

Whiteboard Communications Ltd.

On December 1, 2021, we completed the acquisition of Whiteboard Communications Ltd.

(“Whiteboard”), a student enrollment advisory firm that helps colleges and universities with recruitment initiatives and financial aid strategies.

The results of operations of Whiteboard are included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition.

Perception Health, Inc.

On December 31, 2021, we completed the acquisition of Perception Health, Inc.

(“Perception Health”), a healthcare predictive analytics company focused on bringing data sources together for improved clinical and business decision-making.

The results of operations of Perception Health will be included in our consolidated financial statements and results of operations of our Healthcare segment beginning January, 1, 2022.

The acquisitions of Unico Solutions, Bad Rabbit, Whiteboard and Perception Health are not significant to our consolidated financial statements individually or in the aggregate as of and for the year ended December 31, 2021.

These acquisition 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 as we adopted ASU 2021-08 Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers in the fourth quarter of 2021.

All other tangible and identifiable intangible assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.

The current acquisition date values of assets acquired and liabilities assumed of the Whiteboard and Perception Health acquisitions are considered preliminary and are based on the information that was available as of the dates of the acquisitions.

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 intangible assets valuations 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 Whiteboard and Perception Health acquisitions are subject to change.

We expect to finalize the valuations as soon as practicable, but not later than one year from the acquisition dates.

B3i Analytics, LLC

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The results of operations of ForceIQ are included in our consolidated financial statements and results of operations of our Business Advisory segment from the date of acquisition.

The acquisitions of B3i Analytics and ForceIQ are not significant to our consolidated financial statements individually or in the aggregate as of and for the year ended December 31, 2020.

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The acquisitions of B3i Analytics and ForceIQ are not significant to our consolidated financial statements individually or in the aggregate as of and for the year ended December 31, 2020.

In 2019, we completed the acquisition of an immaterial business in our Education segment.

The results of operations of the acquired business is included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition.

Life Sciences

On November 1, 2021, we completed the divestiture of our Life Sciences business, a reporting unit within our Business Advisory segment to a third-party.

In connection with the sale, we recorded a $ 31.5 million pre-tax gain which is included in other income, net on our consolidated statement of operations.

The Life Sciences business was not significant to our consolidated financial statements and did not qualify as a discontinued operation for reporting under GAAP.

For the ten months ended October 31, 2021, this business generated $ 16.7 million of revenues.

Life Sciences Drug Safety Practice

On December 30, 2020, we sold our U.K.

life sciences drug safety business that was part of the Life Sciences reporting unit to former employees.

In connection with the sale, we recorded a $ 1.5 million loss which is included in other income, net on our consolidated statement of operations.

life sciences drug safety practice was not significant to our consolidated financial statements and did not meet the criteria for reporting separately as discontinued operations.

In 2020, this business generated $ 2.3 million of revenues.

Goodwill and Intangible Assets

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— 7,507 495 8,002

Goodwill impairment charges — ( 59,816 ) — ( 59,816 )

Foreign currency translation — ( 629 ) — ( 629 )

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6,141 3,315 17,186 26,642

Goodwill impairment charges — ( 59,816 ) — ( 59,816 )

Foreign currency translation — ( 629 ) — ( 629 )

Balance as of December 31, 2021:

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$ 434,870 $ 64,439 $ 121,570 $ 620,879

(1) On September 30, 2019, we completed the acquisition of a business in our Education segment.

The results of operations of the acquired business is included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition.

This acquisition is not significant to our consolidated financial statements.

(2) Refer to Note 3 “Acquisitions” for additional information on business combinations completed in 2020.

(1) See Note 3 “Acquisitions and Divestitures” for additional information on business combinations completed in 2021 and 2020.

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2021 Annual Goodwill Impairment Test

Pursuant to our policy, we performed our annual goodwill impairment test as of November 30, 2021 for our five reporting units with goodwill balances:

Healthcare, Education, Business Advisory, Strategy and Innovation, and Enterprise Solutions and Analytics.

We performed a qualitative assessment over all reporting units to determine if it was more likely than not the respective fair values of these reporting units were less than their carrying amounts, including goodwill.

For our qualitative assessment, we considered the most recent quantitative analysis performed for each reporting unit, which was as of November 30, 2020, including the key assumptions used within that analysis, the indicated fair values, and the amount by which those fair values exceeded their carrying amounts.

One of the key assumptions used within the prior quantitative analysis was our internal financial projections;

therefore, we considered the actual performance of each reporting unit during 2021 compared to the internal financial projections used, as well as specific outlooks for each reporting unit based on our most recent internal financial projections.

We also considered the market-based valuation multiples used in the market approach within our prior quantitative analysis, which were derived from guideline companies, and noted that the valuation multiples generally increased over the past year.

We also reviewed the current carrying value of each reporting unit in comparison to the carrying values as of the prior quantitative analysis.

In addition, we considered various factors, including macroeconomic conditions, relevant industry and market trends for each reporting unit, and other entity-specific events, that could indicate a potential change in the fair value of our reporting units or the composition of their carrying values.

Based on our assessments, we determined that it was more likely than not that the fair values for each of our reporting units exceeded their respective carrying amounts.

As such, the goodwill for our reporting units was not considered impaired as of November 30, 2021, and a quantitative goodwill impairment analysis was not necessary.

Further, we evaluated whether any events have occurred or any circumstances have changed since November 30, 2021 that would indicate goodwill may have become impaired since our annual impairment test.

Based on our evaluation as of December 31, 2021, we determined that no indications of impairment have arisen since our annual goodwill impairment test.

The results of an impairment analysis are as of a point in time.

There is no assurance that the actual future earnings or cash flows of our reporting units will be consistent with our projections.

We will monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods.

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

First Quarter 2020 Goodwill Impairment Charges

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The $ 9.9 million non-cash pretax charge related to the Life Sciences reporting unit reduced the goodwill balance of the reporting unit to zero.

Our goodwill impairment test was performed by comparing the fair value of each of the Strategy and Innovation and Life Sciences reporting units with its respective carrying value and recognizing an impairment charge for the amount by which the carrying value exceeded the fair

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To estimate the fair value of each reporting unit, we relied on a combination of the income approach and the market approach with a fifty-fifty weighting.

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This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins, and discount rates that reflect the risk inherent in the future cash flows.

In estimating future cash flows, we relied on internally generated seven-year forecasts.

In estimating

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future cash flows, we relied on internally generated seven-year forecasts.

Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information.

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These multiples were evaluated and adjusted based on specific characteristics of the Strategy and Innovation and Life Sciences reporting units relative to the selected guideline companies and applied to the reporting units' operating data to arrive at an indication of value.

Concurrently with the goodwill impairment tests performed over the Strategy and Innovation and Life Sciences reporting units, we evaluated whether any indicators existed that would lead us to believe that the fair values of our Healthcare, Education, and Business Advisory reporting units would not exceed their carrying values.

Based on our internal projections, consideration of the impact of the COVID-19 pandemic on these reporting units, and review of the amounts by which the fair values of these reporting units exceeded their carrying values in the most recent quantitative goodwill impairment analysis performed, we did not identify any indicators that would lead us to believe that it was more likely than not that the fair values of these reporting units would not exceed their carrying values as of March 31, 2020.

In connection with the goodwill impairment tests performed on the Strategy and Innovation and Life Sciences reporting units as of March 31, 2020, we performed impairment tests on the long-lived assets allocated to the asset groups of the Strategy and Innovation and Life Sciences reporting units.

Based on the impairment tests performed, we concluded that the long-lived assets allocated to the asset groups were not impaired as of March 31, 2020.

We did not identify any indicators that would lead us to believe that the carrying values of the long-lived assets allocated to our other asset groups may not be recoverable as of March 31, 2020.

2020 Annual Goodwill Impairment Test

Pursuant to our policy, we performed our annual goodwill impairment test as of November 30, 2020 on our five reporting units with goodwill balances:

Healthcare, Education, Business Advisory, Strategy and Innovation, and Enterprise Solutions and Analytics.

We elected to bypass the qualitative assessment and proceeded directly to the quantitative goodwill impairment test.

For each reporting unit, we reviewed goodwill for impairment by comparing the fair value of the reporting unit to its carrying value, including goodwill.

In estimating the fair value of the reporting unit, we relied on a combination of the income approach and the market approach utilizing the guideline company method, with a fifty-fifty weighting.

Based on the results of the goodwill impairment test, we determined the fair value of the Healthcare, Education, Business Advisory, Strategy and Innovation, and Enterprise Solutions and Analytics reporting units exceeded their carrying value by 42 %, 132 %, 584 %, 29 %, and 146 %, respectively.

As such, we concluded that there is no indication of goodwill impairment for these five reporting units.

In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by each reporting unit and then discounting those cash flows to present value, reflecting the relevant risks associated with each reporting unit and the time value of money.

In estimating future cash flows, we relied on internally generated ten-year forecasts.

Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information.

In the market approach, we utilized the guideline company method, which involved calculating revenue and EBITDA multiples based on operating data from guideline publicly traded companies.

Multiples derived from guideline companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company.

These multiples were evaluated and adjusted based on specific characteristics of each of the reporting units relative to the selected guideline companies and applied to the reporting units' operating data to arrive at an indication of value.

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Further, we evaluated whether any events occurred or any circumstances changed since November 30, 2020 that would indicate goodwill may have become impaired since our annual impairment test.

Based on our evaluation as of December 31, 2020, we determined that no indications of impairment arose since our annual goodwill impairment test.

The results of an impairment analysis are as of a point in time.

There is no assurance that the actual future earnings or cash flows of our reporting units will be consistent with our projections.

We will monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods.

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

Intangible Assets

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Customer relationships 3 to 13

Trade names 5 to 6 6,130 4,287 28,930 25,894

Technology and software 5 5,800 5,380 5,694 4,321

Non-competition agreements 5 2,090 1,541 2,220 1,447

$ 75,908 $ 53,421 $ 73,629 $ 56,232

Trade names 6 6,000 5,148 6,130 4,287

Technology and software 2 to 5

13,330 5,607 5,800 5,380

Non-competition agreements 4 to 5

2,020 1,347 2,090 1,541

Customer contracts 1 260 101 800 526

Total $ 97,518 $ 65,624 $ 88,449 $ 67,966

In connection with the divestiture of our Life Sciences business within our Business Advisory segment in 2021, we included $ 2.1 million of intangible assets in the calculation of the gain on sale recognized in other income (loss) on our consolidated statement of operations.

The $2.1 million of intangible assets represents the carrying value of the Life Sciences customer relationships intangible asset as of the closing date.

Identifiable intangible assets with finite lives are amortized over their estimated useful lives.

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Amortization Expense

2022 $ 10,670

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

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We elected the practical expedient to combine lease and nonlease components.

No lease agreements contain any residual value guarantees or material restrictive covenants.

No lease agreements contain any residual value guarantees or

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material restrictive covenants.

As of December 31, 2021, we have not entered into any material finance leases.

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First, we test the asset group for recoverability by comparing the undiscounted cash flows of the asset group, which include expected future lease and nonlease payments under the lease agreement offset by expected sublease income, to the carrying amount of the asset group.

If the first step of the

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long-lived asset impairment test concludes that the carrying amount of the asset group is not recoverable, we perform the second step of the long-lived asset impairment test by comparing the fair value of the asset group to its carrying amount and recognizing a lease impairment charge for the amount by which the carrying amount exceeds the fair value.

If the first step of the long-lived asset impairment test concludes that the carrying amount of the asset group is not recoverable, we perform the second step of the long-lived asset impairment test by comparing the fair value of the asset group to its carrying amount and recognizing a lease impairment charge for the amount by which the carrying amount exceeds the fair value.

To estimate the fair value of the asset group, we rely on a discounted cash flow approach using market participant assumptions of the expected cash flows and discount rate.

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Total lease liabilities $ 64,455 $ 70,596

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Year Ended December 31,

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(1) Includes variable lease costs related to short-term leases.

(2) Net lease cost includes $ 0.3 million and $ 0.4 million for the years ended December 31, 2020 and 2019, respectively, recorded as restructuring charges as they relate to vacated office spaces.

(2) Net lease cost includes $ 2.6 million, $ 0.3 million and $ 0.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, recorded as restructuring charges as they relate to vacated office spaces.

See Note 11 “Restructuring Charges” for additional information on our vacated office spaces.

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(3) Net lease cost includes $ 0.2 million and $ 0.3 million for the years ended December 31, 2020 and 2019, respectively, related to vacated office spaces directly related to discontinued operations.

(4) Rent expense, including operating expenses, real estate taxes and insurance, recorded under ASC 840 for the year ended December 31, 2018 was $ 15.1 million.

The table below summarizes the remaining expected lease payments under our operating leases as of December 31, 2021.

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Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 2,960 $ 1,456 $ 12,842

Weighted average remaining lease term - operating leases 7.0 years 7.7 years

Weighted average remaining lease term - operating leases 6.1 years 7.0 years 7.7 years

Weighted average discount rate - operating leases 4.1 % 4.3 % 4.3 %

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This accelerated depreciation expense is included as a component of restructuring charges.

See Note 11 “Restructuring Charges” for additional information on our restructuring charges incurred in 2020, 2019 and 2018.

See Note 11 “Restructuring Charges” for additional

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information on our restructuring charges incurred in 2021, 2020 and 2019.

Property and equipment, net at December 31, 2021 and 2020 consisted of the following:

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Property and equipment, net $ 31,004 $ 29,093

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In the first quarter of 2022, we completed the sale of the aircraft to a third-party.

As a result of the sale, we no longer own any aircraft.

Financing Arrangements

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2024 $ 231,646

Convertible Notes

In September 2014, the Company issued $ 250 million principal amount of 1.25 % convertible senior notes due 2019 (the “Convertible Notes”) in a private offering.

The Convertible Notes were governed by the terms of an indenture between the Company and U.S.

Bank National Association, as Trustee (the “Indenture”).

The Convertible Notes were senior unsecured obligations of the Company and paid interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25 %.

The Convertible Notes matured on October 1, 2019 .

Upon maturity, we refinanced $ 217.0 million of the principal amount of the outstanding Convertible Notes with the borrowing capacity available under our revolving credit facility and funded the remaining $ 33.0 million principal payment with cash on hand.

Prior to maturity, upon conversion, the Convertible Notes would have been settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock.

Our intent and policy was to settle conversions with a combination of shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the indenture.

Upon issuance, we separated the Convertible Notes into liability and equity components.

The debt discount was amortized to interest expense using an effective interest rate of 4.751 % over the term of the Convertible Notes.

The equity component was not remeasured as it continued to meet the conditions for equity classification.

The transaction costs related to the issuance of the Convertible Notes were separated into liability and equity components based on their relative values.

Transaction costs attributable to the liability component were recorded as a deduction to the carrying amount of the liability and amortized to interest expense over the term of the Convertible Notes;

and transaction costs attributable to the equity component were netted with the equity component of the Convertible Notes in stockholders’ equity.

Total debt issuance costs were approximately $ 7.3 million, of which $ 6.2 million was allocated to liability issuance costs and $ 1.1 million was allocated to equity issuance costs.

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The following table presents the amount of interest expense recognized related to the Convertible Notes for the periods presented.

Year Ended December 31,

Contractual interest coupon $ 2,344 $ 3,125

Amortization of debt discount 6,436 8,232

Amortization of debt issuance costs 947 1,245

Total interest expense $ 9,727 $ 12,602

In connection with the issuance of the Convertible Notes, we entered into convertible note hedge transactions and warrant transactions.

The convertible note hedge transactions were intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raised the price at which economic dilution would occur from the initial conversion price of approximately $ 79.89 to approximately $ 97.12 per share.

The convertible note hedge transactions expired in the third quarter of 2019.

The holders of the warrants had the option to purchase an initial total of approximately 3.1 million shares of the Company’s common stock at a strike price of approximately $ 97.12 .

The warrants expired in the second quarter of 2020.

If the average market value per share of our common stock for the reporting period exceeded the strike price of the warrants, the warrants would have had a dilutive effect on our earnings per share.

The warrants were separate transactions and were not part of the terms of the Convertible Notes or the convertible note hedge transactions.

Senior Secured Credit Facility

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The applicable margin will fluctuate between 1.125 % per annum and 1.875 % per annum, in the case of LIBOR borrowings, or between 0.125 % per annum and 0.875 % per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time.

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Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty.

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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

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total debt is on a gross basis and is not netted against our cash balances.

For purposes of the Consolidated Leverage Ratio total debt is on a gross basis and is not netted against our cash balances.

At December 31, 2021, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of 1.73 to 1.00 and a Consolidated Interest Coverage Ratio of 18.43 to 1.00.

Borrowings outstanding under the Amended Credit Agreement at December 31, 2021 totaled $ 230.0 million.

These borrowings carried a weighted average interest rate of 2.5 %, including the effect of the interest rate swaps described in Note 12 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Amended Credit Agreement at December 31, 2019 were $ 205.0 million and carried a weighted average interest rate of 3.0 %, including the effect of the interest rate swap outstanding at the time and described in Note 12 “Derivative Instruments and Hedging Activity.” The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit.

These borrowings carried a weighted average interest rate of 2.7 %, including the effect of the interest rate swaps described in Note 12 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Amended Credit Agreement at December 31, 2020 were $ 200.0 million and carried a weighted average interest rate of 2.5 %, including the effect of the interest rate swaps.

The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit.

At December 31, 2021, we had outstanding letters of credit totaling $ 0.7 million, which are primarily used as security deposits for our office facilities.

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At December 31, 2020, the outstanding principal amount of the promissory note was $3.3 million, and the aircraft had a carrying amount of $ 4.4 million.

In the first quarter of 2022, we completed the sale of the aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on the promissory note.

As a result of the sale, we no longer own any aircraft.

Capital Structure

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The holders of common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders.

Subject to the rights and preferences of the holders of any series of preferred stock that may at the time be outstanding, holders of common stock are entitled to such dividends as our board of directors may declare.

Subject to the rights and preferences of the

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

holders of any series of preferred stock that may at the time be outstanding, holders of common stock are entitled to such dividends as our board of directors may declare.

In the event of any liquidation, dissolution or winding-up of our affairs, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any series of preferred stock that may at the time be outstanding, holders of common stock will be entitled to receive the distribution of any of our remaining assets.

For the years ended December 31, 2021, 2020 and 2019 we recognized revenues of $905.6 million, $844.1 million, and $876.8 million, respectively.

Of the $844.1 million recognized in 2020, we recognized revenues of $ 12.2 million from obligations satisfied, or partially satisfied, in prior periods, of which $ 7.5 million was primarily due to changes in the estimates of our variable consideration under performance-based billing arrangements and $ 4.7 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments.

Of the $876.8 million recognized in 2019, we recognized revenues of $ 2.8 million from obligations satisfied, or partially satisfied, in prior periods due to the release of allowances on unbilled services as a result of securing contract amendments.

Of the $905.6 million recognized in 2021, we recognized revenues of $ 22.9 million from obligations satisfied, or partially satisfied, in prior periods, of which $ 14.6 million was primarily due to changes in the estimates of our variable consideration under performance-based billing arrangements and $ 8.3 million was primarily due to the release of allowances on unbilled services.

During 2019, we recognized a $ 1.0 million decrease to revenues due to changes in the estimates of our variable consideration under performance-based billing arrangements.

Of the $795.1 million recognized in 2018, we recognized revenues of $ 10.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $ 7.2 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $ 3.6 million was primarily due to the release of allowances on unbilled services due to securing contract amendments.

As of December 31, 2021, we had $ 100.0 million of remaining performance obligations under engagements with original expected durations greater than one year.

These remaining performance obligations exclude obligations under contracts with an original expected duration of

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

one year or less, variable consideration which has been excluded from the total transaction price due to the constraint, and performance obligations under time-and-expense engagements which are recognized in the amount invoiced.

Of the $ 60.2 million of performance obligations, we expect to recognize approximately $ 39.2 million as revenue in 2021, $ 10.4 million as revenue in 2022, and the remaining $ 10.6 million thereafter.

These remaining performance obligations exclude obligations under contracts with an original expected duration of one year or less, variable consideration which has been excluded from the total transaction price due to the constraint, and performance obligations under time-and-expense engagements which are recognized in the amount invoiced.

Of the $ 100.0 million of performance obligations, we expect to recognize approximately $ 55.2 million as revenue in 2022, $ 25.6 million in 2023, and the remaining $ 19.2 million thereafter.

Actual revenue recognition could differ from these amounts as a result of changes in the estimated timing of work to be performed, adjustments to estimated variable consideration in performance-based arrangements, or other factors.

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Our deferred revenues balance as of December 31, 2021 and December 31, 2020 was $19.2 million and $28.2 million respectively.

The $ 6.3 million increase primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations.

The $ 9.0 million decrease primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations.

For the year ended December 31, 2021, $ 27.6 million of revenues recognized were included in the deferred revenue balance as of December 31, 2020.

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Net income (loss) from continuing operations $ 62,987 $ ( 23,718 ) $ 41,979

Income (loss) from discontinued operations, net of tax ( 122 ) ( 236 ) ( 298 )

Loss from discontinued operations, net of tax — ( 122 ) ( 236 )

Net income (loss) $ 62,987 $ ( 23,840 ) $ 41,743

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Net income (loss) from continuing operations $ 2.94 $ ( 1.08 ) $ 1.91

Income (loss) from discontinued operations, net of tax ( 0.01 ) ( 0.01 ) ( 0.01 )

Loss from discontinued operations, net of tax — ( 0.01 ) ( 0.01 )

Net income (loss) $ 2.94 $ ( 1.09 ) $ 1.90

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Net income (loss) from continuing operations $ 2.89 $ ( 1.08 ) $ 1.87

Income (loss) from discontinued operations, net of tax ( 0.01 ) ( 0.02 ) ( 0.01 )

Loss from discontinued operations, net of tax — ( 0.01 ) ( 0.02 )

Net income (loss) $ 2.89 $ ( 1.09 ) $ 1.85

The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above were as follows:

The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above at December 31, 2021 and 2020 were 0.1 million and 1.1 million, respectively, and related to unvested restricted stock.

The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above at December 31, 2019 were 3.1 million and related to the warrants sold in conjunction with the issuance of our convertible senior notes.

As of December 31,

2020 2019 2018

Unvested restricted stock awards 1,016 — —

Outstanding common stock options 66 — —

Convertible senior notes — — 3,129

Warrants related to the issuance of convertible senior notes — 3,129 3,129

Total anti-dilutive securities 1,082 3,129 6,258

See Note 7 “Financing Arrangements” for further information on the convertible senior notes and warrants related to the issuance of convertible notes.

In November 2020, our board of directors authorized a share repurchase program (the “2020 Share Repurchase Program”) permitting us to repurchase up to $ 50 million of our common stock through December 31, 2021.

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The 2015 Share Repurchase Program permitted us to repurchase up to $ 125 million of our common stock through October 31, 2020.

The amount and timing of repurchases under both share repurchase programs were determined by management and depend on a variety of factors, including

During the third

quarter of 2021, our board of directors authorized an extension of the 2020 Share Repurchase Program through December 31, 2022 and

increased the authorized amount from $ 50 million to $ 100 million.The amount and timing of repurchases under our share repurchase

programs is determined by management and depends on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements.

All shares repurchased and retired are reflected as a reduction to our basic weighted average shares outstanding based on the trade date of the share repurchase.

During 2021, we repurchased and retired 1,265,261 shares for $ 64.8 million under the 2020 Share Repurchase Program, including 3,820 shares for $ 0.2 million which settled in the first quarter of 2022.

During 2020, we repurchased and retired 313,998 shares for $ 20.9 million under the 2015 Share Repurchase Program and 111,166 shares for $ 5.0 million under the 2020 Share Repurchase Program.

Additionally, during the first quarter of 2020, we settled the repurchase of 18,000 shares for $ 1.2 million that were accrued as of December 31, 2019.

In 2019, we repurchased and retired 210,437 shares for $ 14.2 million under the 2015 Share Repurchase Program, including the 18,000 shares

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements.

Under the 2020 Share Repurchase Program, we repurchased and retired 111,166 shares for $ 5.0 million in the fourth quarter of 2020, which are reflected as a reduction to our basic weighted average shares outstanding for the year ended December 31, 2020 based on the trade date of the share repurchase.

for $ 1.2 million which settled in the first quarter of 2020.

As of December 31, 2021, $ 30.2 million remains available under the plan for share repurchases.

Under the 2015 Share Repurchase Program, we repurchased and retired 313,998 shares for $ 20.9 million in the first quarter of 2020, which are reflected as a reduction to our basic weighted average shares outstanding for the year ended December 31, 2020 based on the trade date of the share repurchase.

Additionally, in the first quarter of 2020, we settled the repurchase of 18,000 shares for $ 1.2 million that were accrued as of December 31, 2019.

In 2019, we repurchased and retired 210,437 shares for $ 14.2 million, including the 18,000 shares for $ 1.2 million which settled in the first quarter of 2020.

All of the 210,437 shares repurchased and retired in 2019 were included as a reduction to our basic weighted average shares outstanding for the year ended December 31, 2019 based on the trade date of the share repurchase.

No shares were repurchased under the 2015 Share Repurchase Program in 2018.

Restructuring Charges

In 2021, we incurred $12.4 million of total pretax restructuring expense.

Of the $12.4 million pretax restructuring expense, $ 8.5 million related to the divestiture of our Life Sciences business, a reporting unit within the Business Advisory segment.

On November 1, 2021, we completed the sale of the Life Sciences business to a third-party, and recognized a $ 31.5 million pre-tax gain which is included within other income (expense), net on our consolidated statement of operations.

For the ten months ended October 31, 2021, the Life Sciences business generated $ 16.7 million of revenue and is not considered significant to our consolidated financial statements.

The total pretax restructuring expense of $12.4 million recognized in 2021 consisted of the following charges:

Employee Costs - We incurred $ 8.1 million of employee-related restructuring expense, of which $ 6.8 million related to transaction-related employee payments made in connection with the divestiture of our Life Sciences businesses and $ 1.3 million related to other employee-related expenses in our Business Advisory segment.

Office space reductions - We incurred $ 3.1 million of restructuring expense related to office space reductions, of which $ 2.3 million related to rent and related expenses, net of sublease income, and accelerated depreciation on furniture and fixtures for previously vacated office spaces and $ 0.8 million related to accelerated amortization and depreciation on the operating lease ROU asset and fixed assets related to our London, U.K.

office which we vacated in connection with the divestiture of our Life Sciences business.

Other - We incurred $ 1.2 million of other restructuring charges, of which $ 0.9 million related to third-party legal and professional advisory fees incurred in connection with the divestiture of our Life Sciences business and $ 0.2 million related to third-party advisory fees related to the reorganization of our internal operating and financial reporting structure.

See Note 19 "Segment Information" for more information on our reorganization which is effective in the first quarter of 2022.

Of the total $12.4 million pretax restructuring charge, $ 7.9 million was recognized in the results of operations of our Business Advisory segment and $ 4.5 million was recognized in our corporate operations.

In 2020, we incurred $20.5 million of total pretax restructuring expense.

Of the $20.5 million pretax restructuring expense, $ 18.7 million related to the restructuring plan executed in the fourth quarter of 2020 to reduce operating costs to address the impact of the COVID-19 pandemic on our business.

The total pretax restructuring expense of $20.5 million recognized in 2020 consisted of the following charges:

Severance - We incurred $ 5.3 million of severance-related restructuring expense, of which, $ 4.8 million related to the fourth quarter 2020 restructuring plan and $ 0.4 million related to workforce reductions completed prior to the fourth quarter of 2020 to better align resources with market demand.

Employee Costs - We incurred $ 5.3 million of severance-related restructuring expense, of which, $ 4.8 million related to the fourth quarter 2020 restructuring plan and $ 0.4 million related to workforce reductions completed prior to the fourth quarter of 2020 to better align resources with market demand.

Of the total $ 5.3 million of severance-related restructuring expense, $ 2.0 million related to our Education segment, $ 1.5 million related to our Healthcare segment, $ 1.0 million related to our Business Advisory segment, and $ 0.8 million related to our corporate operations.

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and portions of our Denver, Colorado, New York City, New York, and Pensacola, Florida offices.

As a result, we recognized $ 13.2 million of non-cash lease impairment charges on the related operating lease right-of-use (“ROU”) assets and fixed assets for those we intend to sublease, as well as $ 0.7 million of accelerated amortization and depreciation on the related operating lease ROU assets and fixed assets we intend to abandon.

See Note 5 “Leases” for additional information on the long-lived asset impairment test.

As a result, we recognized $ 13.2 million of non-cash lease impairment charges on the related operating lease ROU assets and fixed assets for those we intend to sublease, as well as $ 0.7 million of accelerated amortization and depreciation on the related operating lease ROU assets and fixed assets we abandoned.

See Note 5 “Leases” for additional information on the long-lived asset impairment test performed in 2020.

We also incurred $ 0.1 million related to rent and related expenses, net of sublease income, for previously vacated office spaces.

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Of the total $20.5 million pretax restructuring charge, $ 14.8 million related to our corporate operations, $ 2.2 million related to our Business Advisory segment, $ 2.0 million related to our Education segment, and $ 1.5 million related to our Healthcare segment.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

In 2019, we incurred $1.9 million of pretax restructuring expense.

This expense primarily consisted of the following charges:

Severance - We incurred $ 0.6 million of severance expense as a result of workforce reductions to better align resources with market demand and workforce reductions in our corporate operations.

Employee Costs - We incurred $ 0.6 million of severance expense as a result of workforce reductions to better align resources with market demand and workforce reductions in our corporate operations.

Office space reductions - We incurred $ 1.2 million of restructuring expense related to office space reductions.

During 2019, we exited a portion of our Lake Oswego, Oregon office resulting in a $ 0.7 million lease impairment charge on the related operating lease ROU asset and leasehold improvements and $ 0.2 million of accelerated depreciation on furniture and fixtures in that office.

See Note 5 “Leases” for additional information on the long-lived asset impairment test.

See Note 5 “Leases” for additional information on the long-lived asset impairment test performed in 2019.

Additionally, during 2019, we exited the remaining portion of our Middleton, Wisconsin office and an office in Houston, Texas, resulting in restructuring charges of $ 0.4 million and $ 0.1 million, respectively, which primarily consisted of accelerated depreciation on furniture and fixtures in those offices.

During the fourth quarter of 2019, we entered into an amendment to the lease of our principal executive office in Chicago, Illinois.

Among other items, the amendment terminated the lease with

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

respect to certain leased space which we previously vacated and currently sublease to a third-party.

Among other items, the amendment terminated the lease with respect to certain leased space which we previously vacated and subleased to a third-party.

As a result of the amendment, we recognized a restructuring gain of $ 0.4 million.

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Of the $1.9 million pretax restructuring charge, $ 1.5 million related to our corporate operations, $ 0.3 million related to our Healthcare segment, and $ 0.1 million related to our Business Advisory segment.

In 2018, we incurred $3.7 million of pretax restructuring expense.

This expense primarily consisted of the following charges:

Severance - We incurred $ 2.1 million of severance expense as a result of workforce reductions to better align resources with market demand.

Office space reductions - We incurred $ 1.3 million of restructuring expense related to office space reductions.

Of the $ 1.3 million, $ 0.8 million related to the accrual of remaining lease payments, net of estimated sublease income, accelerated depreciation on leasehold improvements, and moving expenses due to exiting a portion of our Middleton, Wisconsin office;

$ 0.4 million related to updated lease assumptions, commission costs, and moving expenses for our San Francisco office vacated in 2017;

and $ 0.1 million related to updated lease assumptions for our Chicago office consolidation.

The restructuring expense related to office space reductions incurred in 2018 were accounted for in accordance with ASC 840, Leases.

See Note 2 “Summary of Significant Accounting Policies” for additional information on our adoption of ASC 842 on a modified retrospective basis on January 1, 2019.

Other - We incurred $ 0.3 million related to the divestiture of our Middle East practice within the Business Advisory segment in the second quarter of 2018.

During the second quarter of 2018, we sold our Middle East practice to a former employee who was the practice leader of that business at the time, and we recorded a $ 5.8 million loss which is included in other income (expense), net in our consolidated statements of operations.

Of the $3.7 million pretax restructuring charge, $ 1.1 million was related to our Healthcare segment, $ 1.0 million was related to our Business Advisory segment, and $ 1.6 million was related to our corporate operations.

The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the years ended December 31, 2021 and 2020.

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Balance as of December 31, 2019

Adoption of ASC 842 (1)

$ 68 $ 91 $ — $ 159

Balance as of January 1, 2019 443 1,349 — 1,792

Additions (1) (2)

5,290 — 1,256 6,546

Payments ( 2,907 ) — ( 363 ) ( 3,270 )

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Balance as of December 31, 2020

2,447 84 893 3,424

Additions (1)(2)

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Balance as of December 31, 2021

(1) Upon adoption of ASC 842 on January 1, 2019, we reclassified the restructuring charge liabilities, which represented the present value of remaining lease payments, net of estimated sublease income, for vacated office spaces from restructuring charge liabilities to operating lease right-of-use assets.

See Note 2 “Summary of Significant Accounting Polices” for additional information on the impact of adoption.

$ 573 $ — $ 567 $ 1,140

(1) Additions and adjustments for the years ended December 31, 2021 and 2020 include restructuring charges of $ 0.1 million and $ 0.2 million, respectively, related to office space reductions directly related to discontinued operations .

(2) Additions and adjustments exclude non-cash items related to vacated office spaces, such as lease impairment charges and accelerated depreciation on abandoned operating lease ROU assets and fixed assets, which are recorded as restructuring charges on our consolidated statements of operations.

All of the $0.6 million restructuring charge liability related to employee costs at December 31, 2021 is expected to be paid in the next 12 months and is included as a component of accrued payroll and related benefits.

Substantially all of the $0.6 million other restructuring charge liability at December 31, 2021 is expected to be paid in the next 12 months and is included as a component of accrued expenses and other current liabilities.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

All of the $2.4 million restructuring charge liability related to employee costs at December 31, 2020 relates to the fourth quarter 2020 restructuring plan.

This liability is included as a component of accrued payroll and related benefits and is expected to be paid in the first quarter of 2021.

The $0.1 million restructuring charge liability related to office space reductions at December 31, 2020 is included as a component of deferred compensation and other liabilities.

The $0.9 million other restructuring charge liability at December 31, 2020 is primarily related to the termination of a third-party advisory agreement and is expected to be paid over the next 25 months.

This liability is included as a component of accrued expenses and other current liabilities and deferred compensation and other liabilities.

Derivative Instruments and Hedging Activity

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Balance Sheet Location 2021 2020

Accrued expenses $ 2,100 $ 159

Other non-current assets $ 1,210 $ —

Accrued expenses and other current liabilities $ 1,604 $ 2,100

Deferred compensation and other liabilities $ 149 $ 3,297

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We do not use derivative instruments for trading or other speculative purposes.

Refer to Note 14 “Other Comprehensive Income (Loss)” for additional information on our derivative instrument.

Refer to Note 14 “Other Comprehensive Income (Loss)” for additional information on our derivative instruments.

HURON CONSULTING GROUP INC.

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December 31, 2021

Interest rate swap $ — $ 627 $ — $ 627

Convertible debt investment — — 65,918 65,918

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Total assets $ — $ 40,057 $ 65,918 $ 105,975

Interest rate swap $ — $ 5,397 $ — $ 5,397

Interest rate swaps $ — $ 1,170 $ — $ 1,170

Contingent consideration for business acquisition — — 3,743 3,743

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$ — $ 5,397 $ — $ 5,397

Contingent consideration for business acquisition — — 1,770 1,770

Total liabilities $ — $ 5,397 $ 1,770 $ 7,167

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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 swap utilizing market-based inputs and discount rates reflecting the risks involved.

See Note 12 "Derivative Instruments and Hedging Activity" for additional information on our interest rate swaps.

Convertible debt investment:

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In the first quarter of 2020, we invested an additional $ 13.0 million, in the form of 1.69 % convertible debt with a senior liquidation preference to the initial convertible notes (the “additional convertible note”);

and amended our initial convertible notes to include a coupon rate of 1.69 % and extend the maturity date to January 17, 2024 , which coincides with the maturity date of the additional convertible note.

and amended our initial convertible notes to include a

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

coupon rate of 1.69 % and extend the maturity date to January 17, 2024 , which coincides with the maturity date of the additional convertible note.

To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE.

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The conclusion of value for our investment is based on the probability-weighted assessment of both scenarios.

The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, 2024 , the applicable waterfall distribution at the end of the expected holding period based on the rights and privileges of the various instruments, cash flow projections discounted at the risk-adjusted rate of 24.0 %, and the concluded equity volatility of 45.0 %, all of which are Level 3 inputs.

The valuation of our investment as of December 31, 2019 takes into consideration the equity value indication as well as the dilutive impact of the convertible debt issued by Shorelight in the first quarter of 2020, the terms of which were known or knowable as of December 31, 2019.

The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, 2024 , the applicable waterfall distribution at the end of the expected holding period based on the rights and privileges of the various instruments, cash flow projections discounted at the risk-adjusted rate of 22.5 % and 24.0 % as of December 31, 2021 and 2020, respectively;

and the concluded equity volatility of 45.0 % as of both December 31, 2021 and 2020, 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.

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Balance as of December 31, 2019 $ 49,542

Purchases 13,000

Change in fair value of convertible debt investment 1,822

Balance as of December 31, 2020 64,364

Purchases 13,000

Change in fair value of convertible debt investment 1,554

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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 deferred compensation liability is fully 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.

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Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations.

Contingent consideration for business acquisition:

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 typically reflects a risk-free rate, and was 2.41 % as of December 31, 2020.

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 in a range of 2.4 % to 5.1 % with a weighted average of 3.7 % as of December 31, 2021 and was 2.4 % as of December 31, 2020.

The weighted average discount rate was calculated using the relative fair values of the contingent consideration as of December 31, 2021.

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.

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Balance as of December 31, 2019 $ —

Payments ( 10,041 )

Remeasurement of contingent consideration for business acquisitions ( 1,506 )

Unrealized loss due to foreign currency translation 106

Acquisition 1,770

Balance as of December 31, 2020 1,770

Acquisition 1,800

Change in fair value of contingent consideration for business acquisition 173

Balance as of December 31, 2021 $ 3,743

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In October 2020, we recognized an unrealized gain of $ 1.7 million to increase the carrying amount of our preferred stock investment to $ 6.7 million, based on an observable price change of preferred stock with similar rights and preferences to our preferred stock investment issued by Medically Home, a Level 2 input.

The unrealized gain of $ 1.7 million is recorded to other income (expense), net on our consolidated statement of operations.

We have not identified any impairments or additional observable price changes in 2020.

The unrealized gain of $ 1.7 million was recorded in other income (expense), net on our consolidated statement of operations.

During the year ended December 31, 2021, there has been no impairment, nor any observable price change related to our investment.

As of December 31, 2021 and 2020, the carrying amount of our preferred stock investment was $ 6.7 million.

Senior Secured Credit Facility

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Foreign currency translation adjustment, net of tax of $0 99 — — 99

Unrealized gain on investments:

Unrealized gain (loss) on investments:

Change in fair value, net of tax of $185 — ( 702 ) — ( 702 )

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Foreign currency translation adjustment, net of tax of $0 157 — — 157

Reclassification adjustments into earnings, net of tax of $0 (2)

( 1,082 ) — — ( 1,082 )

Unrealized gain (loss) on investments:

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(1) The before tax amounts reclassified from accumulated other comprehensive income (loss) related to our cash flow hedges are recorded to interest expense, net of interest income.

(2) In connection with the divestiture of the Life Sciences business, which included a substantially complete liquidation of an investment within a foreign entity, we included $1.1 million of accumulated translation gains in the calculation of our gain on sale recorded within other income, net on our consolidated statement of operations.

See Note 3 "Acquisitions and Divestitures" for additional information on the divestiture of the Life Sciences business in 2021.

Employee Benefit and Deferred Compensation Plans

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At our sole discretion, we may, but are not required to, credit any additional amount we desire to any participant’s deferred compensation account.

Amounts credited are subject to vesting schedules set forth in the Plan, employment agreement, or any other agreement entered into between us and the participant.

The deferred compensation liability at December 31, 2020 and 2019 was $ 34.3 million and $ 27.5 million, respectively.

This deferred compensation liability is funded by the Plan assets.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

Amounts credited are subject to vesting schedules set forth in the Plan, employment agreement, or any other agreement entered into between us and the participant.

The deferred compensation liability at December 31, 2021 and 2020 was $ 39.1 million and $ 34.3 million, respectively.

This deferred compensation liability is fully funded by the Plan assets.

Equity Incentive Plans

In 2012, Huron adopted the 2012 Omnibus Incentive Plan (the “2012 Plan”) which replaced, on a prospective basis, our 2004 Omnibus Stock Plan (the "2004 Plan") such that future grants will be granted under the 2012 Plan and any outstanding awards granted under the 2004 Plan that are cancelled, expired, forfeited, settled in cash, or otherwise terminated without a delivery of shares to the participant will not become available for grant under the 2012 Plan.

The 2012 Plan permits the grant of stock options, stock appreciation rights, restricted stock, performance shares and other share-based or cash-based awards valued in whole or in part by reference to, or otherwise based on, our common stock.

The 2012 Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other share-based or cash-based awards valued in whole or in part by reference to, or otherwise based on, our common stock.

Subsequent to the initial approval of the 2012 Plan and through December 31, 2021, our shareholders approved amendments to the 2012 Plan to increase the number of shares authorized for issuance to 4.6 million, in the aggregate.

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On May 1, 2015, we adopted the Stock Ownership Participation Program (the “SOPP”), which is available to Huron employees below the managing director level who do not receive equity-based awards as part of their normal compensation plan.

Under the SOPP, eligible employees may elect to use after-tax payroll deductions, or cash contributions, to purchase shares of the Company’s common stock on certain designated purchase dates.

Under the SOPP, eligible employees may elect to use after-tax payroll deductions to purchase shares of the Company’s common stock on certain designated purchase dates.

Employees who purchase stock under the SOPP are granted restricted stock equal to 25 % of their purchased shares.

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Share-based awards outstanding under our 2012 Plan and our 2004 Plan provide for a retirement eligibility provision, under which eligible employees who have reached 62 years of age and have completed seven years of employment with Huron will continue vesting in their share-based awards after retirement, subject to certain conditions.

This retirement eligibility provision also applies to future awards granted to eligible employees under the 2012 Plan.

The Compensation Committee of the board of directors has the responsibility of interpreting the 2012 Plan and SOPP and determining all of the terms and conditions of awards made under the plans, including when the awards will become exercisable or otherwise vest.

Total share-based compensation cost recognized for the years ended December 31, 2020, 2019, and 2018 was $ 23.9 million, $ 24.2 million, and $ 18.8 million, respectively, with related income tax benefits of $ 5.4 million, $ 5.3 million, and $ 4.6 million, respectively.

Total share-based compensation cost recognized for the years ended December 31, 2021, 2020, and 2019 was $ 25.9 million, $ 23.9 million, and $ 24.2 million, respectively, with related income tax benefits of $ 6.3 million, $ 5.4 million, and $ 5.3 million, respectively.The $ 25.9 million of share-based compensation cost recognized in 2021 included $ 1.9 million recorded to restructuring charges as it related to the modification of certain nonvested share-based compensation awards to accelerate vesting upon the completed sale of the Life Sciences business.

As of December 31, 2021, there was $ 28.7 million of total unrecognized compensation cost related to nonvested share-based awards.

This cost is expected to be recognized over a weighted average period of 2.4 years.

Restricted Stock Awards

The grant date fair values of our restricted stock awards are measured based on the fair value of our common stock at grant date and amortized into expense over the service period.

Restricted Stock

The grant date fair values of our restricted stock are measured based on the fair value of our common stock at grant date and amortized into expense over the service period.

Subject to acceleration under certain conditions, the majority of our restricted stock vests annually over four years .

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

The table below summarizes the restricted stock activity for the year ended December 31, 2021.

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Nonvested restricted stock at December 31, 2021 868 14 882 $ 53.51

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

The aggregate fair value of restricted stock that vested during the years ended December 31, 2021, 2020, and 2019 was $ 19.8 million, $ 18.6 million, and $ 14.5 million, respectively.

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Performance-based Share Awards

During 2020, 2019, and 2018, the Company granted performance-based stock awards to our named executive officers and certain managing directors.

The total number of shares earned by recipients of these awards is contingent upon meeting practice specific and company-wide performance goals.

The total number of shares earned by recipients of performance-based share awards is contingent upon meeting practice specific and company-wide performance goals.

Following the performance period, certain awards are subject to the completion of a service period, which is generally an additional two years .

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The weighted average grant date fair value per share of performance-based stock granted during 2020 and 2019 was $ 58.84 and $ 47.93 , respectively.

Stock Options

Prior to 2014, the Company granted stock option awards to certain named executive officers.

No stock option awards were granted in 2020, 2019, or 2018.

The exercise prices of stock options are equal to the fair value of a share of common stock on the date of grant.

Subject to acceleration under certain conditions, our stock options vest annually over four years .

All stock options have a 10 -year contractual term.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

Stock Options

We grant stock options at exercise prices equal to the fair value of the Company’s common stock on the date of grant.

Subject to acceleration under certain conditions, our stock options vest annually over four years .

Our stock options have a contractual term between 7 and 10 years.

The fair value of the options granted during 2021 were calculated using the Black-Scholes option pricing model using the following assumptions:

Black-Scholes option pricing model:

Expected dividend yield — %

Expected volatility 40.0 %

Risk-free rate 0.9 %

Expected option life (in years) 4.75 years

Expected volatility was based on our historical stock prices as we believe that our historical volatility provides the most reliable indication of future volatility and sufficient historical daily stock price observations are available.

The risk-free interest rate was based on the rate of U.S.

Treasury bills with an equivalent expected term of the stock options at the time of the option grant.

The expected option life was estimated using the simplified method, which is a weighted average of the vesting term and the contractual term, to determine the expected term.The simplified method was used due to the lack of sufficient data available to provide a reasonable basis upon which to estimate the expected term.

Stock option activity for the year ended December 31, 2021 was as follows:

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Outstanding at December 31, 2020 66 $ 37.31 1.5 $ 1.4

Granted 50 $ 52.49

Exercised ( 23 ) $ 34.34 $ 0.4

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(1) Of the 93,000 outstanding options, approximately 11,000 were granted under the 2004 Omnibus Stock Plan, and the remaining 82,000 options were granted under the 2012 Omnibus Incentive Plan.

The weighted average grant date fair value of stock options granted during 2021 was $ 18.42 .

No stock options were granted in 2020 and 2019.

The aggregate intrinsic value of options exercised during 2020 and 2019 was $ 1.1 million and $ 1.6 million, respectively.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the COVID-19 outbreak, which among other items, includes income tax provisions relating to a five-year net operating loss carryback period, options to defer payroll tax payments for a limited period and technical corrections to tax depreciation methods for qualified improvement property.

During 2020, as a result of the CARES Act, we recognized a $ 1.5 million tax benefit related to the remeasurement of a portion of our income tax receivable for the federal net operating loss incurred in 2018 and the expected federal net operating loss in 2020 that will be carried back to prior year income, both for a refund at the higher, prior year tax rate.

Through December 31, 2020, we deferred $ 12.2 million of payroll tax payments, of which $ 6.1 million is expected to be paid in the fourth quarter of 2021 and $ 6.1 million is expected to be paid in the fourth quarter of 2022.

The deferred payroll tax payments are included as components of accrued payroll and related benefits and deferred compensation and other liabilities on our consolidated balance sheet.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“2017 Tax Reform”), a tax reform bill which, among other items, reduced the corporate federal income tax rate from 35% to 21% and moved from a worldwide tax system to a territorial system.

During 2018, we completed our accounting for all of the enactment-date income tax effects of 2017 Tax Reform.

For the year ended December 31, 2018, we recorded tax expense of $ 2.2 million related to establishing a valuation allowance for foreign tax credits, a tax benefit of $ 0.6 million related to the U.S.

federal return to provision adjustments for the remeasurement of our net deferred taxes based on the new lower rate and tax expense of $ 0.2 million related to withholding tax on outside basis differences due to our change in assertion for permanent reinvestment.

These amounts were recorded as a component of income tax expense from continuing operations.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), which was signed into law on March 27, 2020, is an approximately $2 trillion emergency economic stimulus package in response to the COVID-19 outbreak, which among other items, includes income tax provisions relating to net operating loss carryback period, options to defer payroll tax payments for a limited period and technical corrections to tax depreciation methods for qualified improvement property.

During 2020, as a result of the CARES Act, we recognized a $ 1.5 million tax benefit related to the remeasurement of a portion of our income tax receivable for the federal net operating losses incurred in 2018 and 2020 that were carried back to prior year income, both for a refund at the higher, prior year tax rate.

As a result of electing the retroactive Global Intangible Low-Taxed Income (“GILTI”) high-tax exclusion in the second quarter of 2021, we recognized a $ 1.0 million tax benefit of which $ 0.4 million related to carrying back our increased 2018 federal net operating loss to prior year income for a refund at the higher, prior year tax rate.

During the third quarter of 2021, we recognized an additional tax benefit of $ 2.0 million, primarily related to the U.S.

federal return to provision adjustments for carrying back our increased 2020 federal net operating loss to prior year income for a refund at the higher, prior year tax rate.

HURON CONSULTING GROUP INC.

1 unchanged sentence

(Tabular amounts in thousands, except per share amounts)

The income tax expense for continuing operations for the years ended December 31, 2020, 2019, and 2018 consists of the following:

Through December 31, 2020, we deferred $ 12.2 million of payroll tax payments, of which $ 6.1 million was expected to be paid in the fourth quarter of 2021 and $ 6.1 million was expected to be paid in the fourth quarter of 2022, and were included as components of accrued payroll and related benefits and deferred compensation and other liabilities on our consolidated balance sheet as of December 31, 2020.

In the third quarter of 2021, all of the $ 12.2 million of deferred payroll tax payments were repaid.

The income tax expense for continuing operations for the years ended December 31, 2021, 2020, and 2019 consisted of the following:

Year Ended December 31,

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State income taxes, net of federal benefit 5.2 4.4 6.1

Disallowed executive compensation 1.2 ( 2.8 ) 2.0

Valuation allowance 1.1 ( 3.1 ) ( 2.9 )

Meals and entertainment 0.1 ( 0.6 ) 1.6

CARES Act net operating loss carryback ( 3.8 ) 4.4 —

Stock-based compensation 4.3 ( 1.1 ) 4.9

Tax credits ( 1.3 ) 3.0 ( 3.1 )

Realized investment gains/losses ( 1.1 ) 2.6 ( 1.8 )

Deferred tax adjustments 1.7 0.6 ( 1.7 )

Stock-based compensation ( 0.7 ) 4.3 ( 1.1 )

Foreign source income ( 0.2 ) 0.5 ( 0.5 )

Valuation allowance ( 3.1 ) ( 2.9 ) 6.9

Disallowed executive compensation ( 2.8 ) 2.0 2.5

Deferred tax adjustments ( 0.2 ) 1.7 0.6

Goodwill impairment charges — ( 2.6 ) —

Unrecognized tax benefits — ( 2.0 ) ( 0.4 )

Meals and entertainment ( 0.6 ) 1.6 2.0

Net tax benefit related to “check-the-box” election — — ( 1.4 )

Change in fair value of contingent consideration liabilities — — 2.4

Global intangible low-taxed income — — 2.1

Transition tax on accumulated foreign earnings, net of credits — — 0.8

US federal rate change — — ( 2.3 )

Other — ( 0.8 ) ( 0.1 )

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Accrued payroll and payroll related liabilities 5,645 3,745

Deferred payroll tax payments 3,235 —

Tax credits 1,828 1,773

Net operating loss carryforwards 1,243 944

Deferred payroll tax payments — 3,235

Other 2,009 3,278

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The increase in valuation allowances in 2021 primarily related to an increase in the valuation allowance for foreign losses and tax credits.

The Company has foreign net operating losses of $ 3.8 million which begin to expire in 2027 and state net operating loss carryforwards of $ 5.1 million which will begin to expire in 2023, if not utilized.

We have foreign net operating losses of $ 5.9 million which begin to expire in 2027 and state net operating loss carryforwards of $ 4.9 million which will begin to expire in 2030, if not utilized.

We have federal and state tax credit carryforwards of $ 1.8 million which will begin to expire in 2022, if not utilized.

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Unrecognized Tax Benefits

Balance at December 1, 2017 $ 813

Additions based on tax positions related to prior years 115

Decrease due to lapse of statute of limitations ( 28 )

Balance at December 31, 2018 900

Balance at January 1, 2019 $ 900

Decrease due to settlements of prior year tax positions ( 115 )

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Balance at December 31, 2020 744

Balance at December 31, 2021 $ 744

As of both December 31, 2021 and 2020, we had $0.7 million of unrecognized tax benefits which would affect the effective tax rate of continuing operations if recognized.

It is reasonably possible that approximately $ 0.1 million of the liability for unrecognized tax benefits at December 31, 2021 could decrease in the next twelve months primarily due to the expiration of statutes of limitations.

HURON CONSULTING GROUP INC.

1 unchanged sentence

(Tabular amounts in thousands, except per share amounts)

As of December 31, 2020, we had $0.7 million of unrecognized tax benefits which would affect the effective tax rate of continuing operations if recognized.

As of both December 31, 2020 and 2019, we had less than $ 0.1 million accrued for the potential payment of interest and penalties.

As of December 31, 2021 and 2020, we had $ 0.1 million and less than $ 0.1 million, respectively, accrued for the potential payment of interest and penalties.

Accrued interest and penalties are recorded as a component of provision for income taxes on our consolidated statement of operations.

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See Note 5 “Leases” for additional information on our leases, including the remaining expected lease payments under our operating leases as of December 31, 2021.

During the year ended December 31, 2020, we recognized a $ 0.2 million litigation settlement gain for the resolution of a claim that was settled in the first quarter of 2020.

During the year ended December 31, 2019, we recorded a $ 0.4 million litigation loss accrual related to the legal claim that was subsequently settled during the first quarter of 2020.

During the year ended December 31, 2018, we reached a settlement agreement related to Huron's claim in a class action lawsuit, resulting in a gain of $ 2.5 million.

These items are recorded in litigation and other gains, net on our consolidated statement of operations.

On November 9, 2018, Huron Consulting Services LLC, a wholly owned subsidiary of Huron, was engaged by Oaktree Medical Centre LLC, a management services organization (“Oaktree”), to perform interim management and financial advisory services.

As part of the services, a Huron employee was appointed by Oaktree’s board of directors to serve as Chief Restructuring Officer of Oaktree (the “CRO”).

The engagement letter through which Oaktree retained Huron’s services (the “Engagement Letter”) states that all disputes or claims arising thereunder are subject to binding arbitration, disclaims special, consequential, incidental and exemplary damages and losses and caps liability to the fees paid for the portion of the engagement giving rise to any liability.

On September 19, 2019, Oaktree and certain of its affiliates filed for Chapter 7 liquidation in the U.S.

Bankruptcy Court for the Western District of North Carolina, with the cases subsequently transferred to the District of South Carolina.

As a result of the bankruptcy filing, a Chapter 7 trustee was appointed to oversee the bankruptcy estates, at which time Huron’s services for Oaktree concluded.

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

On September 17, 2021, the Trustee filed a complaint in the Bankruptcy Court for the District of South Carolina against Huron and the CRO, among others (the “Complaint”), alleging breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, negligence, violations of the South Carolina Unfair Trade Practices Act, fraud, civil conspiracy, unjust enrichment, and recovery of avoided transfers under sections 547, 548 and 550 of the Bankruptcy Code.

On December 7, 2021, the Trustee filed an amended version of the Complaint (the “Amended Complaint”), generally alleging the same claims asserted in the initial Complaint but (i) removing the claim for a violation of the South Carolina Unfair Trade Practices Act and (ii) adding a claim for breach of contract.

In the Amended Complaint, the Trustee asserts that Huron and the CRO, among others, did not develop and implement a Chapter 11 restructuring plan on a timely basis and that their failure to do so led to significant damages.

The Trustee seeks an unspecified amount of monetary damages in the Amended Complaint.

We believe the Trustee’s allegations with respect to Huron and the CRO are without merit, and we are vigorously defending ourselves against the allegations raised in the Amended Complaint.

On December 21, 2021, we filed a motion to dismiss all of the claims in the Amended Complaint;

the motion remains pending.

Notwithstanding the foregoing, given the inherent risk and uncertainty associated with all litigation, we cannot estimate the potential liability with respect to such allegations at this time.

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 Annual Report on Form 10-K, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations.

As of the date of this Annual Report on Form 10-K, 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 in the form of letters of credit totaling $ 0.7 million and $ 1.6 million were outstanding at December 31, 2021 and 2020, respectively, primarily to support certain office lease obligations.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

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 December 31, 2020, the estimated fair value of our outstanding contingent consideration liability was $1.8 million.

As of December 31, 2019, the total estimated fair value of our contingent consideration liabilities was zero.

As of December 31, 2021 and 2020, the total estimated fair value of our outstanding contingent consideration liability was $3.7 million and $1.8 million, respectively.

To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys’ fees, incurred in connection with civil or criminal action or proceedings, as it relates to their services to us if such person acted in good faith.

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Healthcare, Business Advisory, and Education.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Our Healthcare segment serves national and regional hospitals, integrated health systems, academic medical centers, community hospitals, and medical groups.

Our Healthcare segment serves providers and payors including national and regional hospitals, integrated health systems, academic medical centers, community hospitals, medical groups and health plans.

Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services;

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establishing a sustainable business model centered around optimal cost structures, reimbursement models and financial strategies;

and evolving their digital, technology and analytic capabilities.

Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization.

evolving their digital, technology and analytic capabilities;

and exceeding the expectations of their employees and patients.

Our solutions help clients adapt to this rapidly changing healthcare environment to become a more nimble, efficient and consumer-centric organization.

We use our deep industry expertise to help clients solve a diverse set of business issues, including, but not limited to, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, evolving organizational culture, and maximizing return on technology investments.

• Business Advisory

Our Business Advisory segment works with C-suite executives, boards, and business unit and functional leadership across a diverse set of organizations, including healthy, well-capitalized companies to organizations in transition, and across a broad range of industries, including life sciences, financial services, healthcare, education, energy and utilities, industrials and manufacturing, and the public sector.

Our Business Advisory professionals have deep industry, functional and technical expertise that they put forward when delivering our digital, technology and analytics, strategy and innovation and corporate finance and restructuring services.

Our Business Advisory segment works with C-suite executives and business unit and functional leadership across a diverse set of organizations, including healthy, well-capitalized companies to organizations in transition, and across a broad range of industries, including healthcare, energy and utilities, financial services, life sciences, industrials and manufacturing, education, and the public sector.

In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage.

Organizations also recognize the need to adopt technologies, automation and analytics to improve their operations and compete in a rapidly changing environment.

Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers in order to evolve their enterprise and business unit strategies, bringing new products to market, and managing through stressed and distressed situations to create a viable path forward for stakeholders.

Organizations also recognize the need to adopt technologies, automation and analytics to improve their operations and compete in a rapidly changing landscape.

Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations, developing insights into the needs of tomorrow’s customers to evolve their enterprise and business unit strategies, bringing new products to market, and managing through stressed and distressed situations to create a viable path forward for stakeholders.

Our Education segment serves public and private colleges and universities, academic medical centers, research institutes and other not-for-profit organizations.

Our Education professionals have a depth of expertise in strategy and innovation;

business operations, including the research enterprise and student lifecycle;

Our Education professionals have a depth of expertise in strategy;

business operations, including in the areas of the research enterprise and student lifecycle;

digital, technology and analytic solutions;

and organizational transformation.

Our Education segment clients are increasingly faced with financial and/or demographic challenges as well as increased competition.

Our Education segment clients are increasingly faced with financial and/or demographic and enrollment challenges as well as increased competition.

To remain competitive, organizations must challenge traditional operating and financial models and reimagine strategic, operational and research-centered opportunities that advance their mission while strengthening their business models.

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optimizing financial and operational performance;

and enhancing the student lifecycle.

and enhancing the student experience.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment.

Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment.

These administrative function costs include costs for corporate office support, office facility costs, costs relating to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management.

These administrative function costs include costs for corporate office support, certain 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.

Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities.

The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

Healthcare, Education and Commercial.

The Commercial segment will include all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities.

In the new reporting structure, each segment will include all revenue and costs associated with engagements delivered in the respective industry segments.

We will also provide revenue reporting across two principal capabilities:

i) Consulting and Managed Services and ii) Digital.

These changes will create greater transparency for investors by improving visibility into the core drivers of our business.

While our consolidated results will not be impacted, we will recast our historical segment information during 2022 for consistent presentation.

HURON CONSULTING GROUP INC.

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Other operating expenses 131,372 135,255 140,285

Litigation and other gains, net ( 150 ) ( 1,196 ) ( 2,019 )

Litigation and other losses (gains) 173 ( 150 ) ( 1,196 )

Depreciation and amortization 20,634 24,405 28,365

Goodwill impairment charges (1)

Other expense, net 5,021 11,215 26,875

Other income (expense), net 27,197 ( 5,021 ) ( 11,215 )

Income (loss) from continuing operations before taxes $ 80,036 $ ( 33,873 ) $ 52,491

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The following table illustrates the disaggregation of revenues by billing arrangements, employee types, and timing of revenue recognition, including a reconciliation of the disaggregated revenues to revenues from our three operating segments for the year ended December 31, 2021, 2020 and 2019.

In conjunction with our continuous evaluation of the appropriate level of disaggregation of revenues as our business evolves and in consideration of a group hire of approximately 300 employees in our Healthcare Managed Services solution within our Healthcare segment in the second quarter of 2021, we began assessing our operating performance by the following three employee types:

billable consultants, full-time equivalents, and Healthcare Managed Services employees.

The disaggregation of revenues by employee type previously reported for the twelve months ended December 31, 2020 and 2019 was revised below to reflect this change.

This change has no impact on our consolidated total revenues or total revenues by segment.

Year Ended December 31, 2021

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Employee Type (1)

Revenue generated by full-time billable consultants $ 254,595 $ 253,747 $ 191,467 $ 699,809

Revenue generated by billable consultants $ 250,552 $ 273,680 $ 197,221 $ 721,453

Revenue generated by full-time equivalents 79,307 17,983 39,179 136,469

Revenue generated by Healthcare Managed Services employees 47,718 — — 47,718

Total $ 377,577 $ 291,663 $ 236,400 $ 905,640

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Employee Type (1)

Revenue generated by full-time billable consultants $ 280,915 $ 243,350 $ 195,844 $ 720,109

Revenue generated by billable consultants $ 234,951 $ 253,747 $ 191,467 $ 680,165

Revenue generated by full-time equivalents 89,823 13,614 31,862 135,299

Revenue generated by Healthcare Managed Services employees 28,663 — — 28,663

Total $ 353,437 $ 267,361 $ 223,329 $ 844,127

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Employee Type (1)

Revenue generated by full-time billable consultants $ 247,416 $ 225,335 $ 170,496 $ 643,247

Revenue generated by billable consultants $ 278,733 $ 243,350 $ 195,844 $ 717,927

Revenue generated by full-time equivalents 116,035 9,158 29,184 154,377

Revenue generated by Healthcare Managed Services employees 4,453 — — 4,453

Total $ 399,221 $ 252,508 $ 225,028 $ 876,757

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Total $ 399,221 $ 252,508 $ 225,028 $ 876,757

(1) Full-time billable consultants consist of our full-time professionals who provide consulting services to our clients and are billable to our clients based on the number of hours worked.

Full-time equivalent professionals consist of our coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to our clients.

(1) Billable consultants consist of our consulting professionals who provide consulting services to our clients and are billable to our

clients based on the number of hours worked.

Full-time equivalent professionals consist of leadership coaches and their support

staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients,

and full-time employees who provide software support and maintenance services to our clients.

Healthcare Managed Services

employees manage and provide revenue cycle billing, collections, insurance verification and change integrity services to healthcare

For the years ended December 31, 2021, 2020, and 2019, substantially all of our revenues and long-lived assets were attributed to or located in the United States.

At December 31, 2020 and 2019, no single client accounted for greater than 10% of our combined receivables and unbilled services balances.

At December 31, 2021 and 2020, no single client accounted for greater than 10 % of our combined balance of receivables from clients, net and unbilled services, net.

During the years ended December 31, 2021, 2020, and 2019, no single client generated greater than 10% of our consolidated revenues.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Valuation and Qualifying Accounts

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Valuation allowance for deferred tax assets $ 2,112 1,090 326 $ 2,876

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

(1) Additions to allowances for doubtful accounts and unbilled services are charged to revenues to the extent the provision relates to fee adjustments and other discretionary pricing adjustments.

To the extent the provision relates to a client’s inability to make required payments on accounts receivable, the provision is charged to operating expenses.

Selected Quarterly Financial Data (Unaudited)

Quarter Ended

Revenues $ 222,619 $ 217,857 $ 205,304 $ 198,347

Reimbursable expenses 19,303 2,970 2,860 1,754

Total revenues and reimbursable expenses 241,922 220,827 208,164 200,101

Gross profit 64,984 67,113 58,495 55,710

Operating income (loss) ( 45,851 ) 15,954 13,699 ( 12,654 )

Net income (loss) from continuing operations ( 42,273 ) 13,572 11,087 ( 6,104 )

Loss from discontinued operations, net of tax ( 35 ) ( 25 ) ( 29 ) ( 33 )

Net income (loss) ( 42,308 ) 13,547 11,058 ( 6,137 )

Net earnings per basic share:

Net income (loss) from continuing operations $ ( 1.94 ) $ 0.62 $ 0.50 $ ( 0.28 )

Loss from discontinued operations, net of tax — — — —

Net income (loss) $ ( 1.94 ) $ 0.62 $ 0.50 $ ( 0.28 )

Net earnings per diluted share:

Net income (loss) from continuing operations $ ( 1.94 ) $ 0.61 $ 0.50 $ ( 0.28 )

Loss from discontinued operations, net of tax — — — —

Net income (loss) $ ( 1.94 ) $ 0.61 $ 0.50 $ ( 0.28 )

Weighted average shares used in calculating earnings per share:

Basic 21,827 21,869 21,905 21,903

Diluted 21,827 22,116 22,175 21,903

Quarter Ended

Revenues $ 204,445 $ 220,754 $ 219,289 $ 232,269

Reimbursable expenses 18,617 23,534 23,636 22,930

Total revenues and reimbursable expenses 223,062 244,288 242,925 255,199

Gross profit 65,496 77,832 75,158 77,315

Operating income 6,756 17,875 20,576 18,499

Net income from continuing operations 3,350 10,569 13,706 14,354

Loss from discontinued operations, net of tax ( 46 ) ( 97 ) ( 52 ) ( 41 )

Net income 3,304 10,472 13,654 14,313

Net earnings per basic share:

Net income from continuing operations $ 0.15 $ 0.48 $ 0.62 $ 0.65

Loss from discontinued operations, net of tax — — — —

Net income $ 0.15 $ 0.48 $ 0.62 $ 0.65

Net earnings per diluted share:

Net income from continuing operations $ 0.15 $ 0.47 $ 0.61 $ 0.63

Loss from discontinued operations, net of tax — — — —

Net income $ 0.15 $ 0.47 $ 0.61 $ 0.63

Weighted average shares used in calculating earnings per share:

Basic 21,868 21,997 22,052 22,051

Diluted 22,311 22,400 22,561 22,676

Subsequent Event

On January 7, 2021, we entered into an agreement to acquire Unico Solution, Inc.

(“Unico Solutions”), a data strategy and technology consulting firm focused on helping clients enhance the use of their data to speed business transformation and accelerate cloud adoption.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

acquisition expands our cloud-based technology offerings within the Business Advisory segment.

The results of operations of Unico Solutions will be included within the Business Advisory segment from the close date, February 1, 2021.

The acquisition of Unico Solutions is not significant to our consolidated financial statements.

On January 18, 2022, we completed the acquisition of AIMDATA, LLC, (“AIMDATA”), an advisory and implementation consulting services firm focused on strategy, technology and business transformation.

The results of operations of AIMDATA will be included within our consolidated financial statements from the close date, and will be allocated among our three operating industries, which are our reportable segments, based on the engagements delivered by the business.

AIMDATA revenues will be reported in our Digital capability.

The acquisition of AIMDATA is not significant to our consolidated financial statements.

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 9A. Controls and Procedures