What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-28 compared with 2022-02-24 · 500 added, 539 removed, 1283 unchanged (45% of the section changed)

50 unchanged sentences

Equity compensation plans approved by shareholders:

2004 Omnibus Stock Plan (1)

10,805 $ 38.18 —

2012 Omnibus Incentive Plan (1)

4 unchanged sentences

Total 227,116 $ 48.89 790,374

(1) Our 2004 Omnibus Stock Plan was approved by the existing shareholders prior to our initial public offering.

Upon adoption of the 2012 Omnibus Incentive Plan, we terminated the 2004 Omnibus Stock Plan with respect to future awards and no further awards will be granted under this plan.

(1) Our 2012 Omnibus Incentive Plan was approved by our shareholders at our annual meeting held on May 1, 2012.

36 unchanged sentences

115434) 10.1 10/5/2004

10.2* Amended and Restated Huron Consulting Group Inc.

2004 Omnibus Stock Plan.

S-8 10.1 5/5/2010

10.2* Huron Consulting Group Inc.

3 unchanged sentences

8-K 10.1 1/6/2017

10.5* Amended and Restated Senior Management Agreement by and between Huron Consulting Group Inc.

8-K 10.2 1/6/2017

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

8-K 10.3 1/6/2017

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

6 unchanged sentences

8-K 10.1 1/4/2013

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

10-K 12/31/2019 10.13 2/26/2020

Number Exhibit Description Filed

2 unchanged sentences

Ending Exhibit Filing Date

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

10-K 12/31/2019 10.13 2/26/2020

10.9 Sixth Amendment to Lease by and between Huron Consulting Services LLC and Onni Van Buren Chicago LLC, dated October 3, 2019.

12 unchanged sentences

10-K 12/31/2014 10.34 2/24/2015

10.17 Second Amended and Restated Credit Agreement, dated as of March 31, 2015, among Huron Consulting Group Inc., as Borrower, certain subsidiaries as Guarantors, the Lenders Party Hereto and Bank of America, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, PNC Bank, Bank of Montreal and Key Bank National Association as Co-Documentation Agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.

Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Managers .

8-K 10.1 4/2/2015

10.18 Second Amended and Restated Security Agreement, dated as of March 31, 2015.

8-K 10.2 4/2/2015

10.19 Second Amended and Restated Pledge Agreement, dated as of March 31, 2015.

8-K 10.3 4/2/2015

10.14* Huron Consulting Group Inc.

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

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

10.21* Huron Consulting Group Inc.

2012 Omnibus Incentive Plan, as amended and restated effective February 13, 2020.

10-K 12/31/2019 10.34 2/26/2020

10.22 Amendment No.

1 of the Second Amended and Restated Credit Agreement, dated as of February 28, 2017, by and among Huron Consulting Group Inc., as Borrower, certain subsidiaries, as Guarantors, and Bank of America, N.A., as Administrative Agent for and on behalf of the Lenders.

8-K 10.1 3/6/2017

10.23 Amendment No.

2 of the Second Amended and Restated Credit Agreement, dated as of October 24, 2017, by and among Huron Consulting Group Inc., as Borrower, certain subsidiaries, as Guarantors, and Bank of America, N.A., as Administrative Agent for and on behalf of the Lenders.

10-Q 9/30/2017 10.1 11/1/2017

10.24 Amendment No.

3 of the Credit Agreement, dated as of March 23, 2018, by and among Huron Consulting Group Inc., as Borrower, certain subsidiaries, as Guarantors, and Bank of America, N.A., as Administrative Agent for and on behalf of the Lenders.

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.

4 of the Credit Agreement, the Pledge Agreement and the Security Agreement, dated as of September 27, 2019, by and among Huron Consulting Group Inc., as Borrower, certain subsidiaries, as Guarantors, and Bank of America, N.A., as Administrative Agent for and on behalf of the Lenders.

8-K 10.1 10/3/2019

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

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

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

8-K 10.1 6/7/2022

Third Amended and Restated Credit Agreement, dated as of November 15, 2022, among Huron Consulting Group Inc., as Borrower, certain subsidiaries as Guarantors, the Lenders Party, Hereto and Bank of America, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A.

and PNC Bank, National Association as Co-Syndication Agents, PNC Capital Markets LLC, as Sustainability Structuring Agent, Bank of Montreal, Fifth Third Bank, National Association and TD Bank, N.A., as Co-Documentation Agents, and BofA Securities, Inc., JPMorgan Chase Bank, N.A.

and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Bookrunners.

8-K 10.1 11/16/2022

10.22 Third Amended and Restated Security Agreement, dated as of November 15, 2022.

8-K 10.2 11/16/2022

10.23 Third Amended and Restated Pledge Agreement, dated as of November 15, 2022.

8-K 10.3 11/16/2022

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

8-K/A 10.1 12/29/2022

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

8-K/A 10.2 12/29/2022

Number Exhibit Description Filed

herewith Furnished

herewith Incorporated by Reference

Ending Exhibit Filing Date

10.26* Huron Consulting Group Inc.

Stock Ownership Participation Program, as amended effective November 23, 2022.

21.1 List of Subsidiaries of Huron Consulting Group Inc.

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Signature Title Date

ROTH Chief Executive Officer and Director 2/24/2022

MARK HUSSEY President, Chief Executive Officer and Director 2/28/2023

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James H.

Roth, John D.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C.

Mark Hussey, John D.

Kelly, and Ernest W.

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Signature Title Date

ROTH Chief Executive Officer and Director

MARK HUSSEY President, Chief Executive Officer and Director

(Principal Executive Officer)

MCCARTNEY Non-Executive Chairman of the Board 2/28/2023

KELLY Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

ROTH Vice Chairman of the Board 2/28/2023

KELLY Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

FEATHERSTONE Chief Accounting Officer (Principal Accounting Officer)

BROWN Director 2/28/2023

EUGENE LOCKHART Director 2/28/2023

Eugene Lockhart

MARKELL Director 2/28/2023

SAWYER Director 2/28/2023

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

As described in Notes 2 and 19 to the consolidated financial statements, in fixed-fee billing arrangements, which accounted for $400.1 million of revenues for the year ended December 31, 2021, the Company agrees to a pre-established fee in exchange for a predetermined set of professional services.

As described in Note 2 to the consolidated financial statements, in fixed-fee billing arrangements, which makes up a portion of total revenues of $1.13 billion for the year ended December 31, 2022, the Company agrees to a pre-established fee in exchange for a predetermined set of professional services.

As disclosed by management, under fixed-fee arrangements, revenues are recognized based upon work completed to date versus management’s estimates of the total services to be provided under the engagement.

Additionally, the Company’s Healthcare practice enters into performance-based billing arrangements whereby fees are tied to the attainment of contractually defined objectives, as a result of adopting the Company’s recommendations, which accounted for $73.4 million of revenues for the year ended December 31, 2021.

Additionally, the Company’s Healthcare practice enters into performance-based billing arrangements whereby fees are tied to the attainment of contractually defined objectives, as a result of adopting the Company’s recommendations, which makes up a portion of total revenues of $1.13 billion for the year ended December 31, 2022.

Under performance-based billing arrangements, revenue is recognized based on an estimate of variable consideration and work completed to date versus the estimates of the total services to be provided under the engagement.

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Total revenues and reimbursable expenses 1,158,961 926,958 871,014

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

Direct costs 636,776 592,428 575,602

Amortization of intangible assets and software development costs 3,803 5,366 5,375

Operating expenses:

Direct costs (exclusive of depreciation and amortization included below) 785,881 636,776 592,428

Reimbursable expenses 26,671 21,369 26,918

Total direct costs and reimbursable expenses 661,948 624,712 669,673

Operating expenses and other losses (gains), net:

Selling, general and administrative expenses 209,381 178,084 170,536

Restructuring charges 9,909 12,401 20,525

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

Depreciation and amortization 27,359 25,489 29,643

Goodwill impairment charges — — 59,816

Total operating expenses and other losses (gains), net 212,171 275,154 232,095

Total operating expenses 1,059,201 874,119 899,866

Operating income (loss) 99,760 52,839 ( 28,852 )

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Net income (loss) $ 75,552 $ 62,987 $ ( 23,840 )

Net earnings (loss) per basic share:

Earnings per share:

Net income (loss) per basic share:

Net income (loss) from continuing operations $ 3.73 $ 2.94 $ ( 1.08 )

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

Comprehensive income (loss) 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:

1 unchanged sentence

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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Exercise of stock options 36,536 — 1,421 1,421

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

Share-based compensation 30,991 30,991

13 unchanged sentences

Non-cash lease expense 6,369 6,967 7,763

Lease impairment charges — 13,217 805

Lease-related impairment charges 211 — 13,217

Share-based compensation 30,971 25,857 24,081

3 unchanged sentences

Deferred income taxes 18,784 12,480 ( 9,859 )

Gain on sale of property and equipment, excluding transaction costs ( 1,111 ) ( 343 ) ( 25 )

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

13 unchanged sentences

Purchases of property and equipment ( 12,547 ) ( 10,871 ) ( 8,125 )

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

Investments in life insurance policies ( 872 ) ( 1,245 ) ( 2,462 )

Distributions from life insurance policies 3,377 — —

Purchases of businesses, net of cash acquired ( 3,448 ) ( 44,819 ) ( 8,701 )

Purchases of investment securities — — ( 13,000 )

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

Capitalization of internally developed software costs ( 11,752 ) ( 4,889 ) ( 8,272 )

Proceeds from note receivable 154 — —

Proceeds from sale of property and equipment 4,753 408 25

Divestitures of businesses, net of cash sold 41,273 ( 1,499 ) —

Divestitures of business 207 41,273 ( 1,499 )

Net cash used in investing activities ( 20,128 ) ( 20,143 ) ( 42,034 )

5 unchanged sentences

Repayments of bank borrowings ( 256,780 ) ( 205,499 ) ( 288,574 )

Repayment of convertible notes — — ( 250,000 )

Payments for debt issuance costs ( 2,686 ) — —

Payments for contingent consideration liabilities — — ( 4,674 )

Deferred payments on business acquisitions ( 1,875 ) — —

Net cash used in financing activities ( 74,108 ) ( 44,410 ) ( 39,615 )

17 unchanged sentences

Description of Business

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 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.

Huron is a global professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation using an enterprise portfolio of technology, data and analytics solutions to empower clients to own their future.

By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.

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:

The new operating model strengthens Huron’s go-to-market strategy, drives efficiencies that support margin expansion, and positions the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the three industries, which are 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:

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

In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries.

The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment.We also provide revenue reporting across two principal capabilities:

i) Consulting and Managed Services and ii) Digital.

These changes 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.

These changes improve visibility into the core drivers of our business.

While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation.

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

Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

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.

In order to better align with industry standards, in the first quarter of 2022, we revised the presentation of our consolidated statement of operations and other comprehensive income (loss) to present depreciation and amortization expense in the aggregate with amortization of intangible assets and software development costs that were previously presented separately within total direct costs and reimbursable expenses.

We also aggregated immaterial line items within selling, general and administrative expenses.

The change in presentation has no effect on our consolidated results, and our historical consolidated statements of operations and other comprehensive income (loss) were revised for consistent presentation.

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

We also generate revenues from software licenses;

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.

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:

1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when we satisfy the performance obligations.

HURON CONSULTING GROUP INC.

1 unchanged sentence

(Tabular amounts in thousands, except per share amounts)

We typically satisfy our performance obligations for professional services over time as the related services are provided.

The performance obligations related to software support and maintenance and subscriptions to our cloud-based analytic tools and solutions are typically satisfied evenly over the course of the service period.

Other performance obligations, such as certain software licenses, speaking engagements, conferences, and publications, are satisfied at a point in time.

We generate our revenues under four types of billing arrangements:

3 unchanged sentences

and software support, maintenance and subscriptions.

• Fixed-fee (including software license revenue):

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

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License revenue from our research administration and compliance software is generally recognized in the month in which the software is delivered.

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:

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

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

We recognize revenues under time-and-expense 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.

• Performance-based:

In performance-based billing arrangements, fees are tied to the attainment of contractually defined objectives.

1 unchanged sentence

First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review.

Second, we have performance-based engagements in which we earn a success fee when and if certain predefined outcomes occur.

Second, we earn a success fee when and if certain predefined outcomes occur.

We recognize revenue under performance-based billing arrangements using the following steps:

1) estimate variable consideration using a probability-weighted assessment of the fees to be earned, 2) apply a constraint to the estimated variable consideration to limit the amount that could be reversed when the uncertainty is resolved (the “constraint”), and 3) recognize revenue of estimated variable consideration, net of the constraint, based on work completed to-date versus our estimates of the total services to be provided under the engagement.

• Software support, maintenance and subscriptions:

Clients that have purchased one of our software licenses can pay an annual fee for software support and maintenance.

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Provisions are recorded for the estimated realization adjustments on all engagements, including engagements for which fees are subject to review by the bankruptcy courts.

Expense reimbursements that are billable to clients are included in total revenues and reimbursable expenses.

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

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 that are billed to clients, primarily relating to travel and out-of-pocket expenses incurred in connection with client engagements, are included in total revenues and reimbursable expenses.

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

Subcontractors that are billed to clients at cost are also included in reimbursable expenses.

When billings do not specifically identify reimbursable expenses, we allocate the portion of the billings equivalent to these expenses to reimbursable expenses.

The payment terms and conditions in our customer contracts vary.

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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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If the financial condition of a client deteriorates in the future, impacting the client’s ability to make payments, an increase to our allowance might be required or our allowance may not be sufficient to cover actual write-offs.

We record the provision for doubtful accounts and unbilled services as a reduction in revenue 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 receivables, we record the provision to selling, general and administrative expenses.

Direct Costs and Reimbursable Expenses

Direct costs and reimbursable expenses consist primarily of revenue-generating employee compensation and their related benefits and share-based compensation costs;

as well as technology costs, commissions, the cost of outside consultants or subcontractors assigned to revenue-generating activities, other third-party costs directly attributable to our revenue-generating activities, and direct expenses to be reimbursed by clients.

Direct costs and reimbursable expenses incurred on engagements are expensed in the period incurred.

We record the provision for doubtful accounts and unbilled services as a reduction in revenue.

To the extent we write-off accounts receivable due to a client's inability to pay, the charge is recognized as a component of selling, general and administrative expenses.

Direct costs primarily consist of payroll costs for our revenue-generating professionals which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes and benefits.

Direct costs also include fees paid to independent contractors that we retain to supplement our revenue-generating professionals, typically on an as-needed basis for specific client engagements, as well as technology costs, product and event costs, and commissions.

Direct costs exclude amortization of intangible assets and software development costs and reimbursable expenses, both of which are separately presented in our consolidated statements of operations.

Direct costs are expensed in the period incurred.

Cash and Cash Equivalents

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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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See Note 13 “Fair Value of Financial Instruments” for additional information on our convertible debt investment.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

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.

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Following our purchase, we have not identified any impairment of our investment.

See Note 13 “Fair Value of Financial Instruments” for additional information on our preferred stock investment and the unrealized gain recognized in 2020.

See Note 13 “Fair Value of Financial Instruments” for additional information on our preferred stock investment and the unrealized gains recognized since our initial investment.

Fair Value of Financial Instruments

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Furniture and fixtures are depreciated over five years .

Aircraft are depreciated over ten years .

Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the initial term of the lease.

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See Note 5 “Leases” for additional information on our leases, including the lease impairment charges recorded in 2022 and 2020.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Software Development Costs

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Thereafter, and until the software is available for general release to customers, these software development costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value.

These capitalized development costs are amortized in proportion to current and future revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the product.

These capitalized development costs are

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

amortized in proportion to current and future revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the product.

We did not capitalize any development costs for this type of software during 2022 or 2021.

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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.

As of December 31, 2022, gross capitalized implementation costs incurred in a cloud computing arrangement and related accumulated amortization was $ 6.5 million and $ 1.5 million, respectively.

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

During the years ended December 31, 2022 and 2021, we recognized amortization of our capitalized implementation costs of $ 1.2 million and $ 0.9 million, respectively.

We did not recognize any amortization of capitalized implementation costs in 2020.

Of the $ 1.2 million amortization for capitalized implementation costs in 2022, $ 0.3 million was recognized as a restructuring charge as it related to accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use.

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

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

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We evaluate the recoverability of long-lived assets based on forecasted undiscounted cash flows.

See Note 5 “Leases” and Note 11 “Restructuring Charges” for information on our operating lease right-of-use asset and fixed asset impairment charges recorded in 2020 and 2019.

See Note 5 “Leases” and Note 11 “Restructuring Charges” for information on our operating lease right-of-use asset impairment charges recorded in 2022 and 2020 and fixed asset impairment charges recorded in 2020.

No material impairment charges for other long-lived assets were recorded in 2022, 2021, or 2020.

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

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

As of December 31, 2022, we have three reporting units:

Healthcare, Education, and Commercial.

In 2022, we performed two goodwill impairment tests:

an interim impairment test for each of our reporting units as of January 1, 2022 in connection with the operating model modification and the annual impairment test for each of our reporting units as of November 30.

We did not identify any impairments during our interim or annual impairment tests performed during 2022.

Further, we evaluated whether any events have occurred, or any circumstances have changed since November 30, 2022 that would indicate goodwill may have become impaired since

HURON CONSULTING GROUP INC.

1 unchanged sentence

(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.

our annual impairment test.

Based on our evaluation as of December 31, 2022, we determined that no indications of impairment have arisen since our annual goodwill impairment test.

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

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.

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.

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:

In 2021, we adopted Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers retrospectively to all acquisitions in 2021.

Under ASU 2021-08, 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.

All other tangible assets 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.

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It is our policy to account for forfeitures as they occur.

Refer to Note 16 "Equity Incentive Plan" for further information regarding share-based compensation.

Sponsorship and Advertising Costs

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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

We amortize the costs we incur to obtain debt financing over the contractual life of the related debt using the straight-line method for our senior secured revolving credit facility.

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

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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.

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 $ 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.

We recognized $ 0.7 million of foreign currency transaction gains in 2022, $ 0.4 million of foreign currency transaction losses in 2021, and less than $ 0.1 million of foreign currency transaction gains in 2020.

Segment Reporting

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As of December 31, 2022, 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.

Healthcare, Education, and Commercial.

New Accounting Pronouncements

Recently Adopted

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):

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848):

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

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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.

On November 15, 2022, we entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”).

The Amended Credit Agreement amends and restates, in its entirety, the Second Amended and Restated Credit Agreement, including amending the base interest rate from LIBOR to Term SOFR.

Consequently, we updated the reference rate within our existing interest rate swap agreements from one month LIBOR to one month Term SOFR.

As a result, in the fourth quarter of 2022, we adopted Accounting Standard Codification ("ASC") 848 , Reference Rate Reform, which had no impact on our consolidated financial statements.

Refer to Note 7 "Financing Arrangements" and Note 12 "Derivative Instruments and Hedging Activity" for further discussion of the Amended Credit Agreement and our interest rate swap agreements.

Acquisitions and Divestitures

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 are included within our consolidated financial statements as of the acquisition date and allocated among our three operating industries, which are our reportable segments, based on the engagements delivered by the business.

Customer Evolution, LLC

Effective December 31, 2022, we completed the acquisition of Customer Evolution, LLC ("Customer Evolution"), a healthcare advisory and technology implementation consulting services firm.

The results of operations of Customer Evolution will be included in our consolidated financial statements and results of operations of our Healthcare segment beginning January 1, 2023.

The acquisitions of AIMDATA and Customer Evolution are not significant to our consolidated financial statements individually or in the aggregate as of and for the year ended December 31, 2022.

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Acquisitions and Divestitures

Unico Solution, Inc.

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(“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.

The acquisition expands our cloud-based technology offerings within our Digital capability.

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

The results of operations were initially recognized within our legacy Business Advisory segment and subsequently allocated among our three operating industries, which are our reportable segments, based on the engagements delivered by the business.

Bad Rabbit, Inc.

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(“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 results of operations of Perception Health are 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.

The finalized measurement of assets acquired and liabilities assumed in the Whiteboard and Perception Health acquisitions were completed in the first quarter of 2022.

B3i Analytics, LLC

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(“ForceIQ”), a Salesforce Industries partner focused on helping clients drive digital transformation and innovation at scale powered by the cloud.

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

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 acquisition expands our cloud-based technology offerings within our Digital capability.

The results of operations of ForceIQ are included in our consolidated financial statements 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.

On November 1, 2021, we completed the divestiture of our Life Sciences business, a reporting unit within our legacy 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.

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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.

life sciences drug safety business that was part of the legacy 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.

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The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2022 and 2021.

Healthcare Business

Advisory Education Total

Healthcare Education Commercial (1)

Balance as of December 31, 2020:

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

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

Foreign currency translation — ( 629 ) — ( 629 )

Balance as of December 31, 2021:

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Goodwill, net as of December 31, 2021 $ 434,870 $ 121,570 $ 64,439 $ 620,879

Goodwill reallocation, net (1)

18,057 ( 1,417 ) ( 16,640 ) —

Goodwill recorded in connection with business combinations (2)

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$ 454,214 $ 122,235 $ 48,517 $ 624,966

(1) The balances shown prior to January 1, 2022 within the Commercial segment related to our Business Advisory segment prior to the modification of our operating model.

Effective January 1, 2022, we reallocated a portion of the goodwill, net of accumulated impairment losses within our Business Advisory segment to our Healthcare and Education segments.

The remaining goodwill, net of accumulated impairment losses was allocated to our new Commercial segment.

(2) See Note 3 “Acquisitions and Divestitures” for additional information on business combinations completed in 2022, 2021 and 2020.

First Quarter 2022 Goodwill Reallocation and Goodwill Impairment Test

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

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

Healthcare, Education and Commercial.

The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and

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energy and utilities.

In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries.

The three reportable segments of Healthcare, Education and Commercial are also our reporting units for goodwill impairment testing purposes.

As a result of the reorganization, we reallocated the goodwill balances of our historical reporting units to our new reporting units based on the relative estimated fair values of each component of the historical reporting units to be allocated to the new reporting units.

Additionally, we performed a goodwill impairment test on the goodwill balances of each of our reporting units as of January 1, 2022 by comparing the fair value of the reporting unit to its carrying value, including the reallocated goodwill.

Based on the results of the goodwill impairment test, we determined the fair values of the Healthcare, Education, and Commercial reporting units exceeded their carrying values by 37 %, 199 %, and 105 %, respectively.

As such, we concluded that there was no indication of goodwill impairment for all three reporting units as of January 1, 2022.

We relied on the income approach to estimate the fair value of the reporting units for both the goodwill reallocation and the goodwill impairment test.

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

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

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

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

2022 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.

Pursuant to our policy, we performed our annual goodwill impairment test as of November 30, 2022 for our three reporting units:

Healthcare, Education, and Commercial.

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.

For our qualitative assessment, we considered the most recent quantitative analysis performed for each reporting unit, which was as of January 1, 2022, 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 2022 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.

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First Quarter 2020 Goodwill Impairment Charges

The worldwide spread of the COVID-19 pandemic in the first quarter of 2020 has created significant volatility, uncertainty and disruption to the global economy.

The worldwide spread of the COVID-19 pandemic in the first quarter of 2020 created significant volatility, uncertainty and disruption to the global economy.

From the onset of the COVID-19 pandemic, we closely monitored the impact it could have on all aspects of our business, including how we expect it to negatively impact our clients, employees and business partners.

While the COVID-19 pandemic did not have a significant impact on our consolidated revenues in the first quarter of 2020, we expected it to have an unfavorable impact on sales, increase uncertainty in the backlog and negatively impact full year 2020 results.

The services provided by our Strategy and Innovation and Life Sciences reporting units within our Business Advisory segment focus on strategic solutions for healthy, well-capitalized companies to identify new growth opportunities, which may be considered by our clients to be more discretionary in nature, and the duration of the projects within these practices are typically short-term.

The services provided by our Strategy and Innovation and Life Sciences reporting units within our legacy Business Advisory segment focus on strategic solutions for healthy, well-capitalized companies to identify new growth opportunities, which may be considered by our clients to be more discretionary in nature, and the duration of the projects within these practices are typically short-term.

Therefore, at the onset of the COVID-19 pandemic in the U.S.

and due to the uncertainty caused by the pandemic, we were cautious about near-term results for these two reporting units.

and due to the uncertainty

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caused by the pandemic, we were cautious about near-term results for these two reporting units.

Based on our internal projections and the preparation of our financial statements for the quarter ended March 31, 2020, and considering the expected decrease in demand due to the COVID-19 pandemic, during the first quarter of 2020 we believed it was more likely than not that the fair value of these two reporting units no longer exceeded their carrying values and performed an interim impairment test on both reporting units as of March 31, 2020.

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

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

Based on the estimated fair values of the Strategy and Innovation and Life Sciences reporting units, we recorded non-cash pretax goodwill impairment charges of $ 49.9 million and $ 9.9 million, respectively, in the first quarter of 2020.

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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.

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

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

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.

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

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

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

Intangible Assets

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$ 74,583 $ 57,219 $ 75,908 $ 53,421

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

Technology and software 2 to 5

13,330 7,975 13,330 5,607

Trade names 6 6,000 5,907 6,000 5,148

Non-competition agreements 2 to 5

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Total $ 94,833 $ 71,441 $ 97,518 $ 65,624

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 sublease certain office spaces to third parties resulting from restructuring activities in certain locations.

Lease Impairment Charges

Operating lease right-of-use (“ROU”) assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group to which the operating lease ROU asset is assigned may not be recoverable.

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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.

During the years ended December 31, 2022 and 2020, we recognized non-cash lease-related impairment charges of $ 0.2 million and $ 9.1 million, respectively.

No lease-related impairment charges were recognized during 2021.

The $ 0.2 million lease-related impairment charge recognized in 2022 resulted from updated sublease assumptions for our previously vacated office space in New York City, New York and was allocated to the operating lease ROU asset.

See below for additional information on our 2020 lease impairment charges.

Fourth Quarter 2020 Lease Impairment Charges

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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, of which $ 9.1 million was allocated to the operating lease ROU assets and $ 4.1 million was allocated to the related fixed assets based on their relative carrying amounts.

The $ 13.2 million of non-cash lease impairment charges was recognized in restructuring charges on our consolidated statement of operations.

See Note 11 “Restructuring Charges” for additional information on our restructuring activities.

Fourth Quarter 2019 Lease Impairment Charge

During 2019, we exited a portion of our Lake Oswego, Oregon office, the remaining portion of our Middleton, Wisconsin office, and an office in Houston Texas, which resulted in $ 0.8 million of non-cash lease impairment charges, of which $ 0.6 million was allocated to the operating lease ROU assets and $ 0.2 million was allocated to the leasehold improvements based on their relative carrying amounts.

The $ 0.8 million of non-cash lease impairment charges were recognized in restructuring charges on our consolidated statement of operations.

As a result, we recognized $ 13.2 million of non-cash lease-related impairment charges, of which $ 9.1 million was allocated to the operating lease ROU assets and $ 4.1 million was allocated to the related fixed assets based on their relative carrying amounts.

The $ 13.2 million of non-cash lease-related impairment charges was recognized in restructuring charges on our consolidated statement of operations.

See Note 11 “Restructuring Charges” for additional information on our restructuring activities.

Fourth Quarter 2019 Lease Modification

In the fourth quarter of 2019, we entered into an amendment to the office lease agreement for our principal executive offices in Chicago, Illinois, which resulted in a non-cash gain on lease modification of $ 0.8 million.

Among other items, this amendment i) extended the term of the lease from September 30, 2024 to September 30, 2029;

ii) provided a renewal option to extend the lease for an additional five year period to September 30, 2034;

iii) terminated the lease with respect to certain leased spaces previously vacated;

iv) provided abatement of certain future base rent payments and our pro rata share of operating expenses and taxes;

and v) provided a one-time cash payment from the lessor as an incentive.

Additional information on our operating leases as of December 31, 2022 and 2021 follows.

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Total lease liabilities $ 56,086 $ 64,455

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Year Ended December 31,

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

(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.

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

The table below summarizes the remaining expected lease payments under our operating leases as of December 31, 2022.

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Depreciation expense for property and equipment was $ 10.3 million, $ 11.0 million, and $ 12.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During the years ended December 31, 2021, 2020 and 2019, we recognized an additional $ 0.4 million, $ 0.6 million, and $ 0.5 million, respectively, of accelerated depreciation expense for fixed assets related to vacated office spaces.

During the years ended December 2021 and 2020, we recognized an additional $ 0.4 million and $ 0.6 million, respectively, of accelerated depreciation expense for fixed assets related to vacated office spaces.

There was no accelerated depreciation expense for fixed assets related to vacated office spaces during 2022.

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

See Note 11 “Restructuring Charges” for additional

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

See Note 11 “Restructuring Charges” for additional information on our restructuring charges incurred in 2022, 2021 and 2020.

Property and equipment, net at December 31, 2022 and 2021 consisted of the following:

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

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Financing Arrangements

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Long-term debt, net of current portion $ 290,000 $ 232,221

Below is a summary of the scheduled remaining principal payments of our debt as of December 31, 2021.

Principal Payments of Long-Term Debt

2024 $ 231,646

Senior Secured Credit Facility

The Company has a $ 600 million senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the “Amended Credit Agreement”), that becomes due and payable in full upon maturity on September 27, 2024 .

The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $ 150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $ 750 million.

The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.

On November 15, 2022, the Company and certain of the Company's subsidiaries entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”).

The Amended Credit Agreement amended and restated, in its entirety, the Second Amended and Restated Credit Agreement entered into as of March 31, 2015 (as amended and modified, the "Existing Credit Agreement").

The Amended Credit Agreement consists of a $ 600 million five-year senior secured revolving credit facility that becomes due and payable in full upon maturity on November 15, 2027 .

The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount up to $ 250 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $ 850 million.

The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under the Existing Credit Agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, share repurchases, permitted acquisitions, and other general corporate purposes.

Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement).

At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin.

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

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At our option, borrowings under the Amended Credit Agreement will bear interest at one, three or six month Term SOFR or an alternate base rate, in each case plus the applicable margin.

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

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

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In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.

The loans and obligations under the Amended Credit Agreement are secured pursuant to a Second Amended and Restated Security Agreement and a Second Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A.

as collateral agent, pursuant to which the Company and the subsidiary guarantors grant Bank of America, N.A., for the ratable benefit of the lenders under the Amended Credit Agreement, a first-priority lien, subject to permitted liens, on substantially all of the personal property assets of the Company and the subsidiary guarantors, and a pledge of 100 % of the stock or other equity interests in all domestic subsidiaries and 65 % of the stock or other equity interests in each “material first-tier foreign subsidiary” (as defined in the Pledge Agreement).

The loans and obligations under the Amended Credit Agreement are secured pursuant to a Third Amended and Restated Security Agreement and a Third Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A.

The Amended Credit Agreement contains usual and customary representations and warranties;

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(i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00;

however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 upon the occurrence of certain transactions, and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.50 to 1.00.

however the maximum permitted Consolidated Leverage Ratio will increase to 4.25 to 1.00 upon the occurrence of a Qualified Acquisition (as defined in the Amended Credit Agreement), and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.00 to 1.00.

Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement.

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At December 31, 2022, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of 1.92 to 1.00 and a Consolidated Interest Coverage Ratio of 14.04 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 2.7 %, 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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Borrowings outstanding under the Amended Credit Agreement at December 31, 2022 totaled $ 290.0 million and carried a weighted average interest rate of 3.8 %, including the effect of the interest rate swaps described in Note 12 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Existing Credit Agreement at December 31, 2021 were $ 230.0 million and carried a weighted average interest rate of 2.7 %, including the effect of the interest rate swaps in effect at that time.

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.

At December 31, 2022, we had outstanding letters of credit totaling $ 0.7 million, which are used as security deposits for our office facilities.

As of December 31, 2022, the unused borrowing capacity under the revolving credit facility was $ 309.3 million.

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On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed from the sellers of the aircraft, a promissory note with an outstanding principal balance of $ 5.1 million.

The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024 , at which time a final payment of $ 1.5 million, plus any accrued and unpaid interest, will be due.

Under the terms of the promissory note, we pay interest on the outstanding principal amount at a rate of one month LIBOR plus 1.97 % per annum.

The obligations under the promissory note are secured pursuant to a Loan and Aircraft Security Agreement with Banc of America Leasing & Capital, LLC, which grants the lender a first priority security interest in the aircraft.

At December 31, 2021, the outstanding principal amount of the promissory note was $2.8 million, and the aircraft had a carrying amount of $ 3.7 million.

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

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.

Prior to the repayment of the promissory note, the principal balance of the promissory note was subject to scheduled monthly principal payments until the maturity date of March 1, 2024 .

Under the terms of the promissory note, we paid interest on the outstanding principal amount at a rate of one month LIBOR plus 1.97% per annum.

At December 31, 2021, the outstanding principal amount of the promissory note was $ 2.8 million, and the aircraft had a carrying amount of $ 3.7 million.

As a result of the sale, we recognized a gain of $1.0 million in the first quarter of 2022 and 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

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.

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.

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 $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.

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.

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.

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.

For the years ended December 31, 2022, 2021 and 2020 we recognized revenues of $1.13 billion, $905.6 million, and $844.1 million, respectively.

Of the $1.13 billion recognized in 2022, we recognized revenues of $ 7.6 million from obligations satisfied, or partially satisfied, in prior periods, of which $ 5.3 million was primarily due to changes in the estimates of our variable consideration under performance-based billing arrangements and $ 2.3 million was primarily due to the release of allowances on receivables from clients and unbilled services.

As of December 31, 2022, we had $ 151.2 million of remaining performance obligations under engagements with original expected durations greater than one year.

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

These remaining performance obligations exclude variable consideration which has been excluded from the total transaction price due to the constraint and performance obligations under time-and-expense engagements which are recognized in the amount invoiced.

Of the $ 151.2 million of performance obligations, we expect to recognize approximately $ 78.7 million as revenue in 2023, $ 30.1 million in 2024, and the remaining $ 42.4 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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Contract Assets and Liabilities

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Unbilled services include revenues recognized for services performed but not yet billed to clients.

Services performed that we are not yet entitled to bill because certain events must occur, such as the completion of the measurement period or client approval in performance-based engagements, are recorded as contract assets and included within unbilled services, net.

Services performed that we are not yet entitled to bill because certain events, such as the completion of the measurement period or client approval in performance-based engagements, must occur are recorded as contract assets and included within unbilled services, net.

The contract asset balance as of December 31, 2022 and 2021 was $ 50.2 million and $ 23.7 million, respectively.

The $ 26.5 million increase primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms.

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

Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition accounting policy.

Our deferred revenues balance as of December 31, 2022 and December 31, 2021 was $ 21.9 million and $ 19.2 million respectively.

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.

The $ 2.7 million increase 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, 2022, $ 18.5 million of revenues recognized were included in the deferred revenue balance as of December 31, 2021.

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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Earnings Per Share

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Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method.

Such securities or other contracts include unvested restricted stock awards, outstanding common stock options, convertible senior notes, and outstanding warrants, to the extent dilutive.

Such securities or other contracts include unvested restricted stock awards, unvested restricted stock units, and outstanding common stock options, to the extent dilutive.

In periods for which we report a net loss from continuing operations, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss from continuing operations per share would be anti-dilutive.

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Net income (loss) $ 3.64 $ 2.89 $ ( 1.09 )

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,

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above at December 31, 2022, 2021 and 2020 was 0.2 million, 0.1 million and 1.1 million, respectively, and related to unvested restricted stock and outstanding common stock options.

Share Repurchase Programs

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.

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.

The 2020 Share Repurchase Program has been subsequently extended and increased, most recently in the fourth quarter of 2022.

The current authorization extends the share repurchase program through December 31, 2023 with a repurchase amount of $ 300 million.

The amount and timing of repurchases under the share repurchase programs were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements.

During 2022, we repurchased and retired 2,037,752 shares for $ 121.3 million under the 2020 Share Repurchase Program, including 15,200 shares for $ 1.1 million which settled in the first quarter of 2023.

Additionally, during the first quarter of 2022, we settled the repurchase of 3,820 shares for $ 0.2 million that were accrued as of December 31, 2021.

During 2021, we repurchased and retired 1,265,261 shares for $ 64.8 million under the 2020 Share Repurchase Program, including the 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

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.

As of December 31, 2022, $ 108.9 million remained available for share repurchases under our share repurchase program.

Restructuring Charges

In 2022, we incurred $9.9 million of total pretax restructuring expense, which consisted of the following charges:

Employee Costs - We incurred $ 5.7 million of severance-related restructuring expense as a result of workforce reductions to better align resources with market demand.

Office space reductions - We incurred $ 2.5 million of restructuring expense related to office space reductions, of which $ 2.3 million related to rent and related expenses, net of sublease income, for previously vacated office spaces and $ 0.2 million related to a non-cash lease impairment charge driven by updated sublease assumptions for a previously vacated office space.

Other - We incurred $ 1.7 million of other restructuring charges, of which $ 0.7 million related to third-party professional advisory fees related to the modification of our operating model, $ 0.6 million related to the early termination of a contract, $ 0.3 million related to the accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use, and $ 0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021.

Of the total $9.9 million pretax restructuring charge, $ 3.9 million was recognized in our Education segment, $ 3.7 million was recognized in our corporate operations, $ 1.6 million was recognized in our Commercial segment, and $ 0.7 million was recognized in our Healthcare segment.

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.

Of the $12.4 million pretax restructuring expense, $ 8.5 million related to the divestiture of our Life Sciences business.

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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

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.

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 professional advisory fees related to the modification of our operating model.

Of the total $12.4 million pretax restructuring charge, $ 7.7 million was recognized in the Commercial segment, $ 4.5 million was recognized in our corporate operations, $ 0.1 million was recognized in our Healthcare segment, and $ 0.1 million was recognized in our Education segment.

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

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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.

Office space reductions - We incurred $ 14.0 million of restructuring expense related to office space reductions, which primarily related to the fourth quarter 2020 restructuring plan.

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

Other - We incurred $ 1.2 million of other restructuring charges primarily related to an accrual for the termination of a third-party advisor agreement in our Business Advisory segment.

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:

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 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 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.

See Note 5 “Leases” for additional information on the amendment.

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.

Other - We incurred $ 1.2 million of other restructuring charges primarily related to an accrual for the termination of a third-party advisor agreement.

Of the total $20.5 million pretax restructuring charge, $ 14.8 million related to our corporate operations, $ 2.1 million was recognized in our Commercial segment, $ 1.8 million was recognized in our Education segment, and $ 1.8 million was recognized in our Healthcare segment.

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, 2022 and 2021.

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$ 3,751 $ — $ 568 $ 4,319

(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 .

(1) 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 $ 3.8 million restructuring charge liability related to employee costs at December 31, 2022 is expected to be paid in the next 15 months and is included as a component of accrued payroll and related benefits and deferred compensation and other liabilities.

All of the $ 0.6 million other restructuring charge liability at December 31, 2022 is expected to be paid in the next 12 months and is included as a component of accrued expenses and other current liabilities.

Derivative Instruments and Hedging Activity

On June 22, 2017, we entered into a forward interest rate swap agreement effective August 31, 2017 and ending August 31, 2022 , with a notional amount of $ 50.0 million.

We entered into this derivative instrument to hedge against the interest rate risks of our variable-rate borrowings.

Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.900 %.

On January 30, 2020, we entered into a forward interest rate swap agreement effective December 31, 2019 and ending December 31, 2024 , with a notional amount of $ 50.0 million.

We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings.

Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.500 %.

On March 16, 2020, we entered into a forward interest rate swap agreement effective February 28, 2020 and ending February 28, 2025 , with a notional amount of $ 100.0 million.

We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings.

Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 0.885 %.

We recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet.

We have designated these derivative instruments as cash flow hedges.

Therefore, changes in the fair value of the derivative instruments are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified into interest expense upon settlement.

As of December 31, 2021, it was anticipated that $ 1.1 million of the losses, net of tax, currently recorded in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.

The table below sets forth additional information relating to our interest rate swaps designated as cash flow hedging instruments as of December 31, 2021 and 2020.

Fair Value (Derivative Asset and Liability)

As of December 31,

Balance Sheet Location 2021 2020

Other non-current assets $ 1,210 $ —

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

Deferred compensation and other liabilities $ 149 $ 3,297

In the normal course of business, we use forward interest rate swaps to manage the interest rate risk associated with our variable-rate borrowings under our senior secured credit facility and we use non-deliverable foreign exchange forward contracts to manage the foreign currency exchange rate risk related to our operations in India.

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

We have designated all of our derivative instruments as cash flow hedges.

Therefore, changes in the fair value of the interest rate swaps and foreign exchange forward contracts are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified to earnings upon settlement.

Interest Rate Swaps

As of December 31, 2022 and 2021, we were party to forward interest rate swap agreements with an aggregate notional amount of $ 200.0 million.

In the fourth quarter of 2022, in conjunction with the amendment to our senior secured credit facility which, among other items, amended the base rate of our variable-rate borrowings from LIBOR to Term SOFR, we updated the reference rate within our interest rate swap agreements from LIBOR to Term SOFR.

Under the terms of the updated interest rate swap agreements, we receive from the counterparty interest on the notional amount based on one month Term SOFR and we pay to the counterparty a stated, fixed rate.

Prior to updating our interest rate swap agreements, we received from the counterparty interest on the notional amount based on one month LIBOR and we paid to the counterparty a stated, fixed rate.

The forward interest rate swap agreements in effect as of December 31, 2022 have staggered maturities through August 31, 2027.

As of December 31, 2022, it was anticipated that $ 4.8 million of the gains, net of tax, related to interest rate swaps currently recorded in accumulated other comprehensive income will be reclassified into interest expense, net of interest income in our consolidated statement of operations within the next 12 months.

Foreign Exchange Forward Contracts

As of December 31, 2022, we were party to non-deliverable foreign exchange forward contracts with an aggregate notional amount of INR 657.9 million, or $ 8.0 million based on the exchange rate in effect as of December 31, 2022.

These foreign exchange forward contracts will mature monthly through September 2023 to hedge a portion of our forecasted monthly Indian Rupee-denominated expenses against foreign currency fluctuation with the United States dollar.

As of December 31, 2022, it was anticipated that $ 0.1 million of the losses, net of tax, related to foreign exchange forward contracts currently recorded in accumulated other comprehensive income will be reclassified into direct costs in our consolidated statement of operations within the next 12 months.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

The table below sets forth additional information relating to our derivative instruments as of December 31, 2022 and 2021.

Derivative Instrument Balance Sheet Location December 31, 2022

December 31, 2021

Interest rate swaps Prepaid expenses and other current assets $ 7,108 $ —

Interest rate swaps Other non-current assets 5,131 1,210

Total Assets $ 12,239 $ 1,210

Interest rate swaps Accrued expenses and other current liabilities $ — $ 1,604

Interest rate swaps Deferred compensation and other liabilities — 149

Foreign exchange forward contracts Accrued expenses and other current liabilities 120 —

Total Liabilities $ 120 $ 1,753

All of our derivative instruments are transacted under the International Swaps and Derivatives Association (ISDA) master agreements.

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Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis on our consolidated balance sheet.

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 instruments.

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Total assets $ — $ 42,114 $ 57,563 $ 99,677

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

Foreign exchange forward contracts $ — $ 120 $ — $ 120

Contingent consideration for business acquisition — — 3,190 3,190

Total liabilities $ — $ 120 $ 3,190 $ 3,310

Level 1 Level 2 Level 3 Total

December 31, 2021

Interest rate swap $ — $ 627 $ — $ 627

Convertible debt investment — — 65,918 65,918

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

Convertible debt investment:

In 2014 and 2015, we invested $ 27.9 million, in the form of zero coupon convertible debt (the “initial convertible notes”), in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint.

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

and amended our initial convertible notes to include a

Foreign exchange forward contracts:

The fair values of our foreign exchange forward contracts were derived using estimates to settle the foreign exchange forward contracts agreements, which are based on the net present value of expected future cash flows on each contract utilizing market-based inputs, including both forward and spot prices, and a discount rate reflecting the risks involved.

Refer to Note 12 “Derivative Instruments and Hedging Activity” for additional information on our foreign exchange forward contracts.

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.

Convertible debt investment:

Since 2014, we have invested $ 40.9 million, in the form of 1.69 % convertible debt in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint.

Effective December 31, 2022, we amended the investment to, among other items, extend the maturity date from January 17, 2024 to January 17, 2027, unless converted earlier.

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

We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting.

After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment to be that of an available-for-sale debt security.

We continue to monitor the key factors of our VIE analysis and the terms of the convertible notes to ensure our accounting treatment is appropriate.

We have not identified any changes to Shorelight or our investment, including the amendment effective in the fourth quarter of 2022, that would change our classification of the investment as an available-for-sale debt security.

The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income.

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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 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 hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date, which was January 17, 2027 and January 17, 2024 for the valuations performed as of December 31, 2022 and 2021, respectively;

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 22.5 % as of December 31, 2022 and 2021, respectively;

and the concluded equity volatility of 40.0 % and 45.0 % as of December 31, 2022 and 2021, 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, 2020

Purchases 13,000

Change in fair value of convertible debt investment 1,554

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These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 inputs.

The significant unobservable inputs used in the fair value measurements of our contingent consideration are our measures of the estimated payouts based on internally generated financial projections on a probability-weighted basis and a discount rate which was 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.

As of December 31, 2021, the discount rate used in the fair value measurements of our contingent consideration was in a range of 2.4 % to 5.1 % with a weighted average of 3.7 %.

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

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Acquisition 1,800

Change in fair value 173

Balance as of December 31, 2021

Acquisition 1,185

Change in fair value of contingent consideration for business acquisition 173

Payment ( 1,379 )

Change in fair value ( 359 )

Balance as of December 31, 2022

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Preferred Stock Investment

In the fourth quarter of 2019, we invested $ 5.0 million, in the form of preferred stock, in Medically Home Group, Inc.

(“Medically Home”), a healthcare technology-enabled services company.

To determine the appropriate accounting treatment for our investment, we performed a VIE analysis and concluded that Medically Home does not meet the definition of a VIE.

In the fourth quarter of 2019, we invested $ 5.0 million in Medically Home Group, Inc.

(“Medically Home”), a hospital-at-home company.

The investment was made in the form of preferred stock.

To determine the appropriate accounting treatment for our preferred stock investment, we performed a VIE analysis and concluded that Medically Home does not meet the definition of a VIE.

We also reviewed the characteristics of our investment to confirm that the preferred stock is not in-substance common stock that would warrant equity method accounting.

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Under the measurement alternative, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment in Medically Home.

On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded to other income (expense), net in our consolidated statement of operations.

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 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.

On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure to the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in our consolidated statement of operations.

During the years ended December 31, 2022 and 2020, we recognized unrealized gains of $ 27.0 million and $ 1.7 million, for cumulative unrealized gains of $ 28.6 million, based on observable price changes of preferred stock issued by Medically Home with similar rights and preferences to our preferred stock investment, a Level 2 input.

These unrealized gains were recorded to other income (expense), net in our consolidated statement of operations.

There were no observable price changes in 2021, nor have we identified any impairments of our investment since inception.

As of December 31, 2022 and 2021, the carrying of our preferred stock investment was $ 33.6 million and $ 6.7 million, respectively.

Senior Secured Credit Facility

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Promissory Note due 2024

The carrying value of our promissory note due 2024 is stated at cost.

Our carrying value approximates fair value, using Level 2 inputs, as the promissory note bears interest at rates based on current market rates as set forth in the terms of the promissory note.

In the first quarter of 2022, we completed the sale of our aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on our promissory note due 2024.

The carrying value of our promissory note due 2024 was stated at cost.

The carrying value approximated fair value, using Level 2 inputs, as the promissory note bore interest at rates based on then-current market rates as set forth in the terms of the promissory note.

Refer to Note 7 “Financing Arrangements” for additional information on our promissory note due 2024.

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The table below sets forth the components of accumulated other comprehensive income (loss), net of tax for the years ended December 31, 2022, 2021, and 2020.

Cash Flow Hedges (1)

Translation Available-for-

Investments Cash Flow

Investments Interest Rate Swaps Foreign Exchange Forward Contracts Total

Balance as of December 31, 2019 $ ( 566 ) $ 15,882 $ ( 380 ) $ — $ 14,936

Foreign currency translation adjustment, net of tax of $ 0

348 — — — 348

Unrealized gain (loss) on investments:

Change in fair value, net of tax of $( 499 )

— 1,323 — — 1,323

Unrealized gain (loss) on cash flow hedges:

Interest rate swaps:

Change in fair value, net of tax of $ 1,693

— — ( 4,652 ) — ( 4,652 )

Reclassification adjustment into earnings, net of tax of $( 388 )

— — 1,106 — 1,106

Balance as of December 31, 2020 ( 218 ) 17,205 ( 3,926 ) — 13,061

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:

Change in fair value, net of tax of $( 385 )

— 1,169 — — 1,169

Unrealized gain (loss) on cash flow hedges:

Interest rate swaps:

Change in fair value, net of tax of $( 641 )

— — 1,606 — 1,606

Reclassification adjustment into earnings, net of tax of $( 678 )

— — 1,929 — 1,929

Balance as of December 31, 2021 ( 1,143 ) 18,374 ( 391 ) — 16,840

Foreign currency translation adjustment, net of tax of $ 0

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

( 1,890 ) — — — ( 1,890 )

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Change in fair value, net of tax of $ 2,209

— ( 6,146 ) — — ( 6,146 )

Unrealized gain (loss) on cash flow hedges:

Interest rate swaps:

Change in fair value, net of tax of $( 3,555 )

— — 9,892 — 9,892

Reclassification adjustment into earnings, net of tax of $ 176

— — ( 489 ) — ( 489 )

Foreign exchange forward contracts:

Change in fair value, net of tax of $ 43

— — ( 120 ) ( 120 )

Reclassification adjustment into earnings, net of tax of $( 11 )

Balance as of December 31, 2022 $ ( 3,033 ) $ 12,228 $ 9,012 $ ( 88 ) $ 18,119

(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.

(1) The before tax amounts reclassified from accumulated other comprehensive income related to our interest rate swaps and foreign exchange forward contracts are recorded to interest expense, net of interest income and direct costs, respectively.

Refer to Note 12 "Derivative Instruments and Hedging Activity" for additional information on our derivative instruments.

(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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

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.

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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.

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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, 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.

Total share-based compensation cost recognized for the years ended December 31, 2022, 2021, and 2020 was $ 31.0 million, $ 25.9 million, and $ 23.9 million, respectively, with related income tax benefits of $ 6.8 million, $ 6.3 million, and $ 5.4 million, respectively.

As of December 31, 2022, there was $ 37.0 million of total unrecognized compensation cost related to nonvested share-based awards.

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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:

Performance-based Stock Options

During 2022, the Company granted performance-based stock options which are earned by the recipients contingent upon meeting practice specific goals.

Following the performance period, these awards are subject to the completion of a service period of an additional two years .

These earned awards vest on a graded vesting schedule over the service period.

For certain performance-based stock options, the recipients may earn additional options for performance achieved above the stated target.

The performance-based stock options were granted at exercise prices equal to the fair value of the Company’s common stock on the date of grant.

Compensation cost is amortized into expense over the service period, including the performance period.

Our performance-based stock options have a contractual term of 7 years.

The fair values of the performance-based stock options granted during 2022 were calculated using the Black-Scholes option pricing model using the following assumptions:

Black-Scholes performance-based option pricing model:

Expected dividend yield — %

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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:

Performance-based stock option activity for the year ended December 31, 2022 was as follows:

Performance-based Options

(in thousands) Weighted

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Outstanding at December 31, 2021 —

Granted 50 $ 52.49

Exercised ( 23 ) $ 34.34 $ 0.4

Forfeited or expired ( 12 ) $ 48.22

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Exercisable at December 31, 2022 —

(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.

(1) All of the outstanding performance-based stock options were granted under the 2012 Omnibus Incentive Plan.

(2) Performance-based stock options granted in 2022 are presented at the stated target, which represents the base number of options that could be earned.

Actual options earned may be below or, for certain grants, above the target based on the achievement of specific financial goals.

(3) All of the outstanding performance-based stock options as of December 31, 2022 were unearned and subject to achievement of specific financial goals.

Once earned, the options will be subject to time-based vesting according to the terms of the award.

Based on 2022 financial results, approximately 47,835 of the 171,000 unearned options will be forfeited in the first quarter of 2023.

The weighted average grant date fair value of stock options granted during 2022 was $ 17.00 .

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.

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.

No performance-based stock options were granted or exercised in 2021 and 2020.

Time-vested Stock Options

In prior years, we have granted stock options to certain employees that are solely earned based on the completion of the stated service period.

These time-vested stock options were granted at exercise prices equal to the fair value of the Company’s common stock on the date

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

No time-vested stock option awards were granted in 2022 or 2020.

Subject to acceleration under certain conditions, these time-vested stock options vest annually over four years .

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

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

Black-Scholes time-vested 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.

Time-vested stock option activity for the year ended December 31, 2022 was as follows:

Time-vested Options

(in thousands) Weighted

(in dollars) Weighted

(in years) Aggregate

(in millions)

Outstanding at December 31, 2021 93 $ 46.25 4.1 $ 0.3

Exercised ( 37 ) $ 38.89 $ 0.5

Forfeited or expired —

Outstanding at December 31, 2022 (1)

56 $ 51.05 5.2 $ 1.2

Exercisable at December 31, 2022 19 $ 48.15 3.9 $ 0.5

(1) All of the outstanding time-vested stock options were granted under the 2012 Omnibus Incentive Plan.

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

No time-vested stock options were granted in 2022 and 2020.

The aggregate intrinsic value of time-vested stock options exercised during 2021 and 2020 was $ 0.4 million and $ 1.1 million, respectively.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law, which 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.

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.

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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.

During 2020, we deferred $ 12.2 million of payroll tax payments, which was all repaid in the third quarter of 2021.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

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, 2022, 2021, and 2020 consisted of the following:

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State income taxes, net of federal benefit 6.1 5.2 4.4

Disallowed executive compensation 1.2 ( 2.8 ) 2.0

Valuation allowance 2.6 1.1 ( 3.1 )

Meals and entertainment 0.1 ( 0.6 ) 1.6

CARES Act net operating loss carryback ( 3.8 ) 4.4 —

Tax credits ( 1.3 ) 3.0 ( 3.1 )

Disallowed executive compensation 1.9 1.2 ( 2.8 )

Realized investment gains/losses 1.4 ( 1.1 ) 2.6

Stock-based compensation ( 0.7 ) 4.3 ( 1.1 )

Foreign source income 1.2 ( 0.2 ) 0.5

Meals and entertainment 0.1 0.1 ( 0.6 )

Stock-based compensation 0.1 ( 0.7 ) 4.3

Deferred tax adjustments ( 2.7 ) ( 0.2 ) 1.7

Tax credits ( 1.0 ) ( 1.3 ) 3.0

CARES Act net operating loss carryback — ( 3.8 ) 4.4

Goodwill impairment charges — — ( 2.6 )

Unrecognized tax benefits — — ( 2.0 )

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

Other ( 0.3 ) — ( 0.8 )

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(Tabular amounts in thousands, except per share amounts)

The net deferred tax asset (liability) for continuing operations at December 31, 2021 and 2020 consisted of the following:

The net deferred tax asset (liability) balance at December 31, 2022 and 2021 consisted of the following:

As of December 31,

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Operating lease liabilities $ 15,249 $ 17,542

Deferred compensation liability 10,331 9,002

Share-based compensation 9,314 8,062

Deferred compensation liability 7,963 10,331

Accrued payroll and payroll related liabilities 6,432 5,645

Tax credits 1,828 1,773

Net operating loss carryforwards 3,304 1,243

Deferred payroll tax payments — 3,235

Tax credits 1,813 1,828

Other 2,012 2,009

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Operating lease right-of-use assets ( 8,354 ) ( 9,837 )

Preferred stock investment ( 7,613 ) ( 441 )

Convertible debt investment ( 4,421 ) ( 6,604 )

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Total deferred tax liabilities ( 71,012 ) ( 54,253 )

Net deferred tax asset (liability) for continuing operations $ ( 10,469 ) $ 3,763

Net deferred tax liabilities $ ( 30,592 ) $ ( 10,469 )

As of December 31, 2022 and 2021, we had valuation allowances of $5.7 million and $2.9 million, respectively, primarily due to uncertainties relating to the ability to realize deferred tax assets recorded for foreign losses and tax credits.

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

The increase in valuation allowances in 2022 primarily related to an increase in foreign losses.

We have foreign net operating losses of $ 3.2 million which begin to expire in 2027 and state net operating loss carryforwards of $ 0.1 million which will begin to expire in 2040, 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.

We have federal tax credit carryforwards of $ 1.8 million which will begin to expire in 2030, if not utilized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

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Balance at January 1, 2020 $ 50

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

Decrease due to lapse of statute of limitations ( 735 )

Balance at December 31, 2019 50

Additions based on tax positions related to prior years 694

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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.

Decrease due to laps of statue of limitations ( 101 )

Decrease based on tax positions related to prior years ( 50 )

Balance at December 31, 2022 $ 593

As December 31, 2022 and 2021, we had $0.6 million and $0.7 million of unrecognized tax benefits, respectively, which would affect the effective tax rate of continuing operations if recognized.

It is reasonably possible that approximately $ 0.6 million of the liability for

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

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.

unrecognized tax benefits at December 31, 2022 could decrease in the next twelve months primarily due to the expiration of statutes of limitations.

As of both December 31, 2022 and 2021, we had $ 0.1 million 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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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.

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

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

We believe the Trustee’s allegations with respect to Huron and the CRO are without merit.

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 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.

On April 19, 2022, the bankruptcy court entered an order staying all of the Trustee’s claims against Huron and the CRO after (i) finding that the state law claims were subject to arbitration and (ii) exercising its discretion to stay the non-state-law claims pending the arbitration proceeding.

The Trustee did not appeal the court’s order prior to the deadline of May 3, 2022.

In October 2022, Huron, the CRO and the Trustee reached agreement on a settlement which provides for the Trustee’s dismissal of the Amended Complaint with prejudice as it relates to Huron and the CRO and a mutual release of claims in exchange for a settlement payment to the Trustee of $ 1.5 million.

As a result, we increased our accrued liability and insurance receivable to $ 1.5 million as of September 30, 2022, which had a net zero impact in our consolidated statement of operations.

In the fourth quarter of 2022, the settlement agreement was approved by the Bankruptcy Court and the settlement payment was made to the Trustee.

Thereafter, the case was dismissed with prejudice as it relates to Huron and the CRO.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business.

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 were outstanding at both December 31, 2022 and 2021 to support certain office lease obligations.

In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements.

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Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments:

Healthcare, Business Advisory, and Education.

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.

Healthcare, Education, and Commercial.

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

The new operating model strengthens Huron’s go-to-market strategy, drives efficiencies that support margin expansion, and positions the company to accelerate growth.

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

Healthcare, Education and Commercial.

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

In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries.

We also provide revenue reporting across two principal capabilities:

i) Consulting and Managed Services and ii) Digital.

These changes improve visibility into the core drivers of our business.

While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation.

Our Healthcare segment serves acute care providers, including national and regional health systems;

academic health systems;

community health systems;

and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical groups;

and long-term care or post-acute providers.

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

digital solutions, spanning technology and analytic-related services and a portfolio of software products;

organizational transformation;

and digital, technology and analytic solutions.

Most healthcare organizations are focused on changing the way care is delivered;

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

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 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.

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 restructuring and corporate finance services.

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

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

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

digital, technology and analytic solutions;

financial advisory and strategy and innovation.

Healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around growth, optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation;

changing the way care is delivered, particularly in light of personnel shortages, and improving access to care;

and evolving their digital capabilities to more effectively manage their business.

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

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

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations.

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

business operations, including the research enterprise and student and alumni lifecycle;

digital solutions, spanning technology and analytic-related services and Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance;

and organizational transformation.

Our Education segment clients are increasingly faced with 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.

We collaborate with clients to address these challenges and ensure they have a sustainable future.

We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology;

Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition, and a need to modernize their businesses using technology to advance their missions.

We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology and analytics;

strengthening research strategies and support services;

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optimizing financial and operational performance;

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, 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.

applying innovative enrollment strategies;

and enhancing the student lifecycle.

Our Commercial segment is focused on serving industries and organizations facing significant disruption and regulatory change by helping them adapt to rapidly changing environments and accelerate business transformation.

Our Commercial professionals work primarily with six primary buyers:

the chief executive officer, the chief financial officer, the chief strategy officer, the chief human resources officer, the chief operating officer, and organizational advisors, including lenders and law firms.

We have a deep focus on serving organizations in the financial services, energy and utilities, industrials and manufacturing industries and the public sector while opportunistically serving commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit.

Our Commercial professionals use their deep industry, functional and technical expertise to deliver our digital services and software products, strategy and innovation, and financial advisory (special situation advisory and corporate finance advisory) services.

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

developing analytics and insights to identify the needs of tomorrow’s customers, evolve their strategies, and bring new products to market;

managing through stressed and distressed situations to create a viable path forward for stakeholders;

and providing financial, risk and regulatory advisory offerings.

Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment.

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

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

Our chief operating decision maker does not evaluate segments using asset information.

HURON CONSULTING GROUP INC.

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Segment operating income as a percentage of segment revenues 24.5 % 26.6 % 26.0 %

Business Advisory:

Revenues $ 359,835 $ 242,374 $ 223,325

4 unchanged sentences

Segment operating income as a percentage of segment revenues 21.1 % 15.7 % 18.2 %

Total Company:

Revenues $ 1,132,455 $ 905,640 $ 844,127

4 unchanged sentences

Other operating expenses 140,145 131,545 135,105

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

Depreciation and amortization 20,271 20,634 24,405

Goodwill impairment charges (1)

Operating income (loss) 99,760 52,839 ( 28,852 )

Other income (expense), net 8,817 27,197 ( 5,021 )

2 unchanged sentences

We do not include the impact of goodwill impairment charges in our evaluation of segment performance.

As of December 31,

Segment Assets:

2021 2020 2019

Healthcare $ 90,059 $ 40,217 $ 73,019

Business Advisory 57,738 38,402 59,315

Education 46,592 34,534 38,881

Unallocated assets (1)

924,960 937,822 933,056

Total assets $ 1,119,349 $ 1,050,975 $ 1,104,271

(1) Unallocated assets include goodwill and intangible assets and our long-term investments, as management does not evaluate these items at the segment level when assessing segment performance or allocating resources.

Refer to Note 4 “Goodwill and Intangible Assets” and Note 13 “Fair Value of Financial Instruments” for further information on these assets.

HURON CONSULTING GROUP INC.

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(Tabular amounts in thousands, except per share amounts)

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

Healthcare Business Advisory Education Total

Billing Arrangements

Fixed-fee $ 218,415 $ 121,648 $ 60,077 $ 400,140

Time and expense 64,394 143,024 147,245 354,663

Performance-based 73,360 18,296 — 91,656

Software support, maintenance and subscriptions 21,408 8,695 29,078 59,181

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

Employee Type (1)

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

Timing of Revenue Recognition

Revenue recognized over time $ 373,148 $ 291,663 $ 236,058 $ 900,869

Revenue recognized at a point in time 4,429 — 342 4,771

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

Year Ended December 31, 2020

Healthcare Business Advisory Education Total

Billing Arrangements

Fixed-fee $ 202,513 $ 101,561 $ 44,839 $ 348,913

Time and expense 58,322 152,716 155,510 366,548

Performance-based 69,316 8,059 695 78,070

Software support, maintenance and subscriptions 23,286 5,025 22,285 50,596

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

Employee Type (1)

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

Timing of Revenue Recognition

Revenue recognized over time $ 349,676 $ 267,361 $ 223,007 $ 840,044

Revenue recognized at a point in time 3,761 — 322 4,083

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

HURON CONSULTING GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share amounts)

The following table illustrates the disaggregation of revenues by capability, including a reconciliation of the disaggregated revenues to revenues from our three operating segments for the years ended December 31, 2022, 2021 and 2020.

For the years ended December 31, 2022, 2021, and 2020, substantially all of our revenues were recognized over time.

Year Ended December 31,

Healthcare Business Advisory Education Total

Billing Arrangements

Fixed-fee $ 249,479 $ 100,635 $ 51,826 $ 401,940

Time and expense 55,204 139,610 154,893 349,707

Performance-based 71,051 6,856 — 77,907

Software support, maintenance and subscriptions 23,487 5,407 18,309 47,203

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

Employee Type (1)

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

Timing of Revenue Recognition

Revenue recognized over time $ 390,884 $ 252,508 $ 223,673 $ 867,065

Revenue recognized at a point in time 8,337 — 1,355 9,692

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

(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

Revenues by Capability 2022 2021 2020

Consulting and Managed Services $ 365,645 $ 327,165 $ 294,456

Digital 169,354 117,602 112,080

Total revenues $ 534,999 $ 444,767 $ 406,536

Consulting and Managed Services $ 192,336 $ 131,369 $ 108,784

Digital 167,499 111,005 114,541

Total revenues $ 359,835 $ 242,374 $ 223,325

Consulting and Managed Services $ 80,013 $ 97,381 $ 110,846

Digital 157,608 121,118 103,420

Total revenues $ 237,621 $ 218,499 $ 214,266

Consulting and Managed Services $ 637,994 $ 555,915 $ 514,086

Digital 494,461 349,725 330,041

Total revenues $ 1,132,455 $ 905,640 $ 844,127

For the years ended December 31, 2022, 2021, and 2020, substantially all of our revenues and long-lived assets were attributed to or located in the United States.

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During the years ended December 31, 2022, 2021, and 2020, 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

12 unchanged sentences

Valuation allowance for deferred tax assets $ 2,876 3,421 630 $ 5,667

(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.

Subsequent Event

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.

(1) Additions to allowances for doubtful accounts and unbilled services are charged to revenues.

To the extent we write-off accounts receivable due to a client’s inability to pay, the charge is recognized as a component of selling, general and administrative expenses.

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